Monday Developments

May 18, 2009

Markets exhibited a better tone on Monday.  Stocks had experienced their worst weekly performance since early March, as risk aversion was buoyed by several worse-than-forecast economic indicators culminating Friday in Euroland first-quarter growth figures.  Real GDP fell last quarter at a seasonally adjusted annual rate of 14.4% in Germany, 9.4% in Italy, and 9.8% in Euroland as a whole.  Eastern European growth rates also tumbled in 1Q09.

Japan’s Nikkei fell 2.4% today, but stocks rose strongly in Europe and the United States.  The Dow is up 2.1% thus far, led by financials.  Better-than-assumed projected earnings from Lowe’s buoyed confidence.

Canada was closed for Victoria Day, and a slack data calendar held down volume.  Oil and bond yields are up.

Since Friday’s close, the dollar has risen 1.2% againt the yen but lost 1.7% against the Aussie dollar, 1.5% against the Canadian dollar, 0.6% against the Swissy and 0.4% against the euro.  The pattern of movement is typical of subsiding risk aversion.   A high official from the Ministry of Finance protested excessive moves in the yen.

Japanese consumer confidence recovered to 33.2 in April from 29.6 in March.   Nationwide and Tokyo department store sales respectively fell by 11.3% and 11.9% in the year to April.  The Reuters monthly Tankan simulating indices for May improved 7 points to minus 69 for manufacturers but weakened 6 points to minus 44 for non-manufacturing.

Euroland’s seasonally adjusted trade deficit narrowed to EUR 2.1 billion in March from EUR 2.9 billion in February and EUR 6.6 billion iun January.  Exports fell 17% from a year earlier.  Singapore domesitc exports dropped 19% y/y.

Producer prices in Finland eased 0.2% in March and dropped 7.0% on year.

Producer input prices in New Zealand fell 2.5% in the first quarter and by 4.7% from 1Q08, while producer output prices posted respective drops of 1.4% and 6.5%.  These were the greatest decline in over 30 years.

Russian industrial output declined 16.9% in the year to April, more than consensus.

Spanish service sector turnover fell nearly 15% in the year to March.

The British Rightmove house price index increased 2.4% in May, their biggest gain for May in six years, and fell by a smaller 6.2% on year, down from a 7.3% 12-month drop in April.

Late Friday, the Bank of Mexico cut its benchmark lending rate by 75 basis points as expected to 5.25%.

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


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