New Overnight Developments Abroad: Stocks in Europe and Asia Much Lower

February 2, 2009

Share prices are down by 2.9% in Italy, 2.8% in France, 2.5% in Germany, 2.2% in Britain and 1.7% in Switzerland. Earlier, they closed off by 1.5% in Japan, 3.1% in Hong Kong, 3.8% in India, 2.4% in Singapore, 1.9% in Vietnam, 1.3% in South Korea and 1.2% in Australia.

Currency movements overnight also reflect high risk aversion. The dollar fell 1.0% against the yen but gained 2.4% against sterling, 1.7% relative to the kiwi, and 1.6% against the Australian dollar. The dollar also is up 0.6% against the Canadian dollar and 0.3% against the euro but is flat against the Swiss franc.

Sovereign bond yields slid in Europe. The 10-year JGB yield was steady at 1.30%. Oil softened 2.8% to $40.51/barrel. Gold dropped 1.4% to $914.60/ounce.

Euroland’s final PMI-manufacturing reading for January, 34.4, was 0.1% less than the Flash reading but above 34.5 in December. PMI scores rose to 36.1 in Italy from 35.5, to 37.9 in France from 34.9, to 38.8 in Ireland from 37.9, and to 31.5 in Spain from 28.5 but fell in Germany to 32.0 from 32.7. The overall picture is one of extreme weakness but perhaps no longer intensifying.

Britain’s manufacturing PMI similarly held far below 50 at 35.8 but edged upward from 34.9 in December and a record low of 34.5 in November.  Other reported PMI’s included the Czech Republic (31.5 after 32.7 in December), Sweden (33.8 versus 32.7), China (42.2 after 41.2), Australia (36.6 after 33.7), Poland (40.3 after 38.3), South Africa (40.7 after 40.1), and Switzerland (35.0 after 36.5).

House prices in Australia fell 0.8% last quarter and by 3.3% from 4Q07.  The Australian leading inflation gauge accelerated in January to 2.7% but continued to point to in-target inflation.

Japanese non-mini auto sales plunged 27.9% in the year to January.

12 zeros were lopped off the Zimbabwe dollar as an anti-inflation target. The country has hyper-inflation and the world’s weakest currency.

South Korean exports and imports plunged in the year to January by 32.8% and 32.1%. South Korean consumer prices edged up just 0.1% and fell to a 12-month rate of 3.7% from 4.1% in the year to December.

Italian wage inflation accelerated to a 12-month rate of 3.5% in December from 3.5% in November. Such went up 3.5% in 2008.

The Russian ruble fell further to 40.51 against its basket despite an interest rate increase to defend it.

Danish retail sales volumes fell 6.6% in the year to December.

Thai consumer prices fell 0.4% in the year to January, the first negative on-year change since late 1999.

Kazakhstan’s largest bank was nationalized.

The biggest industry to advertise at this year’s super bowl was the auto sector. The ads told viewers why they should buy this brand rather than some other but did not touch the main issue of why one should be buying a motor vehicle at all at this precarious time. Later today, the United States releases its manufacturing PMI, construction spending, and personal income and expenditures.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.


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