New Overnight Developments Abroad: Stocks Soar as G-20 Leaders Meet
April 2, 2009
In Asia, stocks advanced 7.4% in Hong Kong, 4.6% in India, 4.4% in Japan, 3.5% in South Korea, 3.0% in Taiwan and Thailand, 2.7% in Vietnam and 2.4% in Malaysia.
Equities climbed 3.3% in South Africa and 2.8% in Australia. The German Dax, Paris Cac, and British Ftse are trading up 4.6%, 4.1%, and 3.3% in Europe.
Currency movements reflect less risk aversion. The dollar is 0.9% higher against the yen but lost 2.5% against the Australian dollar, 2.3% relative to sterling, 2.0% against the kiwi, 0.7% against the Canadian dollar, and 0.6% against the euro.
A Vice President of the Swiss National Bank reiterated intervention threat. Any franc appreciation against the euro will be considered deflationary. The dollar rose 0.4% against the Swissy so far today.
Sovereign bond yields are higher. The ECB is expected to cut its refinancing rate by 50 basis points to 1.0%, and there is speculation it may unveil plans to buy corporate debt as well. The announcement will be at 11:45 GMT, followed by a press conference at 12:30 GMT. The 10-year JGB auction in Japan produced weak results with a 2.33 bid-cover ratio, down from 2.93. The ten-year JGB yield rose 4 basis points to a 3+ month high of 1.38%.
Oil is again above $50, having risen another 4.9% to $50.77 per barrel, but gold dropped 1.1% to $917.40 per ounce.
Hopes run high that the G-20 summit will be considered successful. Positive spin should be taken with a grain of salt. Reports claim that drafts of the statement call for regulating large hedge funds and bolstering IMF resources sharply.
Australia’s trade surplus of A$ 2.109 billion was three times larger than projected. Exports jumped 4.4% m/m and by 35.8% on year, led by gold, whereas imports only climbed 3.5% in the past year. Australia’s Finance Minister Swan seemed to confirm press reports that a third fiscal stimulus is under discussion. Such would be unveiled at the time of the annual budget on May 12th.
Japan’s monetary base increased 6.9% in the year to March and by 5.7% y/y in 1Q09, up from 1.7% in 4Q08 and no change in the year to 3Q08. This acceleration in high powered money reflects quantitative easing. Bank reserves with the central bank were up 69.1% in the year to March. Such rose just 0.1% in 2008.
Japanese stock and bond transactions generated a Y 1.819 trillion capital outflow last week versus an outflow of Y 380 billion in the week of March 21st.
Britain’s Nationwide house price index rose 0.9% in March and posted a smaller 15.7% on-year decline. This was the first monthly increase since October 2007 and was totally unexpected. Nationwide officials said it would be premature to assume the housing correction is over.
Britain’s construction PMI index recovered to 30.9 in March from a record low of 27.8 in February but remained below January’s 34.5 reading.
The Bank of England’s quarterly credit conditions survey found credit demand to have slowed sharply in the first quarter and is likely to shrink further in 2Q, but lenders plan to be less stingy.
Spanish consumer confidence improved to 53.7 in March from 48.6 in February.
German new car sales jumped 40% in the year to March, aided by more working days and incentives.
South African car sales fell 30.1% in the year to March and 34.1% y/y in 1Q09. A 37% drop in U.S. car sales was announced late yesterday.
Norway’s jobless rate edged higher to 2.8% in March from 2.7% in February.
South Korean reserves rose $4.8 billion last month, most in 35 months, but remained $33.3 billion less than in September 2008.
Italy’s budget gap in the first quarter was 43% greater than in 1Q08.
Hong Kong retail sales fell 12.6% on year in February but by just 2.0% in January-February. The data were distorted by movement in the Lunar New Year.
French producer prices fell more sharply than expected in February, recording drops of 0.6% from January and 4.5% from February 2008.
On-year Russian GDP growth slowed to 1.2% in 4Q08 from 6.0% in 3Q08.
Besides the ECB announcement and results of the summit in London of G-20 leaders, investors await U.S. jobless claims and factory orders data.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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