Here’s my summary of the key events overnight that affect New Zealand, with news today from China and Europe.
First up, in Ireland, their government, which has been roundly criticised by other nations for its preferential tax treatment of multinational giants like Apple and Google, has announced a move that seemed likely to further incense its critics.
It has a corporate tax rate of only 12.5% (and already one of the lowest in the developed world) and now it has announced it will cut that rate in half for a new tax category – one covering revenue pegged to companies’ patents and other intellectual property. The Irish claim they are just emulating the UK’s 10% rate. So much for the recent OECD base-erosion initiative.
In China, their trade balance in September has come in way better than expected. Exports missed forecast by just a whisker kept high by western demand, but import values were very low again, as raw material imports fell, especially of oil and coal. While there was a small restocking blip for iron ore last month, the prognosis for suppliers like Australia is not good. China has way too much steel-making capacity.
Back in Europe, Volkswagen has announced a major pivot in its strategy to try and survive its cheating scandal. That involves slashing this years R&D budget by US$1 bln, and shifting to EV development. One consequence of all this is that New Zealand (and Australia) may become a dumping ground for dirty diesel cars. It turns out we adopted Aussie pollution standard rules, and they are stuck at US 2007 and Japanese 2009 levels. Even without the cheat device, VW’s vehicles sold here would probably meet our current standards.
Meanwhile, back in China again, car sales are growing again, up +3.3% from the same month a year ago and restoring growth to a market that had shrank for the past three months.
In New York, the UST 10yr yield benchmark is slightly lower today at 2.07% however.
The US benchmark oil price is unchanged at US$47.50/barrel, while the Brent price is lower at just on US$50/barrel. The IEA has issued a bearish report – bearish for the industry, good for consumers – predicting high supply levels well into the future and demand falling, as economies transition away from energy-intensive demand.
The gold price is unchanged in New York at US$1,165/oz.
The New Zealand dollar starts at about the same place we left it yesterday afternoon. It is now at 66.8 US¢, at 91.6 AU¢, and 58.7 euro cents. The TWI-5 is at 70.9.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »