Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that China's economic growth rate slowed to a weaker-than-expected 9.1% in the September quarter from 9.5% in the June quarter.
Economists had forecast growth of around 9.3% in the September quarter from a year ago. China's economic growth is crucial for New Zealand's economic future, both directly through exports to the world's third largest economy, but also indirectly through Australia, which now has China has its largest trading partner. See more here at Bloomberg.
Some economists are worried China faces a hard landing with growth slowing to 5-6%, rather than a soft landing with growth of around 8-9%. A hard landing would drag commodity prices lower and soften demand for imports from New Zealand and Australia.
China's US$1 trillion stimulus programme early in 2009 to accelerate infrastructure spending boosted demand for Australian iron ore and coal and helped produce half of the world's economic growth since the Lehman Brothers collapse. Some worry that China may not be able to save global growth again because inflation is running hot and the Chinese government has pledged in its latest five year plan to slow growth rates.
Meanwhile, US stocks surged more than 2% in late trade after The Guardian reported France and Germany were ready to agree to a 2 trillion euro rescue fund, therefore helping to ease nerves about a European financial crisis.
Earlier, Bank of America reported better than expected profits, which helped boost its shares more than 6%. Goldman Sachs reported only its second ever quarterly loss.
In Europe, Standard and Poor's downgraded 24 Italian banks on fears about the European debt crisis. See more here at Reuters.
Also, Moody's warned it may downgrade France's Aaa sovereign debt rating because of its high level of debt and the potential costs of supporting French banks. French bond yields rose to their highest levels in 20 years.
The New Zealand dollar was firm over 79.5 USc in morning trade as global stocks rallied. See more here in BNZ's overnight currencies report on our site.
The strength also followed Fonterra's fortnightly milk powder auction saw prices rise around 1.7%, the first rise in five months and the first rise in 9 auctions. See more here in our article.
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