Encouraging Vaccine News and Economic Data Send Equities and Oil Higher Up But Depress Dollar

November 16, 2020

A second Covid vaccine developer, Moderna, reported 94% effectiveness in early trials, and the pace of new cases in France, which was soaring, has subsequently slowed a bit.

Japanese real GDP rebounded more sharply than anticipated in the third quarter, climbing at a 21.4% annualized rate, breaking a streak of three straight quarterly declines, and remaining 5.8% below its year earlier level. Net foreign demand was the main source of third-quarter growth, followed by personal consumption. The GDP price deflator rose 0.3% on quarter, but posted a smaller year-on-year advance of 1.1%. In a separate Japanese release, Japanese capacity utilization in September leaped 6.4% on month.

China released several economic indicators. Industrial production posted a larger-than-expected 6.9% on-year increase in October, matching September’s 9-month high and resulting in a higher year-to-date advance of 1.8%. That’s quite a turnaround from the start of 2020 when output in January-February was 13.5% less than a year earlier. A 4.3% on-year advance in retail sales in October was the best result so far in 2020, and so was a 1.8% year-to-date increase in fixed asset investment. The October jobless rate of 5.3% in October was down from 6.2% last February and the lowest since January. Property price inflation of 4.3% was also its lowest of 2020.

As it did on multiple days last week, the People’s Bank of China injected extra liquidity into the money market today.

Share prices closed up 2.1% in Japan and Taiwan, 2.0% in South Korea, 1.4% in Singapore, 1.2% in Australia, 1.1% in China and 0.9% in Hong Kong. Markets in Europe so far today show gains of 3.1% in Spain, 2.3% in Italy, 2.2% in France, 1.8% in Great Britain, and 1.0% in Germany. DOW Jones and S&P futures have also climbed at least 1%, but the Nasdaq didn’t participate in this extended move.

The price of WTI crude oil leaped 4.3% overnight, while that of gold slipped 0.7%.

The dollar dropped 0.7% against the peso, 0.4% relative to the loonie, and 0.3% versus the yen, kiwi, Aussie dollar, and yuan. The dollar alternatively ticked up 0.2% vis-a-vis sterling and 0.1% against the euro and Swiss franc in overnight trading.

Ten-year sovereign debt yields advanced 3 basis points in the U.K. and 2 bps in the U.S. and Germany.

Real GDP in Thailand rebounded 6.5%, it first quarterly increase in over a year. This halved the year-on-year rate of contraction to 6.4%. Thai officials now expected a 6% average drop in GDP this year, which is revised from an earlier forecast of minus 7.5%.

Indian wholesale price inflation ticked up 0.16 percentage points to an 8-month high of 1.48% in October. The manufacturing component propelled this uptick.

New Zealand’s service sector purchasing managers index recovered to a 2-month high of 50.3 in September after August’s 7.2-point decline to 47.2 in August.

Irish consumer confidence weakened sharply to a 6-month low in October.

After a 52-month high set in October, Britain’s Rightmove house price index accelerated by a further 0.8 percentage points to 6.3% this month.

Indonesia posted its widest trade surplus in almost a decade last month. It totaled $3.6 billion and accounted for over a fifth of the January-October surplus.

In the twelve months through October, Italian consumer prices fell 0.3%, and Czech producer prices went up 0.3%.

While responding favorably to the vaccine reports from Moderna and Pfizer, markets for today at least overlooked U.S. milestones in new cases and hospitalizations from Covid. There were over 135k new cases and 69,987 hospitalizations in the United States on Sunday.

The New York Fed’s Empire State manufacturing index dropped 4.2 points in November to a 3-month low of +6.3. Back in April, such had plunged to -78.2.

A 1.5% increase in Canadian manufacturing shipments in September trimmed the 12-month rate of contraction to 6.2% from 7.9% in August.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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