Talk Money with Tony Field, September, 2 2015

A businessman watches a display showing global stock markets (AAP)
A businessman watches a display showing global stock markets (AAP)

It is starting to seem like deja vu.

Stocks have slumped again on Wall Street, following new figures showing China's economy is slowing faster than expected.

The latest sell-off was sparked by more disappointing data from China.

The Dow Jones Industrial Average fell 469 points, or 2.84 percent. The broader S&P500 slumped 2.96 percent and the tech-heavy Nasdaq was down 2.94 percent.

US stocks were part of a worldwide sell-off, with European markets falling over 3 percent.

Investors were spooked by new data from two sectors showing that growth is weaker than expected.

China's manufacturing sector contracted at its fastest pace in three years.

Its services sector also showed signs of easing. This sector covers areas like retail, banks, hotels, real estate, education, health, social work, computer services, media, electricity, gas and water supply.

There was also some mixed US data for investors to ponder.

Factory activity has fallen to more than a two-year low. But construction spending has increased for eight straight months, with private construction spending hitting a seven-year high.

Energy shares fell after crude oil prices fell 7.8 percent. West Texas oil is trading at US$45.32.

That ended what had been a three day rally in which oil rose 27 percent in value. That was the commodity's strongest three-day rally since 1990.

Global dairy prices

Markets are all about demand and supply. In the case of the GlobalDairyTrade auctions, the supply is being reduced.

Eighteen thousand tonnes of whole milk powder was offered at the latest auction. That is around 50 percent less than at the same time a year ago.

Whole milk powder prices rose 12.1 percent to US$2,078 a tonne.

The overall GDT Index rose 10.9 percent. That followed a rise of 14.8 percent two weeks ago.

The two positive auctions follow what had been ten consecutive falls in auction prices.

Analysts say that if prices remain where they are right now Fonterra should be able to meet its forecast payout of $3.85 per kilogram of milk solids.

But Fonterra will still need to find buyers for the product that is not being sold at the auction. Around 70 percent of its product will be sold outside of the auction.

Total production is forecast to be down by 2 percent this season.

The auction comes the day after Fonterra announced farmers can now apply for a loan to help them deal with the current downturn in prices.

Farmer shareholders can apply for an interest-free loan of 50 cents for every kilogram of share-backed milk solids produced from 1 June to the end of the year.

The loan will be interest-free until 31 May 2017.

The loan will be repayable directly from milk payments, and automatic repayments will occur when total advance rate payments exceed $6.00.

The dollar

The New Zealand dollar is slightly weaker this morning against the US dollar. It is trading at 63.34 cents.

The kiwi is 1.25 percent higher against the Australian dollar at 90.23. It's fallen 1.3 percent against the yen, at 75.82.

The kiwi firmed 0.19 percent against the pound. It is trading at 41.40 pence. It is almost one percent lower against the euro at 56.06.

Canada is in recession

There has been growing talk in New Zealand about a possible recession.

Today another economy went into recession following a big drop in prices for one of its key exports.

Canada has gone into recession following the fall in oil prices. Growth contracted 0.5 percent in the June quarter after contracting 0.8 percent in the previous three months.

It is Canada's second recession in seven years. The figures are the weakest since the 2008 global financial crisis.

But economists think the recession could be short lived.

The numbers for June GDP showed a rebound. But they were not strong enough to offset the weaker figures for April and May.

Economists believe the next quarter could see a rebound, with the growth hitting 2.5 percent by the end of the year.

The basics of investing

If you have wanted to learn more about investing but were not sure where to start you are not alone.

Buying shares or investing in bonds can sound confusing.

The NZX (which operates the New Zealand stock exchange) and the Financial Markets Authority have launched a website with videos offering basic advice for people who would like to learn more about investing. offers short videos on topics like KiwiSaver, investing in the share market, fixed interest and managing investment risk.

The videos feature industry experts speaking in plain language about the principles of investing.

One of the videos features Rob Everett, the chief executive at the Financial Markets Authority, talking about the dos and don'ts of investing; understanding risk and how to spot an investment scam.

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