Investors React to a Batch of Good News
April 19, 2016
Investors are feeling better about U.S. corporate earnings and the chances that China’s economy will avoid a hard landing.
The Bank of Korea did not cut its interest rate, and minutes from the early April Reserve Bank of Australia Board meeting showed no rush to ease, either.
Sentiment toward Germany and Euroland improved much more than expected in April, according to the German ZEW Institute monthly survey.
Oil prices climbed back above the $40 per barrel level, heartened by a worker strike in Kuwait. Precious metals rose too, gold by 0.8% to $1,242.48 and silver to a 10-month peak.
An ECB study claims that its negative deposit rate is promoting bank lending in the euro area.
Emerging market currencies like the South Korean won, which hit a 5-month high, and the rand improved.
The dollar fell 1.1% against the kiwi, 0.5% relative to the loonie and Aussie dollar, and 0.1% vis-a-vis the yuan, euro and Swiss franc.
The yen performed even worse than the dollar, falling 0.5% overnight. Japanese trade figures arrive Wednesday.
Share prices in the Pacific Rim rose 3.7% in Japan, 3.0% in China, 1.2% in Singapore, 1.1% in Hong Kong, 1.0% in Australia, 0.7% in India and 0.5% in New Zealand.
Stocks in Europe have risen thus far by 2.3% in Germany, 1.1% in France, 1.0% in Spain and Switzerland and 0.4% in Great Britain.
10-year sovereign debt yields are up two basis points in the U.K., unchanged in Germany, and a basis point lower in Japan at a new low of -0.14%.
WTI oil rose 1.5% to $40.36 per barrel.
The ZEW expectations index for Germany, a gauge of investor sentiment, rose to a 4-month high of 11.2 in April from readings of 4.3 in March and 1.0 in February. The ZEW expectations index for the eurozone doubled to a 3-month peak of 21.5 from 10.6 the month before. In each case, however, the current situation assessment weakened: Germany’s by 3.0 points to 47.7 and Euroland’s by 0.3 points to minus 12.1.
Euroland’s seasonally adjusted current account narrowed EUR 8.5 billion to EUR 19.0 billion in February. The unadjusted current account surplus during the dozen months through February of EUR 323.8 billion was 22.5% bigger than that in the prior 12 months to February 2015, and as a percentage of GDP such climbed a half percentage point to 3.1%.
Construction output in the eurozone fell 1.1% in February after rising 2.4% in January. Compared to a year earlier, such increased 3.7% in January-February, an improvement over the 0.3% on-year uptick in the final quarter of 2015.
Japanese department store sales recorded a 2.9% on-year decline in March after a 0.2% rise in February. Tokyo sales were 1.1% lower than in March 2015.
The Bank of Korea’s seven-day repo rate was kept at 1.5% in spite of the strengthening won. Officials noted improved sentiment and an upturn of inflation, albeit still below target.
The Reserve Bank of Australia minutes expressed satisfaction with the current policy stance but growth concern about the Aussie dollar’s recently firmer tone. The Official Cash Rate is at a record low of 2.0%.
Hong Kong’s seasonally adjusted jobless rate ticked marginally higher to 3.4% in 1Q16, highest since 4Q13.
New Zealand’s performance of services index fell 1.9 points to a 16-month low of 54.8 in March.
Producer price inflation in Russia has fallen to 3.5% as of February from 7.5% in January, 10.7% in December and 13.9% in November. Polish producer prices fell 1.7% in the year to March.
Italy recorded a EUR 36.8 billion current account surplus during the 12 months through February, up from EUR 30.2 billion a year earlier. The February surplus of EUR 1.4 billion was 26.6% wider than the February 2015 surplus.
U.S. housing starts and building permits data will be released today.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: eurozone current account and construction output, silver prices, ZEW Institute sentiment indices
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