Equities Closing Week on a Down Note

July 19, 2013

Microsoft and Google reported weaker-than-expected earnings, sending both stocks lower in after-hours trading.

Japan’s upper house election on Sunday and ongoing worries about the extent of China’s slowdown are other uncertainties.

In his reprised testimony before the senate Thursday, Fed Chairman Bernanke continued to send a mixed, and therefore somewhat confusing, message.  While not backing away from a likely tapering of quantitative easing soon, he also indicated that a rise in the Fed funds target still lies far away.  Being a lame duck doesn’t help.

Share prices dropped 2.4% in China, 1.6% in Taiwan, 1.5% in Japan, 0.6% in New Zealand and 0.4% in Australia.  Stocks are down by 0.4% in Britain, 0.3% in France and Germany, and 0.2% in Spain.

The yen traded widely overnight between 100.9 and 99.8 but is just 0.1% firmer against the U.S. currency on balance.  The dollar is unchanged against the euro, loonie, Australian dollar, and yuan.  The greenback has lost 0.5% versus the kiwi and 0.2% against the Swissie and sterling.

Ten-year Japanese JGB and British gilt yields are steady.  The 10-year bund is off a basis point.

Oil and gold firmed 0.2% and 0.1% to $108.21 per barrel and $1285.80 per ounce.

Opinion polls suggest Japan’s election on Sunday will give the LDP a majority in the upper house to go along with its lower house majority.  This will greatly augment Prime Minister Abe’s maneuvering room for policymaking on such things as deregulation.

G20 finance ministers are meeting in Russia.

Japanese stock and bond transactions generated a JPY 632 billion net capital outflow last week following an outflow of JPY 471 billion the week before.

Japan’s leading and coincident economic indices were slightly revised upward to 110.7 and 106.0, respectively, in June.  These readings are 3.0 and 0.9 points higher than the May scores.

Japan’s all industry index jumped 1.1% in May and was 1.1% higher in April-May than the average 1Q level.  Construction, industrial output, and services posted monthly increases of 5.2%, 1.9%, and 1.2% from April.  Public Administration lagged with a 0.3% uptick.

German producer prices were unchanged last month and just 0.6% higher than in June 2012.  Non-energy producer prices also were unchanged on month and up 0.4% on year.

The French index of leading economic indicators rose 0.5% in May, reversing a similar drop in April.

Italian industrial orders grew 3.2% in May but still posted a 1.1% on-year decline.  Sales dropped 5.1% between May 2012 and May 2013.

Britain’s public sector net borrowing of GBP 10.234 billion and public sector net cash requirement of GBP 3.10 billion in June were larger than forecast and larger than in May.

Greece reported a rare 35.5 million euro current account surplus for May.  April had seen a EUR 1.187 billion deficit.

The Spanish trade deficit amounted to EUR 27.5 million in May, well down form EUR 1.64 billion in April.

Dutch consumer spending fell 1.8% in May.  Malaysian CPI inflation held steady at 1.8% last month.

The Vietnamese central bank repo rate has been cut by 50 basis points to 5.5%.

Moody’s revised the U.S. sovereign debt rating outlook to stable from negative.

Canadian consumer price figures will be released today.

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

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