Holidays in the U.K., Japan and South Korea Tamp Down Market Volatility
May 6, 2024
Great Britain is observing its early spring bank holiday, while the Japanese and South Koreans are celebrating Children’s Day. Data releases have been comparatively few this Monday and limited to an additional batch of April purchasing manager surveys and Euroland producer prices.
The dollar’s net weighted change compared to its closing before the weekend has been less than 0.1%, with a 0.5% rise against the yen offset by drops of 0.3% versus the yuan and Aussie dollar, 0.2% relative to the Mexican peso, Turkish lira and sterling, and 0.1% against the euro and loonie. The Swiss franc is steady.
Confidence continues to grow that the federal funds rate’s first reduction will occur in September. The 10-year U.S. Treasury yield is down three basis points, and comparable yields in Continental Europe are four basis points lower today. Conversely, share prices have climbed 0.8-1.2% so far this Monday in Germany, France, Switzerland and Italy, while U.S. stock futures show a pre-open rise of 0.3%.
The price of Bitcoin has edged 0.1% upward, while oil and gold prices have strengthened almost 1%.
Producer prices in the euro area (-0.4%) recorded their fifth straight monthly decline in March and were 7.8% lower than a year earlier. Non-energy producer price inflation (down 1.3% year-on-year) was sub-zero percent for a fifth time in a row, while the energy component sank 1.8% on month and 20% on year.
The composite and service sector purchasing manager indices in Euroland suggest that the economy may be emerging from recession. The composite PMI reading of 51.7 was above the 50 neutrality level for a third consecutive month. This was the highest reading in 11 months and up from 46.5 posted last October. The services PMI of 53.3 in April also constituted an 11-month high, balancing the earlier-reported manufacturing index that sank to a 4-month low of 45.7.
Among reported PMIs of the major Euroland economies, composite PMI scores in April ranged from Ireland’s 50.4 reading to Spain’s 55.7. Spain’s service sector PMI of 56.2 was well above the German and French readings of 53.2 and 51.3.
The growth premium that the United States has experienced vis-a-vis Europe during and since the pandemic seems to be narrowing somewhat. Friday’s U.S. S&P Global-compiled composite and service purchasing manager survey readings for April, in contrast to the upward direction of today’s reported Euroland indices, printed at 4- and 5-month lows of 51.3 in each case.
China‘s April composite PMI reading edged up 0.1 point to an 11-month high of 52.8.
India‘s composite PMI settled back in April to a 2-month low of 61.5 after the 41-month peak in March of 62.2.
The Saudi Arabian non-oil private sector PMI matched April’s 2-month low of 57.0, reflecting buoyant growth nonetheless.
Singapore‘s private PMI reading dropped by a sharp 3.1 points to a 9-month low of 52.6 last month, and Hong Kong‘s private PMI edged 0.3 points lower to 50.6, a 2-month low.
While above 50.0 for only the third time in eight months and above the March reading, South Africa’s private PMI for April of 50.3 conveys a quite weak growth pulse.
Russia’s composite purchasing managers index dropped 0.8 points in April to a 15-month low, and the Swedish composite PMI score of 49.0 was below 50 for the first time in 2024 and at a 5-month low.
The officially reported on-year GDP growth experienced by Indonesia continues to look suspiciously steady, with a first-quarter reading of 5.1% following 5.0%, 4.9%, 5.2% and 5.0% in the previous four quarters. It doesn’t matter what other country one examines, the path that GDP takes is invariably bumpier than what Indonesia has been reporting.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: April 2024 composite purchasing manager surveys, Euroland PPI
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