Markets Glad All Over

November 22, 2016

Commodities continued to rally strongly overnight.

  • West Texas Intermediate crude oil leaped another 3.9% to $47.49 and is up 9.3% in the past five business sessions.
  • Precious metals and industrial metals are broadly higher. Gold rose 0.6% to $1,217.10 per ounce. Silver and copper climbed even more steeply.

Equities advanced in the Pacific Rim by 1.7% in Hong Kong, 1.2% in Australia, 1.1% in Indonesia, and 0.9% in China and South Korea. Even in Japan, hit by a 7.4 earthquake in the North East, the Nikkei managed to close up 0.3%.

Share prices in Europe have climbed 1.9% in Italy, 1.0% in the U.K., 0.7% in France, 0.6% in Germany, 0.5% in Spain and 0.4% in Greece.

Ten-year sovereign debt yields have pared back the sharp post-U.S. election rise, dropping nine basis points in Italy, eight bps in Spain and Portugal, five bps in the U.K., four bps in France and three bps in Germany and Switzerland. A lower Treasury yield at the open is indicated, while the Japanese JGB is unchanged.

Dollar strength following the U.S. election was also trimmed both against other advanced currencies and emerging market monies. The dollar slipped 0.4% against the Aussie dollar and 0.1% versus the euro, kiwi, yuan and loonie. The U.S. currency sank 0.7% against the Mexican peso and around a full percent relative to the won and rand.

There hasn’t been much data released, but investors await the Richmond Fed manufacturing survey and U.S. existing home sales today as well as FOMC minutes, durable goods orders, new home sales, the FHFA home price index, and weekly jobless insurance claims as well as preliminary manufacturing and service sector purchasing manager surveys for Germany, France and Euroland all due Wednesday before the Thanksgiving holidays in Japan on the 23rd and the United States on the 24th.

The Confederation of British Industries monthly industrial trends index in the U.K. recovered 14 points to a 5-month high in November, continuing a spate of better-than-expected post-Brexit data.

Britain recorded a 4.3 billion pound public sector net borrowing last month, less than half that in September.

Icelandic wage inflation dipped 0.1 percentage point to 10.4% in October, while Irish producer price inflation accelerated to 1.6%. Consumer price inflation in Hong Kong slowed sharply to 1.2% in October.

Consumer confidence weakened this month in both Turkey and Denmark. The preliminary consumer confidence index for the euro area will be reported later today.

Danish retail sales rose 0.8% on month in October but were 0.7% below the level a year earlier.

Finnish unemployment rose 0.4 percentage points to 8.1% last month, and South Africa’s jobless rate increased 0.5 percentage points in the third quarter to 27.1%.

Switzerland’s trade surplus narrowed 38% on month to CHF 2.678 billion in October.

Japanese department store sales were 3.9% lower than a year earlier in October, a smaller on-year drop than seen in either August or September. Tokyo department store sales fell 4.4% on year.

Hungary’s central bank, whose key interest rate is just 0.90%, is holding a monetary policy meeting today.

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



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