Dollar Flat, Stocks Somewhat Lower as Investors Await Some Key Corporate Earnings Announcements
October 25, 2022
U.S. equities have slipped but by less than 0.5%. Share prices were mixed in Asia and Europe, with gains of 1.0% in Japan and 0.5% in France but losses of 1.5% in Taiwan, 0.7% in in Germany, 0.6% in Great Britain, and 0.5% in India.
The dollar strengthened 0.6% against the Chinese yuan but just 0.1% versus the euro and Swiss franc. Dollar/yen is unchanged so far today, and the greenback has recorded dips of 0.3% against sterling, 0.2% relative to the kiwi and 0.1% against the Australian dollar and Mexican peso.
Ten-year sovereign debt yields have retreated ten basis points in Spain and Italy, nine bps i n Germany, eight bps in the United States and five basis points in Great Britain. The prices of WTI oil and gold are 1.1% and 0.3% lower, while that of Bitcoin is down 0.2%.
Microsoft, Alphabet, and Visa report corporate earnings later today. U.S. FHFA and Case-Shiller house price indices, the Richmond Fed manufacturing survey, and the Conference Board’s U.S. consumer confidence index will be released as well.
Chinese Xi’s consolidation of political power has not been well received in financial markets around the world.
Rishi Sunak is now Britain’s fifth prime minister since the Brexit referendum in June 2016, following Liz Truss, Boris Johnson, Theresa May, and David Cameron. There were just three prime ministers in the 28 years from 1979 to 2007 by contrast: Margaret Thatcher, John Major and Tony Blair.
Today’s released October German business climate survey depicts continuing grim sentiment in the euro area’s largest economy. The index edged 0.1 point lower to a 29-month low of 84.3 and compares to a reading of 97.9 in October 2021. Current conditions fell to a 19-month low, and expectations recovered just 0.3 points above September’s 29-month low. The report is consistent with a possible fourth quarter 0.6% contraction of real GDP. Although supply side delays were slightly less prevalent, inflation remains substantial.
The British CBI survey of industrial trends posted a third straight sub-zero reading in the orders index, which printed at -4 this month after -2 in September and a record high of 26 last May. The CBI’s quarterly index of business optimism plunged from -21 in the second quarter to a 9-quarter low of -48 last quarter.
Swedish producer price inflation, which touched a record high of 25.6% earlier this year, eased 1.4 percentage points to a 2-month low of 20.6% in September.
Spanish producer price inflation fell to a 9-month low of 35.6% last month from 42.9% in August and a record high of 47.0% in March.
Consumer price inflation in Singapore in September matched August’s 170-month high of 7.5% and was up from 2.5% in September 2021.
South Korean consumer confidence relapsed to a reading of 88.8 in October from 91.4 in September. July’s 86.0 reading had been a 27-month low.
Brazilian consumer sentiment in October slid 0.4 points below September’s 20-month high of 89.0.
Turkish business confidence in the manufacturing sector bounced above September’s 27-month low of 99.9 to 100.3 in October. Readings of 100 represent neutrality.
Officials at the State Bank of Vietnam engineered their second straight full percentage point hike of the refinancing rate after this month’s policy review in an attempt to support the economy’s exchange rate and to counter inflation. CPI inflation of 5.9% currently is at a 30-month high and above target. At 6.0%, the key interest rate has been returned to its pre-pandemic level.
Hungary’s central bank base rate was kept at 13.0% after the latest policy review. The rate had been progressively lifted from a pandemic low of 0.60% starting in May 2021, and officials after the last increase had signaled satisfaction that it had risen far enough. “In the Monetary Council’s assessment, maintaining the current level of the base rate for a prolonged period is consistent with the achievement of the price stability objective over the monetary policy horizon.” But to protect the Hungarian forint, “tighter interest rate conditions on overnight quick deposit tenders and foreign exchange swaps are raising short-term rates and properly influencing interest-sensitive capital flows.”
House price inflation in the United States slowed more than expected in August. The FHFA index posted an 11.9% 12-month rate of increase, down from 13.9% in July and this year’s peak of 19.3% last February. The Case-Shiller index of 20 metropolitan areas was 13.1% above its year-earlier level and 1.6% below the previous month. The year-on-year rise in the Case-Shiller index had crested in March-April at 21.2%.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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