Misgivings Surface about EU Summit

December 12, 2011

In an inactive day from a data release standpoint, Commodity prices, European stocks and major European currencies have weakened.  The pattern is all too familiar.  The immediate immediate market reaction to plans to stop the euro debt problem is fleeting once analysts point out that symptoms but not causes have been addressed.

The dollar has strengthened 1.1% against the kiwi, 1.0% versus the Australian dollar, 0.9% relative to the euro, 0.7% against the Swissie and loonie, 0.3% versus sterling, and 0.2% against the yen.  The yuan is somewhat firmer against the greenback.

The German Dax, Paris Cac, and British Ftse so far have dropped by 1.8%, 1.1%, and 0.8%.  In the Pacific Rim, share prices slumped 1.0% in China, 2.1% in India, and 0.9% in Thailand but advanced by 1.4% in Japan, 1.3% in South Korea, 1.2% in Australia, and 0.9% in New Zealand and Indonesia.

Gold and oil prices fell sharply, losing 1.8% and 1.4% to $1686.50 per ounce and $98.07 per ounce.

Yields on 10-year German bunds and British gilts fell by 8 and 5 basis points.

China’s trade surplus contracted somewhat less than projected in November, shrinking to $14.53 billion (smallest since May).  In a sign of slowing demand, on-year export growth of 13.8% was down from 15.9% in October, 17.1% in September, and 24.5% in August.  Import growth of 22.1% exceeded expectations by was the lowest gain since June nonetheless.

Industrial production in India was 5.1% lower than a year earlier in October.  A much smaller decline had been forecast.

Australia posted a diminished AUD 15.95 billion trade surplus in October, which was an 8-month low.  Exports edged 0.2% lower, while imports rose 2.4% from September.  Mortgage loan growth of 0.7% in October was the weakest gain in four months.  Investment loans sank 5.5%.

Japanese data were disappointing too.  consumer confidence retreated to a 3-month low of 37.5 in November from 38.6 in October and 38.5 in September.  Machine tool orders posted a 12-month 15.9% rate of increase in November, down from 20.6% in October. 

Turkish GDP grew 1.7% last quarter but decelerated to 7.7% in on-year terms from 8.3% in 2Q.  Turkey’s current account deficit of $4.2 billion in October was 35% smaller than the month before. 

France’s current account deficit of EUR 4.5 billion in October was a tad greater than in September.  The Dutch trade surplus of EUR 3.4 billion was marginally smaller than in September.  Ireland’s purchasing managers index in November printed below the 50 threshold at 47.7 after an even lower reading of 45.2 in October.

German wholesale prices rose 0.7% in November and by 4.9% from a year earlier.  Oil product prices jumped 2.5% on month and by 16.8% on year.

Danish consumer prices dipped 0.1% in November and decelerated to 2.6% on year in November from 2.8% a month earlier.  Romanian consumer prices advanced by 0.4% on month and 3.4% on year in November.

The U.S. Federal budget figures for November will be reported this afternoon.  Bank of Canada Governor Carney speaks publicly today.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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