Investors in Cautious Mood

June 12, 2019

Trade war concerns continue to weigh on financial markets.

Share prices fell 1.4% in Hong Kong where street riots escalated in protest of an extradition law. Equities also dropped 0.6% in China, 0.5% in India and Indonesia and 0.4% in Japan. European stock markets so far have lost 0.8% in Italy, 0.7% in the U.K. and France and 0.6% in Spain and Germany.

The ten-year U.S. Treasury yield in overnight futures slid two basis points, and the 10-year British gilt dipped a basis point.

West Texas Intermediate crude oil plunged 2.7%, and gold firmed 0.7% on the Comex.

The dollar is narrowly mixed.

Today’s main data surprise has been a 5.2% leap in core domestic Japanese machinery orders versus expectations of a decline of nearly 1%. It was enough to elicit an assessment up” grade from Japanese officials to “showing a pick-up” from “stalling,” but investors remain worried about the coming trade war. Foreign orders for machinery plunged 24.2% on month and 18.3% on year.

Japanese domestic core producer price inflation was halved to a 3-month low of 0.7% in May.

Chinese CPI inflation accelerated 0.2 percentage points in May to a 15-month high of 2.7%, but PPI inflation slowed 0.3 percentage points to a 2-month low of 0.6%. On-year growth in Chinese M2 money remained unchanged in May at 8.5%, while the CNY 1.18 trillion of bank loans that month was somewhat lower than forecast.

Spanish CPI inflation in May was confirmed as the same as the preliminary estimate of 1.5%, a 16-month high.

And Romanian CPI inflation stayed at April’s 6-month high of 4.1%.

Singapore retail sales in April were fewer than a year earlier for a third straight month in April, this time by 1.8%.

The Westpac measure of Australian consumer sentiment dropped 0.6% in June, reversing May’s increase and indicated a short-lived boost from the recent central bank rate cut there.

The Central Bank of the Republic of Turkey is holding a monetary policy review. Baseline forecasts aren’t looking for a change but acknowledge the possibility of a surprise cut.

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

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