More Hopeful Market Mood than Yesterday

February 28, 2012

Equities in the Pacific Rim rose by 1.7% in Hong Kong, 1.6% in India, 1.1% in Indonesia, 1.0% in Thailand, 0.9% in Japan, 0.8% in Singapore and 0.2% in New Zealand, but the Australian bourse dipped 0.1%.  In Europe, the German Dax, Paris Cac and British Ftse have firmed 0.5%, 0.4%, and 0.2%.

The dollar settled back overnight by 0.3% against the euro, Swissie, and loonie, 0.2% against the yen and 0.1% relative to the Aussie dollar and sterling.  The dollar rose 0.2% against the kiwi and is steady versus the yuan.

Oil prices eased another 0.2% to $108.35 per ounce.  One reason for today’s more hopeful mood is the downward correction of oil, but such seems to be no more than that.  Oil prices remain very elevated and, for seasonal reasons, likely to firm further over the near term.  Gold prices are 0.2% higher at $1778.50 per ounce.

Ten-year sovereign debt yields slid two basis points in Britain and a basis point each in Japan and Germany.

Other lifts to confidence came from

  • Approval of a second Greek bailout in Germany’s parliament by a vote of 401-90-5.
  • A decently received Italian bond auction that produced lower average interest rates.
  • High expectations ahead of tomorrow’s second ECB 36-month refinancing operation.
  • Better-than-expected Euroland sentiment indices.

To be sure, S&P downgraded Greek debt further, but that was a contingency move in case the upcoming planned debt swap misfires.  It it goes okay, the rating will be raised.

Japan’s Shoko Chukin index of small business sentiment dipped further from a 50 reading to 45.3 in February from 45.7 in January.

Large-Store Japanese retail sales recorded an on-year decline of 1.0% in January versus a drop of 1.3% between 4Q10 and 4Q11 and a 1.8% decrease in 2011.  Department store and supermarket sales respectively declined by 1.2% and 0.8% on year.  Total retail sales were 1.9% higher than a year earlier.  That’s a second straight increase after a gain of 2.5% in the year to December.  Total retail sales in November had been 2.2% lower than a year before, and such declined by 1.2% in calendar 2011.

The euro area’s economic sentiment index improved a whole point to 94.4 in February from 93.4 in January and 92.8 in December.  Consumer confidence rose 0.4 points to minus 20.3.  Industrial confidence went up 1.2 points to minus 5.8.  There were confidence gains of 1.2 points in retail and 3.6 points in construction, while service sector confidence slid 0.2 from minus 0.7 to minus 0.9.  A separate business climate index for the euro area rose 0.03 points to minus 0.18.  Such bottomed at minus 0.42 in November but remains well below its February 2011 reading of 1.43.

German inflation accelerated in February due to pressures on energy and seasonal foods.  Among the first four reporting states, the CPI posted monthly rises of 0.8% in Brandenburg and Hesse, 0.9% in Bavaria, and 0.7% in Saxony.  On-year inflation ranged from 2.2% in Hesse to 2.5% in Brandenburg.

German consumer confidence printed in March at 6.0 after February’s 5.9 reading.  This was the best score in a year.  Consumer sentiment also rose in Portugal but remained very depressed with a reading of minus 55.8 in February following minus 57.1 in January.  The Swiss UBS consumption indicator slipped to 0.92 in January from 0.94 in December.

Three Swedish indicators were released today.  A large 9.4% monthly contraction of imports caused a fivefold increase of the trade surplus to SEK 11.3 billion in January from December.  Retail sales volume in January was 1.5% greater than a year earlier.  That rise and a 0.1% month-on-month uptick exceeded expectations.  Producer prices increased 0.5% last month and were just 0.1% greater than a year earlier.

Icelandic producer price inflation of 5.7% in January after 6.7% in December was the lowest in 11 months.  The Greek trade deficit narrowed 28% on month to EUR 840 million in December.  Belgian consumer price inflation remained steady at 3.7% this month.  Austria’s purchasing managers index among manufacturers ticked 0.2 points higher to 52.0 in February. 

The Confederation of British Industries reported its monthly survey of retailers.  The distributive trades index was far better than assumed, jumping 20 points to minus 2 in February.  Analysts were looking for only a 3-point increase.

The crucial Michigan Republican primary is being held today.  Arizona’s primary is also taking place.  Several U.S. economic indicators get released:  the Case-Shiller house price index, consumer confidence from the Conference Board, the Richmond Fed factory index, and most importantly durable goods orders.  Weekly chain store sales are due, too. 

Hungary’s central bank is projected to report no change in its benchmark interest rate following this months policy meeting.

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

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