North Korean Dictator Dies
December 19, 2011
Kim-Jong II died of a heart attack. His presumed 28-year-old son and heir apparent, Kim Jong Un, has been named leader of this rogue state. However, a power struggle cannot be ruled out. The South Korean Kospi index fell 3.4%, and the won fell, too.
S&P did not announced a wholesale downgrading of Euroland member credit ratings as had been feared. Such could still happen soon.
Other markets in the Pacific Rim had a difficult session in sympathy with Korean geopolitical uncertainties. Share prices dropped 2.4% in Australia, 2.2% in Taiwan, 1.3% in Japan, 1.6% in Singapore, 1.2% in Hong Kong, and 0.7% in India. This weakness did not extend into Europe, however, where the German Dax and Paris Cac have risen 0.7% and 0.4%.
The dollar is narrowly mixed, with gains of 0.3% against sterling, 0.2% versus the Aussie dollar and Swiss franc, and 0.1% relative to the yen and euro but losses of 0.2% against the loonie and yuan and 0.1% vis-a-vis the kiwi.
The yields on 10-year German bunds and British gilts advanced by five and four basis points. That on Japanese JGBs slid two bps.
Gold is unchanged at $1598.30 per ounce. Oil firmed 0.3% to $93.85 per barrel.
Chinese central bank buying of foreign exchange to contain upward pressure on the yuan during November was the most in 47 months.
Construction output in the euro area recorded a third straight monthly drop, falling 1.4% in October after declines of 1.5% in September and 0.2% in August. The level in October was 6.2% weaker than the 3Q mean. Euroland’s current account swung back to a seasonally adjusted deficit in October of EUR 7.5 billion versus a EUR 2.2 billion surplus in September and deficits in all earlier months this year. The trade balance deteriorated by EUR 7 billion to a EUR 4.4 billion deficit. The unadjusted current account deficit of EUR 59.7 billion during the twelve months to October was somewhat greater than twice as big as that in the previous year to October 2010.
Britain’s Rightmove house price index dropped 2.7% this month but was 1.5% higher than in December 2010.
The French index of leading economic indicators rose 0.5% in October, almost reversing September’s 0.6% drop. The coincident index stagnated between August and October. The Dutch current account surplus narrowed to EUR 10.4 billion last quarter from EUR 11.3 billion in 2Q. Italy’s trade deficit as expected grew in October to EUR 1.97 billion, 49% greater than in September.
Finnish producer prices were unchanged last month and 3.7% higher than in November 2010. Hungarian business and consumer confidence respectively dropped by 0.5 and 3.8 points to negative readings of 14.5 and 53.3 this month. Overall economic sentiment produced a reading of minus 24.6 versus minus 23.2 in November.
New Zealand data releases showed
- A better Services Index reading of 56.6 in November after 51.0 in October.
- A drop in consumer confidence to a reading of 101.3 in 4Q after 112.0 in the third quarter.
- A weaker score in the NBNZ business activity index of 25.7 after 28.8 in November with business sentiment down 1.4 points to 16.9.
Japanese department store sales were 1.9% lower in November than a year earlier after posting a 0.5% drop in October. Tokyo sales were down 3.0% versus a 1.9% slide in the year to October.
The United States National Association of Home Builders index arrives today. So do Canadian wholesale sales figures and Belgian consumer confidence. ECB President Draghi will be testifying before the EU parliament.
Copyright 2011, Larry Greenberg. All rights reserved. No secondary distribution without express permission.