Central bank help China’s central bank eased monetary policy this morning to offset the shock from the impending collapse of its biggest apartment developer and a slowdown economic growth in the world’s second-biggest economy. US stocks surged 1.5% this morning, in part on hopes omicron isn’t as damaging as first thought.
Pumps turned on The People’s Bank of China cut its reserve ratio requirement by 50 basis points for a second time this year, freeing up another US$188 billion (NZ$278.5b) in liquidity for China’s state banks to lend to developers and state-owned firms. (Reuters)
Happy again. For now, US stocks rallied 1.5% this morning as a brittle confidence returned to markets, in part on hopes omicron won’t be as damaging as first thought. US infectious diseases chief Dr Anthony Fauci said overnight early data on the omicron variant doesn’t suggest it causes severe illness. (Guardian/CNN)
Oil confidence Oil prices rose 3.6% overnight to just over US$72 per barrel of crude oil on the easier fears about omicron’s effect on global travel and output. But the NZ dollar remained near its lows of US67.5 cents.
Not so grande Shares in China’s largest apartment developer Evergrande plunged 20% to a record low overnight after it warned it was on the brink of collapse. China’s three main financial regulators then issued coordinated statements saying that any risk of a domino-effect series of collapses through China’s construction sector and the financial sector could be controlled.
Insufficient funds Evergrande said in a statement to creditors: ”In light of the current liquidity status, there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations.”
Contagion Evergrande’s share price collapse spilled over onto other Hong Kong-listed stocks, dragging the Hang Seng down 1.8% overnight. The surprise withdrawal of Didi Xuching from Wall St also hammered tech companies listed in Hong Kong. The local tech stock index fell 3.3%. (CNN)
‘But Xi has our back’ However, fears the Chinese government would simply let the chips fall where they may, as it has repeatedly warned it would do, were eased after a government statement emerged via Xinhua overnight saying the government would “support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the healthy development of the real estate industry”. The statement also avoided commentary used in previous releases that had a harsher stance towards the property market.
Wider mandate The city of New York announced overnight all private sector businesses would have to enact a vaccination mandate for all workers by Dec 27. (CNN)
Fresh on BusinessDesk this morning
Dan Brunskill interviews Mark Clare of Clare Capital about the latest boom in NZ tech M&A.
Paul McBeth previews a big decision due tomorrow on whether Wanaka will get a $280m film studio complex.
Henry Burrell details four simple ways for companies to avoid cyber attacks.
ICYMI yesterday
Pattrick Smellie’s analysis of Christopher Luxon’s first front bench.
The NZX 50 fell 0.6% on frothy trade as global markets digest omicron and the Fed’s pivot to a faster tapering of money printing. (BusinessDesk)
Building activity in the September quarter fell 8.6% from the June quarter because of Auckland’s long lockdown, but that was better than expected. (BusinessDesk)
PGG Wrightson raised its profit guidance by $5m to $58m. (BusinessDesk)
Newly listed Vulcan Steel upgraded its profit forecast by as much as 35%. (BusinessDesk)