New Month Brings Softer Dollar and Weaker Share Prices

December 1, 2014

Among a slew of manufacturing purchasing manager surveys covering November conditions, there were some notable disappointments.  Also, U.S. Friday retail sales for the day after Thanksgiving were significantly short of expectations, and Moodys downgraded Japan’s credit rating to A1 in response to the delayed next sales tax hike.

Share prices have fallen so far today by 2.6% in Hong Kong, 2.0% in Australia, 1.6% in Italy, 1.3% in Singapore, 1.0% in Spain and Britain, 0.8% in Taiwan, South Korea and the U.S., and 0.5% in Germany, France and India.  Stocks rose 0.8% in Japan and 0.4% in China.

The dollar hit a 7-month high of 119.14 yen on Moodys decision but subsequently gave it all back and is currently down 0.4% on balance.  The dollar has also fallen by 0.6% versus the loonie and sterling, 0.3% relative to the euro and Swissie, and 0.5% vis-a-vis the kiwi.  The dollar had edged 0.2% higher against the Aussie dollar and 0.1% versus the yuan.

Commodity prices are higher, with gains of 1.4% in WTI crude oil to $67.09 per barrel and 0.9% in Comex gold to $1,186.40 per ounce.

The ten-year British gilt yield dropped six basis points, and the 10-year Japanese JGB is a basis point lower.  But U.S. treasuries and German bunds are steady.

The Chinese government reported a further slowdown in non-manufacturing activity to a reading of 50.3, which is an 8-month low, and HSBC’s estimated purchasing managers index for Chinese manufacturing declined 0.4 points to a six-month low of 50.0.

Euroland’s manufacturing PMI printed at 50.1,0.3 points below the preliminary estimate, 0.5 points under October’s reading and at a 17-month low.

Manufacturing contracted in Euroland’s three largest members.  Readings below 50 connote outright deterioration.  Germany’s 49.5 was 0.9 points below the October score and at a 17-month low.  France’s 48.4 in November constitutes a 3-month low, and Italy’s 49.0 matched October’s 17-month trough.

Austria (47.4) and Greece (49.1) also had sub-50 PMI readings in November, although each was above October levels.

Economies such as Ireland with a 56.2 score, Spain (54.7), and the Netherlands (54.6) kept Euroland’s overall manufacturing PMI from dropping under 50.

The U.S. Institute of Supply Management estimated that the U.S. manufacturing PMI slipped by 0.3 points to a still robust 58.7 in November.

The Japanese purchasing managers index dropped 0.4 points to a 2-month low of 52.0.  It’s been 50.0 or better since 49.4 in April but hasn’t regained its pre-sales tax level.

South Korea’s manufacturing PMI was again below 50, scoring a 49.0 in November.

Indonesia’s reading of 48.0 indicated the fastest pace of contraction in the 44 months of this data series.

Vietnam’s 52.1 was at a 5-month high, but Taiwan’s 51.4 reading was at a 15-month low.

Brazil recorded a 16-month low of 48.7 on its manufacturing purchasing managers survey, 0.4 points lower than in October.

Australia with a print of 50.1 on its factory PMI was above 50 for the first time in four months.

British manufacturing continued to experience decent growth with a 4-month high PMI of 53.5.

Canada’s 55.3 reading was the same in November as the PMI had been in October.

The Swedish and Norwegian readings of 52.7 and 51.3 connoted faster growth than in October, and each was a tad better than forecast.

But Switzerland’s manufacturing PMI dropped 3.2 points to 52.1 in November, surprising analysts on the downside.

Hungary scored a 55.1, up from a 55.0 PMI in October.  The improvement in the Czech PMI to 55.6 from 54.4 was more impressive.  Poland’s PMI edged up 0.1 point to 53.2 in November.

Russia’s 51.7 represents a 13-month high, but like several of the PMI surveys also produced an acceleration of inflationary pressure.  In Russia’s case that increase reflected the plunge of the ruble.

South Africa’s PMI rose 3.2 points to 53.3 last month.

Italian GDP was confirmed to have contracted for the thirteenth quarter in a row, albeit by 0.1% in 3Q14.

British M4 money fell 2.6% between October 2013 and October 2014.  Mortgage approvals of 59,430 were 3% fewer than in September.

The Indonesian trade balance swung from a deficit in September of $270 million to a small $20 million surplus in October.  Indonesian CPI inflation accelerated to 6.2% from 4.8% and was associated with a slightly higher 4.2% core rate in October.  Thai inflation, but contrast stood at a mere 1.26%.

Capital spending in Japan posted higher 5.5% on-year growth in 3Q than had been assumed in that economy’s preliminary estimate of GDP.  Japanese motor vehicle sales were 13.5% weaker last month than a year earlier, however.

Australian corporate profits, up 0.5% last quarter, performed better than expected.

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

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