NEW ZEALAND: Soft Economy But Outlook Improved Later In May
ANZ business confidence fell to 36.6 in May from 49.3, the lowest since July, while the outlook moderated to 34.8 from 47.7. ANZ notes though that the breakdown of responses indicates that the picture is not as soft as the month averages suggest as they improved in the latter part of the month with positive news on trade talks and are “well off their late-April lows”. Price/cost components generally fell in May. The survey suggests a gradual, soft recovery with higher costs difficult to pass through, which ANZ believes will allow the RBNZ to cut rates to 2.5%.
- Inflation expectations were stable in May at 2.7% but are 0.2pp higher than the recent trough. Pricing intentions fell 4 points to 45.4, the lowest since December, but retail posted its highest reading since March 2024. Costs 3-months out moderated 5 points to 72.8, with the decline across sectors except construction.
NZ ANZ business price/cost components
- Employment intentions remain positive consistent with a stabilisation in the labour market but fell 12 point to 6, the lowest since July, in line with little growth. Thus it is unsurprising that wage expectations 12-months ahead moderated 6 points.
- Activity compared to a year ago, which has a good correlation with GDP, fell 6 points with all sectors down signalling that Q2 was soft.
- Export & investment intentions, profit expectations and construction sentiment were all lower.
NZ ANZ business survey
Source: MNI - Market News/LSEG
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CHINA: Bond Futures Rally on Liquidity Injection
- This morning’s OMO saw a sizeable liquidity injection and unsurprisingly bonds are rallying.
- China’s 10YR bond future is up +0.185 to 109.04 and remains firmly above all major moving averages, the nearest being the 20-day EMA of 108.73
- The 2YR bond future is up just +0.03 at 102.36 and remains below all major moving averages, the nearest being the 20-day EMA at 102.43.
- The cash market is strong also with the CGB 10yr down -1bp this morning at 1.63% with the Hang Seng and Shenzhen bourses higher whilst the CSI 300 is down marginally
CANADA: Networks Calling Election For Carney, Too Soon To Know If Majority
With results now coming in from Canada’s more populous provinces CBC and CTV are calling that Mark Carney will stay PM but it is still too early to say whether his Liberals will have a majority. There has been little change of seats between parties so far. Elections Canada currently has the Liberals leading in 133 districts (50.0% vote share), Conservatives in 93 (38.7%), Bloc Quebecois in 17 (4.8%) and New Democrat in 3 (4.4%). 172 seats are needed to form a majority government.
CHINA PRESS: A-share Market To Be Supported - Analyst
Authorities' support for the A-share market together with China’s low interest rate environment could drive up stock prices in the long run, said Wu Zhaoyin, chief investment officer at Soochow Futures. In the near term, major indexes may fluctuate as firms release annual and quarterly reports, and U.S. tariffs could be adjusted during the May 1-5 holiday period when the exchanges are closed, said Wu, noting impacts can be controlled.
