Many Stock Markets in Asia and Europe Posting Sharp Gains on First Trading Day of August

August 2, 2010

Investors remain predisposed to assuming more risk.

Stocks advanced by 1.7% in China, 1.8% in Hong Kong, 2.0% in Taiwan, 1.3% in Singapore, 1.2% in India, 0.9% in Thailand and 1.1% in Australia.  The Paris Cac, German Dax and British Ftse have traded up 2.1%, 1.8% and 1.3%.  Trailing behind these markets, Japan’s Nikkei only rose 0.4%.

The dollar firmed 0.3% against the yen and 0.2% relative to the Swiss franc but otherwise lost 0.8% against sterling and the Australian dollar, 0.6% against the Canadian dollar, 0.9% against the kiwi, and 0.3% against the euro.

Ten-year German bund and British gilt yields firmed three and four basis points, whereas the 10-year JGB yield eased a single basis point.

Oil advanced 1.2% to $79.86 per barrel.  Gold slipped 0.3%.

Manufacturing purchasing managers indices show continuing momentum at the start of the third quarter.  Readings above 50 connote expansion, while those below 50 indicate contracting activity.

  • The euro area reading in July was revised to a three-month high of 56.7 from a preliminary 56.5 indication and readings of 55.6 in June and 55.8 in May.  Output and orders rose more quickly than in June.
  • The German index of 61.2 was the same as reported in the Flash release and at a three-month high.  Domestic demand strengthened further.
  • The Dutch reading of 55.7 was two-tenths below June’s reading but at a solid level and not far beneath the 32-month high of 57.8 in March.
  • France had a revised reading of 53.9, up two-tenths from the preliminary indication but 0.9 below June’s level and at a 10-month low.  Jobs fell in manufacturing for the first time since September 2009.
  • Greece remains in recession with a 45.3 reading.  Still that was better than 41.8 in May or 42.2 in July.
  • The Italian PMI in manufacturing edged up to 54.4 from 54.3, with growth in jobs for the first time since January 2008.
  • Spain’s index improved to 51.6 from 51.2 but was a bit lower than the 2Q10 average score of 52.0.
  • Ireland had a 51.4 reading, a 5-month low and down from 51.8 in June and 54.4 in May.
  • The British PMI of 57.3 was a five-month low after 57.6 in June and 58.0 in May but showed surprising strength nonetheless.
  • The Czech PMI score of 56.8 exceeded the long-term average of 52.4 but was below readings of 57.6 in both May and June.
  • Poland’s PMI of 52.1 was not as strong as the 3-year high of 53.3 in June but compared favorably with a long-term average of 49.7.
  • Hungary’s PMI swung above the 50-breakeven line to 53.5 and readings of 49.8 in May and 49.6 in June.
  • Russia’s PMI edged up a tenth to 52.7 and was the best score since April 2008.
  • Sweden’s PMI reading of 64.2 exceeded expectations and June’s score of 62.4.
  • The Swiss PMI improved from 65.7 in June to a record high in July of 66.9.
  • Denmark’s PMI rose to 50.7 from 50.3.
  • The Norwegian PMI reading of 54.9 was almost three points better than predicted and up from 50.1 two months earlier.
  • Australia’s PMI rebounded to 54.4 in July after dropping from 56.3 in May to 52.9 in June.
  • Turkey’s PMI exceeded 50 for a 15th straight time, prining at 52.8 after 53.2.
  • South Korea reported a 53.2 reading, similar to June’s 53.3.
  • Taiwan’s manufacturing growth slowed to 50.5 from 53.8 in June, 57.4 in May and 60.7 in April.  Such was the lowest reading in 16 months.
  • As many analysts forecast, China’s PMI dipped under 50 for the first time since March 2009, printing at 49.4 after 50.4 in June and 52.7 in May.  Jobs continued to climb, and nobody thinks this report signals a sustained period of contraction.
  • India, on the other hand, reported a solid reading of 57.6 after 57.3 in June and a 27-month high of 59.0 in May.
  • South Africa’s PMI improved to 49.5 from 48.1 in June.  Analysts had forecast a reading of 48.

Japanese on-year wage growth accelerated to 1.5% in June from 0.1% in May.  Such was the fourth straight month with on-year expansion.

Japanese motor vehicle sales slowed to on-year growth of 15.0% in July from 20.6% in June.

Swiss retail sales were only 0.9% greater than a year earlier in June, a very disappointing result after a gain of 3.8% in the year to May.

Irish retail sales volumes were 1.0% higher than a year before in June, a smaller advance than that of 3.1% in the year to May.

Hong Kong retail sales in June were 15.3% above their year-earlier level.

Commodity prices in New Zealand fell 0.8% in July, half as much as their drop in June.

Australian house prices fell 5.1% in June.  A measure of expected Australian inflation compiled by TD Securities decelerated below 3% in July.

Canada will be closed for the Civic Day holiday.

The United States releases construction spending and its manufacturing PMI data today.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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