Overnight Developments Abroad: Stocks Gain Strongly

June 10, 2009

Equity prices advanced 2.1% in Japan, 2.5% in Germany, 2.1% in France, 2.3% in Britain, 4.0% in Hong Kong, 3.1% in South Korea, 1.0% in China, 2.8% in Thailand, 1.7% in the Philippines, 2.3% in India, 2.3% in Australia and 1.6% in South Africa.

Currency movements reflect a growing appetite for risk.  The dollar rose 0.5% against the yen but shows losses of 1.1% against the Australian dollar, 0.6% versus the Canadian dollar, 0.3% against sterling despite Prime Minister Brown’s political woes, and 0.1% against the euro and Swiss franc.

The 10-year JGB yield firmed a basis point to 1.55%, and bund and gilt yields are also up slightly.

Oil advanced another 1.7% to $71.23 per barrel, while gold traded 0.8% higher to $962.30 per ounce.

Australian consumer confidence recorded the biggest jump in 22 years, gaining 12.7% in June to the highest level since January 2008.

Japanese core private domestic machinery orders sunk 5.4%, three and a half times as much as forecast, in April and were down 32.8% from a year earlier.  Foreign machinery orders dived 21.5% m/m and 66.1% y/y.  Both are running below the government’s expected pace for 2Q09 as a whole.

Japanese domestic corporate goods prices fell by 0.4% in May, widening the 12-month decline to 5.4% from 4.0% in April.  Export and import prices slumped 11.6% and 28.5% from May 2008 levels.

Chinese consumer prices dropped 1.5% on year in April and by 0.8% in January-April from a year earlier.  Producer prices fell 7.2% y/y after on-year drops of 6.6% in April and 4.6% in 1Q09.  Negative inflation will enable the central bank to retain low interest rates despite signs of resurgent activity. Property sales soared 45.3% in January-May from a year earlier, and real estate investment advanced by a robust 6.8%.

French industrial production fell 1.4% in April and by 17.1% on year.  Those results were much worse than forecast.

Italian industrial production rose in April for the first time in a year, gaining 1.1% but dropping 24.2% from April 2008.  Revised Italian national income accounts for the first quarter revealed a greater 2.6% plunge in GDP than the 2.4% drop reported initially.  Real GDP fell 6% from a year earlier.

German final May consumer price data put the CPI down 0.1% from April and unchanged on year.  Consumer prices sank 0.4% at a seasonally adjusted annualized rate in the six months to May, with food dropping 4.0%.  In just May, household energy fell 0.2%, but motor fuels went up 2.1%.  Real factory sector turnover fell by 1.8% in April and 23.2% from April 2008.  German business insolvencies increased about 10% on year in the first quarter.

British industrial production increased 0.3% in April, the first gain since February 2008.  Although down 12.3% on year, the market was encouraged that an end to the British recession may be approaching.  Factory output rose by 0.2% for a second straight time.  Industrial production in Feb-Apr was 3.2% lower than in the previous three months, but that was down from a comparative drop of 6.1% in Dec-Feb from Sept-Nov.

The British goods and services trade deficit of Gbp 3.01 billion was up from Gbp 2.72 billion in March and the largest so far of 2009.  But both exports and imports advanced in an encouraging sign.  The goods only deficit widened to Gbp 7.0 billion from Gbp 6.5 billion in April.

U.S. and Canadian trade data will be reported at 12:30 GMT.  U.S. weekly oil inventories also get released today.

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


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