Fresh Concern about Chinese Growth

September 22, 2014

Investor uneasiness that China’s government is not doing enough to promote faster growth were not alleviated by overnight remarks from China’s finance minister, nor from a G20 statement that talked in generalities but not specifics.  The preliminary September Chinese purchasing managers index for manufacturing gets released on Tuesday.

Group of Twenty finance ministers and central bank heads released a statement over the weekend following their meeting in Cairns, Australia.  It set a goal of 1.8% more collective GDP growth through 2018.  See review for further details.

New Zealand Prime Minister John Key’s National Party won reelection, signaling fiscal policy continuity.  Although securing a narrow parliamentary majority, Key seeks a junior party in forming his next government.

Consumer confidence in New Zealand slumped 3.7% to a reading of 116.7 in the third quarter from 121.2 in 2Q and 120.7 in 1Q.  116.7 is the lowest reading in a year.

Share prices in the Pacific Rim rose 1.1% in New Zealand but fell by 1.9% in China, 1.4% in Hong Kong, 1.3% in Australia, 1.1% in Taiwan and 0.7% in Japan and South Korea.  In Europe, equities have fallen so far by 0.8% in Britain, 0.3% in Switzerland and Italy, and 0.2% in France and Germany.

The dollar posted overnight losses of 0.4% vis-a-vis the yen, 0.2% versus sterling and 0.1% against the euro and Swiss franc, but the U.S. currency has risen 0.5% relative to the Australian dollar, which is especially influenced by the strength of Chinese demand, 0.3% vis-a-vis the loonie and 0.1% against the yuan.  The kiwi is steady.  A former deputy governor of the Bank of Japan said the yen had weakened beyond what is fundamentally appropriate.

10-year sovereign debt yields are down three basis points in Britain and two basis points each in Germany and Japan.

West Texas Intermediate oil dropped 0.5% overnight to $91.98 per barrel.  Comex gold eased 0.2% to $,214.80 per troy ounce.

Bundesbank President Weidmann criticized the latest initiatives by the ECB to promote growth as veering too close to outright quantitative easing.  ECB President Draghi will be speaking to the EU Parliament later today.

Italian industrial orders fell 1.3% in July and were 1.0% lower than a year earlier.  Sales posted monthly and on-year declines, too.

Danish consumer confidence fell 4.3 points to a score of 7.1 in September.  Danish retail sales in August rose 0.6% after being flat in July.

Swiss year-over-year M3 money growth decelerated to 3.4% in August from 3.6% in July.  The Swiss current account surplus widened 3.7% to CHF 14.87 last quarter.  The Greek current account surplus grew 22.6% on month to EUR 1.683 billion in July.

Icelandic wages increased 0.6% last month and accelerated to a 12-month 6.3% rate of rise.

CPI inflation in Hong Kong edged down to 3.9% last month from 4.0% in August.  Hong Kong’s current account deficit widened sharply to HKD 8.9 billion in 2Q from HKD 4.4 billion in the first quarter.  The growth of Taiwanese export orders, 0.1% on month and 5.2% between August 2013 and August 2014, was less than forecast.  The Filipino current account surplus increased 59% to $3.12 billion in the second quarter.

The Conference Board announced a 0.5% decline in India’s index of leading economic indicators during July, along with only a 0.2% rise in the index of coincident economic indicators.

Scheduled U.S. data to be released today are monthly existing home sales and the Chicago Fed National Activity Index.  The presidents of the New York and Minneapolis Federal Reserves speak publicly today.  The Bank of Israel reveals its latest interest rate decision.

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

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