Here's our summary of key events overnight that affect New Zealand, with news we seem to be moving to an end-game of sorts in the US:China trade row.
China has commented for the first time on the American moves to raise tariffs sharply on Chinese goods. It said it will take "necessary countermeasures".
Meanwhile, April data shows Chinese exports fell -3.7% and imports rose +4.0%, narrowing their trade surplus to NZ$21 bln which is about half of what it was in the same month a year ago. But their sensitive surplus with the US edged higher as China bought far fewer American goods, and the Americans keep buying Chinese goods.
Yesterday the Shanghai stock exchange closed down -1.1%, but this morning the S&P500 is up +0.3% after yesterday's big trade-worry-induced fall, while overnight European markets rose slightly more. Despite the real risks, markets seem oblivious to the chance the trade talks will unravel.
Trade is under pressure everywhere. Yesterday we reported the vanishing of global airfreight growth and the reduction in the Asia/Pacific region. Today, March data for passenger travel reveals the softest growth in nine years, slowing to just +3.1% year-on-year. In the Asia/Pacific region, international travel grew just +2.0%. Aussie domestic traffic levels fell more than -3%. All these changes represent fast fall-backs.
In Canada, housing starts jumped unexpectedly, up +23% in April from March and far above analysts estimates.
In Germany, they are moving to deploy overhead electric wires so that hybrid trucks can use their freeway system on an all-electric basis.
In Australia, the lawyers are out in force at their major regulators. Senior officials from ASIC and APRA said the effects of climate change no longer presented merely ethical issues for Australian businesses but must be considered a major financial risk. In fact, they have laid the legal trap of saying the long-term risks posed by climate change are "legally material, forseeable and actionable now" and therefore companies, their boards, and individually directors will have liabilities if they don't act 'now'. But these regulators shied away from saying what should be done.
The UST 10yr yield is now at 2.49%, and that is +4 bps higher in trading today so far. Their 2-10 curve is little-changed at +19 bps and their negative 1-5 curve is narrower at -9 bps. The Aussie Govt 10yr is at 1.74% which is down -2 bps since this time yesterday, the China Govt 10yr is at 3.36% and unchanged, while the NZ Govt 10 yr is at 1.89% and unchanged overnight after a strong dip and then a recovery post the RBNZ decision. Market reaction to yesterday's rate cut has been remarkably modest.
Gold is down -US$5 at US$1,280/oz.
US oil prices have recovered slightly today after yesterday's sharp fall, to just over US$62/bbl while the Brent benchmark is just over US$70/bbl.
The Kiwi dollar will start today a at 65.7 USc and actually very little changed from yesterday just before the RBNZ rate cut. On the cross rates we are a touch lower at 94 AUc. Against the euro we are similar at 58.8 euro cents. That puts the TWI-5 down only marginally at 70.5.
Bitcoin is unchanged from this time yesterday at US$5,885 - but it is almost touching NZ$9,000. 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 ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.