Monday Rebound of Stocks Extended and Dollar Higher Too

March 27, 2018

Share prices closed up 2.7% in Japan, 1.2% in in Hong Kong, 1.4% in Taiwan, 1.1% in China,  1.0% in New Zealand, 0.8% in Singapore and 0.7% in Australia. In European trading, equities have risen between 1.5% and 2.0% in the U.K., Germany and Switzerland and between 1.0% and 1.5% in France, Spain and Italy. Futures point to a higher U.S. open.

The dollar appreciated overnight by 1.0% against the pound, 0.6% versus the euro, 0.5% relative to the Australian and New Zealand dollars, 0.4% vis-a-vis th4 yen, yuan and Swiss franc, 0.3% against the loonie, 0.2% against the won and 0.1% versus the yuan.

Gold settled back 0.8% to $1,349.70 per troy ounce. Copper and WTI oil have firmed 1.1% and 0.4%.

Ten-year German bund and British gilt yields are steady, and their Japanese counterpart edged up a basis point to 0.03%.

In geopolitical news, it appears than North Korea’s leader, Kim Jong Un, may have traveled secretly to China, his ally, by train. And in another surprise, President Trump joined European nations in expelling 60 Russian diplomats from the United States as a response to evidence that the poisoning attack by Russia in Great Britain.

Economic news overnight was led by the release of Euroland’s March economic sentiment index, which fell more than expected. A 1.2 point slide to 112.6, a six-month low, exceeded street forecasts. Subindices for retail, manufacturing, and services dropped to 7-, 6-, and 5-month lows. Consumer confidence matched its preliminary estimate and also February’s 3-month low. A separate business climate index fell 0.14 points to a 6-month low.

On-year M3 money growth in the euro area slowed 0.3 percentage points in February to 4.2%. The 3-month average of M3 growth, now 4.4%, was also 0.3 percentage points lower than previously. Loans to non-financial firms and for home mortgages also showed diminished growth.

German import prices fell 0.6% both on month and on year during February. It was the first negative 12-month changed in 17 months. On-year growth in energy slowed to 3.0% in February from 9.2% in January.

Swedish consumer confidence dropped 2.7 points to a 19-month low of 101.5 in March. Finnish consumer confidence declined 1.1 points in March to a reading of 24.7. But Portugal and Italy reported strengthening consumer sentiment. Italy’s index rose 1.8 points to 117.5, and Portugal’s reading was the best in three months.

Portugal also reported a 4-month high in business sentiment in March. However, Italy’s manufacturing sentiment index slumped 1.3 points, causing its overall economic sentiment index to drop 2.5 points to a reading of 106.0.

South Korean consumer confidence weakened to a 6-month low of 108.1 in March. But the won strengthened overnight.

Hungary’s central bank as expected left its Base Rate at 0.90%. That’s been the level since a 15-basis point reduction in May 2016.

Swedish PPI inflation despite a 0.5% monthly decline in February accelerated in on-year terms to 2.8% from 2.5%. Sweden’s February trade deficit of SEK 3.4 billion was almost three times wider than its year earlier deficit.

Spanish CPI inflation edged up 0.1 percentage point to a 4-month high of 1.2% in March.

Japanese corporate service prices rose 0.2% on month in February, but the 12-month rate of increase slid 0.1 percentage point to 0.6%. The CSPI rose 1.5% in 2015, 0.3% in 2016 and 0.7% on average last year.

Australian new home sales fell 0.7% on month in February after a 2.1% decline in January.

Facebook founder Mark Zuckerberg has declined a request from British parliament to testify there.

Just In: The Case-Shiller U.S. house price index recorded a larger-than-expected 0.75% monthly rise in January, which lifted the 12-month rate of increase to 6.4%. The Richmond Fed manufacturing survey results will be reported a little later today.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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