Mixed Markets Ahead of November Jobs Figures

December 2, 2011

Share prices fell 1.0% in China and posted a fourth consecutive weekly decline.  Equities elsewhere advanced 2.2% in India, 1.4% in Australia, 1.0% in Thailand, 0.5% in Japan and so far show strong gains in Europe of 1.4-1.6% in the Dax, Ftse, and Paris Cac.  European bank stocks were helped by reports that the European Bankers Association may not toughen stress test requirements.

The dollar is 0.4% firmer against the yen and has firmed 0.1% versus the Swissie, but the greenback has also fallen by 0.3% against the kiwi, yuan and loonie and by 0.2% relative to the euro and Australian dollar.  Dollar/sterling is unchanged.

While 10-year British gilts rose five basis points, peripheral European bond yields are lower, and the JGB is steady.

Oil and gold prices have risen by 0.7% and 0.9% to $100.85 per barrel and $1755.10 per ounce.

German Chancellor Merkel gave some hard line remarks, saying the one shouldn’t expect the euro debt crisis to be solved quickly, that governments must abide by fiscal rules or pay penalties, that the ECB mustn’t be a lender of last resort, and ruling out joint euro bond issues.  Other experts have predicted a euro breakup if a full fix is not in place by the time EU leaders meet a week from today.

Euroland producer prices rose only 0.1% in October and recorded a smaller 12-month 5.5% rate of increase.  Energy prices were 12.4% higher than a year ago, whereas all other producer prices collectively went up 3.2%. 

Spanish unemployment rose 1.4% in November, about half as much as in October.  It was the fourth straight increase, nevertheless.

Despite a 2.5% monthly advance in Swiss retail sales, such were 0.2% lower in October than a year earlier.

Britain’s construction purchasing managers index slid 0.6 points in November to a reading of 52.3.  Scores in 2011 have ranged from a high of 56.5 in February to a low of 50.1 in September.

Japan’s Ministry of Finance released disappointing results of its quarterly corporate survey.  Investment sank 2.7% on quarter and by 9.8% on year (fourth times more than anticipated).  Sales and profits rose by 1.9% and 3.6% last quarter but still showed on-year decreases of 1.9% and 8.5%.

Quantitative easing by the Bank of Japan was reflected in an accelerated 19.5% on-year rise of the monetary base in November, up from 17.0% in October and 15.8% in the third quarter.  Current account balances held at the central bank, which rise with increases in excess reserves, were 99.1% greater than in November 2010 versus a 78.4% increase in 3Q and a 27% climb in calendar 2010.  The Bank of Japan’s balance sheet at end-November amounted to JPY 143.2 trillion, up from JPY 133.0 trillion at end-October.

Romanian PPI inflation accelerated to 8.4% in October from 8.1% in September.  Hungary’s EUR 741 million trade surplus in September was 46% larger than a year earlier.  On-year export growth of 8.5% was slower than the 15% pace for January-September, reflecting a slowdown in global and regional demand.  Hungary’s central bank raised its key interest rate this past Tuesday by 50 basis points to 6.5% to protect an increasingly vulnerable forint from declining further.

Brazilian industrial production fell 0.6% in October and 2.2% on year.  The Bank of Mexico announces its latest monetary policy decision today and is not expected to change its key 4.5% interest rate.

JP Morgan’s global purchasing managers index for manufacturing printed a shade lower in November at 49.6, down from 49.9 in October, 49.8 in September, and 50.2 in August.

Canada reported weaker-than-forecast labor statistics at 12:00 GMT, ninety minutes before the U.S. labor force survey arrives.  The jobless rate, which had been projected to hold steady, ticked up a tenth percentage point to 7.4% from 7.3% in October and 7.1% in September.  Employment, which had been thought likely to rebound somewhat more than 20K following a 54K plunge in October instead dropped by another 18.6K.  The combined October-November drop in jobs has more than wiped out an encouraging increase of 60.9K rise in September.  While jobs remain 1.2% above the year-earlier level, they dropped at an annualized rate of 0.3% between August and November.

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

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