New Overnight Developments Abroad: Awaiting Monthly U.S. Labor Force Survey

April 3, 2009

Investors marked time ahead of the 12:30 GMT release of U.S. labor market data for March, which could be a reality check for the post G-20 summit rally.

The dollar recovered 0.4% against the yen, 0.3% versus the Australian dollar, 0.2% against the euro, and 0.1% against the Swissy and Canadian dollar, but the greenback lost 1.0% against the kiwi and 0.2% versus sterling.

Stocks mostly extended yesterday’s gains. The Nikkei rose 0.3%, and the Dax is 0.9% higher.  Stocks climbed 4.5% in India, 4.4% in Vietnam, 3.6% in Pakistan, 1.0% in Singapore and Taiwan, but the British Ftse and Paris Cac show small dips of 0.3% and 0.1%.

Sovereign bond yields are higher.  The 10-year JGB advanced 5 basis points to a 1.43%, highest since mid-December.

Oil strengthened 1.1% to $53.22 per barrel, while gold slid 0.5% to $904.80 per ounce.

Australian motor vehicle sales fell 17.1% in the year to March, while New Zealand motor vehicle sales recorded an on-year drop of 23%.

Service sector PMI readings rose for Euroland to 40.9 in March from 39.2 in February, Germany to 42.3 from 41.3, France to 43.6 from 40.2, Italy to 39.1 from 37.9, Spain to 34.1 from 31.7, and Ireland to 35.7 from 31.8.  Euroland’s composite PMI improved to 38.3 from 36.2, showing a sharp but lessening rate of contraction in overall activity.  Composite PMI’s in Germany and France rose by 2.0 points and 4.7 points to 38.3 and 41.4.  All results were better than their flash indications.  Price sub-indices point to further disinflation.  Euroland’s ECRI leading index of inflation dropped 1.8 points to 86.4 in February.

German import prices slid 0.1% on month and 6.4% on year in February.  Non-oil import prices dropped 1.2% from February 2008 levels.

Bank Indonesia cut its key interest rate to 7.5% from 7.75%. Since peaking at 9.5% last autumn, such has been reduced in five straight months amid weakening economic growth and a falling inflation forecast.

Meeting in Prague, EU finance ministers and central bankers praised yesterday’s G-20 summit.  The six-month Euribor rate recorded a rise for the first time since October, but the one-week and three-month rates continued to grind lower.

The British services PMI also surprised on the upside, climbing to 45.3, best since September, from 43.2 in February, but the jobs sub-index hit another record low. The Halifax measure of house prices in Britain fell 1.9% in March and by 17.6% from a year earlier.

China’s PMI moved above 50, thus connoting expansion, to 52.4 from 49.0.  The last prior above-50 reading was in September.  Chinese bank lending surged for a third consecutive month in March in another sign of improving activity.

On the weak side, however, industrial output in Spain fell 22.6% in the year to February and by 24.2% in Latvia.

The on-year drop in Malaysian exports was almost halved to 15.9% in February from 28% in January.

Swiss consumer prices fell 0.4% in the year to March, most since end-1959. Such also dropped 0.3% from February, more than forecast.

The U.S. labor force survey, including measures for the drop in jobs, rise in wages, and jobless rate, is due at 12:30 GMT. The U.S. reports its service sector PMI figures at 14:00 GMT.  Lacker, Bernanke, and Kohn of the Fed speak publicly today.

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


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