Week Starts with More Sobering News about the Chinese Property Market

May 19, 2014

Chinese property prices rose 6.7% on year in April, down a whole percentage point from March and the smallest 12-month gain since May 2013.  Only 44 of 70 metro areas experienced higher prices in April than March, the fewest 3-1/2 years.  Overall house prices increased 0.3% on month.

The dollar edged up 0.1% against the yuan and Austraian dollar but fell by 0.3% relative to the yen, 0.2% against the euro and 0.1% vis-a-vis the Swiss franc and kiwi.  The U.S. currency is unchanged versus the loonie and sterling.

Share prices slumped 1.4% in China, 1.3% in Australia, 0.6% in Japan, 0.4% in New Zealnad and 0.3% in Indonesia.  Equities are also lower in Europe, led by drops of 2.5% in Italy and 1.0% in Spain.  Stocks are down 0.7% in Switzerland, 0.5% in Britain and and 0.4% in Germany and France.  Astrazeneca shares plunged after the firm rejected Pfizer’s final bid.

The 10-year German bund edged down a basis point, while the 10-year Japanese JGB yield ticked a basis point higher.  The 10-year British gilt is steady.

Commodities are firmer.  West Texas Intermediate oil rose 0.6% to $102.64 per barrel.  The price of gold is 0.5% higher at $1,300.10 per ounce.

Japanese core domestic machinery orders soared 19.1% in March and were 16.1% higher on year, far beating analyst expectations of a 6.5% gain.  Orders rose 4.2% last quarter but are expected to only rise 0.4% this quarter.  Government officials raised their assessment of machinery orders to “on a rising trend.”  Government orders for machinery fell 18.5% but are projected to leap 46.3% this quarter.

Producer output prices in New Zealand advanced by 0.9% in the first quarter versus 4Q13, the largest quarterly increase since 2Q13.  On-year PPI-O inflation of 4.0% was little changed from 3.8% in 4Q13 or 4.1% in 3Q13.  Producer input prices climbed 1.0% on quarter and 3.1% on year.

New Zealand’s service-sector purchasing mangers index climbed 0.4 point in April to a reading of 58.9, best since November 2011.

Real GDP in Thailand dropped 2.1% on quarter in the first quarter of this year and was 0.6% below its year earlier level.  Growth has been hurt by political instability.  In response to this latest data, officials revised projected 2014 growth to a range of 1.5-2.5%, 1.5 percentage points below their previous forecast.  Hong Kong’s jobless rate stayed at 3.1% last month.

Construction output in the euro area fell 0.6% in March, the first drop since October.  This trimmed the 12-month increase to 5.2% from 7.5% in the years to both January and February.  construction output climbed 2.3% in 1Q14 and by 8.4% versus the first quarter of 2013.

The British Rightmove house price index jumped 3.6% in May and accelerated to a year-over-year increase of 8.9% from 7.3% in April, 6.8% in March and 6.3% in January.  Bank of England Governor Carney identified the housing market as the greatest risk to continuing British economic recovery.

Spain’s indices of leading and coincident economic indicators ticked up 0.2% and 0.1% in March.  The Spanish trade deficit widened 28% to EUR 2.05 billion in March.

Portuguese and Czech producer prices in April were respectively 0.6% and 0.3% lower than a year earlier.  Sweden’s seasonally adjusted jobless rate stayed at 8.1% in April, while the unadjusted unemployment rate edged up 0.1 percentage point to 8.7% but was at the same level as in April 2013.

No U.S. economic statistics are being released today, and Canada’s markets will be shut for Victoria Day, celebrating Queen Victoria’s birthday.  Canada gained independence when she was queen.

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

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