x
Breaking News
0

German growth surprise lifts Europe as China subdues Asia

Stock MarketsNov 14, 2017 05:13AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A container ship is seen at the shipping terminal Eurokai in the Port of Hamburg

By Marc Jones

LONDON (Reuters) - Strong German economic growth data drove the euro to a three-week high on Tuesday and gave European stocks a lift after five days of falls put them at a two-month low.

The uplift to sentiment came after disappointing Chinese industrial and retail figures had subdued Asia, with investors also pondering whether a marked flattening in the U.S. yield curve might be a harbinger of a more global slowdown.

There was no sign of that in German where an 0.8 percent third-quarter growth reading beat forecasts and showed the economy growing at annualized rates of more than 3 percent.

The euro jumped to $1.1696 versus the dollar on the figures and reached a one-year top against Sweden's crown after inflation figures there came in weaker than expected.

"It is not the dollar that is weak, it is the euro that is strong," said John Hardy, Saxo Bank's head of FX strategy.

Combined with signs of a move up again in European bond yields, that suggested some traders were back to pricing in an end to the European Central Bank's stimulus, he said.

Also ahead on Tuesday were 13 central bank speakers, including the heads of the U.S., European, British and Japanese central banks

The mood in Asia wasn't nearly so bullish.

China's retail sales rose 10 percent on the year in October, while industrial output grew 6.2 percent. But both were under market forecasts and briefly hit the Australian dollar, which is often used as a liquid proxy for China because of the country's vast exports of raw materials to China.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.17 percent after two sessions of declines, while Australia fell 0.9 percent.

Japan's Nikkei managed to recoup 0.4 percent after four sessions of losses, but that was not enough to shift MSCI's 47-country world index out of the red until Europe opened.

On Wall Street, a sharp drop in General Electric (NYSE:GE) shares on Monday had been offset by gains in high dividend-paying sectors including consumer staples and utilities.

The Dow rose 0.07 percent, while the S&P 500 added 0.10 percent and the Nasdaq 0.1 percent.

Elsewhere, sterling dropped after slightly softer than forecast inflation and a hit three week low. It was at

$1.3091, also pressured concerns British Prime Minister Theresa May may be losing her grip on power.

May's blueprint for Britain's departure from the European Union faces a test starting on Tuesday, when lawmakers try to win concessions on legislation to sever ties.

The dollar was up 0.2 percent at 113.88 yen after bouncing from 113.25 support overnight.

EYING THE YIELD CURVE

A rise in U.S. bond yields has generally made it more attractive to buy dollars with money borrowed in low-rate currencies like the yen and Swiss franc.

Figures on Monday from the Commodity Futures Trading Commission showed the net short position in the Japanese yen to be the largest since January 2014 and in the Swiss franc to the biggest since December 2016.

Yields on Treasury two-year notes hit a fresh nine-year high of 1.6910 percent on Monday, shrinking the spread to 10-year debt to near its smallest since 2007.

The trend in part reflects market wagers the Fed's plans to raise rates in December and two or three times next year will slow the economy.

Tom Porcelli, chief U.S. economist at RBC Capital Markets, said history suggested a flatter, and particularly an inverted, yield curve was "compelling as an early warning sign" of recession.

But with the average amount of time it has taken the curve to go from flat to inverted being 18 months and another 18 months to go from inverted to recession, it suggests the expansion still has multiple years in it, said Porcelli.

In commodity markets, gold inched down to $1,272.50 an ounce. The metal has stayed broadly within $15 an ounce of its 100-day moving average, currently at $1,277 an ounce, for most of the last month.

Oil prices held in a tight range as support from Middle East tensions and record long bets by fund managers balanced rising U.S. production.

U.S. crude was off 19 cents at $56.57, while Brent crude futures eased 23 cents to $62.92 a barrel.

German growth surprise lifts Europe as China subdues Asia
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email