Here's our summary of key events overnight that affect New Zealand, with some speed wobbles appearing around the world.
Yesterday, stocks closed down sharply in Shanghai. They lost a whopping -2.5% on the day, wiping out a cumulative -20% of value since the beginning of the year. Some other markets like Tokyo and Korea were hard-hit too, falling almost as much. Cumulative concerns about trade tension fallout is behind the rapid shift in sentiment. Hong Kong was closed for a public holiday yesterday. But in stark contrast, Hong Kong actually rose +1.6% in a powerful day-long surge. New Zealand and Australia closed about even. This morning Wall Street is also unaffected.
Worryingly, all this China dump comes after their central bank eased credit requirements for banks, and after authorities intervened in their currency markets - all to no avail it seems. Today's market responses will be watched closely.
In China, new data release by authorities there shows that the country owes the rest of the world more than US$1.8 tln in debt. That is up +7.8% from the end of 2017. The issuing of US dollar bonds by corporates is a growing share of those liabilities. As a reference, that compares with the US$1.2 tln in UST assets holding they currently have.
One optimistic note is worth reporting; China may have passed peak CO2 emissions. In fact, their peak may have been five years ago. A new report says that they are on track to decrease them from here on out.
In Mexico, a left-wing candidate has had an overwhelming win in presidential elections. The key focus of those elections was corruption, and it is unsure what impact his ascendancy will have on Mexico's involvement in the TPP or NAFTA will have, although early signs are that a revised NAFTA deal may be easier now.
Adding to policy uncertainty, the MMP coalition government in Germany is looking a little shaky.
In Australia, concerns are growing among analysts that the turn down in their housing market values may ne indicating something more serious. There is talk of a 'nasty cycle' developing, one that may see the RBA need to trim official rates there.
Commodity prices are starting to fall. Copper is down to seven month lows and have fallen -8.5% in a month, albeit from four year highs. The rise and rise of aluminium prices seems to have run out of puff. And dairy prices look like they will be soft again at this week's auction.
The UST 10yr yield is marginally firmer at 2.87%, up +2 bps in New York. The Chinese 10yr is at 3.49% (unchanged) while the New Zealand equivalent is now at 2.86%, down -2 bps.
Gold is down sharply, down -US$10 in New York to just US$1,242/oz in New York. That represents a -US$100 drop or down -8% in just 90 days.
US oil prices remain high and unchanged, and now just under US$74/bbl. The Brent benchmark however is more than -US$2 lower at US$77.30/bbl.
The Kiwi dollar starts today below 67 USc. That is its lowest level in 27 months and a steadily declining confidence in our currency, a cumulative fall of almost -9% since the September general election. On the cross rates we are at 91.5 AUc and at 57.7 euro cents (a -7% drop). That puts the TWI-5 at just 70.6, also almost a -7% decline.
Bitcoin is now at US$6.613 and more than +4% higher than yesterday. in fact it is its highest level in twelve days.
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