Share Prices Sinking on a Thursday Crammed with New Information

March 29, 2012

Equities fell 1.3% in China and Hong Kong, 1.5% in Vietnam, 2.1% in Taiwan, 0.9% in South Korea, 0.7% in Japan and 0.4% in India.  The German Dax, Paris Cac and British Ftse have already lost 1.1%, 1.0%, and 0.9% today.

Continuing the motif of greater risk aversion, the yen has advanced 0.8% against a dollar that otherwise shows gains of 0.4% versus the Aussie dollar, 0.3% against the euro and Swissie, 0.2% vis-a-vis the kiwi and loonie and 0.1% against sterling.

Oil and gold prices eased 0.4% to $104.97 per barrel and 0.2% to $1657.90 per ounce.

The 10-year German bund and British gilt yields edged a basis point lower, while the JGB is steady at 1.00%.

The National Bank of Romania implemented a fourth straight cut of 25 basis points, reducing its benchmark interest rate to 5.25%. Central bank rate decisions today are awaited in South Africa and the Czech Republic.

The Canadian budget will be presented today as well.

Eurozone confidence indices and retail purchasing manager survey results for March were released.

  • Euroland’s economic sentiment index printed down a tenth of a point at 94.4.  Such bottomed at 92.8 in December but remains far below a reading of 105.6 last April.  Industrial sentiment slid 1.5 points to minus 7.2.  Construction sentiment fell 1.9 points to negative 26.5.  Sentiment in services rose 0.6 to minus 0.3, while consumer confidence went up 1.2 points to a reading of minus 19.1.  Retail sentiment climbed to minus 12.2 from minus 14.0.
  • While higher than in February and 6.2 points better than January’s 35-month low, Euroland’s retail PMI score of 49.1 in March was the 10th sub-50 outcome in the past 11 months.  Sub-50 readings connote a contraction of activity.  Although Germany (52.9) continues to experience expanding retail activity, the March reading was down from a 13-month peak of 55.3 in February.  Also, the French unchanged 50.2 reading implies stagnation in retail, while Italy’s score of 42.4, although at a 6-month high, indicates a continuing sharp erosion of retail business.
  • Euroland’s business climate index worsened to negative 0.30 in March from minus 0.16 in February and a post-recession high of 1.44 in February 2011.
  • The Austrian manufacturing PMI fell to 51.5 in March from 52.0 in February.

German labor statistics beat expectations.  Unemployment in March fell 18K in seasonally adjusted terms, nearly twice what analysts projected, and by 82K in non-adjusted terms.  The 6.7% jobless rate was a two-decade low and down from 6.8% in February.  Employment in January-February was 1.5% greater than a year earlier, up from on-year increases of 1.4% in 4Q11 and 1.3% in 3Q11.  Germany’s large unions are seeking a 6.5% wage increase in the upcoming contract talks.

The British Nationwide house price index fell a full percent on month in March, the largest fall in two years, and by 0.9% from March 2011.  Analysts were projecting a monthly uptick of 0.2% and a positive 12-month change for a seventh straight time.  The U.K. index of services in December-February was 0.3% higher than in the prior 3-month period.

British M4 fell by 3.4% in the year to February after recording a 1.8% drop in the year to January.  Mortgage approvals totaling 48.99 thousand last month constituted an 8-month low.  Net mortgage lending rose GBP 1.2 billion, GBP 0.3 billion less than projected, and consumer credit increased GBP 400 million.

Swedish retail sales rose 1.2% in February following a 0.2% uptick the month before.  Sales were 3.4% greater than in February 2011, easily beating analyst expectations.

Spanish CPI inflation slowed to 1.8% in March from 2.0% in February.   Belgian consumer price inflation eased to 3.4% from 3.7% in February.  Greek producer price inflation dropped to 6.8% in February from 7.5% in January.  Icelandic producer prices went up 1.9% in February, a month that tends to produce big rises, but eased to a 4.9% 12-month pace from 5.7% in January.  That was the lowest 12-month increase in a year.

Hungarian unemployment rose more than expected to 11.6% in December-February.  Norwegian unemployment of 2.6% in March met expectations.  Portuguese consumer confidence improved somewhat in March but remained at extremely depressed levels.  Danish Unemployment ticked to to 6.2% in February from 6.1% the month before.

EU leaders begin meeting in Copenhagen tomorrow to buttress the war chest that will defend troubled debtor members.  The hope is that they will agree to a EUR 940 billion stockpile of resources, but there remains some resistance.  S&P said yet another Greek restructuring may be necessary in the future.

Japanese large-store sales in February surpassed the year-earlier level by 0.2%.  Total retail sales rose 2.0% on month, twice as much as predicted, and by 3.5% on year following a 1.8% increase in the year to January.  Stock and bond transactions last week generated a JPY 1.485 trillion outflow.  A new fiscal year in Japan begins next week. Bank of Japan Governor Shirakawa warned that fiscal strains might lift long-term interest rates.

New Zealand business confidence continued to improve in March, reaching a 6-month high of 33.8 after a reading of 28.0 in February.  The index of business activity went up 7.6 points to 38.8.

Retail sales in Hong Kong were 10.1% greater than a year earlier in volume terms last month.  Analysts were expecting a considerably larger on-year gain.  Producer prices in Singapore were 4.8% higher than a year earlier in February.  South African PPI inflation slowed to 8.3% from 8.9% in January.  South Korea’s current account swung to a surplus of USD 639 million last month from a USD 969 million deficit in January. 

The OECD issued its interim assessment of G7 growth prospects, forecasting that GDP will climb at a 1.9% pace on average in those seven economies as a whole during the first half of 2012 but with wide deviation between Europe and North America.  U.S. GDP is expected to run a tad under 3.0%, and Canada will expand at a 2.5% rate.  Germany, France and Italy are collectively expected to slide 0.4% this quarter and recover only 0.9% annualized in 2Q12.  Britain will also stagnate, with GDP dropping 0.4% in 1Q and rebounding 0.5% in 2Q.

Scheduled U.S. data releases include GDP, the Kansas City Fed manufacturing index, and weekly jobless insurance claims. Canada reports producer prices and raw material prices.  Bernanke gives another lecture to students at G.W. University, and Lacker, Plosser, and Lockhart are other Fed officials with speaking engagements today.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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