Election Hangover

November 9, 2012

Global share prices have been falling since the U.S. election.  Today saw losses of 0.9% in Japan, India, and Hong Kong and 0.5% in Australia and South Korea.  In Europe, the Spanish IBEX is down 1.0%, and the German Dax has lost 0.9%.

In times of risk aversion, the yen and dollar tend to outperform.  The dollar has fallen 0.3% against the yen but risen 0.2% relative to the euro, Swissie, and sterling.  The loonie is unchanged, and the Aussie dollar has dipped 0.1% against the greenback.

Ten-year British gilts are seven basis points lower.  The 10-year bund yield dropped 3 bps, and the 10-year Japanese JGB is off a basis point at a mere 0.74%.

Gold firmed 0.3% to $1731.50 per troy ounce.  Oil prices slipped 0.3% to $84.86 per barrel.

Investor confidence wasn’t helped by released European data on industrial production.

Italian industrial production sank 1.5% in September and fell 4.8% compared to a year earlier.

French industrial output slumped 2.7% on month and 2.5% on year.

Swedish industrial production posted monthly and yearly declines in September of 5.0% and 4.1%.

Finnish industrial production scored a seventh straight decline, falling 0.5% on month and 1.7% on year.

Greek industrial production was 7.3% lower in September than a year before.

Finnish industrial production fell 0.5% on month and 1.7% in the year to September.

Irish production plunged13.9% and was 13.7% lower than in September 2012.

Romanian industrial output was 0.1% lower in September than a year before.

British construction output last quarter was revised to show a decline of 2.6%. 

The U.K. index of leading economic indicators rose 0.2% in October, matching its September increase.

Britain’s goods and services trade deficit narrowed to GBP 2.699 billion in September from GBP 4.309 billion in August, enabling the deficit in 3Q12 of GBP 8.467 billion to be 16.3% smaller than in 2Q.  The merchandise trade shortfall was GBP 8.368 billion in September after a GBP 9.984 billion gap in August.

In Asia, Japan reported a 0.4-point drop in consumer confidence to 39.7, the lowest reading so far in 2012.  Japanese M2 money and broad liquidity recorded weak on-year growth of 2.3% and 0.8% in October.

Chinese consumer prices dipped 0.1% on month in October, cutting the 12-month increase to 1.7%, lowest since January 2010.  This has inspire speculation that the PBOC may cut reserve requirements again soon.  PPI inflation was less negative last month, however, at minus 2.8% after minus 3.6% in September.

Chinese industrial production, retail sales, and business investment surpassed expectations.

  • Output grew 9.6% in the year to October, up from a 9.1% pace in 3Q12 and the most since May.
  • Retail sales rose 14.5% on year versus an average increase of 13.5% in 3Q and the most since April.
  • Fixed asset investment showed a year-to-October increase of 20.7%, a 7-month best.

The Reserve Bank of Australia released its quarterly Statement on Monetary Policy, which cut projected economic growth slightly and predicted a downtrend in headline inflation with core CPI hovering around 2.5%.  Global growth risks are skewed to the downside, and officials continued to assert that the Aussie dollar is more elevated than fundamentals warrant.

South Korean producer prices fell 0.7% on month and were just 0.2% higher in October than a year earlier.

German consumer price inflation held at 2.0%, with energy up 5.5% in the year to October and all other consumer prices having risen 1.6%.

Greek consumer price inflation of 1.6% in October was lower than expected.

Norway’s CPI rose 1.1% in the year to October, while producer prices went up 1.7%.

According to the Bank of France, French business sentiment among manufacturers slid to a reading of 91.9 in October from 92.2 in September and 93.1 in August.

Denmark posted surpluses of DKK 9.0 billion in its September current account and DKK 5.3 billion in that month’s trade balance.

Indonesia recorded a $5.34 billion current account deficit last quarter, 30.6% less than in 2Q.

The Central Reserve Bank of Peru left its reference interest rate at 4.25% as expected.

The Bank of Korea likewise made no change in its 7-day repo rate, which was cut by 25 basis points a month ago to 2.75%.

U.S. President Obama will speak at 18:00 GMT on the economy and budget.

Scheduled U.S. data releases are wholesale inventories, import prices, and the monthly budget.

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


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