Stocks Continue Week’s Retreat

December 6, 2017

Equities sold off 2.9% in Hong Kong, 2.0% in Japan, 1.6% in Taiwan, 1.4% in South Korea 1.2% in Singapore and 0.7% in New Zealand. Losses today in Europe so far amount to 1.0% in Germany, 0.5% in France and Spain, 0.4% in Italy and 0.3% in Switzerland. Technology has been hit hardest.

With no definitive breakthrough yet in the Brexit talks, sterling has depreciated 0.6% against the dollar, which otherwise has also risen 0.3% against the Aussie dollar and 0.2% versus the euro and peso but fallen by 0.3% against the yen and loonie and by 0.1% relative to the Swiss franc and yuan.

In futures trading, the ten-year Treasury yield is down 2 basis points. In Europe, the comparable German bund shows no net change, and the British gilt is 2 basis points higher. The 10-year Japanese JGB climbed a basis point.

West Texas Intermediate crude oil sank 1.3% to $56.87 per barrel. Comex gold rebounded 0.3% to $1,268.80 per ounce.

Policymakers at the Reserve Bank of India voted 5-1 to keep the policy interest rate at 6.0%, lowest since 2010, amid a recent bounce in inflation up to a 7-month high of 3.6%. One vote in favor of a 25-basis point cut was cast. Officials perceive balanced inflation risks. Economic growth in India picked up last quarter. The unchanged policy rate decision matched market expectations. The interest rate had been cut by 25 basis points in August.

Monetary policy decisions will be announced later today in Canada and Brazil.

Australian real GDP  growth slowed to a quarterly rise of 0.6% in 3Q from a gain of 0.9% in the prior quarter. Analyst had expected a marginally faster growth rate, but on-year growth still accelerated to 2.8%.

German industrial orders posted an unexpected 0.5% increase in October following a 1.2% advance in September. October’s level was 2.6% greater than their third-quarter average and up 6.9% compared to October 2016. Domestic demand went up 0.5%, while export orders were 0.5% greater than in September.

The retail purchasing managers index for the euro area rebounded 1.3 points to a 5-month high in November of 52.4, led by a 6-month high in Germany’s index to 54.6. The French retail PMI improved 0.7 points to a 2-month high of 52.2, but Italy’s dropped back below the 50 line of separation between improving and deteriorating conditions with a score of 49.2. Italy’s retail PMI had been 50.3 in October and 50.2 in November.

Germany’s construction purchasing managers index slipped another 0.2 points to a 10-month low of 53.1. This year’s high point of 56.4 was registered in March.

Swiss CPI inflation ticked up 0.1 percentage point to a still-sub-1% pace of 0.8%.

Austrian wholesale prices climbed 0.8% on month and accelerated to a 12-month increase of 5.6% in November.

In the year to October, Czech retail sales increased 3.9%, and Hungarian industrial production grew 7.6%.

Mixed data were released in South Africa, showing a 2.2-point monthly advance in business confidence to 95.1 in November but slower quarter-on-quarter growth in GDP of 2.0% annualized in the third quarter.

Norway’s current account surplus of NOK 17.68 billion last quarter was 68% narrower than in 2Q.

ADP estimates that private nonfarm U.S. employment increased 190K last month. Though less than the rise in October, that figure is marginally above what analysts had been anticipating. U.S. mortgage applications bounced back 4.7% last week from a 3.1% drop in the prior week. Still to come: U.S. and Canadian productivity and unit labor costs as well as interest rate announcements in Canada and Brazil.

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


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