Here's our summary of key events overnight that affect New Zealand, with news that equity markets are in turmoil over the future of trade talks between the US and China, but some economic data elsewhere is encouragingly positive.
However, Wall Street has opened the week sharply lower as investors react to the US threats to a US:China trade reconciliation. The S&P500 is down -0.4% in afternoon trade although it opened even lower. Overnight, European markets were down more than -1% on the news, and yesterday, Tokyo was down -0.2%, Hong Kong was down -2.9% and Shanghai was down an eye-popping -5.6% at their close. That is the biggest one-day drop in more than three years. (Both the ASX and NZX markets lows -1% on the day as well.)
The latest PMI assessment of China's services sector shows one that is little-changed in April from March, expanding at a good rate. But clearly May has brought new risks.
The Chinese government has not yet reacted to the Trump tweet threats, planning to continue its talks with the US. It has however banned republication of those tweets in China.
And China's central bank has cut its reserve ratio requirement for SME lending to 8% from 13.5% for most other lending. They hope it will add as much as NZ$65 bln in stimulus support to help cover the bumps in the road while the trade tussle with the US plays out.
In the US, here is something 'new' - a Fed official saying that there will be at least one rate hike in 2019 and another next year. It seemed that recent events had taken these off the table, but apparently it is not so.
In Canada, a quite different report from Toronto and their housing market from the very downbeat Vancouver one. Toronto is reporting a strong rebound in sales, up an impressive +17% year-on-year in April. Prices are rising again as well.
In Europe too, small signs of optimism. Their services PMIs came in slightly better than expected, and a well-watched investor confidence survey has very positive.
Indonesia is reporting sharply lower growth, at the rate of just +5% in Q1 2019. Investment dropped ahead of elections and consumer spending failed to sustain their growth momentum which was expected to run at a +7% rate.
The UN is reporting that the natural world is in more trouble now than at any other time in human history, with extinction looming over 1 mln species of plants and animals. The claim comes in their first comprehensive report on biodiversity.
The UST 10yr yield is now at 2.50%, and that is -3 bps lower in trading today so far. But their 2-10 curve is little-changed at +19 bps and their negative 1-5 curve is still at -9 bps. The Aussie Govt 10yr is at 1.76% which is -4 bps lower since this time yesterday, the China Govt 10yr is at 3.38% and -3 bps lower, while the NZ Govt 10 yr is at 1.89% and also down -3 bps.
Gold is up +US$2 at US$1,281/oz.
US oil prices are little-changed today but with a firmer tone, now just over US$62/bbl while the Brent benchmark is just over US$71/bbl.
The Kiwi dollar will start today a little softer at 66.1 USc, under the expected pressure from the wobbly US:China trade situation. On the cross rates we lower at 94.4 AUc. Against the euro we are at 59 euro cents. That puts the TWI-5 down at 70.9.
Bitcoin is little-changed from this time yesterday at US$5,712. 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 ».
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