Market Unsettled Amid Continuing Geopolitical Threats

April 11, 2017

It’s a dangerous world. U.S. policy on Syria appears to be all over the place. How the Kremlin will respond to the changed U.S. stance is uncertain. North Korea is exploiting the confusion, and the outcome of the fast-approaching French election’s is in greater doubt than a week ago. Brexit negotiations are unlikely to go well.

Gold leaped 1.2% to $1,269.50, and the dollar fell 0.7% against the yen and 0.3% relative to the euro, Swissie, Aussie dollar, and sterling.

Stocks are down in Europe, North America, Japan, Hong Kong and Taiwan.

The 10-year British gilt yield slid two basis points, and its U.S. counterpart has tumbled six bps.

Euroland industrial production data were weaker than assumed, dropping 0.3% in February and posting only a 1.2% 12-month rate of increase.

The German index of leading economic indicators fell 0.2% in February. But the ZEW expectations index, a gauge of investor sentiment toward the economy, climbed to a 20-month high of 19.5 in April from 12.8 in March and 8.4 in February. Current conditions also printed higher. Both expectations and current conditions related to the whole euro area improved, too.

Same store British retail sales posted an on-year drop of 1.0% in March, which was greater than the 12-month declines of 0.6% in January and 0.4% in February.

British CPI inflation last month held at a 3.5-year high of 2.3%, but the core CPI subsided 0.2 percentage points to 1.8%. Producer input prices were 17.9% higher than a year earlier, while producer output prices increased 3.6% above the March 2016 level. House price inflation picked up to 5.8% in February.

The National Australia Bank’s monthly index of economic conditions went up 5 points to +14 in March, even as business confidence dipped a point to a 3-month low of +6.

In the year to March, consumer prices in Sweden rose 1.3%, down from 1.8% in the year to February. In the same 12-month interval, Hungarian consumer prices advanced 2.7%, but Romanian consumer prices only firmed 0.2%.

In the year to February, industrial output climbed 5.5% in Romania and 7.0% in Hungary.

Serbia’s key interest rate was left unchanged as expected at 4.0%.┬áThere was a single 25-basis point cut to the present rate level last year in July. Starting in April 2013, the rate had been previously slashed by 275 basis points by yearend, 150 bps in 2014. 350 basis points of additional rate reduction was engineered in 2015. The current 4% level is a touch less than a third of the 12.25% when this easing began.

Small U.S. business sentiment, according to the NIFB index, slipped to a 4-month low of 104.7 in March. Such had improved from 94.1 last September to 105.9 in January before edging down to 105.3 in February.

West Texas Intermediate crude oil eased back 0.6% overnight to $52.77 per barrel.

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

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