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Prospects Daily: European stocks decline, U.S. factory orders up, Turkey’s inflation accelerates

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Financial Markets…Spanish and Italian government bonds retreated for a second day, with their 10-year yields climbing by 17 basis points and 10 bps respectively, amid signs of political turmoil in both countries. Spain’s 10-year rates rose to 5.42% - their highest level since December 18th, while Italian yields climbed to a one-month high of 4.43%.

European stocks (the Stoxx 600 Index) fell 1% on Monday, the largest decline in 3 months, and the euro weakened 0.5% and 0.7% versus the dollar and the yen from the multi-months highs due to some profit-taking and political uncertainty in Spain and Italy.

Developing-country shares slid for the first time in three days, with the benchmark MSCI stock index declining 0.2%, as falling commodity prices pushed Russian and Brazilian shares down. Russia’s Micex index fell 0.9% and Brazil’s Bovespa index lost 1.3%.

In contrast, China’s Shanghai Composite index rose 0.4% to the highest level since May 8.

High-income Economies
…New orders for the U.S. manufactured goods showed a notable 1.8% (m/m) increase in December following a revised 0.3% decline in November. An 11.7% increase in orders for transportation equipment contributed to this increase in addition to a 4.3% increase in durable goods orders, while non-durable goods showed a 0.3% decline. Shipments of manufactured goods rose by 0.4% in December and inventories of manufactured goods inched up by 0.1% following two consecutive monthly decreases. The inventories-to-shipments ratio was 1.27 in December, unchanged from the previous month.

According to Sentix, investor confidence in the Euro Zone improved for the sixth consecutive month in February with the index moving to -3.9 from -7 in January.

industrial production growth accelerated to 2.7% (m/m) in December compared to a 0.9% increased in November. On an annual basis, industrial production grew 10.7% (y/y) in December, significantly faster than its 3.7% gain in November.

Manufacturing activity in Singapore showed signs of expansion following six months of continuous contraction with the manufacturing PMI improving to 50.2 in January.

Developing EconomiesRomania’s producer price inflation accelerated to 4.9% (y/y) in December largely driven by gains in prices of manufactured goods (5.6% increase y/y).

Inflation in Turkey accelerated to its highest level in three months in January with the consumer price index rising 7.3% (y/y), faster than a 6.2% increase in December. Inflation was largely driven by food and beverage price change (up 4% m/m). The annual inflation remains above the Central Bank’s 5% target. Separately, the producer price index PPI fell 0.18% (m/m) in January.


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