New Overnight Developments Abroad: Sell-off Continued of Equities and Commodities

June 23, 2009

Stocks fell 2.8% in Japan, 4.3% in Vietnam, 3.1% in Indonesia and Australia, 2.9% in Hong Kong, 2.6% in South Korea, 1.8% in Singapore, 1.7% in The Philippines, and 2.3% in Taiwan.  But in Europe, where equities fell sharply yesterday, the Dax and Ftse are up by 0.5% and 0.2%.  Emerging markets are 10% under their recent peak and fell 2.1% today.

Oil lost another 0.8% to $66.95/barrel, and gold edged 0.2% lower to $919/ounce versus $980 on June 4th.

Bund and Gilt yields firmed, while sovereign debt yields eased in Japan (-4 basis points to 1.42% on the 10-year JGB) and North America.

European data released today were softer than hoped.

  • Euroland’s flash composite PMI firmed to 44.4 in June, short of the 45.5 street consensus, from 44.0 in May.  The services PMI fell back to 44.5 from 44.8, while manufacturing climbed 0.7 points to a 9-month high of 42.4.  These results remain under 50, indicating contraction at a slower rate in 2Q.
  • Germany posted PMIs of 43.4 composite (down 0.6 points), 40.5 on manufacturing (up 0.9), and 44.3 on services (down 0.9).
  • France recorded a 47.7 composite PMI, up 1.1, with manufacturing rising 1.2 points to 45.5 but services easing 0.8 points to 47.5.
  • French consumer spending slid 0.2% in May and fell 1.6% from a year earlier.  April’s results were revised to a smaller monthly increase of 0.5%.
  • German exports tumbled 21.2% in the year to 1Q09, including drops of 38.7%, 26.4%, and 22.4% in shipments to Turkey, the U.S.,  and Japan.
  • Real Swiss exports fell 20.7% in the year to May, and the Swiss trade surplus was 21.5% smaller than in May.
  • British net mortgage lending fell to Gbp 2.3 billion in May, lowest since March 2001 and over 40% below the year-earlier level.

Not all European data disappointed, however.

  • Belgian consumer confidence improved a point in June to the best reading since October 2008.
  • German consumer confidence rose 3 points to 2.9 in July from an upwardly revised June reading.
  • French business sentiment advanced two points to 75 in June, highest since December and 7 points above the March low.
  • British mortgage approvals according to BBA data rose 7.4% in May and by 15.8% from May 2008.

Japan’s index of leading economic indicators improved to 76.2 in April from 75.5 in March and 74.1 in February.  The diffusion index for leaders rested on the 50 line of demarcation between expansion and contraction for the first time since mid-2008.  The coincident index was at 86.0, up from 84.8, and the diffusion lagging index had its best print in a year.

Hong Kong’s current account surplus in the first quarter was 49.2% smaller than in 4Q08 and 18.9% less than a year earlier.

Singapore consumer prices jumped 0.8% in May, easily surpassing expectations.  The on-year drop of 0.3% was only a third as much as projected.

Street protests in Iran drew fewer people, and political opponents appeared to be switching strategy.

The Bank of England’s chief economist Dale noted a quickening of underlying British money growth in response to quantitative easing.

The head of the Japanese automaker Toyota observed that U.S. sales do not yet show signs of recovery.

Scheduled U.S. data today include existing home sales, the FHFA index, and the Richmond Fed monthly survey.  The FOMC begins a two-day meeting, which will culminate in a new statement around 18:15 GMT on Wednesday.

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


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