Sterling Rebounds and Streak Ends of Higher Daily Closes in Japan’s Stock Market

October 25, 2017

Sterling rose 0.9% overnight, buoyed by stronger-than-forecast third-quarter GDP growth.

Xi Jinping introduced the new Chinese Politboro, all with similar ages to himself, and in so doing failed to signal an apparent successor in 2022. He is now China’s most powerful leader since Mao.

Japan’s Nikkei closed down 0.5%. That was the first daily loss since September 27th. Compared to then, the Nikkei still shows a 7.1% advance.

In other stock market activity, share prices rose 1.3% in India, 1.2% in Indonesia, 0.8% in Hong Kong and 0.3% in China and Singapore. In Europe, share prices are narrowly mixed.

Aside from the dollar‘s aforementioned slide against sterling, the U.S. currency is hovering around a 3-month high, having registered advances of 0.9% against the Aussie dollar, 0.5% relative to the kiwi, 0.3% vis-a-vis the yen, 0.2% versus the peso and loonie and 0.1% against the yuan, but it has edged 0.1% lower relative to the euro. The ECB will be unveiling its quantitative stimulus plans for 2018 tomorrow.

In futures trading of U.S. Treasuries, the 10-year yield climbed another 3 basis points to 2.45%, a seven-month high. The 10-year British gilt yield jumped six basis points, but German bund and Japanese JGB yields are little changed.

Commodity prices eased. Copper dropped over 0.5%, and gold and oil are respectively down 0.3% and 0.2% at $1,274.40 per ounce and $52.35 per barrel.

Australian CPI inflation slowed 0.1 percentage point last quarter to a 3-quarter low of 1.8%. Core inflation stayed below 2.0% as well.

The German IFO Institute’s monthly business climate index jumped 1.4 points to an all-time peak of 116.7 in October. Business expectations advanced 1.6 points to a record high as well, while perceived current conditions rose 1.1 points to a 3-month high. New record highs were experienced in manufacturing and construction. Retail activity improved to a 4-month high, while conditions for wholesale industries remained solid but eased back to a 9-month low. IFO officials said Germany’s economy is “powering ahead.”

British real GDP, according to the first 3Q estimate of growth, advanced by 0.4%, most since the final quarter of 2016 and faster than forecast. This kept on-year growth steady at 1.5%. Production and services posted respective growth of 1.0% and 0.4% in the quarter, while construction contracted by 0.7%. A separate monthly services index went up 0.2% in August and was 0.4% greater in June-August than in the prior three-month period.

Italian industrial orders shot up 8.7% in August and were 12.2% higher than a year earlier. Industrial sales posted a 3.4% on-year increase.

Swedish consumer sentiment climbed 0.8 points to a 2-month high reading of 101.8 last month.

UBS reported a 0.06 improvement in its Swiss consumption indicator to 1.56 in September, higher than any of the six previous monthly scores. The Swiss ZEW expectations index also increased, rising four points to 32.0 in October.

The British Bankers Association estimate of U.K. mortgage approvals last month, amounting to 41,584, was 0.4% less than in August. Consumer credit climbed 1.5% in the latest month.

Spanish producer prices in September were 0.5% higher than in August and 3.4% greater than a year earlier.

Monetary authorities, who cut Brazil’s central bank Selic rate last in early September, are holding their ensuing policy review today.

The Bank of Canada also has a policy meeting today and is not expected to change its 1.0% interest rate target. An updated Monetary Policy Report will be released after the meeting.

U.S. durable goods orders and new home sales data arrive today.

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

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