New Overnight Developments Abroad: Focus on North American Labor Reports
February 6, 2009
While markets await Canadian and U.S. monthly labor data at 12:00 GMT and 13:30 GMT, very poor and weaker-than-forecast industrial production figures have been released by Germany, Hungary, and Great Britain.
Asian bourses posted strong gains on hopes regarding policy responses to the crisis. The Nikkei rose 1.6%. Stocks climbed 4.0% in China, 3.6% in Hong Kong, 2.5% in Taiwan and Thailand, 3.1% in South Korea, 2.3% in India, 2.7% in the Philippines, 1.7% in Indonesia and 1.4% in Vietnam. Share prices in Europe rose by less — the German Dax is 0.7% higher, and the Paris Cac and British Ftse have gained 0.5%.
Oil slid 2.0% to $40.33/barrel, and gold is steady at $914.90 per ounce.
The dollar is mixed ahead of the labor reports, showing gains of 0.8% against the C-dollar and 0.1% versus the yen but losses of 0.9% against the Australian dollar, 0.6% relative to the kiwi, 0.3% against sterling, and 0.1% against the euro. Dollar/Swissy is unchanged.
The 10-year JGB yield edged off a half basis point to 1.335%. Gilt and bund yields are lower.
German industrial production plunged 4.6% in December (-12% on year). Such dropped 24.6% at an annualized rate last quarter, led by a 36% drop in intermediate goods. VW sales dropped 20% in the year to January.
British industrial production declined 1.7% in December and by 9.4% from December 2007. The declines in 4Q were 4.5% from 3Q (weakest since the start of 1974) and 7.7% from 4Q07. Factory output slumped 5.1% last quarter and by 8.1% from 4Q07. The data point to a downward revision of fourth quarter growth, which was reported initially as a non-annualized fall of 1.5%.
Industrial production in Hungary dived 14.6% m/m and 23.3% y/y in December, much worse than assumed.
ECB President Trichet reiterated his belief that reducing rates to zero is full of pitfalls.
Bank of Japan Governor Shirakawa identified slumping share prices and exports as the main causes of a severe worsening of Japan’s economy. Mitsubishi UFJ Bank had a quarterly loss. Automaker Toyota predicts a Y 450 billion loss this fiscal year, which is a substantial downward revision.
Japan’s index of leading economic indicators fell 2 points in December and posted the 16th sub-50 diffusion index (10.0) in the past 17 months. The diffusion index readings were zero for both the coincident and lagging indices.
The Reserve Bank of Australia’s quarterly monetary policy report accentuates the positive, observing that Australia is and should do better than most economies because of policy stimulus, relatively unscathed financial institutions, and significant exchange rate depreciation. Officials cut forecasts for both growth and inflation, but investors are inferring that future rate cuts will proceed at a limited pace.
France posted a EUR 55.7 billion trade deficit in 2008, 37% greater than in 2007, because of higher oil costs. December’s deficit of EUR 2.45 bln was less than half as big as forecast, however.
Euroland’s ECRI gauge of future inflation fell to a 6-year low of 91.5 in December from 96.1 in November.
The ECB quarterly bank lending survey concluded that standards had again tightened in 4Q08.
British producer price inflation exceeded expectations in January. The PPI-O firmed 0.1% and by 3.5% y/y, with core of still 4.1%. The PPI-I jumped 1.5% but slid on a 12-month basis to 2.3% from 3.3%.
The U.S. is expected to report a drop in jobs of more than a half million workers. Canada’s finance minister warned that the Canadian jobs report will be very poor as well.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
ShareThis
