Share Prices Wobble on Growth Concerns

August 23, 2012

Equities in Europe have fallen so far by 1.8% in Spain, 1.0% in France, and 0.8% in Germany.  U.S. futures point to a decline as well.  Earlier in Asia, stock markets rose 1.2% in Hong Kong, 0.4% in South Korea and 0.3% in China.

Preliminary purchasing manager surveys were reported for China, Euroland, Germany, France and the United States with mixed results.

Yields on 10-year British gilts and German bunds have dropped by seven and six basis points.

Changes in the dollar are relatively minor.  The U.S. currency is up 0.4% against the Australian dollar and 0.1% versus the yen but down 0.2% against sterling, the euro, Swiss franc and kiwi.  The loonie and yuan are steady.

Gold prices advanced 1.6% to $1666.40 per ounce.  Oil edged 0.2% higher to $97.44 per barrel.

China’s HSBC manufacturing PMI index weakened 1.5 points to a 9-month low of 47.8 in August, pointing to a need for more stimulus.  The Conference Board, in contrast, reported that China’s index of leading economic indicators rose by 0.7% in July after holding flat in June.

Germany’s flash manufacturing PMI advanced 2.1 points to a better-than-expected 3-month high of 45.1 in August.  Unfortunately, the services PMI weakened by 2.0 points to 48.3, and the composite PMI was half a point lower at 47.0, worst since June 2009.

The French composite PMI score of 48.9 in August was a 6-month high but still below 50 and thus suggesting that third-quarter GDP growth may be marginally negative.  The manufacturing and service PMIs were at 4- and 7-month peaks.

Euroland’s PMI results showed a 0.1 point uptick on the composite score to 46.6.  This was the seventh sub-50 reading in a row.  Manufacturing (45.3) was at a 4-month high, but services (47.5) was at a two-month low.

The U.S. preliminary manufacturing PMI reading of 51.9 was 0.5 points better than the July reading of 51.4.  Orders went up 1.6 points to 52.6.

Germany released details of its second quarter national income accounts.  Real GDP rose 0.3% (1.1% at an annualized rate).  Personal consumption rose 0.4% and accounted for the bulk of net GDP expansion.  Gross fixeed capital formation slumped 0.9% and exerted a 0.2 percentage point drag on GDP growth.  Net exports enhanced GDP growth by 0.3 percentage points as exports rose 2.5% while imports went up 2.1%.  Inventories depressed growth.  On-year growth in GDP of 0.5% was down from 1.7% in the year to 1Q12.

Germany recorded a EUR 8.3 billion budget surplus in the first half of 2012, equivalent to 0.6% of GDP.

U.S. jobless insurance claims totaled 372K last week, up from 368K the prior week.  This was higher than forecast.

Japanese stock and bond transactions last week generated a JPY 784 billion net capital inflow.

Norwegian mainland GDP rose 1.0% last quarter and accelerated to a 4-quarter increase of 5.0% from 4.6% in the year to 1Q12.

The CBI reported a 14-point deterioration of the reading on its British distributive trades survey to negative 3 from +11 in July.  According to British Bankers Association figures, mortgage approvals of 28.44K last month exceeded July’s level by 9.6%.

The Swiss trade surplus widened 30% on month to CHF 2.92 billion in July.

Danish consumer sentiment printed at zero in August as expected.  The preliminary Ezone consumer sentiment index gets reported later today.

Consumer prices in Singapore went up 0.2% in July and were 4.0% higher than a year earlier.  Core inflation slid to 2.4% from 2.7%.

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



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