China equities still dropping; other Asian markets down; US retails sales growth stalls; Canadians optimistic, but housing slips; EU-UK talks on knife-edge; UST 10yr at 3.16%; oil unchanged, gold firmer; NZ$1 = 65.5 USc; TWI-5 = 69.4

Here's our summary of key events over night that affect New Zealand, with news the pressure is ramping up on China.

The Shanghai equity market couldn't hold yesterday and ended up down more than -1.5%. Tokyo was down even more. The ASX200 was down -1%. But Wall Street has opened its week holding on to Friday's levels following similar flat-lining in European markets.

The China falls are getting extreme. More than US$3 tln has been wiped off the value of China equities in this downturn (more than 20% of Chinese GDP) and the index is now back to levels last seen in November 2014. The 'home team' has not proven to be a strong enough bulwark against market pressures and there are now reports that Beijing is leaning on insurers to come to its aid.

American retail sales barely rose in September as a rebound in car sales was offset by the biggest drop in spending at restaurants and bars in nearly two years.

Meanwhile business inventories are rising.

Across the northern border, Canadian companies are optimistic about the year ahead – especially when it comes to sales growth, foreign demand and their investment plans. And that survey was taken before the new NAFTA agreement was struck. It is noticeable how many companies are moving to fill the space of their American counterparts in the trade with China.

However, Canadian home sales fell more than expected in September with sales levels almost -9% lower than the same month a year ago. Prices have stopped rising, and in fact are falling in Vancouver.

In Europe, they seem to be at the pointy end of the Brexit negotiations. The EU has given Britain a day to settle its position on Brexit before deciding how to respond to a new British threat to “disengage” from talks on an EU exit agreement. Everyone seems to understand these are just negotiation ploys, but they are playing a very dangerous, high-stakes game. The UK-Irish border remains a key issue. Markets and the EU are expecting the UK to concede key points. There will be broad ripples felt even here if they don't.

The UST 10yr yield is unchanged at 3.16%. Their 2-10 curve has slipped to just under +30 bps. The Aussie Govt 10yr is at 2.70% (down -4 bps from this time yesterday), the China Govt 10yr is at 3.62% and up +1 bp, while the NZ Govt 10 yr is at 2.67%, and also down -1 bp.

Gold is up +US$8/oz and now at US$1,226/oz. And that is actually nearing a three month high.

US oil prices remain little changed today at just under US$71.50/bbl. The Brent benchmark is now just under US$80.50/bbl. So far, markets haven't reacted to the US-Saudi-Turkey stress.

The Kiwi dollar is starting today firmer at 65.5 USc and its highest in two weeks. On the cross rates we are also up at 91.7 AUc, and at 56.5 euro cents. That puts the TWI-5 at 69.4 and also a two week high.

Bitcoin is firmer today at US$6.534 and up +4.1% since this time yesterday. This rate is charted in the exchange rate set below.

This chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».