Investor Resilience in the Face of Weak German, British and Japanese Data and a 3% Drop in Oil

January 25, 2016

The Japanese yen rose 0.4% against the dollar, and the Nikkei-225 index of Japanese share prices climbed 0.9% in spite of customs clearance data showing an 18.0% on-year plunge in imports and a 0.8% drop in exports.  From November to December, exports dived 3.8%, and imports plunged 4.0%.  The trade balance was in surplus by JPY 140 billion.  The seasonally adjusted surplus was 37 billion yen, up from 22 billion yen in November.  There was a deficit of JPY 2.832 trillion in 2015, down from JPY 12.816 trillion in 2014 and JPY 11.468 trillion in 2013.  Exports advanced 3.5% in 2015, while imports fell 8.7%.

The euro firmed 0.2% against the dollar.  The German Dax edged up 0.1% despite announced results of the German IFO Institute’s January report on Germany’s business climate, which unexpectedly slumped 1.3 points to 107.3, an 11-month low.  While current conditions edged off just 0.3 points to a 10-month low nevertheless, the serious weakness occurred in expectations, which dropped 2.2 points to a 5-month low of 102.4.  IFO officials said Germany had started 2016 with “an unpleasant surprise.”

Japan’s index of leading economic indicators for November was revised 0.4 points lower to 103.5, a two-month low.  The index of coincident indicators printed at a 2-month low of 111.9, and officials maintained a “weakening” assessment of the COI’s trend.

Sterling gained 0.4% on the dollar, and the British Ftse is unchanged.  The Confederation of British Industries released results of its monthly industrial trends.  The index declined 8 points to a 3-month low of -15 in January.

West Texas Intermediate oil fell 3.1% to $31.20 per barrel.  Comex gold rose 0.6% to $1,104.41 per troy ounce.

Among 10-year sovereign debt yields, the British gilt and Japanese JGB slipped two and one basis points.  The German bund is unchanged, and futures indications point to a somewhat lower U.S. Treasury yield.

In other stock market action, share prices climbed 1.8% in Australia and Taiwan, 1.5% in Hong Kong, 0.8% in China and New Zealand, 1.1% in Indonesia and 0.7% in South Korea.  Equities have so far risen 1.4% in Greece, fallen 0.8% in Spain and 0.7% in Italy and are unchanged in France.

The yuan is steady against the dollar, which otherwise has risen 0.4% against the Aussie dollar, 0.3% against the loonie and 0.2% versus the kiwi but eased 0.1% vis-a-vis the Swiss franc.

Australia’s business confidition index, compiled by NAB, dropped 3 points to 7 in December, lowest since July.  Business confidence fell two points to +3, a 2-month low.

Singaporean consumer prices fell 0.6% between end-2014 and end-2015.

Finnish producer prices declined 2.6% between end-2014 and end-2015.

Spanish producer prices fell 2.2% in the 12 months to December.

Austrian industrial production increased 2.5% on year in November.

Czech economic sentiment improved to a 79-month high in January.  Business sentiment rose 2.0 point to 15.3, and consumer confidence rose 2.5 points to +7.5.

In the year to November, Italian industrial orders increased 12.1%, but retail sales edged down 0.1%.

The Dallas Fed manufacturing index will be reported today.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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