Equities Open Lower after Big Rise Last Week.. Dollar Recovers on Risk Aversion

January 11, 2021

The dollar climbed overnight by 1.1% against the Mexican peso, 0.7% relative to the Swiss franc, sterling, and Canadian, Australian and New Zealand dollars, 0.5% versus the euro, and 0.3% vis-a-vis the yen (to a 5-week high above 104.0). The trade-weighted dollar move was +0.5%.

U.S. equities have fallen 0.6-0.8% in futures trading.

Share prices are down 0.7% in the U.K. and Germany, 0.6% in Switzerland and France, and 0.5% in Italy. Japan’s market was closed for Coming of Age Day, but a sampling of other stock markets around the Pacific Rim saw losses of 2.0% in Indonesia, 2.2% in New Zealand, and 1.1% in China.

The price of West Texas Intermediate crude oil fell back 0.7%, and that of gold rebounded 0.4%. Ten-year sovereign debt yields in the U.S., Germany, U.K. and Japan, by contrast, have retained the bulk of last week’s increases.

Intensifying Covid-19 infections around the world have been the main driver of this latest bout of risk aversion, but a discussed move by the U.S. House of Representative to proceed with impeachment proceedings against President Trump injects another source of uncertainty and unease. Trump is going to be the first U.S. president since Herbert Hoover to oversee a net loss of American jobs during his stewardship.

Chinese consumer and producer price inflation exceeded expectations in December. CPI Inflation which had imploded from 2.7% last July to -0.5% in November, bounced back to a 2-month high of +0.2% last month, while producer prices recorded their smallest year-on-year decline (0.4%) since last February.

Indonesian consumer confidence improved to a 9-month high in December. The latest reading of 96.5 compares to 79.0 as recently as October but 117.7 in February 2020.

Australian retail sales leaped 7.1% in November, their biggest monthly advance since May. This nearly doubled the 12-month rate of increase to 13.3%.

In November, Spanish industrial production was flat on month and 3.8% lower on year. Output had risen on month in each of the previous three months.

Norwegian CPI inflation doubled to 1.4% in December, but core inflation ticked only 0.1 percentage point higher from a 7-month low of 2.9% in November. Despite a 1.6% advance of producer prices, the PPI was 5.7% lower than in December 2019.

Danish 0.5% CPI inflation in December matched November’s outcome. Such has fluctuated from 0.3% to 0.6% for the past seven months.

Investor confidence in the Euroland economic outlook according to the Sentix gauge printed above zero (+1.3) this month for the first time since last February having bottomed at -42.9 last April.

Irish retail sales plunged 12.8% in November amid an intensifying Covid wave and was 4.7% lower than in November 2019. Sales remained 3.8% below the pre-pandemic level last February. Ireland’s construction purchasing managers index in December slipped 1.2 index points below November’s 15-month high.

The Filipino trade deficit narrowed to $19.69 billion in January-November from a shortfall of $37.70 billion a year earlier.

Malaysian industrial production sank 2.7% on month and 2.2% on year in November, and the jobless rate of 4.8% in November was 1.5 times higher than its year-earlier level.

Turkey’s current account deficit widened to $38 billion in the 12 months through November from $24.4 billion in the prior twelve months. Turkish unemployment held steady in October at September’s 22-month low of 12.7%.

Mexican industrial production rose 1.1% on month by fell 3.7% on year in November.

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

 

 

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