Holiday Closures in the United States and Canada

September 7, 2015

Financial markets today will lack the leadership of North American participation due to Labor Day closures in the United States and Canada.

The dollar is mixed, dropping 0.6% against sterling, 0.4% versus the Aussie dollar and 0.1% relative to the euro but advancing 0.4% against the kiwi, 0.3% vis-a-vis the yen, and 0.1% relative to the loonie, Swissie and yuan.

Ten-year British gilt and Japanese JGB yields edged up two and one basis points, while the 10-year German bund dipped a basis point.

In stock market action, The Chinese Shanghai Composite plunged 2.5%, and equities lost 2.6% in Indonesia, 1.2% in India, 0.9% in Hong Kong, 0.4% in Singapore and 0.2% in South Korea and Australia, but the Japanese Nikkei closed 0.4% higher.  Stocks are also up 0.6% in Italy, 0.4% in Germany and Switzerland, and 0.3% in France but have edged 0.1% lower in Britain.

WTI crude oil is 1% lower at $45.56 per barrel.  Comex gold is steady at $1,121.85 per ounce.

From Ankara, Turkey Group of Twenty finance ministers and central bank leaders released a statement Saturday that neglected to cite specific economies, asserted that “global growth falls short of our expectations,” and laid out the following broad policy recommendations including a pledge to avoid competitive devaluations:

We reaffirm the role of macroeconomic and structural policies to support our efforts to achieve strong, sustainable and balanced growth. Monetary policies will continue to support economic activity consistent with central banks’ mandates, but monetary policy alone cannot lead to balanced growth. We note that in line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies. We reiterate our commitment to move toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments. We will refrain from competitive devaluations, and resist all forms of protectionism. We will implement fiscal policies flexibly to take into account near-term economic conditions, so as to support growth and job creation, while putting debt as a share of GDP on a sustainable path. To this end, we will also continue to consider the composition of our budget expenditures and revenues to support productivity, inclusiveness and growth.

German industrial production rebounded 0.7% in July after declining by 0.9% in June.  A faster recover had been predicted, and factory output only bounced 0.3% from the prior month’s slide.  Production of consumer goods sank 3.7% on month and was 2.9% below the 2Q average.  Overall industrial production was only 0.5% greater in July than a year earlier.

Japan’s index of leading economic indicators slipped 1.6 points to a 4-month low of 104.9 in July.  The index of coincident economic indicators also nudged lower, prompting officials to designate its trend as “weakening,” which was the third straight such label versus “improving” previously during the first four months of 2015.

Japanese international reserves, up $1.834 billion in August, rose for the first time since April.  There had been a $7.757 billion drop in May-July.

Chinese officials revised 2014 growth down 0.1 percentage point to 7.3% due mainly to a weaker estimate of service sector activity.

The Sentix measure of investor sentiment toward the eurozone fell 4.8 points to a reading of 13.6 in September, lowest since 12.4 last February.

Industrial production data for July were released in Denmark, Norway, and the Czech Republic.  Danish output fell 3.7%, reversing a similar rise in June and leaving the output level 0.4% lower than a year earlier.  Norwegian production dropped 1.5% on month but repeated June’s 2.8% on-year advance.  Czech output advanced by 1.2% and a greater-than-forecast 4.6% from a year before.

Finland recorded a EUR 500 million January-July trade surplus, EUR 2.0 billion better than a year before.  The Greek trade deficit of EUR 590 million in July was 55% smaller than June’s imbalance.  The Czech trade surplus of CZK 6.76 billion in July was only about half as large as forecast and 61% smaller than in June. 

Austrian wholesale prices fell 3.7% between August 2014 and August 2015, the largest on-year drop since February.

Australia’s construction purchasing managers index jumped 6.7 points in August to an 11-month high reading of 53.8.  It was the first score above the 50 no change line since March.  Australian job ads climbed 1.0% on month in August following a 0.5% decline in July and a 1.2% increase in June.  Ads were 16.7% greater than in August 2014.

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

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