Markets Closed for Holiday in Japan, the United States and Canada

October 13, 2014

After last week’s swoon, financial market volume on Monday will be suppressed by three market closures, Japan for Health and Sports Day, the U.S. for Columbus Day, and Canada for Thanksgiving.

Stocks in the Pacific Basin closed down 2.8% in Taiwan, 1.1% in New Zealand, 1.0% in Indonesia, 0.7% in Singapore and South Korea, 0.6% in Australia, and 0.5% in China, but European markets staged a dead cat bounce, recovering 0.8% in Italy and Spain, 0.6% in Germany, 0.4% in France and 0.2% in Britain.

The weekend did not provide inspiring news.

  • A health working in Dallas has contracted the Ebola virus.
  • Germany and the ECB aired their dirty laundry at the IMF meetings in Washington.  Bundesbank President Weidmann is doing everything in his power to undermine any positive effect from the ECB’s stimulus to lift inflation, asserting that no formal target was agreed on the size of the ECB balance sheet.  ECB President Draghi opined that there is not a bubble in the Ezone bond market.
  • A 0.9% on-year decline in German wholesale prices in September was the biggest drop since May.
  • The Russian ruble fell further in spite of very heavy intervention late last week and the pull-back of Russian troops from the border with Ukraine.  The Russian currency has been pressured by slumping oil prices, which fell another 1.3% and to less than $85 per barrel on WTI grade.
  • Fed Governor Tarullo complained about the abundance of banking problems.
  • Technical indicators suggest more losses lie ahead for U.S. equities when trading reopens tomorrow.

The dollar traded lower today overseas, falling by 0.8% against the Australian and New Zealand currencies, 0.5% relative to the euro and Swiss franc, 0.3% against the yen, 0.2% vis-a-vis the yuan and sterling and 0.1% versus the loonie.

The ten-year British gilt is three basis points lower, and the 10-year bund edged down a basis point.  The 30-year Treasury yield, 3.01%, is now at the level at when the 10-year peaked at which the end of 2013.

The main piece of released data today was the Chinese September trade surplus, which fell more than expected to $31.0 billion from $49.8 billion in August.  The drop mainly reflected a 7% on-year rise in imports, which had been projected to drop slightly.  Import growth, however, was due mainly to re-export activity and failed to alleviate concern about Chinese demand not being strong enough to help out other economies.  The third-quarter trade surplus of $128 billion constitutes a quarterly record high.

Another solid construction purchasing managers survey was revealed for Ireland.  The index edged up 0.1 points to 61.5 and surpassed the 60 threshold for a third straight month in September and the sixth time in the last seven months.

New Zealand house prices and food prices were reported.  Food prices fell 0.8% on month and by 0.1% on year in September, a weaker outcome than in August.  Home prices rose 0.2% in September after a 1.1% jump in August and decelerated to a smaller 12-month increase of 4.1% from 4.8%.

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

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