New Overnight Developments Abroad: Mixed News

December 8, 2009

The dollar lost 0.9% to the yen but shows gains of 0.9% against the pound, 0.3% versus the kiwi, 0.2% against the Swissy, Aussie dollar and Swissy, and just 0.1% versus the euro.

The Ftse, Nikkei, and Paris Cac are off 0.4%, 0.3%, and 0.1%.  The Dax is flat.  Stocks fell 1.7% in Pakistan, 1.1% in the Philippines, and 1.2% in Hong Kong and China, but India’s bourse gained 1.4%.

Gold and oil edged down 0.2% and 0.1% to $1161.5 per ounce and $73.85 per barrel.

Ten-year sovereign debt yields are slightly lower in Germany, Britain and Japan.

Car sales in China and India were 98% and 61.% higher in November than a year earlier.

Japan’s seasonally adjusted current account surplus widened 2.8% on month in October.  The unadjusted surplus increased 42.7% from a year earlier.  Merchandise exports rose another 1.8% on month and fell by just 24.6% on year after a drop of 32.1% in the year to September.  In the first twenty days of November, goods exports were only 7.2% lower than a year earlier.  Japan’s index of leading economic indicators printed in October at 89.7, better than forecast and its highest since July 2008.  The diffusion indices for the leading, coincident, and lagging indices were all at a maximum possible score of 100.

Because of Y 6.6 trillion of portfolio inflows in October, Japan experienced a Y 7.29 trillion surplus on its current account plus long-term capital (formerly known as the Basic Balance).  The strength of Japan’s Basic Balance corresponds to upward pressure on the yen.

However, Japan’s economy  watchers index unexpectedly slumped to 33.9 in November from 40.9 in October and a quarterly average of 41.8 in 3Q09.  The Democratic Party government finally announced a fiscal stimulus, which totaled Y 7.2 billion (about $81 billion) and issued yet another protest against excessive yen movement (that is, strength). Market participants were not very impressed by the this fourth stimulus package in Japan since September 2008.

Japanese bank lending imploded to on-year growth of just 0.2% in November from 1.4% in October, 1.8% in 3Q, and 2.8% in 2Q.  M2 rose 3.3% on year.  Stock and bond transactions generated a Y 1.455 trillion outflow in November.

Reserve Bank of Australia Governor Stevens delivered a hawkish speech that points to more tightening, saying the country’s economy looks much stronger than had been expected early this year.  Australia’s current account deficit was 23% wider in 3Q09 than in 2Q09.  Business sentiment improved three points to +19, best since May 2002, but business conditions slid two points to +10.

German industrial production, like the orders data reported yesterday, was much weaker than assumed in October, dropping 1.8% on month and by 12.4% from October 2008.  Production of capital goods slumped 3.5% but were still 1.2% greater than their average level in the third quarter.  Total production at advanced 15.2% at an annualized rate last quarter.

British industrial production was disappointingly unchanged in October instead of firming 0.5% as predicted.  Such fell 8.4% from a year earlier, the 18th consecutive on-year drop in a row.  Factory output was also unchanged on the month.  Total industrial output fell 1.4% in the three months to October versus their level in May-July.  They had posted smaller drops of 0.9% in 3Q and 0.6% in 2Q.  On the other hand, the Halifax house price index jumped 1.4% in November, about three times more than anticipated, and have recovered 8.5% since bottoming in April.

Britain’s CBI business group released a disappointing monthly industrial trends survey.  The output index swung to minus 7 from plus 4, and export orders worsened four points to minus 41 in spite of a competitive pound.  On the other hand, Lloyds released its most bullish British corporate survey in seven years.

The Bank of France upwardly revised projected fourth-quarter GDP growth by a tenth to 0.6%, twice the actual rate in 3Q.  Monetary officials did this after reporting another rise in manufacturing business sentiment to 99 in November from 96 in October.  The service sector business sentiment index also rose, posting a one-point gain to 85.  The French budget gap of EUR 135 billion in October was 7.2% wider than September’s gap.

Industrial output in Hungary and Romania respectively rose 1.8% and 0.2% in October and recorded on-year drops of 10.8% and 1.5%.  Turkish industrial output was 6.5% greater in October than a year earlier.  The Czech current account deficit narrowed 29% between 2Q09 and 3Q09.  Slovenian industrial output fell 3.8% in October.

Finnish GDP firmed 0.3% last quarter but was still 9.1% lower than a year earlier.

New Zealand’s manufacturing activity index fell 1.4% last quarter.  Residential construction completions in that economy fell 5.4%, and wholesale trade turnover dropped 0.8% in the quarter.

Thai consumer confidence improved further to 69.1 in November from 68.0 in October.  Taiwan reported another trade surplus in November.

The Bank of Canada is expected to leave its key interest rate at 0.25%.  The announcement is scheduled for 14:00 GMT.  Canada also reports housing starts, while the U.S. IBD/TIPP optimism index gets released as well today.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


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