New Overnight Developments Abroad: HSBC Shares Plunged 24%

March 9, 2009

Stock prices are sharply lower, typical of other recent Mondays.  In Asia, equities fell 4.8% in Hong Kong led by a 24% tumble in HSBC, 3.7% in China and Singapore, 2.0% in Thailand, 2.1% in India, 1.5% in The Philippines, 1.6% in South Korea and 1.2% in Japan to a new 26-year low. The Paris Cac, British Ftse, and German Dax are trading 2.6%, 1.9%, and 1.8% lower. U.S. stock futures signal a decline at the open.

The dollar rose 1.1% against sterling, 0.7% versus the kiwi, 0.6% against the Australian dollar, 0.4% relative to the Canadian dollar, 0.3% against the yen but just 0.1% against the euro.  The Swiss edged 0.1% higher.

Officials in Hungary and Poland gave verbal support to their beleaguered currencies, while in contrast officials in Asia seem less committed to supporting their own currencies in the face of weakening export demand. Singapore reserves fell $3.6 billion in February. Czech CPI inflation eased to 2.0% y/y in February.

The ten-year JGB yield slid 1 basis point to 1.29%. Gilt and Bund yields fell, too.

Oil is steady at $45.60 per barrel. OPEC meeting in Vienna on March 15th is likely to cut output quotas again.  Gold edged 0.4% lower to $938.80/ounce.

Japan posted a current account deficit for the first time in 13 years. Exports plunged 46.3% in the year to January, net investment income dropped 31.5%, and the current account swung to a much larger-than-forecast deficit of Y 173 billion from a surplus of Y 1164 billion in January 2008.  The seasonally adjusted surplus fell 53.7% between December and January, as exports tumbled 16.9% on month.

Japanese on-year M2 and M3 growth edged marginally higher in February to 2.1% and 1.1%.  Bank lending growth held relatively stable at 3.5%. Growth in broad liquidity was again negative at minus 0.2%, and commercial paper slumped by 6.1%.

Japanese bankruptcies were 10.4% higher in February than a year earlier.  The Economy Watchers’ index of service sector workers recovered to a still very depressed 19.4 in February from 17.1 in January and 15.9 in December.  Stock and bond transactions generated a Y 5.56 trillion outflow in February.

The Chinese State Information Center is projecting on-year growth of 6.5% in 1Q09, with a 25% plunge of imports.

Swiss unemployment edged up to 3.4% in February from 3.3% in January and 2.7% a year earlier.

The Euroland Sentix index of investor sentiment deteriorated to a another series low of minus 42.7 from -36.1 in February.

The Bank of France projects a 0.6% first-quarter drop in real GDP and reported no change in business sentiment in February from its 70 reading in January.

Producer prices in South Korea firmed 0.6% in February, reflecting the impact of won depreciation, but on-year PPI inflation eased to a 13-month low of 4.4% from 4.7% in January.

Juergen Stark of the ECB expect Germany to have negative growth in each quarter of 2009 and anticipates a further decline of CPI inflation.

Australia’s construction PCI index worsened to a record low in February of 29.5 from 34.1 in January.  House price inflation in New Zealand became more negative in February (-8.9%) versus -8.3% in the year to January.

Britain’s Chamber of Commerce revised its growth forecasts downward to minus 2.8% this year and +0.8% in 2010.

No U.S. data releases are scheduled today.  Canada reports housing starts.  U.S. clocks were moved forward by an hour yesterday.  Europeans shift to Daylight Savings time later, so the time difference between the two regions shortened by an hour.

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


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