Here's my summary of the key news overnight to keep you up-to-date over these holidays.
The US is ending the year on a very big high.
Stock markets have surged overnight to new all-time records. The Dow is over 18,000 for the first time ever and the broader S&P500 is at 2085, also a record.
The trigger for today's surge is the final result for US Q3 economic growth. It has been revised up sharply to +5% pa. and that actually tops the impressive Q2 estimate of +4.6% pa. It is the fastest rate of growth in more than ten years.
Driving the result was a fall in imports, a rise in Federal government spending, and an impressive rise in real PCE (personal consumption expenditure). There is something for everyone to like in this result, especially the markets.
Backing up the data and showing the good vibes are continuing, a respected consumer sentiment survey jumped in December to its highest level in nearly eight years on cheaper petrol and better job and wage prospects.
At the same time, some other housing data was off the pace - this US recovery is happening without housing being the driver. Sales of new-build single-family homes fell for a second straight month in November, a sign that the housing market recovery remains fragile.
Also not as positive, the Commerce Department said overnight that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, was unchanged after it downwardly revised the prior month. Capacity issues may be getting closer for the US.
In France it was announced (quietly) that they are letting their 75% tax on the super-rich expire at the end of 2014. Apparently it has seen talent and capital flight, and it has raised virtually nothing. It appears to have been a bit of an own-goal and the French economy has not benefited either.
In China, Shanghai stocks sank yesterday in the market’s second worst percentage decline of the year, with steep declines for banks, energy firms and construction companies.
In Central America, a start has been made on building a second and competitive canal between the Pacific and Atlantic through Nicaragua. The Chinese-led project is not without controversy however. If it gets completed it will be an engineering wonder, but doubt abound about its local environmental impacts.
In Australia iron ore prices extended their price falls to the lowest level in more than five years amid concern that slowing steel demand in China may hurt consumption in the world’s biggest user just as rising supplies deepen a glut.
Locally, holiday spending on the Paymark network for the first 22 days of December is up +4.6% on the same period last year with a total of $3.9 bln spent. The total number of transactions processed for the period totals 76.2 million compared to last year’s figure of 71.6 million, representing a +6.5% growth.
In the oil markets, prices rose slightly. The benchmark US price is back up to US$57/barrel and the Brent benchmark is just on US$61/barrel. Oil started the year at US$98.40/barrel.
Gold is down, holding its lower level at just US$1,178/oz. Gold started the year at US$1,205/oz.
UST benchmark 10yr bond yields are up today to 2.20% today. New Zealand swap rates rose yesterday and may do so again today. Two year swaps started the year at 3.88% and today are at 3.85%.
The NZ dollar starts today at 77 USc after starting the year at 82 USc, we are at 95.2 AUc today after starting the year at 92.3 AUC, and the TWI is at 78.5 compared with 77.6 at the start of 2014.
Merry Christmas everyone.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
| PAYMARK regional data (1-22 Dec 2014 versus same dates 2013) | ||||||
| Volume (million transactions) | Value of spending ($millions) | |||||
| Region | 2013 | 2014 | Volume Difference | 2013 | 2014 | Value Difference |
| Auckland/Northland | 28.15 | 30.22 | 7.40% | $1,503.20 | $1,581.50 | 5.20% |
| Waikato | 5.34 | 5.7 | 6.80% | $269.10 | $278.30 | 3.40% |
| BOP | 4.6 | 4.92 | 7.00% | $237.20 | $248.20 | 4.60% |
| Gisborne | 0.7 | 0.73 | 4.10% | $32.80 | $33.20 | 1.20% |
| Taranaki | 1.72 | 1.75 | 1.90% | $84.50 | $84.00 | -0.60% |
| Hawke’s Bay | 2.09 | 2.17 | 3.50% | $102.90 | $105.30 | 2.30% |
| Whanganui | 0.77 | 0.83 | 6.80% | $34.50 | $35.80 | 3.80% |
| Palmerston North | 2.23 | 2.33 | 4.20% | $120.20 | $123.10 | 2.40% |
| Wairarapa | 0.67 | 0.72 | 6.00% | $33.10 | $34.30 | 3.40% |
| Wellington | 7.81 | 8.07 | 3.30% | $362.10 | $367.60 | 1.50% |
| Nelson | 1.39 | 1.49 | 6.70% | $73.00 | $79.10 | 8.30% |
| Marlborough | 0.79 | 0.83 | 5.20% | $42.80 | $44.70 | 4.40% |
| West Coast | 0.44 | 0.46 | 4.70% | $25.40 | $25.60 | 1.00% |
| Canterbury | 8.22 | 8.71 | 5.90% | $432.70 | $450.10 | 4.00% |
| South Canterbury | 1.11 | 1.15 | 2.90% | $63.90 | $63.40 | -0.70% |
| Otago | 3.56 | 3.86 | 8.50% | $189.90 | $204.70 | 7.80% |
| Southland | 1.65 | 1.67 | 1.00% | $90.30 | $88.10 | -2.40% |
| ------------------ | ---- | ---- | ------ | --------- | --------- | ------ |
| New Zealand | 71.6 | 76.23 | 6.50% | $3,726.40 | $3,897.30 | 4.60% |
Daily exchange rates
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