New Overnight Developments Abroad: Another Market Reversal

March 31, 2009

Yesterday saw the yen and dollar rise, but today they fell.  The dollar gained 1.4% against the yen but sank otherwise by 1.7% relative to the Australian dollar, 1.5% against the kiwi, 1.0% versus the euro, 0.9% against the Swissy and Canadian dollar and 0.3% versus sterling.

Other market moves today are also consistent with lessening risk aversion after Monday’s upward spike.  Whereas stocks fell 1.5% in Japan and 1.8% in the Philippines, other Asian bourses were mostly higher with gains of 1.6% in Singapore, 1.5% in India, and 0.9% in China and Hong Kong. In Europe, the British Ftse, Paris Cac, and German Dax show strong advances of 2.7%, 1.3%, and 0.9%.

The 10-year JGB yield firmed a basis point to 1.35%.

Oil firmed 1.7% to $49.23 per barrel. Gold rebounded 0.3% to 920.90 per ounce but continues to be restrained by weak Indian demand.

Japanese data were mixed relative to expectations. Japanese unemployment jumped three-tenths to a 3-year high of 4.4%. The job offers ratio fell to 0.59 in February from 0.67 in January and 0.98 a year ago. Jobs fell 0.4% over the past year.  Real household spending firmed 0.3% m/m and fell by a smaller-than-forecast 3.5% from February 2008. Housing starts plunged 24.9% on year, and construction orders dropped 24.9% as well. The Shoko Chukin index of small business conditions improved to a five-month high of 30.4 in March from 25.0 in February and 24.9 in January. Overtime pay plunged by a record 18.5% in the year to February, depressing total cash earnings by 2.7% in the latest statement year.

Japanese Prime Minister Aso is in London already for the G-20 summit and again left out details of his proposed fiscal stimulus.

New OECD forecasts were released, projecting 2009 GDP declines of 4.3% in the entire OECD 30-nation bloc, 6.6% in Japan, 4.1% in the euro area, and 4.0% in the United States.  OECD GDP in 2010 is projected to edged down another 0.1%.

Australian private credit failed to grow last month and rose just 5.4% from February 2008. A Deputy Governor of the central bank hinted at more rate cuts and conceded a recession would not be avoided in 2009.

The preliminary Euroland CPI showed a greatly reduced rise of 0.6% in the year to March. That was less than expected but foreshadowed by earlier German data.

German unemployment increased 69K in March and 185K in the first quarter.  The jobless rate increased a tenth to 8.1% but is only 0.5 percentage points greater than its cyclical low of 7.6%. Jobs were unchanged in the year to February, a sharp deterioration from on-year growth of 1.0% in 4Q08.

The South Korean factory index unexpectedly rose ten points to 58 in April, most since November.

Swedish consumer confidence worsened to -16.5 in March from -14.6 in February. The business sentiment index also fell to minus 42 from minus 35.  The National Institute of Economic Research revised expected GDP growth to -3.9% this year and 0.9% in 2010, drops of 3 percentage points and one percentage points from its prior projections.

Irish private credit grew by a slower 4.8% in the year to February versus 6.0% y/y in January.

Italian retail sales firmed 0.3% m/m in January and 0.7% y/y.  Those results were better than street analysts had assumed.  Italian CPI inflation slowed to an on-year rise of 1.0% in harmonized terms in March from 1.5% in February.

French housing starts in December-February were 22.1% less than a year before.

British consumer confidence improved unexpectedly to minus 30 in March from minus 35 in February.  Service sector output slid 0.2% in January, while British productivity plunged 1.5% last calendar quarter.

Ahead of the ECB meeting on Thursday, rumors are circulating that officials there are considering the purchase of corporate bonds.

The Swiss consumption indicator compiled by UBS softened to 0.89 in March from 0.92 in February.

Later today will see the release of Canadian producer prices and monthly GDP.  Scheduled U.S. data included weekly chain store sales, the Case-Shiller house price indices, and Midwestern PMI scores.

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


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