New Overnight Developments Abroad: Stocks Higher as Yen and Dollar Falter

November 9, 2009

Markets reflect less risk aversion following agreement among G-20 finance ministers meeting in St. Andrews, Scotland to maintain fiscal support.  Officials could not agree on implementation of a Tobin Tax on financial transactions.  India’s Prime Minister Singh is quoted on the wires as saying that faster growth should facilitate a reversal of that country’s fiscal stimulus sooner rather than later.

The dollar edged just 0.1% lower against the yen but has lost 1.8% against the kiwi, 1.2% relative to the Canadian dollar and sterling, 1.1% against the Australian dollar, and 1.0% versus the euro and Swiss franc.

Stocks have risen 1.8% in Germany and Australia, 1.7% in France and Hong Kong, 1.6% in Britain, 2.1% in Thailand and India, 1.3% in Singapore, but just 0.2% in Japan.

Whereas the yield on ten-year JGBs is 3 basis points higher at 1.48%, those on comparable bunds and gilts slid by 2 and 3 basis points.

Oil firmed 1.7% to $78.76 per barrel, while gold surpassed the $1100 milestone with a 1.2% advance to $1108.40 per ounce.

Germany reported two very strong pieces of data.

  • Exports rebounded 3.8% in September, while imports shot up 5.8%.  Surprising weakness in August had punctuated their recent revivals. The German current account surplus widened to EUR 9.4 billion from EUR 4.4 billion in August but was still considerably smaller than EUR 15.5 billion a year earlier.  The year-to-September current account surplus of EUR 70 billion was 44.8% below its year-earlier value, with drops of 22.0% and 18.1% in merchandise exports and imports.
  • Industrial production jumped 2.7% in September, more than 2-1/2 times greater than forecast and following a 1.8% increase in August.  A 5.2% jump in output of capital goods paced the latest month’s advance.  Production rose 3.5% (14.7% annualized) in the third quarter after annualized decreases of 1.7% in 2Q and 40.8% in 1Q.  Industrial output was still 12.9% lower in September than a year ago.

Euroland’s Sentix index of consumer confidence improved to minus seven in November from minus 12.6 in October.

The Bank of France’s business sentiment index rose more than assumed to 95 in October from 92 in September.

Japan reported no intervention last quarter.  However, the country’s international reserves increased another $4.17 billion to $1.0568 trillion in October on top of a gain of $33.4 billion during the third quarter.

China’s news agency Xinhua reports officials are urging the U.S. and other governments with major currencies to keep exchange rates more stable.

The Assistant Governor of the Reserve Bank of Australia made hawkish remarks about the Asian and Australian economies.  Australia’s is the only central bank to so far raise rates more than once and has signaled more tightening to come.  Australian reported a 5.1% increase in the number of housing finance approvals with a value increase of 6.7% during September.  That’s the biggest monthly rise in six month and nearly twice as much as forecast.  Job ads slipped 1.7% in October and by 44.9% from a year earlier, however.

New Zealand house prices posted their first on-year increase in sixteen months, albeit just 0.2%.

Turkish industrial production fell 8.6% in the year to September, including a 9.3% on-year drop in factory output.  Slovakian industrial output declined 5.2% in the year to September, somewhat less than the 6.3% on-year drop in August and much better than had been forecast.

Czech consumer prices slid 0.2% both on month and on year in October.  Those drops were bigger than assumed.  The Czech jobless rate eased a tenth to 8.5% last month.

Sweden‘s government revised upward projected GDP growth to minus 4.9% this year, +2.0% in 2010, and +3.4% in 2011.  Growth of 3.3% is anticipated in 2012.

The U.S. does not have any significant data releases scheduled today.

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


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