Mon 14 Aug 2017


watch Nightly Business Report. watch Bloomberg Technology.

In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks recovered further on Monday from last week’s selloff, with the S&P 500 posting its biggest one-day percentage gain since April as worries eased about a conflict between the United States and North Korea.

  • The S&P 500 rose 24.52 points, or 1.00 percent, to 2,465.84, just the third day this year where the S&P 500 posted at least a 1% gain.
  • The Dow Jones Industrial Average rose 135.39 points, or 0.62%, to 21,993.71.
  • The Nasdaq Composite .IXIC added 83.68 points, or 1.34%, to 6,340.23.

Technology shares were among stocks giving the index its biggest boost. Apple was up 1.5%, while the S&P 500 technology index rose 1.6%.

U.S. officials on Sunday played down the risk of an imminent war with North Korea. Those concerns had helped wipe out nearly $1 trillion from global equity markets last week.

“The selling never did cascade. We had an adjustment and this week investors were able to sit back and say the Korean situation is something to watch, but it’s probably had its effect on the market already. There’s still cash on the sidelines looking for an opportunity to buy the dip. They’re in there with both hands today,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

The CBOE Volatility index .VIX, Wall Street’s fear gauge, fell more than 3 points after it spiked to a 9-month high last week. Safe-haven gold, which hit 2-month highs last week, also dropped.Reuters

Volatility gauges jumped last week and risk assets tumbled as the sudden increase in tension around the Korean peninsula jolted markets globally. The reaction was exacerbated by the rich valuations on display across multiple assets, many of which had barely corrected this year. But White House officials sought to calm the crisis on Sunday by assuring that war was not about to break out, and media attention shifted to strife within the U.S. following the violent white-supremacist rally in Charlottesville, Virginia, over the weekend.

Meanwhile, there was a mixed bag of data out of Asia on Monday. Japan’s second-quarter growth topped estimates, reflecting better domestic demand. China’s economy posted its worst showing this year as curbs on property, excess borrowing and industrial overcapacity began to have an impact.

In other markets:

  • The Stoxx Europe 600 climbed 1.1%.
  • The U.K.’s FTSE 100 Index gained 0.6%.
  • Germany’s DAX Index advanced 1.3%, its biggest rally in a month.
  • The MSCI All-Country World Index increased 0.8%.Bloomberg

Market indices

market_20170814

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,465.84 +1.00% 2,238.83 +10.13%
DJIA INDU 21,993.71 +0.61% 19,762.60 +11.28%
NASDAQ IXIC 6,340.23 +1.33% 5,383.12 +17.77%

The portfolio today

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

Index values

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.828 +1.51% 2.105 +34.37%
Valuation Rate USD/AUD 0.79041 -0.51% 0.72663 +8.77%
AUD-denominated Index AUD 3.581 +2.01% 2.895 +23.69%

Portfolio stock prices

:-) Visa closed on a record high of $101.87, beating its 7 Aug 2017 record of $101.49.
Other stocks within 1% of their record highs include Apple and Facebook.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $938.93 +0.95% $792.45 +18.48%
Alphabet C GOOG $922.67 +0.91% $771.82 +19.54%
Apple AAPL $159.85 +1.50% $115.82 +38.01%
Amazon AMZN $983.30 +1.58% $749.87 +31.12%
Ebay EBAY $35.20 +0.43% $29.69 +18.55%
Facebook FB $170.75 +1.59% $115.05 +48.41%
PayPal PYPL $59.06 +1.76% $39.47 +49.63%
Twitter TWTR $16.09 +1.07% $16.30 -1.29%
Visa V $101.87 +1.78% $78.02 +30.56%
VMware VMW $98.02 +6.60% Opinion $78.73 +24.50%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index (DXY) rose 0.3%.
The EUR fell 0.3% to USD 1.1781.
Britain’s GBP fell 0.4% to USD 1.2968.
Japan’s JPY fell 0.5% to 109.68 per USD, the first retreat in a week.
Bloomberg

AUD

AUD movements
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

Oil and Gas Futures

Futures prices

Prices are as at 15:48 EDT

  • NYMEX West Texas Intermediate (WTI): $47.49/barrel -2.72% Chart
  • ICE (London) Brent North Sea Crude: $50.64/barrel -2.80% Chart
  • NYMEX Natural gas futures: $2.96/MMBTU -0.87% Chart

flag_europe EU: Industrial Production. Jun 2017

Press Release Extract [ser_eu1]

In June 2017 compared with May 2017, seasonally adjusted industrial production fell by 0.6% in the euro area (EA19) and by 0.5% in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In May 2017, industrial production rose by 1.2% in both zones.

In June 2017 compared with June 2016, industrial production increased by 2.6% in the euro area and by 2.9% in the EU28.

eu_prod_20170814

Monthly comparison by main industrial grouping and by Member State

The decrease of 0.6% in industrial production in the euro area in June 2017, compared with May 2017, is due to production of capital goods falling by 1.9%, durable consumer goods by 1.2%, non-durable consumer goods by 0.4% and intermediate goods by 0.3%, while production of energy rose by 1.8%

In the EU28, the decrease of 0.5% is due to production of capital goods falling by 1.5%, durable consumer goods by 0.8%, intermediate goods by 0.4% and non-durable consumer goods by 0.3%, while production of energy rose by 1.4%

Among Member States for which data are available, the largest decreases in industrial production were registered in Ireland (-7.5%), the Czech Republic (-3.8%) and Malta (-3.2%), and the highest increases in Luxembourg (+3.4%), Estonia, Croatia and the Netherlands (all +1.2%).

Annual comparison by main industrial grouping and by Member State

The increase of 2.6% in industrial production in the euro area in June 2017, compared with June 2016, is due to production of energy rising by 5.1%, durable consumer goods by 4.0%, intermediate goods by 3.8%, capital goods by 1.6% and non-durable consumer goods by 0.6%.

In the EU28, the increase of 2.9% is due to production of durable consumer goods rising by 4.2%, intermediate goods by 3.9%, energy by 3.7%, capital goods by 2.4% and non-durable consumer goods by 1.5%.

Among Member States for which data are available, the highest increases in industrial production were registered in Estonia (+14.5%), Romania (+11.5%) and Sweden (+8.9%). Decreases were observed in Ireland (-8.1%) and Malta (-1.3%).

Eurostat, “Industrial Production. Jun 2017“, 14 Aug 2017 More

flag_japan Japan update

GDP. Q2/2017

Preview: TradingEconomics

The Japanese economy advanced 1.0 percent on quarter in the June quarter of 2017, following an upwardly revised 0.4 percent growth in the previous period and beating market consensus of a 0.6 percent expansion, preliminary estimates showed. It was the strongest growth since the first quarter 2015, boosted by robust domestic demand and capital expenditure. On an annualised basis, the economy expanded 4.0 percent, compared to an upwardly revised 1.5 percent growth in the prior quarter. It was the sixth straight quarter of expansion and the first time the economy had gone that long without a contraction since the 2005-2006 period, driven by private consumption and business spending. GDP Growth Rate in Japan averaged 0.50 percent from 1980 until 2017, reaching an all time high of 3.20 percent in the second quarter of 1990 and a record low of -4.80 percent in the first quarter of 2009.TradingEconomics

Press Release: ESRI

jp_gdp_20170814

Economic and Social Research Institute, Cabinet Office, “Quarterly Estimates of GDP (Expenditure Approach) and Its Components. Apr.-Jun. 2017 (The 1st preliminary)“, 14 Aug 2017, Graphic More

Currency: USD/JPY

JPY movements
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: Nikkei 225

N225 movements
^ Nikkei N225 movements over the past week Chart: Google Finance

flag_china China update

Factory Output. Jul 2017

Press Report: Reuters

China’s factory output slowed more than expected in July while investment and retail sales also disappointed, reinforcing views that the world’s second-largest economy is starting to lose some steam as lending costs rise and the property market cools.

Factory output rose 6.4% in July from a year earlier, the slowest pace since January this year, statistics bureau data showed on Monday.

Analysts polled by Reuters had predicted factory output would grow 7.2% in July, down from 7.6% in the previous month.Reuters

Fixed Asset Investment. Jul 2017

Fixed-asset investment grew 8.3 percent in the first seven months of the year, cooling slightly from 8.6 percent in the first half of the year. Analysts had expected the growth rate would remain steady.Reuters

Preview: TradingEconomics

Non-farm fixed asset investment in China rose 8.3 percent year-on-year to 337,409 CNY billion in January to July of 2017, below a 8.6 percent increase in the first half of 2017 while markets estimated an 8.6 percent increase. Growth eased slightly as investment in ongoing construction projects slowed (19.4 percent from 19.7 percent in Jan-Jun) while domestic-funded investment decelerated (8.9 percent from 9.3 percent). Meanwhile, investment from the central government fell less (-7.2 percent from -10.9 percent in the prior period) and foreign investments shrank further (-5.7 percent from -4 percent). Fixed Asset Investment in China averaged 21.10 percent from 1996 until 2017, reaching an all time high of 53 percent in February of 2004 and a record low of 6.30 percent in December of 1999.TradingEconomics

Investment in Real Estate Development. Jul 2017

China’s real estate investment growth slowed in July from June, as government curbs continued to cool an overheated property market and undermined investment, even though underlying demand in smaller cities appears resilient.

As part of a broader effort to temper financial risks stemming from a build-up of debt since the 2009 financial crisis, Chinese authorities have imposed a range of cooling measures over the past year to deflate a housing bubble. The measures steps targeted at speculators in the biggest cities appear to be paying dividends.

However, speculators have flocked to China’s smaller cities that have a massive overhang of unsold houses, which could worry policymakers who want to keep the property market stable ahead of a once-in-five-years Communist Party congress later this year.

Growth in property investment, which mainly focuses on residential real estate but also includes commercial and office space, eased to 4.8 percent in July from a year earlier, versus 7.9 percent in June, a Reuters calculation from the National Bureau of Statistics’ data showed.

Property sales measured by floor area grew a mere 2 percent in July compared to a year ago, marking its slowest growth since December 2015, down sharply from a 21.4 percent uptick in June, reflecting further cooling in China’s biggest cities as government curbs continue to take the heat off the market.

New construction starts measured by floor area, a telling indicator of developers’ confidence, contracted for the first time since last September, falling 7 percent in July from a year ago, compared to a 14 percent increase in June.

Real estate investment, which directly affects 40 other business sectors in China, is considered a crucial driver for the economy. But some analysts expect increasingly stringent cooling measures will eventually drag on investment and dampen construction activity.

Policymakers have prioritized stabilizing an overheated property market ahead of the party reshuffle this year, reiterating the need to avoid dramatic price fluctuations that could threaten the financial system and harm social stability.

But Liu Shijin, a government advisor from a top think tank, expected growth in the real estate sector to slow to a new normal of about 2 percent in the second half this year, adding, “It should not be seen as abnormal if there is no growth or negative growth.”

As soaring property prices have made affordability issue a rising concern for policy makers, Chinese officials have been pushing for more initiatives to increase supply in the hottest market, even though their effectiveness still remains to be seen.

Beijing pioneered the idea in early August that the government will share home-buyers’ ownership for cheaper personal-use only houses, in a bid to make housing more affordable and to further stabilize the real estate market.

Inventory of finished homes – which is usually smaller than private estimates – continued to fall. Inventory floor area in the first seven months shrunk by 11 percent, compared to a fall of 9.6 percent in the January-to-June period.Reuters

Total Retail Sales of Consumer Goods. Jul 2017

Press Report: Reuters

Retail sales rose 10.4 percent in July from a year earlier, cooling from June’s 11 percent pace and also failing to meet analysts’ expectations for a 10.8 percent rise.Reuters

Preview: TradingEconomics

Retail sales rose 10.4 percent from a year earlier in July of 2017, following a 11.0 percent increase in the previous month and below market consensus of a 10.8 percent gain. It was the weakest increase in retail trade since February, as sales went up at slower paces for most categories: telecoms (7.9 percent from 18.5 percent in June), automobiles (8.1 percent from 9.8 percent), building materials (13.1 percent from 15.2 percent), furniture (12.4 percent from 14.8 percent), office supplies (10.8 percent from 16.4 percent), home appliances (13.1 percent from 13.3 percent), personal care (7.1 percent from 11.2 percent), jewelry (2.6 percent from 6.3 percent) and cosmetics (12.7 percent from 17.0 percent). Sales increased more only for oil, oil products (5.6 percent from 4.2 percent). Retail Sales YoY in China averaged 12.82 percent from 2010 until 2017, reaching an all time high of 19.90 percent in January of 2011 and a record low of 9.50 percent in January of 2017.TradingEconomics

Official NBS Statement Addressing Factory Output, Fixed Asset Investment, Real Estate Investment, and Retail Sales

In July, all regions and departments implemented the arrangements made by the CPC Central Committee and the State Council and as a result, the momentum of steady and sound economic development and deepening structural adjustment continued. The economy maintained within a proper range, the production demand grew steadily, employment and prices of commodities were stable, the supply-side structural reform achieved remarkable results, the transformation and upgrading and the development of new driving forces made steady progress, the market expectation continued to grow higher and the quality and efficiency of the economy were improved.

1. The Development of the Industry was Steady and the Profit of Enterprises Improved Notably.

In July, the real growth of total value added of the industrial enterprises above designated size was 6.4 percent compared with a year ago, 1.2 percentage points slower than last month, 0.4 percentage point faster than the same month last year. An analysis by types of ownership showed that the value added of the state holding enterprises went up by 6.7 percent year on year; collective enterprises down by 3.6 percent; share-holding enterprises up by 6.7 percent; and enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan up by 6.7 percent. In terms of sectors, the value added of the mining decreased by 1.3 percent on a year-on-year base, the manufacturing grew by 6.7 percent and the production and supply of electricity, thermal power, gas and water grew by 9.8 percent. The value added of high-tech industry and equipment manufacturing industry grew by 12.1 percent and 10.7 percent year on year respectively, 5.7 percentage points and 4.3 percentage points faster than that of the industrial enterprises above designated size as a whole. The sales-output ratio of the industrial enterprises above designated size reached 97.9 percent. In July, the total value added of the industrial enterprises above designated size went up by 0.41 percent compared with last month. From January to July, the value added of the industrial enterprises above designated size grew by 6.8 percent year on year. In July, the manufacturing PMI was 51.4 percent, staying above the 50-point mark separating growth from contraction for twelve months in a roll.

From January to June, the total profit made by industrial enterprises above designated size was 3,633.8 billion yuan, up by 22.0 percent year on year. The cost for per-hundred-yuan revenue from principal business of industrial enterprises above designated size was 85.69 yuan, 0.02 yuan less on a year on year base; the profit rate of principal business of industrial enterprises above designated size was 6.11 percent, 0.42 percentage point higher year on year. At the end of June, the debt-to-asset ratio of industrial enterprises above designated size was 55.9 percent, a year-on-year decrease of 0.8 percentage point.

2. The Service Industry Maintained Fast Growth with Higher Business Activity Index.

In July, the Index of Services Production increased by 8.3 percent year on year, 0.3 percentage point slower than last month and 0.5 percentage point faster than the same month last year. From January to July, the Index of Services Production increased by 8.3 percent year on year, 0.1 percentage point faster than the same period last year. Specifically, information transmission, software and information technology services, transport, storage and postal services and leasing and business services maintained double-digit growth. From January to June, the business revenue of service enterprises above designated size increased by 13.2 percent year-on-year, 3.4 percentage points faster than the same period last year.

In July, the business activity index for services was 53.1 percent, 0.5 percentage point higher than that of the same month last year. Specifically, the business activity index for sectors like air transport, postal services, telecommunication, broadcast, television and satellite transmission services kept within the expansion range of 60.0 percent and above. From the perspective of market expectation, the Business Activities Expectation Index were 60.4 percent, 0.4 percentage point higher than last month, growing for three months in a roll.

3. The Investment in Fixed Assets Grew Steadily and the Construction of Infrastructure Continued to be Strengthened.

From January to July, the investment in fixed assets (excluding rural households) was 33,740.9 billion yuan, a year-on-year growth of 8.3 percent, 0.3 percentage point slower than the first six months, 0.2 percentage point faster than the same period last year. Specifically, the investment by the state holding enterprises reached 12,301.3 billion yuan, a rise of 11.7 percent; private investment reached 20,464.0 billion yuan, up by 6.9 percent, accounting for 60.7 percent of the total investment. The investment in the primary industry was 1,067.7 billion yuan, up by 14.4 percent year on year; the secondary industry 12,715.0 billion yuan, up by 3.4 percent, among which the investment in manufacturing was 10,438.9 billion yuan, up by 4.8 percent; the tertiary industry 19,958.3 billion yuan, an increase of 11.3 percent. The investment in infrastructure was 7,205.8 billion yuan, an increase of 20.9 percent. The investment in high-tech manufacturing industry increased by 20.7 percent, 12.4 percentage points faster than the total investment. The funds in place for investment in fixed assets were 34,107.3 billion yuan, up by 1.5 percent year on year, 0.1 percentage point faster compared with the first six months. The total investment in newly-started projects was 28,688.3 billion yuan, an increase of 1.9 percent year on year, with the growth rate turning from decrease to increase. In July, the investment in fixed assets (excluding rural households) grew by 0.61 percent month-on-month.

4. The Growth of Investment in Real Estate Development Slowed Down and the Floor Space of Commercial Buildings for Sale Decreased.

From January to July, the total investment in real estate development was 5,976.1 billion yuan, a year-on-year growth of 7.9 percent, 0.6 percentage point slower than the first six months. In particular, the investment in residential buildings went up by 10.0 percent. The floor space of houses newly started was 1,003.71 million square meters, up by 8.0 percent year on year. Specifically, the floor space of residential buildings newly started went up by 11.9 percent. The floor space of commercial buildings sold reached 863.51 million square meters, a year-on-year increase of 14.0 percent. Of this total, the floor space of residential buildings sold increased by 11.5 percent. The total sales of commercial buildings were 6,846.1 billion yuan, a growth of 18.9 percent year on year. Specifically, the sales of residential buildings were up by 15.9 percent. The land space purchased for real estate development was 124.10 million square meters, up by 11.1 percent year on year. By the end of July, the floor space of commercial buildings for sale was 634.96 million square meters, 10.81 million square meters less than that at the end of June. The funds in place for real estate development enterprises from January to July reached 8,766.4 billion yuan, up by 9.7 percent year on year.

5. Market Sales Grew Fast and Online Retailing Maintained a Strong Momentum.

In July, the total retail sales of consumer goods reached 2,961.0 billion yuan, a year-on-year rise of 10.4 percent, 0.6 percentage point slower than last month, 0.2 percentage point faster than the same month last year. Analyzed by different areas, the retail sales in urban areas reached 2,547.4 billion yuan, up by 10.2 percent year-on-year, and the retail sales in rural areas stood at 413.6 billion yuan, up by 11.7 percent. Grouped by consumption patterns, the income of the catering was 320.4 billion yuan, up by 11.1 percent year on year; and the retail sales of goods were 2,640.6 billion yuan, up by 10.3 percent. In particular, the retail sales of the enterprises above designated size reached 1,200.4 billion yuan, an increase of 8.6 percent. The sales of upgraded consumer goods witnessed fast growth. Specifically, the sales of sports and recreational articles and household electric appliances and audio-video equipments increased by 26.6 percent and 13.1 percent respectively. In July, the total retail sales of consumer goods rose by 0.73 percent compared with last month. From January to July, the total retail sales of consumer goods increased by 10.4 percent year on year.

In the first seven months, the online retail sales reached 3,661.7 billion yuan, a year-on-year growth of 33.7 percent, 0.3 percentage point faster than the first six months. Specifically, the online retail sales of physical goods were 2,782.0 billion yuan, an increase of 28.9 percent, accounting for 13.8 percent of the total retail sales, an increase of 2.2 percentage points compared with the same period last year.

6. The Consumer Price Increased Mildly and the Growth of Producer Prices for Industrial Products was Stabilized.

In July, the consumer price went up by 1.4 percent year on year, 0.1 percentage point slower than last month. Grouped by commodity categories, prices for food, tobacco and alcohol went down by 0.1 percent year on year; clothing up by 1.4 percent; housing up by 2.5 percent; articles and services for daily use up by 1.1 percent; transport and communication down by 0.2 percent; education, culture and recreation up by 2.5 percent; medical services and health care up by 5.5 percent; other articles and services up by 1.3 percent. In terms of food, tobacco and alcohol prices, prices for grain went up by 1.6 percent, pork down by 15.5 percent, fresh vegetables up by 9.1 percent. In July, the month-on-month consumer price was up by 0.1 percent. From January to July, the consumer price was up by 1.4 percent year on year.

In July, the producer prices for industrial products went up by 5.5 percent year on year, growing at the same rate as last month, up by 0.2 percent month on month. From January to July, the producer prices for industrial products went up by 6.4 percent year on year. In July, the purchasing prices for industrial producers were up by 7.0 percent year on year, the same as last month. In the first seven months, the purchasing prices for industrial producers were up by 8.5 percent year on year.

7. The Imports and Exports Grew Fast and the Share of General Trade Increased.

The total value of imports and exports in July was 2,322.3 billion yuan, an increase of 12.7 percent year on year. The total value of exports was 1,321.7 billion yuan, up by 11.2 percent; the total value of imports was 1,000.5 billion yuan, an increase of 14.7 percent. The trade balance was 321.2 billion yuan in surplus. In the first seven months, the total value of imports and exports was 15,462.7 billion yuan, a year-on-year increase of 18.5 percent. The total value of exports was 8,530.6 billion yuan, up by 14.4 percent, and the total value of imports was 6,932.1 billion yuan, up by 24.0 percent. From January to July, the import and export of general trade increased by 19.1 percent, accounting for 56.7 percent of the total value of the imports and exports, 0.3 percentage point higher than the same period last year. The export of mechanical and electrical products grew by 14.2 percent, taking up 57.1 percent of the total export.

In July, the export delivery value of industrial enterprises above designated size reached 1,062.1 billion yuan, a year-on-year increase of 8.6 percent. In the first seven months, the export delivery value of industrial enterprises above designated size reached 7,167.2 billion yuan, up by 10.5 percent on a year-on-year base.

Generally speaking, the national economy in July was stable with the sound momentum maintained and the structural adjustment deepened. However, we must be aware that the international environment is still complicated and changing, the structural contradictions at home are acute and there are potential troubles lurking. At the next stage, united even closer around the Party Central Committee with Comrade Xi Jinping at its core, we must stick to the general working guideline of making progress while maintaining stability, implement the new development philosophy, focus on the supply-side structural reform, moderately increase the aggregate demand, play a stronger role in guiding the development of expectations and strengthen the driving force of innovation so as to ensure the steady and healthy development of the economy, the deepening of the supply-side structural reform, the bottom line of no systematic financial risk and the social harmony and stability.

National Bureau of Statistics of China, “Overall Economic Performance was Steady with Continued Sound Momentum in JulyMore

Currency: USD/CNY

CNY movements
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: CSI300

CSI300 movements
^ Shanghai CSI300 movements over the past week Chart: Google Finance