A Drop in Share Prices

November 5, 2013

Equities fell 1.3% in India, 0.7% in Hong Kong, 0.6% in South Korea, 0.4% in the Philippines, and 0.2% in Indonesia and Malaysia.  In Europe, Spain’s IBEX has slumped 1.3%, and stocks are 0.6-0.7% lower in Britain, Germany, France and Italy.  Not all markets dropped.  Japan’s Nikkei closed 0.2% firmer.  Stocks rose 0.8% in Australia, 0.6% in New Zealand, and 0.1% in China.

The dollar has fallen by 0.5% against the kiwi and sterling, 0.3% relative to the yen, and 0.1% versus the Australian dollar.  The greenback is unchanged against the yuan, up 0.2% versus the euro and Swissie, and 0.1% firmer relative to the loonie.

The 10-year British gilt yield climbed six basis points to 2.68%.  The 10-year German bund is a basis point higher, and Japanese JGBs are steady.

Gold and oil are 0.2% and 0.4% softer at $1312.00 per ounce and $94.26 per barrel.

There were dovish remarks about tapering overnight by Rosengren and Powell of the Federal Reserve.  Bullard emphasized the data dependency of policy.

Bank of Japan Governor Kuroda made optimistic remarks about progress in ending deflation but reiterated the risks to success and the Bank Board’s determination to provide even more stimulus if needed.

Japan’s monetary base recorded on-year growth of 45.8% in October, down from 46.1% in September.  Although the first monthly deceleration in nine months, growth in the monetary base has evolved nicely from 7.0% in full-2012 to 15.2% in 1Q13, 30.2% in the second quarter, and 42.0% last quarter.

The Reserve Bank of Australia left its Official Cash Rate at a record low of 2.5% as expected but released a statement with a more strident protest against the Aussie dollar’s elevation.

Romania’s central bank cut its main interest rate by another 25 basis points to 4.0%.  The move follows reductions of 25 bps at end-September, 50 bps in early August, and 25 bps at midyear.

Like the earlier PMI reports on British manufacturing and construction, the service sector purchasing managers index jumped 2.2 points to a robust 60.5 in October.  that was the fourth reading of at least 60 and the best score since May 1997.  Along with readings of 59.4 in the construction PMI and 56.0 in manufacturing, these surveys suggest GDP growth in the middle of a 1.0% to 1.5% quarter-on-quarter band.  The Bank of England policymakers may need to move the guided likely timing of a rate hike in closer as a result.

Australia’s service-sector PMI improved 0.8 points to 47.9 in October.  Such had average scores of 41.8 in 3Q13, 42.1 in 2Q, and 47.8 in 1Q.

Service PMI’s were reported to have improved in both China and India.

  • According to the compilation by HSBC, China’s composite PMI rose to a 7-month high of 51.8 from 51.2 in September.  It was the third straight reading of at least 50 after sub-50 scores in June and July.  The services PMI of 52.6 followed 52.4 in September and was at a 2-month high.
  • India’s services PMI jumped by 2.5 points from a 53-month low in September, but at 47.1 was the fourth month below 50 in row.  Such reading imply contraction.  The composite Indian PMI rose 1.4 points to 47.5.

Sweden’s services PMI improved to a 2-month high of 53.7 in October from 53.3 in September.  October’s score matched August’s and was the fourth reading in a row above 50.

The Irish services PMI, 60.1, erased almost all of September’s drop of 4.8 points to 56.8.  Ireland’s service sector activity has expanded for the past 15 reported months.  New orders rose at their most rapid pace since March 2007.

South Africa’s composite PMI swung from 49.8 in September to an expansionary 51.5 reading in October.

Lessening political violence in Egypt was reflected in a revival of its non-oil PMI to 49.5 in October, from 44.7 in September, 42.2 in August and 41.7 in July.  49.5 constitutes an 11-month high.  Saudi Arabia’s non-oil PMI fell 2.1 points to 56.7, and the U.A.E. PMI dipped 0.3 points to 56.4.

Hong Kong’s business PMI edged up 0.1 to 50.1 in October.  Although a 7-month high, it conveys stagnation.

Producer prices in the euro area edged up 0.1% in September, less than forecast, despite a 0.5% increase in the energy component.  Non-energy producer prices slid 0.1% on month and on year.  Total producer prices were 0.9% lower than a year earlier and posted a 3Q-over-2Q uptick of 0.1%.

Swiss consumer prices slid 0.1% on month and 0.3% on year in October.  Those results were a tad below expectations.

British same-store sales according to the Retail Consortium rose 0.8% on year in October.  Total sales were 2.6% greater than a year before.

Spanish unemployment jumped by 87K last month, more than twice expectations.  Czech retail sales growth accelerated to an on-year 3.7% rise in 3Q13.

Filipino producer prices fell 1.1% on month and by a slightly accelerated 6.4% on year in September.  The CPI edged up 0.1% on month and 2.9% on year.  In Taiwan, CPI inflation of 0.6% in October was less than forecast, and the wholesale price index dropped 1.6% from a year earlier.

The global manufacturing purchasing managers index compiled by JP Morgan went up 0.3 points to 52.1 in October despite a 0.1-point dip in production.

The U.S. IBD/TIPP index gets released today but will be overshadowed by the ISM non-manufacturing PMI report.  Lacker and Dudley speak publicly.  Canadian trade numbers are due.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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