European Share Prices Higher after Drop in Asia

May 31, 2012

May 31st is seeing the typical month-end deluge of economic data, some of which have proved better than expected.

  • The volume of German retail sales rose 0.6% in April on top of May’s 1.6% increase.
  • Euro area CPI inflation slowed more than expected to 2.4% in May from 2.6% in June.
  • Swiss real GDP advanced 0.7% last quarter instead of stagnating as analysts had projected.  This was the biggest rise since 3Q10.
  • Japanese housing starts and construction orders posted on-year increases in April of 10.3% and 16.2%.
  • Japanese motor vehicle output in April was 173.8% greater than in quake-dampened April 2011.
  • French consumer spending in April climbed 0.6% on month, twice expectations.
  • Britain’s nationwide house price index rose 0.3% in May, the first on-month increase since February.  It’s on-year drop of 0.7% was smaller than assumed.
  • Filipino GDP grew 2.5% last quarter and by 6.4% on year, exceeding expectations.

European share prices also are benefiting from expectations that Irish voters today will endorse the EU Fiscal Stability Treaty.

Considerable concern continues about the plight of Japanese banks and the contagion that such may cause.

Stocks have risen by 0.8% in London, 0.6% in Madrid and Paris and 0.4% in Frankfurt.  In the Pacific Rim, by contrast, Japan’s Nikkei fell by 1.1%, and share prices slumped 2.2% in Indonesia, 1.4% in Vietnam, 0.6% in India, 0.4% in Australia and Singapore, and 0.3% in China and Hong Kong.

The dollar has settled back 0.4% against the yen, 0.3% versus the euro, Aussie dollar and kiwi, 0.2% relative to the Swiss franc, and 0.1% against sterling.  The dollar firmed 0.2% against the loonie and is 0.1% higher relative to the yuan, which Chinese officials have been allowing to retreat this month.

Oil and gold prices bounced up 0.2% to $88.01 per barrel and $1568.0 per ounce.  Commodities, nonetheless, fell sharply in May as a whole.

Brazil’s key Selic interest rate was cut 50 basis points to a record low of 8.5% by monetary authorities.  The move had been anticipated.

Japanese industrial production edged up 0.2% in April on top of a 1.3% advance in March.  Output in April was 13.4% greater than a year earlier and 0.5% above the 1Q12 mean. Officials project production will decline 3.2% in May and recover 2.4% in June, implying a 0.8% 2Q-over-1Q drop.

Japanese labor cash earnings posted a 0.8% on-year increase in April, down from 1.3% in March and below expectations.  Stock and bond transactions last week generated a 283 billion yen net capital inflow after an outflow of JPY 403 billion in the prior week.

South Korean industrial production rose 0.9% in April, which was better than forecast, but was unchanged from a year earlier.

Business sentiment in New Zealand fell 8.7 points to a 4-month low of 27.1 in May.  M3 money growth accelerated to a 5.5% 12-month rate of increase from 5.0% in March.  Retail sales in Hong Kong posted a 7.6% rise in the year to April, down from 13.2% in May.  Thailand’s current account in 1Q12 was 70% smaller than in 4Q11.  Malaysian PPI inflation slowed to 2.3% in April from 2.9% in March.

Australian private investment increased 6.1% last quarter and by 28.6% on year, surpassing expectations.  Aussie building permits fell 8.7% on month and 24.1% on year in April, falling well short of expectations.  Private sector credit growth in Australia increased 0.4% in April and 3.8% from a year earlier, and M3 money was 7.25% larger than in April 2011.

India reported slower on-year GDP growth of 5.3% in 1Q12, down from 6.1% in 4Q11 and 9.2% in the first quarter of 2011.  Manufacturing was mostly responsible for this slowdown, the fourth such deceleration in a row.

Germany reported labor statistics as well as retail sales.  The seasonally number of unemployed workers was unchanged at 2.872 million in May, and the jobless rate fell a tenth percentage point to 6.7%.  In harmonized ILO terms, the jobless rate of 5.4% in April was down from 5.5% in March and 6.1% in April 2011.  German jobs were 1.4% greater in April than a year earlier versus an on-year increase of 1.5% in 1Q12.

British consumer confidence according to the GFK measure improved two points to negative 29 in May.

Greek retail sales were 16.2% lower than a year earlier in March.  Italian CPI inflation edged down to 3.2% in May from 3.3% in April.  Core inflation also slowed.  French producer prices were unchanged on month and 2.7% higher on year in April.  Hungarian PPI inflation quickened from 6.4% in March to 7.1% in April.  Norwegian retail sales volume slipped 0.1% in April and by 3.7% on year.  Polish GDP climbed 0.8% last quarter, trimming the on-year pace to 3.8% from 4.2% in the final quarter of 2011.  Spain’s current account deficit of EUR 3.2 billion in March was down from a EUR 5.9 billion shortfall in February.  Danish GDP rose 0.3% last quarter but just 0.2% from the first quarter of 2011. 

Turkey’s trade deficit narrowed 10.4% in April.  Iceland’s trade surplus of ISK 9.5 billion in April was 77% larger than in March.  South African producer price inflation slowed to 6.6% in April from 7.2% in March. 

Scheduled U.S. data releases today include revised 1Q GDP, the ADP estimate of private-sector employment, weekly jobless insurance claims, and the Chicago and Milwaukee regional PMI surveys.  Canada releases its quarterly current account figures. 

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

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