Equities Ending Week on an Up-Note; Dollar a Touch Softer
January 19, 2024
Stock markets in the Pacific Rim recorded Friday gains of 2.6% in Taiwan, 1.4% in Japan, 1.3% in South Korea and 1.0% in Australia, but Chinese and Hong Kong share prices dipped 0.5%. U.S. stock futures are up around 0.5%, and major European markets are up but by less.
Ten-year sovereign debt yields in Europe fell overnight by 7 basis points in Italy, 5 bps in Spain, 4 bps in France and 3 bps in Germany and the U.K.. The 10-year Japanese JGB yield jumped 5 basis points ahead of next Tuesday’s Bank of Japan policy decision and updated quarterly Outlook. The 10-year Treasury yields didn’t change overnight but still shows a 20-basis point increase from last Friday’s close.
The dollar fell overnight by 0.4% against the Australian dollar, 0.3% versus the Mexican peso, and 0.1% vis-a-vis the loonie, euro, kiwi and yuan. The dollar gained 0.2% against sterling and 0.1% against the Swiss franc but is unchanged relative to the yen. The price of gold climbed 0.7%, but those of bitcoin and oil are down 0.6% and 0.2%.
Sterling softened against other currencies. Prime Minister Sunak is expected to call elections sometime for the second half of this year, and his Conservative Party is trailing significantly in the polls as the British economy suffers from sticky inflation (rising to 4.0% in December) and sluggish growth. A 3.2% monthly drop in British December retail sales reported to day was the largest monthly slide in 35 months.
Japanese consumer price inflation eased 0.3 percentage points in December to 2.6%, and 18-month low, and core CPI (2.8%) also slid to a year and a half low. Japan’s tertiary index of service sector activity recorded a third straight monthly drop, this time of 0.7% in November, and its 0.9% 12-month rate of increase was well below the third quarter’s 2.3% year-on-year advance.
Chinese foreign direct investment growth swung from +6.3% in 2022 to -8.0% in 2023.
German producer price deflation deepened from -7.9% in November to -8.6% last month. By contrast, Germany recorded a PPI inflation rate of +21.6% in December 2022 and a peak pace of 43.8% in August-September of 2022. The energy component in this latest report was 23.5% lower than a year ago. All other components of the PPI showed a rise of just 0.3% versus 14.0% when the overall index peaked.
Switzerland’s combined PPI/import price index fell in December by 0.6% on month and 1.1% on year. The monthly change has been negative or flat in 7 of the past 8 months. Domestic producer prices and import prices were respectively up 0.5% and down 4.4% compared to December 2022 levels.
Slovenian producer price inflation sank to zero percent in December, a 3-year low from a record high of 22.5% May 2022.
The National Bank of Kazakhstan’s base rate has been lowered for the fourth time since last July. The 50-basis point decline to 15.25% brings the cumulative drop so far to 150 basis points and has been justified by the deceleration of consumer price inflation to 9.8% in December from 21.3% ten months earlier. According to a released statement, “in the absence of shocks, the gradual reduction of the base rate will continue, with the possibility of intermittent pauses. Nevertheless, the decline cycle can be long.” Officials seek a 5% inflation target, and so far the pace of deceleration has more or less conformed to their expectations. Following a pandemic low base rate level of 9.0% maintained for the year through July 2021, the rate was lifted by 75 basis points in the rest of 2021 and 700 basis points during 2022.
Hong Kong’s jobless rate of 2.9% on average in the fourth quarter was down from 3.5% a year earlier.
New Zealand’s manufacturing purchasing managers index printed at 43.1 in December, indicating the second fastest activity shrinkage of 2023 next to October when the index touched 42.5.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British retail sales, Chinese foreign direct investment, German and Swiss PPI, Japanese consumer prices, National Bank of Kazakhstan
ShareThis
