New Overnight Developments Abroad: Stocks in Asia and Europe Rally Further to Start Fresh Week

July 20, 2009

Stocks advanced 3.7% in Hong Kong, 2.7% in South Korea, 3.0% in Thailand, 2.0% in China, 3.1% in India, 1.6% in Malaysia, 1.3% in the Philippines, and 1.2% in Australia.

Japan was closed for Marine Day.

In Europe, the German Dax and Paris Cac are 1.5% higher, while the British Ftse has risen 1.4%.

The dollar and yen continue to correlate inversely with stocks.  The U.S. currency has edged 0.1% higher against the yen but shows sharp declines of 1.7% against the kiwi, 1.2% against the Australian and Canadian dollars, 1.0% relative to sterling and 0.9% against the euro and Swiss franc.

CIT has apparently averted bankruptcy.  The WSJ reports that a $3 billion financing deal was reached with creditors.

Sovereign bond yields are higher in Europe, with ten-year bunds and gilts up five and three basis points.

Gold jumped 1.4% to a three-week high of $950.70 per ounce.  Oil advanced 1.6% to $64.58 per barrel.

Late on Friday, the Bank of Mexico signaled a 25-basis point reference rate cut to 4.50% as had been expected, but after accrued reductions this year totaling 375 bps, the central bank projected improving growth and suggested that enough monetary relief had probably now been provided.

Australian producer prices fell 0.8% last quarter, their greatest quarterly drop since at least the beginning of 1998.  This halved on-year PPI inflation to 2.1% from 4.0% in 1Q and 6.4% in 4Q98.  Import prices sank 5.9% between 1Q and 2Q09.  These results were considerably lower than forecast.

German producer prices likewise undershot expectations, edging down 0.1% in June and falling 4.6% from June 2008, their greatest 12-month decline since December 1968.  Non-energy producer prices were unchanged on the month and 2.8% lower on the year.

Britain reported several housing market figures that suggest a flattening situation.

  • Mortgage approvals by the six largest banks increased to 51K in June according to the Bank of England from 45K in May. 
  • The Council of Mortgage Lenders said gross mortgage lending in June increased 17% to a 6-month high of Gbp 12.3 billion.  Such was still off 48.3% from June 2008.
  • The Rightmove house price index increased 0.6% in July, cutting the 12-month drop to 3.1% from 5.5% in June.

British M4 growth continued to slow, however, falling to 14.2% in the year to June from 16.7% in July, 17.4% in April, and 18.1% in May.  M4 bank lending rose just Gbp 4.8 billion after climbing Gbp 23.2 billion in May.

ECB President Trichet and a French official, Gueant, exchanged verbal barbs future fiscal policy plans.

New Zealand’s services index suffered a setback, dropping 1.2 points to 45 in June, its 15th sub-50 reading in a row.

Dutch consumer confidence was unchanged at minus 24 in July but eight points better than in July 2008.  The Dutch trade surplus narrowed slightly from a year earlier to EUR 2.5 billion in May, as exports and imports each suffered declines of more than 20%.

Used car sales in Taiwan increased 9.2% in the year to June.

The Thai trade surplus narrowed 61% between May and June.  Exports and imports each fell over 25% from a year earlier.

New house prices in China rose 6.3% in the year to June.

Iceland unveiled a 270 billion kronur plan to recapitalize the banking system.

The U.S. index of leading economic indicators and Canadian wholesale trade and international security transactions data will be released later today.

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


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