Equities Find Better Footing and Dollar Firmer, Too

January 15, 2014

The dollar rose overnight by 0.6% against the Swiss franc, 0.5% relative to the euro, 0.4% against the Aussie dollar, 0.2% vis-a-vis the loonie and kiwi, and 0.1% against the yuan, yen and sterling.

Japan’s Nikkei rebounded 2.5% from a 3.1% slump the day before.  Equities also closed up 1.2% in India and Indonesia, 1.0% in New Zealand, 0.6% in Taiwan, Singapore and Australia, 0.5% in Hong Kong, and 0.4% in South Korea.  Chinese share prices dipped 0.2%, but European stocks are up 1.2% in Germany, 0.8% in Italy, 0.7% in France, and 0.4% in Britain and Spain.

Ten-year sovereign debt yields ticked up a basis point in Japan, Germany and Britain.

Gold and WTI crude oil prices rose 0.5% to $1,238.70 per ounce and $93.06 per barrel.

China reported new bank lending in December of only 482.5 billion, considerably less than November’s total of 624.6 billion yuan and indeed the smallest total in a year.  New loans rose 8.4% between 2012 and 2013.  Chinese M2 money recorded on-year expansion of 13.6%, down from 14.2% and the lowest rise since the year to August 2012.  On-year M1 and M0 growth of 9.3% and 7.1% were also lower in December than November’s results.

Chinese international reserves advanced by $157 billion during 4Q13 to $3.82 trillion at the end of last year.  There was a full-year increase of $508 billion, almost four times greater than the increased recorded during 2012.

Japanese M2 growth decelerated to 4.2% in December from 4.4% in the year to November.  M2 also rose 4.2% between 4Q12 and 4Q13, up from 3.8% in the third quarter.  2013 saw M2 post an average rise of 3.6% after gaining 2.5% in 2012.  Broad liquidity increased 2.9% last year after a tiny 0.3% uptick in 2012.

Japanese machine tool orders were 28% greater in December than a year before.  That’s up from a 15.4% rise in the year to November.

Retail sales in Singapore ticked up 0.1% in November but were 8.7% lower than a year earlier.  South Korea recorded a 3.0% jobless rate in the final month of 2013.

Wholesale price inflation in India slowed to a five-month low of 6.16% in December from 7.52% in November.

Australian motor vehicle sales were just 0.1% greater in December than a year earlier despite a decent 1.7% monthly advance.

Food price inflation in New Zealand edged up to 1.5% in December from 1.4% in November.

Euroland’s seasonally adjusted trade surplus widened to EUR 16.0 billion in November from EUR 14.3 billion in October and EUR 12.8 billion in September, EUR 12.5 billion in August, and EUR 11.0 billion in July.  Two-way trade has sputtered.  Between September and November, imports fell 2.3%, and exports edged 0.1% lower.  The year-to-November surplus of EUR 139 billion unadjusted was 99% greater than the EUR 70 billion surplus a year before mainly because of a 3.6% on-year decline in imports.

German real GDP grew 0.4% last year after a 0.7% rise in 2012.  Average GDP growth in the six years between 2007 and 2013 was 0.7% per annum.  Between 2012 and 2013, personal consumption and government expenditures respectively rose by 0.9% and 1.1%, but investment in machinery and equipment fell 2.2%, and construction contracted 0.3%.  Net exports exerted a 0.3 percentage point drag on GDP growth.

Swiss retail sales volume expanded 1.9% in November and by 4.2% in year-over-year terms.  Each advance exceeded analyst expectations.  Finnish retail sales slipped 0.3% in the year to November.

The Conference Board index of British leading economic indicators rose 0.5% in November, outpacing a 0.2% increase of the index of coincident economic indicators.

The World Bank’s forecast of global GDP growth in 2014 was bumped up 0.2 percentage points to 3.2% despite downward revisions to its projected growth in China (7.7%) and Brazil (2.4%).  GDP is forecast to rise 2.8% in the U.S., 1.4% in Japan, and 1.1% in the euro area.

On-year CPI inflation in December printed at 0.3% in Spain and 0.4% in HungaryProducer prices over the same span rose 1.7% in the Czech Republic but fell 1.4% in Denmark.

South Africa’s manufacturing purchasing managers index fell by 2.5 points in December to the first sub-50 reading (49.9) since last April.  South African retail sales recorded a monthly 1.2% advance and a 12-month increase of 4.2% in November. 

Norway’s trade surplus narrowed 1.4% in December to 33.42 billion kroner, while the Dutch surplus in November was 12.5% larger than October’s at EUR 4.23 billion.

U.S. mortgage applications shot up 11.9% last week.  The 30-year fixed mortgage rate was six basis points lower at 4.66%.

Other scheduled U.S. data releases today include producer prices, the Empire State manufacturing index, and most importantly the Federal Reserve Beige Book of regional economic and price trends.  Lockhart and Evans of the Fed speaks publicly.  Brazil’s monetary policy committee, known as Copom, will announce its latest interest rate decision.  Canada reports existing home sales.

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

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