Market Jitters as January 20th Nears
January 9, 2017
European share prices have so far today lost 1.6% in Italy, 0.8% in Greece, 0.6% in Spain, 0.5% in Germany, and 0.3% in Switzerland.
Japanese markets were shut for Coming of Age Day. Stocks elsewhere in the Pacific Rim rose 0.9% in Australia and 0.5% in China and New Zealand but fell 0.6% in Indonesia.
10 year German bund and British gilt yields are off two and five basis points.
West Texas Intermediate oil sank 1.9% to $52.96 per barrel. Comex gold is 0.5% firmer at $1,179.70 per ounce.
The dollar advanced 1.0% against sterling to a 10-week high. The pound was depressed after Prime Minister May said disparaged retaining some residual special access to the single market if doing so compromises self-control of immigration.
The dollar advanced more than 1% against the won amid higher tensions between the two Koreas.
The Turkish lira is also weak today as that government mulls constitutional changes.
The dollar is unchanged against the euro and Swissie, 0.2% firmer against the yuan, and up 0.1% relative to the Mexican peso.
Investors are uneasy about the likelihood of radical and broad-based U.S. policy changes during the first 100 days of the Trump Administration. The renown economist, Larry Summers, said financial market deregulation would be hugely dangerous. Trump is thought likely to designate China a currency manipulator and thereby unleash a trade war between the world’s two largest economies. The potential clash was underscored by a top Chinese government advisor saying the yuan has been overvalued for the past 3-4 years.
Data released today do not explain the more jittery tone of markets.
German industrial production rose 0.4% in November, which lifted the 12-month rate of increase to 2.2%.
Germany posted a larger trade surplus of EUR 22.6 billion in November, as exports (+3.9%) and imports (+3.5%) posted sharp month on month rises. The current account surplus of EUR 24.6 billion rebounded from October’s dip to EUR 19.4 billion and was close to the year-earlier surplus of EUR 24.9 billion.
The Sentix gauge of investor sentiment toward the euro area soared 8.2 points to a reading of 18.2 in January, a 17-month high.
The volume of Swiss retail sales recorded the first on-year advance, 0.9% in November, since July 2015.
Australian building permits recovered 7.0% in November, more than had been forecast. The on-year decline imploded from 24% in October to just 4.8%.
Australia’s construction purchasing managers index rose 0.4 points to a 5-month high of 47.0 in December.
British house price inflation according to the Halifax index accelerated to 6.5% in December from 6.0% in November and 5.2% in October.
The Bank of France manufacturing sentiment index increased to 102 in December from 101 in November, 99 in September and October, and 98 in August. Service and construction sector sentiment also ended the year 2-3 points higher than last August. The central bank projects stronger GDP growth in the final quarter than last summer.
Euroland unemployment stayed at 9.8% in November but was 0.7 percentage points lower than a year earlier. Italy’s jobless rate of 11.9%, however, was at its highest level in 17 months.
Chinese international reserves continued to ebb in December, dropping another $41 billion to $3.011 trillion. The large stock of reserves has been cited by those wishing to designate Beijing officials as a “currency manipulator.”
Greek industrial production in November recorded on-year growth of 2.3%.
But Turkish retail sales were 2.0% weaker in November than a year earlier.
U.S. consumer credit data will be reported today. Rosengren and Lockhart, Federal Reserve regional branch presidents, will be speaking publicly today.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.