Some Market Relief after Chinese Data Announced

January 19, 2016

The eagerly awaited Chinese economic data confirmed slower growth late in 2015 but not as much so as feared.  Chinese data are notoriously distrusted, so one has to wonder how long today’s rally will last.

The dollar fell 1.1% against the Australian dollar, 0.7% versus the loonie, 0.2% relative to the kiwi and sterling and 0.1% vis-a-vis the yuan.  On the other hand, the dollar recovered 0.6% against the yen, which had previously benefited as a perceived safe haven, as well as 0.2% relative to the euro.  The Swissie is steady.

Share prices climbed 3% in China, 1.2% in India, 0.9% in Australia, 0.6% in South Korea and Taiwan, and 0.2% in Japan.  Stocks have recovered 2.2% in Germany, 2.0% in Greece, Switzerland and Spain, 2.5% in France, 1.1% in Italy and 0.% in Great Britain.

West Texas Intermediate oil rebounded 1.9% to $29.99 pr barrel.  Comex gold is 0.3% softer at $1,087.00 per ounce.

Ten-year sovereign debt yields climbed six basis points in Britain, 2 bps in Germany and a basis point in Japan.

Chinese real GDP grew 1.6% between 3Q and 4Q, posting an on-year gain last quarter of 6.8, just 0.1 percentage point lower than in 3Q.  GDP grew 6.9% on average during 2015, not far below the government’s 7% target.  On-year growth had been 7.3% in 4Q14, 7.7% in 4Q13, 7.6% in 4Q12, and 8.1% in 4Q11.

Chinese industrial production posted the same 6.1% year-on-year increase in December as in November.  That was down from 7.9% in the year to December 2014, however.  Output grew 5.9% on average last year versus 7.9% in 2014.

Chinese retail sales went up 11.1% in the year to December, 0.1 percentage point less than the prior month’s on-year pace.  Sales rose 10.7% on avefage in 2015, better than the 8% rise in 2014.

Fixed asset investment in China rose 10.0% last year, down from 15.7% in 2014.

British consumer price inflation was 0.2% in December after 0.1% in November and negative 0.1% in October.  Core inflation edged up 0.2 percentage points to 1.4% last month.  Retail price inflation of 1.2% in December was 0.1 percentage point above November’s pace.  Producer output prices recorded a smaller 1.2% on-year drop in December versus a decline of 1.5% in the year to November, while producer input prices sank 10.8% on year last month versus a drop of 13.1% in the year to November.  The DCLG measure of U.K. house price inflation accelerated to an 8-month high of 7.7% in November from 7.0% in October and July’s recent trough of 5.2%.

Eurozone consumer prices were unchanged on month in December and 0.2% higher than a year earlier.  Core CPI inflation stayed at 0.9%.  Energy dropped 5.8% between December 2014 and December 2015.

German consumer prices slid 0.1% on month in December and recorded a 0.3% 12-month increase, same as in October but below November’s outcome of 0.4%.

The German ZEW Economic Institute’s measure of investor sentiment toward Germany fell back to a reading of 10.2 in January, a 3-month low, from 16.1 in December.  Current conditions improved 4.7 points to a 4-month high of 59.7, however.  The sentiment index associated with Euroland fell to 22.7 in January from 33.9 in December in spite of a 2.1-point improvement to -7.5 in the reading for current conditions.

Euroland’s current account surplus widened to a 2-month high of EUR 22.6 billion in November on a seasonally adjusted basis from EUR 25.6 billion in October.

Construction output in the eurozone increased 0.8% in November and 2.1% from a year earlier.

The Swiss PPI/import price index in December fell 0.4% on month and had the same 12-month 5.5% rate of decline as recorded in November.  Domestic producer prices dipped 0.3% on month and fell 3.6% compared to a year earlier.

South Korean producer prices dipped 0.2% last month and posted a 3.9% December-to-December decrease.

Business sentiment in New Zealand swung from a -14% third-quarter reading to +15% last quarter.

Turkish monetary authorities are holding a policy meeting today. 

The U.S. NAHB housing index and TIC capital flow data will be reported later today.  Bank of England Governor Carney speaks publicly today.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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