Thank God It’s Friday as Risk-Off Mood Persists

July 24, 2015

Share prices in the Pacific Rim fell 1.8% in China, 1.2% in Hong Kong, 0.9% in South Korea, India and Indonesia and 0.6% in Japan.

Comex gold dropped another 0.8% to $1,082.00.  West Texas Intermediate oil stayed below $50 but recovered 0.5% to $48.69 per barrel.

Ten-year sovereign debt yields declined another five basis points in the U.K. and a basis point in Germany.  The 10-year JGB edged up a basis point back to 0.40%.  The ten-year future is hovering about midway between 2.25% and 2.30%.

The commodity-sensitive Australian and New Zealand dollars lost 0.9% and 0.5% against their U.S. counterpart overnight.  The greenback is also up by 0.4% relative to the euro, 0.2% versus sterling and 0.1% vis-a-vis the yen, loonie and Swiss franc.  The Chinese yuan is steady.

In European stock markets, share prices have recovered 0.5% in Italy, 0.4% in France, 0.2% in Germany and Britain and 0.1% in Switzerland, but this looks like a dead-cat bounce.

The preliminary Japanese manufacturing purchasing managers index printed at a 5-month high of 51.4 in July, well above forecast and 1.3 points better than in June.  Orders increased after falling in June, but output prices fell.

China’s preliminary manufacturing PMI fell to a 15-month low of 48.2 in July, marking the fifth sub-50 reading in a row.  50 divides expanding activity from a contraction.  July’s reading was 1.2 points below June’s.

Euroland’s preliminary July PMI findings were lower than final June results and constitute 2-month lows.  The composite PMI was 53.7 versus 54.2 in June and 53.9 on average last quarter.  The manufacturing PMI slid 0.3 points to 52.2.  The services preliminary PMI was 53.8 versus 54.4 in June.

Germany posted a composite July PMI of 53.4, a 2-month low after 53.7 in June.  Manufacturing fell 0.4 points to 51.5, while services dipped 0.1 to 53.7.

The French composite PMI was 51.5, a 3-month low after 53.3 in June and 52.0 in May.  Manufacturing fell back under the 50 threshold to 49.6 in July from 50.7 in June.  Services dropped to a 3-month low of 52.0 after spiking to 54.1 in June.

Japanese stock and bond transactions generated a net 530 billion yen capital outflow in the week of July 17 versus an outflow of 231 billion yen the prior week.

New Zealand’s trade balance swung to a NZD 60 billion deficit last month from a NZD 350 billion surplus in May.  Dairy exports have been soft.

South Korean consumer sentiment improved to a July reading of 100 after 99 in June.  The year-to-May Filipino trade deficit of $1.28 billion was 36.3% narrower than a year earlier.  Malaysian unemployment held steady at 3.1% in May.  Singapore industrial production was much weaker than assumed in June, falling 3.3% on month and 4.4% on year.

Sweden recorded a SEK 25.1 billion trade surplus in the first half of 2015, 74.3% greater than the SEK 14.4 billion surplus in the first half of 2014.

Spanish producer prices dropped 1.4% in the year to June despite a fifth month-on-month increase in a row.  Finland’s PPI was 1.2% lower than a year earlier in June and recorded the first monthly dip since January.  Italian wage inflation stayed at 1.1% in June.

Austrian industrial production fell 0.8% on month but rose 0.7% on year in May.  Czech business sentiment and consumer confidence both weakened in July.  The Greek debt crisis seems to have impact sentiment in Eastern Europe more than in Euroland.

Scheduled U.S. releases today are new home sales and the preliminary PMI compiled by Market Economics.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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