Trump’s Latest Comment on Tariffs Stirs Up Fresh Market Anxiety
July 20, 2018
Stocks had performed decently in the Pacific Rim, rising overnight by 2.1% in China, 1.0% in Hong Kong, 0.4% in Australia and 0.9% in Taiwan. The Japanese Nikkei had been an exception, drifting down 0.3%.
In an interview with CNBC, President Trump signaled a willingness to impose tariffs on China equal to the sum of all U.S. imports from that country in 2017, that is $505 billion. This figure, although far above the actual amount of tariffs now in place ($34 billion) was enough to rattle investors as trading swung to Europe.
Share prices in Europe have declined so far by 1.4% in Greece, 0.6% in France and Italy, 0.5% in Germany and 0.3% in Great Britain.
The 10-year British gilt yield slipped a basis points. Gold is flat, and WTI oil has firmed 0.2%.
Fears about huge coming tariffs are bolstering the dollar. Chinese officials allowed the yuan to sink another 0.8% against the U.S. currency. The dollar otherwise has appreciated so far today by 1.0% against the kiwi, 0.9% versus the peso, 0.8% vis-a-vis the Australian dollar, 0.6% versus sterling, 0.5% relative to the loonie, and 0.3% against both the euro and Swiss franc. But dollar/yen is trading unchanged.
Following a hopeful 1.0% advance in April, Japan’s all-industry index edged up just 0.1% in May. This supply-side monthly proxy of GDP was damped by a 0.2% dip in industrial production and only a 0.1% uptick in service sector activity.
Euroland’s seasonally adjusted current account surplus narrowed 25% on month to EUR 22.4 billion in May, and the unadjusted surplus of just EUR 4.62 billion represents a 16-month low. But as a percent of GDP, the current account surplus over the last 12 reported months equaled 3.6%, up from 3.2% during the year through May 2017.
German producer price inflation accelerated 0.3 percentage points further to a 9-month high of 3.0% in June. Energy was up 6.2%, but all other components of the PPI showed a 12-month rise of 2.0%.
Japanese consumer price inflation held steady at 0.7% in June. While core CPI, which excludes only perishable foods, rose to a 0.8% 12-month increase from 0.7% recorded in the year to May, core core consumer price inflation that excludes energy as well as fresh food turned negative by 0.2% following readings of zero percent in May and 0.2% in April. Energy prices climbed 1.6% last month and were 7.3% greater than a year earlier.
Euroland’s debt-to-GDP ratio climbed to 86.8% of GDP in the first quarter of 2018 from 86.1% in the previous quarter. The euro area government deficit in the first quarter of just 0.1% of GDP moved very close to being balanced. In the first quarter of 2017, such had equaled 1.1% of of GDP, and that was down from a deficit equal to 1.9% of GDP in the first quarter of 2016.
British fiscal debt at mid-2018 equaled 85.2% of GDP.
Italy recorded a EUR 2.23 billion current account surplus in May. Dutch consumer confidence remained unchanged in July, and Irish producer prices were 0.2% lower in June than a year earlier.
South Korean producer price inflation rose 0.4 percentage points to 2.6% in June.
Canadian retail sales and consumer price data will be released later today.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, German PPI, Japanese CPI and all industry index, Trump tariff threat