New Overnight Developments Abroad: Sterling and Global Stocks Lower

June 17, 2009

The pound has lost 0.9% against the dollar.  Otherwise, the U.S. currency shows smaller gains of 0.4% against the Aussie and New Zealand dollars and 0.1% versus the Swiss franc, yen, and Canadian dollar.  The greenback is 0.2% weaker against the euro, which reportedly was buoyed by demand out of Russia and talk of planned diversification by BRIC nations.

Most stock markets continued to correct downward, two notable exceptions being rises of 0.9% rise in Japan and 1.7% in China.  Stocks closed down by a further 1.7% in South Africa and Thailand, 2.9% in the Philippines, 3.2% in India, and 1.5% in Australia.  In Europe, the Dax, Cac40 and Ftse show similar losses of 1.1% or 1.2% amid heightened concern about the outlook for profits.

Bund yields are lower.  Gilt yields are higher, and the 10-year JGB yield is flat at 1.47%.

Oil eased 0.4% to $70.18/barrel ahead of today’s weekly U.S. report on inventories.  Gold edged 0.1% higher to $933.30 per ounce.

Central banks in Chile and Turkey each cut their key rates yesterday by 50 basis points.  The Norges Bank announces its rate decision for Norway in a little while and is expected to leave such unchanged at 1.5%.

In Japan, both the government and Bank of Japan upgraded assessments of the economy for a second straight month.  Government officials were more upbeat about personal consumption for the first time in two years.

President Obama predicted that the U.S. jobless rate may crest at as high as 10%.

Euroland’s seasonally adjusted trade deficit narrowed for a third consecutive month to EUR 0.3 billion in April from EUR 1.8 billion in March and EUR 5.3 billion in January.  Trade was in surplus by EUR 2.7 billion on an unadjusted basis.  Between April 2008 and April 2009, exports slumped 26.8%, and imports dropped 27.6%.  Exports and imports also fell on a monthly basis by 1.3% and 2.7%, respectively.

Construction output in the euro area rose 0.6% in April but was 4.7% lower than a year earlier.  Such had declined 6.5% at a seasonally adjusted annualized rate in the first quarter of this year.

South African retail sales tumbled 6.7% in the year to April.  That was the third straight on-year decline, the biggest drop in almost nine years, and larger than what analysts had been forecasting.

British unemployment on a claimant count basis went up 39.3K last month, the smallest increase since last July and just two-thirds as much as predicted.  The average rise in the first four months of 2009 had been 82K including a gain of 49.6K in April.  Unemployment on such a basis edged up a tenth to 4.8%, but the jobless rate of 7.2% according to European measurement norms was a touch lower than assumed.  Average on year wage earnings growth of 0.8% with bonuses and 2.7% without bonuses in Feb-April underscored the weakness of the labor market.  Factory sector productivity in Feb-April posted an on-year drop of 7.5%, so unit labor costs went up 9.4%.

Bank of England minutes from the meeting on June 4th revealed unanimous votes to keep the Bank Rate at 0.5% and planned bond purchases at Gbp 125 billion.  No surprise there.  Officials were somewhat more hopeful about the recession winding down but mindful that improvement was fragile.

Australian housing starts fell 4.0% in the first quarter, which was more than forecast.  The Aussie index of leading economic indicators went up 0.7% in April, trimming its on-year decline to 3.5% from 5.1%.

Malaysian consumer price inflation slowed to 2.4% on-year in May from 3.0% in April.  Prices firmed 0.2% on month.

A 12.1% on-year drop in non-oil domestic exports in Singapore in May compared favorably with the 19.2% decline in April.  Exports rose 5.6% on month.

U.S. consumer prices and current account data get reported today.  Canada releases wholesale sales and its index of leading economic indicators.

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


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