Here's our summary of key events overnight that affect New Zealand, with news that markets have moved into a risk-off mode today.
And Chinese New Year is upon us again, starting a huge family-reunion migration that will involve more than 400 mln rail trips alone, expected to be +8.3% higher than the records smashed just one year ago.
Overnight, European equity markets were lower across the board, and by almost -1%. That follows Japan (-0.6%), Hong Kong (+0.0%) and Shanghai (-0.2%). Australia was closed yesterday of course, and the NZX traded very thinly (+0.0%). Today, the S&P500 is down -1.2% in mid-day trade. Bellwether stock Caterpillar reported sharply lower profits that surprised analysts because that is a sharp reversal from prior 2018 quarters. They have been hurt by soft demand in China plus higher US manufacturing and freight costs. That sent their shares tumbling more than -8%.
A respected quarterly survey of business investment in the US has reported that 84% of businesses didn't change their businesses’ capital investment or hiring plans following the US$1.5 tln business tax cut (from 35% to 21%) that came into effect on January 1, 2018. That proportion was actually higher than in 2017 (81%). Those corporate tax cuts were designed to spur business spending and job growth. That hasn't happened.
In the US, the Trump Administration has lifted sanctions on a key oligarch and ally of Vladimir Putin. It's a move not all lawmakers in the US approve of.
A new trade dispute is brewing between Malaysia and the EU over the EU's campaign against palm oil. Singapore-based conglomerate Wilmar has a choke-hold on South East Asian production of palm oil (and the region's politicians).
The biggest trade dispute at present is the looming Brexit deadline. Ireland is saying it would not accept any changes to an agreement aimed at preventing a hard border on the island of Ireland. London is boxed in and under pressure, more so as supermarket chains now say they can't be sure they can maintain food supplies in a hard Brexit situation. That may occur in just 60 days. A plan is on the table in the London parliament to extend the UK membership of the EU if a hard Brexit is the only option.
In Germany, they have committed to ending coal mining and using coal as a source of their electricity production, by 2038, giving them 20 years to wean themselves off this fossil fuel. They are already in a program to eliminate nuclear power.
The UST 10yr yield is -3 bps lower today to be just on 2.73% and building on last week's small fall. Their 2-10 curve is now under +15 bps. The Australian Govt. 10yr yield is at 2.22%, holding after last week's big fall. The China Govt. 10yr yield is unchanged at 3.16%, and the New Zealand Govt. 10yr yield is at 2.35% and up +1 bp.
Gold is holding at its new higher level of US$1,302.
US oil prices have fallen very sharply today, down almost -US$2/bbl to just on US$51.50/bbl while the Brent benchmark is just on US$59.50/bbl. Markets are past the turmoil in Venezuela and now concentrating on the lower market demand conditions.
The Kiwi dollar starts today holding up at 68.3 USc. On the cross rates we are little changed at 95.4 AUc, and at 59.8 euro cents. And has the TWI-5 up to 72.4.
Bitcoin is -3.8% lower today at US$3,411. This rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».