Anxiety Up ahead of U.S. Election and Greek Parliamentary Vote on Bailout

November 5, 2012

Share prices in Europe have slumped 1.3% in Spain, 1.1% in Italy, 0.8% in France, 0.5% in Britain and 0.4% in Germany.

Equities in the Pacific Rim earlier closed down 0.8% in Indonesia, 0.6% in South Korea, 0.5% in Japan and Hong Kong, 0.4% in Taiwan, 0.3% in Singapore, and 0.2% in China and New Zealand, but the Australian market ticked up 0.3%.

The United States went back on Standard Time over the weekend, restoring the New York – London differential to five hours.  The New York – Tokyo differential is now fourteen hours rather than thirteen.

The dollar climbed by another 0.4% against the euro and Swiss franc, 0.3% relative to sterling, 0.2% against the loonie, and 0.1% versus the kiwi and yuan.  The greenback is 0.2% softer versus the yen than at Friday’s close and has dipped 0.1% against the Australian dollar.

The 10-year British gilt yields dropped four basis points, while the yields on both 10-year German bunds and Japanese JGBs are off a basis point.

Gold and oil prices firmed modestly by 0.2% to $1678.40 per ounce and 0.1% to $84.96 per barrel.

Gas shortages persist in the U.S. Northeast.  A second Nor’easter storm is predicted for Wednesday.  Americans select a president and much of the congress tomorrow.

Several more purchasing manager surveys for October were reported.

  • The British services PMI fell to a 22-month low of 50.6 in October from 52.2 in September and 53.7 in August, suggesting that better economic growth in the third quarter was not representative of a sustaining improvement.  The state of domestic demand and business sentiment is very fragile.
  • In contrast, Ireland’s service-sector purchasing managers index jumped to a 5-year high of 56.1 from 53.9 in September and 51.7 in August.  New orders grew at their fastest pace since August 2007, the month when the global financial crisis began.
  • China’s PMI services exhibited a slower pace of growth in October with a reading of 53.5 after 54.3 according to the HSBC measure.  The composite PMI scored a three-month high of 50.5 after readings of 50.3 in September and 49.9 in August.
  • Hong Kong’s PMI was 50.5, up from 49.6 in September and matching the reading in August.
  • India’s PMI score in services slid two points to 53.8, while its composite PMI dropped 1.5 points to 53.5.  However, input inflation accelerated.
  • The non-oil Saudi Arabian PMI fell 0.5 points but remained extremely buoyant at 59.8 in October.  The non-oil PMI in the United Arab Emirates stayed at 53.8 last month, which is above its historic long-term average score of 52.7.
  • Sweden’s service-sector PMI rebounded to 50.3 after dropping to 47.2 in September from 50.7 in August.
  • Hungary’s manufacturing PMI printed at a stagnant 49.9 in October following readings of 52.4 in September and 49.6 in August.
  • Australia’s PSI measure of service sector activity remained below 50 (thus connoting contraction) for a ninth consecutive month but to a lesser degree with a reading of 42.8 after 41.9 in September.

There were several other economic releases in Australia. Retail sales advanced 0.5% in September and posted a 3.7% 12-month increase.  But sales in the third quarter dipped 0.1%.  Australia’s goods and services trade deficit narrowed 22.4% on month in September to a smaller-than-expected A$ 1.456 billion.  Exports fell 0.6%, but imports slumped by a greater 2.2%.  Job ads in October dropped by 4.6% on top of a 3.9% slide in September.  Expected inflation over the coming year remained at 2.4 according to the TD-MI survey, the same pace as signaled in the prior month’s survey.

The Sentix gauge of investor confidence in the euro area continued to edge higher, printing this month at minus 18.8 versus negative readings of 22.2 in October, 23.2 in September and 30.3 in August.  It was the least negative reading since April.

Spanish unemployment was 10.8% greater in October than a year earlier and 128.2 thousand higher than in September.

Czech non-auto retail sales rose 0.4% in September but posted a 3.3% decline from a year earlier.  Romanian retail sales fell 0.4% in September but was 2.9% higher than in September 2011.

Indonesian GDP grew 6.2% between the third quarters of 2011 and 2012.

India’s $18.1 billion trade deficit in October was around 60% larger than anticipated and greater than the September gap of $15.6 billion.

Turkish consumer prices increased 2.0% last month but slowed more sharply than expected in on-year terms to 7.8% from 9.2% in the year to September.  Core CPI inflation fell to 6.1% from 6.7%.  Producer prices rose 0.2% in October but slowed to a 2.6% 12-month rate of increase from 4.0% in September and 4.6% in August.

G20 finance ministers and central bank leaders are meeting in Mexico City.  Europe’s debt problems head the agenda.

The U.S. service sector PMI report will be released by the Institute of Supply management later today.  Canadian housing permits also arrive.

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

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