New Highs in the U.S. Stock Market on Final Day of November

November 30, 2017

There’s been the usual ton of data released on this final day of the month, but other matters seem to be lifting confidence. Another gradual Federal Reserve interest rate hike in December seems increasingly probable. For once, news from the Brexit talks has been encouraging. Progress continues on the U.S. tax bill’s movement through Congress. Asia got its first major central bank interest rate hike (in South Korea) since the start of Fed normalization. All major economies around the world are expanding, yet inflation remains benign.

The DOW and S&P climbed to new record highs, and the former crossed over the 24,000 milestone. Stocks in other countries did not follow the U.S. cue, with losses of 2.0% in Hong Kong, 1.8% in Indonesia, 1.4% in Taiwan and India, 0.7% in Australia and 0.6% in China. Japan’s Nikkei rose 0.6%, however, but the British Ftse is off 0.5%.

The dollar slid 0.6% against the euro, 0.3% relative to the Aussie dollar, 0.2% against the yen and 0.1% versus sterling and the yuan. The loonie fell 0.3%, reacting to news that Canada experienced its second largest quarterly current account deficit ever in the third quarter.

Gold and oil prices are marginally softer at $1,283.10 per ounce and $57.26 per barrel.

A 0.5% rise of Japanese industrial production in October following September’s drop of 1.0% was disturbingly below market expectations. Japanese housing starts and construction orders were respectively 4.8% below and 6.7% above their October 2016 levels. On-year growth in motor vehicle output accelerated to 6.4% last month from 1.7% in September and 5.7% in August.

The Chinese government’s manufacturing and non-manufacturing purchasing manager indices of 51.8 and 51.4 were each above October’s results but below September’s.

On-year real GDP growth in India rebounded to 6.3% in the third quarter from a 3-year low of 5.7% in the second quarter. Analysts had been predicting 6.4%.

Harmonized CPI inflation in the euro area edged up 0.1 percentage point to 1.5% in November, but core stayed unchanged at 0.9%. Energy price inflation accelerated to 4.7% from 3.0% the month before.

Euroland’s jobless rate declined for a second straight month, dipping to 8.8% in October from 8.9% in September, 9.0% in August, and 9.8% in October 2016.

German retail sales volume sank 1.2% on month in October, versus expectations of a 0.3% increase, and by 1.4% from a year earlier. But German labor statistics were strong. The jobless rate stayed at 5.6% in November as the number of unemployed workers fell by a greater-than-expected 18K. Jobs in October were a robust 1.5% greater than a year earlier.

British consumer confidence fell by 2 points to a 4-month low in November of minus 12. The British Nationwide House Price index edged up just 0.1% in November, leaving the 12-month rate of increase unchanged at 2.5%.

French consumer price inflation edged up 0.1 percentage point to 1.2% in November, but PPI inflation slowed 0.6 percentage points in October to 1.4%.

Italian joblessness stayed at 11.1% in October. Italian CPI inflation dipped 0.1 percentage point to 0.9% in November, and its producer prices went up 2.0% on year in October.

Swiss GDP growth accelerated to a 0.6% on-quarter gain and a year-on-year pace of 1.2% the third quarter of 2017. The Swiss index of leading economic indicators rose a half point in November to its best level since mid-2010, but Swiss retail sales volume dropped 1.5% on month and 3.0% on year in October.

On-year Portuguese GDP growth slowed to 2.5% last quarter from 2.9% in 2Q. In the year to October, retail sales and industrial production rose by 3.5% and 1.8%.

Between 3Q16 and 3Q17, real GDP expanded 3.1% in Spain, 1.7% in Belgium and 1.3% in Denmark.

South African PPI inflation slowed to 5.0% in October.

Australian M3 money and private credit grew by 6.6% and 5.3% in October. Each increase was slightly less than recorded in September. Australian building permits were 18.4% greater than a year earlier in October, but in New Zealand permits posted a 9.6% month-on-month drop last month. Business sentiment in New Zealand deteriorated sharply in November, printing at minus 39.3 after -10.1 in October and zero in September.

The Bank of Korea’s Base Rate was raised by 25 basis points to 1.5%, marking its first rise since 2011.

The Chicago regional purchasing managers index fell 2.3 points in November to a still-robust 63.9, which was the lowest reading since August.

U.S. real personal consumption expenditures rose only 0.1% in October after jumping 0.5% in September and being unchanged in August. Personal income rose 0.4% for a second straight month, and the savings rate edged up 0.2 percentage points to a lowly 3.2%. At 1.6% and 1.4%, the total PCE price deflator and the core PCE each reflected a 0.1 percentage point dip in inflation compared to the month before.

U.S. new jobless insurance claims last week totaled 238K, and the four-week average was 242-1/4K.

Canada’s current account deficit widened 24% to C$ 19.35 billion in 3Q17 and was also more than C$ 1.5 billion greater than its year-earlier level.

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




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