Business
Kia ora, Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news of a big bump in the road today.Worries about spreading contagion from troubles in China’s property market is sending global equity markets into their steepest decline in months.But the sentiment fall is broad, affecting currencies, interest rates, and commodities.Meanwhile, Canada is voting today in Federal elections that could well tip their internationally-popular prime minister out of office on the basis that he has been ineffective at home. Canada's currency is falling.And the market sell-off comes as both Japan and China have had long holiday weekends. But that has not stopped angry investors in property developer Evergrande turning out to continue their besieging of the company's offices, even holding some managers hostage. The firm can't sell assets fast enough to service its impending bond payment obligations. The company blamed "ongoing negative media reports" that "have dampened the confidence of potential property purchasers". There is no sign yet of a Beijing bailout.China's central bank is to issue a regular policy statement tomorrow and it may move to try and quell the crisis. The US Fed will be watching closely too, and they report in next on Thursday.Elsewhere in the world there was not a lot of economic data released, but one lone bit deserves attention - German producer prices. They rose much more than expected in August, and are up +12.0% from a year ago. The month-on-month rise from July was at an even faster pace. German industry hasn't faced pressure like this in almost 50 years.A good part of those cost pressures are from freight in the global supply chains, and that is not easing off with the Baltic Dry index rising yet again, now at a new 12 year high.But there are reports that the iron ore price fell almost -10% yesterday alone, especially on futures markets.The sharp drop the weekend futures market suggested might happen on Wall Street has happened. The S&P500 is down a major -2.2% in afternoon trade to open their week, and falling. Overnight, European markets fell hard, with Frankfurt down -2.3% and London down -0.9% to bookend their Monday trading. Yesterday, both the very large Tokyo market and the Shanghai market were on holiday, saving them the embarrassment. But Hong Kong traded and fell a sharp -3.3%, driven of course by Evergrande. Locally, the ASX ended yesterday down -2.1%, while the NZX50 got away relatively lightly with only a -0.4% fall.The UST 10yr yield opens today at just over 1.31%, down -5 bps from this time yesterday. The price of gold will start today at US$1763/oz and up +US$9.But oil prices have drifted another -US$1 lower overnight so in the US they are now just under US$70.50/bbl, while the international Brent price is now under US$73.50/bbl.The Kiwi dollar opens today at just on 70.3 USc and little-changed since this time yesterday. Against the Australian dollar we are just under 97 AUc. Against the euro we are just on 59.9 euro cents. That means our TWI-5 starts today at 73.7 and now below the top of the 72-74 range of the past ten months.The bitcoin price has fallen today and hard, now at US$44,055 and down -7.1% from this time yesterday. Volatility in the past 24 hours has been extreme too at just under +/- 6.2%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we’ll do this again tomorrow.