Renewed Appetite for Risk
February 22, 2024
Following a near-3% slide Wednesday prior to a better-than-forecast earnings report, Nvidia stock has shot up 13% in pre-open futures trading. The tech-intensive Nasdaq has climbed 2% in pre-market trading, followed by a 1.3% jump in the SPX and a lesser 0.4% DJIA advance.
Other stock markets have done well, too. Japan’s Nikkei finally after 34 years has eclipsed its all-time high of 38,957 touched on December 29, 1989. The Nikkei had plunged to 14,336 by August 1992 and to 7055 in March of 2009. It’s been a long road of starts and stops for Japan’s stock market. Aside from today’s net 2.2% advance in the Nikkei, share prices closed up 1.5% in Hong Kong, 1.3% in China, 0.9% in Taiwan, and are showing gains of 1.1-1.5% right now in Germany, Italy and France. The British FTSE is only 0.2% firmer.
The dollar overnight lost 0.3% against sterling and the Canadian, New Zealand and Australian dollars. The dollar is also down 0.2% versus the euro and 0.1% relative to the Swiss franc, but it touched a fresh record peak against the Turkish lira after the Central Bank of Turkey’s key interest rate was left unchanged at 45.0%. This pause in tightening was signaled at the January press conference following a 250-basis point rate hike that culminated a 36.5 percentage point tightening begun shortly before mid-2023. Officials do not rule out additional restraint but believe that policy may now be sufficiently tight to restore the 5% inflation target. But 5% is miles away from the current on-year CPI inflation of 64.9%.
There’s been little change in 10-year sovereign debt yields today, just single basis point upticks in the U.S. and U.K. but no change in Germany or Japan. Likewise oil (-0.2%) and gold (+0.2%) show minimal movement. Bitcoin is down 0.7%.
Among preliminary purchasing manager surveys for February reported today, Euroland’s composite index rose more than expected to an 8-month high of 48.9 despite a half-point drop in manufacturing to a 2-month low of 46.1. The French manufacturing and services PMI scores climbed to 11- and 8-month highs, lifting the composite reading to a 9-month high of 47.7. In Germany, the services PMI rose 0.5 points to a 2-month high of 48.2, but the composite and manufacturing indicators fell to 4- and 3-month lows. Britain’s services PMI held steady at January’s 8-month high as manufacturing jumped 3.7 index points to an 11-month high, resulting in the slowest pace of decline in overall private sector activity in the past 9 months.
Japan’s composite PMI settled back to a 2-month low of 50.3 but exceeded the 50 neutral threshold for the fourth time in five months. Australia’s composite PMI of 51.8 was its best score in ten months, led by service sector strength. India’s composite PMI improved to a 7-month high of 61.5.
French business confidence slid to a 3-month low of 97.8, falling further under the long-term average score of 100. Weakness was most pronounced in services, which fell to a 34-month low.
CPI inflation in Euroland was left unrevised at 2.8% in January, a 2-month low and down from 8.6% one year earlier. Core CPI inflation of 3.3% represents a 22-month low.
Like the Central Bank of Turkey, the Bank of Korea left South Korea’s interest rate benchmark unchanged at 3.5%, where such has been since a 25-basis point hike in January 2023 that culminated three percentage points of tightening since August 2021. CPI inflation in South Korea punched in at a 7-month low of 2.8% in January.
Preliminary inflation estimates for January of 0.8% in Italy and 4.5% for Austria were left unchanged. Cypriot CPI inflation that month was at a 2-month high of 1.7% but down from a 491-month high of 10.9% in July 2022.
Mexican GDP only rose 0.1% last quarter, the least in nine quarters and resulting in year-on-year growth of 2.5%, the lowest in nearly three years and below average 2023 growth of 3.2%.
Indonesia’s current account deficit equaled 0.4% of GDP last quarter and 0.5% of GDP in 2023 versus surpluses equal ot 1.1% of GDP a year earlier and 1.0% in full-2022.
U.S. new jobless insurance claims fell for a third week in a row to a mere 201k last week from 213 in the prior week and 227k two weeks before that.
The Chicago Fed National Activity index fell 0.32 points to -0.30 in January, weakest since October.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Korea, Central Bank of Turkey, Japanese Nikkei, Nvidia, Preliminary purchasing manager survey results
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