Stocks Rebound Somewhat but Situation Still Unstable
November 13, 2018
With the G20 summit in Argentina on November 30 – December 1 fast approaching, U.S. Treasury Secretary Mnuchin and Chinese Vice Premier Liu Yandong discussed trade issues in a phone conversation, the first high-level U.S.-Sino talks of any sort on this explosive issue. A breakthrough was not reported, but some equity markets bounced higher after Monday’s thumping on the possibility that Trump and Xi will reach a truce by the summit.
Share prices currently show gains of 1.9% in Greece, 0.9% in Germany, 0.6% in France, 0.2% in the U.K. and 0.4% in Italy and Spain. Earlier in the Pacific Rim, stocks rose 0.9% in China, 0.7% in Hong Kong, and 1.0% in India and Indonesia. However, not all markets partook in this rally. Stocks fell 2.1% in Japan, 1.8% in Australia, 1.2% in New Zealand, 0.6% in Taiwan, 0.5% in Singapore and 0.4% in South Korea.
In another sign of concern about the global economic outlook, West Texas Intermediate crude oil extended its drop by 2.0% to $58.73 per barrel. There have been a record number of consecutive daily declines. Since October 3rd, oil has plunged 23%. Gold, meanwhile, dipped 0.2% this morning.
Ten-year sovereign debt yields are up 4 basis points in Italy and the U.K. and 3 bps in Greece. But the Japanese JGB and German bund are unchanged, and the U.S. 10-year Treasury yield has dipped a basis point, in contrast.
Investor confidence regarding the German economy rebounded 0.6 to a 2-month high of -24.1 in November according to the ZEW expectations index. That’s still weaker than this measures long-term average. Moreover, current conditions were marked lower to a 26-month low, and the ZEW expectations index for the whole euro area fell 2.6 points further to a reading of minus 22.0 this month versus -7.2 as recently as September. And Euroland’s current conditions index was nearly halved to 18.2 this month from a score of 32.0 in October.
German CPI inflation in October was confirmed to have risen to the preliminary estimate of 2.5%, most since September 2008. Energy prices rose 1.0% on month and 2.4% on year, while all other consumer prices collectively ticked up 0.1% on month and rose 1.7% on year.
British monthly labor statistics revealed a 20.2K rise in jobless claims in October associated with a 0.1 percentage point uptick in the jobless rate; a 0.1 percentage point rise in the ILO-basis unemployment rate to 4.1% after posting the lowest level since 1975 in both July and August; and some acceleration in average wage earnings in September to 3.2% for regular pay and 3.0% for pay plus benefits.
Switzerland’s producer price/import price combined index rose 0.2% on month in October, trimming its 12-month rate of rise to 2.3% from 2.6% in September and 3.4% in August. Domestic producer price were unchanged on month and 1.4% higher compared to October 2017.
Norwegian real GDP grew 0.6% last quarter, but year-on-year growth slowed sharply to 1.1%.
On-year growth in Dutch retail sales of 1.7% in September was the least since March and only half as much as recorded in August.
Portuguese CPI inflation slowed 0.4 percentage points to 1.0% in October.
Indian CPI inflation also slowed in October, reaching 3.31% versus 3.7% in September, 4.92% in June, and 5.21% at the end of 2017.
The National Australia Bank’s monthly measures of business confidence and business conditions in Australia each fell in October by two points.
New Zealand food prices fell on month in October and were merely 0.6% above their year-earlier level.
The NFIB index of small business optimism fell to a 4-month low of 107.4 in October.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British labor statistics, German CPI, German ZEW expectations index, trade talks
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