Chinese Share Prices Rocket Higher

February 25, 2019

A threatened U.S. escalation of the tariff war with China set for March 1st was called off. President Trump said trade talks this past weekend yielded substantial progress and said that contingent upon continuing progress he would host a finalizing summit with Chinese President Xi at his club in Florida. No date given. China’s stock market shot up over 5% in response today. Equities in Hong Kong, India and Taiwan closed 1.2%, 1.0% and 0.7% higher. Japan’s Nikkei rose 0.5%. Other Asian markets and stocks in Europe haven’t moved much. The U.S. market is poised to rise at the open.

The dollar is only marginally changed against the yen, euro, Swiss franc, loonie and sterling but shows losses today of 0.7% versus the kiwi, 0.6% vis-a-vis the Australian dollar and Mexican peso, and 0.4% relative to the Chinese Renminbi. The price of gold is unchanged.

Ten-year sovereign debt yields have firmed two basis points in the U.S., German, and Great Britain but remain steady at minus 0.05% in Japan.

West Texas Intermediate crude oil slipped 0.5% to $56.99 per barrel.

Japan’s December readings for the indices of leading, coincident, and lagging economic indicators were each revised below their preliminary indications. The LEI ended 2018 at a 26-month low, and the trend designation of the index of coincident economic indicators was “weakening” for a fourth straight month. A separate Japanese data release revealed that corporate service prices in January had dropped 0.5% on month and posted a 12-month increase of 1.1% for the fifth time in the past eight months.

Retail sales growth in New Zealand last quarter jumped 1.7%, three times the expected rise, and were 4.5% greater than a year earlier. A 3.5% on-year rise in sales volume was the most in a year.

On-year CPI inflation in Singapore averaged 0.4% in the three months through January versus 0.7% in the previous three-month period through October.

Danish retail sales in January fell 0.3% on month and edged up a mere 0.1% compared to the year-earlier level.

Spanish producer price inflation of 1.8% in January was up from 1.7% in December but well below readings of 2.9% in November, 4.6% in October or 5.3% in September.

Czech PPI inflation rebounded 0.5 percentage point to 2.9% in January, but Finnish PPI inflation fell to a 10-month low of 3.2% from 3.8% in December, 4.7% in November, and 6.2% last August.

Icelandic CPI inflation decelerated 0.2 percentage points to 1.8% in January.

The Czech consumer confidence index dropped 2.8 points to a 19-month low of 106.4 in February, even as business sentiment rose 0.8 points to a 3-month high.

Austrian industrial production rose on month in January for the first time in three months but only by 0.2%. Output exceeded its year-earlier level by 1.8%, down from a 5.7% 12-month rate of increase posted in November.

Mexico’s current account was in balance last quarter — neither in surplus nor deficit — compared to a $1.9 billion deficit in the final quarter of 2017.

Two huge events are on the menu tomorrow: Fed Chairman Powell’s first day of Humphrey-Hawkins testimony to congress and Theresa May’s updating speech to Parliament on the status of Brexit negotiations with the EU.

The Bank of Israel monetary officials are conducting a scheduled review of monetary policy today.

U.S. data releases today will include retail sales, the Dallas Fed manufacturing index, and the Chicago Fed National Activity Index.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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