NEW ZEALAND: ANZ Business Survey Points To Turning Point
After extremely weak Q3 growth data, the ANZ business survey continued to sound a more positive note with the outlook rising to 50.3 from 48.0 in December. Business confidence was down moderately to 62.3 from 64.9, but remains elevated. According to this survey, Q4 should see an improvement in activity as the past own activity rose 10 points to be at zero.
NZ ANZ business confidence vs activity outlook
Source: MNI - Market News/Refintiv
- The RBNZ is forecasting headline CPI to ease 0.1pp to 2.1% y/y in Q4, which quarterly business inflation expectations are consistent with. However, there was a pickup in price/cost components in December, which will be monitored.
- 3-month ahead cost expectations rose sharply to 70.1 from 62.9 with ANZ noting the increase was across sectors except retail but is currently putting down to volatility. Also wage expectations in 12 months picked up to 79.2 from 75.5.
- As a result, 3-month ahead pricing intentions remained high at 42.7 up from 42.5 and 1-year inflation expectations rose 0.1pp to 2.6%.
NZ ANZ business price/cost measures
- In terms of activity, only employment and export intentions didn’t rise. Residential & commercial construction were their highest since 2021, helping to drive investment intentions to 21.5 from 18.0. This is good news given capex fell 5.0% y/y in Q3.
- Employment compared to a year ago deteriorated to -13.3 from -11.6 with every sector negative and hiring intentions easing only 0.4 points to 14.3, but should improve given the pickup in activity.
- When asking firms what their biggest problems were, costs/prices were steady to lower in Q4, but finding skilled labour increased signalling some constraints.
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EQUITIES: Investors Dump China Focused ETFs Following US election
ETFs focused on investing in Chinese stocks faced significant outflows last week, with the iShares China Large-Cap ETF (FXI) losing $984m and the KraneShares CSI China Internet ETF (KWEB) seeing $710m in withdrawals. Concerns over China's growth outlook, deflationary pressures, and potential US tariffs under a Trump administration weighed on sentiment, leading to a 16% drop in the MSCI China Index since October, as per BBG. There was a bounce in Chinese and Hong Kong markets rebounded Monday, supported by financial stocks and regulatory measures to boost corporate valuations.
- It should also be noted that flows in the first half of October were records highs, following stimulus announcements from the Chinese government.
Chart. China ETF Flows (Source BBG)
JGBS: Futures Uptick Overnight, Light Local Calendar
In post-Tokyo trade, JGB futures are stronger, +3 compared to settlement levels, after US tsys finished with modest gains, well off session cheaps.
- Muted reaction to data: NAHB housing market index surprised higher at 46 (cons 42) in November after 43, for its highest since April. The 3pt increase was driven by expectations for future sales (+7) which at 64 are now its highest since Apr 2022.
- Market focus remains on Trump's cabinet picks, with the Treasury Secretary position still up for grabs. Latest reports suggest that Trump's shortlist is growing, and he is to hold interviews this week with the leading candidates, including (but not limited to) Scott Bessent, Howard Lutnick, Kevin Warsh and Marc Rowan.
- The NASDAQ and S&P 500 rallied 0.6% and 0.4%, respectively, supported by a pop in Tesla amid talk the Trump administration is looking to ease regulations on autonomous vehicles.
- Gold rallied back above the $US2600 an ounce mark, oil retook $US73 a barrel, and iron ore is within sight of the $US100 a tonne level.
- Today, the local calendar is empty apart from 1-year supply.
JGB TECHS: (Z4) New Lows
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 146.53 - High Aug 6
- PRICE: 142.82 @ 16:36 GMT Nov 18
- SUP 1: 142.71 - Low Nov 15
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
Prices fell further again Friday, extending the recent pullback. Recent weakness has culminated in a break of 143.57, marking both the Jul 17 high on the continuation contract as well as the Oct 22 low. For now, the 50-dma tops out at 144.19, and marks first resistance. Any recovery would open 146.53, the Aug 6 high (cont) and a bull trigger.
