Kia ora,
Welcome to Thursday'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 East Asia is back to normal in contrast to the US and Europe.
First, the number of job openings in the US edged down slightly in the first week of December, a sign of a softening labour market amid an upsurge in pandemic infections, and ebbing fiscal support for households.
And mortgage applications fell for a second straight week and essentially ending a long upward run. But they do remain quite elevated on a year-on-year basis.
In Australia, a Westpac-Melbourne Institute consumer sentiment survey has come in very positively, especially for expected future conditions. It is now 48% above the low in April and has reached its highest level since October 2010, marking a ten year high. Sentiment has fully recovered from their COVID recession.
Separately, China seems to have extended its ban on Aussie log imports, claiming a biosecurity risk.
In China, deflation is setting in harder now. They have had producer price deflation for a long time and in November it eased to -1.5% year-on-year. But now they also have consumer price deflation, and it bit quite hard in November. Analysts had expected the year-on-year inflation rate to fall to 0%, but in fact it fell to -0.5% and below zero for the first time since 2009. A year ago, their CPI was rising at +4.5%, so this has been a sharp turn down. This retreat is being driven by pork (-12%) and petrol prices (-18%). However, beef prices are up +4.2% and lamb prices up +2.2% above year-ago levels.
However, new loan growth in China in November was strong although it just matched analyst expectations.
But the bond woes roll on for some major companies. Their great tech chip-making hope, Tsinghua Unigroup, is now warning more bond payment misses are likely
Japan is reporting a rather substantial improvement in their machinery orders for October. After a -4.4% monthly fall in September they were expecting a modest +3% rise in October, bringing the year-on-year result to -11%. But in fact orders poured in. They were up a huge +17% from September, meaning the October level is now almost +3% higher than the same month a year ago. That is a very substantial positive surprise. Export orders drove the gains.
Japanese machine-tool orders for November also reported a strong recovery and are now +8% higher than the same month in 2019.
After starting the day in positive territory, the S&P500 has now moved negative, reporting a -0.6% fall and growing in early afternoon trade. Tech stocks are falling even harder today. Overnight European markets closed mixed with Frankfurt up +0.5% and Paris down -0.3%. London was flat. Yesterday, the very large Tokyo market ended its session up a very strong +1.3%, Hong Kong was up +0.8%, while Shanghai was down -1.1%. The ASX200 closed out yesterday with a +0.6% gain while the NZX50 Capital Index closed with a +1.3% rise.
The latest global compilation of COVID-19 data is here. The global tally is 68,470,000 and a +667,000 rise in one day. At this rate, we will top 100 mln by the end of January.
But the largest number of reported cases globally are still in the US, which rose a record +238,000 overnight to 15,627,000.
The UST 10yr yield will start today firmer, now at just under 0.95% and a +4 bps rise.
The price of gold is lower today, falling -US$27 to US$1842/oz. For the first time this year, ETFs are divesting their gold holdings.
Oil prices are slightly softer at just under US$45.50/bbl in the US, while the international price is soft at just over US$48.50/bbl.
And the Kiwi dollar is little-changed again at 70.4 USc. But against the Australian dollar we have fallen by -½c, back down to 94.5 AUc. Against the euro we are unchanged at 58.3 euro cents. That means our TWI-5 is still at 72.5, a level it has been at for more than two weeks now.
The bitcoin price has fallen another -2.5% today and is now at US$18,383.
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. We will do this again tomorrow.