Rough Day Concludes Rough Week for Equities, Especially Tech Sector

April 11, 2014

Stocks in Europe have slumped so far by 1.8% in Germany and Switzerland, 1.7% in Spain, 1.4% in France and 1.2% in Britain and Italy.

Japan’s Nikkei closed down 2.4%  and below the 14,000 level.  Stocks also dropped by 1.0% in Australia, 0.8% in Hong Kong, 0.6% in south Korea and 0.5% in New Zealand and Taiwan.  A decline is indicated at the U.S. open.

The dollar is unchanged against the yen, Swiss franc and Chinese yuan.  Traders are on guard for possible Japanese intervention to prevent the yen from strengthening past 100/$.  The dollar has strengthened 0.4% versus the loonie, 0.3% relative to sterling, 0.2% vis-a-vis the Australian dollar and 0.1% against the euro and kiwi.  The Turkish lira extended its recent losses.

Gold ($1,310.10 per ounce) and oil ($103.28 per barrel) and more or less steady.

The ten-year British gilt and German bund yields have edged up two and one basis points.  As in the case yesterday for Greece, Ireland and Spain, Italy’s auction today of sovereign debt went quite well.

Minutes from the Bank of Japan’s March 10-11 Policy Board meeting revealed contentment with Japanese macroeconomic trends.  After that and the subsequent April meeting, Governor Kuroda went out of his way to dispel speculation that monetary stimulus would be augmented soon.

The Central Reserve Bank of Peru retained a 4.0% main interest rate.  Such had been cut from 4.25% to 4.0% in November 2013; that was the first reduction since August 2009.  Inflation is currently above the 1-3% target range but projected to settle back into that band.  Projected growth during the first half of this year is now believed likely to be somewhat softer than imagined previously. 

U.S. producer prices increased 0.5% in March and accelerated to a 12-month 1.4% increase, the highest on-year pace since last August.  Core inflation was also 1.4%.  Energy producer prices dropped 1.3% on year, while food went up 0.6%.

German consumer price inflation fell to 1.0% in March from 1.2% in February, 1.3% in January, 1.4% in December and 2.0% on average in 2012.  The 1.0% pace is the lower since August 2010.  Energy dropped 1.6% on year, while all other consumer prices were 1.4% higher over the last 12 reported months.

German wholesale prices stagnated in March and were 1.7% lower than a year earlier.  The average WPI decline in calendar 2013 was 0.6%.

Greek import prices went up 0.7% in February but remained 2.8% lower than a year earlier.

Japanese domestic corporate goods prices were unchanged between February and March, and their 1.7% 12-month increase was the lowest in nine months and down from a 2.6% on-year rate in November.  Export prices tumbled 2.7% on year, most since April 2013, while import prices recorded a 1.5% decline, most since June 2013.

Japanese M2 money growth slowed to an on-year 3.5% pace in March, a ten-month low, while broad liquidity expansion of 3.7% was at a 7-month low despite a year of aggressive quantitative easing intended to double the size of the monetary base.

Chinese consumer prices fell 0.5% on month in March and to a 10-month low in on-year terms of 2.4%.  PPI inflation, which has been less than zero since March 2012, fell by 2.3% in the year to March.  That’s the largest 12-month decline since July 2013.

Spanish consumer prices slipped 0.1% in the year to March.  Consumer prices in Hungary were just 0.1% higher in March than a year ago.

Food prices in New Zealand slid 0.3% on month in March but were 1.2% higher than in March 2013.

In India, factory output and industrial production recorded declines of 3.7% and 1.9% between February 2013 and February 2014.  India’s trade deficit in March of $10.5 billion was 29% wider than in February.  Analysts had anticipated some shrinkage in the shortfall.

The French current account deficit narrowed 62% on month to EUR 1.4 billion in February.  Analysts were predicting a larger gap.  The Czech current account deficit plunged 51.6% to CZK 6.34 billion in February.  Turkey’s current account deficit of $3.19 billion in February was 34.6% smaller than in January.  The Dutch trade surplus of EUR 4.47 billion in February showed slight growth from January.

British construction output fell 2.8% in February, more than reversing January’s increase and slicing the 12-month rate of increase in half to 2.8%.  According to the Conference Board, the U.K. indices of leading and coincident economic indicators respectively rose 0.4% and 0.3% in February.

The Reuters/U. Michigan measure of U.S. consumer confidence will be released later this morning.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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