Chinese Statistics Rattle Investor Confidence

January 20, 2011

The euro advanced 0.2% on the dollar and also climbed against other currencies.  The dollar rose 0.9% against the kiwi, 0.6% versus the Australian dollar, 0.3% relative to the Canadian currency, 0.2% against the yen and 0.1% against sterling.  Dollar relationships against the Swiss franc and Chinese yuan are unchanged.

Higher-than-expected Chinese GDP growth last quarter (+9.8% on year versus 9.6% in 3Q and analyst forecasts of 9.4%) sent Chinese stocks down 3.3% on new speculation of further monetary restraint there.  Stocks also fell by 2.3% in Indonesia, 1.7% in Hong Kong, 1.3% in Pakistan, 1.1% in Singapore, 1.2% in Thailand, 1.1% in Australia and 0.7% in Taiwan.  In European trading, the British Ftse has slumped 1.5%, and the German Dax and Paris Cac show losses so far of 0.8% and 0.5%.

The yield on 10-year JGBs fell by six basis points, while those on comparable sovereign German and British debt went up one and two basis points.

Oil and gold prices fell 0.5% to $90.41 per barrel and $1363.20 per troy ounce.

Here’s a rundown of the released Chinese data:

  • Real GDP in calendar 2010 advanced 10.3%, beating the 9.1% increase in 2009.
  • CPI inflation settled back to an as-expected 4.6% in December from 5.1% in November.  That was still above October’s 4.4% and compares unfavorably with 1.9% in the previous year to December 2009.  Food prices were 9.6% greater than a year earlier.
  • Producer price inflation last month of 5.9% was just two-tenths less than in November and surpassed forecasts of 5.6%.  The PPI had risen 1.7% in the year to December 2009.
  • Retail sales went up 19.1% on year, accelerating from 18.7% in November and surpassing expectations.
  • Industrial production grew 13.5%, similar to expectations and to on-year advances of 13.3% in November, 13.1% in October and 13.3% in September.
  • Urban fixed asset investment rose 24.5% last year, a shade less than an on-year gain of 24.9% in January-November.  In 2009, such climbed 30.5%.

Japan’s index of leading economic indicators was revised to 100.6 in November, 2.9 points higher than in October.  The revised coincident index showed a rise of 1.7 points to 102.4, while the index of lagging economic indicators slid a point to 87.8.  Expressed as a diffusion index, the leading index has been below the key 50 level since May but at 45.5 is edging closer to that threshold.

Convenience store sales in Japan were 3.3% greater in December than a year earlier.  Stock and bond transactions generated a JPY 397 billion outflow last week after a net outflow of JPY 591 billion in the previous week.

Consumer prices in New Zealand were lifted sharply by a 2.5-percentage point increase in the goods and services tax to 15%.  The CPI jumped 2.3% on quarter in 4Q, most since 3Q89, and by 4.0% on year, up from 1.5% in the year to 3Q and the most in nine quarters.  A gauge of consumer price inflation expectations in Australia accelerated sharply to 4.6% in January from 2.8% in December.

CPI inflation in Hong Kong rose to 3.1% in December from 2.9% in November.  Core inflation firmed two-tenths to 2.8%.  Taiwanese export orders advanced 3.0% on month and 15.3% on year in December, surpassing expectations of a 12.3% twelve-month rate of rise.

From Britain came word that the CBI that the improvement in the industrial trends survey index to minus 3 in December from minus 15 in November was reversed this month as the index printed at minus 16.  Analysts were anticipating a reading of minus one.

The ZEW expectations index of investor sentiment toward Switzerland worsened to minus 18.4 in January from minus 12.5 in December but remained above November’s reading of minus 30.9.  The “current situation” component continued to improve, rising to 71.1 from 62.5 in December and 50.0 in November.

German producer price inflation ended 2010 at 5.3% after a greater-than-expected 0.7% on-month advance in December.  PPI inflation was at 4.4% in December and averaged 1.6% in 2010 as a whole after minus 4.2% in 2009 and plus 5.5% in 2008.

Italian industrial orders unexpectedly sank 4.3% in November, trimming the 12-month increase to 9.6%.  That was well below the expected on-year rise of 14.8%.  Industrial turnover was 12.1% greater than a year earlier.

The Netherlands had a 5.1% jobless rate last quarter and a reading of minus eight for consumer confidence in January.  Danish consumer sentiment improved more sharply than anticipated to 3.3 in January from minus 0.7 in December.  The Greek current account deficit widened 9.4% on month to EUR 2.57 billion in November.

South African wholesale turnover jumped 3.9% on month and by 8.1% on year in November.  Sales in January-November show an on-year rise of 1.9%.

Late Wednesday, the Monetary Policy Committee, COPOM, in Brazil raised its key Selic interest rate by 50 basis points to 11.25%.  There has now been a cumulative increase of 250 basis points since April, which reverses half of a 500-bp reduction administered between January and July of 2009.

Central bank rate decisions will be delivered today in Turkey and South Africa, where the key rates stand at 6.5% and 5.5%.  Neither is thought likely to get changed.

Scheduled U.S. data today include existing home sales, the Philly Fed manufacturing index, the index of leading economic indicators, and weekly figures for energy inventories and jobless insurance claims.  Canada will be reporting wholesale sales and its index of leading economic indicators.

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

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