Equities Holding Friday-Monday Gains So Far

October 6, 2015

The dollar has lost 0.4% against the Australian dollar, 0.3% versus the euro, 0.2% vis-a-vis sterling, and 0.1% against the yen and Swissie.  The dollar edged 0.1% higher relative to the kiwi and yuan.  China’s currency has pulled ahead of the yen into fourth place among most used monies around the world.

Japan’s Nikkei closed higher by 1.0%.  China continues to observe National Golden Week holiday.  Other stock markets around the Pacific Rim rose 2.4% in Indonesia, 1.6% in Singapore, 0.8% in New Zealand, 0.6% in South Korea and India, 0.5% in Taiwan, and 0.3% in Australia.  The German Dax and Paris Cac are 0.4% higher,  Stocks are up 0.3% in Switzerland and 0.2% in Spain but down 0.4% in Greece and 0.2% in Britain.

Among commodities, gold has edged 0.2% higher to $1,137.86 per ounce, and WTI oil dipped 0.1% to $46.13 per barrel.

Ten-year British gilt and Japanese JGB yields rose two and one basis points, while the comparable German bund yield is a basis point lower.

The biggest disappointment of the day comes from German industrial orders which sank 1.8% in August on top of a 2.2% drop in July, which was revised from minus 1.4% estimated initially.   Analysts had projected a moderate on-month rise for August.  Now the July-August level is 2.0% lower than the 2Q mean, which had increased 2.9% from 1Q.  Between July and August, orders fell 2.8% for capital goods, 1.5% for consumer goods and 0.4% for producer goods.  Domestic demand dropped by 2.6%, while foreign orders declined 1.2% on top of a 6.1% plunge in July.

Key interest rates at two central banks were left unchanged as analysts were anticipating.

  • The Australia Official Cash Rate stays at a record low of 2.0%, the level since 25-basis point cuts in February and March of this year.
  • Poland’s seven-day reference rate remains at 1.5%.  It’s prior change also was made in March, a cut then of 50 basis points.

More purchasing manager survey results for September were reported.

  • Euroland’s retail PMI rose half a point to 51.9.  A 54.2 reading in July had been indicated the fastest growth in 54 months.  September saw the second fastest pace in that span. 
  • Germany’s retail PMI slid 0.7 points to 54.0, indicating the second slowdown of retail activity in a row.
  • France’s retail PMI of 49.5 implies mild contraction.
  • Italy’s retail PMI jumped 3.0 points to a 68-month high of 51.7.
  • Germany’s construction PMI rebounded from a 7-month low of 50.3 in August to a 68-month high of 52.4 last month.
  • India’s composite PMI printed lower at 51.5, connoting the slowest expansion of operating conditions since June.  The services PMI of 51.3 was a half point less than August’s reading but a half point above July’s.
  • Hong Kong’s private purchasing managers index bounced above August’s 76-month low of 44.4 to a reading in September of 45.7, still indicating profound weakness with the sharpest contraction of exports to Mainland China since November 2008.  The 46.1 average score in 3Q was the weakest quarter since the spring of 2009.

Swiss consumer price inflation remained at negative 1.4% in September, its lowest level otherwise since July 1959.

Filipino producer price deflation swelled to 8.0% in August.  In the year to July, the PPI had fallen 6.8%.  An article in Monday’s Financial Times had highlighted the problem of significant PPI deflation that’s rampant in Asia.  The article flags job losses and diminishing consumer demand and immediate consequences of the deflation and warns that such threatens to intensify the slowdown in the global economy.  The Philippines also reported a 0.2% monthly drop in consumer prices during September, cutting the 12-month rate of rise in the CPI to just 0.4%.

Cypriot consumer prices fell 1.9% in the year to September, the same on-year decline as in August.

One group of economies where inflation is actually rising are emerging markets that have experienced rapid currency depreciation.  Colombian consumer prices rose 0.5% in September, swelling the 12-month increase to 5.35% from 4.74% in August.

British house price inflation according to the Halifax index slowed to 8.6% in the third quarter from 9.6% in 2Q.  The index dropped 0.9% on month in September.

New car registrations in the U.K., a gauge of sales, were 8.6% greater in September than a year earlier, down from a 9.6% gain in August and 12.9% in June.

U.S. trade figures for August due today are likely to reveal a yawning deficit.  The dollar’s strength since May 2014 is weighing increasingly on U.S. net exports and, in turn, on GDP growth.  Canada also will be releasing trade data as well as the IVEY-PMI index.  Other U.S. releases today are the IBD/TIPP optimism index and weekly chain store sales.

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

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