Continuing Post-Election Rally in Dollar and U.S. Equities
November 11, 2024
Banks are closed in the United States and France on this 106th anniversary of the end of the First World War. Bond markets there are consequently closed, but stock exchanges remain open.
In overnight trading, the weighted DXY dollar index climbed 0.4% to another five-month high, gaining 1.1% versus the Mexican peso, 0.8% versus the Japanese yen, 0.5% relative to the euro and Swissy, 0.3% vis-a-vis sterling and Chinese yuan, but just 0.1% against the Canadian dollar.
U.S. stock futures have risen 0.4% above the pre-weekend close, and German, Italian and French share prices have advanced somewhat over 1.0%. Asian Pacific stock exchanges had a rougher going, with losses of 1.3% in Hong Kong, 12% in South Korea, 0,7% in New Zealand, and 0.4% in Australia on continuing disappointment over China’s failure to provide more fiscal support. The Shanghai Composite index still managed to firm 0.5%, but Japan’s Nikkei edged only 0.1% higher.
Crypto currencies have been a huge winner since the U.S. election result. The price of Bitcoin leaped by a further 2.3% overnight and at $82,228 has appreciated almost five-fold since the low of $16,482 on November 12, 2022. In contrast, WTI oil and Comex gold prices have declined 1.6% and 1.0% so far today. Euroland 10-year sovereign debt yields are marginally lower, whereas their British counterpart has ticked a basis point upward.
According to a published quick summary of the end-October Bank of Japan Board meeting that left the short-term interest rate at 0.25%, officials were apprehensive that the fast-approaching U.S. election could inject new volatility into the yen and other world financial markets. They concluded that policy erring on the side of caution would be prudent.
Data released today by Japan revealed a much lower-than-expected JPY 1.272 trillion seasonally adjusted current account surplus in September that was its smallest size in 18 months. A three-month low in the economy watchers index, which measures the sentiment observed by service sector workers, printed at only 47.5, not far above May’s 21-month low.
There was more weak Chinese data released over the weekend, raising the specter of deflation and risk of sub-target economic growth. Consumer price inflation in October eased to a 4-month low of 0.3%, core CPI of 0.2% was minimally above September’s 43-month low, and the 12-month change in producer prices of -2.9% was its most negative in 11 months. Also, new yuan loans were less than in any October since 2009, and year-to-date motor vehicle sales growth of 2.7%, was down from 9.1% in January-October 2023.
Price data reported today showed
- A 29-month low in Norwegian core consumer price inflation of 2.7%, which had peaked in mid-2023 at 7.0%.
- Sub-zero Norwegian producer price inflation of -3.5% .
- Danish total and core CPI inflation last month was only 1.6% and 1.5%.
- Lithuanian CPI inflation slowed to a 6-month low of 0.3% in October.
- Although at a 6-month high of 2.8%, Czech CPI inflation last month remained far from the peak of 18.0% in September 2022 and much closer to the intervening low of 2.0% touched most recently in June.
- The mess in Gaza hasn’t helped Egyptian CPI inflation, which hit a 4-month high last month of 26.5%.
- In the immediate wake of Russia’s initial invasion of Ukraine, CPI inflation in Moldova soared as high as 34.6% in October 2022. Such receded to 3.3% by this past May but was back at an 11-month high of 5.3% last month.
The British RICS house price balance index rose percentage points in September and exceeded zero for the first time in two years.
Ireland’s construction purchasing managers index rose 0.4 points last month to a 2-month high but at 49.4 remained slightly below the 50 line of demarcation between improving and deteriorating conditions. Industrial production in Ireland during September was 5.3% below its year-earlier level.
Turkish industrial production was 2.4% lower in September than a year earlier, marking the fourth straight year-on-year decline. Slovenia as well reported lower industrial production in September than a year earlier (-0.4%).
Mexico‘s year-on-year decline in industrial production was also -0.4%. A more appealing note was struck by Mexican consumer sentiment which unexpectedly jumped two full index points to its best level this century.
However, consumer confidence in Indonesia weakened 1.9% last month and 5.2% over the past half year to a 22-month low.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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