Firmer Equities, Softer Dollar but Not Against the Yen

August 26, 2010

Stocks in the Pacific Rim advanced by 0.8% in Australia and Malaysia, 0.7% in Japan, and 0.3% in China and India.  In Europe, the Paris Cac and British Ftse are 0.7% stronger, and the German Dax has edged 0.4% higher.

Dollar/yen is steady at 84.60.  Together the two currencies lost 0.5% against the euro, sterling, Swissy and kiwi, and 0.4% relative to the loonie and Aussie dollar.  The Chinese yuan is steady and maginally softer than 6.8 at 6.8002 per dollar.

Ten-year sovereign bond yields are unchanged in Germany, up 3 basis points in Japan, and 1 basis point higher in Britain.

Oil recovered 1.2% to $73.41 per barrel.  Gold climbed 0.2% further to $1244.10 per ounce.

No significant data were released overnight.  The market is focused upon today’s U.S. weekly jobless claims report, tomorrow’s speech by Fed Chairman Bernanke at the Jackson Hole Central Banker Symposium, and political pressure in Japan to initiate new monetary and fiscal policy stimulus.

German consumer confidence improved further to 4.1 in September from 4.0 in August, 3.6 in July and 3.5 in July.  Most other euro area economies do not share the strength of Germany and France.  Italian consumer confidence suffered an unexpected setback in August, dropping to 104.1 from 105.6 in July.

Dutch consumer confidence rose three points to minus 11 in August.

Bank lending in the euro area to the private sector accelerated to an on-year pace of 0.9% in July, best since June 2009, from 0.5% in June and 0.2% in May.  Private sector credit growth improved to 0.6% from 0.1% in the prior two months.  M3 rose 0.2% on year in July and by 0.1% in May-July. 

Swiss jobs grew 0.6% between 2Q09 and 2Q10, a better advance than that of 0.1% in the year to the first quarter of 2010.

Sweden’s 8.0% jobless rate in July was a tad above expectations, but hours worked advanced by 7.0%.  The Swedish trade surplus of SEK 11.3 billion last month exceeded the SEK 10.6 billion surplus of July 2009 in spite of stronger import growth (30.0%) than export growth (22.3%).  The year-to-July surplus of SEK 43.7 billion was 32.2% smaller than a year earlier, however.  Swedish producer prices firmed 0.1% on month and 1.0% on year in July.  Iceland’s CPI increased 0.2% on month and 4.5% on year in August.  On-year inflation in July had been 4.8%.

Spanish GDP growth last quarter was confirmed at 0.2% from the first quarter, and the on-year dip was revised to minus 0.1% from minus 0.2% reported earlier.  Between 2Q09 and 2Q10, exports and consumption rose 10.5% and 2.0%, but investment slumped 7.0% with an 11.4% decline in construction.

The British group CBI released results of its monthly survey of retailers, which showed less improvement than forecast.  The index rose just two points to 35, still the best since April 2007.

As expected, the central bank in the Philippines left its overnight borrowing rate steady at 4.0%.  Investors still await the first tightening move in that country.

Industrial production in Singapore slowed to a 12-month expansion rate of 9.9% in July from 26.1% in June and 58% in May.

Hong Kong posted a HKD 30.5 billion trade deficit in July.  Imports (24.9%) recorded a stronger 12-month increase than exports (+23.3%).  Both of those advances were smaller than anticipated.

Producer prices in South Africa rose 1.3% on month in July, a whole percentage point less than forecast.  On-year PPI inflation slowed to 7.7% from 9.4% in June.

According to Conference Board data, Australia’s index of leading and coincident economic indicators respectively rose 0.1% and 0.3% in June.  Following elections this past weekend, Australia’s two main political parties hold 71 seats apiece, five short of what’s needed for a majority.  The prospect of a hung parliament means the proposed mining sector tax will likely be delayed.

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

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