Difficult Session in Asia but European Markets Are Higher
September 10, 2018
Share prices fell 1.4% in Hong Kong, 1.2% in China and India, 1.1% in Taiwan, 0.7% in New Zealand, and 0.4% in Indonesia and Singapore. The Japanese Nikkei rose only 0.3% despite a significant upward revision of second-quarter GDP growth in that economy.
Equities in Europe, by contrast, have advanced in today’s session so far by 3.2% in Greece, 2.2% in Italy, 1.1% in Spain, 0.9% in Switzerland, 0.5% in France and 0.3% in the U.K. and Germany.
Movements in key dollar relationships have been insignificant. The greenback has eased 0.4% against the South African rand, 0.2% against the euro and Swiss franc, and by 0.1% relative to the Aussie dollar, sterling, and Mexican peso but also shows gains of 0.3% against the Chinese yuan and Russian ruble, 0.2% vis-a-vis the loonie, and 0.1% against the Japanese yen. The dollar recovered 1.0% against the Turkish lira. Turkish monetary authorities are likely to hike their interest rate rather substantially this Thursday.
WTI crude oil rose 0.7% so far today. Comex gold has dipped 0.1%.
Ten-year German bund and Japanese JGB yields edged a basis point higher, while their British and U.S. counterparts remain steady.
Japanese 2Q quarterly GDP growth was revised up to 3.0% at a seasonally adjusted annualized rate (SAAR) from 1.9% reported a month ago. The jump in non-residential investment from 5.2% estimated originally to 12.8% was the main driver of this faster GDP growth. Net exports exerted a half percentage point drag on overall growth. Real GDP was 1.4% greater than in the second quarter of 2017. Japan’s GDP price deflator was unchanged on quarter and just 0.1% higher compared to year earlier.
In other Japanese data released today,
- The current account surplus in July of JPY 2.01 trillion was 14.4% smaller than a year before. The seasonally adjusted current account surplus of JPY 1.485 trillion was down from a surplus of JPY 1.762 trillion, as import growth of 3.2% exceeded the 1.8% rise of exports.
- Japan experienced 8.3% more bankruptcies in August than a year earlier. That was the first on-year increase since March.
- On-year growth in bank lending in July-August of 2.1% was similar to the 2.05% pace seen in the first half of 2018.
- Japan’s economy watchers index rose 1.7 points to a reading of 48.7 in August, which was a 4-month high. The “outlook” sub-index improved to a 6-month high and surpassed the 50 neutral level.
Chinese CPI inflation rose 0.2 percentage points to a 6-month high of 2.3% in August, but PPI inflation slowed to a 3-month low of 4.1%.
China’s trade surplus narrowed for a second straight month to $27.91 billion, a 3-month low. On-year import growth of 20.0% was twice as much as the 9.8% increase in exports.
Slower growth in consumer spending and business investment caused Turkish GDP growth to decelerate to 0.9% on quarter and 5.2% on year in the second quarter from 1.5% on quarter and 7.3% on year in 1Q. On-year Turkish growth was at a six-quarter low despite an export boost from a more competitive lira.
Investor confidence in the euro area economy according to the Sentix gauge fell to a reading of 12.0 in September from 14.7 in August and a 2018 high of 32.9 last January.
Ireland’s construction purchasing managers index dropped 2.4 points to a 5-month low in August of 58.3.
The Bank of France released August business surveys showing a 2-point improvement in manufacturing to a 5-month high, unchanged sentiment in the service sector, and a one-point dip in construction to a 5-month low. The central bank reaffirmed its projection that French GDP will expand 0.4% this quarter, beating the second quarter’s performance.
British industrial production growth again fell short of street estimates, rising just 0.1% in July and posting a lower 12-month increase of 0.9%. But construction output growth of 0.5% came as a surprise and lifted its 12-month rate of increase to 3.5% from 2.2%. As recently as April, construction had been 1.3% lower than a year earlier. Another pleasant surplus was a drop in the British goods and services trade deficit to just GBP 111 million in July, a 5-month low. The merchandise trade shortfall slipped marginally below GBP 10 billion.
Norwegian CPI inflation last month of 3.4% was up from 3.0% in July and three times higher than its trough last November. But PPI inflation of 22.8% was almost five times greater than 4.7% recorded last February. Danish consumer prices slipped 0.4% on month and were just 1.0% higher in August than a year earlier. Greek CPI inflation in August also was at 1.0%. Czech CPI inflation ticked 0.2 percentage points higher to 2.5% last month.
The Danish current account surplus widened to a 13-month high of DKK 16.9 billion in July.
Indonesian retail sales grew 2.9% on year in July, somewhat more than 2.3% recorded in the year to June but well below May’s spike of 8.3%.
Boston Fed President Rosengren endorsed the need to raise interest rate further and dismissed the importance of the flat yield curve in the current context.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: and economy watchers index, and trade surplus, British industrial production and trade balance, chinese PPI, CPI, current account, French business sentiment, Japanese GDP