Firmer Stock Markets and a Softer Dollar

December 18, 2017

With passage of a U.S. tax cut at mid-week looking increasingly probable, equities rallied in Asia and Europe overnight, and the dollar eased a bit.

Dollar declines amount to 0.3% relative to sterling, the euro, Swiss franc loonie and peso, 0.2% against the Australian and and New Zealand dollars, and 0.1% versus the yen.

Share prices jumped 1.6% in Japan and thus far show gains of 1.6% in Germany, 1.3% in Greece and 1.2% in France. Stocks also rose 0.7% in Australia, 0.4% in Hong Kong and India and are currently up 0.7% in Spain and Italy and 0.4% higher in the U.K. and Switzerland.

Gold and oil have firmed 0.4% to $1,262.10 per ounce and $57.46 per barrel.

The 10-year German bund yield edged up a basis point, while gilts and JGBs are steady.

Japan’s customs clearance trade surplus totaled 113 billion yen in November, down from 147 billion yen a year earlier. On-year growth in exports of 16.2% was nearly as great as the 17.2% advance of imports. Trade volume rose 5.5% on the export side and 2.6% in the import side. Local-currency increases of exports and imports each exceeded 10.0%. The seasonally adjusted surplus of JPY 364 billion was slightly wider in November than October’s surplus of JPY 349 billion.

Chinese property prices in November rose 0.3% on month, same as in October, but their 12-month rate of increase slowed to a 21-month low 5.1% and failed to climb in 11 of 70 cities.

Final CPI data for the euro area in November revealed a 0.1% month on month increase and matched the flash on-year pace of 1.5%.  That’s up from 1.4% in October but the same 12-month increase as recorded in both August and September. Energy rose 1.5% on month and accelerated to 4.7% on year from 3.0% in October. Core inflation was unchanged at 0.9% and a mere 0.1 percentage point higher than in November 2016. Service sector consumer prices were only 1.2% higher than a year earlier, while non-energy industrial goods registered on-year growth of merely 0.4%.

Italy’s unadjusted trade surplus of EUR 4.953 billion in October 18% bigger than a year earlier. The seasonally adjusted surplus declined, however.

The monthly British industrial trends survey compiled by the Confederation of British Industry did not fall back in December as analysts were expecting following November’s surprise 19-point advance but instead printed at an unchanged reading of 17, matching October’s best-of-2017 result.

Consumer prices in Austria rose 2.3% in the year to November, while Czech producer prices were 0.9% higher in the same 12-month period.

New home sales in Australia were 0.1% greater than in October and 2.1% higher than a year earlier.  The Australian government’s mid-year economic and fiscal outlook projects smaller budget deficits in 2017-18 and 2018/19 and maintains the view that there will be a surplus in 2020-21.

New Zealand’s Performance of Services index rose to a 3-month high of 56.4 in November. The ANZ measure of consumer confidence in New Zealand dropped 1.5% in December on top of declines of 2.8% in October and 2.1% in November. But despite this 3-month streak of slippage, the level of the index, 121.8, conveys still-robust household optimism.

The U.S. National Association of Home Builders releases its monthly housing market index later today. British Prime Minister Theresa May addresses parliament.

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

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