American retail strong; ECB preps easing; China profits drop; PBoC adds more QE; China bond concerns; AU to slash card merchant fees; UST 10yr yield 2.22%; oil lower, gold slumps; NZ$1 = 65.4 US¢, TWI-5 = 71.2

Here’s my summary of the key events over the weekend that affect New Zealand, with news of extended economic stresses coming out of China.

But first, it’s been a big start to the holiday shopping season worldwide and in the US in particular. Sales at American brick-and-mortar stores on Thanksgiving Day and Black Friday were down slightly from last year, but the performance was still seen as strong in a holiday shopping season where discounts spread well beyond the weekend and many shoppers have moved to the web.

In Europe, all eyes are on the upcoming ECB review on Friday morning, our time. Some policy fireworks are widely expected.

In China, industrial profits sharply slumped by -4.6% year-on-year in October, widening the -0.1% drop in September, and adding to the corporate debt default risk. The sluggish data reported by the Chinese National Bureau of Statistics on Friday was mainly driven down by the energy-and commodity-intensive industries with problems of overcapacity, including oil, steel and coal. But high-tech manufacturing achieved +14% year-on-year profit growth. Profits by equipment manufacturing firms increased by +9%.

Chronic QE continues in China in the face of the extended slowdown. Their central bank injected another NZ$24 bln into their financial markets on Friday.

And just when it looked as if a relative calm was returning to Chinese markets, stocks nose-dived again on Friday. The main Shanghai share index lost -5.5%. There may be some technical influences, but the result was awful. And this comes as concerns grow over the sudden rise of corporate bond issuance in the September quarter. It was up to almost 30% of all new credit issues in China in the period, almost exploding out of nowhere.

Their financial markets may or may not be polluted, but the air in their capital certainly is. Embarrassing for China ahead of this week’s UN Climate talks in Paris.

In Australia, banks and airlines are bracing for up to AU$800 million to be slashed from the estimated AU$3 bln they get from merchant credit card fees and surcharges.

Wall Street was on Thanksgiving holiday but there were some bond trades. The UST 10yr yield benchmark slipped again, slightly, to 2.22%.

The US benchmark oil price is lower as well, now under US$42/barrel, while the Brent benchmark is under US$45/barrel. Huge new Iranian supply is about to enter markets.

And the gold price sunk sharply over the weekend, now at just US$1,056/oz and a six year low.

The New Zealand dollar starts the week at 65.4 US¢, at 90.9 AU¢, and at 61.7 euro cents. The TWI-5 is at 71.2.

If you want to catch up with all the local changes on Friday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ». And don’t forget to vote in the Flag Referendum

Daily exchange rates

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for(i=0;i

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