Forecasters and business leaders expect inflation to rise, plus a big apple result for T&G Global
Inflation expectations nudge higher
Inflation expectations crept up slightly in the Reserve Bank’s latest survey.
The mean expectation for inflation based on a two-year horizon, lifted to 1.43 percent versus 1.24 percent in the June-quarter survey. However, the mean expectation for one-year-ahead inflation was more pronounced rising to 1.03 percent from 0.74 percent in the June quarter. This also returned it to within the RBNZ’s target range of 1-3 percent.
Respondents expect the official cash rate to remain at 0.25 percent at the end of September, in line with the Monetary Policy Committee’s forward guidance. A cash rate at zero or less next year was considered an outside possibility by some respondents.
The outlook for the housing market attracted mixed expectations with a 50-50 split on whether house prices will increase or decrease this quarter reflecting a large amount of uncertainty, the RBNZ said. A total of 39 business leaders and professional forecasters participated in the survey.
Apple sales lift T&G Global
Shares in fresh produce exporter T&G Global jumped 9.6 percent to $2.85 yesterday after the company announced a doubling in its half year net profit to $9.5 million, up from $4 million last year.
Revenue increased 20 percent to $671.3 million from the prior year following a $125 million lift in the group’s apple division to $440.5 million. Domestically, its New Zealand business, under T&G Fresh, lifted revenue to $153.8 million from $135.4 million following April’s acquisition of Freshmax NZ.
CEO Gareth Edgecombe said the company had successfully managed continuous operations through the Covid-19 lockdown, with early shipments of apples into Europe and the UK enabling the uplift in sales. But more recently, global markets are now witnessing volatility and uncertainty, particularly in Asia, where sales continue to be impacted by the full or partial closure of wholesale markets and “large quantities” of commodity apples remain unsold.
New CovidCard set to be trialled
Plans for the launch of a private sector backed CovidCard to replace the Government’s existing contact tracing app moved a step closer yesterday after being given the green light to begin a trial phase. The card embeds a bluetooth device and battery, with a memory chip in a small, wearable format, similar to a security swipecard or bracelet, which would automatically record all daily contacts between people wearing the device.
The decision to trial the CovidCard in a single region, likely to be Rotorua, follows weeks of lobbying by the card’s backers including Trade Me founder Sam Morgan and former Air NZ CEO Rob Fyfe. One attractive feature of the card is that data would be anonymous and accessed only in the event of a contact tracing event.
The decision to trial the CovidCard follows largely failed attempts by the Government to improve both the uptake and regular use of its Covid-19 smartphone tracing app. In addition, increasing concern that the public is growing accustomed to the country’s almost Covid-free status has health officials worried about the rising level of complacency should community transmission return at some point.
Paymark data reflects lift in regional accommodation spending
New data from electronic payments provider Paymark has revealed regional accommodation spending improved last month with the Bay of Plenty, West Coast, Nelson/Marlborough, Gisborne, Taranaki and Hawke’s Bay all benefiting. Wellington, however, saw the largest drop in spending, with a decline of more than 30 percent from July 2019 while Auckland and Otago (which includes Queenstown) were also hit with spending in both centres down about 20 percent.
Nationally, accommodation spending through Paymark was 10.9 percent below the same month last year while retail spending overall through Paymark merchants increased 11.4 percent on the same time last year, it said.
“Growth occurred across most sectors for the first month since February,” Paymark said.
Clock ticking on new US government stimulus deal
The clock is ticking as US lawmakers’ attempt to meet a self-imposed deadline to conclude a new stimulus deal before the weekend, though it appears hopes are fading as both sides appear no closer to actually reaching an accord. Treasury Secretary Steven Mnuchin said a plan would be hard to reach without “agreement on the major issues” after meeting leading Democrats yesterday. White House Chief of Staff Mark Meadows said President Donald Trump was prepared to use executive authority to extend some measures, such as supplemental unemployment insurance, if necessary.
Markets have been closely following developments with the expectation a deal would be done amounting to more than US$1 trillion in additional stimulus. Any failure to do so could lead to markets selling off in response.
Oil prices on the rise, for now
The price of oil has risen above US$45 a barrel for the first time since the coronavirus outbreak forced countries across Europe into lockdown. However, the rebound may prove to be short-lived, according to oil market analysts.
Global oil prices climbed to highs of US$45.50 a barrel on Wednesday after official US data revealed its stores of crude – which were filled to the brim in April – are beginning to empty as energy demand returns in line with the easing of lockdown restrictions.
The oil price has doubled since late April when Brent crude tumbled to 21-year lows of US$16 a barrel. But analysts believe crude may struggle to stay above $40 a barrel over the next couple of months as global oil production begins to rise and demand begins to slow due to the timing of maintenance at refineries.
The Opec oil cartel and its allies, known as Opec+, have begun to increase output after an historic agreement was struck earlier in the year to rein in production thereby preventing the global market becoming oversupplied during the first wave of coronavirus lockdowns.
Bank of England tones down its optimism
The Bank of England has toned down its previous optimism for economic recovery, releasing new forecasts for the UK economy showing a faster initial rebound in GDP but a slower return to its pre-pandemic peak. The Monetary Policy Committee left policy unchanged on Thursday, with interest rates on hold at 0.1 per cent, and its target for the total stock of asset purchases also steady at £745bn.
The committee said the initial hit from coronavirus lockdown measures had been less severe than it projected in May, although it still expected output to be more than 20 percent lower in the second quarter of 2020 than in the final quarter of 2019. A strong recovery in some areas of consumer spending is expected to drive a rapid rebound over the coming months, with GDP falling 9.5 per cent over the year as a whole, compared with the 14 per cent contraction the central bank had projected in May.
However, the BoE believes the recovery will slow dramatically after the third quarter of 2020, reflecting consumers’ continued concerns about health risks and fears over job security. Its central forecast shows GDP more than 5 per cent below its pre-pandemic peak at the end of 2020, and only regaining its pre-crisis level at the end of 2021.
Tech geeks get to lay eyes on new Samsung smartphone
Samsung is talking up its new flagship smartphone with an ecosystem of interconnected gadgets to try to snatch back its top spot in the global market from Chinese rival Huawei. The company’s latest smartphone, the Galaxy Note 20, was one of five new devices unveiled yesterday, alongside an updated tablet, smart watch, wireless earbuds and a folding smartphone.
Unlike other recent launches that have been recorded or streamed without an audience, Samsung beamed in dozens of fans by videoconference, displayed on a large curved screen.
Samsung’s latest smartphone comes in two versions — the 6.7-inch Galaxy Note 20, starting at US$999.99, and the 6.9-inch Note 20 Ultra starting at US$1,299.99.
The Note 20 is powered by the fastest processor in Samsung’s Galaxy series, the company said, and features what it calls its “best screen yet.” It is also compatible with 5G, a capability Samsung has been keen to emphasise, giving it the edge over Apple which is yet to release its first 5G smartphone.
Trump Campaign frozen out of Twitter account
In a technology first for an incumbent US President and in response to growing public anger at lax monitoring of content by the tech giants, Twitter froze the account of the Trump campaign yesterday for violating its misinformation rules. The freeze occurred after a video was posted in which the US president said children were “almost immune” to coronavirus.
The clampdown came just hours after Facebook removed the same post from Donald Trump’s personal account on the platform. Twitter said on Wednesday that the tweet from the @TeamTrump account, which showed a video of the president in a Fox News interview, was “in violation of the Twitter rules on Covid-19 misinformation”.
The Trump campaign will be required to remove the tweet before they can tweet again Twitter said in a statement. Facebook had taken action on the same post, saying the video “includes false claims that a group of people is immune from Covid-19 which is a violation of our policies around harmful Covid misinformation”. Twitter said it was the first time it had removed one of the president’s posts for breaching its coronavirus misinformation rules and suggests the forthcoming Presidential campaign is going to be much more tightly monitored for false claims than previously.