Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that fear of a sovereign debt crisis in Europe has returned with a vengeance.
Concerns that a restructuring of Greek sovereign debt could force German and French banks to take big losses rolled across Europe, sparking fear that Spanish and Portugese debt could eventually be effected.
The measure expressing that fear is the spread between the bond yields for Portugal, Ireland, Italy, Greece and Spain (PIIGS) and the safest European debt, German bunds. The Portugese spread to bunds rose a further 30 basis points overnight to 6.6%, while the Spanish spread rose 10 basis points to 250 basis points.
European stocks fell 2% and the euro fell to record low against the Swiss Franc. It also fell to a three month low of US$1.40.
Elsewhere, the Dow fell 1%, partly on fears about the European crisis and partly on news of slower than expected factory output growth in America and in Europe.
Also, the HSBC/Market estimate of the Chinese Purchasing Managers Index showed a likely slowdown in Chinese factory output.
The Australian dollar fell sharply on both sets of news to around US$1.05, while the New Zealand dollar fell to a lesser extent to around 79 USc.
Meanwhile, Stuff reports Fonterra's board is expected to release its first forecast of the payout for 2011/12. Economists are picking a payout forecast in the high NZ$6/kg area, which is down from the NZ$7.77 forecast for the just completed 2010/11 year. See more detail here.
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