China Delivers Two Disappointments to Investors
November 7, 2022
Officials in China announced that for now there is to be no change in the government’s zero Covid objective, quelling rumors last week that a modification would soon be forthcoming to promote faster growth. Also China’s October trade surplus of $85.2 billion was $10 billion smaller than street estimates. A 0.7% year-on-year dip in imports was the first 12-month decline in 26 months. The country’s foreign exchange reserves increased by $23 billion last month.
The dollar strengthened 0.6% overnight against the Chinese yuan but otherwise fell by 0.6% against sterling, 0.4% versus the Swiss franc, 0.3% on a weighted basis, and 0.1% relative to the yen and euro.
Ahead of tomorrow’s U.S. midterm election and Thursday’s scheduled release of U.S. consumer price data, the ten-year U.S. treasury yields has slipped back two basis points, while 10-year sovereign debt yields in Europe are down five basis points in Italy and by three basis points in Germany, France and Spain. The 10-year British gilt yield is unchanged, in contrast, lending support to sterling but depressing the British Ftse 100 stock index by 0.2%.
Most other stock markets began the week on an upward note, with gains of 2.7% in Hong Kong, 1.5% in Taiwan, 1.2% in Japan, 1.0% in South Korea, 0.8% in Indonesia and 0.5% in New Zealand and Australia. equities so far show gains of 0.8% in Italy and Germany and 0.4% in U.S. futures.
The prices of West Texas Intermediate oil and Bitcoin are down 1.0% and 0.6%, while gold is steady.
Construction in Euroland continues to be squeezed by rising interest rates, supply shortages, and the feared energy crisis. The construction purchasing managers index posted a contractionary sub-50 reading for a sixth consecutive month. At 44.9 in October, the PMI was its weakest in 29 months. Among the three biggest economies using the euro, France’s construction PMI dropped to a 32-month low of 48.3, while the Italian and German readings of 48.1 and 43.8 were four-month highs.
German industrial production in September rose 0.6% in September, its first monthly advance since June and resulting in a 7-month high in the year-on-year comparison, which increased to 2.6%. But production of intermediate goods edged down 0.1%.
Industrial production in the Czech Republic during September posted its best on-year growth (8.3%) since June 2021.
Danish industrial production jumped 1.9% on month and 18.9% on year in September.
In Norway, however, industrial production fell 2.4% on month in September, which resulted in the smallest 12-month increase (just 0.9%) since January.
The Sentix gauge of investor sentiment toward Euroland’s economy recovered 7.4 index points in November but remained historically weak with a reading of -30.3.
Indonesian GDP in 3Q grew 1.8% on quarter and a marginally less-than-expected 5.7% on year, up from 3.5% in the year ending 3Q 2021.
Among countries reporting price data this Monday,
- Estonian consumer price inflation slowed to a 4-month low of 22.5% last month from 23.7% in September and a record 24.9% in August.
- Tunisian CPI inflation of 9.2% in October was at a 422-month high and up from 6.3% a year earlier.
- Colombian CPI inflation accelerated to a 283-month high of 12.2% last month. Producer price inflation of 25.5% decelerated to an 11-month low.
- CPI inflation of 6.0% in Thailand last month was its lowest in six months.
- The British Halifax house price index fell 0.4% on month and decelerated to a 11-month low year-on-year advance of 8.3% in October, down significantly from the recent high of 12.5% set in June.
Iceland recorded a record monthly trade deficit in October.
The Greek year-to-date trade deficit of EUR 27.3 billion was 62.5% wider than that in January-September of 2021.
Consumer confidence in Mexico last month matched September’s 2-month high of 41 and remained near August’s 17-month low of 40.9.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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