Hong Kong Upheaval and Quarter-End Deluge of Data

September 30, 2014

The euro touched a new low of $1.2571 overnight on this final day of the third quarter, down from $1.3693 at midyear.  Overnight net rises in the dollar amount to 0.7% against the euro and Swiss franc, 0.3% versus the yen and sterling, 0.2% relative to the loonie and 0.1% against the Australian and New Zealand dollars.  The yuan has firmed 0.2%.

Share prices fell another 1.3% in Hong Kong, 0.8% in Japan, 0.4% in Singapore and 0.3% in South Korea.  Australia’s market rose 0.5%, and stocks in Europe show gains of 1.3% in Italy, 1.2% in France and Spain, and 0.6% in Germany.  The British Ftse is unchanged.

Ten-year sovereign debt yields are unchanged in Britain and Japan.  The 10-year German bund is a basis point softer.

Comex gold slumped 1.1% to $1,205.60 per ounce.  WTI crude oil dropped 0.4% to $94.35 per barrel.

Street riots in Hong Kong escalated.

Released data present a mixed bag.  Still to come: U.S. consumer confidence, Case Shiller house price index, Chicago and Milwaukee regional PMIs, and Canadian GDP and producer prices.

Japan reported better-than-expected unemployment, labor cash earnings, retail sales, lower than expected small business sentiment, industrial production, and real household spending and income, plus weak housing data.

  • The jobless rate fell 0.3 percentage points to a 3-month low in August of 3.5%.  Employment was 0.8% higher than in August 2013, but the 1.10 job offers-to-seekers ratio was unchanged.
  • After a surprisingly large July 2.6% on-year jump in labor cash earnings, a gauge of wage inflation, such were 1.4% above a year earlier in August.  This was the sixth on-year advance in a row.
  • Retail sales grew 1.9% on month and 1.2% on year in August.  Large store sales posted on-year growth of 1.6%.
  • The Shoko Chukin index of small business confidence fell to a 3-month low of 47.6 in September from 47.7 in August and 48.7 in July.
  • Industrial production, which analysts expected to show a 0.2% uptick in August, fell 1.5% instead and was 2.9% weaker than in August 2013.  METI officials said output “has weakened,” which was also the assessment after June and July figures got released.  The inventory ratio jumped 8.5% on month and 7.0% on year.  Motor vehicle output fell 6.7% on year.
  • Real household spending slid 0.3% on month after a 0.2% dip in July and posted a 12-month 4.7% rate of decline.  Real disposable income sank 5.2% below its year-earlier level.
  • Housing starts posted an on-year drop of 12.5% in August after declines of 15% in May, 9.5% in June and 14.1% in July.  Construction orders growth of 8.6% in August was the smallest 12-month advance since March.

In the euro area,

  • Consumer price inflation slipped further to 0.3% in September from 0.4% in July and August and 1.0% in September 2013.  Core inflation dropped 0.2 percentage points to 0.7%.  Service sector price inflation also declined by 0.2 percentage points as did inflation among non-energy industrial goods.
  • Unemployment remained at 11.5% for a third straight month in August.  The youth jobless rate is 23.3% in the common currency area.
  • German retail sales volume jumped 2.5% on month in August, enabling the average level in July-August to exceed the 2Q level by 0.8%.  August sales were 0.1% higher in August than a year before.
  • German unemployment unexpectedly rose 12K in September, although the jobless rate of 6.7% since March remained unchanged.  Employment was 0.8% higher than a year earlier in July-August.
  • French consumer spending rose 0.7% in August, reversing a 0.7% drop in July. 
  • French producer prices dipped 0.3% on month in August and recorded a 12-month 1.4% rate of decline.
  • Italian CPI inflation remained at negative 0.1% in September, and producer prices posted a 1.7% drop in the year to August, the deepest such decline since March 2013.  Italy’s jobless rate improved 0.3 percentage points to 12.3% in August.
  • Greek and Austrian producer prices fell by 0.6% and 1.0% in the year to August.
  • Portuguese industrial production and retail sales recorded on-year growth in August of 3.5% and 1.3%, respectively.

Britain’s Nationwide house price index dipped 0.2% on month in September, breaking a 16-month-long streak without a drop.  The 12-month pace of increase slowed to 9.4% from 11.0% in August.

British GDP growth in 2Q14 was revised up a tad to a quarterly gain of 0.9%, while the on-year pace held at 3.2%.  The U.K. current account deficit of GBP 23.1 billion was 12.7% wider than the 1Q shortfall and exceeded analyst expectations, too.

Consumer confidence in the U.K. fell two points to minus 1 in September after showing a 3-point improvement in August.

Danish GDP was only 0.4% greater than a year before in 2Q according to revised statistics.  Icelandic producer prices were 5.6% above a year before in August.

Two central banks reported policy meeting results.

  • The Reserve Bank of India kept key interest rates including the 8% repo unchanged.
  • The National Bank of Romania as expected cut its benchmark by 25 basis points to a record low of 3.0%.  There have been 4 such cuts so far in 2014.

Industrial production in South Korea, which analysts expected to rise marginally, instead plunged 3.8% in August, sending the 12-month change into the red with a drop of 2.8%.  But South Korea also reported a rise in business sentiment.

New Zealand business sentiment weakened sharply to 13.4% in August from 24.4% in July.  New Zealand building permits stagnated in August after ticking 0.1% higher in July.

Australian on-year M3 money growth accelerated to 8.2% in August from 7.5% in July.  Private credit expanded 5.1%, same as in July.

China’s index of leading economic indicators slid 0.1% last month.  The HSBC-compiled purchasing managers index for manufacturing was revised down 0.3 points to 50.2 for September.  That’s the same as August’s result and below 51.7 in July, 51.0 in June and 50.8 in May.

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

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