Share Prices Strengthened on China Trade Concession and Favorable Corporate News

November 25, 2019

It’s been a risk-on start to this holiday-shortened week. Share prices rose 1.5% in Hong Kong, 1.3% in India, 1.0% in South Korea, 0.8% in Japan and 0.7% in China. European markets so far show gains of 0.4-0.6% in Germany, France, Italy, Spain and Switzeraland as well as a 0.8% jump in the British Ftse.

Currency movements have been slight. The greenback fell 0.3% against sterling and 0.1% versus the kiwi, Aussie dollar and yuan. The dollar rose 0.2% relative to the yen and is unchanged vis-a-vis the loonie, Swiss franc and peso.

Ten-year U.S. Treasury and German bund yields rose by 2 and 1 basis points, while their British and Japanese counterparts are a basis point lower.

Prices for gold and oil softened 0.5% and 0.1%.

Chinese trade negotiators are reportedly increasing penalties on violations of intellectual property rights. The lack of such a concession until now had impeded completion of Phase I of U.S.-Sino trade talks. Equity markets also got a lift from several pieces of favorable corporate news.

The German monthly business climate index compiled by the IFO Institute unexpectedly rose 0.3 points in November to a 4-month high. Perceptions of current conditions and expectations about the future each improved. By sector, manufacturing and construction produced lower readings, but those negatives were more than offset by higher scores in the services sector and trade-related activities.

The CBI monthly survey of British distributive trades resulted in a better reading in November of -3. That score followed -10 in October, -16 in September and -49 in August but was the seventh negative reading in a row.

Producer prices in October were lower than a year earlier by 2.8% in Spain and 0.9% in Finland.

Austrian industrial production rose only 0.2% in September following declines in three of the four previous months, and September’s level of output was 0.5% below that of a year earlier.

Czech business sentiment and consumer confidence plumbed lower in November to respective 66-month and 61-month lows. But a 5.4% on-year rise of Polish retail sales in October constituted a 2-month high.

Japan’s index of leading economic indicators in September was revised downward by 0.3 points to 91.9, which matches the 117-month low hit in August. Although the index of coincident economic indicators was revised marginally higher and to a 4-month high, Japanese officials retained a trend designation of “worsening.”

CPI inflation in Singapore ticked downward to a 3-month low of 0.4% in October and was accompanied by a lowest core inflation rate (0.6%) in over three years.

Brazilian consumer sentiment fell to a 4-month low in November. That economy posted a $7.9 billion current account deficit in October, which was more than twice the size of the deficit in September and the largest gap since July.

Mexican GDP was flat in both the second and third quarters and hasn’t risen since the final quarter of 2018. Growth between the third quarters of 2018 and 2019 was negative 0.3%.

The Israeli Central Bank monetary committee is reviewing policy today. The bank’s key interest rate has been 0.25% since a 15-basis point hike one year ago.

Data releases later today include the Chicago Fed National Activity Index, the Dallas Fed manufacturing index, and China’s index of leading economic indicators.

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

 

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