Better Market Tone as Still No U.S. Reprisal on Syria

April 12, 2018

Never said when an attack on Syria would take place. Could be very soon or not so soon at all.

Trump’s tweeted clarification regarding Syria has dampened the perceived immediacy of a geopolitical meltdown. Stocks in response have trimmed yesterday’s losses.

Euro area industrial production, which had been forecast to hold generally flat in February, instead fell for a third straight month. The 0.8% drop also surpassed the declines of 0.1% in December and 0.6% in January. Production fell 1.5% in Germany, 2.3% in Portugal and 1.2% in Finland, and the 12-month rate of increase for production in Euroland was cut to 2.9% from 3.7% in January and 5.2% in December.

For a second straight month, the National Bank of Serbia has reduced its key policy interest rate by 25 basis points. Such falls to 3.0%. This pair of reductions matches the size of rate reductions in 2017 and 2016. Previously, the rate had been cut by 350 bps in 2015, 150 bps in 2014, and 275 bps in the last eight months of 2013. Officials noted that inflation has recently fallen more sharply than expected.

The Bank of Korea left its Base Rate unchanged at 1.5%. A 25-basis point hike last November was the first increase since 2011.

Central bank policy makers are also meeting today in Ukraine, Mexico, and Peru.

The dollar was mixed overnight, rising by 0.4% against the Swiss franc, 09.3% versus the yen, 0.2% relative to the yuan, and 0.1% vis-a-vis the euro but slipping 0.4% against the kiwi, 0.3% versus the peso, and 0.2% against sterling. The loonie and Australian dollar are steady.

Downward share price momentum extended into the Pacific Rim with losses on Thursday of 0.9% in China, 0.8% in Indonesia, 0.7% in New Zealand, 0.3% in Singapore and 0.1% in Japan. But in Europe, equities show gains so far of 0.7% in Italy, 0.4% in Germany and Switzerland, and 0.3% in the U.K. and France.

Ten-year German bund and British gilt yields climbed today by two and three basis points, while their U.S. and Japanese sovereign counterparts are each a basis point firmer.

Comex gold has settled back 0.8%, and WTI crude oil is 0.2% softer. Copper slumped more significantly.

Japanese M2 money posted the same 3.2% on-year increase in March as in February. But first-quarter M2 growth of 3.3% was down from a 4.0% rise in all of 2017.

The British Royal Institute of Charter Surveyors’ house price balance index printed at zero percent in March, matching February’s result and the joint five-year low.

There was less on-year growth in foreign direct investment into China last month (0.4%) and during the first quarter (0.5%) than last December (7.9%).

An 8.6% on-year rise in Singapore retail sales in February was distorted upward in part by the lunar new year and was the most since February 2015.

Greek unemployment of 20.6% in January was the lowest since November 2011.

Irish CPI inflation settled back to a mere 0.2% last month. Likewise, CPI inflation dropped to 4.0% in Romania from 4.7% the month before. But CPI inflation accelerated by 0.4 percentage points to 1.6% in France and by 0.3 percentage points to 2.0% in Sweden.

Industrial production in Romania and Hungary was 6.7% and 4.1% greater in February than a year earlier.

The Bank of Japan’s quarterly Sakura Report, which examines regional economic trends, upgraded two regions, retained expanding¬† or expanding moderately assessments on six others, and downgraded just one area. In remarks, Governor Kuroda said inflation had ticked up slightly but identified protectionism as a risk factor.

U.S. import prices and weekly jobless insurance claims data will be reported later today.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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