Tough Week for Markets Ending on Tenuous Upbeat

June 14, 2013

Stocks partly recovered in the Pacific Rim, rising 1.9% in Japan, 2.0% in Australia, 4.4% in Thailand, 3.3% in Indonesia, 2.1% in the Philippines, 1.1% in Malaysia, 1.9% in India, 1.0% in Singapore, 0.7% in China, and 0.4% in New Zealand, Hong Kong and South Korea.  In Europe, however, gains are muted at 0.4% in Germany, 0.2% in France and 0.1% in Britain and Spain.  Italy’s market has slid a further 0.3%.

Ten-year sovereign debt yields dropped four basis points in Britain and Japan and by three bps in Germany.

The yen continues to trade firmly and is 0.3% stronger than Thursday’s close against the dollar, which otherwise shows overnight gains of 0.4% versus sterling, 0.3% against the euro, Swissie and Aussie dollar, as well as 0.2% relative to the loonie and kiwi.  The greenback edged down 0.1% against the yuan.

Gold and oil prices edged up 0.1% and 0.3% to $1378.80 per ounce and $97.00 per barrel.

Japan’s cabinet endorsed Prime Ministers third arrow of stimulus measures to promote economic growth.

Minutes from the Bank of Japan May 21-22 Policy Board meeting declared that the economy is starting to pick up but also revealed doubts about achieving 2% inflation within two years.

ECB Pdt Draghi defended the legality of the Outright Monetary Transactions facility.

An article in the Wall Street Journal predicted the Fed would soon signal that an end to quantitative easing is not near.

Investors were heartened by yesterday’s better-than-forecast U.S. retail sales and jobless insurance claims data.  That optimism could become unhinged, however, if today’s large batch of data disappoint.  Scheduled U.S. releases today feature industrial production, capacity usage, producer prices, the U. Michigan/Reuters consumer sentiment index, the Treasury TIC capital flow figures, and the quarterly current account.

Late yesterday came word of decisions to leave unchanged central bank interest rates in Chile at 5.0% and Peru at 4.25%.  Both results had been expected.

Eurostat, the statistical agency of the euro area, released final consumer prices figures for May and first-quarter employment.

  • The CPI edged up 0.1% on month and accelerated to a 12-month 1.4% in crease from 1.2% in April.  Inflation was still below March’s 1.7% pace and 2.4% in the year to May 2012.  Core consumer prices rose 0.2% on month and 1.2% on year, while energy dropped 1.2% from April and by 0.2% on year.  Some very large decelerations of on-year inflation occurred between May 2012 and May 2013, for instance to 0.9% from 2.3% in France, 0.9% from 2.7% in Portugal, 0.2% from 3.7% in Cyprus, 1.1% from 2.6% in Belgium, 1.3% from 3.5% in Italy, 1.6% from 2.2% in Germany, and 2.5% from 3.1% in Finland.
  • Employment fell by 0.5% between 4Q12 and 1Q13, greater than the 0.3% previous quarterly decline.  Jobs were 1.0% lower than a year earlier and down by 1.8% in the two years between 1Q11 and 1Q13.

New Zealand food prices were 0.1% softer in May than a year before, the same 12-month dip as in April.  The New Zealand business purchasing managers index rose four whole points to 59.2 in May.

According to the Conference Board, Britain’s leading and coincident indices of economic indicators respectively rose 0.2% and 0.0% in May.  Both results were not as good as those in the prior month. 

British construction output suffered a setback in April, dropping for the first time in three months (6.5% from March), but such recorded the smallest on-year decline (1.1%) in a year and a half.

The Dutch trade surplus narrowed 30% to EUR 3.5 billion in April.  The Irish trade surplus widened by a marginal 4.5% to EUR 3.96 billion in April.   Finnish CPI inflation ticked up to 1.6% in May from 1.5% in April.  Greek import prices fell 1.4% on month and by 5.2% on year in April.  Austrian CPI inflation rose to 2.3% from 2.0% in April.

Retail sales in Singapore rebounded 5.3% in April, fully unwinding March’s drop and exceeding expectations of a 2% recovery.  Hong Kong industrial production rose 0.5% in the year to 1Q13, while producer prices increased in that span by 0.6%.

Indian wholesale price inflation continued to recede last month, reaching a 4.7% 12-month pace, lowest in three years, after 4.9% in April.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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