Weaker-than-Expected Chinese Data and a Rise in Oil Prices

May 16, 2016

In April, Chinese M2 money grew 12.8% on year, down from 13.4% in March and a recent high of 14.1% in January.  The 12-month increase in industrial production and retail sales slowed to 6.0% and 10.1% from 6.8% and 10.5% in March.  Fixed asset investment in the first four months of 2016 was 10.5% greater than a year earlier, down from a first-quarter pace of 10.7%.

An upwardly revised projected average crude oil price released by Goldman Sachs for the second half of this year lifted West Texas Intermediate by 2.0% to $47.12 per barrel.  Comex gold advanced 0.8% to $1,283.40 per troy ounce.

The dollar is narrowly mixed,recording gains of 0.2% against the yen and 0.1% relative to the Swiss franc and sterling along with losses of 0.4% versus the kiwi, 0.2% vis-a-vis the Australian dollar and 0.1% against the Swiss franc, Chinese yuan and Canadian dollar.  Emerging market currencies are also mixed, with gains in the Russian ruble and Polish Zloty but declines in the South African rand and South Korean won.

Share prices in the Pacific Rim rose 0.8% in China and Hong Kong, 0.6% in Australia and India, and 0.3% in Japan.  The German and Swiss markets are shut for Whit Monday.  Elsewhere in Europe, stocks are down 1.2% in Spain, 1.0% in France, 0.5% in the U.K., and 0.4% in Italy.

The 10-year British gilt yield is two basis points lower, while the 10-year Japanese JGB edged up a basis point.

Japanese domestic corporate goods prices dropped 0.3% on month and 4.2% on year in April.  The 12-month slide was the most since November 2009.  Import prices were 13.7% lower than a year earlier.  Separately, a 26.4% on-year drop reported in Japanese machine tool orders for April was the largest decline since before mid-2015.

New Zealand’s services purchasing managers index rose 2.6 points to a 4-month high of 57.7 in April.

Indian wholesale price inflation of 0.3% in April was the first 12-month increase since May 2015, reflecting lessening energy price deflation and a somewhat larger 12-month rise in food.

Indonesia’s trade surplus widened over 30% on month to $670 million because imports fell more sharply than exports.

Turkey’s seasonally adjusted jobless rate slipped 0.2 percentage points to 9.9% in February compared to January.

Real GDP in Thailand expanded 0.9% on quarter and 3.2% between 1Q15 and 1Q16, the largest year-on-year pace in three years.  The acceleration was led by government spending and net exports.  Personal consumption rose by a decent 2.3% as well.

The U.K. Rightmove house price index advanced 0.4% in May, lifting the 12-month trend to 7.8%, highest thus far in 2016, from 7.3% the month before.  But IMF Director Lagarde had harsh words for the potential ramifications if British voters choose to leave the European Union.

Czech producer prices edged up 0.1% in April but recorded a larger 4.7% on-year decline.

Ireland’s trade surplus widened 12% on month to EUR 4.11 billion in March.

According to reportedly informed sources, Japanese Prime Minister Abe has decided to delay a planned 2 percentage point rise in the national sales tax for a second time.  It’s supposed to be raised effective April 2017, but an announced postponement should be made by early June.

Scheduled U.S. data releases today are the National Home Builders Association housing index, the Empire State Manufacturing index, and Treasury-compiled U.S. capital flows.

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

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