Data Surprises Prompt Risk-Off Action
December 8, 2015
Share prices plunged 1.9% in China, 1.4% in Hong Kong, 1.3% in Taiwan and Indonesia, 1.0% in Japan and 0.9% in Australia. The sour mood extended into Europe, where stocks so far have lost 4.3% in Greece, 2.2% in Italy, 2.1% in Spain, 1.6% in France, 1.7% in Germany and 0.6% in the United Kingdom. The DOW fell over 140 points (0.8%) in the first 25 minutes of trading.
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West Texas Intermediate crude oil dropped another 2.6% to $36.66 per barrel, and Brent fell under $40 for the first time since February 2009. Comex gold is 0.4% firmer at $1,075.94 per troy ounce.
Ten-year British gilt and Japanese JGB yields are a basis point softer. The 10-year Treasury yield, 2.20%, is off two basis points.
The dollar shows mixed changes, with losses of 0.6% against the Swiss franc, 0.5% versus the euro and yen and 0.1% vis-a-vis the loonie but advances of 0.9% against the Aussie dollar, 0.4% relative to sterling and 0.1% against the kiwi and yuan.
Against China’s currency, the dollar has appreciated 3.5% since mid-2015.
Chinese trade figures provided one huge disappointment for investors. The November surplus printed at $54.10 billion compared to expectations of about $64 billion. Exports sank 6.8% on year, and imports collapsed even more sharply (8.7%).
Several Japanese economic statistics got released Tuesday.
- Real GDP growth in 3Q was revised from -0.8% at an annualized rate to +1.0%, so it turns out that the economy didn’t contract in consecutive quarters after all. The improvement, however, was counterbalanced by a more worrisome composition of growth last quarter. Personal consumption growth and public investment were revised lower to 1.5% and negative 5.8%.
- The seasonally adjusted JPY 1.494 trillion current account surplus in October was almost twice the size of the September surplus because of a 3.4% on-month plunge in imports rather than the strength of exports which were unchanged from September. Compared to October 2014, exports fell 3.7%, and imports plummeted 16.4%.
- In the first twenty days of November, customs clearance exports were 0.4% lower than a year earlier, and imports showed a 6.9% on-year dive.
- Bankruptcies posted a smaller 3.4% on-year slide in November, fewer than the declines of 7.3% in October and 18.6% in September.
- The economy watchers index, an index that measures perceptions of service sector workers like cab drivers, slumped to a 10-month low of 46.1 in November from 48.2 in October. The forward-looking outlook component dropped 0.9 points to a 3-month low of 48.2.
British industrial production edged only 0.1% higher in October after no change in September but was 1.7% greater than a year earlier. Factory output dropped 0.4% on month and 0.1% on year in October.
The British Halifax house price index dipped 0.2% last month, resulting in a 9.0% 12-month rate of increase in September-November, down from 9.7% in the year to August-October.
Revised eurozone national income accounts confirmed the preliminary third-growth estimates of 0.3% on quarter, down from 0.4% in the second quarter and 0.5% in the first quarter, along with a 1.6% four-quarter increase. A 0.4% advance in consumption was a tad less than expected, and net exports exerted a surprising 0.3 percentage point drag on growth between 2Q and 3Q in spite of a more price competitive euro. Negative growth resumed in Greece and continued in Finland. Spain’s 0.8% quarterly growth outpace the increases of 0.3% in Germany and France and Italy’s rise of just 0.2%.
The business sentiment indices for France compiled by the Bank of France dipped a point in November for both manufacturers and non-manufacturers, prompting the central bank to revised projected fourth-quarter GDP growth lower to 0.3%. France’s trade deficit widened to EUR 4.6 billion in October from EUR 3.6 billion in September and EUR 3.0 billion in August.
Icelandic GDP rose 0.7% on quarter and by a smaller 2.6% on year in 3Q15.
The index of Australian business conditions remained at +10 last month, while that for business confidence went up two points to +5, according to the National Australia Bank.
On-year growth in Turkish industrial output of 4.6% in October was a four-month high. Industrial production in South Africa fell 1.1%, in contrast.
Canadian housing starts increased 7.2% on month to 211.9K in November, while building permits in October rebounded 9.1% on month from a 6.6% drop the month before.
The NFIB gauge of U.S. small business sentiment declined 1.3 points to 94.8 in November, lowest since the spring. As disappointing as that news was, a 1.7-point increase in the IBD/TIPP Optimism index surprised analysts on the upside. Job openings according to the Labor Department’s monthly JOLTS index printed at 3.6% in November, down from 3.7% in October. Chain stores sales softened last week according to the weekly Johnson Redbook measure.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
This entry was posted on Tuesday, December 8th, 2015 at 9:39 am and is filed under New Overnight Developments Abroad - Daily Update. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
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