Failed Greek Debt Negotiations Hammer Stocks in Asia and Europe

June 15, 2015

A lack of progress in Greek debt talks over the weekend maintained heavy selling pressure on equities, which have fallen 4.5% in Greece, 1.6% in Germany and Spain, 2.1% in Italy, 0.9% in Switzerland, 1.2% in France and 0.7% in Britain.  Around the Pacific Rim, stocks fell 2.0% in Hong Kong and Indonesia, 2.1% in China, 0.9% in Singapore, 0.5% in Taiwan and South Korea, 0.6% in New Zealand, 0.1% in Australia but not at all in Japan.

The Bank of Russia’s key interest rate was slashed by a further 100 basis points to 11.5%, bringing this year’s cumulative decline to 550 basis points, over half of the incremental increase engineered in the final two months of 2014.  Diminishing inflation risks, the ruble’s rebound, and the possibility of a considerable cooling of economic activity were cited.

The government of Japan issued its monthly economic assessment, retaining the view of a moderate economic recovery but upgrading the assessment of business investment.

Reserve Bank of Australia Assistant Governor Chris Kent said the RBA’s monetary accommodation is supporting demand in that economy.

New Zealand’s performance of services index climbed 1.5 points to a 7-month high of 58.0 from a 5-month low reading in April of 56.5.

The dollar appreciated overnight by 0.6% against the Swiss franc, 0.5% versus sterling, 0.4% vis-a-vis the loonie and euro, 0.2% relative to the yen, and 0.1% against the kiwi.  The Chinese yuan and Aussie dollar held steady.

West Texas Intermediate crude oil prices sank 1.2% to $59.24 per barrel.  Comex gold traded 0.4% lower to $1,174.60 per troy ounce.

The ten-year German bund yield fell four basis points to 0.79%, and the 10-year British gilt firmed two bps to 2.01%.  The Japanese JGB stayed level, and futures indicate a lower U.S. Treasury yield at the open.

The eurozone’s April trade surplus of EUR 24.3 billion was the largest seasonally adjusted surplus in at least a year.  Exports rose 1.2% on month, while imports fell 1.6%.  The unadjusted EUR 77.1 billion surplus in the first four months of 2015 surpassed its year-earlier total by 69.5%, as exports grew 6.0% versus import on-year growth of only 1.0%.

The Swiss PPI/import price index dropped 0.8% on month in April versus expectations of a tiny uptick and was 6.0% lower than a year earlier.  Domestic producer prices also fell 0.8% on month and declined 4.3% on year.  Swiss retail sales volume recorded a 2.1% monthly increase in April and was 1.6% above its year-earlier level.

Italian consumer prices posted a rise of 0.1% in May versus both April and May 2014.  Finnish consumer prices dipped 0.1% from April and were unchanged in year-on-year terms.  

Dutch retail sales in April in on-year terms accelerated to a rise of 2.6%.  Singapore retail sales growth accelerated more than twofold to 5.0% in April. Finnish retail sales fell 2.9% on year in value terms and 1.9% on a volume basis in April.  There’s been a 1.0% on-year drop over the first four months of 2015.

Wholesale prices in India posted a smaller 2.36% on-year decline in May than forecast or than seen in April.  Danish producer prices fell 4.1% in the year to May.

Turkey’s unemployment rate slipped to 10.0% last month from 10.2% in April, while Sweden’s seasonally adjusted jobless rate stayed at 7.8%.

Ireland’s trade surplus widened 38.5% to EUR 4.57 billion in April.  The Czech current account surplus fell by 25% to CZK 20.55 billion in April.  The Dutch trade surplus of EUR 5.05 billion in April was 7.7% smaller than in the prior month.

A big day lies ahead on the U.S. data release front involving industrial production, capacity utilization, the NAHB housing market index, and the Empire State manufacturing index.  Canada’s monthly survey of manufacturing sales, orders and inventories also arrives today.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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