Mixed European Data… U.S. Market Closed

July 4, 2012

There will be no U.S. market trading today because of the Independence Day holiday.

Retail sales in the euro area rose 0.6% in May following April’s 1.4% decline.  Sales volume in April-May together was 1.0% below the first-quarter average.  Sales in May, although stronger than assumed, were down 1.7% from a year earlier.

Euroland’s composite purchasing managers index printed at 46.4 in June after 46.0 in May.  Such averaged 46.4 last quarter, down from 49.5 in the first quarter, suggesting the worst calendar quarter of GDP growth in three years.  The service-sector PMI was at 47.1, a three-month high but 2.4 points below the 1Q mean.

The German composite PMI index slid 0.4 points to 48.1, with a 1.9-point drop in services to a score of 49.9.  German GDP probably declined modestly in 2Q.

The French composite and service-sector PMIs in June were 47.3 and 47.9.  Despite improvement from May, French GDP likely contracted about 0.5% last quarter.

Italy recorded a composite PMI score of 43.3, a 2-month low, and a service-sector PMI score of 43.1, which was a 3-month high.  Italian GDP seems to have fallen about 1% in the quarter.

Spain composite PMI was even worse than Italy’s reading at 42.0.  The services PMI (43.4) has been lower than the 50 no-change level for the past year.

Ireland’s composite PMI (51.4) was the highest reading since March.  The services PMI in June (49.7) was 0.8 points better than in May but 2.5 points lower than in April.

The British purchasing managers index for services dropped two whole points to a 51.3 in June, lowest since October.  An average second-quarter reading of 52.6 points to modestly positive GDP expansion last quarter after back-to-back contractions in 4Q11 and 1Q12.

The dollar is unchanged overnight against the yen, loonie, and Aussie dollar.  The U.S. dollar has risen 0.3% relative to the euro and Swissie, 0.2% versus the kiwi, and 0.1% relative to sterling.

Share prices in selected markets of the Pacific Rim rose by 0.4% in Japan and South Korea, 1.1% in New Zealand and Australia, and 0.6% in Indonesia.  Prior gains in Europe have been trimmed, however.  The German Dax, Paris Cac and British Ftse have lost 0.6%, 0.7% and 0.2%.

Oil and gold prices are down 0.7% at $87.01 per barrel and 0.4% at $1615.40 per ounce.

10-year German bund and British gilt yields have dropped five and three basis points, respectively.

The Executive Board of the Swedish Riksbank reached a 4-2 split decision not to change the 1.5% repo rate but expressed mounting concern about the European debt crisis, asserting that if such weakens, a rate cut might become necessary.  The two dissenting votes by Ekholm and Svensson favored a cut of 50 basis points to 1.0%.  The majority endorsed a lower projected repo path in the future.

Poland’s central bank, Narodowy Bank, kept its key policy rate steady at 4.5%.

Japan’s composite PMI fell below the 50 level to 49.1 and has dropped 4.1 points over the past three months.  The services PMI was less than 50 for a second straight time.

Australia’s service-sector PMI rebounded to 48.8 from 43.5.  The Reserve Bank eased monetary policy last November, December, May and June by 125 basis points in all, but no further easing occurred after the July 2012 meeting.  Australian retail sales outperformed expectations in May with a monthly advance of 0.5% and a 3.3% increase from a year earlier.

Russian composite and service sector PMI scores of 52.6 and 53.2 were 1.9 and 1.7 points lower than the levels in May.

India’s composite PMI improved 0.4 points to 55.7, whereas the service sector index slid by that same amount to 53.4.  Inflation remains too elevated.

HSBC released its Chinese PMI scores.  The composite index dropped by 1.3 points to just 50.6, and the services index slumped 2.4 points to 52.3, which constitutes a 10-month low.  Input inflation continues to recede.

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

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