Here's my summary of the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the New Zealand dollar surged to a five month high overnight of 83.5 USc and a record high of 63.2 Euro cents.
This follows a renewal of risk appetites on global markets overnight after stronger than expected factory output figures in America, Europe and China.
Growth currencies such as the New Zealand and Australian dollars often rise and fall along with appetites for risk and expectations for global growth, given commodity prices often move violently in one direction or the other depending on the global economic growth outlook. The Australian dollar rose to US$1.07. See more here BNZ's currencies report on our site.
China's official Purchasing Managers' Index (PMI), which is the most closely watched measure of factory activity, rose to 50.5 in January from 50.3 in December. See ,more here at Bloomberg. Anything over 50 is seen as expansion and expanding Chinese factory output is seen as good for the Australasian economies, given our reliance on exports to China. More than 60% of New Zealand's exports are now to Australia and Asia, while just 7% of New Zealand exports go to the Eurozone.
See more here from ABC on the Chinese factory figures and what they mean for Australia.
American and European factory output figures were also better than expected, which boosted US and European stock markets.See more here on American PMI figures here at Reuters.
US stocks are up 1% in late trade, while European stocks rose 2% overnight. See more here at Bloomberg.
However, the European crisis is far from over, although it has been quietened down by expectations the European Central Bank that it will lend another €1 trillion of three year loans to European banks.
The Greek crisis is worsening. Another crisis meeting of feuding Greek politicians has been called to agree on yet another more aggressive series of austerity measures to cut spending and increase taxes ahead of April elections. Most of the politicians have rejected the idea of more austerity, even though Greece's German donors are demanding it before they agree to a €130 billion bailout package. That deal must be agreed by the end of this week or Greece is likely to default on bond payments due on March 20. See more here at Reuters on the Greek standoff.
Meanwhile the political focus is tightening in America ahead of November Presidential elections as the likely candidates are narrowed down. Private equity investing millionaire Mitt Romney looks set to be the Republican candidate against Democratic President Barack Obama.
Obama announced plans overnight for US$5-10 billion worth of refinancing help for some of the 11 million home owners in America who are 'under water', where their mortgage is worth more than their home. See more here at Reuters.
Closer to home, the fortnightly auction overnight of milk powder on Fonterra's GlobalDairyTrade platform showed prices fell 0.9% for their third auction in the last four. But prices remain remarkably stable around where they have been since last July and are down just 23% from their March 2011 peak. They fell much faster and further when the global economy slumped in late 2008 and early 2009.
Dairy output is up 15% in much of the North Island and a near record payout of around NZ$7/kg is expected, which is boosting export returns and may boost some provincial economies if farmers choose to spend money rather than repay debt. See more here from BusinessDesk on our site.
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