Oil and European Share Prices Show Firmer Tone

September 28, 2016

This has been another day with comparatively few releases of economic data — mostly some sentiment measures.

  • Japanese small business sentiment recovered 1.4 points to a 2-month high of 47.7 in September but remains mired below the 50 threshold.
  • Consumer confidence in China according to the Westpac gauge rebounded 3.7 points to a 3-month high of 115.2 in September after a 2.5-point drop in August.
  • German consumer confidence in October returned to August’s level of 10.0 from a September’s recent peak of 10.2. Such ended 2015 with a reading of 9.5.
  • French consumer confidence remained level at 97 in September, matching readings in August and June. Such had been 96 in July and at 98 in May.
  • Italian consumer confidence slipped back 0.4 points to 108.7 in September, bringing the cumulative drop since 112.5 in May to 3.8 points. Manufacturing confidence in Italy, however, improved 0.8 points after a 1.8-point decline in August.
  • Sweden’s economic tendency index rose 2.9 points to a 5-month high of 103.0 in September. Both consumer confidence and manufacturing sentiment advanced strongly.

Today’s market focus is preoccupied with other matters. One is Federal Reserve, which got slammed by Trump in Monday night’s debate. Chair Janet Yellen testifies today before the House Financial Services Committee presumably on banking regulation. She’ll probably be asked also questions on monetary policy and Trump’s accusation of politicized monetary policy. Other Fed officials speaking publicly today include Bullard, Evans, Mester and George.

The Fed is not the only central bank in the news. ECB President Draghi appears before Germany’s parliament. The Bank of England’s Governor Carney spoke about current economic uncertainties, and Deputy Governor Shafik warned that more monetary stimulus in the future is probable.

Yet another development being watched is an OPEC meeting in Algiers. The cartel has had trouble agreeing to production limits that would stabilize the price, but there is some hope that enough progress may be reported to keep a deal before yearend possible. West Texas Intermediate oil rose 1.7% today and moved above $45.00 to $45.41 per barrel. Comex gold is little changed at $1,329.20 per troy ounce.

The U.S. dollar’s biggest move overnight versus other major currencies has been a 0.8% advance relative to the kiwi. The greenback otherwise is unchanged against the Aussie dollar, sterling and the loonie, 0.3% higher relative to the yen, and up 0.1% vis-a-vis the euro, Swiss franc and yuan.

In Pacific Rim stock markets, share prices fell 1.3% in Japan, 1.0% in Taiwan, 0.5% in South Korea and 0.3% in China but rose 0.5% in New Zealand.

Stock market tone improved in Europe, however, supported by a partial rebound in the recently batter Deutche Bank price. The German Dax and Paris Cac are each 1.0% higher. Greek stocks rose 1.2%, while markets are up by 0.7% in London and Madrid, and 0.8% in Italy.

While the 10-year Japanese JGB yield dropped 2 basis points to a one-month low, the comparable British gilt and German bund yields are up 3 and 2 basis points.

The UBS Swiss consumption indicator printed higher at 1.53 in August after an upwardly revised score of 1.45 in July and the best result since January.

Irish retail sales rose 5.2% in the year to August, less than its on-year increase of 6.3% the month before.

Hourly wage growth in Italy was unchanged on month in August and 0.6% when compared to a year earlier.

U.S. mortgage applications fell 0.7% last week despite a 4-basis point decline in the 30-year fixed mortgage rate to 3.66%.

U.S. durable goods orders will be reported later this morning.  The end of the calendar quarter and midpoint of Japan’s fiscal year is just two days away.

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

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