Weaker Stocks, Stronger Dollar, Lots of Data Released

June 8, 2012

The dollar and yen climbed overnight by 1.1% against the euro and Swiss franc, 0.8% versus the kiwi, Aussie dollar and sterling, 0.7% relative to the loonie and 0.1% against the yuan.

Equities slumped 2.1% in Japan, 1.1% in Australia, 0.9% in Hong Kong, 0.8% in Singapore, 0.7% in China, South Korea and New Zealand, and 0.6% in The Philippines.  In Europe, share prices have fallen 1.0% in Paris, 0.7% in Frankfurt and 0.6% in London.

Commodities and sovereign debt exhibit further signs of renewed risk aversion.

  • Oil and gold prices are 2.6% and 0.6% lower at $82.58 per barrel and $1578.70 per ounce.
  • 10-year British gilt and German bund yields plunged by ten and eight basis points.  The 10-year JGB is two basis points lower.

Japan’s economy watchers index declined 3.7 points in May to a reading of 47.2. 

Second-quarter Japanese GDP growth got revised upward to 4.7% at a seasonally adjusted annualized rate from 4Q.  Such initially was reported as 4.1%.  The contraction of non-residential investment was revised to 8.2% from 14.8%.  GDP had edged up only 0.1% in the final quarter of 2011.  GDP advanced 2.8% between the first quarter of 2011 and the first quarter of 2012.

On-year growth in Japanese bank lending held at 0.4% in May.

Japan recorded an unadjusted JPY 334 billion current account surplus in April compared to JPY 424 billion a year earlier.  The seasonally adjusted JPY 289 billion surplus was 63% smaller than the surplus in March.  The customs trade deficit in the first 20 days of May of JPY 749 billion was 29% narrower than a year earlier.

Germany’s EUR 11.2 billion current account surplus in April was considerable smaller than forecast.  The surplus in March had been EUR 19.9 billion.

The U.S. goods and services trade deficit narrowed to $50.062 billion in April from $52.617 billion in March.

Canada posted a C$ 367 million trade deficit in April following a C$ 152 million surplus in March, as exports fell by 1.2% and imports edged 0.1% higher.

Canada’s jobless rate held steady in May at 7.3%.  Employment rose just 7.7K after largest two-month gain since early 1981 in March-April.  Canadian labor productivity only ticked 0.1% higher last quarter after back-to-back gains of 0.7% in the final two quarters of 2011.  Unit labor costs rose 0.4% and by 2.6% when expressed in U.S. dollar terms.

Canadian housing starts of 211.4K in May were close to expectations but 13.3% fewer than in April.

Quite a few countries reported industrial production for April.  Dutch IP dropped 2.7% on month and was unchanged on year.  Finnish industrial output climbed 0.6% on month but dropped 3.2% on year.  Italian output declined by 1.9% from March and 8.8% from a year before.  Swedish output was unchanged from march and 6.2% weaker than a year before.  Greek output was 2.2% lower than in April 2011.  Turkish production rose 1.0% on month and 1.8% on year. 

There were also several European GDP data releases.  Greek GDP plunged 7.6% in 1Q12 and by 6.5% from the first quarter of 2011.  Icelandic on-year growth nearly doubled from 2.7% in 4Q11 to 4.5% in 1Q12.  Hungarian GDP fell 1.2% on quarter and by 0.7% from the first quarter of last year.  Portuguese GDP slid 0.1% from 4Q11and by 2.2% on year. 

British producer output prices fell 2.5% in May, cutting the 12-month increase to 2.8% from 3.2% in April.  Core PPI-O inflation slowed to 2.1% from 2.3%.  Producer input prices fell twice as much a forecast, dropping 2.5% on month and only edging 0.1% higher on year.

French business sentiment according to the Bank of France index worsened to a reading of 93 last month from 95 in April.  The French trade deficit of EUR 5.8 billion in May was 4% wider than in April.

Australia posted a A$ 0.2 billion trade surplus in April following an A$ 1.3 billion deficit in March.

The Bank of Korea left its key interest rate unchanged at 3.25% as expected.

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

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