New Overnight Developments Abroad: Gustav Evoking Less Market Fear
September 1, 2008
Gustav did not intensify further as predicted. Oil fell 1.4% to $113.85/barrel. Stocks slumped sharply in Asia but much less so in Europe as storm news got better. Nikkei -1.8%. China -3.5%. Hong Kong -1.7%. South Korea -4.1%. Dax -0.1%. Cac40 unchanged. Ftse -0.5%. Gold dipped 0.2% to $833.30/ounce.
On this Labor Day holiday in both the United States and Canada, the U.S. dollar fell 0.9% against the yen and 0.2% against the Swiss franc, but it has firmed 1.2% against sterling, 0.7% against the Australian dollar, 0.6% versus the kiwi, 0.4% against the euro, and 0.2% against the Canadian dollar.
The yield on 10-year JGB’s rose 6.5 basis points to 1.47%.
Japanese motor vehicles sales sank 10.7% y/y in August. Weaker wage growth in July of 0.3% y/y in Japan points to softer consumer spending ahead.
Australian data mixed. Net exports to cut 2Q08 growth by 0.1 percentage point, and business inventories to trim another 0.1 percentage point. But profits soared 14.3% last quarter, five times greater than anticipated, and the current account deficit narrowed 35% from 1Q08 and 22% from 2Q07 to A$ 12.77 billion. Australia’s commodity price index in local currency terms shot up by a further 7.0% in August.
British mortgage approvals of 33K in July were their lowest since at least April 1993 and down over 60% y/y. Total net bank lending was its weakest since January 1997. The British factory-sector PMI firmed from 44.1 in July to 45.9 but remained below 50 for a fourth straight month. The price component rose to its highest since at least November 1999. M4 grew 11.2% in the year to July, down from 11.3% y/y in June.
Euroland’s manufacturing PMI of 47.6 was a tenth higher than its flash indication and 2/10ths above July’s 47.4 level. Such had been at 54.3 in August 2007.
Germany’s PMI reading of 49.7 was below 50 for the first time since August 2005 and down from 50.9 in July and 56.0 in August 2007. German retail sales disappointed yet again. Not including the automotive sector, such according to government data fell 1.5% m/m after a drop of 1.4% in June and were unchanged from July 2007. Including the automotive sector according to Bundesbank figures, such firmed 0.6% in July from June but were 3.2% lower than in July 2007.
The French factory PMI score was revised to 45.8 in August from a 45.1 flash indication and a 47.1 level in July. This was the third sub-50 reading in a row.
The Italian manufacturing PMI recovered to 47.1 in July from 45.3 in June but has been less than 50 for six straight months. Italian wages accelerated to a 12-month advance of 4.3% in July from 3.6% in June.
Spain’s PMI score in August improved more than expected to 42.4 — still a very depressed figure — from 39.2 in July. The Irish PMI was 44.9 after 43.4 in July. Hong Kong’s PMI slid to 48.5 from 49.4, and Russia’s fell to 49.4 (worst since November 2004) from 50.4. Sweden’s PMI worsened as well to 46.4 from 48.6. The Swiss index reached a 3-year low of 52.5 — still relatively good for Europe — after 54.1 in July and 64.2 in August 2007. The Greek PMI rose to 52.5 from 51.6.
Thai consumer price inflation decelerated much more sharply than expected to 6.4% in August from 9.2% in July. Likewise, South Korean consumer price inflation unexpectedly fell for the first time in a half-year to 5.6% in August from 5.9% in July. The central banks in Thailand and South Korea had each raised key interest rates in August to 3.75% and 7.5%, respectively.
Real Dutch consumer spending slid 0.9% in June. Danish retail sales volume dropped 4.1% in the year to July.
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