Economic Concerns Regarding China Weigh on Global Markets
July 5, 2023
China’s composite and service sector purchasing managers indices (five month lows of 52.5 and 53.4 in June) drew the most attention from today’s slew of PMI releases.
Investors are also eagerly awaiting minutes from last month’s FOMC meeting in hopes of getting greater clarification on the likelihood of a rate hike resumption at the next review slated for July 26-27. Most analysts are projecting a 25-basis point rate hike.
Today’s resumption of full North American market trading has seen a drop in share prices around the world, including declines of 1.6% in Hong Kong, 0.7% in China, 0.6% in South Korea, Indonesia and Singapore, 0.5% in Taiwan and 0.3% in Japan’s Nikkei-225. Major European stock exchanges and U.S. futures are down around 0.5%.
10-year British gilt and Japanese JGB yields are up two and one basis points, while their German and U.S. counterparts show a 1-basis point dip and no change, respectively.
The dollar is unchanged against the euro and yen but up 1.0% relative to the ruble, 0.4% versus the yuan, kiwi and loonie, 0.2% vis-a-vis the Swiss franc, and 0.1% against the kiwi and sterling.
WTI oil and gold prices are up by 2.0% and 0.3%, while Bitcoin has fallen 1.1%.
Turkish consumer price inflation, which crested at a 292-month high last October, decelerated only 1.4 percentage points further to 38.2% in June. The incremental dip reflected volatile items, while core CPI rose to 47.3%. Turkish producer price inflation dipped 0.4 percentage points to a 25-month low of 40.4%, just a quarter of the 157.7% record high last October.
Producer prices in the euro area fell on month for a fifth straight time in May, this time by 1.9%. That was enough to depress the 12-month rate of change below zero percent to a 30-month low of -1.5% compared to +0.9% in April and 24.5% last December. The energy component imploded from an on-year advance of 43.6% last December to -13.3% by May.
June CPI inflation in Thailand and the Philippines of 0.2% and 5.4% were the lowest 12-month increases in 22 and 13 months, respectively.
Other purchasing managers survey results for June reported today showed
- Downward revisions in Euroland‘s composite and service sector measures to 6- and 5-month lows of 49.9 and 52.0. Commenting on the figures, experts said a considerable momentum loss had occurred in each of the bloc’s major economies late in the second quarter characterized by weak demand, slower inflation, and a deterioration of business expectations. The French and Italian composite PMIs slipped under the 50 level separating an improving conditions from deteriorating ones.
- Britain‘s composite and services PMI indices were unrevised from preliminary estimates of 52.8 and 53.7, both at their lowest since March.
- Sweden‘s composite and service PMI readings dropped to 4-month lows of 46.1 and 45.8 in June.
- Japan‘s composite and service PMI scores were also at 4-month lows, respectively 52.1 and 54.0.
- Australia‘s composite and service sector readings were each revised lower and, at 50.1 and 50.3, at 3-month lows and conveying near-stagnation.
- India‘s economy continues to perform comparatively well, with June PMI scores of 59.4 overall and 58.5 for the services sector. Nevertheless, those readings fell to 3-month lows last month.
- Hong Kong‘s private sector PMI index slid to a 6-month low of 50.3 last month.
- Singapore‘s private PMI ticked 0.2 points higher but at 49.7 remained under 50 for the ninth time in ten months.
- South Africa‘s PMI did likewise, edging up 0.8 to 48.7 but staying under 50 for the 4th consecutive time.
- Lebanon‘s PMI reading exceeded 50 for the first time since last August and reached a 10-year high, but it was only at 50.2 last month.
- Russia‘s composite and service-sector PMIs rose to 3-month highs of 55.8 and 56.8.
- The non-oil purchasing manager indices of Egypt, Saudi Arabia, and the U.A.E. o 49.1, 59.6 and 56.9 climbed to their best levels in 22 months, 2 months and four years.
Housing prices in the euro area posted a second straight quarterly decline, depressing the year-on-year rate of increase to 0.4% in 1Q 2023 from +9.2% last summer.
French and Spanish industrial production in May were respectively 2.6% above and 0.1% below year-earlier levels.
U.S. factory orders and the IBD/TIPP optimism index will be reported a little later this morning.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland PPI and house price index, service sector PMI reports, Turkish CPI and PPI
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