New Overnight Developments Abroad: European Stocks Lower

August 10, 2009

The German Dax, Paris Cac and British Ftse have slipped 0.7%, 0.6% and 0.6%, and U.S. futures indicate a lower open with no new data scheduled.

Pacific Rim stocks closed mixed.  Gains were made of 1.1% in Japan, 2.7% in Hong Kong, 2.7% in Pakistan,1.7% in Indonesia, 2.4% in The Philippines and 2.2% in Vietnam.  Equities lost 1.0% in India, 2.0% in Singapore, 0.3% in China and Sri Lanka, and 0.1% in Thailand.

The dollar lost 0.8% against the kiwi and Aussie dollar, 0.3% versus the euro, 0.2% against the yen and Swiss franc, and 0.1% against the Canadian dollar.  Sterling is 0.2% softer against the dollar.

10-year JGB and Treasury yields are one basis point firmer at 1.46% and 3.87%.

Oil and gold are down 0.6% and 0.4% at $70.49 per barrel and $956.10 per ounce.

Core private domestic Japanese machinery orders jumped by a robust 9.7% in June, 3.3 times greater than anticipated after three monthly declines in a row.  Such were still down 29.7% from June 2008.  Core orders dropped 4.9% last quarter after declines of 15.1% in 4Q08 and 9.9% in 1Q09.  Foreign machinery orders shot up 43.8% but were still down 57.8% from a year earlier.

On-year growth in Japanese M2 and M3 rose two-tenths each to 2.7% and 1.9%, while M1 growth remained at 0.5%.  Bank lending growth slowed to 2.1% from 2.4%.

The Japanese economy watchers index, a gauge of small firm business sentiment, improved slightly to 42.4 in July from 42.2 in June, 36.7 in May, and a trough of 15.9 last December.  Corporate bankruptcies rose 6.5% in the year to June, down from 21.5% in the year to May.

Japan’s current account surplus of Y 1153 billion in June was three times larger than anticipated despite a Y 602 billion merchandise trade surplus that was very close to expectations.  Exports and imports recorded on-year declines of 37.0% and 43.8% in June and of 43.9% and 40.0% in the first half of 2009.  Japan’s “Basic Balance,” the current account plus long-term capital flows posted deficits of Y 3.71 trillion in June and Y 13.628 trillion in 1H08.  Stock and bond transactions in July generated a Y 385 billion outflow.

French business sentiment improved by three points to 87 in July according to the Bank of France’s survey.  French industrial production firmed 0.3% in June but fell 12.8% from a year earlier.  Production in the second quarter fell 0.8% from 1Q and by 15.0% from 2Q08.  These results were somewhat weaker than expected and were even worse excluding autos.  Transportation equipment posted a jump of 3.6% in June on top of May’s 7.4% advance.

The EU Sentix investor confidence gauge improved to minus 17.0 in August, the best score in a year, from minus 31.3 in July.  Both current conditions and expectations were assessed better.

Norwegian consumer prices fell 0.6% in July, cutting their 12-month rise to 2.2% from 3.4% in June.  Producer prices slumped 5.7% from June and by 7.1% from June 2008.  Danish harmonized consumer prices also fell 0.6% in July from June, while firming 0.7% from July 2008.  Lithuanian consumer prices dropped 0.8% in July and rose 3.0% y/y after climbing 4.2% in the year to June.

Turkish industrial production rose 7.3% in June, cutting the 12-month drop to 9.7% from a decline of 17.4% in the year to May.  Turkey’s June current account deficit was 46.1% smaller than a year earlier.

Romania recorded a trade deficit of EUR 668 million in June, down 68% y/y, and EUR 4.3 billion in 1H09.  Czech consumer prices slipped 0.4% in July and posted an on-year increase of just 0.3%, down from 1.2% in the year to May.  The Czech jobless rate increased further to 8.4% in July from 8.0% in June and 5.3% a year ago.

Housing finance approvals in Australia recorded a ninth straight monthly increase, but the 1.1% gain was only half as much as May’s rise and what analysts were expecting.  Australian reserves increased 3.8% to USD 44.05 billion in July.

House prices in New Zealand firmed 0.7% in June but were 5.0% lower than in June 2008.

Indonesian real GDP jumped 2.3% in the second quarter and by 4.0% from 2Q08.  On-year growth of 4.0% was down from 4.4% in 1Q.  Indonesia weathered the global recession better than most economies in the region.

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


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