Chinese GDP and a New Drop in Oil Prices

January 20, 2015

Chinese GDP recorded on-year growth of 7.3% last quarter, 7.3% in the second half of 2014, and 7.4% for the full calendar year.  2014 growth was the slowest since 1990 and below the government’s target for the first time years.

Other Chinese data released today showed

  • Industrial production rising at a 3-month high of 7.9% on year in December and by 8.3% in full 2014. 
  • On-year growth in retail sales of 11.9% was at a 4-month high and close to the average gain of 12.0% in full 2014.
  • Business investment growth last year of 15.7% was down from 15.8% in January-November.  That was the slowest pace since 2001.

West Texas Intermediate oil has traded 3.9% lower to $46.79 per barrel.  In response, U.S. share prices are lower on the day in spite of pretty across-the-board gains in Asia and Europe.

Comex gold went up 0.8% to $1,282 per troy once.

Share prices climbed 2.1% in Japan, 1.9% in India, 1.2% in China, 0.9% in Hong Kong, and 0.8% in Singapore and South Korea.  In Europe, stocks have so far risen by 1.0% in France and Spain, 0.8% in Switzerland, and 0.7% in Britain and Italy.  The German Dax is off 0.2%, however.

The dollar is mixed, with advances of 1.1% against the loonie, 1.0% versus the kiwi, 0.7% relative to the yen, and 0.2% vis-a-vis the euro but losses of 0.8% against the Swiss franc and 0.5% versus sterling.  The yuan is steady.

10-year sovereign debt yields have increased by two basis points in Canada and a single basis point in Germany, Japan, Switzerland and Britain.  But the 10-year U.S. Treasury yield is four basis points lower than last Friday.  U.S. markets were shut on Monday.

The IMF released updated forecasts for its October World Economic Outlook, revising projected 2015 and 2016 growth downward by 0.3 percentage points each to 3.5% and 3.7%.  The gloomier prognosis was made despite the fall in oil prices and upward revisions to the U.S. outlook now calling for GDP to rise 3.6% in 2015 and 3.3% next year.

Turkey’s central bank in a surprise cut the one-week repo rate by 50 basis points to 7.75%.  The previous reduction occurred a half year ago.  Overnight borrowing and lending rates were not changed.

The U.S. National Association of Home Builders housing market index remained at December’s reading of 57 in January. Such averaged 56 in the second half of 2014 and was also at 56 in January 2014.

Sweden’s Ministry of Finance revised projected 2015 growth to 2.4% from 3.0%.  Officials expect 2.7% growth in 2016 versus a forecast of 3.2% made three months ago.

German producer prices fell 0.7% on month and 1.7% on year in December.  Non-energy producer prices fell 0.4% on year, while energy tumbled 4.9%.  The PPI posted an average drop of 1.0% in calendar 2014.

The ZEW Economic Institute’s index of investor expectations toward Germany jumped 13.5 points to an 11-month high of 48.4 in January, goosed by the likelihood of ECB quantitative stimulus and the recent slide in oil prices.  Current conditions improved 12.4 points to a 4-month high of 22.4.  The ZEW expectations index for Euroland printed at 45.2, 13.4 points better than in December.

German agreed earnings grew 3.1% last year following increases of 2.4% in 2013, 2.7% in 2012, and 1.7% in 2011.

Euroland’s fiscal deficit-to-GDP ratio slid to 2.3% in 3Q14 from 2.5% in the second quarter and 2.9% a year earlier.

Consumer confidence in Belgium improved three points to a 7-month high of minus nine in January.

Canadian manufacturing sales fell another 1.4% in November, slicing the 12-month increase to 2.6% from 4.8%.  Orders fell 1.7% on month but rose 2.9% on year.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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