Higher Equities, Weaker Bonds, and a Mixed Dollar
March 27, 2023
The tone of equities began weakly overnight in Asia where share prices closed down 1.8% in Hong Kkong, 0.8% in Indonesia, 0.5% in Taiwan and 0.4% in China but brightened in Europe and U.S. stock futures. The German, French, British, Italian and Spanish stock exchanges currently show gains of 0.9% or more this Monday, and the DOW and SPX are each 0.7% firmer in pre-open futures trading. Bank shares have partially recovered from heavy losses last week.
Ten-year sovereign bond yields are up 11 basis points in Germany, 9 bps in France, 8 bps in the United States and Spain, and 6 basis points in the U.K. and Italy.
A 0.6% rise of the dollar‘s yen translation value has been counterbalanced by losses of 0.3% versus the Swiss franc, Mexican peso and sterling, 0.2% relative to the Canadian dollar, and 0.1% vis-a-vis the euro and Australian dollar.
Prices for gold and bitcoin tokens are 1.4% and 0.2% weaker. Alternatively, West Texas Intermediate oil has strengthened 1.3%.
Chinese corporate profits were 22.9% weaker in January-February than a year earlier, attesting to the growth-dampening impact of President Xi’s priority of political obedience. By comparison, profits had dipped only 4% in 2022 after a sharp 34.3% rebound in 2021.
An improved reading in Germany’s monthly IFO business climate index reported today further discredits the universal expectation last autumn of a coming winter recession. The index printed 2.1 points higher in March at a 13-month high of 93.3 versus 93.3 last October but still a considerable distance south of the January 2018 peak of 104.9. Sub-indices for current conditions and future expectations rose to their best respective levels in 7 and 13 months. The climate improved this month in manufacturing, services, trade and construction to 19-, 9-, 13-, and 7-month highs.
Finnish consumer sentiment and manufacturing sector confidence advanced this month to their best levels in one year and 28 months, respectively.
After plunging to -23 in January, the CBI monthly British distributive trades survey index recovered to +2 in February and +1 this month, suggesting stagnation but not a contracting trend.
Brazilian consumer confidence rebounded from February’s 9-month low in February to a 3-month high in March that, at 87, was just 2 index points below last September’s post-2019 high.
Turkish business confidence among manufacturers improved 2.8 index points this month despite the earthquake but, at 105.2, was considerably below the July 2021 105-month peak of 114.8.
Japan’s January indices of leading and coincident economic indicators were revised upward by 0.1 and 0.3 points but nonetheless were their weakest readings in 26 and 8 months, respectively.
On-year Japanese corporate service price inflation accelerated to a 4-month high of 1.8% in February from 1.6% in January and 1.5% in December.
Malaysian producer price inflation decelerated to negative 0.8% in February, a 26-month low and the first subzero result in 25 months. A 121-month high of 17.2% had been touched in October 2021.
Brazil’s current account deficit of $2.8 billion in February followed deficits averaging $10.1 billion in the two prior months and a gap of $4.2 billion in February 2022.
Money and credit growth in the euro area continued to slow in February. M3 in December-February was only 3.5% higher than a year earlier, compared to a 4.7% advance between the final quarters of 2021 and 2022. Bank lending to households slowed to 3.2% on year, weakest in 24 months, and the 5.7% growth of loans to non-financial firms was down from 6.3% in December. Credit growth to private residents and to the public sector both slowed, too.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese corporate profits, German IFO Business climate index, Japanese corporate service prices
ShareThis
