Gloom about Europe Overshadowing Everything Else
May 9, 2012
The view is gaining support that Greece will soon abandon the euro, triggering a chain reaction that will spread to Spain and beyond. IMF/EU/ECB aid monitors have scrapped plans to visit Greece this month pending clarification of that nation’s political situation. It seems Greece may hold new elections on June 17, the same day as the second round of French parliamentary elections.
Share prices tumbled 1.5% in Japan, 1.9% in China, 1.2% in Indonesia, 1.1% in Singapore, 0.9% in Australia, Taiwan, and South Korea, and 0.8% in Hong Kong.
The Paris Cac and British Ftse are down 0.5% and 0.4%. While the German Dax edged 0.1% higher, U.S. stock futures indicate a further drop at the open.
The dollar lost 0.2% against the yen and moved further below JPY 80.0. The euro fell 0.2% against the dollar and moved below $1.3000. The greenback also has climbed 0.4% aginst the Canadian and Australian dollars, 0.3% versus the kiwi, and 0.2% relative to the Swiss franc and sterling. The yuan is steady and weaker than 6.31 per dollar.
Gold slumped 1.4% and fell below $1600 to $1582.40 per ounce. Oil prices fell 0.7% to $96.34 per barrel.
The 10-year British gilt yield fell by three basis points, while the comparable German bund and Japanese JGB yields dipped one basis point. The 10-year Treasury yield has declined 48 basis points to 1.82% over the past five weeks, once again defying predictions by the fiscal doomsayers that the United States will follow Greece’s storyline if Draconian austerity isn’t imposed as soon as possible. So far, the closer parallel has been with Japan.
Japan’s leading and coincident economic indices climbed in March by 0.6 and 0.3 points to 96.6 and 96.5, respectively.
The British Retail Consortium reported weaker-than-expected sales in April that appear to have been distorted by wet weather and the later Easter. Same-store sales were 3.3% lower than a year earlier, their worst result in 13 months. Total sales fell 1.0% on year.
Trade data were reported by a number of countries.
- Germany’s seasonally adjusted trade surplus stayed at EUR 13.7 billion in March and averaged EUR 14.2 billion per month in 1Q compared to EUR 13.7 billion per month in the final quarter of 2011, EUR 13.2 billion per month in 2011, and EUR 12.9 billion per month in 2010. Exports and imports advanced by 0.9% and 1.2% from February. The non-seasonally adjusted trade surplus of EUR 17.4 billion in March was 7.4% smaller than a year before.
- Germany posted an unadjusted EUR 19.8 billion current account surplus in March versus EUR 11.7 billion in February and EUR 21.3 billion in March 2011. The 1Q12 current account surplus of EUR 40.9 billion was similar to the surplus of EUR 40.5 billion in 1Q11.
- French exports and imports dropped between February and March by 1.5% and 2.6%. The trade deficit accordingly narrowed 8.9% on month to EUR 5.721 billion and was also smaller than the March 2011 deficit of EUR 6.19 billion.
- Hungary’s EUR 608 million trade surplus in March was about 25% weaker than forecast because of a 3.6% on-year decline in exports.
- Romania’s first-quarter trade deficit of EUR 1.69 billion was 12% wider than a year earlier. Exports fell 0.4% on year.
- Malaysia recorded a MYR 10.45 billion trade surplus in March. The 1Q surplus was MYR 29.8 billion.
Greek CPI inflation ticked upward to 1.9% in April from 1.7% in March. The 1.5% harmonized CPI inflation rate was above expectations and reflected an 0.8% monthly advance.
German real manufacturing turnover edged up 0.2% in March and was only 0.7% stronger than a year earlier. The continuing softness of German consumption is impeding prospects for Europe to get past the current debt crisis.
A two-day Bank of England policy meeting began today. That central bank is not expected to expand quantitative easing. The current QE ceiling will be reached this month.
U.S. wholesale inventories data arrive today. Several Fed officials speak publicly: Pianalto, Kocherlakota, and Plosser. German Chancellor Merkel and Bundesbank President Weidman also will be making public comments.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.