A Moderate Uptick in Equities in Spite of More Trade Worries

May 30, 2019

Share prices in Europe are up 1.0% in Spain, 0.6% in Germany, 0.5% in France and the U.K., and 0.3% in Italy. U.S. futures suggest a rise at the open of U.S. stocks at the open, but that could change when U.S. data arrive covering GDP, jobless insurance claims and the advance trade deficit indication. In the Pacific Rim, equities closed mixed, with gains of 0.8% in South Korea and Taiwan, 0.7% in India, and 0.4% in Hong Kong but declines of 0.7% in Australia, 0.6% in Singapore and 0.3% in Japan and China.

The 10-year U.S. Treasury yield has bounced from yesterday’s intra-day low of 2.21% to 2.26%. There have also been one-basis point rises in the 10-year German bund and Japanese JGB yields and of 2 bps in 10-year British gilts.

The price of  WTI oil is 0.3% higher, and that of Comex gold is 0.4% lower.

Movements today in the dollar amount to zero percent relative to sterling and the euro and muted otherwise — just down by 0.2% relative to the loonie and  0.1% versus the Aussie dollar, kiwi, yuan and peso, along with a 0.1% uptick vis-a-vis the Swiss franc and yen.

There have been some troubling news concerning trade. News emerged that trade talks between the U.S. and European Union remain stalled. China is threatening to stop exports of rare earth minerals and to halt purchases of U.S. soybeans.

Markets are closed today for Ascension Day in Norway, Switzerland, and Indonesia.

Producer price data were reported for a number of economies. South Africa’s PPI inflation rate accelerated 0.3 percentage points (ppts) to a 5-month high of 6.5% in April. A 1.4% year-on-year drop in Malaysian producer prices in April was the smallest decline in a string of six straight months with decreases. Greek PPI inflation slid 0.8 ppts to a 2-month low of 3.6%, and the Filipino rate of producer price inflation (3.8%) also constituted a 2-month low.

Spanish consumer price inflation fell nearly in half to a 16-month low of 0.8% in May from 1.5% posted in April.

Building permits fell 7.9% in New Zealand during April after a 6.9% drop the month before, while permits in Australia declined by 4.7% on month and a whopping 24.2% from a year earlier.

In the first quarter, private business investment in Australia, which had been forecast to rise somewhat, instead fell 1.7%. This offset a 1.3% increase in the final quarter of 2018 and was the third slid in four quarters.

In Portugal last month, industrial production increased 2.9% but posted another year-on-year decline, this time of 1.6%. Retail sales, on the other hand, dropped 1.0% on month but increased 6.5% compared to the year-earlier level.

In addition to GDP, trade, and jobless claims data, U.S. pending home sales will be reported today, and Canada releases its first-quarter current account numbers. U.S. Vice Chair Clarida and Bank of Canada Deputy Governor Wilkins will be speaking publicly. Yesterday’s unexpected 9-minute speech from U.S. Special Prosecutor Mueller hasn’t appeared to affect markets today.

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

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