New Overnight Developments Abroad: Euroland Industrial Orders Posted Sharp Gain in July

August 24, 2009

Investors less fearful about taking risk.  Stocks in the Pacific Rim advanced 3.4% in Japan, 3.2% in Australia, 2.8% in Taiwan, 2.0% in South Korea, 2.2% in India and Pakistan, 1.3% in Thailand, 2.7% in Singapore and 1.7% in Vietnam.  Stocks in Britain, Germany and France are 0.8% higher.

The yen, which trades positively with risk aversion, fell 0.6% against the dollar.  Commodity-sensitive currencies are firmer.  The Australian dollar, kiwi, and Canadian dollar show gains of 0.8%, 0.5%, and 0.3% against the U.S. currency.  The dollar also eased 0.1% against the sterling but firmed 0.4% against the Swiss franc and 0.2% against the euro.  Elevated hopes of world recovery lifted many emerging market currencies like the South African rand and Indian rupee.

The yield on 10-year JGBs rose 2 basis points to 1.34%. Bund yields also advanced by 2 basis points.

Oil and gold are steady but high at $73.85 per barrel and $954.60 per ounce.

Euroland industrial orders jumped 3.1% in July, the most in 19 months.  Their 12-month drop narrowed to 25.1% from 30.3% in May and 35.1% in April.  Orders for capital goods shot up 5.6% after stabilizing in May.  Total orders declined 0.5% in 2Q at an annualized pace after plunging by 37.3% in 1Q and 52.7% in 4Q08.

The Eastern European ZEW index of investor confidence rebounded from +4 in July to +36 in August.

Thai GDP increased 2.3% last quarter after dropping 1.9% in 1Q, and on-year negative growth eased to minus 4.9% from minus 7.1%.

Taiwanese industrial production posted a 12-month drop of 8.1% in July after one of 11.3% in June, and export orders fell by 8.8% after minus 10.9% in June.

Australian motor vehicle sales fell 6.9% in July.

In Britain, the Royal Bank of Scotland real estate market survey suggests that home prices may decline by a further 10%+.  Several other housing indicators have recently suggested the market is stabilizing.  But the Rightmove house price index did decline 2.2% in August.

The ICAER index of British business sentiment increased to +4.8 in 3Q09 from minus 28.2 in the second quarter.

Danish consumer confidence rose to minus 26 in August from minus 32.

Japanese supermarket sales fell 4.8% in the year to July after falling 4.4% in the year to June.

Singapore consumer prices fell 0.5% in the year to July, same as the on-year decline in June.  Such show a 0.6% on-year increase in January-July.

There are no significant U.S. data releases today, just the Chicago Fed survey.  Trichet joined Bernanke in urging financial regulatory reform at the Jackson Hole Symposium.  Canada announces retail sales at 12:30 GMT.  Hungary’s central bank is likely to cut its benchmark interest rate today.

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


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