New Developments Abroad: Stocks Take Another Tumble

July 29, 2008

Equities fell in Asia and Europe.  Japan -1.5%. China -1.9%. Taiwan -3.0%. India -3.9%. Korea -2.0%. Thailand -1.3%. Hong Kong -1.9%. Germany -1.2%. France -1.5%. Britain -0.5%. Australian -1.5%.

The dollar firmed 0.3% against the pound, 0.2% relative to the yen and 0.1% versus the euro, C-dollar and Swissy.  Largest rise (0.6%) posted against the kiwi.

The ten-year JGB yield fell 4.5 basis points to 1.52%.  Little change in U.S. and European 10-year bond yields.

Oil climbed 0.6% to $125.43 per barrel. Gold prices are steady at $938.20/ounce.

The Bank of Japan Deputy Governor warned of a possible shallow recession after the release of data showing a 4.1% jobless rate, highest since September 2006, the lowest ratio of job offers to seekers since February 2005, on-year declines in June of real disposable incomes of 4.3% , real household spending of 1.8%, and large-store retail sales of 3.9% including an 11.8% plunge in clothing sales.  A 0.3% on-year increase in total retail sales reflected higher fuel prices; adjusted for price increases, retail sales actually fell by 3.3% y/y.

The Reserve Bank of India raised its repo rate to 9.0% from 8.5%.  This was the third advance since June.

Business sentiment in Australia fell from +13 in 1Q08 to +6 in 2Q08, worst since 2001.

New dwelling approvals plunged 20.1% y/y in New Zealand to a 22-year low.

A survey by the Norges Bank confirmed that commercial banks in Norway have tightened their lending standards.

Four more states in Germany reported CPI data for July, two showing a 0.6% rise from June and two recording a monthly gain of 0.5%.  The figures point to higher on-year inflation.

Bank of England data showed record low mortgage approvals of 36K in June and the lowest total net lending since February 1999.  Total British personal borrowing recorded the smallest on-month increase since April 1993 and the lowest on-year climb since October 1997.

According to the CBI monthly retailer survey, the British retail sector in July plunged to its weakest point since 1983, with a score of -36 after -9 in June.  Retailers, who had anticipated a -7 reading, now look for a score of -32 in August.

French consumer confidence plumbed to a seventh consecutive record low of -48 in July versus -46 in June and -37 in March.  French housing starts tumbled 28.2% between 1H07 and 1H08.  French producer prices rose 0.7% m/m and 7.3% y/y in June, propelled by a 2.1% m/m rise in energy costs (22.0% y/y).

An INSEE study found greater weakness in industrial demand in the third quarter.

South Korean business sentiment slid to 88.9 in August, a 43-month low, from 90.9 in June and 96.1 in July.  Neither Europe nor Japan nor emerging Asia has been immune to the economic weakness that began in the United States.  Whereas U.S. macroeconomic policy was loosened at the first whiff of trouble, policies in other countries continue to be tightened to address higher inflation.  OECD CPI inflation rose from 3.9% y/y in May to 4.4% in June, most since March 2000. 

Italian hourly wages rose 3.6% y/y in June, most since January 2005. Industrial output in Italy fell 0.9% m/m in July.  Orders tumbled 2.3%.

Dutch consumer sentiment worsened to -31 in July from a -19 reading in June.  Swedish retail sales rose 1.8% m/m and 3.3% y/y in June.


Comments are closed.