Street Protests Send Share Prices Lower

September 26, 2012

Greece and Spain, where protestors against austerity have taken to the streets, are back in the spotlight.  Disparaging comments yesterday by Philly Fed President Plosser about the effectiveness of quantitative easing had transformed a winning session in equities into a losing one by the close.  Resumed gloom about Europe has carried that adverse momentum into overseas trading today.

Share prices fell 2.0% in Japan, 1.1% in China and Indonesia, 0.8% in Taiwan and Hong Kong, 0.7% in Singapore, 0.6% in South Korea and the Philippines, and 0.3% in India and Australia.  Selling pressure intensified in Europe, where stocks have thus far plunged 3.0% in Spain, 2.6% in Italy, 2.0% in France, 1.5% in Germany and 1.1% in Britain.

The euro shows a $1.28 handle and is down 0.3% from Tuesday’s close.  With a 77-handle, the yen has strengthened another 0.1% against the greenback.  Analysts doubt Japanese officials will intervene unilaterally despite persistent verbal warnings about the dangers of a rising exchange rate.  The dollar has risen 0.2% against the Swiss franc and 0.1% versus the Australian dollar but has lost 0.1% against the yuan and kiwi as well as relative to the yen.  Sterling and the loonie are steady against the U.S. currency.

Spanish sovereign bond yields spiked upward and show a much wider 444-basis point premium against 10-year German bunds, which have fallen eight basis points.  British 10-year gilts are down by seven basis points, and the 10-year Japanese JGB is two bps lower.

Oil prices fell by 0.7% to $90.77 per barrel.  As recently as September 14, such briefly poked above $100 on an intra-day basis.  Gold prices ticked up 0.1% to $1767.30 per ounce.

Paradoxically amid the mounting gloom about Europe, the Conference Board announced a 0.6% rise in Euroland’s index of leading economic indicators in August following no change in July and a 0.2% dip in June.  Whatever green shoots sprouted last month will no doubt wilt over coming months.

The September reading on Britain’s distributive trades survey was +6, nine points better than in August.

French consumer confidence fell two points to a score of 85 in September.

Four of five German states reported slower CPI inflation in September than August.  Headline total CPI was at or somewhat below 2.0% last month.  Core inflation was benign, printing at or a bit under 1.5%.

Italian retail sales slid 0.2% in July, which was slightly worse than the expected result, and by 3.2% from a year earlier.

Swedish consumer confidence sagged to a reading of +2.0 from +5.4 in August.  The Swedish trade surplus narrowed to SEK 3.3 billion in August from SEK 3.7 billion in July and SEK 9.9 billion in June.  There was a surplus of SEK 51.9 billion in January-July versus SEK 48.9 billion a year earlier.  Norway’s jobless rate in June-August averaged 3.0%. Finnish retail sales volume was 1.2% higher than a year before in August.

Japanese auto production was stronger than expected in August.

New Zealand recorded a NZD 789 million trade deficit in August, some 25% larger than assumed.  Exports and imports each posted on-year declines.

Industrial production figures from Singapore were disappointing, showing declines of 2.3% on month and 2.2% on year.

U.S. new home sales will be released today.  Jews around the world are observing Yom Kippur.  Iran’s controversial president speaks at the United Nations.

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

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