End of November Brings Many Data Reports and Stock Market Pause

November 30, 2020

Dollar losses overnight amounted to 0.4% against sterling, 0.3% versus the loonie, and 0.2% relative to the euro and kiwi. The greenback also rose 0.2% against the Australian dollar and 0.1% vis-a-vis the yen and peso. There’s been no net change against the yuan or Swissy.

Some profit-taking took place in stock market trading overnight in the Pacific Rim, with daily losses of 3.0% in Indonesia, 1.6% in South Korea, 2.1% in Hong Kong, 1.3% in Australia, 1.0% in Taiwan, 0.8% in Japan and 0.6% in China. A mixed picture in Europe includes declines of 0.7% in Spain, 0.3% in Italy, and 0.2% in France but also a 0.6% rise in the German Dax. U.S. futures point to a moderate drop at the open. After a stellar rise this month, equities may simply be pausing on this final day of the month, or it could herald an over-bought condition.

Other signs of risk aversion return are commodity price declines so far today of 0.9% in gold and 0.5% in WTI oil, as well as 10-year bond yield upticks of 2 basis points in U.S. Treasuries and a basis point each in British gilts and German bunds.

The latest pandemic news has taken a slight turn for the better. Good news was reported on the vaccine development front, U.S. deaths dipped under 1000 per day to a 2-week low yesterday, and the intensity of Europe’s second wave seems to be letting up a bit.

China’s NBS-compiled manufacturing and non-manufacturing purchasing managers indices advanced in November to 38- and 101-month highs of 52.1 and 56.4, respectively.

On-year growth in Japanese retail sales of 6.4% in October ended a streak of seven consecutive on-year declines and was the biggest rise in 13 months. The preliminary industrial production report brought more confirmation of an emerging upward trend. Production rose 3.8% on month, augmenting the 8.7% quarterly increase and cutting the year-on-year loss sharply to 3.2%. The year-on-year decline in Japanese construction orders cratered to just 0.1% in October from 10.6% in September and 28.5% in August. Housing starts were lower than a year earlier for a sixteenth straight time, but the 8.3% drop in October was the smallest since March.

Third-quarter GDP figures were reported for several economies. Real GDP in Turkey rebounded 15.6% versus 2Q but still fell 6.7% on year. In Austria, real GDP increased 12.0% on quarter but fell 4.0% on year. Danish GDP also contracted 4.0% on year in spite of a 4.9% quarterly recovery. The year-on-year contraction of GDP in Cyprus of 4.4% was down from a 12.3% drop in the second quarter. Portuguese GDP grew 13.3% on quarter but fell 5.7% on year. Belgian GDP jumped 11.4% on quarter and fell 4.5% on year. In Poland, GDP climbed 7.9% in 3Q, which greatly reduced the year-on-year contraction to 1.5%. Iceland, which is heavily dependent on tourism, saw GDP growth bounce only 2.6% upward, resulting in another double-digit on-year contraction, this time of 10.4%.

A greater-than-forecast 0.8% decline in German consumer prices in November translated into a 70-month annual inflation rate low of negative 0.3%. The energy component was more negative in November (-7.7% on year) than in October. Italian consumer prices fell by 0.1% on month and 0.2% on year in November. That’s the 8th month in a row without positive CPI inflation. Spanish CPI inflation of -0.8% in November was its most negative since May.

British mortgage approvals far outperformed expectations in October, reaching 97.5 thousand, which was the most in 157 months. The stock of M4 money recorded a higher 13.1% advance from a year earlier, but consumer credit posted a second straight decline of GBP 600 million.

Switzerland’s KOF index of leading economic indicators settled back to a 4-month low in November. Swiss retail sales in October were 3.2% greater than in the prior month and 3.1% above their year-earlier level.

Retail sales have been depressed by intensifying Covid infections. In South Korea such fell 0.9% on month and 0.2% on year in October. The on-year increase of Dutch retail sales of 7.1% in October was down from 10.4% in August.

The Canadian current account deficit widened to a 2-month high of C$ 7.528 billion last quarter, bringing the January-September gap to C$ 28.4 billion versus a deficit of C$ 20.4 billion a year earlier. After spiking 16.5% in third quarter, Canadian building permits fell 14.6% last month, and Canadian producer price inflation moved above zero percent for the first time since January to 0.7% in October.

Growth in Australian corporate profits of 3.2% in the third quarter was much slower than the second-quarter spike of 15.8%. Business confidence in New Zealand improved to a 38-month high of -6.9 in November, marking the third straight advance after bottoming at -41.8 in August.

South Africa experienced a 2-month high in its trade surplus of ZAR 36.13 billion in October, but that was still well short of the record high of ZAR 45.7 billion back in June.

U.S. pending home sales in October recorded a second consecutive monthly decline, trimming its year-on-year advance to a still robust 20.2% from 20.5% in September and 24.5% in August.

The U.S. Chicago regional purchasing managers index slipped back to 58.2 in November from 61.1 in October and a reading of 62.4 in September.

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

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