Japanese Nikkei Plays Catch-Up after Holiday
September 19, 2017
As Japanese markets reopened following a 3-day holiday weekend, the Nikkei-225 leaped 390 points or 2.0%, moving back up the 20K level. But other stock markets did not follow suit.
Equities elsewhere in the Pacific Rim closed down 0.5% in Singapore and Taiwan, 0.3% in Hong Kong, 0.2% in China and 0.1% in Australia, New Zealand, South Korea and India. Stocks in Europe were buoyed by the ZEW Institutes monthly measures of investor sentiment, which advanced in September. Also, German Chancellor Merkel appears headed for a comfortable election victory for a fourth term. Stock markets thus far are up 0.4% in Spain and Switzerland, 0.3% in the U.K., and 0.1% in Italy, Greece, and France.
Even though minutes from the Reserve Bank of Australia Board meeting earlier this month expressed concern that further A-dollar appreciation would depress growth and lift inflation, the Aussie currency and kiwi rose overnight by 0.6% relative to the greenback.
A speech yesterday by Bank of England Governor Mark Carney had predicted weaker British growth and higher inflation as Brexit plays out. The Bank of England’s post-MPC statement last week has prepared markets for a first interest rate hike in a decade before too much longer, but Carney didn’t add any clarity regarding when such will happen and the timing and magnitude of ensuing rate normalization other than to insinuate that the process will be slow. Sterling is unchanged from Monday’s close against the dollar.
The dollar is also unchanged against the yen, up 0.2% versus the Swiss franc and 0.1% against the yuan but down 0.3% relative to the euro and 0.1% vis-a-vis the loonie and peso.
Ten-year sovereign debt yields are unchanged in the U.K. and Japan but down a basis point in Germany.
West Texas Intermediate crude oil advanced 1.0% overnight, securing a comfortable foothold above $50 at $50.42 per barrel. Gold edged 0.1% higher to $1,311.40 per ounce.
The German ZEW Institute released measures of investor sentiment for Germany and the whole euro area. Regarding Germany, expectations improved 7.0 points in September to a 2-month high of 17.0, which still lies below the measure’s long-term average value of 23.8. Perceived current conditions also climbed, printing at a 3-month high of 87.9 versus 77.3 six months earlier. Regarding the euro area, expectations advanced 2.4 points to a 2-month high of 31.7, but the present situation was seen 2.9 points lower at a 2-month low of 35.5.
Construction output in Euroland edged up 0.2% for a second straight month in July, but the on-year advance fell to 3.4% from 4.3% in June and 3.6% in the second quarter.
Euroland’s July current account surplus of EUR 25.1 billion seasonally adjusted exceeded analyst forecasts, printing between July’s EUR 22.8 billion and May’s EUR 29.8 billion. The unadjusted EUR 32.5 billion was smaller than that in July 2016 of EUR 36.8 billion. Over the past year, Euroland’s current account surplus equaled a robust 3.5% of GDP, half a percentage point more than in the previous twelve months.
Markets await a slew of U.S. data releases, featuring the 2Q current account and including housing starts, building permits and import prices. Canada’s monthly survey of manufacturing sales, orders and inventories arrives as well.
Australian home prices rose 1.9% in the second quarter, which maintained a 10.2% on-year rate of advance. New Zealand consumer confidence slipped 0.9% in the third quarter according to the Westpac measure.
PPI inflation in South Korea accelerated to 3.2% in August.
Icelandic consumer prices fell 0.8% on month and 2.6% on year in August.
President Trump addresses the U.N. today.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, Japanese Nikkei, RBA minutes