Stocks Rose as Heavy Data Flow Continued

August 31, 2011

Share prices advanced by 3.3% in Singapore, 2.4% in Thailand, 2.0% in South Korea, 1.6% in Hong Kong, 1.2% in Taiwan, 1.0% in the Philippines, and 0.6% in Australia but were flat in Japan where weaker-than-expected industrial output data got released.  The German Dax, Paris Cac, and British Ftse have so far scored solid gains of 1.3%, 1.5%, and 0.9% overnight.

The dollar fell 1.5% against the Swiss franc but is unchanged against sterling, the Canadian and Australian dollars, the euro and the yuan.  The dollar also eased 0.3% against the yen and 0.2% relative to the kiwi.  An advisor to China’s central bank is recommending greater holdings of gold.

Oil prices fell 1.0% to $88.05 per barrel, while gold at $1829.60 per ounce is retaining yesterday’s big advance.

Ten-year German, British and Japanese sovereign debt yields each firmed a basis point.

Japanese industrial production rose 0.6% in July, only about half as much as forecast, and remained 2.8% lower than a year earlier.  Some market players wonder if the post-quake rebound is losing steam.  However, July orders were 5.2% above the 2Q average level, and survey indications suggest that orders in 3Q will exceed the 2Q level by 6.3%.

Japan’s manufacturing purchasing managers index edged down 0.2 points to 51.9 in August, and both export orders and production contracted in the latest month.  The 52.0 average reading in July-August compares to means of 49.2 in 2Q and 50.2 in 1Q.

Japanese housing starts in July exceeded the year-earlier level by 21.2%, four times greater than anticipated.  Starts has posted on-year growth of 0.3% in April, 6.4% in May and 5.8% in June.  Construction orders grew 5.7% in July, similar to June’s 6.0% in crease.  Labor cash earnings were 0.1% lower than in July 2010.

Asian emerging economies are showing some ill-effects from the difficulties of the advanced nations.

  • South Korean industrial production fell 0.4% on month in July, the first decline in three months, and rose 3.8% on year versus an expected 6.2% on-year rise.  That 3.8% increase was the smallest in ten months.
  • Fillipino GDP rose 0.6% last quarter, half of the expected growth rate, and was 3.4% greater than a year earlier.

British consumer confidence weakened to a four-month low of minus 31 on the GFK measure in August from negative 30 in July, minus 25 in June, and minus 21 in May.  Irish joblessness edged up a tenth to 14.4% in August.

The volume of German retail sales held unchanged in July and was 1.6% lower than a year earlier.  Their increase in June was revised to 4.5% from 6.3% reported last month.  German unemployment fell by 8K in August after a 10K decline in July.  The jobless rate held at 7.0% both seasonally adjusted and unadjusted.  Employment stagnated in July but was 1.3% higher than a year earlier.

Euro area unemployment in May and June was revised upward from 9.9% to 10.0% and remained at 10.0% in July.   That’s hardly lower than the 10.2% jobless rate in July 2010.  The preliminary CPI inflation rate in August is estimated to have been at 2.5%, the same as in July and 0.6 percentage points above the ECB target ceiling.

Norwegian retail sales volume fell by 0.9% on month and 1.3% on year in July.  These result were worse than forecast.  Danish real GDP advanced 1.0% last quarter and by 1.9% from 2Q10.  Sweden’s current account surplus narrowed 7% to SEK 61.3 billion in the second quarter. Hungarian producer prices firmed 0.3% on month but fell 1.0% on year in July.

Australian private credit grew 0.2% in July and retained a 2.7% 12-month rate of increase.  M3 was 8.9% higher than in July 2010 after posting an 8.7% increase in the year to June.  New Zealand M3 growth slowed to 6.3% in July from 7.3% in June, by contrast.  New Zealand business sentiment weakened for a fifth consecutive month to 34.4 in August from 47.6 in July, while the New Zealand activity index slid 0.4 to 43.3.

FOMC minutes released yesterday revealed a wide spectrum of preferences among Fed officials.  Some opposed the majority ruling of setting a conditional near-two year freeze on short-term rates, but others wanted more aggressive ease.

U.S. scheduled data releases today include factory orders, the ADP private employment estimate, mid-western purchasing manager indices, and weekly oil inventories.  Canada reports June and 2Q GDP.  Central bank interest rate announcements will be made in Brazil and Iceland.  Today marks the end of August.  Soon summer will be just a memory.  Obama presents a major address on September 5.  Presidential primaries lie just a few months away.

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

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