Equities and Dollar Rise after Difficult Week

September 13, 2021

Equity markets in Europe have strengthened slightly more than 1.0% in Italy and Spain and by 0.7-0.9% in Germany, France and Great Britain. U.S. stock futures are up around 0.6%, but markets earlier in the Pacific Rim had given no warning as what was to come with Hong Kong’s Hang Seng index faltering 1.5% and the Japanese and Chinese indices rising just 0.2% and 0.3%.

The weighted DXY dollar index is up 0.2%. The greenback rose 0.5% against the Swiss franc, 0.3% relative to the euro and 0.1% vis-a-vis the Japanese yen.

Ten-year U.S. Treasury and British gilt yields slipped a basis point, whereas their German and Japanese counterparts remain flat.

The price of WTI oil jumped 1.2% and is back above $70 per barrel. Gold‘s price dipped 0.2% and is further below $1800 per ounce.

There’s been a central bank rate hike in Kazakhstan. The policy rate of that country’s national bank was lifted 25 basis points to 9.5%. This was the second increase of 2021 and matched the move made in July. In 2020, the rate had been hiked by 275 basis points in March but then cut 25 bps in April and by a further 25 bps in July. Inflation of 8.7% is at a 57-month high and above a target centered on 5%.

German wholesale prices posted a smaller 0.5% month-on-month increase in August after a string of 1.0% or more advances, but the 12-month rate of increase still moved 1.0 percentage point higher to 12.3%, most since the early autumn of 1974.

Japanese domestic producer prices were unchanged in August, their first non-positive change in nine months, and year-on-year PPI inflation dipped 0.1 percentage point below July’s 13-year high to 5.5%. Import prices advanced 2.9% on month and 26.5% on year.

Indian consumer price inflation slowed 0.3 percentage points to a 4-month low in August of 5.3%, which is below the the 6% target corridor ceiling.

Serbian CPI inflation climbed a full percentage point in August to a 95-month high of 4.3%.

Food price inflation in New Zealand slowed 0.2 percentage points to a 3-month low of 2.4%.

Business conditions improved in Japan in the third quarter according to the Ministry of Finance’s latest quarterly survey and are expected to rise further during the coming two quarters, but large firms continue to experience a considerably better climate than smaller ones.

Ireland’s construction purchasing managers index fell back to a 4-month low of 57.5 in August, having crested at 66.4 in May.

Factory output in Hong Kong grew 1.9% last quarter, and the 5.6% advance from a year earlier was the most in 42 quarters. There had been five straight on-year declines from the final quarter of 2019 through 4Q 2020.

Turkish industrial production slumped 4.2% in July, slashing the year-on-year rise to 8.7% from 24.1% in June and 66.3% in April. Retail sales rose only 0.7% in July, and the 12-month 12.3% increase was the smallest since February.

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


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