Equities and Commodity Prices Higher; Bonds and Dollar Lower on Light Data Release Monday
January 9, 2023
Investor optimism had been buoyed strongly just prior to the weekend by a U.S. employment situation report that appeared consistent with a soft landing rather than a coming recession. A further boost has come from China’s promised economic policy support to quicken that economy’s return to pre-pandemic growth now that zero-Covid has been scrapped. The wild cards here will be the counter-balancing drag from an inevitable upsurge in the disease and the effect on world commodity prices of accelerating Chinese demand. The latter is likely to push the timing of next cycle of central bank rate cutting out farther into the future.
Mondays tend to be the lightest day of the week for released data, and that tendency this week has been accentuated by Japan’s Coming of Age holiday, which celebrates all people in that country reaching the age of 20 this fiscal year.
Share prices closed today up 2.6% in South Korea and Taiwan, 1.9% in Hong Kong, 1.4% in India, 0.9% in Singapore, and 0.6% in Australia and China. Equities rose moderately so far in Germany, France, Italy, Spain and among U.S. futures.
Prices for WTI oil, Bitcoin, and gold have climbed 3.3%, 0.7% and 0.3% so far today. Bitcoin has recovered 11% since its 52-week low hit on November 21, and gold is near an 8-month peak.
The movement out of safer fixed income assets into riskier investments has seen 10-year sovereign debt yields increase by 8 basis points in Italy and Spain, 7 bps in Germany and France, and 3 basis points in the United States. The 10-year JGB yield remains pressed near its new upper daily limit of 0.50%.
And the weighted DXY dollar index has lost 0.3%, with declines of 0.8% against Chinese yuan, 0.5% relative to the Canadian, Australian and New Zealand dollars, and 0.3% versus the euro and sterling. The yen is 0.3% firmer.
German industrial production rose 0.2% in November but posted a 12-month dip (-0.4%) for the second month in a row. On-year increases in August and September had been preceded by five straight year-on-year declines.
Unemployment in the euro area remained at a record low of 6.5% in November, representing a 0.6 percentage point improvement from November 2021.
Ireland’s construction purchasing managers index moved 3.6 points further below the 50 neutral level in December to a 5-month low of 43.2, which is not much above a 16-month low of 41.8 last July.
Consumer price inflation in Lithuania continued to recede in December, reaching a 5-month low of 21.7% versus 24.1% in September but still well above 9.2% at the end of 2021.
Total CPI inflation in Mexico of 7.82% was marginally higher than in November. Core inflation was at 8.35% and not far south of November’s twenty plus year peak.
France experienced a tenth consecutive current account deficit in November. At EUR 6.8 billion, such was the second largest shortfall of 2022. Denmark’s current account surplus narrowed to a six-month low of DKK 31.8 billion in November but close to the average monthly surplus of DKK 31.2 billion in January-October.
The Swiss seasonally adjusted 1.9% jobless rate last month was a half percentage point lower than in December 2021.
Consumer confidence in Indonesia ended 2022 just about halfway between the year’s highest reading in May and its lowest score in March.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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