Focus Continuing on Europe, and the Mood Remains Apprehensive

March 26, 2012

The dollar climbed 0.6% against the yen but is otherwise narrowly mixed, with losses of 0.3% versus the loonie and 0.1% against the Australian dollar but gains of 0.2% vis-a-vis the euro and Swissie and 0.1% relative to sterling.  The dollar was fixed in Beijing at a new post 2005 low of 6.2858 yuan but in fact is 0.1% firmer right now.

Share prices in the Pacific Rim fell 1.8% in India, 1.4% in Taiwan, 0.5% in Singapore and Thailand, 0.4% in South Korea and 0.2% in Australia.  Stocks edged up 0.1% in China and Japan.  In Europe, such are up 0.4% and 0.3% in Frankfurt and London but 0.1% softer in Paris.

Ten-year German bund and British gilt yields rose by five and four basis points.  That on Japanese JGBs slid two basis points.

Oil and gold prices slipped by 0.4% and 0.1% to $106.47 per barrel and $1660.20 per ounce.

A 7.2 magnitude earthquake hit central Chile.

Rich Santorum won the Louisiana primary over the weekend but trails heavily in the total delegate count to Romney.

There has been a bunch of developments in Europe.

  • After releasing its March German business climate index, the IFO Institute claimed that Euroland’s main economy “is losing some of its momentum.”
  • Spain’s new conservative government failed to win a majority of seats in Andalucia regional elections, taking 50 versus 47 seats won by the Socialists.
  • Spanish bond yields firmed in response.  Italian Prime Minister Monti expressed concern over the increase.
  • In regional elections in the Saarland, German Chancellor Merkel’s CDU Partt broke a streak of regional setbacks and will extend the 12 years that it has ruled that state government.  The CDU took 35.2% of the vote, but the Free Democrats got only 1.2%.  The FDP is the CDU’s junior partner in the national election.  National parliamentary elections will be held in 2013.
  • The index of euro area coincident indicators slid 0.1% in February after showing no change in January.  The index of leading indicators went up 0.8%.
  • Consumer confidence in Italy unexpectedly rose 2.4 points to a reading of 96.8 in March.
  • A summit of finance ministers is scheduled for March 30-31 to hammer out details of the EU bailout fund.

The aforementioned IFO business climate index ticked up 0.1 points to 109.8 in March.  Current conditions stagnated, while expectations edged up 0.3 points.  All of the overall improvement was concentrating in retailing, as manufacturing, construction and wholesaling posted lower scores than in February.  The overall reading, moreover, remains 4.5 points below the 12-month peak of 114.3 set last June.  The IFO services index fell 0.5 points to 22.4 and was 5.6 points weaker than seen in March 2011.

In Eastern Europe, Czech business sentiment rose 0.9 points in March, while consumer confidence weakened 4.1 points, leaving the composite confidence index just 0.1 point higher on balance.  Romanian on-year money growth accelerated last month.  Both M3 and M2 were more than 9.5% higher than in February 2011.  Retail sales in Poland slowed to a 12-month 13.7% advance in February (this being a leap year).  Likewise, Hungarian retail sales posted a smaller 0.6% rise from a year ago.  The Polish jobless rate of 13.5% in February was 0.3 percentage points higher than in January and 0.1 percentage points above the year-earlier reading.

Finnish producer prices rose 2.2% in February from a year earlier, a bigger 12-month gain than those of 1.8% in January and 1.4% in December.

New Zealand posted a larger $161 million trade balance last month than expected, but exports, which fell 6.9% on year, were smaller than assumed.

Industrial output in Singapore was 12.1% higher in February than a year earlier.

U.S. pending home sales will be released today.  Fed Chairman Bernanke and ECB President Draghi both have public speaking engagements.  The Bank of Israel will announce its latest interest rate decision.

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

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