Japan Exports Declined in October

News Event

From Trading Economics: Exports from Japan decreased 10.3 percent year-on-year to JPY 5869.9 billion in October of 2016. It is the 13th consecutive drop and much worse than expectations of an 8.6 percent fall. Sales went down mainly to the United States (-11.2 percent); China (-9.2 percent); the European Union (-9.5 percent); South Korea (-4.6 percent) and Taiwan (-2.8 percent). By product, declines were reported for transport equipment (-9 percent), namely cars (-9.1 percent); machinery (-7.9 percent), namely metalworking (-26.9 percent), parts of computer (-17.3 percent) and power generating machines (-8.1 percent); electrical machinery (-10.9 percent), namely semiconductors (-7.1 percent) and manufactured goods (-15.2 percent), namely iron and steel products (-19.3 percent).

Market Opening Wrap

In European Equity Markets stocks ended lower on Friday, with mining and energy stocks bearing the brunt of the sell off after commodities prices slipped following a rally in the dollar. The pan-European STOXX 600 closed 0.4 percent lower after rising earlier in the session to a one-week high. However, the index finished for a second straight week in positive territory, helped by a pledge by U.S. President-elect Donald Trump to boost infrastructure spending. Italian stocks, down 1.8 percent, underperformed the broader stock market after banks hit six-week lows, hurt by the prospect of a referendum vote on Dec. 4 that could topple Matteo Renzi's reformist government.

 

In Currency Markets the US dollar extended its record winning streak against the euro amid speculation Donald Trump's reflationary economic policies will trigger faster monetary tightening. The greenback has strengthened for 10 straight days against the euro, the longest rally since the shared currency's debut in 1999. The dollar is also heading for the biggest two-week advance against the yen since that same year. The dollar advanced 0.5 percent to $1.0573 per euro as of 11:30 a.m. in New York, and reached the strongest level since December. The U.S. currency added 0.6 percent to 110.80 yen, on track for a two-week advance of more than 7 percent, the biggest since 1999.

 

In Commodities Markets a stronger dollar weighed down oil prices on Friday, but Brent crude was headed for its first weekly gain in five on hopes that OPEC might agree to limit production cuts at the end of the month. The OPEC is moving closer to finalizing its first deal since 2008 to limit output, with most members prepared to offer Iran flexibility on production volumes, ministers and sources said. Brent was down 42 cents, or 0.9 percent, to $46.07 per barrel at 11:30 a.m. in New York, but it was still on track to gain nearly 3 percent for the week, its first weekly increase in five weeks. U.S. WTI crude was down 41 cents, or 0.9 percent as well, at $45.01 a barrel. It was on track to gain 3.6 percent for the week, the first weekly increase in four.

 

In US Equity Markets  stocks were lower in early afternoon trading on Friday as health stocks weighed and investors cashed in after the post-election rally, but the three major indexes continued to hover near record levels. The Nasdaq hit a record high earlier in the session, helped by a rise in Microsoft and other big tech stocks.  Losses in shares of Merck and Johnson and Johnson dragged down the S&P health sector .SPXHC, which led the decliners with a 1.08 percent fall. Eight of the 11 major S&P 500 sectors were lower. The S&P 500 was  down 0.23 percent, at 2,182.01. Gap and Abercrombie & Fitch fell more than 10 percent after both retailers warned of a challenging holiday quarter.

 

In Bond Markets Benchmark U.S. Treasury yields rose to their highest levels of the year on Friday, spurred by expectations of higher interest rates after the election of Republican Donald Trump as U.S. president and technical positioning. The yield on benchmark 10-year Treasury notes was up over 4 basis points at 2.323 percent after hitting 2.355 percent earlier on Friday, which was the highest since Dec. 4, 2015.  Yields on Treasuries of all maturities are on pace to register the largest two-week gains in more than a calendar year as investors dump U.S. government debt.

Source: Institute of Trading an Portfolio Management