Here's my summary of the key events overnight that affect New Zealand, with news China has pushed its currency lower as global woes are to the fore at present.
In the UK, equities slumped in trading overnight. the FTSE100 was down -2.5% today. Other key EU markets were down even more. Wall Street is down -2% in mid-afternoon trade.
Ratings agency S&P has stripped Britain of its AAA credit rating, slashing it by two notches to AA. They also said they see a higher risk that Scotland will create "constitutional issues".
In the US, new data out for their service sector shows continued expansion but at a more subdued pace.
In China, new data out for Shanghai shows a fast pace of new home buying. It was up +20% year-on-year. The average price is now NZ$7,750/sq m. On that basis, a 100m2 home would cost NZ$775,000.
In Australia, they are in the last few days of their election campaign and the incumbent government looks likely to retain power, according to the latest polls.
In New York, the benchmark UST 10yr yield has fallen further and is now at just 1.46% in late trading. Locally, swap rates were stable yesterday, but they did flatten especially the 1-5 curve which is now down to just +11 bps. Expect local rates to soften today following Wall Street's lead. We could find our wholesale rates at record lows across the whole curve. Risk premiums don't seem to be counteracting these falls (despite what banks may be telling you).
The US benchmark oil price is down another US$1 and now just over US$46/barrel and the Brent benchmark is just over US$47/barrel.
The gold price is only up +$5 today and seems to be settling at US$1,320/oz. Given the turmoil, gold has not really been much of a counter cyclical hedge in this event. Copper prices are actually higher today.
And finally, the NZ dollar starts a little lower, now at 69.9 US¢, at 95.3 AU¢, and at 63.5 euro cents. The TWI-5 index is at 73.9. Our currency continues to rise against the British pound. And the Chinese yuan fell to its weakest level against the American dollar since late 2010, after China’s central bank cut its daily-fix value for the currency by the biggest margin since its surprise devaluation in August 2015. Today's drop reveals the Chinese aren't acting as a stabilising force, more of an opportunist, and this may raise trade tensions with the Americans.
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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