Financial Markets Don’t Like Strongmen Rulers

November 4, 2016

The Turkish lira fell over 1.0% in response to the arrest of Kurdish lawmakers who oppose the authoritarian Prime Minister Erdogan.

Global stocks are down as U.S. opinion polls show that the possibility of Donald Trump winning the presidency has to be taken seriously.

Share prices in the Pacific Rim fell 1.8% in South Korea, 1.3% in New Zealand and Japan, 0.9% in Australia and 0.6% in India and Indonesia.

Share prices in Europe have so far fallen by 1.2% in Spain, 1.1% in Italy, 0.9% in France and Germany, 1.3% in the U.K. and 0.6% in Greece.

West Texas Intermediate crude oil is unchanged on the day but down sharply on the week at $44.67 per barrel. Gold edged down 0.1% to $1,302.1 per ounce.

The 10-year British gilt yield slumped 7 basis points, and the bund is off a basis points. The 10-year JGB remains 7 bps under zero. The BOJ is targeting such at zero.

The dollar is unchanged against the yen and Aussie dollar, up 0.2% versus the loonie and 0.3% relative to the kiwi, but down 0.2% against sterling and 0.1% vis-a-vis the euro and Swiss franc.

The U.S. and Canada report labor and trade statistics today, but these usually big events are overshadowed by the U.S. election.

Euroland producer prices firmed 0.1% in September, trimming their 12-month decline to 1.5% from 1.9%.

Euroland’s composite and service sector purchasing managers indices improved to 3-month highs of 53.3 and 52.8. The German, Spanish and French service PMIs were also 3-month highs. Italy’s services PMI was at a 2-month high, but Ireland’s sank to a 41-month low.

Japan’s services PMI of 50.5 following two sub-50 readings was at a 3-month high, and its composite PMI of 51.3 was at a 9-month peak.

The quarterly Australian Monetary Policy Statement retained existing growth and inflation forecasts and expressed some concern about potential overheating in the property market.

Australian retail sales rose 0.6% in September after a 0.5% August increase and were 2.8% higher than a year earlier. Sales volume in the third quarter, however, dipped 0.1%.

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

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