Overseas Share Prices Didn’t Follow Yesterday’s U.S. Rally

March 2, 2017

Stocks were mixed in the Pacific Rim. While Australia’s bourse climbed 1.3% and the Japanese and Indonesian markets went up 0.8%, stocks fell 0.2% in Hong Kong and 0.5% in India. In Europe, the Greek and Spanish markets are flat, and the German and British ones have dipped 0.1%. U.S. futures are a tad down.

Lael Brainard is the latest high Federal Reserve official to endorse raising the federal funds rate soon. The possibility of an increase at this month’s FOMC meeting is now solidly priced into the market.

West Texas Intermediate crude oil fell 0.9% to $53.34 per barrel following Wednesday’s indication of a big rise in U.S. inventories. Comex gold is 0.7% lower at $1,241.60 per ounce. Copper settled back.

Buoyed by speculation of another normalizing tightening of U.S. monetary policy, the dollar’s advance was extended by a further 1.0% against the Australian dollar, 0.7% versus the kiwi, 0.5% relative to the yen and peso, 0.3% vis-a-vis the Swiss franc, 0.2% against the euro and loonie and 0.1% versus the yuan.

Ten-year sovereign debt yields leaped 9 basis points in Greece and rose another 2 bps in Germany, Britain, Italy and U.S. futures. Japan’s JGB yield bucked that trend, halving to 0.03% overnight.

Bank Negara Malaysia’s overnight policy rate was left unchanged at 3.0%, its level since a 25-basis point reduction last July.

Faced with an uptick in inflation and greater perceived inflationary risks, the National Bank of Ukraine, which between August 2015 and October 2016 slashed its key interest rate by sixteen percentage points, left that rate unchanged at 14.0% and stressed the need to dampen the chance of overshooting its inflation goals.

Euroland’s consumer price inflation rose 0.2 percentage points to 2.0% in February, but core inflation stayed level at 0.9%. The energy component posted a 12-month 9.2% increase versus an 8.1% drop in the prior year to February of 2016.

Producer prices in the euro zone advanced 0.7% on month and more than doubled their on-year increase to 3.5% in January, as the 12-month rise of energy producer prices soared to 9.7% from 3.8% the month before.

Unemployment in the euro area stagnated at 9.6% in January despite a 0.3 percentage point decline to 20.0% in youth unemployment.

Swiss real GDP growth last quarter got revised to 0.1% on quarter from zero reported initially. On-year growth slowed to 0.6% from 1.4% in the third quarter and 1.3% in 2016 as a whole.

The volume of Swiss retail sales climbed 0.6% in January but posted a 1.4% decline from a year earlier.

German import price inflation nearly doubled to 6.0% in January. That on-year advance contrasts with an average drop of 3.1% during 2016. Energy imports cost 42.3% more than in January 2016. Non-energy import prices are also rising due to euro softness.

Spanish GDP growth last quarter (0.7% from 3Q and 3.0% on year) confirmed the preliminary estimate.

Italy’s jobless rate was 11.9% for a third straight month in January.

Portuguese retail sales and industrial production increased by 2.0% and 2.7% in the year to January.

Britain’s construction purchasing managers index rose 0.3 points to a 2-month high of 52.5, and prices remained around an 8-1/2 year peak.

The global manufacturing purchasing managers index compiled by J.P. Morgan rose 0.2 points to a 69-month high of 52.9 in February.

Japan’s monetary base on average recorded on-year growth of 22.0% in the first two months of 2017, down from 22.3% in the fourth quarter of 2016 and 25.0% in full 2016. The Bank of Japan’s balance sheet of JPY 487.9 trillion at the end of February was 2.4% greater than its end-2016 level. Japanese stock and bond transactions last week generated a 149 billion yen net capital inflow, only partly reversing a JPY 482 billion outflow in the previous week.

South Korean retail sales and industrial production rose 4.0% and 1.7% in the year to January. The South Korean purchasing managers index, whose release was delayed by yesterday’s holiday, firmed 0.2 points to a 2-month high of 49.2.

Canadian real GDP climbed 0.6% last quarter or 2.6% at a seasonally adjusted annualized rate from the 3Q level. Despite outpacing U.S. growth in that period, growth in 2016 as a whole of 1.4% was a tad slower than the 1.6% U.S. pace. Monthly GDP data for December showed a 0.3% rise from November and a 2.0% increase from a year earlier.

U.S. jobless insurance claims fell back last week to an incredibly low 223K, defying the government’s claim that 94 million Americans are out of work.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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