Enormous Rebound in Asian Equities

September 9, 2015

Amid hopeful speculation of new Chinese fiscal stimulus, the Shanghai Composite index closed 2.3%, and other stock markets in the region recorded even larger gains.  Japan’s Nikkei jumped 1,343 points or 7.7%, the largest percentage daily advance since October 28, 2008, which was a corrective move in an otherwise bear market.  Equities also advanced 4.2% in Hong Kong, 3.6% in Taiwan, 3.0% in South Korea, 2.1% in Australia, 1.4% in Singapore, 1.6% in India and 0.9% in New Zealand where the central bank is holding policy meeting.

Stock market gains thus far in Europe amount to 2.5% in France, 2.4% in Spain, 1.7% in Germany, 1.6% in Greece, 1.8% in Italy, 1.9% in Switzerland but just 0.2% in Britain where poorer-than-expected trade and industrial output data were released.

The dollar is mixed, with overnight looses of 0.5% against the kiwi and 0.3% versus the Swiss franc and Aussie dollar but advances of 0.6% relative to the yen, 0.4% against the euro, 0.2% vis-a-vis the loonie and sterling and 0.1% relative to the yuan.

Ten-year sovereign debt yields are up two basis points in Germany and a basis point in Britain.  The 10-year Japanese JGB is steady at 0.36%.

West Texas Intermediate oil fell by 0.7% overnight to $45.62 per barrel.  Comex gold edged down 0.1% to $1,120.59 per ounce.

Japanese M2 money growth accelerated further to 4.2% on year in August from 4.0% in July, 3.9% in 2Q and 3.5% in 1Q.  Broad liquidity growth also picked up in the most recent reported month, reaching 4.7% versus 3.4% in calendar 2014.  But a Bank of Japan Board member, Sayuri Shirai, warned against cutting the 0.1% short-term interest rate further.

Japanese consumer confidence rebounded from a 40.3 reading in July to 41.7 in August.  41.7 was also June’s score.  Other than July, consumer confidence has ranged narrowly since March between 41.4 and 41.7.  Such levels reflect considerable pessimism.

Japanese machine tool orders posted a 16.5% on-year decline in August, their first year-over-year decrease of 2015.  The high point in February showed a 28.8% on-year advance.

The British merchandise trade deficit jumped to GBP 11.082 billion in July, the largest shortfall in a year, from GBP 8.507 billion in June.  Exports sank 5.2% on month, while imports firmed 0.6%.  The total goods and services deficit climbed slightly over fourfold on month to GBP 3.37 billion, a four-month high.

British industrial production posted a second consecutive 0.4% monthly drop in July and was merely 0.8% greater than a year before.  Factory output dropped by 0.8% on month and 0.5% on year in July.

British shop prices fell 1.4% in the year to August, the same year-over-year deflationary pace as recorded in July.

According to the Westpac measure, Australian consumer sentiment dived 5.6% in September after rising 7.8% in August.

Home loans in Australia edged 0.3% higher in July, only about half as much as forecast.

Greek consumer prices recorded an on-year decline in August of 1.5% according to national data but were 0.4% lower than a year earlier on a harmonized basis with other regional CPI figures.  Greek industrial output declined 1.6% between July 2014 and July 2015. 

Czech on-year CPI inflation of 0.3% in August was down from 0.5% in July and the lowest since March.

Dutch factory output slid 0.3% in July and recorded a much slower 12-month 0.6% rate of increase.

South Korean unemployment fell to 3.6% in August from 3.7% in July and 3.9% in June.

The Bank of Canada announces its latest interest rate decision at 10:00 EDT.  The Board lowered the overnight target rate by 25 basis points at the prior meeting in July.  Canadian real GDP contracted in both the first and second quarters but performed better in June according to monthly figures.

U.S. mortgage applications tumbled 6.2% last week.  The 30-year fixed mortgage rate edged two basis points higher to 4.10%.

Canadian housing starts and the U.S. Labor Department’s JOLTS survey of job separations and hires get reported today.

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

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