New Overnight Developments Abroad: Focus on Banks and Flu

April 29, 2009

Bloomberg claims that stress test results require six of the nineteen banks to increase their capital.

Germany became the eighth country with a case of swine flu.  Obama asking for $1.5 billion to counteract swine flu.

Japan closed for Showa Day holiday.  Three more golden week closures set for next Monday through Wednesday.

Vietnam’s central bank left its key refinancing and discount rates unchanged at 7.0% and 5.0%.  Other central banks with scheduled rate decisions today occur at the Fed, Malaysia, Brazil, and Poland.  An official from the Swedish Riksbank argued against cutting key rate below 0.5%.  Minutes of the last Turkish central bank meeting point to more moderate rate cuts in the future.  ECB President Trichet said very low inflation now helps even out excessive past inflation and will give way to rising inflation late in 2009.  The ECB quarterly lending survey found tighter credit conditions in the first quarter and a likelihood of further tightening in 2Q09, albeit to a less pronounced degree than in 1Q09.

The dollar rose 0.9% against the yen but fell sharply against commodity-sensitive currencies such as the kiwi (1.8%), Aussie dollar (1.4%) and loonie (1.1%).

The dollar also lost 0.9% against sterling, 0.6% against the euro and 0.5% relative to the Swiss franc, as investors await the FOMC statement at 18:15 GMT.

Stocks rose by 3.7% in India, 3.5% in China, 3.0% in Indonesia, 2.9% in South Korea, 2.8% in Hong Kong, 2.3% in Singapore, and 1.9% in Vietnam.  The Paris Cac is up 1.5%, and the German Dax and British Ftse are trading 1.1% higher.  Gilt and bund yields are higher.

Economic sentiment in Euroland rose 2.5 points to 67.2 in April versus an expected 65 score.  Consumer confidence and industrial confidence each improved 3 points to -31 and -35, which are still very weak readings.  Sentiment in construction and services advanced two points each to -34 and -19.  Consumer price expectations (-2 after +1) and corporate price expectations (-12 after -14) moved in opposite directions.

Bloomberg’s retail PMI’s rose 4.3 points to 48.4 in Euroland, 4.5 points to 48.9 in Germany, 3.5 points to 49.2 in France, and 4.9 points to 46.8 in Italy.

The Swiss index of leading economic indicators worsened to -1.86 in April from -1.66 in March and +1.26 a year earlier.

Average weekly wages in Britain tumbled 5.8% in the year to February, most since 2001.

South African consumer price inflation ticked down less than forecast to 8.5% in March from 8.6% in February.

Ezone money and credit growth continued to decelerate sharply last month.  Private loan growth in Euroland slowed to 3.2% y/y in March from 4.3% in February and 5.8% in December. Lending to firms slowed to 6.3% from 7.7% in February and 9.5% in December.  M3 expanded 5.1% y/y, down from 5.8% in February and 7.5% in December.

German real plant and equipment orders recorded on-year declines of 35% in March and 42% in 1Q09.  Germany’s government revised its growth forecast to minus 6% in 2009 and plus 0.5% for next year.

Spanish GDP fell 1.8% last quarter and by 2.9% from 1Q08.

New Zealand had a NZ$ 324 million trade surplus in March versus a NZ$ 43 million deficit in March 2008.  A NZ$ 4.80 billion deficit accrued over the last 12 months, similar to the deficit of NZ$ 4.53 billion in the 12 months to March 2008.  Business sentiment in New Zealand jumped to -14.5 in April from -39.3 in March, its biggest improvement in 16 months.  New home sales in Australia increased 4.2% last month.  Australia’s fourth largest bank, ANZ, reported a 43% drop in earnings.

South Korea posted a record $6.64 billion current account surplus in March.  Between 1Q08 and 1Q09 the current account improved by $13.1 billion to a surplus of $9.29 billion.

The United States reports first-quarter GDP at 12:30 GMT, with forecasts centered on a drop of 5% saar.

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


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