World Financial Markets React to Street Protests in China Against Covid Policy
November 28, 2022
A Fresh burst of risk aversion to start the week sent the dollar up 0.8% against the Australian dollar, 0.7% relative to the kiwi, 0.5% versus the loonie and Chinese yuan, 0.4% vis-a-vis sterling, 0.2% against the yen, and 0.1% versus the Swiss franc. The euro notably edged 0.1% higher against the dollar, aided by hawkish remarks from European Central Bank President Lagarde.
Ten-year sovereign debt yields climbed 8 basis points in Italy, 4 bps in France, 2 bps in Germany and a basis point in the U.K., but remain unchanged in the United States and Japan.
Equities have dropped today so far by 1.5% in Taiwan, 1.2% in South Korea, 1.6% in Hong Kong, 0.4% in Australia and Japan, 1.0% in Spain, 0.9% in Germany and Italy, and 0.6% in the U.S. and France.
Prices for West Texas Intermediate oil and Bitcoin are down by 1.1% and 1.7%. Gold is 0.3% softer.
Swiss National Bank President Jordan said a further interest rate at the December quarterly review appears likely, and ECB President Lagarde expressed doubt that inflation in the euro area has crested.
There’s been a 250-basis point central bank policy rate increase in Ghana. Five increases since March total 12.5 percentage points. At 27.0%, the new rate level is at a 2-decade high but still 13 percentage points below Ghana’s year-on-year rate of consumer price inflation. Central bank officials are also concerned about the sharp depreciation of their currency this year.
Chinese industrial profits, which advanced by a sharp 34.3% in 2021 and 8.5% on year in the first quarter of 2022, recorded an on-year gain of only 1.0% in the first half of this year and now show a year-on-year decline of 3.0% for January-October. China’s big economic drag has been the government’s stringent approach to Covid, and China’s slowdown is hurting surrounding Southeast Asia and Australia as well.
But in Japan, retail sales grew 1.1% on month in September, almost as much as the 1.3% jump in August which followed a 0.8% rise in July. The 12-month rise in retail sales of 4.5% was the steepest this year.
Taiwanese consumer confidence slumped to a 158-month low of 60.0 in November from 73.7 in the initial month of 2022.
Instead of rising a half percent as analysts were predicting, Australian retail sales in October slid 0.2%, ending a streak of nine consecutive month-on-month increases.
Great Britain’s distributive trades index swung sharply to -19 in November from +18 in October, essentially reversing all of the earlier month’s improvement, and prospects are not good for the December holiday season, either.
Consumer confidence in Finland improved in both October and November but, at -16.9 in the latter month, remains not far removed from September’s 27 year-plus low of -18.3.
Norwegian retail sales in October dropped 0.3% on month and 5.0% on year, its weakest results in three months. Irish retail sales rose 0.7% in October and recorded a smaller 2.6% 12-month rate of decline.
Money and credit growth continued to slow in the euro area, which based on numerous other indicators appears to already have moved into recession. M3 money rose 5.1% on year in October, down from 6.0% in the third quarter. On-year growth in loans to households slowed further to 4.2% from 4.4% in September and 4.5% in August.
Austria’s manufacturing purchasing managers index printed well below the 50 neutral threshold and, at 46.6 in November, was unchanged form October’s 28-month low.
Mexico’s trade deficit of $2.0 billion in October was narrower than forecast.
The Dallas Fed manufacturing index rose 5 index points in November to a 3-month high but, at -14.4, printed below zero for a seventh consecutive time.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Ghana, Chinese corporate profits, Japanese retail sales
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