Here’s my summary of the key events over the weekend that affect New Zealand, with news that China may not be struggling as much as many believe.
But first, China has announced a major effort to link rural China and its products to the cities. Their government said it will partner with the State Post Bureau to get e-commerce companies and express delivery firms to expand into rural regions to directly link farmers with consumers, reducing the role of middlemen. The goal is to drive rural growth.
China also said it is getting rid of virtually all price controls. They will all be gone by 2017.
What is interesting about all this is that analysts are starting to fully understand the size of China’s service economy and it may be much larger than thought. Most focus to date has been its factory economy, but the service sector continues to show none of the stagnation of its manufacturing sector which answers why the long-reported slowdown isn’t happening locally.
Meanwhile in Shanghai, their housing market is in full recovery. Home sales from January to August rose +19% from a year ago, rebounding from a sharp -20% drop in January and February. Mortgage lending is also up strongly.
In Europe, while the company itself is trying to blame “fewer than 10” workers, the size of the VW diesel car recall just got enormous with more than 8.5 million cars ordered to be fixed, 11+ million worldwide. Whether the vehicles will meet emissions standards after removing what is now more than three defeat devices, is unknown. Blaming-the-workers seems an odd response from VW; the company is governed through a unique structure, involving a hybrid of control by members of the Porsche and Piëch families, the state government of Lower Saxony, and their labour unions.
In New York, the UST 10yr yield benchmark inched higher on Friday and is currently at 2.04%. Investor appetite for risk remained firm at the end of last week, pushing the S&P500 up +0.5% to a two-month high. And this was despite a small slip in American industrial production in September. This was probably less worrying because their August data was revised higher.
The US benchmark oil price is marginally higher at just over US$47/barrel, and the Brent benchmark is just on US$50/barrel.
The gold price was lower at the end of trading in London and New York, now at US$1,185/oz.
The New Zealand dollar starts holding the gains of last week. It will open at 68.2 US¢, at 93.7 AU¢, and 60 euro cents. The TWI-5 is at 72.3 and now at a twenty week high.
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 »