Here’s my summary of the key events overnight that affect New Zealand, with news the world’s miners are scrambling to adjust to a China that is changing tack.
This comes as China’s exports continue to fall, and the slump in imports has now extended to a record 13 months. Exports were down -6.8% and far more than the -5% fall expected, while imports were down -8.7% although less than the -12% fall expected. Analysts were expecting a trade surplus of US$64 bln but after these varying falls it came in at ‘only’ a US$54 bln surplus. That is still a gigantic monthly trade surplus.
The data, especially the fall in imports, has roiled the mining industry. Brazil took another blow, and Anglo-American, a major miner, has announced it will cut its workforce by 60%; that’s shedding 85,000 jobs. That will hit South Africa hard. Glencore, Rio Tinto and BHP are also making big restructuring moves. And there will be big downstream implications too.
But the fall in Chinese imports is not affecting Australia as much as you might think. Australian business confidence is on the improve, outside the mining sector of course. Above average business conditions are an encouraging sign that their recovery continues to gain traction. Although better business conditions are not being felt uniformly across the economy, according to the latest NAB business confidence survey, underperforming industries have gradually been gaining ground in recent months.
The dairy industry is not being buffeted either. The derivatives prices are holding, and this morning’s review of Fonterra’s payout level is expected to be a tame affair.
In New York, the UST 10yr yield benchmark fell -4 bps and is now at 2.22%.
The US benchmark oil price is down yet again, now just over US$37/barrel, while the Brent benchmark is just over US$40/barrel. There is real fear in this market of an intensifying global glut.
The gold price slipped as well, now at US$1,074/oz.
The New Zealand dollar has held similar levels since the start of yesterday and is still at 66.4 US¢, at 92 AU¢ and at 61 euro cents. The TWI-5 is still at 71.8.
If you want to catch up with all the local changes on yesterday, we have an update here.