Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that French bank stocks rebounded after they reassured investors they had plenty of capital and access to funds in the event of a Greek default.
Shares in Societe Generale rose 15% and BNP Paribas rose 7.2% overnight, helping to drag European stock markets up 2.1% and lifting the Dow 0.4% by the close. See more here at Bloomberg.
Investors had slammed the French banks earlier this week, fearing they would be hit hard by any Greek default and subsequent writedown of the values of Greek bonds and other assets they have on their books. See more here from Reuters on European shares.
However, deep concerns remain about the Greek debt situation and the potential for a Greek exit from the Euro that could trigger much more serious financial market and banking system disruption.
German Chancellor Angela Merkel and French President Nicolas Sarkozy Angela Merkel mucked around overnight, failing to agree on a joint statement before agreeing to a teleconference call tomorrow with Greek Prime Minister George Papandreaou.
Concerrns about the deteriorating European situation have everyone worried, including Barack Obama, who overnight called for European leadership on the issue. See more here at Reuters.
Even our own Finance Minister Bill English warned yesterday that a global growth slowdown and/or European Financial meltdown could slow our growth.
Also overnight, Italy struggled to sell government bonds in an auction. See more here at Reuters.
The CEO of FIAT also warned the financial system could 'go off the rails'. See more here at Reuters.
See my explainer from last week on how the European mess developed and what it means for New Zealanders.
Meanwhile these concerns about the global economy are expected to see the Reserve Bank of New Zealand, hold the Official Cash Rate at 2.5% when it releases its September quarter Monetary Policy Statement at 9 am tomorrow.
Most bank economists expect the first hike to now be in December. Other economists see rates on hold until well into next year.
The New Zealand dollar was steady around 82 USc overnight, but remains firm just under 80 Australian cents on hopes the Reserve Bank of Australia will hold rates, which makes the Australian dollar relatively less attractive than the New Zealand dollar, where rates are still expected to rise. See more here in BNZ's currencies report.
(Updated with currencies detail, charts below)
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