90 seconds at 9 am: US markets up 3% and NZ$ over 70 USc on US retail sales, Euro stress tests

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with BNZ, including news the Dow closed up 2.8% and the S&P 500 closed up 3.1% after a rise in US retail sales and details about European bank stress tests were welcomed by financial markets.

US retailers' sales rose 4% in the first 5 months of 2010, according to the International Council of Shopping Centers, boosting hopes consumers in the world's biggest economy have not snapped their wallets completely shut. However, the numbers don't include data for June where many saw weak employment and the European Financial Crisis hitting consumer and business sentiment hard.

Also, the Baltic Dry Index of prices for bulk shipping fell 5% overnight to a 14 month low on growing concerns about a global economic slowdown that would reduce demand for the coal, iron ore and soy transported on such bulk ships. The Baltic Dry Index is widely seen as a leading indicator of global economic activity.

Meanwhile, European banking regulators have released more details of planned stress tests on 91 European banks that have reassured some in the markets. The include plans to assume losses on Greek debt of 17% and losses on Spanish debt of 3%.

The Greek losses are much less than many analysts had been expecting of around 30%, boosting hopes the banks may not be forced to raise massive amounts of new capital or worse.

This cuts both ways though. If markets don't believe the tests are credible, this could leave many European banks mired in their currently frozen inter-bank lending markets.

The surge in the Dow helped lift the New Zealand dollar however. It rose to 70.3 USc from 69.7 USc. It often moves in tandem with the US stock markets, which are a good indicator of global risk appetites and the outlook for global economic growth. Our currency is seen as one of the riskier ones that is linked to volatile global commodity prices.