Caution weighs on markets

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By Interest.co.nz, Interest.co.nz / Podcasts NZ, and David Chaston. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.

Kia ora,

Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

Today we lead with news signs of caution are showing up in all sorts of markets.

But first, prices held in the overnight dairy auction - or at least they did in US dollar terms. But with the rising Kiwi currency, this latest event brought overall prices -2.0% lower in New Zealand dollars. The key WMP and SMP prices were virtually unchanged in US dollars. The best performer was Cheddar cheese, up +1.2% in US dollars but even that was not enough to record a gain in NZD. Overall the changes are not enough to alter any farm gate payout forecast.

In the US, retail sales last week were little changed from the prior week.

The latest data for Taiwanese export orders were strong, but no better than was expected.

In China, central planning for food security is in full swing, but despite that, they are importing vast amounts of food. You get a sense they know this is a strategic weakness, one they are working hard to address. But success looks far away.

Global trade is rising, and rising fast. The Baltic Dry freight index is now at a 20 month high, as demand for commodity cargoes, both 'hard' and 'soft', rise sharply.

Yesterday we noted that the WMO warned about unrestrained rises in global temperatures and the dire consequences. Today, the IEA is reporting that global CO2 emissions from energy-related activities will rise by +1.5 bln tonnes in 2021, the second-largest rise in history (after 2014), driven largely by rising demand for coal to be used for electricity generation.

The release of the RBA minutes reveals that the Aussies no longer think the pandemic has done any long-term economic damage to them. It is quite a different outlook from the fears that existed at the start of the emergency.

On Wall Street, the S&P500 is down -0.8% in early afternoon trade, compounding yesterday's -0.5% decline. Overnight, European markets fell about -2.0% across the board. Yesterday, Shanghai ended down -0.1%, Hong Kong ended up +0.1%, but Tokyo set the European scene, down -2.0%. The ASX200 ended yesterday down -0.7%, and that was matched by the NZX50 Capital Index.

The UST 10yr yield starts today at 1.56% and -4 bps lower.

The price of gold starts today at US$1778/oz and that is up +US$7 since this time yesterday.

Oil prices are softer, down -US$1 at just under US$62.50/bbl in the US, while the international price is just under US$66/bbl.

The Kiwi dollar opens today at just under 71.8 USc and unchanged from this time yesterday. Against the Australian dollar we are decidedly firmer at 92.9 AUc. Against the euro we are little-changed at 59.7 euro cents. That means our TWI-5 is still just under 73.6.

The bitcoin price will start today at virtually the same lower level they were at yesterday, at US$55,852 and a mere -0.4% lower, and almost the same as at this time on Monday. However, volatility in the past 24 hours has been highish at +/- 3.0%.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

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