Investors Digesting Japanese and Chinese Data Releases

November 12, 2012

The dollar opened the week on a marginally negative footing versus commodity-sensitive currencies, dipping 0.4%, 0.3%, and 0.2% against the Australian, New Zealand and Canadian dollars.  The dollar also edged 0.1% lower against the yen, yuan, and Swiss franc but firmed 0.1% relative to sterling.  EUR/USD is unchanged.

There are partial market closures to observe Veterans Day and Amistice Day, marking the 94th anniversary of the end of World War I.

Share prices rose 0.7% in New Zealand, 0.5% in China, and 0.2% in Hong Kong but fell 0.9% in Japan, 0.4% in Taiwan and Indonesia, 0.3% in Australia and 0.2% in South Korea.  In Europe, equities have risen 0.5% in Italy and 0.3% in Britain and Germany, but stocks dropped 0.7% in Spain.

Gold prices have firmed 0.3% to $1736.40 per ounce.  Oil edged down 0.1% to $85.95 per barrel.

Ten-year German bunds and Japanese JGB yields are unchanged from Friday.  The 10-year British gilt dipped a basis point.

Japanese nominal and real GDP sank last quarter at annualized rates of 3.6% and 3.5%.  Real GDP recorded on-year growth of just 0.1%.  In annualized comparisons of the change between 2Q and 3Q, consumption fell 1.8%, non-residential investment plunged 12.1%, an exports plummeted 18.7%.  Government investment rose 16.8%, and residential housing rose 3.6%.  Inventories buoyed the GDP growth rate by one percentage point.  The GDP price deflator was 0.7% lower than a year earlier.  Prime Minister Noda said these poor data add urgency to the need for pro-growth policies.  Bank of Japan Governor Shirakawa said the Bank of Japan will continue its “powerful” monetary easing.

Japan’s tertiary index, a measure of service sector activity rose 0.3% in September and 0.1% in the third quarter.  The index registered on-year gains of 0.2% from September 2011 and 0.6% from 3Q11.

Japanese domestic corporate goods prices fell 0.3% in October and by 1.0% from a year earlier.  Import and export prices respectively slipped by 0.3% and 0.1% from September to October.

Led by a 13.4% on-year drop in domestic demand, Japanese machine tool orders sank 6.7% in October, more than twice as much as the 2.8% drop in the year to September.

Chinese data were mixed.  Trade figures provided the good news.  The $31.99 billion surplus in October was the largest monthly total since January 2009 and resulted from greater-than-anticipated on-year export growth of 11.6% together with an unchanged 2.4% 12-month increase in imports.  The bad news involved money and credit growth.  Bank lending in October of 505.2 billion yuan was the smallest amount since September 2010 and some 14-15% less than forecast.  Aggregates of money posted smaller-than-expected on-year increases of 10.5% in M0, 6.1% in M1 and 14.1% in M2.  These gains were each less than posted in the year to September.

Industrial production in India was 0.4% lower in September than a year before.  Analysts had been anticipating a result similar to August’s on-year increase of 2.3%.

Australian housing loans increased 0.9% in September.  Investment lending advanced by 8.6%.

In Europe, Greece’s parliament passed the 2013 budget.  Presuming that the EMU parliament gives approval, this means that the next installment of aid to Greece from the troika of creditors will go forward.

Despite a monthly drop of 0.6% in German wholesale prices last month, the 12-month rate of WPI increase rose to an 11-month high of 4.6%.  Mineral fuel prices fell by 3.0% on month but jumped by 9.1% on year.

Danish consumer prices dipped 0.1% in October, trimming the on-year increase to 2.3% from 2.5% in September and 2.6% in August.

Romanian CPI inflation slowed to 5.0% in October from 5.3% in September.

The Dutch trade surplus doubled in September to EUR 3.6 billion.  The Czech trade deficit contracted 73% on month to CZK 7.1 billion.

Ireland’s construction purchasing managers index edged closer to the 50 no change threshold, rising to a five-month high of 42.6 in October from 41.9 in September and 40.7 in August.

FOMC minutes will be released at 19:00 GMT.  Mexico reports industrial production.

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

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