The US dollar is firmer but largely confined to the ranges seen before the weekend against most of the major currencies. The yen is also firmer as dollar sellers reemerged near JPY114.00. The dollar is gaining against most emerging market currencies, though Asian currencies, notably the Korean Won, are firmer.
Although emerging market currencies and commodities are heavier, global equities are continuing their advance since bottoming February 11-12. Even disappointing industrial output and retail sales figures from China over the weekend did not hold back Chinese shares. The Shanghai Composite rose 1.75% to bring the month-to-date gain to 6.4%. The MSCI Asia-Pacific index rose 1.25% to reach its best level since January 6.
European markets are higher as well. The DAX is straddling the 10,000 level for the first time since the middle of January. The three German state elections saw the anti-EU/anti-immigrant AfD surpass the threshold to serve in local parliaments. However, the lead party in state coalition was returned, suggested that the Bundesrat, the upper chamber of parliament where the states are represented, will not change.
The Dow Jones Stoxx 600 is up about 0.65%, led by materials and information technology. Profit-taking appears to be weighing on the energy sector and utilities. European bond markets are also firm. Benchmark 10-year yields are off 2-4 bp. Fitch took away Finland’s AAA rating before the weekend to AA+, matching S&P, leaving only Moody’s, of the big three rating agencies with the highest rating. Finnish bonds seem unperturbed and are among participating fully in today’s advance.
Japan reported a surprising 15% rise in January machine order. The Bloomberg consensus was for a 1.9% rise. The December series was revised to 1.0% from 4.2%. However, the year-over-year pace jumps to 8.4%. This is aforward-looking data point and is a proxy for capex.
