Here's my summary of the key events overnight that affect New Zealand, with news China's economic stumbles are standing out in an improving world.
Markets have re-opened in the US after a long weekend holiday and the period of thin trading over the summer is now over. Wall Street equities are up strongly in mid-afternoon through heavy trading, bond yields are also higher.
Shares were also up in Shanghai yesterday but the rally there was hollow with volumes unusually light.
In a move to try and reassure investors on China's equity markets after the recent official manipulation, China has scrapped its 5% dividend tax for long-term investors. It is unlikely to restore much faith however.
China's exports fell sharply in August. The country is facing its most worrying decline since the GFC, with overseas shipments falling -5.5% last month compared with a year earlier, this amid signs of a steepening downturn. Imports fell even heavier, down -14.4%, although some of that will be related to the very low oil price. Despite the declines, China managed to post a monster trade surplus exceeding US$60 bln.
A very good trade surplus was also turned in by Germany (US$23 bln) on the back of surging exports which were up more than expected. In contrast to China, Germany grew its imports far more than expected.
The German trade data is for August, but comes on the back of Eurozone GDP data that showed the region grew a creditable (for them), and better than expected, +1.5% pa in Q2. That compares with the USA at +3.7, Japan at -0.3%, China at +7.0% and Australia at +2.0%. New Zealand will report next week on Thursday at it will be around +2.5%.
Back in the US, the just-released Federal Reserve Labor Market Conditions Index rose +2.1 points in August, the largest monthly improvement in US labour markets since January. And Americans took on more consumer debt in July.
In New York, the UST 10yr yield benchmark is up today at 2.19%. Yesterday we saw local swap rates essentially on hold awaiting tomorrow's RBNZ signals.
The US benchmark oil price is up modestly today, now at US$46/barrel and the Brent benchmark is at US$49/barrel.
The gold price is also up marginally, now to US$1,121/oz.
The New Zealand dollar starts today higher with a small bounce across the board, at 63.4 US¢, at 90.2 AU¢, and 56.7 euro cents. The TWI-5 is now at 68.1.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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1 Comments
US$23B surplus for Germany, US$60B surplus for China and ongoing. Logically this is not sustainable indefinitely, otherwise one or two countries end up owning the world, or end up loosing the money that they have either invested or loaned overseas, unless of course we are all to end up serfs to one or two countries. Something is wrong with the world economic system. I thought that floating currencies balanced these forces out. Clearly in the case of China we have outright control and manipulation by the government and the foolish common currency is abnormally favouring Germany. And the rest of the world is in a mad cash printing currency war. (perhaps as a result) We needs some fresh and decisive thinking in these sorts of areas otherwise the world economy is going to spiral out of control (that's if it isn't already), staggering from one crisis to the next.
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