Chinese GDP Disappointment Quells Mini-Stock Market Rally

April 13, 2012

Pacific Rim equities extended the Wednesday-Thursday recovery in global share prices.  Stocks advanced 1.8% in Hong Kong, 1.6% in Taiwan, 1.5% in Pakistan, 1.3% in Thailand, 1.2% in Japan, and 1.0% in Australia and The Philippines.  In Seoul where there was some relief that North Korea’s rocket launch had failed, stocks gained 1.1%.

Then came the release of Chinese data.

  • GDP increased 1.8% between 4Q11 and the first quarter of this year and was only 8.1% greater than a year earlier.  This increase was smaller than even the guarded expectations of analysts and the lowest on-year advance since a rise of 7.4% between 2Q08 and 2Q09.  Real GDP had risen 11.8% in the year to 1Q10 and 9.7% in the year to 1Q11.
  • Industrial production in March was 11.9% greater than a year earlier.  That’s the second sub-12% result in a row.  On-year growth had been 12.8% in December, 13.8% last September, 15.1% in June 2011, and 14.8% in March 2011.
  • Retail sales grew an as-expected 15.2% in the year to March, down from on-year gains of 18.1% in December, 17.7% in September and 17.7% in June 2011.
  • Property prices sank 14.6% on year in the first quarter.

The Monetary Authority of Singapore unexpectedly tightened its policy stance at its semi-annual review, reversing a reduction made last October in the slope of the Singapore dollar’s target trading band.  This action was taken after news that retail sales rose by a greater-than-forecast 19.0% in the year to February and that real GDP in Singapore had risen by a larger-than-projected 9.9% from 4Q11 at an annualized rate.

Peru’s central bank left its key interest rate at 4.25% where such has been since May 2011.

The Bank of Korea as expected left its key 7-day repo rate unchanged at 3.25%, where such has been since June 2011.

Minutes from the Bank of Japan’s Board meeting of March 12-13 struck a wait and see stance as policymakers sought to assess the impact of easing moves undertaken at their February meeting.

Final German CPI figures showed increases in March of 0.3% from February and 2.1% from March 2011.  Non-energy consumer prices were 1.6% above a year earlier.  The harmonized CPI index went up 0.4% on month and 2.3% on year.

British producer output prices climbed 0.6% on month in March but slowed to a 26-month low of 3.6% in year-over-year terms from 4.1% in the year to February.  The core PPI-O index showed a half-percentage point slowdown to 2.5% from 3.0% in February.  Producer input price inflation decelerated to 5.8% from 7.8%.  The core PPI-I measure was 4.3%, down from 5.6% in the year to February.

Italian CPI inflation held at 3.3% last month and was 3.8% on a harmonized basis.  Spanish CPI inflation ticked down a tenth of a percentage point to 1.9%, but investor concerns about Spanish debt were fueled further by news that Spanish bank borrowing from the ECB swelled 49% to over EUR 225 billion last month.  Speculation is high that the ECB is going to resume its purchases of national bonds, a policy weapon not engaged since the early days of this year.  Finnish CPI inflation of 2.9% in March was down from 3.1% in February.

Finland’s current account swung to a EUR 230 million deficit in February from a EUR 175 million surplus the month before.  The Dutch trade surplus narrowed 26% between January and February. Italian industrial production adjusted for the number of business days was 6.8% less in February than a year earlier.  Hungarian industrial output was 1.1% greater than a year earlier in February. 

Scheduled U.S. data today feature the consumer price index and the preliminary U. Michigan index of consumer sentiment.  The Fed’s policy doves, Bernanke and Dudley, will be out in force today with public speeches.  Brazil reports retail sales.

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

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