Japan Producer Prices Fall

News Event

From Trading Economics: Japan's producer prices decreased by 2.2 percent year-on-year in November 2016, following a 2.7 percent drop in the previous month and beating market consensus of 2.3 percent decrease. It was the 20th straight month of decline and the smallest fall since May 2015, as prices went down at a slower pace for: Transport equipment (-1 percent from -1.1 percent in October); chemicals (-5.8 percent from -6.1 percent); petroleum and coal products (-5.7 percent from -7.2 percent); and iron and steel (-2.6 percent from -3.4 percent). On a monthly basis, prices rose by 0.4 percent, following a 0.1 percent fall in October and better than expectations of a 0.3 percent gain.

Market Opening Wrap

In Asian Equity Markets Japan's Nikkei index rose for a fifth day on Monday helped by a strong show on Wall Street and a weak yen, while investors picked up defensive stocks that underperformed in the recent rally. The Nikkei rose 0.8 percent to 19,155.03, the highest closing level since mid-December last year. The broader Topix added 0.4 percent to 1,531.43 and the JPX-Nikkei Index 400 advanced 0.4 percent to 13,712.76. Though MSCI's broadest index of Asia-Pacific shares outside Japan was broadly flat after posting its biggest weekly rise in nearly three months last week, energy plays in Hong Kong and Shanghai such as CNOOC and PetroChina were among the top gainers.

In Currency Markets the dollar inched lower on Monday but didn't stray far from recent highs ahead of a U.S. Fed meeting that's expected to deliver an interest rate hike as well as clues to future monetary policy. The dollar edged down 0.1 percent to 115.25 yen after earlier touching 115.62 yen, its loftiest peak since February. The euro was flat on the day at $1.0560. It remained under pressure after the ECB announced on Thursday that it will extend its bond-buying program longer than many investors had anticipated, although it trimmed the size of its monthly purchases.  The dollar was down 0.4 percent at C$1.3121 after earlier falling to C$1.3115, its lowest since late October. The dollar index was 0.1 percent lower at 101.52.

In Commodities Markets oil prices shot to their highest levels since mid-2015 on Monday after OPEC and other producers reached their first deal since 2001 to jointly reduce output in order to rein in oversupply and prop up markets. Brent crude rose to $57.89 per barrel in overnight trading between Sunday and Monday, the highest level since July 2015. U.S. WTI crude also hit a July 2015 high of $54.51 a barrel. OPEC plans to slash output by 1.2 million bpd from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd in a bid to end overproduction that has dogged markets for two years.  Gold prices edged lower amid a broad rise in risk appetite with spot gold hitting its lowest since Feb. 5 at $1,153.93 an ounce and was down 0.3 percent.

In US Equity Markets  major stock indexes powered to another day of fresh record highs on Friday, as investors bid up shares in sectors that have lagged in the month-long rally since Donald Trump's presidential election. The Dow Jones industrial average rose 0.72 percent, to 19,756.85, the S&P 500 gained 0.59 percent, to 2,259.53 and the Nasdaq Composite added 0.5 percent, to 5,444.50. The S&P consumer staples sector rose 1.4 percent, bolstered by Coca-Cola's  2.5-percent gain. The company said Muhtar Kent would step down as chief executive and named company veteran James Quincey as his successor. Healthcare gained 1.2 percent, helped by Bristol-Myers Squibb's 3.3-percent rise after the drugmaker raised its dividend.

In Bond Markets  long-dated Japanese government bond prices tumbled on Monday, driving the benchmark 10-year yield to its highest in 10 months, on the back of continuing gains in U.S. bond yields and Japanese shares. The benchmark 10-year JGB yield rose 1.5 basis points to 0.065 percent, at one point, climbing to 0.070 percent, its highest since mid-February. The 30-year yield rose 8.5 basis points from its previous close to 0.785 percent and the 40-year JGB yield rose 6.0 basis points to 0.885 percent.

Source: Institute of Trading and Portfolio Management