A Mood to Take on More Risk

November 24, 2014

Asian markets rallied in lagged reaction to China’s interest rate cut on Friday, and European market confidence was heartened further by a better-than-forecast German business climate report.   Another supportive factor has been speculation that the ECB is poised to start purchasing sovereign debt soon.  This will be a light day from a data release perspective.  Japanese markets were closed to observe Labor Thanksgiving Day.

The dollar advanced 0.4% against the yen and Australian dollar, 0.2% versus the yuan, and 0.1% relative to the kiwi but has eased by 0.2% against the euro and 0.1% vis-a-vis the Swiss franc and sterling.  The loonie is unchanged.  The Russian ruble extended last week’s recovery by more than 1.5% today.

Share prices in the Pacific Rim climbed 2.6% in China, 2.0% in Hong Kong, 1.1% in Australia, 0.7% in South Korea, 0.6% in India and 0.3% in Taiwan.  In Europe, equities are stronger by 1.4% in Spain, 1.0% in France , 0.7% in Germany and 0.6% in Italy.

The 10-year British gilt yield firmed two basis points.  While the 10-year bund is only steady, Spain’s 10-year sovereign bond yield of 1.97% is a record low, and its Italian counterpart has fallen by 4 basis points.

Ahead of Thursday’s OPEC oil ministers meeting in Vienna, WTI crude oil began the new week with a 0.4% rise to $76.82 per barrel.  Comex gold is 0.2% lower at $1,195.70 per ounce.

The Ifo Institute index of German business climate completely reversed October’s 1.5 point slide, returning to September’s 104.7 level.  This prompted IFO analysts to declare, “the downturn in the German economy has ground to a half for the moment at least.”  Manufacturing, construction, wholesaling and retail all improved in November.  However, IFO’s sister index for services worsened to a reading of 19.3 in November from 23.8 in October.

Economic sentiment in the Czech Republic rose 1.3 points to the highest level since January 2011.  Consumer confidence hadn’t been as strong as in November since March 2007, and business confidence rose 0.8 points to a 44-month peak.

Brazilian consumer sentiment, by contrast, weakened by much more than forecast in November, dropping 6.2 points to 95.3.

Finnish producer prices were 0.3% lower than a year earlier in October, and Singapore’s CPI inflation rate of just 0.1% in October brought such to near a 5-year low.  Vietnam CPI inflation of 2.6% this month was lower than forecast.

Industrial production in Taiwan grew 9.0% between October 2013 and October 2014, surpassing expectations by 1.5 percentage points.

31 thousand Swiss jobs were created last quarter.

Scheduled U.S. data getting released today are the Chicago Fed National Activity Index, the Dallas Fed manufacturing index, and preliminary findings of the U.S. services and composite PMI surveys done by Markit Economics.  The Bank of Israel announces its latest interest rate decision.

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

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