Softer Stocks, Oil, and Yen on Halloween
October 31, 2016
Share prices fell 0.6% in South Korea, 0.2% in Taiwan, and 0.1% in Japan and Singapore. Sharper equities in Europe show markets already down 0.8% in France and Italy, 0.6% in Spain and Switzerland, 0.5% in Greece, and 0.4% in the U.K. and Germany.
OPEC minister failed over the weekend to secure any agreement on curbing production, and WTI crude fell a further 0.5% to $41.48 per barrel, which is near a one-month low. The ruble declined in sympathy.
The dollar has strengthened 1.2% against the yen after weaker-than-expected Japanese retail sales and industrial production were reported. Total sales were flat on month after falling 1.2% in August and recorded a 1.9% drop in the year to September. Large-store sales decreased 3.2% on year in September and 2.2% between 3Q15 and 3Q16. Industrial production stagnated in September, slashing the 12-month increase to 0.9% and resulting in a third-quarter on-year uptick of just 0.2%. Motor vehicle production posted a smaller 1.4% on-year rise after an 8.8% advance in August.
Japanese housing starts and construction orders recorded respectable on-year advances of 10.0% and 16.3% but were overshadowed by the aforementioned disappointing retail sales and industrial production.
The dollar also rose 0.3% against the euro and sterling, 0.2% relative to the kiwi, and 0.1% vis-a-vis the Swiss franc, but the U.S. currency edged down 0.1% against the loonie, Aussie dollar and yuan.
Among emerging market currencies, a nearly 2% jump in the rand followed news that fraud charges were dropped against South Africa’s finance minister. But the won depreciated, and the Mexican peso only recouped part of its initial losses from the reopening of the FBI’s investigation of Clinton’s emails.
The ten-year British gilt yield slipped two basis points, while its German and Japanese counterparts are steady.
The flash euro area GDP growth rate has been estimated at 0.3% from 2Q and 1.6% compared to the third quarter of 2015. Both changes are the same as recorded during the second quarter of this year.
Preliminary consumer price data for Euroland also were reported. These showed a higher total inflation rate of 0.5% but a lower non-energy inflation pace of 0.7% in October compared to 0.8% in September, 0.9% in August, 1.0% in July and 1.2% in October 2015. Core inflation, which excludes food as well as energy, was unchanged at 0.8% for a third straight month but down from 1.1% in October 2015.
German retail sales volume plunged 1.4% in September, the biggest month on month drop in two years. Sales edged just 0.4% higher on year. Sales in 3Q were unchanged from 2Q, and September’s level already was 1.0% below the 3Q average.
Italian consumer and producer prices were unchanged on month in October and September, respectively. Their 12-month reductions were 0.1% and 0.7%.
Spanish retail sales growth dipped 0.1 percentage point to 3.2% in September, but the Spanish current account surplus in August was over 65% greater than a year earlier.
Greek retail sales fell 2.6% on year and 4.4% on month in August.
Icelandic producer prices in September recorded decreases of 2.0% from August and 5.5% on year.
South Korean industrial production in September was 2.0% weaker than a year earlier. Retail sales in the same span edged up only 0.5%. Malaysian producer price inflation moved above zero to 0.4% in October.
Australian private credit growth dipped to 5.4% in September from 5.8% in the year to August. The ANZ activity index and gauge of Australian business confidence each weakened in October.
New Zealand building permits only recovered 0.2% in September from August’s drop of 1.5%. New Zealand M3 money growth decelerated in September to a 12-month 4.8% advance.
Growth in South African M3 money and domestic credit accelerated in September to 5.6% and 7.2%, respectively.
Scheduled U.S. data today include personal income, personal spending, the PCE price deflator, the Dallas Fed manufacturing index, and the Chicago regional purchasing managers index. Canada releases producer prices. Colombia will announce its latest monetary policy decision.
The BOJ began a two-day policy meeting that will culminate tomorrow in a statement, a Kuroda press conference and publication of a new Outlook of Prices and growth. The FOMC releases a statement on Wednesday but has no press conference planned.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Ezone CPI and GDP, German retail sales, Japanese industrial production and retail sales
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