New Overnight Developments Abroad: Another Monday Plunge in Stocks

March 2, 2009

Equities tumbled 3.8% in Japan, 3.9% in Hong Kong, 4.2% in South Korea, 3.5% in Thailand, 3.9% in Singapore, 2.8% in Australia and 2.3% in Indonesia. In Europe, the Ftse, Cac40 and Dax have lost 4.4%, 3.9%, and 3.3%.

Currency, bond, and commodity movements also reflect another surge in risk aversion. Latest scare is speculation that U.S. banks will be nationalized. The dollar eased 0.5% against the yen but is up by 1.4% against the kiwi, 1.3% versus sterling, 0.7% against the Canadian and Ozzie dollars, 0.5% against the euro and 0.4% against the Swiss franc.  Ten-year gilt and bund yields fell 9 basis points, while 10-year JGB yields firmed 3.5 basis points to 1.305%.

Oil dropped 4.6% to $42.70 per barrel. Gold firmed 0.8% to $950..40 per ounce.

Plenty of factory PMI scores for February have been released.

  • The euro area index was 33.5, a tenth lower than the flash indication and down from 34.4 in January.  There were record low readings for the overall PMI and its orders, jobs and price components.
  • The German PMI was 32.1 after 32.0 in January. The French PMI slumped to a record low of 34.8 from 37.9.  Spain’s index (31.8 after 31.5) and Italy’s score (35.0 after 34.9) ticked marginally higher but signaled continuing deep contractions. Ireland’s index tumbled to 33.2 from 38.9.
  • The Danish index fell to 26.5 from 29.9.  The Swiss index dropped to 32.6 from 35.0. Each of these readings was a record low.
  • Sweden’s index edged up to 33.9 from 33.8.  The Czech index improved to 32.6 from 31.5.  Poland’s reading was 40.8 after 40.3.
  • South Africa had a record low reading of 39.2 after 40.7. India experienced a fourth straight sub-50 reading, 47.0 after 46.7 in January.
  • Australia’s PMI suffered one of the biggest monthly drops, falling to 31.7 from 36.6.
  • Britain’s index fell 1.1 points to 34.7.  The jobs component (33.3) was a a series low.  So was the output component.

Australian gross profits slumped 6.5% last quarter.  A much worse-than-anticipated 1.9% decline in business inventories points to a clearly negative GDP growth rate last quarter and sets the stage for another Reserve Bank easing on Wednesday (local time). Not all Australian data released today were weak, however.  Expected inflation accelerated to 3.1% in February from 2.7% in January.  Home sales recovered 8.3% in January.

Japanese non-mini motor vehicles sales fell 32.4% in February from a year earlier. Total motor vehicle sales dropped 24.3%.

South Korean exports and imports fell by 17.1% and 30.9% in the year to February.  The trade balance swung to a surplus of $3.3 bn from a deficit of $3.4 bn.  The won weakened on the news to 1594.9, lowest since March 1998, and it required intervention support.  Industrial production rebounded 1.3% in January ,but capacity usage sank to 61.5%, lowest since September 1980.

Indonesian exports and imports plummeted by 36.1% and 34% in the year to January.  These drops exceeded expectations.

India’s exports and imports suffered 12-month losses of 15.9% and 18.2% in January.

Polish real GDP slowed to 2.9% on year last quarter from 4.8% in 3Q, 5.8% in 2Q and 6.7% in 2007.

Euroland’s flash CPI in February ticked up to a 1.2% on-year pace from 1.1%, but a downtrend still seems to be intact.

Norwegian retail sales (+0.6%) and credit growth of 9.7% in the year to January were better than assumed, but the Norges Bank is still seen likely to cut its rate later this month.

Italy’s real GDP fell 1.0% in calendar 2008, with drops of 0.9% in consumption, 3.7% in exports and 3.0% in investment.  Italian consumer prices firmed 0.2% m/m and 1.5% y/y in February.

The Hometrack index of British house prices fell 0.8% and by 10.0% on year in February, a series low. Gross mortgage lending fell 62% in the year to January according to the Building Societies Association.  Bank of England data for January put mortgage approvals unchanged but extremely low at 31K, net mortgage loans down 90% y/y, and consumer credit 61% below its January 2008 level.

Australia’s commodity price index rose 2.8% in Aussie dollar terms and was just 3.5% below the peak month last October.

Canada releases 4Q and December GDP data at 13:30 GMT.  The U.S. releases construction spending and factory PMI data today.  The New York area is being hit by its biggest snowstorm in years.

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


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