Steep Retreat Resumes in Equities; Lots of Data Reported in Final Session of January
January 29, 2021
Share prices fell 3.0% in South Korea, 2.0% in Indonesia, 1.9% in Japan, 1.8% in Taiwan, 1.3% in India, 0.9% in Hong Kong, and 0.6% in both Australia and China overnight. European markets and U.S. futures are down 1.0% or more. Efforts to halt the meteoric advance of shorted stocks like GameStop worked only briefly.
The dollar fell 0.3% against the yuan and 0.1% versus the euro, loonie and kiwi but advanced 0.5% relative to the yen.
Ten-year sovereign debt yields increased overnight by 4 basis pints in the U.K., 3 bps in Germany, 2 bps in the United States, and a basis point in Japan. The price of gold strengthened 1.5%, and that of WTI oil is 0.5% firmer.
Investors got a more complete picture of the extent of the slowdown in economic growth last quarter around the world. Yesterday brought news that U.S. GDP had advanced 4.0%, just an eighth as fast as in the summer quarter. The 3.5% GDP average contraction in 2020 was the most since just after WW2. Today’s fourth-quarter GDP reports showed
- A 0.1% uptick in Germany, down from 8.5% in 3Q (note that in Germany and other countries, quarterly rates of GDP are not reported in annualized terms as is the case in the U.S. report whereby America’s 4.0% pace was really 1.0%). German GDP dropped 5.3% in 2020 as a whole compared to the 2019 mean level.
- French GDP had soared 18.5% in 3Q but then fell back 1.3% last quarter, which was only about a third of its expected retreat. Nonetheless, French GDP collapsed 8.3% in 2020 versus 2019.
- Belgian GDP edged 0.2% higher last quarter but posted a 4.8% decline from the final quarter of 2019.
- Austrian GDP fell 4.3% in 4Q after recovering 12.0% in 3Q, and the more recent slide swelled the on-year rate of contraction to 7.8% from 4.2% in the prior quarter.
- Spanish GDP grew 0.4% last quarter after a 16.4% surge in 3Q. This left year-on-year growth hardly changed at negative 9.1%. Spain’s economy shrank 11.0% in 2020.
- Polish GDP contracted 2.8% in 2020, its first negative result in 24 years, after a 4.5% increase in 2019.
- Mexican GDP rose 3.1% last quarter but also recorded a non-positive growth comparison (-4.5%) from the year-earlier level for the seventh straight quarter.
- On-year Taiwanese GDP growth, which is strongly influenced by Mainland China’s business cycle, accelerated to a 39-quarter high of 4.94% last quarter after 3.92% in 3Q.
- Hong Kong GDP grew only 0.2% on quarter, down from 2.7% in 3Q, and that resulted in a sixth straight on-year decline, this time of 3.0%. In full 2020, Hong Kong’s economy fell 6.1% after a 1.8% slide in 2019.
U.S. personal income and personal consumption expenditures last month — respectively up 0.6% and down just 0.2% — performed better than analysts were anticipating. Those changes were accompanied by higher inflation according to the PCE price deflator (+0.4% from November and 1.3% from a year earlier). The core PCE price measure from 0.3% on month and accelerated 0.1 percentage points to a 12-month 1.5% rate of increase.
Japanese industrial production slumped 1.6% in December, triple the prior month’s drop but close to market expectations. Production was 3.2% below the December 2019 level and plunged 10.1% in 2020 as a whole, which followed a 3% slide in 2019. Japan’s jobless rate last month matched December’s 2.9%.
Japanese housing starts (-9.0% on year in December), construction orders (-1.3% on-year), and consumer confidence (a 3-month low of 29.6 in January) were also reported. Housing starts have posted year-on-year declines without interruption since mid 2019.
Dutch retail sales plunged 9.9% last month in reaction to social gathering restrictions and recorded the largest 12-month rate of decline (3.1%) in the last 87 months.
Spanish retail sales rose 1.0% in December but posted their 10th straight on-year decline, albeit the smallest one (1.5%) in that sequence.
Portuguese retail sales and industrial production recorded similar on-year declines in December of 4.5% and 4.4%.
South Korean industrial production and retail sales in December were respectively 3.4% higher and 2.0% lower than year-earlier levels.
Spain’s November current account surplus of EUR 3.335 billion was the largest in a year.
Thailand’s trade surplus of $24.5 billion in 2020 was more than double the prior year’s size.
Turkey’s trade surplus of $49.9 billion in 2020 was 67% wider than in 2019.
The Swiss leading economic index sank to a six-month low of 96.5 in January from 104.1 in December and 110.2 last August.
German import price deflation last month (-3.4%) was its least negative in ten months.
Producer prices in Singapore went up 2% on month, but the 12-month rate of decline narrowed 2.5 percentage points nonetheless to 6.9% in December.
Spanish consumer price inflation moved above zero percent in January (+0.6%) for the first time since printing at +0.7% last February.
French producer prices rose 0.8% in December (rising energy costs) but still ended the year 1.2% below their end-2019 level.
M3 money in Euroland grew 11.3% on year last quarter, up from a 10.0% rise between 3Q19 and 3Q20. In December M3 and total credit were 12.3% and 9.6% higher than a year earlier.
Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German and French GDP, U.S. personal income and spending
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