Geopolitical Risks Persist but Market Risk Aversion Pauses

April 19, 2017

European equities recovered 1.0% in Spain, 1.5% in Italy, 0.5% in Greece, 0.4% in France and 0.3% in Germany. Share prices opened a little  higher in the United States. Earlier, stocks had fallen 1.1% in Taiwan, 0.8% in China, 0.5% in South Korea, 0.6% in Australia but edged 0.1% higher in Japan.

The dollar climbed 0.6% against the Australian dollar and yen, 0.5% relative to the loonie and kiwi, 0.3% versus the euro, and 0.2% against sterling and the Swiss franc.

Ten-year U.S. Treasury, German bund and British gilt yields each increased four basis points overnight.

Comex gold sank back 1.1% to $1,279.40 per ounce. WTI oil edged up 0.2% to $52.52 per barrel.

Euro zone CPI inflation data matched the preliminary indication. The harmonized CPI went in March increased 0.8% on month but decelerated in on-year terms to 1.5%, a 3-month low, from 2.0%. Core inflation of only 0.7% was down from 0.9% in the three prior months and 1.0% in March 2016.

Euroland’s seasonally adjusted trade surplus of EUR 19.2 billion in February recovered from EUR 15.7 billion in January but was smaller than any monthly surplus in the second half of 2016. Imports fell 1.7% on month, while exports moved up 0.4% after a 0.9% drop in the prior month. The unadjusted surplus in the first two months of 2017 of EUR 17.3 billion was EUR 5.7 billion smaller than a year before.

Euroland’s business investment rate of 23.5% and corporate profit share of 41.0% in the final quarter of 2016 were each at their highest levels since the third quarter of 2008.

Australian new motor vehicle sales recovered 1.9% in March but were still 3.0% lower than a year earlier. The Westpac index of leading Australian economic indicators improved to 0.08% in March from -0.07% in February.

New Zealand’s Performance of Services index recovered 0.3 points to a 2-month high of 59.0 in March.

India’s index of leading economic indicators rose 1.7% last month. The index of coincident economic indicators climbed by 1.9%.

Released price data today showed on-year CPI inflation of 6.1% in South Africa, 2.0% in Austria, and 5.1% in Malaysia. Producer prices in the 12 months to March increased by similar amounts in South Korea (4.2%) and Portugal (4.0%). Polish wages were 5.2% greater than a year earlier over the same span of time.

The Federal Reserve Beige Book, an examination of U.S. regional economic trends, will be released later today.

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



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