Investor Hope in a Time of Uncertainty

December 4, 2012

The downside risks are formidable.  Global growth slowed this quarter.  The U.S. fiscal negotiations remain stalemated.  The European recession persists, and finance ministers from the EU are meeting yet again today in Brussels.  Nonetheless, yesterday’s hopeful mood among investors has persisted.

The dollar has fallen 0.5% against the Australian and New Zealand dollars, 0.4% relative to the yen, 0.2% versus sterling and the euro and 0.1% against the loonie.  The Swiss franc and Chinese renminbi are steady.

Share prices rebounded 1.1% in China but fell by 0.8% in New Zealnad and Indonesia, 0.6% in Australia, and 0.3% in Japan.  In Europe, Italian equities have advanced 1.1%.  The Paris Cac and Spanish IBEX are up 0.7% and 0.5%, and the German Dax has risen 0.3%.  The British Ftse is flat.

The 10-year British gilt yield rose two basis points, while its German and Japanese counterparts are steady.  10-year bond yields in Italy fell additionally and are at a 2-year low.

Gold and oil prices settled back 0.8% to $1707.80 per ounce and $88.77 per barrel.

The Reserve Bank of Australia as expected cut the Official Cash Rate by 25 basis points to match the multi-decade low of 3.0% hit in 2009.  The Bank of Canada releases its final scheduled interest rate announcement at 14:00 GMT today.

Australia’s current account deficit widened by 20.5% between 2Q and 3Q to A$ 14.9 billion last quarter.  Aussie building permits sank 7.6% in October, more than four times faster than forecast, but the 12-month change remained strong at +14.5%.  Commodity prices in New Zealand increased another 1.0% in November.

Japan’s monetary base recorded on-year growth in November of 5.0%, down from 10.8% in October and the lowest since May.  Japanese labor cost earnings were 0.2% higher than a year earlier in October following a 0.5% on-year drop in September.

Britain’s construction purchasing managers index retreated below the 50 level that separates contraction from expanding activity.  Such printed in November at 49.3 after 50.9 in October, 49.5 in September, 49.0 in August and 50.9 in July.

Same-store sales in the U.K. were 0.4% greater than a year earlier in November.  The gain was only half as much as analysts predicted and followed a 0.1% dip in October.  Total retail sales according to the British Retail Consortium recorded a 1.8% 12-month increase in November.

Producer prices in the euro area edged 0.1% higher in October.  The 12-month increased edged lower to 2.6% from 2.7% in September, with energy showing a 5.9% jump but all other producer prices rising just 1.5%.  On-year PPI inflation ranged from 4.6% in Portugal and 4.1% in Greece to 2.9% in France, 2.6% in Italy and 1.5% in Germany.

Spanish unemployment advanced by 74.3K in the current month, less than the 128K increase in October.

Romanian PPI inflation accelerated slightly to 6.8% in October from 6.6% in September.  Romanian retail sales dived 2.1% on month and firmed just 0.6% on year in October.

Consumer confidence in South Africa weakened two points last quarter to a reading of negative 3.

U.S. motor vehicle sales of 15.5 million last month somewhat exceeded expectations.  President Obama rejected House Speaker Boehner’s deficit-reduction proposal, saying it lacked sufficient balance between spending cuts and new revenues.  Also, the proposed spending reductions were not specific enough.  The New York regional PMI, known as the NAPM index, will be reported today as well as weekly chain store sales.

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

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