Stocks Mixed,Dollar and Oil Price Down at Start of September’s Third Week

September 14, 2020

Equities advanced in the Pacific Rim, slid marginally in Europe, and appear poised to open higher in the United States.

The dollar fell overnight by 0.7% against sterling, 0.5% versus the kiwi, 0.3% relative to the peso, euro, and Swiss franc, 0.2% vis-a-vis the yuan and 0.1% against the yen and loonie.

The price of West Texas Intermediate crude oil fell 0.7% and is hovering close to last Tuesday’s 3-month low. Gold is 0.4% firmer.

Ten-year U.S. Treasury and German bund yields are steady.

Yoshihido Suga, Japan’s cabinet secretary for the past eight years is poised to succeed  Japanese Prime Minister Abe after capturing 70.6% of the votes cast to pick the Liberal Democratic Party’s next leader. Abe stepped down one year ahead of  the end-date of his term for health reasons. There will not be an imminent parliamentary election because of the pandemic. Suga is less ideological than Abe and does not head a party faction. He’s known for hard work and committed to the pillars of Abenomics, which are stimulative monetary and fiscal policies, structural government reforms, and deregulation.

Industrial production in the euro area rose less rapidly in July (4.1%) than June (9.5%) and remained 7.2% below February’s level and down 7.7% from a year earlier.

Monthly growth in Japanese industrial production during July was revised up 0.7 percentage points to 8.7%, but the level remained 15.5% lower than a year earlier. Production had posted declines of 3.0% in 2019, 4.3% in the first quarter of 2020 and 16.9% in the second quarter. Industrial capacity and capacity usage in July were 0.4% and 19.2% weaker than a year earlier.

In contrast to the rebound of industrial production, service sector activity in Japan declined by 0.5% in July. The tertiary index that measures services had previously posted declines of 1.1% in the first quarter and 10.1% in the second quarter, and July’s level was 9.4% weaker than a year earlier.

The Irish construction and New Zealand services purchasing managers indices in August fell to 3-month lows. Ireland’s construction index has revived from a record trough in April of 4.5 to readings of 19.9 in May, 51.9 in June, and 53.2 in July before relapsing to 44.0 last month. As will other PMIs, a score below 50 connotes contracting activity. New Zealand’s service sector PMI printed in August at 46.9, down from 54.4 in July and 54.1 in June but above April’s 37.5.

Indian wholesale price inflation returned to positive territory, albeit a mere 0.16%, after four straight sub-zero percent results. The overall rise was powered primarily by manufactured goods. Indian consumer price inflation, by contrast, decelerated marginally to a 2-month low of 6.93% in August from 6.93% in July.

House price inflation in China remained at 4.8% for a second straight month in August, matching its highest level since May 2018.

Industrial production in Hong Kong recorded the largest on-year drop (5.1%) in the second quarter in almost 11 years.

Turkish industrial production and retail sales posted monthly advances in July of 8.4% and 9.5% and year-on-year increases of 4.4% and 11.9%. Back in April, output and sales had sunk to 31.3% and 20.4% below year-earlier levels.

Construction output in Greece was 26.6% weaker than a year earlier in 2Q in spite of a 6.6% rebound for the first quarter’s level.

Finnish CPI inflation slowed to a 2-month low of 0.2% in August.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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