2021 Starting the Way 2020 Ended

January 4, 2021

The dollar fell 1.0% against the yuan, 0.7% versus the euro, Swiss franc and Mexican peso, and hit multi-year lows against several currencies.

Share price futures point to a higher open in U.S. equity trading after the New Year’s Day holiday. Stock markets rose 2.1% in Indonesia, 2.5% in South Korea, 1.2% in Taiwan, and 0.9% in Hong Kong and China. A 0.7% drop in Japan’s Nikkei did not follow the trend of other stock markets, but European markets are showing gains above 2.0% in the U.K. and above 1.0% in Germany, France, Spain and Italy.

President Trump is still pressuring Georgian election officials to overturn that state’s results, and many congressional Republicans are following his disruptive advice.

Covid-19 cases, hospitalizations and deaths remain highly elevated. In the past 72 hours, global cases have risen 1.68 million, 40% of which have been counted in the United States.

But the faster-than-expected development of vaccines has juiced business confidence as reflected in many of today’s reported December manufacturing purchasing manager surveys.

Euroland’s PMI rose to a 31-month high of 55.2 in December, led by Germany’s 58.3 reading, which was indicated the fastest improvement in 34 months. Buoyant Chinese demand for German exports was one strength, and many European businesses (especially in the Netherlands and Ireland) benefited from a temporary surge in British demand before the Brexit transition period ended. All eight PMI surveys for members of the euro area had higher manufacturing PMI readings in December than November, underscoring that the second wave of Covid is hurting economic activity far less than the first wave last spring.

Two lingering problems underscored in the PMI surveys, however, are intensifying supply chain strains and accelerating input price inflation.

China’s manufacturing PMI slid to a 3-month low of 53.0 but still signals pretty robust expansion.

Japan’s manufacturing PMI ended 2020 at the breakeven “50.0 level,” ending a 19-month sequence of readings below that threshold.

India’s PMI printed at a 2-month high of 56.4, comfortably in expansionary territory.

Among other Pacific Rim reports, the factory PMIs of Taiwan and Indonesia reached their best levels in 119 and 10 months, respectively. Malaysia‘s 48.1 reading signaled the slowest deterioration in four months, and 2-month highs were achieved in Thailand and Vietnam. Australia‘s manufacturing IHS-compiled PMI edged 0.1 below November’s 35-month high to print at a robust 55.7.

The British PMI elevated even further to a 37-month high of 57.5 but is likely to fall back now that the Brexit witching hour has passed.

In Eastern Europe, the Czech PMI scored 57.0, a 32-month high. Hungary‘s 51.1 was unchanged from November’s 3-month peak, and Poland posted a 5-month high score.

Switzerland’s PMI jumped 2.8 points to a 27-month high of 58.0, but Turkey’s index fell 0.6 points to a 7-month low of 50.8. Likewise, Denmark‘s manufacturing index dropped 5.1 points to an 8-month low of 41.9, and Norway‘s index slid 0.1 point to a 3-month low of 51.9. In contrast, Sweden‘s manufacturing PMI leaped 5.1 points to a 127-month peak of 64.9.

In other data released today,

  • Turkish CPI inflation accelerated in December to a 16-month high of 14.6%, while PPI inflation rose to a 19-month high of 25.15%.
  • Indonesian CPI inflation increased 0.1 percentage point to a 6-month high of 1.68% but remained over a percentage point shy of the pre-pandemic 2.9% last February.
  • Real GDP grew in Singapore last quarter by 2.1% from 3Q, but year-on-year growth remained in the red at minus 3.8%. That drop compares with a 1% rise between the final quarters of 2018 and 2019.
  • Portuguese consumer confidence rebounded to a two month high in December, albeit still quite depressed at -26.2 versus -7.8 last January. Portuguese business confidence held steady yet depressed at November’s 2-month low of -0.1.
  • Austrian unemployment climbed to a 7-month high of 11.0% in December.
  • Retail sales in Hong Kong were 4.7% weaker in November than a year earlier. That’s the smallest on-year drop in 17 months.
  • India’s $15.71 billion trade deficit in December was the largest since November 2018.
  • British mortgage approvals spiked way more than anticipated to 105k in November, the most since August 2007. Net mortgage lending of GBP 5.7 billion was the heaviest since March 2016.

A videoconference of OPEC ministers and oil ministers outside that cartel will take place later today. The price of WTI oil is down 0.6% today.

The price of gold has strengthened today by 2.1%. From a record high above $34,000, the price of a bitcoin hit an air pocket today and plunged to less than $28,000.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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