Stocks, Euro, and Several Metals Fall as Week Begins

March 7, 2016

The dollar has strengthened 0.7% against the Swiss franc and kiwi, 0.4% relative to the euro and sterling, and 0.2% vis-a-vis the Aussie dollar.  The yen is up 0.3% against the dollar.  Offshore yuan weakened relative to the officials in-country quote, which is unchanged against the dollar.

Stocks fell 0.6% in Japan, 0.5% in Singapore, 0.4% in Indoneisa but firmed 0.8% in China and 0.6% in Hong Kong.  Share prices in Europe are down across the board, with losses thus far of 1.6% in Italy, 1.2% in Spain, 1.1% in the U.K., 1.0% in Greece and France, 0.9% in Germany and 0.4% in Switzerland.

Gold is 0.9% stronger, but copper, zinc and aluminum are among many metals that lost ground.  West Texas Intermediate crude oil climbed 1.6% to $36.49 per barrel.

10-year sovereign debt yields fell by three basis points in Japan, Germany and Britain.

Markets greeted news of a smaller $28.6 billion drop during February in Chinese reserves to $3.2 trillion with doubt.  Such had dropped by $99.5 billion in January and $107.9 billion in December, reflecting massive capital outflows.

At China’s 12th National People’s Congress over the weekend, a larger planned fiscal deficit was unveiled, and officials set a 2016 growth goal of 6.5-7.0%, down from 6.9% actually recorded last year.  Officials seek average growth of no less than 6.5% during the coming five years.  Fat chance.

Japan’s index of leading economic indicators declined to a 13-month low in January.  Although the index of coincident economic indicators rebounded to a 9-month high, officials continued to label the trend “weakening.”

Bank of Japan Governor Kuroda gave a speech, proclaiming no inclination to ease further in the near term and endorsing plans for a sales tax hike in 2017.  Kuroda called this a wait and see period to monitor the effects of the recently introduced negative interest rate and implied that quantitative easing would continued at the current pace of JPY 80 trillion per annum.  The ECB Governing Council is widely expected to unveil further stimulus thus Thursday.

Australia’s construction purchasing managers index slipped 0.2 points to a reading of 46.1 in February, weakest in twelve months.  Last year’s high of 53.8 occurred in August.  Aussie job ads fell 1.2% last month.

German industrial orders, down 0.1% in January from February but up 1.1% on year, was a tad better than forecast but dampened by a 4.0% on-month decline in demand for producer goods.  Domestic orders fell 1.6%, while foreign orders went up 1.0% on month.

Sentix, a gauge of investor sentiment toward the eurozone, dropped half a point to 5.5 in March after readings of 6.0 in February, 9.6 in January and 15.7 in December.

Italian producer prices fell 0.7% in December and 2.5% from the end of 2014.  Austrian wholesale prices posted a 5.3% on-year decline in February.

In the year to January, industrial production rose 2.2% in Hungary and 1.4% in Denmark but fell 0.2% in Norway.

Over the weekend, Trump won primaries in Kentucky and Louisiana, while Cruz took Kansas and Maine.  Trump leads in the delegate count, 384 to Cruz’ 300.  Clinton won Louisiana, while Sanders won in Maine, Nebraska and Kansas.  Clinton leads the delegate count 1,129 to 498.

U.S. consumer credit and the Fed’s index of labor market conditions will be reported today, and Fed Vice Chair Stanley Fisher speaks publicly.

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

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