Here's my summary of the key news overnight in 90 seconds at 9 am, including news Chinese stocks fell another 1% overnight to a 3 year low as more and more Chinese companies reported profit slumps because of the sharp slowdown in Chinese economic growth.
Despite rallies in markets across the Northern and Southern Hemispheres, China's stock market has been the second worst performing stock market in the world in the last quarter. It is down 7.7%, better only than the Cyprus stock market.
Even Chinese retailers and car sales yards are reporting a slide in activity. See more here at Bloomberg.
This slump in China's growth rate as construction and export activity slowed down has depressed the prices of commodities used to make steel and generate electricity, including coal and iron ore. Stockpiles have built up and prices have fallen 40-50% in the last year. This was a factor in yesterday's decision by Solid Energy to suspend production at its Spring Creek coal mine on the West Coast and reduce production at Huntley at the cost of hundreds of jobs.
Another factor is the stubbornly high New Zealand dollar, which has remained high despite the slump in commodity prices. This is different from the 2008 and 2009 falls in commodity prices after a China slowdown, which triggered sharp declines in the New Zealand dollar. The New Zealand dollar was solid around 80.1 USc this morning.
Meanwhile, the second estimate of US GDP growth in the second quarter was revised up to an annualised rate of 1.7% from 1.5% at the first estimate, but economists said this was still too slow for the US Federal Reserve to avoid having to carry out a third round of Quantitative Easing or money printing later this year. See more here at Reuters.
Markets are on hold waiting for Federal Reserve Chairman Ben Bernanke to talk to central bankers at Jackson Hole on Friday. He announced QE II in his speech in Jackson Hole speech in 2010.
The problems in the Euro-zone continued to nag away overnight. German Chancellor Angela Merkel met with Italian Prime Minister Mario Monti and clashed over whether Europe's new rescue fund should get a banking license to buy government bonds. Merkel is not keen, while Monti likes the idea. See more here at Bloomberg.
The European Central Bank meets on September 6 to decide on a massive bond buying plan, although there remains division within the bank. Germany's Bundesbank is opposed. ECB President Mario Draghi, an Italian, hit back at the Bundesbank criticism overnight. See more here at Bloomberg.
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