Financial Markets Fixated on Latest Round of Price and Bank Earnings Data
April 11, 2023
Ahead of U.S. consumer price and producer price releases tomorrow and Thursday, respectively, investors are combing through a number of other inflation reports around the world. There is additional concern that quarterly U.S. bank earnings due shortly will accentuate recessionary risks, and ongoing IMF/World Bank meetings running all this week also may generate market-sensitive headlines.
Stock markets in Asia and Europe are mostly higher, but U.S. equity futures are marginally lower. There were stock market gains of 1.4% in South Korea, 1.3% in Australia, and 1.1% in Japan but a dip of 0.1% in China. Share prices so far today have risen 0.7% in Italy, 0.4% in Germany and 0.3% in France.
Whereas the ten-year U.S. Treasury yield has dipped a basis points, counterparts in Europe show post-Easter increases of ten basis points in the U.K., Italy, and Spain and nine basis points in France and Germany.
The drop in the U.S. asset interest rate advantage is associated with a 0.4% weighted depreciation of the dollar thus far today. The U.S. currency has fallen 0.5% versus the Swiss franc, 0.4% against the euro, 0.3% relative to sterling and 0.2% vis-a-vis the Japanese yen, New Zealand dollar and Australian dollar.
Norwegian CPI inflation backed up to a 2-month high of 6.5% in March from 6.3% in February. Norwegian inflation had crested at a 35-year peak of 7.5% in October but exceeded its March 2022 level by two percentage points. In other economies reporting price data today, there was further deceleration in March. For instance,
- Brazilian consumer price inflation declined a full percentage point to a 25-month low of 4.7%.
- Chinese consumer prices recorded a second straight month-on-month decrease, resulting in the lowest 12-month rate of increase (just 0.7%) in 18 months. CPI inflation had crested at 2.8% last September.
- Chinese producer prices, which posted an on-year increase of 8.3% in March 2022, were down 2.5% year-on-year in March 2023, their largest such decline in 33 months.
- In Moldovia, CPI inflation has decelerated from a record high of 34.6% last October to a 13-month low in March of 22.0%.
- Danish CPI inflation fell to an 11-month low of 6.7% last month from 7.6% in February and a 479-month peak of 10.1% last October, but such remains higher than the March 2022 pace of 5.4%.
- Norwegian producer prices posted their steepest on-year drop (-21.9% in March) in over two decades. A year earlier, in contrast, the PPI was 79,4% above the March 2021 level.
- Taiwanese consumer price inflation of 2.35% last month was at a 4-month low.
Retail sales volume in the euro area fell 0.8% on month in February, reversing January’s increase and widening the 12-month rate of decline to 3.0%. The monthly drops in Germany, France and Greece all surpassed 1.0%.
The Sentix gauge of investor sentiment toward Euroland rebounded 2.4 index points to a 2-month high of -8.7 in March.
Same-store sales in the U.K. sank only 3.5% year-on-year in March, their smallest 12-month decrease in 7 months.
Australia‘s Westpac consumer confidence measure improved to a 10-month high in April, 9.4% above the reading in March. A separate consumer confidence index compiled by National Australia Bank rose to a 7-month high in March.
Japanese machine tool orders experienced their greatest year-on-year decline (15.2%) in 30 months during March.
Chinese motor vehicle sales were 9.7% greater in March than a year earlier but still recorded a 6.7% on-year drop in the first quarter as a whole. New Chinese yuan bank loans totaled CNY 3.897 trillion last month, most ever for the month of March, but Chinese M2 money growth slowed 0.2 percentage points to 12.7% year-0n-year.
Turkish industrial production in March plunged 6.0% on month and 8.2% on year. Factory output in South Africa was 5.2% weaker than a year earlier, their largest slide in 10 months.
Officials at the Bank of Korea left their interest rate benchmark unchanged at 3.5% for a second successive scheduled meeting. From a pandemic low of 0.5%, the rate was raised ten times by a total of 300 basis points between August 2021 and January 2023. A released statement alludes to financial market-related uncertainty by clearly leaves the door open to further rate increases if needed in the future. South Korean CPI inflation has settled back to a 1-year low but, at 4.2%, remains more than double the 2% medium-term target.
The Board deems it warranted to judge whether the Base Rate needs to rise further while maintaining the restrictive policy stance for a considerable time with an emphasis on ensuring price stability. In this process the Board will thoroughly assess the pace of inflation slowdown, the economic downside risks and financial stability risks, the effects of the Base Rate raises, and monetary policy changes in major countries.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Korea, China CPI and PPI, Euroland retail sales
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