Market Unease at Start of Fresh Week

September 28, 2015

A fresh wave of risk aversion swept over European stock markets, where share prices are down so far by 2.2% in France, 2.3% in Greece, 1.8% in Italy, 1.5% in Germany but just 0.4% in Great Britain and Switzerland.

Japan’s Nikkei tumbled 1.3%, and stocks dropped by 2.1% in Indonesia, 1.4% in Singapore and 1.0% in India.  Minuscule upticks occurred in China and Hong Kong, however, even though China continues to be a major source of international investor unease.

Ten-year sovereign debt yields are down six basis points in the U.K. and two bps in Germany, and a decline is also indicated in U.S. futures. 

Among commodities, West Texas Intermediate crude oil has declined 1.3% to $45.11 per barrel, and Comex gold is 1.1% weaker at $1,133.47 per troy ounce.

The dollar rose overnight by 0.4% against the kiwi, 0.3% versus the Australian dollar and euro, and 0.2% vis-a-vis the loonie and Swiss franc.  The U.S. currency fell 0.4% relative to the yen and is unchanged against sterling.

The on-year contraction in Chinese corporate earnings intensified to 8.8% in August, most since 2011.  Such had fallen 2.9% in the year to July.

IMF Director Lagarde said the next World Economic Outlook update, due October 6, is likely to embody a softer global growth forecast.

Prosecutors in Germany have initiated a criminal investigation against VW, adding to mistrust of corporate governance.

The front-running Republican candidate for U.S. president, Donald Trump, gave an interview of 60 Minutes, detailing a package of planned policy changes that looks too good to be true.  His blustery trust me message sounded like a manic bi-polar patient.

Federal Reserve officials, including the Chicago, San Francisco, and New York district presidents, Evans, Williams and Dudley, will be speaking publicly today.

Japan’s index of leading economic indicators (LEI) printed at a 4-month low of 105 according to final July figures.  The index of coincident economic indicators (COI) slid to a 2-month low and was designated as being on a “weakening” trend by officials for a third straight month.  The diffusion representation of these two measures were respectively at nine- and 11-month lows in July.

U.S. Speaker of the House Boehner, who was unable to impose party discipline, resigned on Friday.  Republican lawmakers once again are threatening to close the government over a specific issue.  This time it is abortion.

The Central Bank of Colombia on Friday hiked its benchmark interest rate for the first time since August 2014.  The new 4.75% rate level is the highest since late 2012.  The tightening of monetary policy despite weak economic growth was a response to above-target inflation fed by a sharp depreciation of the peso this year.

The Bank of Israel’s monthly monetary policy decision is due today.

Swedish retail sales posted an inflation-adjusted on-year increase of only 1.0% in August, down from 6.1% in July and 4.1% in June.  It was the weakest on-year advance since October 2012.  Sweden’s seasonally adjusted trade surplus narrowed to SEK 0.4 billion in August from SEK 0.9 billion in July and SEK 1.6 billion in June.  The unadjusted trade balance recorded an SEK 3.6 billion deficit, twelve times wider than June’s gap but similar to the year earlier deficit of SEK 3.7 billion.

Thailand’s trade surplus narrowed 6.4% on month to $721 million in August.  Exports were 6.7% weaker than a year earlier.

Italian business confidence improved 1.5 points to a better-than-forecast reading of 104.2 in September.  Consumer sentiment, up 3.4 points to 112.7, also surprised analysts with its unexpected strengthening.

Irish retail sales fell on month and to a 9.3% 12-month rate of increase in August from 10.2% in July.

Finnish consumer sentiment sank to a 10-month low of 4.2 in September from  an 8.3 reading in August.  Industrial confidence dropped 3 points to -10, its first decline since June.

The United States releases personal income and spending, a report that also includes the closely watched personal consumption price deflator.  U.S. pending home sales and the Dallas Fed manufacturing index are due as well. 

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

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