Equity Rout Paused but Rise of Commodity Prices Continues
March 8, 2022
The price of Nickel soared more than 200%, forcing that exchange to stop trading. Prices for silver (+2.6%), WTI oil (+2.5%), wheat (+1.2%) and gold (+0.8%) climbed further as well.
The euro recovered 0.3% overnight, causing the DXY dollar index to fall almost 0.3%. The greenback gained 0.4% against the yen, 0.5% versus the Australian dollar, and 1.0% relative to the Turkish lira but lost 0.1% against the kiwi and yuan and almost 4% vis-a-vis the highly volatile Russian ruble.
As investors continue to sort out the implications of Fed tightening, rising inflation, and the uncertain future evolution of the Russian-Ukrainian war, ten-year sovereign debt yields jumped 11 basis points in Germany, 8 bps in the United States and Great Britain, 6 bps in France, 5 bps in Switzerland and a basis point in Japan.
The deeply downward momentum of U.S. and European share prices on Monday extended into the Pacific Rim overnight where equities lost 2.4% in China, 1.7% in Japan, 2.1% in Taiwan, 1.2% in Singapore, and 1.4% in New Zealand and Hong Kong. But European markets exhibited some bargain hunting with gains so far of 3.2% in Italy, 3.3% in Spain, 1.9% in France, 1.7% in Germany and 0.6% in the British Ftse.
Price data reported today include a 156-month high in Latvian CPI inflation of 8.7% last month versus -0.2% in February 2021, a 303-month high in Lithuanian CPI inflation of 14.2% in February 2022 versus just 0.6% in the year through February 2021, a 159-month high of 7.8% in Chilean CPI inflation, a 2-month high of 11.5% in Taiwanese wholesale price inflation, and a 6-month low in Taiwanese CPI inflation.
Italian retail sales slipped 0.5% on month in January, their second drop in two months, but sales were still 8.4% above their year-earlier level as covid restraints lessened.
German industrial production was much stronger than forecast in January, climbing on month (2.7%) at the fastest pace in since October 2020 and returning to positive year-on-year growth for the first time since August. However, output still remained somewhat below its pre-pandemic level.
Industrial production in Spain fell 2.6% in January, the most in 21 months and resulting in a smaller than expected 1.7% year-on-year increase. Irish industrial production also dropped in January, falling 3.1% on month and by 19.6% on year.
On-year growth in British same-store sales of 2.7% in February was only a third as much as in January.
Employment grew 0.5% in the euro area last quarter, just half as quickly as in 3Q 2021 and by the least since the first quarter of 2021. There were 2.2% as many employed workers last quarter as a year earlier, which reversed a 1.7% drop in jobs between 4Q 2019 and 4Q 2020.
The second estimate of Euroland GDP growth last quarter was unrevised. GDP edged only 0.3% higher, down from gains of 2.3% in 3Q and 2.2% in 1Q. Personal consumption contracted 0.6% in the year’s final quarter, and net exports exerted a drag of 0.6 percentage points on GDP growth. Positive growth was sustained by support from inventories, a 3.5% increase in business fixed investment, and a 0.5% rise in government spending. Fourth-quarter GDP was 4.6% greater than in the same quarter a year earlier and managed to expanded 5.3% in 2021 as a whole following its 6.4% plunge in 2020.
Several Japanese economic statistics were released today:
- The current account posted its largest deficit (1.189 trillion yen) in January in eight years, and the seasonally adjusted current account surplus slumped to JPY 192 billion from JPY 812 billion in December and more than 1.0 trillion yen in November.
- The economy watchers index fell to a six-month low in February with a very depressed reading of 37.7.
- The January indices of leading and coincident Japanese indicators slipped to 3-month lows, and the trend designation on the coincident measure was “weakening” as it had been during the final four months of 2021.
- Japanese labor cash earnings were 0.9% greater in January than a year earlier, which constitutes an 8-month high for that measure.
- On-year growth in bank lending slowed to 0.4% last month from 0.5% in January and 0.7% in 4Q 2021.
South African GDP expanded 1.2% on quarter in 4Q 2021 and 1.7% versus the year-earlier quarter. But average GDP growth in 2021 of 4.9% represents a 14-month high following a plunge of 6.4% in 2020.
The National Australia Bank monthly indices of that economy’s business confidence and business conditions improved to 4- and 3-month highs in February.
Concerns about inflation and the persistent shortage of available labor depressed U.S. small business sentiment to a 13-month low of 95.7 from 97.1 in January and a 2021 high of 102.5 in June, according to the NFIB index.
The U.S. goods and services trade deficit was extended in January by the combination of a 1.7% contraction of exports and a 1.2% increase in imports. At a record high of $89.692 billion, the deficit was 9.4% bigger than the prior month’s deficit and 37.7% greater than the January 2021 deficit.
Canada’s trade deficit also widened in January. Thanks to a 7.4% monthly slump in imports and only a 0.2% downtick in exports, the trade gap climbed to C$ 2.618 billion in January from C$ 1.582 billion in December. Back in the first month of 2021, Canada sported a trade surplus of C$ 1.588 billion.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland GDP and employment growth, Japanese current account, U.S. and Canadian trade balances
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