Stock Markets Around the World Battered Further
May 14, 2020
Hope has dissipated that the pandemic will be contained soon. Global cases surpassed 4.45 million, and the death toll is approaching 300,000. Social distancing is expected to be necessary to some extent at least through the end of the year, and world economic activity as a result will struggle to regain upward momentum. Risk aversion remains the dominant theme in financial markets, as investors continue to react to coronavirus warnings from Dr. Fauci of the NIH and Fed Chairman Powell’s bearish economic outlook and aversion to utilizing negative interest rates. Investors are also bracing for another multi-million weekly increase in new jobless insurance claims.
Share prices in the Pacific Rim closed down 2.8% in India, 1.9% in Singapore, 1.7% in Japan and Australia, 1.5% in Hong Kong, 1.4% in Taiwan, and 1.0% in China. Equities in Europe so far show losses of 2.5% in the U.K., 2.2% in Italy, 2.1% in France, 1.9% in Germany, 1.7% in Spain and 1.5% in Switzerland. U.S. stock futures are lower, too.
Safe-haven demand sent the dollar up overnight by 0.5% versus the Australian dollar, 0.4% relative to the kiwi and peso, 0.3% vis-a-vis the euro and Swiss franc, 0.2% against sterling, and 0.1% vresus the yuan. The loonie and euro are unchanged against the dollar. The Swiss National Bank has ramped up intervention sales of the franc to counter its strength.
The price of WTI oil jumped 4.3%, and the ten-year U.S. Treasury yield has declined four basis points. Gold‘s price strengthened another 0.4% to a 3-week high.
Australian unemployment climbed a full percentage point to 6.2% last month. Analysts had anticipated an even bigger jump, but such was constrained by an out-sized 2.5 percentage point drop in labor market participation. A contraction of 594,300 jobs was a shade larger than forecast.
Italy’s EUR 5.685 billion trade surplus in March revealed year-on-year plunges in imports of 18.1% and exports of 13.5%. A EUR 12.3 billion surplus in the first quarter was 53.8% larger than a year earlier.
Japanese machine tool orders dived 48.3% below their year-earlier level in April, marking the largest 12-month drop since the third quarter of 2009.
Turkish industrial production and retail sales respectively slumped 7.1% and 8.1% between February and March. They also each recorded year-on-year declines of 2.0% and 0.2%, their weakest comparisons on such a basis in seven months.
Wholesale turnover in South Africa dropped 1.9% on month and 3.3% on year during February even before the Covid-19 global pandemic got really cooking.
There were a number of price data releases today pointing to rapid disinflation.
- The monthly rise in German consumer prices last month was revised up 0.1 percentage point to 0.4%, but on-year CPI inflation still flattened half a percentage point to a 41-month low of 0.9%. Energy prices slumped 3% on month and 5.8% on year.
- German wholesale prices sank 1.4% in April to post their greatest year-on-year drop (3.5%) since November 2009.
- The combined Swiss PPI and import price index fell on month for a third straight time in April. The size of the latest drop was 1.3% and depressed the year-on-year decline to a 49-month high of 4.0%. In the 12 months through April, import prices slumped 7.8%, and domestic producer prices declined 2.0%.
- Irish CPI inflation of -0.1% was negative in April for the first month in two years.
- Spanish CPI inflation of -0.7% last month was negative for the first time since the summer of 2016 and also down 1.8 percentage below the pace in January.
- India’s planned wholesale price release was incomplete because the pandemic prevented calculation of manufactured goods prices. But on-year inflation in the food component fell 2.4 percentage points to 2.56%, and fuel costs crashed 8.4 percentage points to an on-year drop of 10.1%.
- Finnish CPI inflation of -0.3% last month was negative for the first time since February 2016.
French unemployment of 7.8% in the first quarter of 2020 was down from 8.7% a year earlier.
Canada today will be releasing its monthly survey of manufacturing sales, orders and inventories.
Aside from the aforementioned U.S. jobless insurance claims, the Labor Dept also reports on import and export prices.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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