Share Prices Post Further Gains

October 16, 2012

Markets were less risk averse this Tuesday.  Speculation persists that Spain will request aid, a condition for activating unlimited ECB bond buying.  It’s debate night in America.  Investors await several U.S. and Canadian statistics this morning.

Share prices in Europe have risen 1.2% in Spain, 0.7% in Germany, and 0.5% in Italy, France and Great Britain.  Japan’s Nikkei advanced 1.4% earlier in the day, and equities rose 0.8% in South Korea, 0.4% in Indonesia, 0.3% in the Philippines and Hong Kong and 0.2% in Australia.  In India, however, such fell 0.7%.

The dollar‘s rise of 0.3% against the yen but drop of 0.5% versus the euro also reflects lessening risk aversion.  The dollar elsewhere is up 0.5% against the kiwi and 0.2% relative to the loonie, but it has dropped 0.4% vis-a-vis the Swiss franc, 0.2% versus the Aussie dollar and 0.1% against sterling.

Ten-year German bund and British gilt yields are up by two and one basis points, respectively.  The 10-year Japanese JGB is steady.

Gold prices firmed 0.2% to $1740.40 per ounce.  Oil edged 0.1% lower to $91.79 per barrel.

The kiwi was depressed after the release of New Zealand consumer prices, which showed sub-target 0.8% on-year inflation, lowest since the final quarter of 1999.  The CPI went up 0.3% between 2Q12 and 3Q12.  The Reserve Bank of New Zealand’s main interest rate has been at 2.5% since a 50-basis point cut in March 2011.

Minutes from the Reserve Bank of Australia’s October Board meeting downgraded the growth assessment, thereby justifying a decision to cut the Official Cash Rate by 25 basis points to 3.25%.

British consumer prices rose 0.4% in September but eased in on-year terms from 2.5% in August to a 34-month low of 2.2%.  Core consumer price inflation held steady at 2.1%.  Retail price inflation slowed to 2.6% from 2.9%.

British producer price data also were released.  The producer output index rose 0.5% in September and accelerated in on-year terms to 2.5% from 2.3% in August and 1.8% in July.  Core PPI-O inflation held at 1.2%.  Producer input prices slid 0.2% on month and by 1.2% on year.  Producer prices were somewhat above analyst expectations.

Britain’s ONS house price index, formerly calculated by the Department of Communities and Local Government, edged 0.1% higher in August but dropped in on-year terms to 1.8% from 2.0% in July and 2.3% in June. 

New car sales in the 27-nation European Union posted a 10.8% on-year drop in September, greater than August’s 8.9% slide and the greatest 12-month decrease in two years.

In the euro area,

  • The seasonally adjusted trade surplus widened to EUR 9.9 billion in August from 7.2 billion in July, bolstered by a 3.7% monthly increase in exports after July’s drop of 2.2%.  Imports rose 2.1%.  The unadjusted surplus was EUR 6.6 billion, with export growth from August 2011 of 10.4% dwarfing import growth of 1.3%.  The year-to-August surplus of EUR 46.9 billion compares to a deficit of EUR 26.8 billion in January-August 2011.
  • Investor sentiment toward the region failed to improve according to the ZEW Institute.  The current conditions index printed at minus 79.4 in October, 3.1 points weaker than in September.  Expectations recovered just 2.4 points further to minus 1.4.
  • Consumer price inflation was revised marginally downward.  The CPI jumped 0.7% on month in September and remained well above target with a 12-month increase of 2.6%, same as in August.  Non-energy CPI inflation held steady at 1.8%.  Core inflation of 1.5% was unchanged from August but lower than forecast.

The ZEW investor expectations index for Germany printed at negative 11.5 in October.  That’s an improvement from minus 18.2 in September and minus 25.5 in August and was the best score since March.  The current conditions index for Germany declined by another 2.6 points, however, to a score of +10.0.

Italy’s trade balance swung to a deficit of EUR 0.6 billion in August from surpluses of EUR 4.5 billion in July and EUR 2.5 billion in June.  Dutch retail sales were 0.9% greater in September than a year earlier following a 3.9% on-year drop in July.

Turkish consumer confidence dropped to a 25-month low of 88.8 in September following readings of 91.1 in August, 92.8 in July and 91.8 in June.

Scheduled U.S. data to be released today include consumer prices, industrial production, the National Association of Home Builders index, Treasury-reported capital flows (TIC), and weekly chain store sales.  Canada releases net securities transactions.  Tonight’s Romney-Obama debate from Hofstra University will be done in a town hall format with questions from voters.  It starts at 21:00 EDT (01:00 GMT on Wednesday). 

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

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