Most Stock Markets Head Back Lower

February 1, 2016

Share prices fell 1.8% in China, 1.0% in Singapore, 0.4% in Hong Kong and 0.2% in India.  European equities are so far down 1.1% in Germany, France, and the U.K., 0.8% in Italy a and 0.3% in Switzerland and Spain.  Stocks rose 2.0% in Japan, 0.8% in Australia and 0.7% in South Korea.

Ten-year sovereign debt yields rose four basis points in the U.K. but fell 5 bps to a mere 0.04% in Japan.  The German bund is 2 basis points lower at 0.31%.

West Texas Intermediate crude oil turned back downward, dropping 3.6% to $32.42 per barrel.  Comex gold climbed 0.5% to $1,123.90 per ounce.

The dollar fell 0.5% against the euro and Swissie and 0.4% versus sterling.  The greenback edged up 0.2% relative to the yen, 0.1% vis-a-vis the loonie and kiwi and is steady against the yuan and Australian dollar.

Results from a slew of manufacturing purchasing manager surveys for January were reported.

First, Euroland’s PMI replicated the flash indication of 52.3, 0.9 points lower than in December and at a 3-month low.  Manufacturing stagnated in both France (a five-month low of 50.0) and Greece (a two-month low of 50.0).  Positive but slower expansion in the factory sector were signaled by PMI readings of 52.5 in The Netherlands (an 11-month low), 53.2 in Italy (a 4-month low) and 52.3 in Germany (a 3-month low).  Spain’s 55.4, Ireland’s 54.3, and Austria’s 51.2 score represented 8-, 6- and 2-month highs.  Spain experienced the fastest factory sector growth in Euroland for the first time in 11 years. The data are consistent with eurozone factory-sector growth of 1.5% early this quarter but also indicate intensifying deflationary pressure exerted by input prices.

China’s Caixin-compiled manufacturing PMI was again below the 50 no-change level in January, printing at 48.4, which is a 2-month high but the same level as the fourth-quarter average.  The government-compiled manufacturing PMI also arrived below 50, printing 0.3 points below December’s reading at 49.4.  The government’s non-manufacturing PMI dropped 0.9 points to 53.5.

Australia’s Performance of manufacturing index sank 0.4 points to a 4-month low of 51.5.

Japan’s manufacturing PMI dipped 0.3 points below December’s 21-month high to 52.3, a 4-month low.  Input prices fell for the first time in over 3 years.

South Korea’s PMI slid 1.2 points to a 2-month low of 49.5.

Taiwan’s PMI also was at a 2-month low, dropping 1.1 points to 50.6 with slower growth in both production and new orders.

Indonesia’s PMI increased 1.1 points to a 15-month high but, with a sub-50 reading of 48.9, indicated continuing contraction and a record low input price sub-component.

Malaysia’s 48.6 indicated the slowest rate of decline in eight months.

Vietnam’s PMI of 51.5 was at a 6-month high and above 50 for the third time in four months.

India’s manufacturing PMI bounced back above 50 to a 4-month high of 51.1 from December’s 49.1 reading, which had been depressed by flooding.

Turkey’s PMI sank to a 2-month low of 50.9.

The British manufacturing PMI climbed 0.8 points to a 3-month high of 52.9.  Input prices were strongly deflationary.

Russia posted a PMI score of 49.8, up 1.1 points but only a 2-month high. 

In Norway, an energy exporter, the PMI jumped 2.1 points to a 9-month peak of 49.2.

Sweden’s PMI sank to a 2-month low of 55.5, still conveying robust expansion.

Poland’s PMI fell 1.2 points to a 4-month low of 50.9.

But the Czech PMI improved 1.3 points to a 6-month high of 56.9.

And Hungary scored a 53.0, 3.1 points better than December’s reading and a 2-month high.

The South African factory PMI fell 2.0 points to 43.5.  The factory sector is deeply in recession.

Brazil’s manufacturing PMI also lay well below 50 but, being up 1.8 points to 47.4, indicated a slower pace of contraction.

The Central Bank of Colombia hiked its key interest rate to 6.0% from 5.75%.  The action had been anticipated.

Consumer prices in Thailand fell 0.5% between January 2015 and last month, while producer prices tumbled 2.4% in the same 12-month span.

Indonesian CPI inflation accelerated to 4.1% in January from 3.3% in December, but core inflation slowed 0.3 percentage points to 3.6%.

Japanese motor vehicle sales posted a deeper 6.9% on-year slide in January. 

The South Korean current account surplus narrowed 25% in December compared to November.  It’s $7.46 billion size compares to an average of $8.95 billion over the first 11 months of 2015.

A fresh phase of the U.S. presidential election campaign begins tonight with the Iowa Caucus.

U.S. personal spending was flat in December, marginally softer than forecast.  Personal income rose by an as-expected 0.3%.  The PCE deflator — up 0.6% on year for all items and 1.4% for core — remain substantially under the Fed’s medium-term goal of 2%.

Still to come: U.S. construction spending and U.S. manufacturing PMI.

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

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