2018 Economic Calendar
POWERED BY  econoday logo
U.S. & Intl Recaps   |   Event Definitions   |   Today's Calendar   |   



Risk aversion
International Perspective - October 5, 2018
By Anne D. Picker, Chief Economist


Global Markets

Global equities retreated on the week. Continued concerns regarding international trade frictions especially with China now that a late settlement has been reached with Canada sent the U.S. dollar upward. And the better than anticipated economic data in the U.S. sent bond yields higher given expectations for more fed fund rate increases including another in December. However, the Reserve Banks of Australia and India left their policy interest rates unchanged.


Reserve Bank of Australia

The Reserve Bank of Australia again left its main policy rate unchanged at 1.50 percent as anticipated and where it has been since August 2016. In its statement, the RBA again highlighted that the global economic expansion is continuing but noted that growth slowed in China and that "the direction of international trade policy in the United States" represents an uncertainty for the global outlook. In their domestic outlook, the RBA retained their forecast for the economy to grow on average by just over 3.0 percent in 2018 and 2019. Mining exports and non-mining business investment are still expected to support headline growth despite ongoing concerns about the household consumption outlook and the impact of drought conditions in some parts of the country.


The statement noted that the outlook for the labour market is positive, with a further decline in the unemployment rate over the next couple of years to around 5.0 percent expected from the current 5.3 percent. Wage growth has "picked up a little" and it is expected this trend will continue, albeit gradually. Although one-off moves in some administered prices are expected to result in a slight dip in headline inflation in the current quarter, officials continued to forecast inflation to rise modestly from current levels around 2.0 percent to be somewhat higher in 2019 and 2020.


Reserve Bank of India

The Reserve Bank of India surprised and left its repurchase rate unchanged at 6.50 percent at its policy review. Expectations were for another 25 basis point increase after two consecutive 25 basis point increases in August and June. The decision was described as being consistent with a newly-adopted "stance of calibrated tightening of monetary policy" as part of efforts to meet their inflation target over the medium-term, compared with their previous description of the stance as "neutral". Five of the six members of the Monetary Policy Committee voted to leave policy rates unchanged with the other member supporting an increase of 25 basis points.


The statement accompanying the decision noted that recent data have continued to indicate solid growth in the industrial sector, with aggregate rainfall patterns during the annual monsoon season uneven but generally indicating a positive outlook for agricultural production. The RBI noted that recent GDP data showed stronger-than-expected growth and expressed confidence about the outlook for household consumption, but also noted offsetting factors impacting investment and uncertainty about the outlook for exports. Reflecting this assessment, the board retained their forecast for economic growth to strengthen from an estimated 6.7 percent last fiscal year to 7.4 percent in the current fiscal year, with their forecast for growth next fiscal year revised down from 7.5 percent to 7.4 percent.


After the RBI raised policy rates in June and August in response to concerns about the inflation outlook, incoming data have since shown a significant moderation in price pressures. Headline CPI inflation fell from 4.92 percent in June to 4.17 percent in July and then 3.69 percent in August, below the mid-point of the RBI's target range of 2.0 percent to 6.0 percent. Officials noted that these declines were largely driven by "unusually benign" food inflation as a result of the absence of a normal seasonal increase in fruit and vegetable prices. This has prompted a downward revision to their near-term inflation forecasts, though inflation is still expected to pick up over the medium-term.


Global Stock Market Recap

  2017 2018 % Change
Index Dec 29 Sep 28 Oct 5 Week 2018
Australia All Ordinaries 6167.3 6325.5 6301.1 -0.4% 2.2%
Japan Nikkei 225 22764.9 24120.0 23783.7 -1.4% 4.5%
Topix 1817.56 1817.25 1792.7 -1.4% -1.4%
Hong Kong Hang Seng 29919.2 27788.5 26572.6 -4.4% -11.2%
S. Korea Kospi 2467.5 2343.1 2267.5 -3.2% -8.1%
Singapore STI 3402.9 3257.1 3209.8 -1.5% -5.7%
China Shanghai Composite* 3307.2 2821.4 2821.4 0.0% -14.7%
India Sensex 30 34056.8 36227.14 34377.0 -5.1% 0.9%
Indonesia Jakarta Composite 6355.7 5976.6 5731.9 -4.1% -9.8%
Malaysia KLCI 1796.8 1793.2 1777.2 -0.9% -1.1%
Philippines PSEi 8558.4 7276.8 7078.2 -2.7% -17.3%
Taiwan Taiex 10642.9 11006.3 10517.1 -4.4% -1.2%
Thailand SET 1753.7 1756.4 1720.5 -2.0% -1.9%
UK FTSE 100 7687.8 7510.2 7318.5 -2.6% -4.8%
France CAC 5312.6 5493.5 5359.4 -2.4% 0.9%
Germany XETRA DAX 12917.6 12246.7 12111.9 -1.1% -6.2%
Italy FTSE MIB 21853.3 20711.7 20346.0 -1.8% -6.9%
Spain IBEX 35 10043.9 9389.2 9253.9 -1.4% -7.9%
Sweden OMX Stockholm 30 1576.9 1662.4 1634.9 -1.7% 3.7%
Switzerland SMI 9381.9 9088.0 9042.1 -0.5% -3.6%
North America
United States Dow 24719.2 26458.3 26447.1 0.0% 7.0%
NASDAQ 6903.4 8046.4 7788.5 -3.2% 12.8%
S&P 500 2673.6 2914.0 2885.6 -1.0% 7.9%
Canada S&P/TSX Comp. 16209.1 16073.1 15946.2 -0.8% -1.6%
Mexico Bolsa 49354.4 49471.3 48052.9 -2.9% -2.9%
*Shanghai Composite closed for the week


Europe and the UK

European equities tumbled on the week thanks to upbeat U.S. data and hawkish comments from Federal Reserve officials boosted expectations for inflation and continued Fed rate increases in the coming months. The FTSE was down 2.6 percent, the CAC retreated 2.4 percent, the DAX was 1.1 percent lower and the SMI slid 0.5 percent. The export-oriented FTSE was also lower after the British currency rallied. European Union Brexit negotiators said that a divorce deal with Britain was very close. Concerns surrounding Italy’s budget situation along with Brexit uncertainties also kept investors on edge. Trade tensions between the U.S. and China also weighed on investor sentiment.


Prime Minister Giuseppe Conte reaffirmed his country's commitment to the euro after an Italian lawmaker said that the country would resolve its problems by returning to its own currency. "I'm totally convinced that Italy would resolve most of its problems with its own currency," Claudio Borghi, the economic head of the ruling League party, told RAI radio. "Having control of one's own means in monetary policy is a necessary condition - although not sufficient - to carry out the ambitious and enormous project of renewal." Italy’s 10-year bond yield soared to 4-1/2 year highs before reassuring comments from the government bought calm to a jittery market. Italian banks, whose large government bond holdings make them sensitive to political stress, tumbled. But then there is Brexit as well. The pound slid to a three-week low mid-week as a conflict over UK Prime Minister Theresa May’s Brexit plan escalated, with deep divisions on show at the ruling Conservative Party’s conference.


Asia Pacific

Asian equities were lower across the board for the week. The Shanghai Composite was closed for the week for a holiday. Losses ranged from 0.4 percent (All Ordinaries) to a high of 5.1 percent (Sensex). Asian shares tumbled as a surge in U.S. Treasury yields raised concerns about the outlook for interest rates. Media reports suggesting that China secretly inserted surveillance microchips into servers used by Apple and Amazon also weighed on market.


Indian shares tumbled Friday to hit six-month lows and the rupee breached the 74-mark against the dollar for the first time ever, after the Reserve Bank of India kept its repo rate unchanged at 6.5 percent. Many had expected a 25 basis point interest rate increase to defend the falling rupee. Investors were also disappointed by the Reserve Bank of India’s narrow focus on inflation at a time when U.S. yields are inching up and oil prices are surging toward $100 a barrel on concerns stemming from the upcoming U.S. sanctions on Iran.


After surging to a high last reached in November 1991 Tuesday, the Nikkei dropped the remaining days of the week. The index was down 1.4 percent on the week. The gains have been underpinned by the prospect of stronger corporate earnings on the back of a weaker yen. The Nikkei rallied 5.5 percent in September, and its sharp gains in the short period of time made the market prone to profit-taking. This was illustrated when the Nikkei fell to its lowest close in two-weeks on Friday, tracking weakness in the U.S. as rising U.S. Treasury yields dimmed the allure of most stocks except financial ones.


Japanese banks — and particularly regional ones — gained after advisers to Prime Minister Shinzo Abe presented a rough draft on policy ideas that included consolidation of regional banks. But overall, analysts said the stock market had become overbought in a very short timeframe, leaving shares vulnerable to profit-taking.


Currencies and Bonds

The U.S. dollar advanced against five of six counterparts. The currency was down against the pound sterling but was higher against the yen, euro, Swiss franc and the Canadian and Australian dollars. The currency is outperforming other major currencies. It is also growing stronger than other economies including the Eurozone. The pound sterling climbed after European Brexit negotiators said they felt a deal was close.


The yield on the U.S. Treasury 10 year notes continued to climb after September’s employment report Friday. The report indicated continued strength in the U.S. labor market. The yield climbed all week following a batch of upbeat economic data which reinforced expectations that the Fed will increase the fed funds rate again in December.


Selected currencies — weekly results

2017 2018 % Change
Dec 29 Sep 28 Oct 5 Week 2018
U.S. $ per currency
Australia A$ 0.779 0.723 0.705 -2.4% -9.6%
New Zealand NZ$ 0.709 0.663 0.644 -2.8% -9.1%
Canada C$ 0.796 0.774 0.772 -0.2% -2.9%
Eurozone euro (€) 1.194 1.161 1.152 -0.7% -3.5%
UK pound sterling (£) 1.344 1.303 1.312 0.7% -2.4%
Currency per U.S. $
China yuan 6.534 6.867 6.869 0.0% -4.9%
Hong Kong HK$* 7.816 7.828 7.837 -0.1% -0.3%
India rupee 64.081 72.490 73.768 -1.7% -13.1%
Japan yen 112.850 113.590 113.680 -0.1% -0.7%
Malaysia ringgit 4.067 4.138 4.150 -0.3% -2.0%
Singapore Singapore $ 1.338 1.367 1.383 -1.1% -3.2%
South Korea won 1070.630 1109.300 1130.500 -1.9% -5.3%
Taiwan Taiwan $ 29.775 30.533 30.847 -1.0% -3.5%
Thailand baht 32.696 32.322 32.818 -1.5% -0.4%
Switzerland Swiss franc 0.979 0.9767 0.992 -1.5% -1.3%
*Pegged to U.S. dollar
Source: Bloomberg


Indicator scoreboard


September final manufacturing PMI was 53.2, down a sizeable 1.4 points and short of its final August reading for a 2-year low. The headline activity index was depressed by a combination of smaller increases in both output and new orders, particularly exports. Growth of backlogs actually turned negative for the first time in nearly three-and-a-half years and employment recorded its smallest advance in more than 18 months. Against this backdrop, business confidence weakened to a 35-month low. Price pressures were again significant but input cost inflation still eased to its slowest rate in 13 months. However, by contrast factory gate inflation accelerated to a 3-month high. Across the region, the best performer was easily the Netherlands (59.8) ahead of Ireland (56.3) and Austria (55.0). Germany (53.7), Greece (53.6) and France (52.5) were some way behind but still well clear of Spain (51.4) and Italy (50.0).



August manufacturing orders rebounded 2.0 percent following an unrevised 0.9 percent decline. However, the annual change still deteriorated from a decline of 0.8 percent to a drop of 2.2 percent, the weakest performance since yearly growth first turned negative in June. The impressive monthly headline gain masked a worryingly steep 2.5 percent drop in domestic orders that was more than offset by a 5.8 percent spurt in overseas demand. Orders from the Eurozone declined 2.2 percent but from the rest of the world jumped 11.1 percent. Despite the August recovery, overall orders are still 2.7 percent below their level at the start of the year and their average for July/August 1.8 percent below their mean reading in the second quarter. In other words, the underlying trend remains soft and likely consistent with a further slowdown in production over coming months.




Third quarter Tankan survey shows business sentiment was slightly weaker in both the manufacturing sector and the non-manufacturing sector. Firms across both sectors revised up their plans for capital expenditure in the fiscal year ending March 2019. The business conditions index for large manufacturers fell from 21 in the three months to June to 19 in the three months to September. The equivalent index dropped from 20 to 15 for medium-sized manufacturers and was unchanged at 14 for small manufacturers. Aggregating manufacturers of all sizes, the index fell from 17 to 16. Business sentiment was more mixed in the non-manufacturing sector but weaker on aggregate. For firms of all sizes across both the manufacturing sector and the non-manufacturing sector, the business conditions index moderated from 16 in the three months to June to 15 in the three months to September. Capital expenditures across firms of all sizes in both the manufacturing and non-manufacturing sectors are forecast to increase by 8.5 percent in the fiscal year ending March 2019 compared with a previous estimate for an increase of 7.9 percent. Firms in the manufacturing sector forecast capital expenditures to grow by 16.5 percent in the current fiscal year, up from the previous estimate of 16.0 percent, while firms in the non-manufacturing sector forecast capital expenditure to increase 4.0 percent after a previous estimate for an increase of 3.3 percent.



August merchandise trade surplus increased from a revised A$1.548 billion in July to A$1.604 billion. Exports and imports both increased moderately on the month. Exports rose 0.5 percent on the month to A$36.56 billion, after falling by a revised 0.9 percent in July. Non-rural goods (around 60 percent of the total) were again weak, falling 1.0 percent on the month after dropping 0.2 percent previously, but this was offset by a strong rebound in exports of rural goods (around 15 percent of total exports), up 3.3 percent after declining 1.6 percent previously, and stronger exports of services, up 0.6 percent after dropping 0.7 percent previously. On the year, growth in total exports picked up from a revised 14.5 percent in July to 15.3 percent in August. Imports advanced 0.4 percent on the month to A$34.96 billion after increasing a revised 0.7 percent in July. Increases in imports of consumption goods, services, and capital goods were partly offset by declines in imports of intermediate and other merchandise goods and non-monetary gold. Total imports increased 12.0 percent on the year, up from a revised increase of 10.7 percent in July.




Employment in September rebounded from August’s decline and increased 63,000. The increase was driven mainly by part-time employment. Part-time employment, up 80,200 was consistent with typical seasonal patterns. Full-time employment was down 16,900 jobs, reversing the full time/part time performances of the previous month. The unemployment rate declined 0.1 percentage point to 5.9 percent. Compared with a year ago, employment was up 222,000 or 1.2 percent, entirely the result of gains in full-time work (224,000). Over the same period, total hours worked increased 0.7 percent. In the third quarter, employment was up 66,000 following little change in the first and second quarters. Employment increased in Ontario and British Columbia while it was little changed in the remaining provinces. More people worked in construction, finance, insurance, real estate, rental & leasing, public administration and agriculture. At the same time, employment declined in information, culture & recreation and business, building & other support services. Employment increased for private sector employees while the number of public sector employees was little changed. The number of self-employed workers decreased.


Bottom line

The Reserve Banks of Australia and India left their respective policy interest rates unchanged at 1.5 percent and 6.5 percent respectively. The rupee sank to a record low after the RBI stayed on hold. Economic data in Europe were mixed while in the U.S. they were mostly positive. The Nikkei touched a 27 year high but quickly sank on profit taking. The USMCA replaced NAFTA.


It will be a quieter upcoming week with the focus mainly on August industrial production and merchandise trade data. The UK posts monthly GDP. There are no central bank meetings this week.


Looking Ahead: October 8 through October 12, 2018

The following indicators will be released this week...
Oct 8 Germany Industrial Production (August)
Oct 9 Germany Merchandise Trade (August)
Oct 10 France Industrial Production (August)
Italy Industrial Production (August)
UK Monthly GDP (August)
Merchandise Trade (August)
Oct 12 EZ Industrial Production (August)
Asia Pacific
Oct 10 Japan Machine Orders (August)
Oct 11 Japan Producer Price Index (September)
Oct 12 China Merchandise Trade (September)
India Consumer Price Index (September)
Industrial Production (August)
Oct 9 Canada Housing Starts (September)


Anne D Picker is the author of International Economic Indicators and Central Banks.


powered by [Econoday]