Nikkei Plunges 4.2%, Greatest Daily Decline since August 16th

February 4, 2014

With Chinese markets still closed for the Lunar New Year, share prices fell 4.2% (or 611 points) in Japan, 2.9% in Hong Kong, 1.8% in Australia, 1.7% in South Korea, 1.0% in New Zealand, and 0.8% in Singapore and Indonesia.  In Europe, the German Dax is down 1.0%, but many other markets have only moderate losses such as those in the U.K. (0.4%), Italy and France (0.3%), Spain (0.2%) and Switzerland (0.1%).  U.S. stock futures point to an initial rise after yesterday’s dive.

Dallas Fed President Fisher wants the FOMC to keep up the pace of tapering in spite of recent market turmoil.

Both the South African rand and Turkish lira rebounded over 1.0%.

The Aussie dollar leaped to a three-week high of USD 0.8916 after the Reserve Bank of Australia indicated satisfaction with the current policy stance, returning the bias from ease to one of neutrality.  The U.S. currency presently shows declines of 1.7% against the Oz and 0.9% versus the kiwi.  The dollar is also off 0.1% vis-a-vis the loonie and sterling, but it is up 0.5% against the Swissie, 0.4% relative to the yen, 0.2% against the euro and 0.1% versus the yuan.

Gold has fallen 0.5% to $1,254.70 per ounce.  Oil edged up 0.2% to $96.58 per barrel.

The ten-year German bund and Japanese JGB yields are a basis point lower, while the British gilt ticked a basis point higher after another steller U.K. PMI result, this time for construction.  The construction purchasing managers index advanced 2.5 points, extending its uptrend to a six-year high of 64.6 in January.  This was the third month above 60.  The series only climbed above the 50 expansion or contraction threshold last May.

Among other released PMIs, Indonesia’s manufacturing PMI edged up to 51.0 from 50.9, marking the fifth straight month of expanding activity, albeit at a very modest rate.  Egypt’s non-oil PMI sank to a 4-month low of 48.7 from 52.0 in December, but the Saudi Arabian non-oil PMI rose 1.0 to a 15-month high of 59.7 in January, indicating the fastest expansion since October 2012.  The United Arab Emirates non-oil PMI dipped 0.3 to 57.1, which though a 3-month low still indicates brisk growth in activity.

Producer prices in the euro area increased 0.2% in December and posted a smaller on-year drop of 0.8% after declining 1.2% in the year to November.  A 0.5% monthly increase in energy accounted for the entire monthly uptick, as all other producer prices collectively were unchanged from November.  The PPI in 4Q fell 0.3% (1.3% annualized) from the third-quarter level.

Growth in Japan’s monetary base quickened to a 51.9% 12-month rate of rise from 48.2% in 4Q13.  Likewise, the Bank of Japan’s balance sheet, which held steady in December, rose to 232.2 trillion yen at end-January from 224.1 trillion yen at end-2013.

Bank of Japan Governor Kuroda, testifying in the Diet, spoke of smooth progress being made toward the central bank’s goal of 2% core inflation by early 2015.

Hong Kong retail sales recorded smaller-than-projected on-year growth in December of 5.7% in value and 6.1% in volume.  Each gain was also less than seen in the year to November.

Indonesian consumer price inflation slipped to 8.2% this month from 8.4% in December but continues to far exceed target. 

South African business sentiment in January fell 1.5% in January.

Scheduled U.S. data releases today feature factory orders, the IBD/TIPP Optimism index, the NAPM index (PMI for the New York area), and weekly chain store sales.  Much of the eastern United States continues to experience very harsh winter.  The New York area will get three snow storms in the space of a week, including one yesterday that dumped about nine inches.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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