Nervous Market Undertone

October 28, 2016

With the fast-approaching monthend, the usual heavy flow of data releases is being digested. Investors are in a guarded mood with just over a week left before the U.S. election. The Fed is widely expected to raise interest rates soon. The BOJ, meeting Monday and Tuesday is not expected to modify its stance. The first look at U.S. third-quarter GDP heads this day’s news.

The dollar has risen 0.4% against sterling, 0.2% versus the Aussie dollar and 0.1% relative to the yen but fallen 0.2% vis-a-vis the euro, 0.3% against the kiwi and 0.1% versus the yuan.

Stocks in the Pacific Basin fell 0.9% in Hong Kong, 0.5% in Singapore, 0.3% in China, 0.2% in Australia and 0.1% in New Zealand and Indonesia. But Japan’s Nikkei advanced 0.6%.

Stocks in Europe are down 0.8% in Italy, 0.2% in Germany and Spain and 0.1% in Switzerland and Greece. The Paris Cac and British Ftse have risen 0.3% and 0.2%.

10-year British gilt and Japanese JGB yields firmed a basis point overnight.

WTI oil is down 0.8% at $49.34 per barrel. Comex gold is off 0.2% at $1,267.20 per troy ounce.

The Bank of Russia left its key rate at 10.0%. At the prior meeting, officials cut the rate by 50 basis points.

Japanese core inflation remained at negative 0.5% in September, but Tokyo total inflation rose to +0.1% in October from -0.5% the month before.

Japan’s jobless rate dipped 0.1 percentage point to 3.0% in September, but on-year employment growth slowed to 0.9% from 1.3%.

Real household spending in Japan rose 2.8% on month in September but recorded a 2.1% drop from a year earlier.

The growth of Australian GDP in fiscal 2015/16 has been revised downward to 2.8% from 2.9%.

Australian PPI inflation was just 0.5% last quarter, half the on-year pace in 2Q and less than a third as much as the 1.7% posted in the year to 3Q15.

Euroland economic sentiment leaped 1.4 points to a 10-month high of 106.3 in October, easily exceeding analyst expectations. Confidence in industry and construction were at their best levels in over a year.

Switzerland’s index of leading economic indicators printed at 104.7 in October, 3.1% better than in September and the best score since January 2014.

French GDP growth last quarter was only 0.2% after a 0.1% 2Q on 1Q drop. GDP was 1.1% higher than a year earlier. Net exports exerted a 0.5 percentage point drag in the latest quarter, and personal consumption was flat.

German CPI inflation accelerated in October according to six reporting states.

French CPI inflation in October stayed at 0.4%, and domestic producer prices recorded a 1.7% drop from a year earlier.

Austria’s manufacturing purchasing managers index rose 0.4 points to a 4-month high of 53.9 in October.

Portuguese retail sales and industrial production increased 3.1% and 1.8% in the year to September, while consumer confidence improved in Portugal in October to a reading of negative 10.7 from -11.3 in September and -12.7 in August.

Swedish and Norwegian retail sales respectively rose 0.6% and fell 0.6% in the year to September. Norwegian unemployment of 2.8% in September was the lowest in 17 months.

Spanish GDP grew only 0.7% on quarter in 3Q, least seven quarters but still managed to record an on-year advance of 3.2%. Spanish consumer price inflation, like German CPI, accelerated in October to 0.7% according to national data and 0.3% on a harmonized basis.

Singapore’s 4.1% on-year drop in producer prices was the smallest decline since May 2015.

Besides GDP, the U.S. releases the quarterly employment cost index and the U. Michigan consumer sentiment index today.

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

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