Lower Share Prices and Bond Yields but Fairly Steady Currencies
October 19, 2012
Overnight movements in the dollar this Friday were limited to gains of 0.2% against the Swiss franc and 0.1% vrsus the euro, Aussie dollar, yuan and loonie, along with dips of 0.1% relative to the yen and sterling and no change vis-a-vis the kiwi.
Stock market tone was set by yesterday’s disappointing earnings reports from Google and Microsoft. In the Pacific Rim, share prices fell by 0.8% in South Korea and Taiwan, 0.6% in Indonesia and India, 0.4% in Singapore, and 0.2% in China. Japan’s Nikkei closed 0.2% higher and barely back above the 9,000 threshold. European stock prices are lower, led by declines of 1.4% in Spain and 1.2% in Italy but also including losses of 0.5% in Germany, 0.4% in France, and 0.1% in Britain.
Today is the 25th anniversary of the 508-point, 22.6% crash in the Dow Jones Industrials. For the ensuing 12-1/4 years, the DJ index advanced at a 16.9% per annum pace, but over the last 12-3/4 years, it has risen just 1.1% per year. For the entire 25 years, the DJIA has climbed 8.6% per annum.
The yields on ten-year German bunds and 10-year British gilts are off three basis points and a single basis point. The 0.79% 10-year Japanese JGB yield is unchanged.
Gold prices have dropped 0.7% overnight to $1733.20 per ounce, and oil has dipped 0.1% to $91.99 per barrel.
Today is the second and final day of the summit of European Union leaders, who continue to implement what they promise. So instead of investing supervisory powers in the ECB for the whole euro area as of January 1, 2013, they now pledge to make it happen some time next year. Spain has still not requested a bailout package, and German Chancellor Merkel and French President Hollande were at continuing odds on several issues.
Japan’s all-industry index, a supply-side monthly proxy of GDP, edged up 0.1% in August, but the average July-August level was 0.5% lower than the 2Q12 mean. In August versus July comparisons, industrial production sank 1.6%, but services, public administration, and construction went up by 0.4%, 0.2%, and 0.1%.
Japan’s index of leading economic indicators in August was revised down by 0.4 points to 93.2 after a July reading of 93.0. The final calculations of the coincident (93.5) and lagging (87.3) indices were also a tad below their preliminary values.
Bank of Japan Governor Shirakawa spoke of a prolonged Chinese slowdown but said conditions had improved in the U.S. economy. Business sentiment in Japan has weakened.
Foreign direct investment (FDI) in China was 6.8% lower than a year earlier in February. That’s the largest on-year drop since November 2009. FDI contracted by 3.8% in January-September. Malaysian CPI inflation edged down to 1.3% in September from 1.4% in August. Taiwanese export orders recorded their first on-year increase (1.9%) in seven months in September.
Euroland posted a seasonally adjusted current account surplus of EUR 8.8 billion in August after EUR 8.1 billion in July and EUR 15.2 billion in June. Every month this year thus far has seen a surplus. The unadjusted surplus in the twelve months through August was EUR 66.5 billion compared to a deficit of EUR 25.3 billion in the previous twelve months.
German producer prices rose 0.3% on month and 1.7% on year in September. Energy climbed 3.1% from a year earlier, while all other producer prices collectively went up by 1.1%.
Italian industrial orders increased 0.7% in August but were still 9.0% lower than in August 2011. Industrial sales posted a 12-month decline of 2.6%.
Britain’s public sector net borrowings totaled GBP 10.732 billion last month, similar to GBP 10.753 billion in August and EUR 11.4 billion a year earlier. Outstanding public debt equaled 67.9% of GDP.
Irish producer price inflation dropped sharply to 2.2% in September from 6.0% in August.
U.S. existing home sales and Canadian consumer prices get reported later today. The U.S. presidential candidates hold their last planned debate on Monday but appeared on the same stage in New York last night in a moment of comic relief.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, foreign exchange, Japanese all-indutry index