Stocks, Commodities, Bond Yields Slip ahead of U.S. Data

May 13, 2016

Markets are ending the week on a risk averse note. 

  • The yen advanced 0.9% against the dollar in spite of Bank of Japan Governor Kuroda’s assertion that the central bank is prepared to ease decisively further.
  • A lower open is indicated in U.S. stock futures.  Downward momentum was fueled by yesterday’s gloomy report from Macy’s.  U.S. retail sales are due later.
  • The Japanese Nikkei fell 1.4%, and stocks also dropped 1.0% in Hong Kong, 1.2% in India, 0.9% in Indonesia, 0.7% in Taiwan, 0.6% in Australia, 0.5% in South Korea, 0.4% in Singapore and 0.3% in China.
  • Share prices in Europe are down 1.4% in Greece, 0.5% in the U.K. and Italy, 0.4% in Switzerland and France and 0.1% in Spain and Germany.
  • Ten-year British gilt and German bund yields slipped by two and one basis points.
  • West Texas Intermediate oil dropped back 1.7% to $45.93 per barrel.
  • Other commodities like iron ore cheapened. 
  • Gold edged up 0.3% to $1,275.40 per troy ounce.

The dollar strengthened against many emerging market currencies.  Relative to other advanced economy monies, the dollar has risen 0.5% against the Aussie dollar, 0.3% relative to the loonie and kiwi, and 0.2% versus the euro and sterling.  The yuan is flat, and so is the Swiss franc.

Peru’s central bank interest rate was kept unchanged at 4.25%.  Officials engineered for 25-basis point increases between September 2015 and this past February.

The Bank of Korea left its main interest rate at 1.50%.  The last change was a 25-basis point cut in June 2015.

Real GDP in the eurozone rose 0.5% last quarter, which was not quite up to street expectations but nonetheless the quickest growth pace in a year.  GDP grew 1.5% over the past four quarters, up from 1.3% in the year between 1Q14 and 1Q15.  Within the common currency area,

  • German GDP growth accelerated to 0.7% on quarter from 0.3% gains in the two last quarters of 2015.  GDP was 1.6% higher than in 1Q15.
  • French GDP rose 0.5% on quarter and 1.3% on year.
  • Italian GDP went up 0.3% on quarter and 1.0% from the first quarter of 2015.
  • Spanish GDP increased by 0.8% for a third straight quarter and was 3.4% greater than a year earlier.
  • Dutch GDP growth accelerated to 0.5% from 0.3% the quarter before, and GDP recorded on-year growth of 1.4%.
  • Greek GDP contracted 0.4%, generating a third straight on-year drop, this time of 1.3%.
  • Portuguese GDP edged up just 0.1% on quarter and 0.8% on year.
  • Finnish GDP went up 0.4% on quarter but just 0.9% on year.
  • GDPI in Austria grew 0.6% on quarter but merely 1.0% on year.
  • In Cyprus, GDP rose 0.9% on quarter and 2.7% on year.
  • Belgian GDP advanced 0.5% on quarter and 1.5% on year.

Other reported GDP figures released today showed a 0.4% quarterly contraction in Hong Kong along with a year-on-year rise of 0.8%.  Poland’s GDP dipped 0.1% in 1Q16 , cutting the four-quarter rate of growth there to 2.5% from 4.0% in 4Q15.  In the four quarters through 1Q16, GDP rose 4.2% in Malaysia and Romania, but just 0.5% in Hungary where such dropped 0.8% relative to 4Q15.

Japanese M2 money grew 3.3% in the year to April, in between increases of 3.4% in 4Q15 and 3.2% in the first quarter of 2016.

Japan’s tertiary index, a gauge of service sector activity, rose 0.7% in March but just 0.1% in the first quarter.  Japan reports real GDP next week.  The tertiary index edged 0.1% lower between March 2015 and March 2016.

Retail sales in Singapore dropped 1.4% in March but posted a 5.1% on-year advance.

German consumer prices posted April declines of 0.4% from March and 0.1% from a year earlier.  Energy prices rose 0.9% on month but fell 8.5% on year.  All other consumer prices were down 0.6% on month but up 0.9% on year.

Spanish consumer prices fell 1.1% in the year to April after posting a 12-month 0.8% rate of decline in March.

Italian consumer prices in April were 0.5% lower than a year earlier.

Greek import prices plunged 7.8% in the year to March.

British construction output slumped 3.6% in March and 4.5% from a year earlier.  The first quarter’s average level was 1.1% lower than the 4Q15 mean and down 1.9% from 1Q15.

April car sales in the 25-nation European Union surpassed their year-earlier level by 9.1%.

New Zealand retail sales volume rose 0.8% in the first quarter.

U.S. producer prices will be reported today as well as retail sales.  The U. Michigan/Reuters consumer sentiment index for May arrives, too.

Brazilian President Rousseff has been impeached and suspended from her duties at least temporarily.

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

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