Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news a US Congressional 'super-committee' set up to agree US$1.2 trillion worth of deficit cuts has announced it has failed to come to an agreement.
The failure refocuses investor attention on America's massive budget deficits and borrowing at a time its economy remains fragile. The failure of the 'super-committee' means US$1.2 trillion worth of cuts will be automatically imposed on US government spending, starting from the first quarter of next year.
That is equivalent to cuts worth 8% of GDP, but spread over 10 years, and could tip the world's largest economy back into recession. See more here at MarketWatch.
US stocks fell 2-3% in late trade and the New Zealand dollar fell to an 8 month low overnight of 74.5 USc, given concerns a slowing global economy would hit demand for commodities and reduce appetites for 'riskier' currencies such as the New Zealand dollar.
See more on US stocks here at Bloomberg.
The NZ dollar was around 74.9 USc in morning trade. It is down from 82 USc just three weeks ago and a record post-float high of 88 USc in August. See BNZ's currencies report on our site here.
Meanwhile, European stocks fell 3% overnight as concern continues to grow about the European sovereign debt crisis spreading to the core of Europe and its banking system.
Bond yields remained near record highs in early trade as the European Central Bank appeared to pause its programme of buying Spanish and Italian bonds to support the market. In late trade Bloomberg reported late in the day sources saying the ECB had started buying again.
The rise in Spanish bond yields came despite the election of a centre-right government yesterday that has pledged yet more austerity, despite youth unemployment rising in Spain to 46%. See more here at Reuters.
(Updated with link to Super Committee failure announcement and clarification about cuts spread over 10 years)
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