Stocks Up on Lessening Korean Tensions

December 21, 2010

Solid stock price advances have occurred in the Pacific Rim and Europe.  Gains amounted to 2.2% in China, 1.9% in Indonesia, 1.5% in Japan, 0.9% in India, 0.8% in South Korea and Australia, 0.7% in Thailand and Taiwan and 0.6% in New Zealand and so far in France and Germany.  The British Ftse is trading 0.7% higher.

The dollar is mostly lower with drops of 0.5% against the Swissy, 0.3% versus the kiwi and euro, 0.2% against the yuan and Australian dollar, and 0.1% relative to the yen.  The dollar is 0.3% firmer against the Canadian dollar and has edged up 0.1% against sterling.

Ten-year German bunds and British gilts rose one and three basis points, while the 10-year JGB yield settled back another basis point.

Oil is steady at $89.38 per barrel, while gold edged 0.1% higher to $1386.80 per ounce.

The Bank of Japan as expected voted unanimously to leave its key interest rate at zero to 0.1%.  Monetary officials downgraded the assessment of industrial production to “recently declined slightly” and business sentiment to “somewhat weak” but said business investment has started to pick up.  The economy is projected “to grow at a slower pace for some time,” and subsequent return to a more moderate pace hinges on faster global growth.  BOJ Governor Shirakawa said Bank officials continue to watch the yen carefully.

Minutes from the Australian central bank meeting held earlier this month called the policy stance “mildly restrictive” but “appropriate.”  Australia’s index of leading economic indicators rebounded 0.6% in October.

British consumer confidence remained at minus 21 in December instead of improving a point as some anticipated.  Swedish consumer confidence weakened to a reading of 20.8 this month from 22.6 in November. 

The U.K. public finance figures in November were much worse than anticipated.  Public-sector net borrowing hit a record high of GBP 23.3 billion after GBP 9.2 billion in October and GBP 17.4 billion in November 2009.  The public-sector net cash requirement was GBP 16.8 billion, GBP 2.0 billion wider than a year earlier.  There was a GBP 19.9 billion current budget deficit last month, and debt reached 58.0% of GDP, up from 57.1% in October and 50.0% a year ago.

Germany’s consumer confidence reading was 5.4 in January versus 5.5 in December and 5.1 in November.  Analysts had predicted a rise near to 6.0.  The German index of leading economic indicators advanced 0.8% in October on top of a 0.7% rise in September.

Japan’s all-industry index, a supply-side approximation of GDP, dipped another 0.2% in October after falling 0.8% in September and was 0.8% below the third-quarter average level.  Drops of 2.0% in industrial output and 0.2% in public spending outweighed rises of 0.5% in services and construction during October.  The all-industry index was only 1.4% greater than in October 2009.

Malaysia’s jobless rate dipped further to 2.9% in October from 3.1% in September.  Hong Kong CPI inflation rose to 2.9% in November from October’s 2.6% on-year pace.

North Korean officials said

  • South Korea’s live-fire military drill isn’t worth retaliating against.
  • International inspectors will again be allowed to see their nuclear facilities.

Moody’s is putting Portugal’s debt rating on watch for a possible downgrade.

Dutch consumer spending was 1.1% greater than a year earlier in October after a 1.7% on-year increase in September.  Finnish unemployment fell to 7.1% in November from 7.4% in October. 

Switzerland’s trade surplus narrowed to CHF 1.93 billion last month from CHF 2.10 billion in October.  Italy’s non-EU trade deficit was 18.5% wider in November than October, while its jobless rate dipped two-tenths to 8.3% in the third quarter from 8.5% in 2Q10.  Spain’s trade deficit of EUR 3.7 billion in October was 16% smaller than September’s shortfall.

Canadian CPI inflation decelerated to 2.0% in November from 2.4% in October.  The 12-month advance of energy slowed to 6.7% from 9.1%, and food prices posted a 1.5% increase after 2.2% in the year to October.  Clothing exerted a further disinflationary force.  Core inflation also dropped by four-tenths, reaching 1.4% on year while remaining steady in month-on-month terms.

Canada will also be releasing retail sales figures today.  The U.S. reports weekly chain store sales, and Belgium announces business sentiment.

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

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