Stocks Sharply Lower in Asia and Europe

January 10, 2011

The fear of tighter monetary policies to curb inflation depressed Asia equities.  Share prices fell by 4.2% in Indonesia, 2.4% in India, 1.9% in China, 2.1% in The Philippines, 1.8% in Thailand, 1.0% in Singapore and 0.7% in Pakistan and Hong Kong.

Japanese markets were closed for Coming of Age Day.

European stocks have been hammered for a different reason, renewed concern about the sovereign debt problems of the peripheral members, as Greece, Portugal, Italy and Spain each try to sell debt this week.  Portugal’s finance minister denied weekend reports that Germany and France are urging Portugal to accept a rescue package.  Peripheral bond spreads are generally wider but off their highs amid talk of ECB bond buying.  The Paris Cac is down 1.6%, while the German Dax and British Ftse have declined 0.9% and 0.6%.

EUR/USD is unchanged, remaining not far from 1.2900.  The dollar has firmed 0.7% against the Australian dollar, 0.4% versus the Canadian dollar, 0.3% against the kiwi, 0.2% relative to the yen and sterling and 0.1% against the yuan.  The dollar was unaffected by the Tucson massacre.

Ten-year British gilt and German bund yields rose six and two basis points.

Copper fell for a fifth straight day on news of a 2% decline in Chinese imports of that metal last month.  Oil firmed 0.7% and at one point touched $89.98 per barrel.  Gold is steady at $1370 per troy ounce.

China’s trade surplus narrowed much more last month than forecast, printing at $13.1 billion, smallest since April, after $22.9 billion in November and $27.1 billion in October.  The news comes conveniently ahead of President Hu’s state visit to the United States on January 18-21.  Exports were 17.9% greater than a year earlier, while imports posted on-year growth of 25.6%.  These rates of rise were considerably less than recorded in November.

The Sentix index of investor confidence in Euroland improved less than anticipated to 10.6 this month from 9.7 in December.

French industrial production jumped 2.3% in November, more than twice what analysts were forecasting, and was 5.3% greater than in November 2009.

Greek industrial output sank 2.8% in November and by 7.6% on year.  Year-to-date production was 15% less than two year earlier.  Irish industrial output fell 1.9% but showed a double-digit 15.7% on-year advance.

Many Scandinavian indicators were released. Swedish industrial production advanced 1.1% in November and 12.1% from a year before.  Industrial orders fell 2.0% but exceeded their year-earlier level by 15.9%.  Norwegian consumer prices rose 1.1% in December and accelerated to a 2.8% twelve-month rate of rise from 1.9% in November.  Norway’s PPI leaped 4.6% on month and by 23.9% on year.  Danish consumer prices firmed 0.1% last month and 2.8% on year.  Denmark recorded a DKK 10.66 billion current account surplus in November, 7.5% wider than in October.  Retail sales in Denmark slid 0.2% in November but posted a 2.1% on-year advance.  Iceland’s trade surplus in December was 10% bigger than in November.  Finnish industrial production fell 1.0% in November but was 6.2% greater than a year earlier.

The Czech jobless rate of 9.6% in December was a half percentage point above expectations.  Czech consumer prices increased 0.5% last month and 2.3% from the end of 2009.  Hungary’s trade surplus in November was 42.5% larger than a year earlier.  The January-November Hungarian trade surplus of EUR 1.7 billion was only half as large as its year-earlier value.

The Halifax index of British house prices sank 1.3% last month, three times faster than forecast.  Prices in 4Q were 1.6% lower than a year earlier compared to a 2.6% on-year rise in 3Q  and a 6.6% increase in 2Q from a year before.

Swiss retail sales volume fell 1.8% in November, reversing October’s gain of 1.6%.  Such were 2.5% greater than in November 2009.

Turkish industrial production fell 1.3% in November, trimming the 12-month rate of increase to 8.4% from 12.8%.

Australian retail sales rose just 0.3% in November after a 0.8% drop in October and a 0.1% uptick in September.  Sales were 2.3% higher than a year before.

New Zealand’s trade deficit narrowed over 40% on month in November to NZD 186 million.  Exports were 19% above a year earlier.

Malaysian industrial production fell 3.7% on month but rose 5.1% on year in November.  South Korean producer price inflation accelerated to 5.3% in December from 4.9% in November.

South African auto sales were 29.6% larger in December than a year earlier.

No U.S. data are scheduled today.  Yellen of the Fed over the weekend made the claim that QE2 would give a large boost to U.S. jobs over the coming two years.  Canada reports building permits today.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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