Investors Get Some Better News

December 11, 2018

Equities have rallied after China tentatively indicates plans to cut tariffs on U.S. car imports by more than half. Share prices in Europe have risen 2.4% in Germany, 2.3% in Switzerland, 2.2% in France, 1.9% in Spain and the U.K., and 1.8% in Italy. The Dow Jones Industrials and Nasdaq climbed over 1.0% in very early U.S. trading. Earlier in the day, stocks closed down in Japan, Singapore, and Indonesia but rose in China and India.

The dollar is narrowly mixed, with 0.1% upticks versus the yen, euro and Swiss franc and downticks of 0.4% against the Aussie dollar, 0.3% relative to the kiwi, 0.2% vis-a-vis sterling and 0.1% against the loonie.

West Texas Intermediate oil rebounded 2.3% to more than $52.00 per barrel. Gold is little changed.

Ten-year sovereign debt yields increased 2 basis points in the U.K. and Italy and a basis point each in the U.S., France and Japan. The German bund is flat.

The German ZEW Institute’s monthly measures of investor sentiment saw the German expectations index recover 6.6 points to -17.5, which is still weak in its historical context. Moreover, perceived current conditions fell to a reading for December of 45.3 from 58.1 in November and 70.1 in October, and Euroland’s expectations index and current conditions index each fell in the latest month.

U.S. producer price inflation subsided to 2.5% in November from 2.9% in October despite a 0.1 percentage point uptick in core PPI to 2.7%.

The NIFB U.S. small business sentiment index dropped 2.6 points to a 7-month low of 104.8 in November.

Monthly British labor statistics revealed a 21.9K rise in jobless insurance claims in November, a greater-than-forecast advance in jobs during August-October, and an acceleration of on-year wage earnings growth to 3.3% over the same 3-month period.

Chinese new bank lending, which had declined to 697 billion in October from CNY 1.3 trillion in September, rebounded to CNY 1.25 trillion last month. On-year growth in M2 money remained unchanged at 8.0%.

On-year Japanese M2 money growth slowed further in November to 2.3% from 2.7% in October, 2.9% in 3Q, 3.1% in 2Q, and 4.0% in full-2017. Japanese machine tool orders, which began 2018 with a 48.8% on-year increase in January, posted a second consecutive on-year drop last month of 16.8% after dipping just 0.4% in the year to October. Japanese business sentiment improved this quarter among non-manufacturers but worsened among manufacturers.

National Australia Bank’s monthly indices of business conditions and business confidence each fell a point in November to 11 and 3, respectively.

The Philippines experienced a record monthly trade deficit of $4.21 billion in October. Such had been at $3.93 billion in September and $2.59 billion in October 2017.

Likewise, Turkey had a record current account surplus of $2.77 billion in October versus a surplus of $1.81 billion but deficits of $3.84 billion in October 2017 and $21.17 over the first ten months of 2018.

CPI inflation decelerated last month to an 11-month low of 3.4% in Romania and a 5-month low of 3.1% in Hungary.

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


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