Hopeful about Eurogroup Meeting in Brussels

February 20, 2012

European officials are said to be near agreeing on a EUR 130 billion Greek bailout.  Their meeting starts at 14:00 GMT.  Greek Finance Minister Venizelos asserted that all conditions for aid have been met by his country.  China’s Vice President and front-contender to be the next leader expressed a willingness to support the euro.

In the meantime, investors are encouraged by Saturday’s news Saturday of the People’s Bank of China’s second reserve requirement reduction.  Like the first one announced November 30, the reserve ratio was cut by 50 basis points and will free roughly 400 billion yuan of liquidity (about $63 billion equivalent).  The ratio now becomes 20.5%.

The dollar is unchanged against the yen and yuan but has depreciated by 1.0% against the euro, 0.9% versus the Swiss franc, 0.8% against the kiwi, 0.7% versus the Aussie dollar, 0.6% against the loonie, and 0.3% relative to sterling.

Share prices climbed 1.1% in Japan.  The Nikkei closed at 9485 but poked briefly above 9500 for the first time in over a half year.  Equities gained 1.4% in Australia, 1.3% in The Philippines, 0.8% in Taiwan and New Zealand, 0.7% in Singapore and 0.5% in Thailand.  The German Dax has advanced 1.4%, while the Paris Cac and British Ftse are trading 0.8% higher.

Oil shot up 1.7% to $105.00, highest since May, and gold prices have risen 0.5% to $1735.00 per ounce.

The yields on ten-year German bunds and British gilts rose by three basis points apiece to 1.97% and 2.22%.  JGBs are unchanged.

U.S. markets will be closed today for President’s Day.  India also celebrated a holiday closure, commemorating the Hindu festival of Shiva.

Japan recorded a customs clearance trade deficit of JPY 1.475 trillion in January, three times larger than the JPY 479 billion shortfall a year earlier.  Exports fell by 20.1% to China, 13.7% to all Asia, 7.7% to the EUR, and 9.3% on year over all.  But exports to the United States were 0.6% greater than a year earlier.  The seasonally adjusted trade deficit widened 7.7% to JPY 613 billion from JPY 569 billion in December.

Japanese department store sales swung back into the red, posting a 1.1% on-year decline in January after firming 0.8% between December 2010 and December 2011.  The index of leading economic indicators printed at 94.0 in December, revised downward from 94.3 reported initially but still above November’s reading of 93.7.  The coincident index, 93.6, was 2.3 points better than November’s score.  Expressed as diffusion indices, where scores greater than 50 connote improvement, the leading and coincident indices in December were 50 and 90.

In Thailand, which was slammed by terrible floods late in 2011, real GDP plunged 10.7% in the fourth quarter and by 9.0% from 4Q10.  The drops were steeper than analyst forecasts.  GDP as a result edged up only 0.1% in 2011.

New Zealand producer output prices edged up 0.1% last quarter and receded in on-year terms to 4.2% from 4.7% in 3Q, 4.8% in 2Q and 5.3% in 1Q11.  Producer input prices increased 0.5% on quarter, a two-year low, and by 3.4% on year versus a gain of 4.3% in the year to 4Q10.

Taiwanese export orders were 8.6% lower than a year earlier in January.  The Filipino current account swung to a $864 million surplus last month, an improvement of almost $1.0 billion from December’s reading.  Hong Kong CPI inflation of 6.1% in January surpassed December’s 5.7% and analyst forecasts.

French business sentiment in manufacturing was unchanged in February.  The reading of 92, however, was below scores of 94 in December and 96 in November.

Italian industrial orders jumped 5.5% in December but fell by 3.9% in the fourth quarter.  Orders were also 4.3% lower than a year before.

Britain’s Rightmove house price index leaped 4.1% on month in February and recorded a 1.4% on-year increase.  The housing market has improved according to other recently reported gauges as well.

The Greek current account deficit in December was EUR 2.17 billion, a shade less than in November.  Finnish consumer prices rose 0.6% in January and to a slightly higher 12-month increase of 3.2%. 

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

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