Chinese Price Data Dampen Market Risk Aversion

April 11, 2016

Chinese share prices recovered 1.6% after a tough week.

Comex gold advanced 0.7% to $1,249.87, near a three-week high.

West Texas Intermediate crude oil is trading at $39.55 per barrel, just a tad south of the $40 threshold.

The 10-year British gilt yield rose four basis points to 1.40%.  German bunds and Japanese JGBs are steady.

Dollar/yen rebounded 0.2%.  BOJ Governor Kuroda expressed concern about unstable global financial markets and again said the central bank is prepared to unveil additional stimulus if needed.

Progress was said to be made by Italy’s finance ministry and central bank to tackle the problem of bad bank loans.

Chinese producer prices recorded an on-month increase (0.5%) for the first time in 30 months.  The 12-month rate of PPI decline in March, 4.3%, was down from 4.9% in February and 5.9% in the final five months of 2015.  Meanwhile, CPI inflation remained at February’s 20-month peak of 2.3%.  Consumer prices dipped 0.4% on month in March.

Aside from its aforementioned yen relationship, the dollar is down 0.8% against sterling, 0.5% relative to the kiwi, 0.2% versus the Australian dollar, and 0.1% vis-a-vis the loonie.  The U.S. currency is unchanged against the euro and yuan.

Equities closed up 1.4% in India and 0.7% in Hong Kong but fell by 0.4% in Japan and 0.1% in New Zealand, South Korea and Australia.  Stocks in Europe have risen 1.4% in Italy, 1.2% in Spain, 1.0% in Germany, and 0.5% in France but are flat in the U.K. and down 0.3% in Switzerland.  Emerging market bourses improved somewhat.

Japanese core domestic machinery orders relapsed 9.2% in February after jumping 15.0% in January.  Their 12-month chance was a drop of 0.7%.  Machinery orders from the government and abroad posted solid monthly increases of 25.9% and 6.3% in February but were below year-earlier levels by 7.0% and 31.2%. 

The World Bank lowered its 2016-18 growth projections for developing East Asia to 6.3% for 2016 and to 6.2% for 2017 and 2018.

Industrial production growth in Malaysia of 0.9% on month and 3.9% on year in February exceeded expectations.

Home loans in Australia rose 1.5% on month in February following January’s drop of 3.9%.

Italian industrial production dropped 0.6% in February, cutting the 12-month rate of increase to 1.2% and leaving output growth in the three months to February just 0.3% higher than in the prior three months.

Ireland’s construction purchasing managers index fell to a three-month low in March but at 62.3 still reflected very brisk activity.

A number of European economies released price data:

  • In Norway, consumer price inflation picked up slightly to 3.3% overall and in core terms in March, but the 12-month drop in producer prices remained huge at 14.9%.
  • Czech consumer prices dipped 0.1% on month and slowed to a 12-month 0.3% pace.
  • Romanian consumer prices tumbled 3.0% between March 2015 and last month, which was a slightly bigger drop than forecast.
  • Danish consumer prices were unchanged from a year earlier in March and recorded a 0.3% on-year drop in harmonized terms.

The first-quarter U.S. corporate earnings season kicks off later today with Alcoa’s report.

No U.S. macroeconomic data releases are planned.

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

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