Profit-Taking Friday

April 15, 2016

Investors were in a more sober mood at week’s end.

  • The dollar fell back 1.0% against the kiwi, 0.7% relative to the won, 0.5% versus the yen, 0.3% vis-a-vis the Aussie dollar and sterling, and 0.2% against the euro.  The loonie and yuan are unchanged.
  • Share prices in Europe are down 0.8% in Switzerland, 0.6% in Italy, France, and Germany, 0.5% in the U.K., and 0.4% in Spain.
  • Japan’s Nikkei also lost 0.4% overnight.  The Shanghai Composite edged down 0.1% despite a slew of reassuring Chinese data. Equities climbed 0.8% in Australia and 0.4% in New Zealand and Taiwan.  Indian markets were closed for a holiday.
  • Most ten-year sovereign debt yields fell overnight.  For instance, the Japanese JGB pushed deeper into the red, dropping 3 basis points to -0.13%.
  • West Texas Intermediate crude oil dropped 2.5% to $40.47 per barrel ahead of the Duha summit of producers.
  • Gold edged up 0.2% to $1,231 per ounce, but many industrial metals are lower.

Chinese GDP, retail sales, industrial production, fixed asset investment, and money and bank lending were reported. 

  • Real GDP recorded on-year growth of 6.7% last quarter, matching expectations but down from 6.8% in 4Q and 7.0% in the first quarter of 2015.
  • On-year retail sales growth accelerated more than expected to 10.5% in March from 10.2% in January-February and 10.2% in March 2015.
  • Industrial output beat street estimates by even more than retail sales, with a 12-month increase in March of 6.8% after 5.9% in January-February and 5.6% in March 2015.
  • Fixed asset investment, which had risen 10.0% in 2015 following 15.7% in 2014, recorded a 10.7% on-year increase in the first quarter of 2016.
  • New bank loans in March of CNY 1.37 trillion was almost twice the gain in February and above street forecasts although less than in January.
  • On-year growth of 13.4% in M2, 22.1% in M1 and 4.4% in M0 money was greater than the February results and beat analyst forecasts.

The weekend seems fraught with things that can go wrong.  Maybe oil suppliers fail to find common ground on a production freeze in Duha.  The IMF/World Bank meetings in Washington are bound to produce rhetoric stressing the fragile state of the world economy.  In Brazil, a vote on Sunday to impeach President Rousseff is expected.  Tuesday’s New York Primary shapes up as a pivotal event in the U.S. Democratic and Republican primaries.  The Democrats have conducted a more issue-oriented and civil contest than the Republicans until now, but that was less in evidence in Thursday night’s debate between Sanders and Clinton in Brooklyn.  Just over two months remain before the potentially catastrophic British referendum vote on whether to stay in the EU.

Revised Japanese industrial production scaled back the size of February’s drop from 6.2% reported initially to a still alarming 5.2%.  Output in January-February was 1.4% below the 4Q15 average, and February’s level was 1.2% less than a year earlier.  Inventories as a percent of shipments leaped 5.7% in February, and capacity usage tumbled 5.4%.

Euroland’s seasonally adjusted trade surplus in February of EUR 20.2 billion was the smallest since October.  Export growth of 0.7% on month was dwarfed by a 2.6% rise in imports.  The combined EUR 27.1 billion unadjusted January-February surplus was almost identical to the year-earlier amount and reflected drops of 0.3% on year in both exports and imports.

Car sales in the European Union recorded on-year growth of 6.0% in March, less than half as much as in February and below the 1Q pace of 8.2%.

Construction output in the U.K. recorded a second straight on-month decline in February, a dip of 0.3%.  Construction was just 0.3% higher than in March 2015.

Italy’s trade surplus of EUR 3.9 billion in February was 11% wider than a year earlier.

Icelandic CPI inflation dropped to a mere 0.3% in March from 0.9% the month before.

Turkish unemployment dipped 0.2 percentage points (ppts) in seasonally adjusted terms to 10.1%, but the unadjusted 11.1% was only 0.2 ppts less than in January 2015. South Korean joblessness slipped to 3.8% last month from 4.1% in February.

Retail sales in Singapore swung from a 7.6% on-year rise in January to a 3.2% drop in February. 

U.S. data releases today feature industrial production, the U. Michigan consumer sentiment index, the Empire State manufacturing index, and Treasury-compiled capital flows.  Canada’s monthly survey of manufacturing sales, orders and inventories also arrive.

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

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