New Overnight Developments Abroad: Chinese Equities Rebound, Dollar Steady

August 20, 2009

The Chinese CSI index advanced 4.3%, inspired by a strong earnings estimate from a stock analyst and a prediction that monetary policy will remain accommodative.  Most other bourses are higher too: Indonesia +2.2%, India +1.4%, Singapore +1.5%, Hong Kong +1.9%, South Korea +2.0%, France +1.5%, Britain +1.4%, and Germany also +1.4%.

The dollar is unchanged against the euro and shows very minor net movement otherwise, with gains of 0.2% against the yen and 0.1% relative to sterling and the Canadian dollar but dips of 0.2% against the Australian dollar and 0.1% versus the kiwi and Swiss franc.

Bund and gilt yields are up slightly, while the 10-year JGB is steady at 1.35%.

Oil ($72.40 per barrel) is holding yesterday’s sharp gain but not extending them.  Gold ticked 0.1% higher to $945.80 per ounce.

Following a series of cuts, the Central Bank of the Philippines kept a 4.0% policy interest rate as had been expected.

Japanese stock and bond transactions generated a Y 306 billion inflow last week, 45% larger than the week before.

Bank of Japan arch-hawk Mizuno made uncharacteristically dovish remarks about the risk of a slowing export recovery, and he hinted that unconventional liquidity-pumping operations may be extended past end-2009.  He suggested that the central bank may announce preconditions for raising the 0.1% key interest rate.

Taiwanese GDP fell 7.54% in the year to 2Q, slightly less than forecast and down from an on-year contraction of 10.24% in 1Q09.

Hong Kong consumer prices fell 1.5% in the year to July.  Core CPI was down 0.3% in the past year.

Norwegian non-oil GDP unexpectedly firmed 0.3% last quarter. Such had been projected to dip that amount.  Total GDP slid 1.3% and by 4.8% from 2Q08.

The Afghan presidential elections have been surrounded by considerable violence.

Australia’s central bank sold just A$ 705 million last month compared to A$ 3.376 billion of mostly intervention in May-June.  Imports increased 6% in July.

British real retail sales firmed 0.4% in July on top of June’s 1.3% advance and posted a 3.3% on-year increase, most in 14 months.  These results were slightly better than forecast.  Sales in May-July were 1.2% greater than in Feb-April.  U.K. M4 increased 13.6% in the year to July and by 1.0% from June, which were stronger gains than forecast.

The U.K. government debt stood at 56.8% of GDP in July, up from 43.5% a year earlier and 35.5% in July 2007 just before the crisis began.  Public sector net borrowing equaled Gbp 8.016 billion in July versus a net repayment in July 2008 of Gbp 5.224 billion.  The total net borrowing in April-July of Gbp 49.8 billion was more than three times greater than a year ago, as the recession slammed revenues.  The current budget showed a Gbp 5.144 billion deficit in July compared to a Gbp 7.825 billion surplus in July 2008.  The deficit in April-July of Gbp 40.1 billion compares to one of Gbp 8.9 billion a year earlier. The public sector net cash requirement was unexpectedly in the red.  All the public finances figures were worse than forecast.

China’s current account surplus in 1H09 was USD 130 billion, down 32% from its 1H08 level.

The Dutch jobless rate increased to 4.9% in May-July from 4.1% a year earlier.  Sweden had a 9.1% unemployment rate last quarter. 

Scheduled U.S. data include weekly jobless claims, the index of leading economic indicators, and the Philly Fed index.  Canada will be announce wholesale sales today.

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


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