Here's my summary of the key events overnight that affect New Zealand, with news of some pretty remarkable changes in Chinese housing markets in 2017.
Firstly, the overnight dairy auction brought little change in prices however. Overall the 22,030 tonnes sold went for prices that were +0.6% higher. The WMP price was -0.1% lower. These changes were less than the NZX derivatives market signaled. And worse, in NZD they represent a -2.9% fall from the previous auction. In fact, in NZD we are now down -7% since the start of 2017 which is not a good way to begin the year. In USD the 2017 drop is less, at -3.3%. The rising NZD isn't helping dairy industry returns.
A new Report from China shows that nearly half of all people with total assets worth more than NZ$2 mln consider overseas properties their most important means of investment. That's a group of more than 1.3 mln people, according to the data in the Report, but it is growing quickly, up more than +10% in a year. On average, this group has 2.3 overseas houses each, and almost 16% of them own at least four each. Over half of the properties they bought were to gain access to desired school districts for their children's education. "Hedging against risks" was the other main motivation. Of the top cities singled out in the study, Auckland and Wellington were #2 and #3 for overseas housing investment returns. Actually, Hamilton beat both in their all-city House Price Index growth ranking.
This may get a new boost because of some sudden and large falls in local Chinese housing markets. Following tougher house-buying rules, property sales in Beijing, Shanghai, Guangzhou and Shenzhen declined -22%, and -5% in the first week of 2017 alone. In a wider range of cities, transaction volumes slumped an eye-watering -84% from a month earlier, and there was no new land supply in first-tier cities, the data showed.
In the UK, their prime minister has set out details of a clean and clear exit from the EU. She has chosen an "all out" policy with the aim to be extracted by as soon as possible. Article 50 will be invoked by the end of March, apparently. There will be some severe consequences for both parties.
In New York, the UST 10yr yield is much lower today and now at 2.34%. This fall is sure to resonate in local wholesale interest rate markets. As the reality of the Trump Inauguration gets closer, markets are losing steam. Just how much the group of self-interested billionaires are in charge now is reflected in the Trump adviser Scarramucci doing personal deals with sanctioned Kremlin money funds in Davos. Its open season, with this group of insiders convinced laws no longer apply to them. It is a worrying development.
Oil prices are essentially unchanged today, now still at US$52.50 for the US benchmark, while the Brent benchmark is now just on US$55.50 a barrel.
The gold price is up another US$9 and is now at US$1,211/oz.
The New Zealand dollar has also risen overnight by almost 1c, now at 71.9 US¢ and approaching a two month high. On the cross rates it is firmer as well at 95.2 AU¢, and against the euro at 67.2 euro cents. The NZ TWI-5 index is at 77.4.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».