Decent Data but Equities Fall Anyway

July 25, 2013

British GDP experienced the best quarter in nine, rising twice as fast in the second quarter (0.6%) as in 1Q and to 1.4%

above the level in 2Q12.  Britain’s services index in March-May was 0.8% higher than in December-February.

The German industrial business climate index of the IFO Institute improved another 0.3 points to 106.2, thanks to a 0.7 point rise in the current situation index.  Retail’s climb of 4.3 points provided the main lift in July.  The IFO services climate index printed at 18.2 after 11.7 in June, more than offsetting the 3.3-point drop in June.

Swedish consumer sentiment climbed 1.9 points to a reading of 100.3 in July.  Swedish producer prices wee 4.7% lower in June than a year earlier.

Spanish unemployment fell for the first quarter in two years, decreasing to 26.26% in 2Q from 27.16% in 1Q.

Italian consumer confidence rose 1.5 points to a 97.3 reading in July.  Analysts were anticipating marginal deterioration.

Belgian business sentiment rose 0.8 points to negative 12.0 in July.  Dutch business sentiment was also better than forecast.

South Korean GDP growth accelerated to a 2-year high of 1.1% in 2Q13 from 0.8% in the first quarter.  GDP was 2.3% higher than in the second quarter of 2012.

Japanese corporate service prices were 0.4% higher in June than a year earlier, accelerating from a 0.3% on-year rise in May.

U.S. durable goods orders jumped 4.2% in June on top of increases of 3.6% in April and 5.2% in May.

Although higher last week than in the week of July 13, U.S. jobless insurance claims of 343K remain below the 350K threshold, and continuing jobless claims edged below 3.0 million.

Stock market losses in the Pacific Rim amounted to 1.4% in India, 1.2% in Singapore, 1.1% in Japan, 0.9% in Indonesia, and 0.5% in China and New Zealand.

Stocks in Europe show losses so far of 1.2% in Germany, 0.6% in Britain and Spain, and 0.5% in France and Italy.  U.S. stocks fell at the open.

The dollar has fallen 1.2% relative to the kiwi, 0.5% against the yen, 0.3% versus the Swiss franc and 0.2% against the loonie and euro.  The yuan and Aussie dollar are steady.

Ten-year sovereign debt yields are up four and three basis points in the U.S. and Japan and by a single basis point in Germany and Britain.

The price of gold has firmed 0.2%, while oil is 0.1% softer.

Money and credit growth softened in the euro area last month.  M3 was only 2.3% higher than a year before and posted a 2.8% second quarter-over-2Q12 gain.  Both increases were less than forecast.  Lending to the private sector dropped by 1.6% on year, deepening from a 1.1% decline in the year to May.  Lending to firms fell 3.2% on year.

Japanese stock and bond transactions generated a JPY 648 billion net capital inflow in the week of July 20, swinging around from a JPY 618 billion outflow in the previous week.

South African PPI inflation accelerated to 5.9% in June from 4.9% in May, whereas Irish PPI inflation slowed to 0.4% from 1.9%.

There were two central bank decisions today, both expected.

  • The Reserve Bank of New Zealand retained a 2.5% Official Cash Rate as expected, but the statement predicted that inflation will trend upward back to target and hinted of higher interest rates after 2013.
  • Bangko Sentral ng Pilipinas kept the Filipino repo and reverse repo rates unchanged as expected at 5.5% and 3.5%, speaking of benign inflation and robust domestic demand-led growth.

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

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