Market Eyes on Europe

January 9, 2012

French President Sarkozy and German Chancellor Merkel are holding talks today in Berlin.  A fair number of European economic statistics were released.  Governments in Spain, Italy, and Greece plan debt auctions this week, and monthly interest rate policy meetings take place Thursday at the ECB and Bank of England. 

Japan was closed for Coming of Age Day.  China released money and credit figures for December. 

The dollar softened 0.7% against the kiwi, 0.4% relative to the euro and Swissie, 0.3% versus the yen, and 0.1% against sterling.  The loonie and Aussie dollar are steady, and the yuan slipped 0.1%.

Share prices in the Pacific Basin advanced 3.4% in China, 1.5% in Hong Kong, 1.3% in The Philippines, 0.8% in Thailand and 0.5% in Indonesia and Malaysia, but such fell 0.9% in Singapore and South Korea, 0.2% in India and New Zealand, 0.4% in Taiwan, and 0.1% in Australia.  The German Dax, Paris Cac and British Ftse are 0.5%, 0.2%, and 0.1% softer.

The yields on 10-year German bunds and British gilts climbed three and two basis points.

Oil eased 0.6% to $100.92 per barrel in spite of continuing Iranian threats to shut the Straits of Hormuz.  Gold edged 0.1% higher to $1617.80 per ounce.

On-year growth in Chinese money and bank lending exceeded expectations last month.  M2 accelerated to 13.6%, strongest since July, from 12.7% in the year to November.  Yuan loans reached CNY 640.5 billion, the most since 740 billion yuan last April and up from CNY 562 billion in November.  Loans in full 2011 were 6.0% lower than the amount in 2010, but such are expected to rebound in 2012, and monetary policy becomes somewhat more accommodative.

German industrial production fell 0.6% in November, which was a bit less than forecast, and posted a 3.6% 12-month advance, down from 4.1% in the year to November.  While factory output fell 1.0%, led by a 1.4% drop in intermediate goods, construction rose 4.5%.  Industrial production in October-November was 1.5% smaller than the level in the third quarter. 

Germany’s current account surplus surpassed expectations in November, printing at EUR 14.3 billion after a EUR 10 billion surplus in October.  The EUR 117 billion year-to-date surplus was 4.2% smaller than a year earlier.  The seasonally adjusted trade surplus widened 20% on month in November to EUR 15.0 billion, reflecting a 2.5% increase in exports and a 0.4% on-month dip in imports.  The seasonally adjusted trade surplus had averaged EUR 13.3 billion per month in 3Q and EUR 12.1 billion per month in 2Q.

The Sentix gauge of investor sentiment toward the euro area recovered 2.9 points to minus 21.1 in January.  Current conditions were perceived to have worsened by 1.5 points, but future expectations improved by seven points.

Greek industrial production rose 4.1% in November, cutting the 12-month rate of decline to 7.8% from 12.3%.

France’s trade deficit narrowed 21% to EUR 4.4 billion in November.  Denmark’s current account surplus widened 58% to DKK 12.6 billion.  Also in November, the Hungarian trade surplus increased 36% to EUR 666 million, while Romania’s trade deficit widened 13.5% to EUR 900 million.

Czech retail sales rose 0.7% on month and 0.5% on year in November, beating forecasts.  Czech CPI inflation edged up a tenth percentage point to 2.4% in December and averaged 1.9% last year.  The Czech jobless rate increased further last month to 8.6%.

Swiss retail sales volume climbed 0.3% on month and 1.8% on year in November.  That economy’s jobless rate of 3.3% in December was a bit above forecasts.  The Irish construction purchasing managers index of 49.9 indicated marginal contraction.  Sweden’s services index went up 0.1% on month and 2.6% on year in November.

Retail sales in Australia stalled in November, breaking a string of four consecutive increases.  Sales were 3.1% greater than a year earlier.  New home sales rose 6.8%, however, to a 21-month high, and the construction PMI index improved 1.4 points to 41.0 last month, best since February.  New Zealand posted a trade deficit in November of NZD 308 million.  Such was the fourth straight shortfall, but the trade position over the past 12 reported months had an average surplus of NZD 55 million per month.

South Korean producer price inflation fell to 4.3% last month from 5.1% in November. 

In North America, scheduled data releases today include U.S. consumer credit, Canadian housing permits, and Mexican consumer and producer prices.  The New Hampshire Republican presidential primary is tomorrow.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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