Investors Seeking a Floor
June 21, 2022
Bottom-fishing lifted share prices by 1.8% in Japan, Pakistan and India, 1.9% in Hong Kong, 2.4% in Taiwan, and 1.4% in Australia this Tuesday. Equities currently are up 1.2% in France and show a 0.7% rise in Italy, Germany, and Great Britain. U.S. stock futures have climbed around 1.7%.
Mixed movement in the dollar saw such advance 0.6% against the yen overnight but settle back 0.4% versus the euro, 0.5% relative to the peso, and 0.2% vis-a-vis the Canadian dollar. The DXY dollar index is 1.5% softer than last week’s two-decade high.
In this counter-trend trading session, bitcoin has recovered 1.8%, and ten-year sovereign debt yields have undergone diverse changes too, with those in Greece and Italy down 13 and 4 basis points, and those in the U.S. and Germany up 6 and 2 basis points.
Prices for WTI oil and gold are up 1.2% and down 0.3%, respectively.
Euroland’s current account posted deficits during April on both a seasonally adjusted basis (-EUR 5.8 billion) and in unadjusted terms (-EUR 5.4 billion). Sanctions against Russia have squeezed exports, and high commodity prices have lifted import costs. The seasonally adjusted deficit was larger than March’s shortfall of EUR 1.6 billion, and the unadjusted surplus of EUR 186 billion over the past twelve reported months was 41% smaller than a year earlier. As a percent of GDP, the cumulative surplus shrunk to 1.5% over the past 12-month period from 2.7% in the year through April 2021.
Euroland’s loss has been Russia’s gain and reflected in the ruble, which touched a 7-year high overnight.
Polish producer price inflation accelerated 0.6 percentage points to a 321-month high of 24.7% in May. Latvian PPI inflation advanced 2.2 percentage points to a record high of 31.5% last month. But CPI inflation in Hong Hong settled back to a 4-month low of 1.2%.
The British Rightmove house price index registered its smallest 12-month increase (9.7%) in four months during June, and the orders component of the Confederation of British Industry’s monthly industrial trends survey retreated to a 2-month low of 18 in June from a reading of 26 in May.
The Westpac New Zealand consumer confidence index plunged to a 30-plus-year low of 78.7 this calendar quarter from readings of 92.1 in the first quarter, 99.1 in the final quarter of 2021 and 110.0 in the third quarter of 202o.
Published minutes from the Reserve Bank of Australia’s policy meeting this month affirmed that more rate hikes will be needed and committed to restoring in-target inflation, that is within a 2-3% corridor. But further cresting is projected in the near-term to around 7% later this year.
Still ahead: the release of U.S. existing home sales and the Chicago Fed National Activity Index as well as Canadian retail sales and home price data. Powell will be delivering semi-annual congressional testimony on monetary policy and U.S. economic prospects tomorrow and Thursday.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British industrial trends survey, Euroland current account, RBA minutes