Asian Stocks Fall as China Reopens

February 9, 2011

The end of China’s week-long Lunar New Year celebration saw equities decline by 1.4% in Thailand and Hong Kong, 1.2% in Indonesia, China, Taiwan and South Korea, and 1.0% in India.  The Chinese yuan, which had risen 0.6% during the break, reversed the move and returned to 6.594 per dollar.

In other trading, the dollar rose 0.4% against the New Zealand and Australian dollars, 0.3% against the yen and 0.1% versus sterling while dipping 0.1% against the euro and Canadian dollar.  The British Ftse, Paris Cac and German Dax show modest declines so far of 0.3%, 0.2% and 0.1%. 

Ten-year sovereign debt yields firmed three, two, and one basis points in Germany, Japan and Britain.

Gold is holding onto yesterday’s gains at $1363.20 per barrel, and oil prices have firmed 0.2% to $87.13 per barrel.

Today’s main event will be Fed Chairman Bernanke’s testimony on the economic outlook and monetary and fiscal policy before the House Committee on the Budget.  Now controlled by the Republicans, this will not be a friendly atmosphere for Bernanke, who’s become one of many objects of the Tea Party’s contempt.  Investors continue to debate worldwide whether higher commodity prices will spread to general inflation or if abundant economic slack will keep the latter at subdued levels as Bernanke believes.

Britain’s merchandise trade deficit soared to GBP 9.247 billion in December from GBP 8.460 billion in November and an average shortfall of GBP 7.950 billion over the first ten months of 2010.  The goods and services deficit widened 22.4% on month to GBP 4.831 billion, exceeding expectations of GBP 4.1 billion.  The  goods trade deficit in 2010 was 18% larger than in 2009.  Amid massive fiscal restraint this year, Britain will be more dependent than ever on an improving external balance.  The boost from previous sterling depreciation has so far not been as much as hoped.

British shop prices were 2.5% higher in January than a year earlier according to data released by the British Retail Consortium.  That’s up from a 12-month 2.1% rise booked in December.

Germany recorded a EUR 17.6 billion current account surplus in December versus EUR 12.9 billion in November and EUR 19.2 billion in December 2009.  The current account surplus in 2010 was EUR 10 billion larger than the year before.  A seasonally adjusted merchandise trade surplus of EUR 13.9 billion in December was EUR 2 billion bigger than the November surplus, while the fourth-quarter surplus of EUR 13.4 billion per month was the same as that posted in the third quarter.  Exports advanced 0.5% for a second consecutive monthly increase.

Japanese consumer confidence rebounded to 41.1 in January from 40.1 in December and a quarterly average reading of 40.5 in the fourth quarter.

Australian consumer sentiment, which had dived 5.7% in January in response to huge flooding, only recovered 1.9% in February.

New Zealand credit card spending rose 2.4% last month, more than reversing December’s 1.4% drop.

On-year Taiwanese consumer price inflation of 1.1% in January was lower than forecast.

Hong Kong’s composite purchasing managers index rose to 55.2 in January from 55.0 in December, 53.5 in November, 53.0 in October and 52.8 in September.

The HSBC service-sector PMI reading for China dipped to 52.0 in January from 53.1 in December and 56.4 in November, suggesting that monetary austerity is crimping that economy perhaps more than generally appreciated.  The associated composite PMI printed at 54.6 in January, down from 55.2 in December and a six-month high of 57.4 last October.

Hungary had a trade surplus of EUR 5.55 billion in 2010 after a surplus of EUR 3.74 billion in 2009.  Romania’s trade deficit amounted to EUR 9.46 billion last year versus a shortfall of EUR 9.87 billion in 2009.

Greek industrial production fell 1.0% in December and was 5.2% less than a year earlier.  Industrial production posted a 5.7% decline in 2010 as a whole and was 14.6% lower than the 2008 output level.

DIHK, the German Chamber of Commerce, is projecting that German GDP will expand 3.0% this year.  GDP advanced 3.6% in 2010 after dropping 4.7% in 2009.

Czech consumer price inflation decelerated to 1.7% in January from a 12-month 2.3% rate of increase in December. 

U.S. mortgage applications fell 5.5% last week after jumping 11.3% in the previous week.  U.S. weekly oil inventory data will also be released today.  Besides the Bernanke testimony, the Fed’s Lockhart also has a public speaking engagement.

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

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