Curtain Opens on 2014 Trading

January 2, 2014

The dollar has a seasonal tendency to appreciate in the first couple of days of the year, and 2014 has not been an exception.  The greenback gained 1.1% against the Swiss franc, 0.9% relative to the kiwi, 0.8% versus the euro and Australian dollar, 0.5% vis-a-vis sterling, 0.2% against the loonie, and 0.1% versus the yen.

Like every other month of the year, January began with a slew of purchasing manager surveys for investors to peruse.

The Japanese, Swiss and New Zealand markets remain closed.

Asian share prices were mixed, but European markets are mostly down, with the Paris Cac, Spanish Ibex, German Dax, and British Ftse down 0.9%, 0.8%,  0.5% and 0.2%.  Share prices fell 1.2% in India, 2.2% in South Korea, 0.7% in New Zealand, and 0.4% in China but rose by 1.6% in the Philippines and 1.2% in Indonesia.

Gold, which sank sharply in 2013, is up 1.3% today. Oil eased 0.4%. 

Ten-year German bund and British gilt yields are four and two basis points firmer.

Most of the PMI reports were satisfactory.  The notable disappointment was the French manufacturing survey, with a reading of 47.0, down 0.1 from the flash indication and at a 7-month low.  The recession in French manufacturing deepened as the year ended.  The 4Q average reading of 48.2 compares to 49.7 in 3Q where a reading of 50 delineates expansion from contraction and the further below 50 the faster the slide.

Euroland as a whole saw the manufacturing PMI punch in at 52.7, matching the preliminary estimate.  This is the best reading in 31 months and follows 51.6 in November and 51.3 in October.  The Dutch reading of 57.0 was at a 32-month high.  So was Italy’s 53.3 score.  Germany’s index was revised marginally upward to a 30-month high of 54.3.  The readings for Ireland of 53.5 and Spain of 50.8 were at 2-month highs.  The troubled Greek economy scored a 49.6, its closest reading to 50 in four years.  Greek production and orders both expanded.  Austria’s 54.1 was at a 2-month low. 

Ezone retail PMIs were disappointing.  The overall regional measure fell 0.3 points to 47.7, with drops of 1.6 points to 50.7 in Germany and 0.5 to 46.1 in France partly mitigated by a 33-month high of 43.3 in Italy.

The British PMI score of 57.3 was not as robust as projected after November’s 58.1 but otherwise the best figure of the year.

Sweden’s PMI fell back to 52.2 after jumping to 56.0 in November from 52.0 in October.  Denmark’s reading likewise settled back to 53.5 in December after rising to 57.9 in November from 54.1 in October and 50.1 in September. 

Among east European economies, Poland’s manufacturing PMI retreated to 53.2 in December from 54.4 in November, the Czech reading slid to 54.7 from a 2.5-year high of 55.4 in November, and Hungary’s 50.2 score was down from 52.6 the month before.

Australia’s factory survey posted a second straight sub-50 reading and third in five months.  The 47.6 reading was similar to 47.7 in November.  Home prices in Australia recorded their best advance in 2013 since 2009.

India’s PMI in manufacturing dropped 0.6 points to 50.7, but the fourth-quarter average of 50.5 exceeded the 3Q mean of 49.4.

Turkey scored a 53.5 after a 32-month high of 55.0 in November.

Indonesia’s 50.9 was above the 50 threshold for a fourth straight month and 0.6 points better than in November.  South Korea’s PMI firmed 0.4 points to 50.8, a 7-month high. Vietnam’s PMI improved to 51.8 from 50.3 in November, and Taiwan’s 55.2 in December was also better than the November result.

Two Chinese PMI surveys were reported.

  • The HSBC-compiled index of 50.5 was at a 3-month low.
  • The government-authorized CFLP PMI-manufacturing index slid to a 4-month low of 51.0 from 51.4 in November.

The Russian manufacturing PMI dropped 0.6 points to 48.8.  The Russian services PMI rose 0.7 to 53.6, but business expectations were more depressed than in November. 

Sri Lanka’s central bank has cut its repo rate to 8.0% from 8.5% while leaving the reverse repo unchanged at 6.5%.

On-year GDP growth in Singapore slowed to 4.4% in 4q from 5.8% in 3Q. 

Indonesian CPI inflation of 8.4% in December was unchanged.  Thai CPI inflation eased to 1.7% last month from 1.9% in November.  Hong Kong retail sales recorded faster on-year 8.5% growth in November after a 6.3% increase in October. 

U.S. new jobless insurance claims last week dipped by 2K to 339K, but the four-week average of 357K was 8K greater.  Other scheduled U.S. data today encompass the manufacturing PMI, construction spending.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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