Last Week’s Stock Market Euphoria Dissipates

September 24, 2018

Equities dropped 2.0% in Hong Kong, 1.8% in India, 1.3% in Indonesia and 0.5% in New Zealand. Losses in European markets so far amount to 1.2% in Greece, 0.6% in Italy, 0.5% in Spain, 0.3% in Germany, 0.2% in France and Switzerland, and 0.1% in Great Britain. The more sour mood reflects China’s refusal to engage in new trade talks under Trump’s tariff threats.

A number of markets are closed for holiday. The Japanese and Chinese are celebrating the Autumn Equinox and Mid-Autumn Festival, respectively. It’s Heritage Day in South Africa and Chusok Day in South Korea.

There will be no Kavanaugh testimony today. That’s been moved to Thursday when Blasey Ford is also set to go before the senate judiciary committee. Meanwhile, another sexual misconduct accusation has been leveled against the Supreme Court nominee, this time by a Yale student.

The dollar dropped overnight by o.9% against the Turkish lira, 0.8% relative to the Russian ruble and 0.6% versus the South African rand. It also has retreated 0.5% against sterling and 0.1% versus the euro but is unchanged relative to the yen, yuan, and Swiss franc. The dollar has firmed 0.4% against the Mexican peso, 0.2% vis-a-vis the Australian dollar and loonie and 0.1% versus the kiwi.

West Texas Intermediate crude oil advanced 1.7% to the vicinity of $72/barrel. Gold firmed 0.2%.

Ten-year U.S. Treasury and German bund yields are a basis point higher, and their British counterpart rose by two basis points.

Today’s meager diet of released data is headlined by the German IFO Institute’s September index of German business climate, which edged down 0.2 points to a 2-month low of 103.7. Current conditions and future expectations were each at a 2-month low as well, but officials at the Institute put a very positive spin on the release, declaring that “despite growing uncertainty, the German economy remains robust.”

Czech economic sentiment and consumer confidence improved to 3-month highs this month.

CPI inflation in Singapore edged up 0.1 percentage point in August to a 15-month high, albeit of only 0.7%.

The Confederation of British Industry’s monthly industrial trends index weakened more than forecast in September, printing at a 4-month low of minus 1 versus readings in August of +7 and in July of +11.

Finnish PPI inflation edged 0.1 percentage point higher to 6.2% in August.

The Chicago Fed National Activity Index and Dallas Fed regional manufacturing index will be reported later today.

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

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