U.S. Restraints on Immigration Rattle Markets

January 30, 2017

Numerous Asian markets from China to South Korea, Taiwan, Singapore, Malaysia, and Hong Kong were closed for the Lunar New Year (of the Rooster).

There’s been an uproar over President Trumps executive orders concerning immigration banning visitors from many Islamic countries but conspicuously not Saudi Arabia.

Stocks fell 0.5% overnight in Japan, 0.9% in Australia, 0.8% in New Zealand, and are thus far down by 3.1% in Greece, 1.9% in Italy, 1.0% in Spain, 0.9% in France, and 0.7% in Germany and Great Britain.

10-year sovereign debt yields jumped 9 basis points in Italy and 5 bps in Spain but are down a basis point in both the U.K. and Germany.

On flight to safety forces, the dollar has advanced 0.5% against the euro, 0.3% relative to the Swiss franc, 0.4% versus sterling and 0.2% against the Aussie and New Zealand dollars. But the dollar slipped 0.4% against the yen.

West Texas Intermediate oil and Comex gold edged up 0.2% and 0.1% to $53.27 per barrel and $1,192 per troy ounce.

Reporting German states from North Rhine Westphalia, Brandenburg, Bavaria, Saxony and Hesse revealed on-month consumer price declines in January but a further acceleration in on-year comparisons, which exceeded 2.0% in three of those instances.

Economic sentiment in the euro zone climbed 0.4 points to a higher-than-expected January reading of 108.2. That’s up from 102.8 in March 2016. Consumer sentiment printed 0.4 points higher at -4.7. Industrial confidence climbed from zero to 0.8. Service sector confidence was 0.4 points higher at 13.5, but retail sentiment dropped 0.9 points to 2.4. Construction also fell to a 2-month low of -12.8. The economic climate index, 0.77, matched December’s reading, which had been at the strongest level since mid-2011.

Japanese retail sales slumped 1.7% on month in December, the worst outcome since last February. Retail sales were 0.6% higher in December and 0.7% greater in the fourth quarter than year-earlier levels. Large-store retail sales posted a larger 1.3% on-year decline in December. A slew of other Japanese data are due Thursday including labor market statistics, industrial production, small business sentiment, and housing starts.

Austria’s manufacturing purchasing managers index improved a whole point to a 70-month high of 57.3 in January. Austrian producer prices were 0.8% higher than a year earlier in December after a 0.2% on-year dip in November.

Portuguese consumer confidence and business sentiment respectively rose by 2.0 points and 0.1 points to -6.2 and +1.2 in January. Between end-2015 and end-2016, Portugal’s industrial production and retail sales rose by 5.1% and 3.9%.

The Swiss index of leading economic indicators fell back to 101.7 in January from 102.1 in December and 102.2 in November.

Spanish real GDP grew 0.7% last quarter. On-year growth slipped to 3.0% from 3.2% the quarter before. Spain’s economy also expanded 3.2% on average in both 2015 and 2016.

Greek retail sales growth accelerated to 3.6% in November, and producer prices posted a 5.1% increase in the 12 months to December.

An ECB Governing Council member said interest rates will not be raised until well after quantitative stimulus has been phased out.

Norwegian retail sales were 2.2% lower in December than a year before.

New Zealand posted trade deficits of NZD 41 million in December, NZD 1.586 billion in the fourth quarter, and NZD 3.198 billion in 2016, which was considerably wider than the NZD 3.537 billion deficit in 2015.

A major focus this week will be the central bank policy meetings in Japan (announcement due tomorrow along with revised forecasts), the United States (due Wednesday with no press conference scheduled) and the Bank of England (due Thursday and to be accompanied by a new quarterly Inflation Report).

Scheduled U.S. data to be released today are the Dallas Fed manufacturing index, personal income and spending, and pending home sales.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

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