Stocks Again Reverse Direction… Yen and Dollar Decline

April 10, 2018

A strong Monday session in stocks was almost completely squandered in the last hour of trading by a 300 point drop of the Dow. Once again, the index opened sharply higher on Tuesday and is currently 1.6% higher on the day.

Elsewhere, share prices gained 2.2% in Hong Kong, 1.7% in China, 1.3% in Indonesia and 0.8% in Australia. Markets in Europe show gains so far of 0.9% in Germany, 0.7% in the U.K., 0.6% in Switzerland, 0.5% in France and 0.3% in Italy.

The catalyst for today’s improved tone was remarks from Chinese leader Xi Jinping promising to reduce tariffs significantly and to loosen restraints against direct investment by foreign automakers. However, details were lacking, so this rally, like others before it, could sputter.

The dollar rose 0.3% against the yen but is otherwise broadly lower, with declines of 0.8% versus the loonie and kiwi, 0.9% against the Australian dollar, 0.4% vis-a-vis the euro and sterling, and 0.1% against the Swiss franc.

West Texas Intermediate crude oil strengthened 2.0% overnight. Gold is 0.2% firmer.

The ten-year U.S. Treasury and German bund yields edged up a basis point, while their British and Japanese counterparts are unchanged.

In geopolitical news, President Trump will not be attending the summit of the Americas in Peru. He’s staying home to handle the U.S. response to Syria. Facebook CEO Zuckerberg’s congressional testimony begins this afternoon.

U.S. March PPI data surpassed expectations. The total PPI index rose 0.3% on month and accelerated to a 3.0% 12-month rate of increase, most since November. Core PPI, like total PPI inflation, rose by 0.2 percentage points to 2.7%.

U.S. small business sentiment dropped to a 5-month low of 104.7 from 107.6 in February, which had been the most optimistic score since the summer of 1983.

Dallas Fed President Kaplan expects two more hikes of the federal funds target this year.

The National Australia Bank’s indices of Aussie business conditions and confidence fell to 3- and 4-month lows in March. New Zealand capacity usage rose 0.7 percentage points to 93.5% last quarter.

A 28.1% on-year rise in Japanese machine tool orders in March was down from 39.5% in February and smallest in 8 months.

British same store sales recorded a 1.4% on-year advance in March. Analysts were anticipating virtually no change.

In the year to March, consumer prices rose 2.2% in Norway, 1.7% in the Czech Republic, 1.0% in The Netherlands, 2.0% in Hungary, and 0.5% in Denmark.

Brazil’s on-year consumer price inflation slowed a bit to 2.7% in February.

French and Italian industrial production respectively rose 1.2% and fell 0.5% on month in February but posted similar 12-month gains of 3.0% and 2.5%. Irish industrial production that month was 3.5% greater than a year earlier, but South African factory output growth slowed to only a 0.8% 12-month rate of increase.

Canadian housing starts in March, a pace of 225K, was better than forecast.

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

Tags: , ,


Comments are closed.