New Overnight Developments Abroad: Stocks and Sterling Falter

July 6, 2009

Stock markets around the world continued to move lower, and a drop is indicated by U.S. futures.  India’s Sensex tumbled 5.8% on a forecast of the biggest budget gap since 1994 (6.8% of GDP).  Equities also decined 1.4% in Japan, 1.9% in Indonesia, 1.5% in Singapore, 1.2% in Hong Kong, and 1.2% in Australia.  In Europe, the German Dax and Paris Cac are trading off 1.5%, while the British Ftse has lost 1.2%.

The dollar has risen 1.2% against sterling, 0.8% against the Aussie dollar, 0.4% relative to the euro, Swissy, and kiwi, and 0.2% against the Canadian dollar.  The yen is 0.8% stronger against the dollar despite more North Korean missile tests.

The yield on 10-year JGB’s dipped a basis point to 1.32%.  10-year Gilt yields fell sharply to as low as 6.63%.

Oil is 3.9% lower than last Thursday at $64.10 per barrel, and gold has dropped 1.1% to $922 per ounce.

Over 140 Chinese are dead after ethnic rioting in Xinjiang Province.

The Bank of Japan’s regional economic report following the quarterly meeting of branch managers concluded that conditions remain severe but have begun to stop worsening.  The pace of deterioration has lessened in response to public investment support and turnarounds in exports and industrial output.  Consumption remains weak, and investment is substantially lower.

BOJ Governor Shirakawa claimed that financial conditions are calmer but require close monitoring.

The diffusion index for Japan’s index of leading economic indicators printed at 60 in May after 50 in April.  Such was the best score since May 2006.  The coincident index, 66.7, surpassed 50 for the first time since February 2008.

British new car registrations fell just 15.7% in the year to June, least in nearly a year after drops of 24.8% in May, 24.0% in April, and 27.7% in 1Q09.

An article in Sunday’s London Times said the Bank of England may announce a Gbp 25 billion boost in its program of Gilt purchases after its monthly policy meeting this week.

Taiwanese consumer prices fell 2.0% in the year to June, most since 1970.  The PPI declined by a record 13.6% y/y.

Euroland’s Sentix Index of investor sentiment worsened for the first time in four months, printing at minus 31.3 after minus 27.0.

Australian job ads fell by a further 6.7% last month and by 51.4% from June 2008.  The TD-MI index of expected inflation firmed 0.4% in June but was up by only 1.4% on year, below the Reserve Bank’s inflation target of 2-3%.

New Zealand house prices firmed 0.4% last quarter but dropped 7.1% from 2Q08.  South African house prices fell 4.4% in the year to June.

U.S. Vice President Joe Biden admitted that the Obama Administration back in February underestimated the severity of the recession.  No U.S. data releases are scheduled today.

Russia’s VTB Capital Indicator produced bleak June readings suggesting that real GDP in 2Q may post an on-year drop of over 6% after the drop of 5.4% in 1Q.

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


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