Price of Oil Softens Further

October 26, 2016

It appears that Russia will probably not join OPEC’s effort to cut production. In response, West Texas Intermediate crude oil fell another 1.4% to $49.25 per barrel.

Stocks in Europe and the Pacific Rim have performed weakly overnight, depressed by a number of weaker-than-expected corporate earnings reports.

  • Equities lost 1.5% in New Zealand and Australia, 1.2% in Hong Kong, 1.1% in South Korea, and 0.9% in India and Singapore, but Japan’s Nikkei closed up 0.2%.
  • In European trading so far, share prices have fallen 1.0% in the U.K. and Germany, 0.8% in Switzerland and France, 0.5% in Italy and 0.2% in Spain.

Gold is marginally lower at $1,272.10 per troy ounce.

Ten-year sovereign debt yields jumped six basis points in Great Britain and 5 bps in Germany. Futures trading points to an increase in the U.S. as well.

The dollar rose 0.3% against the euro overnight but lost 0.4% relative to the Australian currency, 0.3% vis-a-vis the Swissie, 0.2% against the yuan and sterling, and 0.1% versus the kiwi. Dollar/yen is steady.

A poll is out giving Trump a marginal lead in Florida, but Clinton still appears to have a comfortable national lead.

Australian consumer price data for the last quarter are higher than forecast, dampening prospects that the Reserve Bank of Australia  official cash rate might be cut further. The overall CPI rose 0.7% on quarter and accelerated to a 12-month 1.3% increase, same as in the first quarter, from 1.0% in 2Q. Measures of core inflation were the same in 3Q as in 2Q.

Japanese corporate service prices stagnated on month in September and were only 0.3% higher on year. The CSPI had risen 0.4% in the prior year to September 2015.

Japanese small business sentiment, measured by the Shoko Chukin index, increased to a 7-month high of 48.3 in October from 47.7 in September and 46.3 in August.

Industrial production in Singapore advanced for a second straight month, posting a buoyant 3.3% increase between August and September and surpassing the year-earlier level by 6.7%.

Chinese consumer sentiment according to the Westpac MNI measure printed 1.6% higher in October at a 6-month high of 117.1.

French consumer confidence climbed a point to a 5-month high of 98 in October.

But German consumer confidence fell 0.3 to 9.7 in November, a 6-month low.

German import price deflation narrowed to 1.8% in September from 2.6% in August and a recent lowpoint of -6.6% in the year to April. Energy prices fell 9.6% on year versus a drop of 11.7% recorded in the year to August. Non-energy import prices were 0.9% lower than in September 2014. Export prices in Germany dropped 0.6% in the year to September versus a 0.3% on-year rise in the prior year to September 2015.

Italian retail sales unexpectedly slipped both on month (0.1%) and from a year earlier (0.2%) during August.

The British Bankers Association estimate of U.K. mortgage approvals in September rose to a 3-month high of 38,252. Net mortgage lending was 2.6% lower than a year earlier, but consumer credit growth continues on its best trend since the Great Recession.

Norway recorded an SEK 3.2 billion trade surplus in September, but the year-to-date tally remains in the red.

Icelandic unemployment edged higher in September but remained low at 3.2% on a seasonally adjusted basis.

U.S. new home sales data will be released today.

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


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