Fresh Appreciation for Latest ECB Actions Spurs Market Rally

March 11, 2016

Share prices in Europe have rallied 3.1% in Germany, 4.4% in Italy, 3.3% in Spain, and 1.6% in Great Britain.

Stock markets in the Pacific Rim closed up 0.3% in Australia, 0.5% in Japan, 0.2% in China and 0.4% in India.

The Dow shows a current daily advance of 1.2%.

West Texas Intermediate crude oil rebounded by a strong 2.4% to $38.76 per barrel, while comex gold fell 1.2% back to $1,256.85 per ounce.

The risk-in mood is reflected in 10-year sovereign debt yield increases of 3 basis points in the U.S. and U.K. and one basis point in Japan.

The National Bank of Poland left its key interest unchanged at 1.5% as markets were expecting.  The last changes were  in January and March of 2015, when the rate was cut by 50 basis points each time.

Construction output in the U.K. was weaker than forecast in January, slipping 0.2% on month and 0.8% on year.  Britain’s trade deficits eased only marginally in January after spiking the month before.  The goods and services deficit of GBP 3.459 billion was down from GBP 3.699 billion in December, and the  merchandise deficit contracted just 1.5% to GBP 10.289 billion.

The Bank of England’s quarterly survey of inflation expectations in February showed a forecast of 1.8%, least since the November 1999 poll.

German consumer price inflation dropped a half percentage point to a five-month low of zero in February,  matching the one-year low.  German wholesale prices dropped 0.5% on month in February, nearly doubling their year-on-year rate of decline to 1.9%.

Reflecting the distortion of the New Year holiday in part, Chinese bank lending fell to a 10-month low of 727 billion yuan in February from January’s record high of CNY 2.510 trillion.  M0 money was 4.8% lower than a year before, a 13-month low, while M2 growth of 13.3% and M1 growth of 17.4% were at 2-month lows.

Japan’s Ministry of Finance reported a deterioration of business sentiment from a reading of +4.6 last quarter to -3.2 this quarter, and the index is expected to stay in the red until 3Q16.

U.S. import prices slipped 0.3% on month and dropped 6.1% in the year to February.  Such had fallen 10.2% in the prior 12 months to February 2015.  Energy was the dominant depressant, but non-fuel import prices were 2.7% lower than a year earlier.

Canadian unemployment edged up for a second straight time, reaching 7.3% in February afteer 7.2% in January and 7.1% in December.  Jobs fell 2.3K last month after sliding 5.6K in January and were only 0.7% higher than in February 2015.

New Zealand’s manufacturing purchasing managers index printed 2.0 points lower at 56.0 in February, a 3-month low.  New Zealand food prices dropped 0.5% between February 2015 and February 2016.

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

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