Continuing Retreat in Share Prices
March 22, 2017
The Japanese Nikkei tumbled 414 points or 2.1%. Equities also fell 1.6% in Australia, 1.4% in Hong Kong, 1.1% in India, 1.3% in Singapore and 0.5% in China and South Korea. This followed yesterday’s U.S. selloff and extended into Europe where stocks so far today are down 1.4% in Greece, 0.8% in the U.K., 0.6% in Switzerland, and 0.5% in both France and Germany.
Investors are coping with several concerns.
- A belief that the post-U.S. election advance had become overdone.
- Uncertainty over where the Russian meddling investigation will lead. The impeachment word has become more than a whisper. One of the biggest bear markets in the DOW since the Second World War was a 45.1% plunge from January 11, 1973 to December 6, 1974, a period covering the Watergate scandal.
- Uncertainty surrounding tomorrow’s Obamacare repeal and replace vote. Failure to approve is believed likely to jeopardize other planned initiatives like tax reform and financial market deregulation.
- Disharmony at last week’s G20 meeting has taken the world a giant step closer to protectionism wars.
- Efforts have so far been ineffective to defuse North Korea’s nuclear weapons program, which has been accelerating.
- Fed monetary policy normalization is picking up. Cleveland District President Mester favors reducing the Fed balance sheet this year.
- Other central banks like the ECB, Bank of England, and even the BOJ may shift gears away from accommodation, too, during 2017.
- Commodity prices are sliding again, which spells bad news for many emerging market economies. West Texas Intermediate crude oil slumped 1.5% to $47.54 per barrel, and copper lost 0.9%. Gold dipped 0.1%.
- The Brexit two-year countdown is about to begin. Article 50 of the Lisbon Treaty will be activated a week from today.
The dollar slipped 0.3% against the yen overnight but rose 0.4% versus the Australian dollar and Mexican peso, 0.3% relative to the loonie, and 0.2% vis-a-vis the euro, kiwi and sterling. Japan reported a strong trade balance.
Ten-year sovereign debt yields dropped another four basis points in Germany and Great Britain. The 10-year Treasury yield has fallen 21 basis points in the past seven business days.
The Japanese customs trade surplus increased to JPY 813 billion in February from JPY 235 billion a year earlier, as exports advanced 11.3% and imports edged only 1.2% higher.
However, Japanese department store sales and supermarket sales during February were respectively 1.7% and 3.3% lower than a year earlier. And the all industry index, a monthly supply-side proxy of GDP, rose just 0.1% in January after dropping 0.2% in December.
Euroland’s seasonally adjusted current account surplus narrowed to EUR 24.1 billion in January from EUR 30.8 billion in December. The current account surplus over the past dozen reported months equaled 3.3% of euro area GDP.
Indices of leading economic indicators were reported for several countries.
- France‘s LEI rose 0.4% in January, matching December’s increase.
- China‘s LEI leaped 1.2% in February, even more than January’s 0.9% increase. A year ago but no longer, there was great concern that China might be headed for a hard economic landing as Japan experienced in the 1990s.
- South Africa‘s LEI advanced 0.9% in January after a 0.6% rise the month before.
- Australia‘s Westpac-compiled LEI dipped 0.1% last month after being unchanged in January.
Irish PPI inflation accelerated to 2.4% in February from 1.6% in January and 1.3% in December. South African CPI inflation eased back to 6.3% last month versus 6.6% in January.
Norwegian unemployment slipped slightly to 4.2% in November-January, which is more or less aligned with the long-term average.
Icelandic wage cost inflation slowed further to 5.5% last month from 8.7% in January and 9.1% in December. Subdued wage pressures continue to be a global theme.
Danish retail sales dipped 0.1% further in February and were 3.4% less than a year earlier.
U.S. mortgage applications slumped 2.7% last week, reversing the prior week’s increase as the 30-year fixed rate held steady at 4.46%. U.S. weekly oil inventories, which have been climbing and depressing world prices, get released today. Monthly U.S. data on existing home sales and the FHFA home price index are due, too.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Ezone current account surplus, Japanese trade surplus, Obamacare repeal and replace vote
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