Roller Coaster Ride in Asian Equities

June 25, 2013

The dollar has retreated 0.4% against the yen, 0.3% versus the loonie, and 0.1% against the Aussie dollar and sterling but has edged up 0.2% relative to the yuan and 0.1% vis-a-vis the Swiss franc and kiwi.  EUR/USD is steady at $1.3124.

China led another steep decline in Asian share prices initially overnight, but losses were almost entirely pared after a top Chinese monetary official promised to ” stabilize market expectations and guide market interest rates to reasonable levels.”

Equities fell just 0.3% in China and Australia, 0.2% in Indonesia, 0.7% in Japan, and 0.6% in Malaysia.  Bigger net losses were suffered in the Philippines of 3.1%, Taiwan (1.2%), New Zealand (1.1%), but stocks posted gains in India and Singapore of 0.5% and Hong Kong of 0.2%.  The turnaround gained momentum in Europe where the German Dax, Paris Cac, Spanish Ibex and British Ftse show advances of 1.5%, 1.3%, 0.9% and 0.9%.

Ten-year sovereign debt yields declined six, three, and one basis points overnight in Britain, Germany, and Japan.  U.S. futures point to a dip, too.

Gold and oil prices rebounded 0.7% and 0.6% to $1286 per ounce and $95.75 per barrel.

Several meaningful U.S. economic indicators will be released later today:  durable goods orders, the Case-Shiller house price index, the FHFA house price gauge, the Richmond Fed manufacturing index, the Conference Board index of consumer confidence, and new home sales.  Weekly chain store sales arrive, too.

Federal Reserve District Presidents Fisher and Kocherlakota of the Dallas and Minneapolis express concern late yesterday at the magnitude of the recent rise in long-term interest rates.

On-year Japanese corporate service price inflation accelerated from negative 0.3% in April to positive 0.3%, a 5-year high, in May.  The turnabout was spearheaded by a 2.8% jump in ocean transportation and an atypically small drop in advertising costs.

Japanese small business sentiment rose 1.4 points to a three-month high of 49.6 in June.  The index averaged 49.1 in 2Q after period averages of 46.7 in the first quarter of this year and 43.6 in the final quarter of 2012.

South Korean consumer sentiment rose to a 13-month high of 105 in June from 104 in May.  The Filipino trade deficit widened 72% on month to $1.02 billion in April.  South Africa’s index of leading economic indicators went up 0.2% to 102.8 in April.  Hong Kong’s trade deficit of HKD 44.27 billion last month was 3.7% bigger than in April.

France’s statistical agency, INSEE, reported a 13-month peak in business sentiment of 93 in June after readings of 92 in May and 88 in April.

Britain’s distributive trades index rebounded to +1 in June from readings of minus 11 in May, negative 1 in April, zero in March and +8 in February.  According to the British Bankers Association,

Dutch 1Q GDP growth was revised a quarterly contraction of 0.4% from -0.1%.  GDP was 1.8% smaller than a year earlier after an on-year drop of 1.5% in 4Q12.

Italian retail sales dipped 0.1% in April and fell 2.9% compared to a year earlier.  Polish retail sales were 0.5% higher in May than a year before.

Spanish producer price inflation unexpectedly swung from negative 0.6% in May to positive 0.8% in June.  Swedish producer prices fell somewhat less sharply from a year before in May (4.9%) than in April (5.3%).  Swedish import prices were 6.2% lower than in May 2012.  Polish unemployment declined to 13.5% in May from 14.0% in April.  Finnish unemployment in May of 10.8% was 1.3 percentage points above a year earlier.  The Greek current account deficit of EUR 1.12 billion in April was 26% wider than a year earlier.

Magyar Nemzeti Bank officials are expected to cut Hungary’s central bank interest rate yet again today in spite of recent market turbulence.

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

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