A Better Market Tone
June 24, 2011
Equities rose 2.9% in India, 2.4% in China, 1.9% in Hong Kong, 1.7% in South Korea, 1.2% in The Philippines, 0.9% in Japan and Thailand, 0.7% in Indonesia and Singapore, and 0.2% in Australia. The Paris Cac, British Ftse, and German Dax are 1.7%, 1.4%, and 1.3% higher.
The ten-year Japanese JGB yield touched a 2011 low of 1.10%. But the 10-year German bund and British gilt yields rebounded by a single basis point each.
Oil prices recovered 0.5% and remain above the key $90 level at $91.44 per barrel. Gold is steady at $1520.60 per ounce.
The dollar lost 0.4% against the yen, Swiss franc and Australian dollar. The dollar firmed 0.2% against the Canadian dollar and euro and by 0.1% versus the yuan, but it slid 0.1% vis-a-vis sterling and the kiwi.
Investors are relieved that the EU/ECB/IMF agreed contingently on aid to Greece, whose parliament must next pass a multi-year austerity package next week.
Another market support came from the German IFO Institute business climate index for June, which was better than anticipated with an overall reading of 114.5, up from 114.2 in April and May. The main surprise came from a 1.8 rise in current conditions to 123.3, a new high for the move. Expectations slid 1.1 points to 106.3. In the four months since February, expectations have dropped 4.4 points, while current conditions have risen 3.1 points. Sectoral indices showed a 4.4-point improvement in wholesaling to 21.5, but a 3.6-point drop in retail, which expectations have softened. Construction rose 3.6 points, while manufacturing remained robust at 27.7 after a 27.8 reading in May.
In contrast, the IFO services climate index dropped to a reading of 26.4 in June from 27.4 in May, 28.9 in April, and a high of 33.0 in February.
The Czech Republic, South Korea and France released consumer confidence measures for June. The Czech index fell to 80.0 from 81.3 but was accompanied by news of a 0.3 increase to 93.5 in business sentiment. South Korean consumer confidence eased two points to 102. The French index of consumer sentiment stayed level at 83, although the May index was revised down from 84 reported initially.
Italian retain sales rose 0.4% on month and 0.5% on year in April. The results surpassed expectations. Hungarian retail sales rose 0.4% on month in April but posted a bigger-than-assumed 1.3% drop from a year earlier. The Greek trade deficit narrowed 28.7% to EUR 1.22 billion in April and weaker imports.
Euroland’s index of leading economic indicators fell 0.2% in May, reversing April’s uptick. Spanish producer prices fell 0.3% in May and recorded a smaller 12-month 6.7% rate of increase.
Japanese corporate service prices eased 0.3% in May on top of a 0.2% monthly drop in April. On-year CSP deflation deepened to 0.9% from a 0.7% drop in the year to April. Malaysian consumer price inflation ticked up to 3.3% in May from 3.2% in April. Vietnamese consumer prices jumped 1.1% in June and were 20.8% higher than a year earlier.
The final revision of 1Q U.S. GDP will be released today, along with new monthly data on orders for durable goods.
Copyright Larry Greenberg 2011. All rights reserved. No secondary distribution without express permission.
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