Chinese Data Released on a U.S. Holiday

January 20, 2014

The U.S. Martin Luther King JR. holiday has sucked leadership out of today’s market action.

  • The dollar shows only small changes from Friday’s closing, losing 0.3% against the euro and Aussie dollar, 0.2% relative to the yen, and 0.1% versus the Swiss franc and sterling.  The loonie, kiwi and yuan are unchanged.
  • Share prices in the Pacific Rim dlosed down 0.9% in Hong Kong, 0.6% in China, Japan and Singapore, 0.2% in Australia and 0.1% in New Zealand.  Equities are down 0.4% in Germany and 0.2% in France, Italy and Spain, but they are unchanged in Britain and up 0.2% in Canada.
  • The 10-year sovereign debt yields dipped a basis point in Germany, Britain and Japan.
  • WTI crude oil fell by 1.0%, while gold is 0.3% firmer.

China reported 4Q and 2013 GDP growth as well as December retail sales, industrial production, business investment and home prices.

  • Although just a tenth percentage point less than growth in 2012, last year’s 7.7% result constituted a 14-year low.  GDP expanded as much as 10.4% as recently as 2010.  In the final quarter of 2013, real GDP went up 1.8% after a 2.2% increase in 3Q.  On-year growth of 7.7% matched the full-2013 result and was down from 7.8% between 3Q12 and 3Q13.
  • Fixed asset investment increased 19.6% in 2013, down from 19.9% in January-November, 20.7% in full-2012 and 23.8% in 2011.
  • Industrial production grew 9.7% between end-2012 and end-2013, down from on-year growth of 10.0% in November and 10.3% in October and the slowest outcome since a similar rise in the year to July.  Full-2013 industrial production also increased by 9.7%.
  • A 13.6% increase of retail sales matched expectations and was higher than the 13.1% advance for full-2013.
  • For a fourth consecutive month, home prices rise by less on month in December than in the prior month.  The 12-month rate of increase was 9.9%.  House prices went up in one fewer city than had been the case in November.  China’s central bank continues to tolerate tight money market liquidity in order to cool the property market and in hopes of averting the kind of collapse that Japan’s housing market experienced in the 1990s.
  • China’s business climate index fell two full points or 1.6% between 3Q13 and 4Q13.

Japanese industrial production growth in November was revised from a preliminary estimate of +0.1% to a dip of 0.1%, which still left the average level in October-November 1.6% above the 3Q mean.  Shipments were flat in November, and the inventory ratio dropped by 1.2% on month and 11.0% on year.  Capacity usage fell 0.5% from October but rose 6.2% on year, and capacity recorded a 12-month 1.1% rate of decline.

Japanese machine tool orders, according to revised estimates, posted a 28.1% advance between December 2012 and December 2013.

South Korean producer prices dropped 0.4% between end-2012 and end-2013, marking their 15th straight month of on-year decline.

House prices in New Zealand fell 1.1% in the year to December.  Expected Australian inflation over the coming year according to the MI-TD measure accelerated to 2.7% from 2.4%, no doubt because of the softer exchange rate.

German producer prices fell 0.1% on average in 2013 and 0.5% on an end-year to end-year basis.  It was the first calendar year drop in four years.  Even if one excludes energy, the PPI dropped 0.2% between December 2012 and December 2013.

The British Rightmove house price index recorded its largest on-year increase in January (+6.3%) since November 2007.  House prices went up 1.0% on month.

In the year to November, Italian industrial orders and sales climbed 3.0% and 0.4%, respectively.  Spanish industrial orders fell 5.1% in the year to November adjusting for variations in the number of business days. 

Belgian consumer confidence ticked a point higher to a reading of minus 4 in January.  Portuguese producer prices dipped 0.1% between end-2012 and end-2013.

Tomorrow should be a busier day, with a scheduled decision from Germany’s court on the constitutionality of the ECB OMT scheme and announced interest rate decisions from central banks in Turkey and Hungary.  New Zealand fourth-quarter consumer prices and the latest ZEW expectations indices for the euro area and Germany are also scheduled.

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

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