Stocks Rebound After Chinese Data Release

October 13, 2010

Equities advanced 2.4% in India, 2.0% in Sri Lanka, 1.8% in Indonesia, 1.6% in Thailand, 1.7% in Singapore, 1.5% in Hong Kong, 1.4% in China and 0.7% in the Philippines and Malaysia.  Stocks are up 1.4% in Germany and France and by 1.2% in Britain.  Stocks lagged well behind in Japan (0.2%) and were unchanged in New Zealand and Australia.  Where currencies have appreciated sharply in recent months, it’s hard to be optimistic on earnings, exports, and share prices.

Ten-year sovereign bond yields rose by four basis points in Germany and by two bps in Japan and Britain.

Oil and gold prices climbed 1.2% and 0.9% overnight to $82.61 per barrel and $1358.40 per troy ounce.

The dollar lost 0.9% to the Australian dollar, 0.5% against the kiwi, 0.4% versus the euro, 0.3% relative to the Canadian dollar, 0.2% against sterling and 0.1% against the Chinese renminbi.  Dollar/Swissy is steady, and the dollar edged 0.1% higher against the yen.

China reported a $194 billion additional leap in its international reserves last quarter to $2.65 trillion as of end-September.  China’s trade surplus settled back to $16.9 billion in September but recorded a third-quarter surplus of $65.7 billion, 59.3% greater than the $41.2 billion surplus in 2Q10.  Exports were 32.5% larger in the third quarter than a year earlier.

Chinese bank lending in September of 595.5 billion yuan was 9.2% higher than in August and 19% greater than forecast.  M2 money expanded by a continuing very robust 19% in the year to September after 19.2% in August and 17.6% in July.

Japanese machinery orders were significantly stronger than forecast for a second straight month in August.  Core private domestic orders increased 10.1% and averaged 11.8% higher in July-August than the 2Q mean level.  A 0.8% increase in 3Q after +0.3% in the second quarter had been predicted by officials.  Foreign orders slid 3.7% in August, but their average level in July-August was 3.2% greater than the 2Q mean.

Unconventional liquidity injections by the Bank of Japan have not accelerated growth in Japan’s money supply or bank lending.  M3, M2, M1, and broad liquidity recorded on-year growth in September of 2.1%, 2.8%, 2.4% and 0.5% versus 3Q10-over-3Q09 advances of 2.1%, 2.8%, 2.2%, and 0.6%.  Bank loans were 1.8% lower in September and 3Q10 than a year earlier.  The Bank of Japan’s balance sheet contracted by JPY 4.0 trillion between end-September and October 10th.

Housing finance in Australia was unchanged in August from a month earlier after increasing 2.3% in July and dropping 1.0% in June.  Aussie consumer confidence rebounded 3.3% in October from a 5.0% decline in September.  Food prices in New Zealand rose 0.7% on month and 1.3% on year in September.

Germany’s six economic institutes revised their collective 2010 growth forecast to 3.5% from 1.5% projected six months ago.  The think tanks expect German GDP to show slower growth in 2011 of 2.0%, however.  Axel Weber, president of the German Bundesbank and a contender to become the next ECB president, suggested that central banks could be raised before all unconventional liquidity injections have been withdrawn.

Industrial production in the euro area increased 1.0% in August, exceeding analyst expectations, and was 7.9% greater than a year earlier.  Quarterly increases expressed at annualized rates were 9.4% in 1Q10 and 10.1% in 2Q, and non-annualized output in July-August was 0.9% higher than the average second-quarter level.  August’s increase would have been even larger if not for a 0.7% drop in energy.  The production of capital goods, intermediate goods, and consumer durables posted monthly advances in August of 3.0%, 1.4% and 1.8%.

The Conference Board index of British leading economic indicators rose 0.1% in September following a 0.2% rise in August.

Average weekly earnings in the U.K. rose 1.7% in the year to June-August and by 2.0% excluding bonuses.  The claimant count of unemployment rose by 5.3K in September after a 3.8K increase in August and a 1.0K dip in July.  In the prior nine months to June, unemployment had fallen by 16.9K per month.  Britain’s jobless rate stayed at 4.5% on a claimant basis in September and dipped to 7.7% in June-August from 7.8% in May-July on an ILO basis, which is more representative for comparisons with other economies.

French consumer prices dipped 0.1% in September and were 1.6% above a year earlier.  Both changes were lower than anticipated.

Switzerland’s producer/import price index slid 0.1% in September and was 0.3% above a year before.  Swiss inflation was lower than forecast.  The import price component recorded a monthly 0.3% drop.

Portuguese consumer prices firmed 0.2% in September and recorded a 12-month rise of 1.9%.

The Czech current account deficit of CZK 18.1 billion in August fell between deficits of CZK 32.5 billion in July and CZK 14.8 billion in June.

South African retail sales volume fell by 1.4% in August, slicing the on-year pace of rise to 4.6% from 8.0% in July.  These were disappointing and unexpected results.

U.S. import prices and monthly federal budget data are scheduled today, along with weekly oil inventories.  Canada releases house prices.

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

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