Markets Tentatively Stabilize after Chinese Regulatory Change
January 8, 2016
After the elimination of automatic circuit breakers, which had limited daily declines in Chinese share prices to 7%, China’s stock market rebounded 2.0% on Friday, and the yuan nudged up 0.2% against the dollar.
Elsewhere, stocks rose 0.9% in Hong Kong, 0.7% in South Korea, 0.8% in Singapore and 0.4% in Indonesia but fell 0.4% in Japan and Australia and 0.9% in New Zealand. Stocks are narrowly mixed as well in Europe, awaiting the release of U.S. labor statistics at 08:30 EST (13:30 GMT). Equities have risen 0.4% in the U.K., 0.3% in Germany, 0.2% in Italy and 0.1% in Spain. They are unchanged in France but down 0.7% in Greece and 0.2% in Switzerland.
The dollar recovered 0.6% against the euro, yen and Swissie, 0.4% versus the kiwi, and 0.1% vis-a-vis the loonie. The Aussie dollar is unchanged.
Ten-year sovereign debt yields have fallen two basis points in Japan and a basis point each in the U.K. and Germany, but the futures indication on the 10-year Treasury shows a marginal uptick in yield.
Gold settled back 0.9% to $1,098.93 per ounce, and WTI oil ticked up 0.2% to $33.33 per barrel.
Citing low inflation, Chicago Fed President Evans said he does not share the preference of some of his FOMC colleagues for as many as four interest rate hikes this year.
Industrial production in November was reported in a number of countries.
- Such dropped 0.3% on month and was only 0.1% higher than a year earlier in Germany. These results were weaker than forecast.
- French output slumped 0.9% on month and posted a smaller 2.8% 12-month rate of increase.
- Greek production grew 2.2% on month and 1.8% on year.
- Turkish output declined 0.9% on month, cutting the 12-month increase to 3.5%.
- Dutch production advanced 1.0% from October and 2.3% from a year earlier.
- Norwegian output dropped 0.8% on month and 1.8% versus November 2014.
- Swedish production increased 1.4% on month and 6.2% on year.
- Output in Ireland fell 0.6% between October and November but was 11.3% greater than in November 2014.
- Finnish output slid 0.5% on month and 1.7% on year.
- In Hungary, production was 1.4% lower than a year before despite a 7.0% climb above October’s level.
- Czech production dropped 1.2% on month but rose 3.2% on year.
Japanese reserves grew $206 million last month but recorded a $27.3 billion decline compared to the end of 2014.
Labor cash earnings in Japan were unchanged in November from a year earlier. Upcoming annual wage talks hold one of the main keys to whether the Bank of Japan further augments monetary stimulus.
Japan’s leading, coincident, and lagging indices of economic indicators were all lower in November compared to October levels.
Australian retail sales increased 0.4% on month and 4.1% on year in November. That was the third 0.4% monthly rise in the past four reported months.
Australia’s construction purchasing managers index fell 3.9 points to a six-month low in December of 46.8. Such had been above the 50 no change threshold in the previous four months.
Switzerland reported an unchanged 3.4% jobless rate in December. Swiss consumer prices fell 0.4% on month and 1.3% on year in December, which was more deflationary than forecast.
Brazilian CPI inflation of 10.67% last month was up from 10.48% in November and 6.4% a year earlier. Further acceleration is likely in light of the weak real.
The German current account surplus increased to EUR 24.7 billion in November from 22.9 billion euros in October and EUR 18.5 billion in November 2014. The widening reflected services, as merchandise trade recorded smaller surpluses of 22.7 billion euros unadjusted and EUR 19.7 billion euros seasonally adjusted. Exports grew 0.4% on month, but imports went up 1.6%.
The French trade deficit of EUR 4.63 billion in November was a tad larger than October’s shortfall.
The British goods and services deficit in November of GBP 3.17 billion and goods only deficit of GBP 10.642 billion were smaller than October’s imbalances but not as low as forecasters had predicted.
Canada, like the United States, releases unemployment, employment and other labor statistics today. Canada also reports housing starts and building permits, while Mexico releases both CPI and PPI figures.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese circuit breakers, foreign exchange, German industrial production and trade
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