Equity Sell-Off Continues
January 14, 2014
In Japan, whose market was closed Monday for Coming of Age Day, the Nikkei-225 slumped 490 points or 3.1%. Equities in Europe are down 0.5% in Germany, 0.4% in Spain and France, 0.3% in Italy and 0.2% in Britain. Other Pacific Rim stock markets recorded losses of 1.5% in Australia, 0.7% in New Zealand, 0.4% in Singapore and Hong Kong, 0.5% in India and 0.2% in Taiwan. Two exceptions to the weakening trend were China (+0.9%) and Indonesia (+3.2%). Stocks are falling on new concerns that global growth in 2014 will not be a buoyant as was hoped.
A mixed dollar ahead of released U.S. retail sales and import price data shows gains of 0.6% against the yen, 0.7% versus the Aussie dollar and 0.4% relative to the loonie but losses of 0.5% against the Swiss franc, 0.3% vis-a-vis sterling, 0.2% against the kiwi and 0.1% relative to the euro. The yuan is unchanged.
The yield on 10-year Japanese JGBs relapsed four basis points to 0.65%. The 10-year German bund is a basis point softer, while the 10-year British gilt edged a basis point higher.
Gold softened 0.3% to $1,247.30 per ounce. WTI crude oil moved up 0.2% to %91.98 per barrel.
Japan’s JPY 593 billion current account deficit in November followed a JPY 128 billion October shortfall and was also 3.3 times wider than the JPY 180 billion deficit in November 2012. The seasonally adjusted current account gap remained small, however, at JPY 47 billion after JPY 59 billion in October. The merchandise trade deficit in November amounted to JPY 1.008 trillion seasonally adjusted and JPY 1.254 billion not so adjusted.
Japan’s customs clearance trade deficit in the first twenty days of December totaled JPY 1.38 trillion, 83% wider than a year before as imports soared 30.6% on year while exports grew by 18.9%.
Japanese stock and bond transactions generated a JPY 2.37 trillion net capital inflow in the final month of 2013, largely on foreign net buying of JPY 2.13 trillion of Japanese equities. Bank lending in Japan recorded a rise between December 2012 and December 2013 of only 2.3%. The 4Q-over-4Q rise was 2.2%.
Japan’s economy watchers index rose 2.2 points to a higher-than-forecast reading of 55.7. Such was the best result since the same score last May. Japanese bankruptcies posted a larger 15.7% on-year drop in December.
Industrial production in the euro area recorded a larger-than-anticipated 1.8% month-on-month advance in November and showed the greatest on-year increase (3.0%) since May 2010. Output in October-November averaged 0.3% more than the mean level in the third quarter.
A slew of British price data was released. Foremost, CPI inflation of 2.0% in the year to December met the Bank of England’s target for the first time since November 2009. Core CPI edged down 0.1 of a percentage point to 1.7%. Retail prices firmed 0.5% on month and 2.7% on year, and the RPIX inflation rate ended 2013 at 2.8%. House price inflation according to ONS, and formerly known as the DCLG index, came in at a lower-than-projected 5.4%. Producer output prices were unchanged on month between November and December and just 1.0% higher than at end-2012. Producer input prices firmed 0.1% on month but fell 1.2% between end-2012 and end-2013. The core PPI-O and core PPI-I inflation rates in December were +1.0% and -1.6%.
German wholesale prices rose 0.4% on month in December but posted a 1.8% on-year decline. Energy fell 4.0% between December 2012 and December 2013. Germany’s WPI dipped 0.5% in 2013 as a whole following increases of 7.5% in 2011 and 2.8% in 2012.
French CPI inflation in December stayed at a very subdued 0.7%. Italian inflation also ended the year at 0.7%. Swedish consumer prices last month were just 0.1% higher than at end-2012. Finnish consumer prices rose 1.6% in the year to December. Greek import prices fell 1.6% in the year to November.
The French current account deficit narrowed EUR 100 million to EUR 1.9 billion in November. Turkey’s current account deficit in November of $3.94 billion was 35% wider than the October deficit.
Scheduled U.S. data to be released today cover retail sales, import and export prices, and business inventories. Yesterday, investors learned that federal budget transactions last month generated a $53 billion surplus, more than in any prior December. The 4Q deficit of $173.6 billion consequently was 41% smaller than the accrued deficit in the final quarter of 2012.
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: euro area industrial production, Japanese current account, Yen