Asian Equities Falter

May 5, 2010

Stocks declined 3.8% in Indonesia, 3.5% in the Philippines, 3.0% in Taiwan, 2.1% in Hong Kong, 1.4% in Singapore, 1.5% in New Zealand and 1.3% in Australia.  Japan observed the final holiday of Golden Week, Children’s Day.  China’s CSI index bucked the trend, firming 0.6%.  In Europe, stocks fell sharply in Spain and Portugal, but the British Ftse is flat.  The German Dax and Paris Cac are trading just 0.1% lower.

The IMF chief, Strauss-Kahn, and Bundesbank President Weber each warned of contagion risks in Europe.  Meanwhile, Greek workers engaged in a 24-hour national strike of protest against budget cutbacks.

The yield on German bunds slid 0.3%, while that on British gilts is 0.2% higher.

The dollar advanced by a further 0.3% against the suspect euro and Swissy and firmed by 0.2% relative to the kiwi, yen, and Canadian dollar.  The greenback eased 0.1% against sterling and the Australian dollar.

Oil prices fell 0.8% further to $82.11 per barrel, while gold remained steady at $1169.00 per ounce.

Australian building permits jumped 15.3% last month, most in 7-1/2 years, and posted a 12-month increase of 51.6%.  The AIG services diffusion index rose to 52.3 in April from 48.4 in March.

Bank Indonesia left its key policy interest rate unchanged as expected at 6.5%.

Iceland’s central bank rate was cut by 50 basis points to 8.50%, also as expected.

Euroland retail sales were unchanged last month in volume terms.  Sales were also flat in the first quarter compared to 4Q09.  March sales were depressed by a 2.4% decline in Germany.  Overall euro area sales were 0.1% lower than a year earlier, a small drop than anticipated.

Britain reported a sharply improved PMI reading for construction of 58.2 in April after 53.1 in March and 48.5 in February.  The British Retail Consortium reported a 2.0% on-year rise in shop prices.

Spanish industrial production on a working-day adjusted basis was 5.4% greater in March than a year earlier.

The EU Commission projects that the euro area’s deficit and debt-to-GDP ratios will be 6.6% and 84.7% this year and 6.1% and 88.5% in 2011.  GDP and consumer prices are seen rising 0.9% and 1.5% in 2010.

Euroland’s service sector purchasing managers survey index for April was revised upward to 55.2 from a flash indication of 55.0 and readings of 54.9 in March, 51.9 in February and 50.7 last October.  The composite PMI of 59.3, best since August 2007, was 0.6.4 points higher than the reading in March.

  • Activity reaccelerated at the start of the second quarter in Euroland’s second biggest economy, France, where the composite PMI rose 3.4 points to 59.2, and the service-sector PMI increased 5.4 points to 59.2 as well.  Jobs declined less sharply.
  • Germany posted a composite PMI score of 59.3, up from 58.7 in March, and a service-sector PMI of 55.2 after 54.9 in March.
  • Italy’s service-sector PMI eased back to 54.5 in April from a 29-month high of 55.3 in March.
  • Spain’s service PMI likewise slid to 50.9 from 51.3 in March.  Such had been previously below 50, connoting a contraction.
  • Ireland’s PMI in services exceeded 50 for the first time since January 2008, printing at 51.0 after 49.6 in March, 48.8 in February and 44.4 in January.

Hong Kong’s composite PMI reading was a robust 55.9 in April.  Hong Kong continues to benefit from strong mainland China demand.

India’s service-sector PMI improved to 62.1 after scores of 58.1 in March and 60.9 in February.

Taiwanese consumer price inflation was 1.3% in April, with a benign core rate of 0.2%.  Wholesale price inflation accelerated sharply to 9.1% from 6.8%.

Canada reports building permits today, and Norway’s central bank may raise its key interest rate.  At 14:00 GMT, the U.S. service-sector purchasing managers survey data get released.

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



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