New Overnight Developments Abroad: OPEC Didn't Cut Output Quotas

March 16, 2009

Contrary to expectations, OPEC ministers in Vienna did not agree to further production cuts, and the dollar is showing losses against commodity-sensitive currencies.  The buck has dropped 1.3% against the kiwi, 0.7% against the Australian dollar, and 0.5% against the Canadian dollar.  It has also fallen 1.7% against sterling, 0.8% against the euro, and 0.2% relative to the Swiss franc.  Dollar/yen is trading 0.2% higher, however.  The ruble lost ground on lower oil prices.

Most stock markets are higher, their fifth straight advance.  Gains amounted to 1.8% in Japan, 2.0% in India, 1.2% in Vietnam, 3.6% in Hong Kong, and 1.6% in China.  In Europe, the Cac40, Dax, and Ftse are up by 2.4%, 2.1%, and 1.4%.

Oil slumped 4.7% to $44.09 per barrel, while gold edged 0.2% lower to $928.20 per ounce.

G20 finance ministers met for two days in Britain, calling the clean-up of toxic bank assets the greatest priority.  They pledged aid to emerging economies, and the registration of hedge funds was urged.

Euroland jobs fell 0.3% last quarter after a dip of 0.1% in the third quarter.  On-year employment growth was zero, a drop from 0.6% in 3Q and 1.5% in 1Q08.

Harmonized consumer prices in Euroland rose 0.4% last month and by 1.2% from February 2008, confirming the preliminary indications.  Core inflation (excluding energy and unprocessed food) also posted a 0.4% monthly advance but slid a tenth to 1.7% on its 12-month comparison.  Food and household energy led rises.

Italian national consumer prices firmed 0.2% and 1.6% on-year in February.

Japan’s Nikkei Press reported that Bank of Japan Policy Board, which meets Tuesday and Wednesday, will consider raising the monthly amount of JGB’s that it buys (currently Y 1.4 trillion) and may agree to begin purchasing subordinated bank debts as a recapitalizing measure.

The FOMC is not expected to change policies on Wednesday. Fed Chairman Bernanke granted a rare interview to 60 Minutes Sunday night, predicting a recovery in 2010 but identifying a lack of political will to clean up the banks as the greatest downside risk.

New Zealand’s manufacturing index fell 5.4% last quarter.  Its service-sector PSI index improved to 46.3 in February from 42.7 in January but has been below 50 for eleven consecutive months.

South Korean import price inflation accelerated to 18.0% in February from 16.7% in January, reflecting the weaker won.

Chinese corporate goods prices fell 6.0% in the year to February after dropping by 4.2% y/y in January.  CGP inflation peaked at 10.2% in March 2008.

Britain’s Rightmove house price index rose 0.9% in March and posted a slightly smaller on-year drop of 9.0%.

Norwegian exports and imports fell in February by 1.7% and 3.7%. Compared to February 2008, they plunged 18.4% and 16.5%.

Czech producer prices fell 0.6% in the year to February.  Slovak consumer prices rose 2.4% over the same period.

Foreign direct investment into China fell 15.8% in the year to February, a fifth straight on-year decline.

Romania and Russian reported large but diminished 12-month declines in industrial production of 12.1% and 13.2%.

A heavy slate of U.S. data releases today includes the Empire State factory index at 12:30 GMT, Treasury TIC figures at 13:00 GMT, industrial output at 13:15 GMT and the NAHB index at 17:00 GMT.

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


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