Weak Market Tone to End Decent Week

April 12, 2013

Share prices in Europe and Asia had a difficult sessionJapan’s ten-year JGB yield climbed five basis points and is over 15 basis points above recent low.  The dollar is up 0.7% against the euro but down 0.6% against the yen in a reversal of recent movements.

Euroland industrial production data were disappointing.  Investors now await

  • Today’s release of U.S. retail sales, producer prices, business inventories and U. Michigan index of consumer sentiment.
  • Public remarks by Fed Chairman Bernanke and Boston Fed President Rosengren later today.  Both are policy doves.
  • Monday’s release of Chinese first-quarter GDP and monthly retail sales and industrial production.
  • The outcome of a meeting of euro area finance minister (Ecofin) in Dublin today, which is to consider easing the aid packages of Portugal and Ireland, as well as some matters pertaining to Cyprus.

Central bank policy announcements were made in Singapore, Chile, and Peru, none of which included a change of stance.

Equities are down 1.3% in Germany and Italy, 1.0% in Spain, 0.8% in France and 0.6% in Britain.  Losses in the Pacific Rim amounted to 1.6% in India, 1.3% in South Korea, 1.0% in Taiwan, 0.6% in China, and 0.5% in Japan and Malaysia.

Commodity prices dropped sharply.  Gold is over $19 lower, a decline of 1.2% to $1545.80 per ounce.  WTI oil at $92.46 per barrel is 1.1% softer.

The U.S. dollar has risen by 1.0% against the kiwi and 0.6% relative to the Aussie dollar but is down 0.3% against the loonie.  The buck is up 0.1% against sterling and down 0.1% versus the yuan.

The 10-year British gilt yield fell by four basis points, while German bunds are steady.

Ezone industrial production recovered 0.4% in February after falling 0.6% in January.  Output in those two months was 0.1% below the 4Q12 average level, and February’s level was 3.1% less than in February 2012, which was the steepest on-year decline since November.  Individual on-year declines in February amounted to 6.5% in Spain, 3.9% in Greece, 3.8% in Italy, 2.9% in France and 2.5% in Germany.

German wholesale prices slid 0.2% in March.  Their on-year increase of 0.3% was down from 1.4% in February and 4.6% last October.  Indeed, the 0.3% uptick was the smallest 12-month rate of WPI increase since December 2009.  Spanish CPI inflation accelerated to 2.4% in March from 2.0% in February.  Italian CPI inflation held at 1.6% last month, and Greek import prices were 1.8% lower in February than a year before.

Construction output in Britain was 7.0% lower in February than a year earlier.  The U.K. index of leading economic indicators rose 0.4% in March, twice as much as its gain in February and the March uptick of the index of coincident economic indicators.  France posted a similar EUR 4.9 billion current account deficit in February to its EUR 5.0 billion shortfall in January.  Hungarian industrial output posted a somewhat smaller 1.1% on-year decline in February after a 1.4% drop between January 2012 and January 2013.

After conducting a semi-annual policy review, the Monetary Authority of Singapore left the slope, center, and width of the Singapore dollar trading path unchanged.  Modest yet gradual appreciation will continue to be permitted.

Chile’s central bank retained a 5.0% interest rate.  The last change, a cut of 25 basis points, was made in January 2012.

Likewise, Peru’s central bank did not adjust its 4.25% interest rate, which has been at that level since a 25-basis point increase in May 2011.

Japan’s tertiary index rose 1.1% in February, not quite reversing all of January’s drop of 1.5%.  Combined January-February service-sector activity was 0.3% below the 4Q12 mean.  The February tertiary index was also 1.6% lower than a year earlier.  The Conference Board index of Japanese economic indicators rose 1.0% in February following a 0.8% gain in January.

Real GDP in Singapore contracted 0.6% in the year to first quarter.  Analysts had anticipated scant change.  Compared to 4Q, the annualized growth rate was negative 1.4% instead of the anticipated increase of roughly that amount. 

Industrial production in India was only 0.6% greater in February than a year earlier.  The on-year advance in December-February was a paltry 0.9%.  Indian on-year CPI inflation slowed somewhat to 10.4% last month from 10.9% in February.

New Zealand food prices slumped 1.3% on month and 0.4% on year last month.  Filipino M3 money growth slowed to 9.9% in February from 10.2% in the year to January. 

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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