Oil prices fall and stocks rise after Israel agrees to ceasefire talks with Lebanon, improving the chances of a broader Middle East ceasefire. Elsewhere, Kiwis drove less in March and China’s deflation may be over.
And then in our deep-dive interview, ANZ Economist Maddy Dunk details where and how ANZ Research has lowered its house price forecasts in Australia’s capital cities.
5 things to know in 5 minutes:
News overnight from the Middle East started out bad with the Strait of Hormuz still closed because of Iran’s protests over Israeli strikes in Lebanon, but the mood lightened after Donald Trump was reported to have asked Benjamin Netanyahu to help, which then saw Israel agree to ceasefire talks with Lebanon. ANZ Economist Henry Russell says oil prices fell and stocks rose after the news.
The Aussie and Kiwi dollars both rose around 0.5% overnight, having already risen between 1-2% after the ceasefire was first announced. ANZ Head of FX Research Mahjabeen Zaman says both are being driven by risk sentiment.
Attention remains on what the ongoing effects of the conflict will be. ANZ Senior Commodities Strategist Daniel Hynes says Australia’s vulnerabilities are mainly diesel and jet fuel which are imported from the Middle East via Asian refineries.
The impact of the oil price shock may have already fed through to New Zealanders’ driving behaviour. ANZ’s Truckometer showed light traffic activity down 2.4% in March, although ANZ New Zealand Chief Economist Sharon Zollner says that came after a big bump in February. Heavy traffic rose - potentially due to front-loading of freight movements.
The impact is also already been seen in CPIs out for Asian economies. Later today, China releases price data for March. ANZ Senior China Strategist Zhaopeng Xing expects the annual CPI at 1.4% in March, and the producer price index - the PPI - to be up 0.8%. That would be the first positive print in three-and-a-half years.
Cheers
Bernard.
PS: Catch you next week with the latest on the Middle East conflict, and also whether China managed to exit deflation in March.
