Investors Uneasy Awaiting U.S. Jobs and Trade Data

October 4, 2019

Today’s big question is whether the U.S. jobs statistics due in an hour corroborate other weak data released during the past month. Yesterday brought stunning news that the non-manufacturing purchasing managers index slumped 3.8 points in September to a 3-year low and embodied drops of 6.3 points in production and 6.6 points in new business. At 52.8, the PMI is 7.4 points below its late 2018 high of 60.4 last November. It seems that in the U.S., as elsewhere, weakness in manufacturing caused by Trump’s trade war is infecting other parts of the economy. U.S. and Canadian trade figures also get reported this morning. The preliminary U.S. trade estimate showed a marginal widening in August compared to July’s deficit.

The dollar lost some ground overnight, slipping 0.5% against the Swiss franc, 0.4% relative to the kiwi, 0.3% versus the Australian dollar, 0.2% against the yen, and 0.1% vis-a-vis the euro and loonie. Sterling eased 0.1% overnight, and Chinese markets were again closed for the National holiday.

Share prices dropped 1.1% in Hong Kong and India, however. The Reserve Bank of India cut its benchmark interest rate for the fifth time since February. Today’s reduction to 5.15% was 25 basis points, and the total decline of all five moves has been 135 basis points in size. Other stock markets in the Pacific Rim recorded declines of 0.6% in South Korea, Singapore, and Australia and 0.4% in Indonesia, but the Japanese Nikkei went up 0.3%. European stocks are up marginally.

Ten-year sovereign debt yields fell two basis points in the U.K. and Japan and a single basis point in U.S. futures but are steady in Germany. U.S. stock future suggest a decline at the open.

WTI oil and Comex gold are trading 0.3% and 0.1% firmer.

A statement released by the Reserve Bank of India explaining its interest rate cut today unveils a downwardly revised growth forecast and postulates that a slight uptick of inflation will be temporary. India’s composite PMI for September (49.8) and service-sector purchasing managers index of 48.8 each fell below the 50 level that separates improvement from deterioration. Both indices represent 19-month lows.

Hong Kong’s private sector PMI edged up 0.7 points to 41.5 in September, the second weakest outcome since February 2009.

Construction PMI surveys for Euroland, Germany, France and Italy were published today. Euroland’s construction PMI rose to a 2-month high of 50.5. The German and Italian PMI readings in construction of 50.1 and 50.2 were at 3-month highs but indicating only minimal improvement, while the French index slipped to a 4-month low.

Euroland’s productivity purchasing managers index printed at 49.5 in September, its fifteenth straight reading below the 50.0 threshold.

Australian retail sales advanced 0.4% on month in August, most since a 0.9% increase last February, but the 2.3% increase from a year earlier was the smallest 12-month gain thus far in 2019. New home sales in Australia reversed July’s 7.2% plunge with a 7.3% increase in August, but the year-on-year change remained in the red at -4.6%.

Indonesian consumer confidence slipped to a 10-month low in August.

CPI inflation in the Philippines of 0.9% in September was only about half August’s 1.7% 12-month rate of increase. Such had been as high as 6.7% last October and not as low ast 0.9% since May 2016.

U.S. motor vehicle sales in September were slightly higher than August’s level and also greater than forecast, but factory orders posted a disappointing 0.1% downtick in August and a drop of 2.9% from a year earlier.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

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