Here's my summary of the key news overnight in 90 seconds at 9 am, including news Chinese Premier Wen Jiabao has announced at the Communist Party's annual Congress that China's growth target would be cut to 7.5% from the 8% set in 2005.
China would also reduce its emphasis on foreign capital inflows and exporting, and increase its emphasis on boosting internal consumption and imports. See more here at Reuters.
The news dragged down currencies sensitive to expectations about global growth, including the New Zealand and Australian dollars, and pulled both European and US stocks lower.
The New Zealand dollar fell to 82.1 USc and fell more than a yen to 66.8 yen.
China's central bank also said it was considering widening the band in which the Renminbi currency floats, helping to liberalise the currency somewhat. However, at the same time, the renminbi was allowed to fall the most since November 2010, suggesting China is comfortable with a lower currency. This is exactly the complaint many western countries have made about China, in that it artificially suppresses its currency to support its export sector. See more here at Bloomberg.
US and European stocks fell 0.6% overnight on concerns about global growth triggered by the announcement from China, which has been the world's biggest source of growth for the last four years. The news could be good for New Zealand in the long run if China can encourage consumption and more imports by its growing middle class. However, in the short run, slower growth in China may suppress demand for New Zealand's and Australia's commodity exports and prices.
Meanwhile, European services sector output fell by more than expected, reinforcing fears that Europe's economy is sliding towards recession. See more here at Bloomberg.
Also, concerns about Greece's bailout deal have returned with fears creditors may not agree to a planned debt restructure before a Thursday deadline.
Greece has even threatened to force through a 70% plus haircut if the required 75% of creditors don't sign up in time. That could trigger Credit Defaul Swap contracts and unsettle financial markets. See more here at Bloomberg.
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