Greek-Inspired Risk Aversion Hits All Markets

February 4, 2010

The dollar, yen and JGB yields are up.  Stocks and commodities are lower.  Markets await several central bank policy decisions and fret about long-term fiscal problems in Greece and other countries.  Several pieces of weak data were reported overnight as well.

The yen rose 0.3% against a dollar that otherwise shows gains of 1.6% against the kiwi, 0.4% relative to the euro, Aussie dollar and sterling, 0.3% against the Swiss franc and 0.1% versus the Canadian dollar.

Stocks fell 1.8% in Hong Kong, 1.6% in India, 0.6% in Australia, and 0.5% in Japan.  The Ftse, Dax and Cac40 have traded down 1.0%, 0.8%, and 0.8%.  Toyota shares got whacked.

Oil and gold lost 0.9% and 0.8% to $76.26/barrel and $1102.70 per ounce.

German industrial orders sank 2.3% in December.  Analysts looked for no change.  Foreign orders and domestic orders dropped by 3.2% and 1.4%.  Domestic orders for capital goods, a lead measure of future business investment, dropped 2.0% in December and 5.8% in 4Q09.  Total orders were 8.4% higher in December, nonetheless, than a year earlier.

New Zealand unemployment jumped eight-tenths to a 10-year peak of 7.3% last quarter from 6.5% in 3Q09.  Forecasts centered on 6.8%. Jobs in 4Q were 2.4% lower than a year earlier.

Australian retail sales fell 0.7% in December, three times more than expected, but posted on-year growth of 3.0%.  Building approvals rose 2.2% in December and by 53.3% from a year earlier.  The Reserve Bank of Australia did not raise rates this week, pausing after three increases during the fourth quarter of 2009.

Bank Indonesia left its policy interest rate unchanged at 6.5% as analysts had expected.  The onset of tightening is anticipated around midyear by forecasters.

Investors await the policy decisions of the Bank of England at 12:00 GMT and the ECB at 12:45 GMT.  What will Trichet say about Greek debt?  Will Britain’s central bank halt its asset purchase program?  The Czech central bank also announces a rate decision today, and forecasters expect no change there.

Nakamura of the Bank of Japan warned of similar bond market disorder in Japan to what Greece is now experiencing.  He rejected the notion that deflation could be defeated by the Bank of Japan just printing a lot of money.

China’s foreign minister said, “the renminbi exchange rate has never been the major cause of the U.S. trade deficit.”  The remark was a reply to President Obama’s latest complaint about Chinese currency policy.  Bank lending in China reportedly remained very strong in January, surpassing CNY 1.5 trillion in spite of policy steps to rein such in.

British new car registrations were 29.8% higher than a year earlier in January after jumping 38.9% on year in December.  The Halifax British house price index increased 0.6% on month in January and accelerated to an on-year gain of 3.6% from 1.1% in December.

Switzerland’s trade surplus narrowed 31.3% to Chf 1.36 billion between November and December.

U.S. factory orders and jobless insurance claims data get released today.  The Canadian IVEY-PMI index gets reported, too.

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

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