European Equities Lower in Spite of Better than Expected Industrial Output Data

October 10, 2012

Taking their cue from Tuesday action in North America, share prices fell by 2.0% in Japan, 1.6% in South Koreak 1.1% in Singapore, 0.9% in India, 0.5% in the Philippines and New Zealand, and 0.3% in Taiwan and Australia.  In Europe stocks have lost 0.7% in Spain, 0.5% in Italy, 0.4% in Britain, and 0.3% in Germany and France.

The dollar is unchanged against the Swiss franc, Japanese yen, Canadian dollar and British pound.  The greenback lost 0.3% versus the Aussie dollar and 0.1% relative to the kiwi and yuan.  The dollar has edged 0.1% higher against the euro.

The yield on 10-year British gilts is three basis points firmer, and that on 10-year German bunds has risen one basis point.

Oil and gold prices slid by 0.5% and 0.1% to $91.89 per barrel and $1764.00 per ounce.

Investor concern continues to fester over the Spanish government’s reluctance to formally ask for financial aid, a necessary condition of the ECB before it buys Spanish debt.  Another source of gloom is weakening global economic prospects, underscored by the latest IMF projections.  There is a story that Germany’s six economic institutes will be slashing its estimate of German growth next year in half to just 1%.

French, Italian, Greek and Swedish industrial production in August surpassed expectations.

  • French output jumped 1.5% instead of dipping 0.2%.  Manufacturing recorded a gain of 1.8%.
  • Italian production advanced 1.7% on month.  Analysts were anticipating a small drop there, too.  Output was 5.2% lower than in August 2011.
  • Greek industrial output was 2.5% greater than a year earlier in August versus a 4.9% on-year drop in July.
  • In Sweden, where a 0.9% decline was anticipated, production rose 0.4% instead.  Output exceeded the August 2011 level by 3.2%.

Swiss National Bank President Jordan called the SNB’s 1.20 franc per euro ceiling “right” and said the currency policy would be maintained for the foreseeable future.

British Prime Minister Cameron said the British economy is at a key crossroads and defended austerity in TINA terms.  Former PM Thatcher made TINA (there is no alternative) a famous acronym in her era.

Japanese Prime Minister Noda engaged in more verbal intervention overnight against an excessively strong yen.

German wholesale prices jumped 1.3% last month, the second straight monthly rise of at least 1.0%.  The gain was spurred by a 5.4% leap in mineral fuel prices and left overall on-year WPI inflation at 4.2%, highest since last November and up from a 2012 low point of 1.1% in June.  Danish consumer prices rose 0.2% last month and by 2.5% from a year earlier. Norwegian consumer prices increased 0.9% on month and retained a 12-month increase of 0.5%.  Norway’s PPI fell 1.1% on month and rose 1.4% from September 2011, which was only half as much as forecast.  Romanian consumer price inflation accelerated to a higher-than-forecast 5.3% in September from 3.9% in August. 

Romanian industrial production fell 1.1% in August and by 1.7% from a year earlier.  Romania’s trade deficit of EUR 1.0 billion in August was 14% wider than a year before.  Portugal’s trade deficit of EUR 2.18 billion in August was 9% greater than the July shortfall.  Finnish industrial output fell 0.8% in August and posted the same 1.4% on-year drop as recorded in January-July.

Japanese machine tool orders were 3% lower than a year earlier in September according to preliminary figures.  South Korean M2 money and broad liquidity posted on-year growth in August of 5.7% and 9.2%, respectively.  Filipino M3 growth slowed to 6.2% from 8.7% in July.

The Bank of Brazil’s committee of interest rate policy makers, Copom, is expected to announce an unchanged Selic rate later today.

U.S. wholesale inventories, the Labor Departments JOLTS index of layoffs and hiring trends, and the Fed’s Beige Book will be released today.  But the main event will be tomorrow night’s vice presidential debate in Danville, Kentucky between Paul Ryan and Joe Biden.  In the wake of President Obama’s famous flop in Denver, some national polls now put Romney in the lead.  Election Day is four weeks from yesterday.

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

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