Markets rebound slightly on China comments

Comments from Chinese Premier Wen Jiabao spurred a rebound in financial markets overnight. Jiabao pledged to focus more on stimulating growth in China, which has been seen as a boost to overall global growth. These comments were also backed up by similar views from France and Germany, where the respective finance ministers pledged to pursue growth. The French and German finance ministers also pledged to ‘do everything necessary to keep Greece within the Eurozone’.In the markets, the Kiwi starts the day back above the .7600 level vs. the USD, up over a cent from Friday night’s lows. The Kiwi is back above the .7700 level vs. the AUD and up nearly 1 cent vs. the Euro, Pound and Japanese Yen.

It looks like the markets are in for more stimulus, from Europe right across to China. Japan is also expected to weigh in with more Yen stimulus this week when the Bank of Japan meets.

The Kiwi has lost 6 cents in May up until yesterday and it looks set for a rebound on the moves to stimulate growth from the major nations. The growth measures will be positive for commodity prices which have been falling sharply of late. Whilst the uncertainty over Greece will not be gone for another month or so, we still think longer term, that the Kiwi will rise due to the endless amounts of money printing from the major nations.

Thursday sees the release of the New Zealand budget. The National Government has pre-released most of the information, in what they have dubbed a ‘zero budget’ for its lack of new spending. Whilst the ratings agencies like the implied austerity, New Zealanders are voting with their feet as the exodus across the Tasman increases. Yesterday’s migration data showed a net loss of 870 people for April. A total of 4,500 Kiwi’s headed off to Australia in April bringing the annual total to nearly 40,000 leaving for the lucky country. Higher wages and better job prospects in the mining sector are the big draw cards.