New Overnight Developments Abroad: Stocks Higher, Yen Lower

April 6, 2009

The dollar gained another 1.0% against the yen, solidifying its beachhead above the 100 level.  North Korean tensions are a fresh issue.

The dollar otherwise lost 1.3% relative to the New Zealand dollar while easing 0.3% against sterling and the Australian dollar and 0.2% against the euro, Swissy, and Canadian dollar.

Stocks closed up 1.2% in Japan, 3.1% in Hong Kong, 1.8% in India, and 1.5% in Singapore. In Europe, the British Ftse, Paris Cac and German Dax are trading higher by 1.0%, 1.1%, and 0.9%.  Even Italy’s bourse is 1.4% higher despite a 6.3 magnitude earthquake about 60 miles from Rome.

Gold fell 1.9% to $880.10 per ounce on a further melting of risk aversion and has now dropped over $100 since February 20th. Oil firmed 0.9% to $52.51/barrel.

Japanese Prime Minister Aso is calling for another large fiscal stimulus worth some 2% of GDP.  Details to be unveiled Friday.

No U.S. data scheduled today, but Treasury will announce terms  of its 3- and 10-year note auctions. Canada releases building permits and the IVEY-PMI index.

February Euroland producer prices fell 0.5% in February, about as expected, with energy costs off 0.7% and all other prices dropping 0.4%. Producer prices fell 1.8% in the year to February, a 9.4 percentage point swing from a rise of 7.6% in the year to September 2008.

February retail sales volume in Euroland declined 0.6%, also close to what had been forecast, and posted a 12-month drop of 4.0%. On-year declines were paced by Spain’s 9.0% and Finland’s 7.6%, while Portugal and France chipped in with losses of 2.5% and 3.3%.  German retail sales eased 0.2% m/m and 0.9% on-year.

Sentix Research reported an unexpected improvement in Euroland sentiment to -35.3 in April from -36.1 in March. April saw the highest reading since January.  Compared to that month, current conditions were 18 points weaker, but expectations had recovered by 19 points.

Japan’s index of leading economic indicators fell 2.0% in February after drops of 2.2% in January and 2.5% in December.

Markets are more confident of an Australian rate cut at 03:30 GMT tomorrow following two data releases today.  The TD-MI leading inflation gauge slid 0.1% and to an in-target 2.6% 12-month increase.  Australian job ads tumbled 8.5% on month in March and by 44.6% from March 2008.

The head of the IMF called China’s yuan undervalued.

An ECB official said there is room for further easing by the central bank. Trichet last Thursday implied that rates would drop again in May, plus quantitative easing is likely to be launched then.

The Serbian Central Bank cut its two-week repo rate to 15.0% from 16.5%, following a 125-bp reduction implemented on January 22nd.  Today’s move had not been widely anticipated.  Eastern European banks have generally been hesitant to ease because of vulnerable currencies.

British car sales tumbled 30.5% in the year to March and by 29.7% in the year to 1Q09.

Germany’s construction PMI index improved sharply to 46.7 in March from 37.8 in February.

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


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