Renewed Downward Pressure on Equities and the Dollar

May 17, 2021

Equities this Monday fell 3.0% in Taiwan, 1.8% in Indonesia, 0.9% in Japan, and 06% in South Korea. Losses so far range from 0.3% to 0.7% in the U.K., Germany, France and Spain, and U.S. futures point to a drop at the open of about 0.3%.

Ten-year sovereign debt yields have climbed six basis points in Italy, 3 bps in France and Spain and two bps in Great Britain and Germany.

The dollar declined 1.0% against the Turkish lira, 0.2% relative to the euro, yen and the DXY index, and 0.1% against the loonie and Swiss franc.

The price of gold is 0.6% stronger, but cryptocurrencies has softened. WTI oil is little changed.

In China last month, fixed asset investment, retail sales, industrial production and property prices respectively recorded solid 12-month increases of 19.9%, 17.7%, 9.8%, and 4.8%. Meanwhile, the jobless rate fell 0.2 percentage points to 5.1%.

New Zealand’s service-sector purchasing managers index leaped to a record high of 61.2 in April from 52.9 in March, 49.7 in February and 48.0 at the start of 2021.

Ireland’s construction PMI index improved to a 3-month high of 49.3 in April from readings of 30.9 in March, 27.0 in February, and an 8-month low of 21.2 in January.

There were 120.8% more orders for Japanese machine tools in April than a year earlier. That enormous gain from a pandemic-depressed level followed 12-month advances of 65.1% in March, 36.7% in February and 9.7% in January.

Thailand recorded its third straight quarterly rise in real GDP, but the size of the gain decelerated to just 0.2%. On-year growth of -2.6% remained in the red for a fifth straight quarter.

Danish GDP growth returned to negative ground (-1.5% vs 4Q) in the first quarter following increases of 6.3% in 3Q 2020 followed by 0.7% in 4Q 2020.

Price data released today have underscored the effect of supply chain disruptions.

  • Wholesale price inflation in India climbed to 10.49% in April, a 131-month high. Fuel price inflation nearly doubled to 20.9%, and year-on-year rises in the wholesale prices of manufactured goods climbed 1.7 percentage points to 9.0%.
  • Czech PPI inflation intensified 1.3 percentage points to a 113-month high of 4.6% in April.
  • The final release of Italian CPI data for April confirmed a 2-year high of 1.1%. Such had been at -0.2% as recently as December.
  • On-year change in the combination Swiss index of producer prices and import prices flipped from -0.2% in March to a 30-month high of 1.8% in April.
  • Danish CPI inflation swell half a percentage point to a 42-month high of 1.5% in April.
  • And Japanese domestic PPI inflation tripled between March and April to a 79-month high of 3.6% and was accompanied by a sharp advance in import price inflation to 15.1% from 5.7% in March and -5.0% in February.

The Empire State manufacturing index, which is compiled by the NY Federal Reserve, and the National Association of Homebuilders’ monthly housing market index will be released today.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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