Wall Street down sharply; US consumers maxed out on debt; Australia says do not travel to China; China faces grain shortages; oil down and gold up; NZ$1 = 66.3 USc; TWI-5 = 69.4

Here's our summary of key economic events overnight that affect New Zealand, with news Wall Street is in full retreat today.

But first up, apologies for our late start today. We had an internal server issue - it was not a DDoS attack. phew.

First, Wall Street has returned from their Labor Day long weekend in a grumpy mood. The S&P500 was down -2.8% but it is worse in tech with the NASDAQ down -4.1%. Overnight, European markets were similarly negative, down -1.5% on average. Yesterday Shanghai ended up +0.7%, Hong Kong closed up +0.1% and Tokyo was up +0.8%. The ASX200 was up +1.1% and the NZX50 Capital Index was up +0.3% at the close.

One driver was the falling oil price, down as global demand weakens.

Another may be the new Fed data showing a slowing of growth in consumer debt, probably indicating consumers are maxed out now.

In an echo from the escape from China by Australian journalists, Australia has now issued a ‘Do Not Travel’ warning to all its citizens over the fear of arbitrary arrest and State hostage taking.

These sort of tensions are seeing local governments adopting special arrangements to retain and attract the special skills of foreigners. Beijing City is mulling a 15% top income tax arrangement as one incentive to come or stay. That is a huge reduction from their standard 45% rate for high-paid workers for incomes over NZ$200,000.

And staying in China, a team of Chinese researchers has found the coronavirus that causes COVID-19 can survive for more than a week on the surface of chilled fresh salmon, raising implications that it could be a source of international transmission.

And the widespread recent bad weather and major storms in China have exacerbated their food security pressures. Grain prices have now hit five year highs.

We don’t often note events in Indonesia, but here’s something interesting. E-commerce sales there will exceed US$40 bln this year, large enough to be larger than for India. The pandemic is remaking retail in the world’s fourth largest country by population.

In Australia, business confidence remains weak. Business conditions unwound most of the previous month’s gains – mainly reflecting a weakening in the employment index, though trading and profitability were also weaker. There is some way to go before they are in recovery mode.

The latest global compilation of COVID-19 data is here. The global tally is 27,401,000, up +200,000 since yesterday. Global deaths now exceed 894,000.

Just under a quarter of all reported cases globally are in the US, which is up +24,000 to 6,496,500 and a relentless rise despite the holiday weekend and the official reluctance to test. Their death total is now 193,700.

In Australia, there have now been 26,374 COVID-19 cases reported, and that is only +52 more cases overnight and clearly the Victorian emergency easing. Deaths however have now topped 770.

The UST 10yr yield is down -4 bps and now at 0.68%.

The price of gold is up +US$10 and now at US$1,939/oz.

Oil prices are lower today, down to just on US$39/bbl in the US while the international price is down to just on US$42/bbl.

The Kiwi dollar is softer again today and now at 66.3 USc and more than a half cent fall overnight. Against the Australian dollar we are softer too at 91.6 AUc. Against the euro we are down at 56.3 euro cents. That means our TWI-5 has slipped -50 bps to 69.4.

The bitcoin price is little-changed today, down but only marginally to US$10,162. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».