Opening Bell on 2022

January 3, 2022

Some financial markets such as those in Japan, China, Great Britain, Australia, and New Zealand remained closed on this first business day of 2022. But manufacturing sector purchasing managers surveys were reported for many economies, and some price data were released, too.

In market activity, the dollar held steady against the Japanese yen and Chinese yuan, rose by 0.4% relative to the Turkish lira, 0.3% vis-a-vis the Australian and New Zealand dollars and 0.2% versus the euro, Swiss franc, sterling, and Canadian dollar.

U.S. stock futures point to a rise at the open of around a half percent. Equities have climbed today by 1.6% in India, 1.3% in Indonesia, 1.2% so far in France and Italy, 0.9% in Germany and Switzerland.

Ten-year U.S. Treasury and German bund yields have risen three and two basis points.

West Texas Intermediate oil is 0.4% firmer, while gold has drifted 0.3% lower.

The purchasing manager findings that cover manufacturing in December revealed some hopeful signs, notably “some tentative signs that supply chain disruptions may be starting to recede.” Delivery times shortened a bit in some cases, and inflationary pressure lessened marginally. PMI indices signal whether business conditions improved (values above 50.0) or deteriorated, and higher readings in December than November indicate faster rates of improvement or slower rates of deterioration.

All of today’s reported PMI indices were above 50.0. Those for Greece (a 4-month high of 59.0), the Czech Republic (4-month high of 59.1), Poland (5-month high of 56.1), Turkey (3-month high of 52.1), India (11-month high of 57.6), Malaysia (8-month high of 52.6), Taiwan (4-month high of 55.5), South Korea (3-month high of 51.9), and the Philippines (9-month high of 51.8) all increased last month.

Euroland’s manufacturing PMI reading matched the preliminary estimate of 58.0, a ten-month low, but employment and production grew faster than in November. Confidence in the future improved to an 8-month high, and input price inflation rose at the slowest pace in 8 months. Within the euro area, Italy reported the fastest growth with a reading of 62.0, while Germany (57.4), Spain (56.2) and France (55.6) had the three lowest readings.

Nordic readings for Norway (a 10-month low of 58), Denmark (a 10-month low of 64.4), and Sweden (a 4-month low of 62.1) were softer but nonetheless elevated from a broader historical perspective.

The Swiss manufacturing PMI rebounded 0.2 points in December to a 2-month high of 62.7 but remained well below July’s sizzling record high reading of 71.1.

High inflation and how central banks are likely to address such figures to be a major theme of 2022, along with the unpredictable evolution of the Covid-19 pandemic. At one extreme has been Turkey, where the central bank has slashed its interest rate by 500 basis points in the final four months of 2021 to 14%. CPI inflation there was reported at a 231-month high of 36.1% in December following a record monthly leap of 13.6% in the final month of last year. Meanwhile, Turkish producer prices shot up 19.1% on month and by 79.9% from a year earlier, which was the greatest 12-month increase in 238 months.

Pakistani CPI inflation accelerated 0.8 percentage points to a 22-month high of 12.3% in December despite a monthly dip of less than 0.1% in consumer prices.

In Peru, consumer prices jumped 0.8% on month (twice as much as in November), lifting on-year inflation by 0.9 percentage points to a 155-month high of 6.4%.

In Portugal, consumer prices in December were unchanged from November but 2.8% higher than at end-2020, marking the largest 12-month rate of increase in 110 months.

Although just 1.87%, CPI inflation last month in Indonesia hit its highest level in 13 months and a half-percentage point above June’s 10-month low.

South Korea experienced a trade deficit in December for the first time in 20 months. The surplus in 2021 of $29.5 billion was down from $44.76 billion in 2020.

On-year growth in Hong Kong retail sales of 4.2% in November was down from 9.4% in October and the slowest in four months.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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