Continuing Focus on Emerging Market Difficulties

January 27, 2014

Asian share prices were battered additionally at the start of the new week.  Stocks fell 2.5% in Japan, 2.6% in Indonesia, 2.1% in Hong Kong, 2.0% in Thailand and India, 1.8% in the Philippines, 1.6% in South Korea and Taiwan, 1.3% in China and Malaysia, and 1.1% in Singapore.  While the British Ftse followed suit and is 1.3% lower, other European bourses show milder movement.  Equities are off 0.5% in Switzerland, 0.2% in Germany and 0.1% in Spain but unchanged in Italy and up 0.1% in France.

Several emerging market currencies such as the South African rand took a further tumble.  However, initial losses in the Turkish lira were reversed and then some after word of a non-scheduled meeting of Turkish monetary policymakers tomorrow to address the currency’s depreciation.

Australian’s are observing Australia Day.

The dollar is mixed against advanced currencies, with overnight gains of 0.5% against the yen, 0.4% versus the Swissie, and 0.1% relative to the euro but drops of 1.2% against the Aussie dollar, 0.2% vis-a-vis the loonie, 0.3% against sterling and 0.1% versus the kiwi.  The yuan is steady.

Ten-year sovereign debt yields have recovered three basis points in the U.K. and a basis point each in Japan and Germany.

WTI crude oil firmed 0.3% to $96.88 per barrel.  Gold is 0.1% softer at $1,263.10 per ounce.

Japan posted a JPY 1.302 trillion unadjusted customs trade deficit in December, 101.6% greater than a year earlier.  In seasonally adjusted terms, the December deficit totaled JPY 1.149 trillion, which lay in between JPY 1.294 trillion in November and JPY 1.086 trillion in October.  2013 saw a record JPY 11.475 trillion deficit, 65% greater than the deficit in 2012.  Exports went up 9.5% in 2013 but were eclipsed by a 15.0% jump in imports.

The German IFO business climate index printed 1.1 points higher in January at 110.6.  The subindex for current conditions, 112.4, was 0.8 points higher and at a 19-month peak, while expectations improved by 1.5 points to a near three-year peak of 108.9.  The three readings in January 2012 had been 104.2 overall, 108.0 for current conditions and 100.5 on expectations.  January’s improved business climate index was the third rise in a row, and the rise from December reflected higher readings in manufacturing, construction and wholesaling most of all.  The IFO services climate index printed at 25.5 in January, up from 23.9 in December, 19.3 in November and 15.7 in October.

Dutch business sentiment improved more than anticipated in January and printed at 0.7. 

South Korean consumer confidence went up two points to 109 in January, a 3-year high.  Such had been at 102 in September. 

New Zealand’s Performance of Services index recovered to a reading of 57.5 in December from 56.4 in November and 58.0 in October.

Euro area finance ministers are holding a monthly meeting today in Brussels.

Scheduled U.S. data releases today are new home sales, the Dallas Fed manufacturing index, and Markit Economics’ preliminary estimate of the services PMI.  The Bank of Israel will reveal its decision regarding its interest rate for the month of February.

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

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