Asian Stocks Clobbered

January 26, 2010

Stock markets fell by 3.5% in Taiwan, 2.6% in China, 2.5% in Singapore, 2.4% in Hong Kong, 2.0% in South Korea and 1.8% in Japan.  Australia’s market closed 0.7% lower, and the Paris Cac, British Ftse and German Dax have traded 0.7%, 0.6% and 0.5% weaker.

Currency movements also reflect a new wave of risk aversion.  The dollar has lost 0.7% against the yen and fallen beneath the key 90/USD level.  But the greenback otherwise rose 1.0% against the kiwi, 0.8% versus the Australian dollar, 0.7% relative to sterling, 0.5% against the Canadian dollar and 0.4% against the euro and Swiss franc.

Sovereign ten-year bond yields fell 7 basis points in Britain, 6 bps in the United States, 4 bps in Germany and 2 bps in Japan.

Oil and gold slid respectively below $75 and $1100 and show losses of 1.0% and 0.4%.

S&P sliced Japan’s credit rating outlook to negative from stable.  The Bank of Japan left monetary policy unchanged.  Key interest rate is still 0.1%.

Two Japanese economic indicators were released.

  • Small business sentiment, compiled by Shoko Chukin Bank, recovered only part of December’s sharp drop, rising in January to 41.3.  Such printed at 43.0 in November and 40.4 in December.  The manufacturing component stayed at 41.3 and compared to 45.8 in November.  Non-manufacturing returned to November’s 41.3 from 39.6 in December.
  • Corporate service prices were unchanged on month in December but 1.5% lower than in December 2008.  The CSPI fell 2.5% in 2009 as a whole.

British GDP grew more slowly than forecast last quarter.  According to the advance estimate, GDP went up just 0.1%, a fourth of the street consensus, and fell by 3.2% from 4Q08.  Real GDP dropped 4.8% last year after an uptick of merely 0.5% in 2008.  The services and production sectors each rose 0.1% last quarter.  Construction was flat, and agriculture dipped 0.6%.

South Korean GDP growth got revised down slightly to 0.2% in 4Q following a 3.2% jump in 3Q.

Singapore industrial output in December was 14.4% greater than a year earlier after being down 9.5% on year in November.

Malaysia’s central bank, Bank Negara, left its key interest rate at 2.0% as expected.

Germany’s IFO business climate index continued to show improvement, rising to 95.8 in January from 94.6 in December, 93.8 in November, 86.1 at mid-2009 and a low-point of 82.2 in March 2009.  Current conditions rose 0.8 to 91.2 on the month, while the expectations component moved above 100 to 100.6 from 98.9 in December and 79.3 a year earlier. Analysts had been looking for a 95.1 reading on the overall index.  Manufacturing, construction, and wholesaling each showed better readings in January than December, whereas retailing worsened a half-point to minus 12.8.  The IFO Institute also released a separate services climate index, which settled back to 4.9 from 5.5 in December due to a 4-point decline in current conditions to minus 2.  IFO officials cautioned that Germany’s recovery is still not self-sustaining.

Euroland’s current account returned to surplus in November for the first time since July, albeit a surplus of just EUR 0.1 billion after a seasonally adjusted deficit in October of EUR 4.6 billion.  The accrued current account deficit over the last twelve reported months was EUR 71.8 billion versus EUR 135.5 billion during the 12 months to November 2008.

Spanish mortgages were 1.8% higher than a year earlier in November.  The amount of mortgage lending was down 6.5%, however.

Italian consumer confidence fell two points to 111.7 in January from 113.7 in December.  Little change had been expected.  Italian retail sales were unchanged in November and 1.3% lower than a year earlier.

French consumer spending on manufactured goods provided a good surprise with a jump in December of 2.1%, some three times more than forecast.  The on-year increase rose to 5.9%.

The Swiss consumption indicator, on the other hand, slid to 1.20 last month from 1.26 in November.

Sweden posted a SEK 92.3 billion trade surplus last year, 12.8% less than in 2008.  Exports fell 17%.

British mortgage loans rose 2.1% on month to 45,897 in December according to BBA data.

Brazilian consumer confidence rose to a reading of 113.0 in January from 112.3 in December.

U.S. President Obama reportedly will propose a three-year freeze in non-defense discretionary spending.   Scheduled U.S. data today included the Case-Shiller and FHFA house price measures, consumer confidence, and the Richmond Fed index.  Investors also await interest rate announcements from Poland and South Africa.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.