Softer Share Prices and Dollar

December 3, 2013

The dollar slid overnight by 0.6% against the kiwi, 0.4% versus the yen, Swiss franc and sterling, 0.3% relative to the euro, and 0.2% against the Australian dollar.  The greenback is unchanged against the yuan and 0.1% firmer relative to the loonie.

Share prices have fallen by 1.1% in South Korea, 0.8% in Indonesia, 0.5% in Hong Kong, 0.3% in Australia, 0.3% in Taiwan and 0.2% in India.  In Europe, stocks have lost 1.7% in France so far, 1.1% in Germany, 1.0% in Spain and Italy, and 0.8% in Britain.  U.S. futures also have dropped.  Two exceptions to the downward trend have been rises of 1.0% and 0.6% in equities in China and Japan.

Oil and gold prices firmed overnight by 0.3% to $94.13 per barrel and 0.1% to $1,223.40 per ounce.

The ten-year German bund and British gilt yields edged a basis point southward.  The 10-year Japanese JGB yield moved two basis points higher.

Growth in Japan’s monetary base accelerated to a 12-month increase of 52.5% in November from 45.8% in October, 42.0% in 3Q, 30.2% in 2Q, and 15.2% in 1Q.  The Bank of Japan’s balance sheet climbed to JPY 224.1 trillion at end-November from 215.5 trillion yen a month earlier and JPY 208.2 trillion at the end of the third quarter.   Japanese capital spending rose 1.5% in the third quarter, but labor cash earnings continued to stagnate in October with an on-year uptick of just 0.1%.  For Abenomics to produce enduring benefits, it will be imperative for wage inflation to accelerate as well as price inflation.  So far that hasn’t happened.

Britain’s construction purchasing managers index improved 3.2 points in November to a reading of 62.6, best since August 2007.  On Monday, it was reported that the manufacturing PMI index went up 1.9 points to 58.4, best since February 2011.

In earlier released PMI data this week,

  • The Institute of U.S. Supply Management reported a 0.9-point increase in the manufacturing PMI, led by gains of 3.0 points in orders and 3.3 points in jobs.  The subindex for prices fell 3.0 points, however.
  • Euroland’s manufacturing PMI rose 0.3 points to 51.6.  Within the euro area, the Dutch, Austrian and Italian indices set 31-, 30- and 30-month peaks of 56.8, 54.3 and 51.4.  The German index (52.7) was the best in 29 months, while the Greek score of 49.2 constituted the slowest rate of contraction in 51 months.  The Spanish index (48.6) and French index (48.4) were 6- and 5-month lows.  Ireland’s 52.4 reading was at a 3-month low.
  • Sweden’s factory PMI climbed four points to 56.0.  Norway had a reading of 54.5 after 53.7 in October. 
  • For China, HSBC reported a 0.1-point dip of the manufacturing PMI to 50.8, while the government-authorized CFLP measure stayed at 51.4.  CFLP also reported that the non-manufacturing Chinese PMI was 56.0 in November, down from 56.3 in October but above September’s 55.4 reading.
  • India’s PMI improved to a 4-month high of 51.3 from an October reading of 49.6.
  • The Indonesia manufacturing PMI fell by 0.6 to 50.3.  Taiwan’s index rose 0.4 points to 20-month high of 53.4, but Vietnam’s 50.3 reading was 1.2 points lower than in October.  South Korea scored a 50.4 after 50.2 the month before.
  • Russia’s manufacturing PMI swung from an expansionary reading of 51.8 in October to a sub-50 and thus contractionary 49.4 in October.
  • The Turkish PMI reading of 55.0 was the highest score for that economy since March 2011.
  • Poland’s 54.4 after 53.4 in October was the best reading since April 2011.  The Czech reading (55.4) was at a 2-1/2 year high.
  • Brazil posted a 49.4, down from 50.2 in October and the fourth sub-50 reading in five months.
  • Mexico’s 51.9 was 1.7 points greater than in October and at a 7-month high.
  • The Swiss index climbed 2.3 points to 56.5.
  • Australia’s manufacturing PMI sank sharply to 47.3 from 53.1 the month before and 51.7 in September.
  • According to JP Morgan’s compilation, the world manufacturing PMI of 53.2 was 1.1 points better than in October, the 11th reading in a row above 50, and the best score in 2-1/2 years.

Producer prices in the euro area fell more sharply than forecast in October, dropping 0.5% on month and 1.4% on year.  Energy slumped 1.4% on month, and all other producer prices collectively eased by 0.1%.

The Reserve Bank of Australia left the Official Cash Rate unchanged at 2.5% as expected.  The statement accompanying the decision was very similar to that from October’s meeting, including another protest about excessive Aussie dollar strength.  2.5% on the OCR was nonetheless deemed “appropriate.”

Australian retail sales climbed 0.5% in October and surpassed the year-earlier level by 3.4%.  Australia recorded a A$ 12.71 billion current account deficit in the third quarter, largest since 4Q13 but less than the year-earlier quarterly deficit of A$ 14.9 billion.  Aussie building permits fell 1.8% on month but stayed 23.1% higher on year in October.  Aussie corporate profits in 3Q exceeded their year-earlier level by 3.9%.

Turkish consumer prices were steady on month between October and November but 7.3% higher than in November 2012.  Turkey’s PPI decelerated to a 12-month increase of 5.7% in November from 6.8% in October.

South Africa posted a 233 billion rand current account deficit last quarter, equal to 6.8% of GDP.

Norwegian retail sales in October were 0.8% higher than a year before.

Scheduled U.S. data today encompass weekly chain store sales, the monthly IBD/TIPP optimism index and the monthly New York regional PMI (the NAPM) index.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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