Global Economic Indicators: Key Developments Affecting New Zealand

Today’s economic news is dominated by several significant events from around the world, particularly the Reserve Bank of Australia’s (RBA) interest rate review. As US financial markets are observing Presidents’ Day, other economies continue to report on their economic health, offering insights on global trends.

Canadian Housing Market Shows Resilience

Canadian housing starts saw an increase in January, rising by 3.7% compared to the previous month and outperforming last year by the same margin. Demand in major cities like Montreal and Vancouver was the driving force behind this growth, indicating ongoing strength in the Canadian housing sector.

Japan’s Economic Growth Continues

The Japanese economy exhibits consistent growth, beating estimates with a quarterly increase of 0.7%. This marked the third consecutive quarter of expansion, underscored by a robust rebound in business investment. Year-on-year, Japan’s GDP growth is at 2.8%, significantly surpassing the expected 1.0%. Considering Japan’s position as the world’s fourth-largest economy, this growth is particularly noteworthy.

Singapore Exports Take a Dip

In a surprising turn, Singapore’s exports decreased by 3.3% in January, far exceeding the expected 0.3% dip. This setback has widened the country’s trade deficit, highlighting challenges in maintaining export momentum.

Chinese Vehicle Sales Experience Recent Fluctuations

Chinese new vehicle sales decreased in January, reflecting both a seasonal dip and an unexpected decline compared to the previous month. Year-over-year, sales also showed a slight dip, a situation not observed since the pandemic era.

Indian Exports Show Weakness

Similar to Singapore, Indian exports fell by 1.3% in January compared to the previous month. Given that India’s exports are about one-tenth the size of China’s and less than those of Taiwan, this decline is significant and has contributed to a wider trade deficit.

Reserve Bank of Australia’s Cash Rate Update

At 4:30 PM, the RBA will announce the latest update to its cash rate target. While markets anticipate a 25 basis point (bps) cut to 4.10%, the level of certainty is moderate. Possible outcomes include a reduction, no change, or even a hike, influenced by the RBA’s focus on relatively high inflation levels.

Global Bond Yields

The US 10-year Treasury yield stood at 4.49%, up by 1 basis point since yesterday. The 2-10 yield curve gap remains at 23 basis points. In contrast, the Australian 10-year bond yield rose to just under 4.50%, increasing by 7 basis points. Chinese and New Zealand bond yields also saw slight increases.

Stock Market Performance

While US markets are closed due to Presidents’ Day, other global indices have shown varied performance. European markets rose, with significant gains in Frankfurt, while Asian markets were more subdued. Notably, the NZX50 index increased by 0.6%, outperforming the ASX200.

Commodities Update

The price of gold is poised to start the day at just under $2,898/oz, up by $15 from the previous day. Oil prices have seen a modest increase, with the US benchmark Bund crude rising by 50 cents to just over $71/bbl.

Kiwi Dollar Performance

The New Zealand dollar remains stable at 57.4 US cents, unchanged from the previous day. Against the Australian dollar, it weakened slightly to 90.1 cents, while it strengthened to 54.8 euro cents. The Trade Weighted Index of Five Currencies (TWI-5) stood just over 67.2, down by 10 basis points.

Cryptocurrency Activity

Bitcoin began the day at $95,470, a 1.7% decline from the prior day. Recent volatility has been minimal, oscillating within 1.0% over the past 24 hours.

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