Dollar Down and Share Prices Up

May 28, 2012

U.S. markets will be closed for Memorial Day, and Whit Monday observances held down activity in Europe and selected other regions.

There’s been a bit of a respite in the degree of risk aversion.  Greek opinion polls over the weekend indicated that Greek voters are have second-thoughts about Grexit, fearing that abandoning the euro might be even more catastrophic than pursing mandated austerity and staying a member.

Share prices rose 1.6% in China, 1.2% in India, 0.9% in Taiwan, 1.0% in Australia, 0.5% in the Philippines, Hong Kong and South Korea, 0.4% in Indonesia and0.2% in Japan.  The British Ftse, Paris Cac and German Dax have traded up 1.0%, 0.9%, and 0.8%, but the IBEX is 0.5% weaker.  Stocks also fell by 0.7% in New Zealand and 0.4% in Vietnam.

The dollar dropped back 1.5% against the kiwi, 1.3% versus the Australian dollar, 0.7% relative to the loonie, 0.6% versus the euro and Swiss franc, 0.4% against the yen and 0.1% vis-a-vis the yuan.

Oil and gold prices have risen 1.1% and 0.7% to $91.81 per barrel and $1582.40 per troy ounce.

The 10-year German bund and British gilt yields rose by two and one basis points, whereas the 10-year Japanese JGB is a basis point lower.  An 18-bp increase in the Spanish 10-year sovereign debt yield lift its premium against German bunds above 500 basis points and to a record width. 

Italian bonds reacted adversely to a drop in that economy’s business sentiment index to a 33-month low of 86.2 in May from 89.1 in April and quarterly average readings of 91.6 in 1Q12 and 93.4 in 4Q11.

Vietnam’s repurchase rate has been reduced 100 basis points to 11.0%.  On-year growth in Vietnamese industrial output slowed to 6.8% from 7.5% in April.

In a scheduled speech, Reserve Bank of Australia Governor Stevens neglected to comment on contemporary monetary policy.

Japanese corporate service prices were unchanged on month in April and posted a 12-month dip of 0.2%, same as in March.  Minutes from the Bank of Japan’s meeting of April 27 spoke of a need to loosen policy to support economic recovery.  This justified an increase of the asset purchase program by JPY 5 trillion net to JPY 70 billion.

There was no shift in Chinese monetary policy announced over the weekend.  Chinese industrial profits were 2.2% lower in April than a year earlier.

Britain’s Hometrack house price index ticked 0.2% higher in May but remained 0.6% lower than a year earlier.  Such had fallen 0.9% between April 2011 and April 2012.

Irish retail sales fell 1.5% on month and 2.7% on year in April.  The Greek trade deficit of EUR 1.37 billion in March was 27% larger than in February.  Sweden’s trade surplus of SEK 4.7 billion in April was down from an SEK 5.4 billion surplus in March.  The SEK 27 billion year-to-April surplus was a bit higher than the surplus of SEK 24.4 billion in the first four months of 2011.  Swedish retail sales on a volume basis slid 0.2% in April and posted a smaller 0.8% 12-month rate of increase. Finnish consumer confidence improved to 1.6 points to 12.0 in May but was 3.4 points lower than a year earlier.

U.S. markets are closed today.  The Bank of Israel reveals its latest interest rate policy decision.

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

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