New Developments Abroad

May 5, 2008

After a solid week, the dollar opened Monday with broad but mild losses. The kiwi and Aussie dollar, both up 0.5%, are the main beneficiaries. The dollar also dipped 0.3% against the euro and by 0.1% against the yen, Swissy, and C-dollar. Greenback’s only gain is 0.2% versus sterling.

Japan was closed today and will remain shut Tuesday for Golden Week holidays.

In Asia, China’s CSI 300 equity index rose 2.4%, while the South Korean Kospi gained 1.3%.

The British Ftse increased 2.1%, but the German Dax is unchanged. The Paris Cac is off 0.3%.

After Microsoft withdrew its hostile bid for Yahoo, Yahoo shares plunged 26%, while Microsoft’s stock price advanced 4.1%.

Sovereign bond yields are mostly higher.

Australian car sales fell 7.9% m/m in April. House prices increased 1.1% in 1Q08 compared to street expectations of a 0.1% uptick. A privately compiled inflation gauge showed consumer price inflation in Australia intensifying to a 5-year high of 4.3% y/y (+0.5% m/m) in April. That news reinforced expectations that the Reserve Bank of Australia will not cut its 7.25% cash rate. The central bank announces its decision at 04:30 GMT Tuesday. The central bank shifted policy to a neutral bias after raising rates by 25 bps each in August, November, February and March. A rate cut remains a long time away. First, officials must assess how the economy responds to the twin stimulants of a large tax cut and a big jump in the nation’s terms of trade (ratio of export prices to import prices).

Both Alan Greenspan and Warren Buffet claimed the United States is in recession, but Greenspan called such “pale,” meaning it’s not very intense.

New Zealand new car sales slid 12.8% m/m but advanced by a solid 13.6% y/y in April. Labor costs rose 0.7% from 4Q and 3.5% y/y during 1Q08.

Comments by the head of China’s central bank, Zhou, suggest that inflation eased in April, sending Chinese long- and short-term interest rates slightly lower.

Investor sentiment in Euroland fell in May to 3.5 from 4.1 in April. This was less than forecast and included the surprising finding that expectations about the U.S. economy had recovered to their best level since the outset of the global credit crunch.

Russian consumer prices rose 1.4% m/m in April on top of a 1.2% jump in March.

The Norwegian jobless rate was 1.6% in April, down from 2.0% a year earlier.

Italian real consumer spending sank 1.7% m/m in March. Spending on goods fell 3.4%.

Oil is trading up 0.4% at $116.77/bbl, while gold has recovered 1.2% to $868.30 per ounce.


Comments are closed.