Holidays and Relief

May 1, 2017

Numerous markets including most of Continental Europe, China, Mexico, South Africa, Brazil, Hong Kong, Singapore and Ukraine were closed today for May Day. Britain is observing its early May bank holiday as well.

Investors are mostly relieved that the U.S. Congress struck a $1.1 trillion spending authorization deal over the weekend to avert a government shutdown at least through the end of the third quarter. The bill is more aligned with Democratic Party priorities than those held by his Republican Party.

Japan’s Nikkei advanced 0.6%. The yen weakened 0.2% on balance and touched a one-month low overnight. The 10-year Japanese JGB yield is at zero percent, matching the Bank of Japan’s target. Japanese motor vehicle sales recorded a smaller 5.4% on-year increase in motor vehicle sales during August after posting rises of 13.8% in March, 13.4% in February and 8.6% in this year’s first month.

Australia’s Performance of Manufacturing index┬árecovered 1.7 points to a 2-month high in April of 59.2, which is a mere tenth of a point shy of February’s 177-month peak. Australian expected inflation accelerated to 2.6% in April. Australian equities climbed 0.6%. The U.S. dollar fell 0.4% and 0.3% against its Australian and New Zealand counterparts.

Against other key currencies overnight, the dollar shows no change on balance versus the euro, Swiss franc, or yuan. The dollar has risen 0.3% relative to sterling and 0.1% vis-a-vis the loonie and peso.

West Texas Intermediate crude oil fell 0.5% to $49.08 per barrel. Comex gold is 0.3% softer at $1,264.10 per troy ounce.

The Dutch manufacturing purchasing managers index was unchanged in April, matching March’s 2-month low of 53.8. The recent high in February had been 58.3. April data reflect a leveling off in the recent acceleration of inflationary pressure.

Although China is shut for May Day, the government released its official manufacturing and non-manufacturing PMIs for April. Manufacturing printed at a 7-month low of 51.7, down 0.6 points, and non-manufacturing was 1.1 points lower at 54.0, a 6-month low.

South Korea’s trade surplus doubled in April to $13.30 billion.

The volume of Swiss retail sales posted an on-year jump of 2.1% in March, most since June 2014, and rose from the prior month level for a third consecutive time.

U.S. markets will be open. Labor Day celebration in America are observed on the first Monday of September. U.S. personal income and spending data arrive today. So does the report on construction spending. Treasury Secretary Mnuchin delivers a speech.

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

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