Further Rise of Share Prices Ahead of ECB Event

March 6, 2014

Stocks have risen 1.6% in Japan, 1.1% in India, 0.9% in Taiwan, 0.8% in New Zealand, 0.6% in Hong Kong and Indonesia, and 0.5% in China.  In Europe, equities are up so far by 1.3% in Spain, 0.7% in France, 0.3% in Germany and Switzerland, and 0.2% in Britain. 

The dollar fell overnight by 0.8% against the Australian dollar, which was buoyed by strong Aussie trade and retail sales statistics.  The dollar also lost 0.7% against the kiwi, 0.2% versus the loonie, and 0.1% relative to the euro, Swissie and yuan.  The dollar is 0.4% higher against the yen and has edged up 0.1% vis-a-vis sterling.

The ECB did not change its 0.25% refinancing rate, nor its 0.0% deposit rate or 0.75% marginal lending rate.  This inaction will disappoint many investors.  Press conference from President Draghi starts at 13:30 GMT.

The Bank of England left its policy settings unchanged as expected.  The Bank rate stays at 0.5%, and the asset purchase facility ceiling holds at GBP 375 billion.

Bank Negara Malaysia retained a 3.0% overnight lending rate despite higher inflation.  The action was expected, however.

Ten-year sovereign debt yields firmed 3 basis points in Britain and a basis point each in Japan and Germany.

Gold fell 0.5% to $1,333.70 per ounce.  Oil dropped 0.3% to $101.11 per barrel.

German industrial orders advanced 1.2% in January after a 0.2% dip in December.  January orders were 1.9% greater than the average level in 4Q13 and 8.4% higher than a year earlier.  Orders for capital goods, consumer goods, and intermediate products all increased in January.

Germany’s construction purchasing managers index rebounded to a 2-month high of 53.6 in February from 52.5 in December.  This was the second best reading since August.

Australia recorded an A$ 1.433 billion trade surplus in January, largest in two years.  Between December and January, exports climbed 4.4%, whereas imports went up 1.0%.  Analysts were expecting the surplus to be smaller than A$ 300 million versus a A$ 591 billion surplus in December.

Australian retail sales rose 1.2% in January, most in 11 months, after gaining 0.7% in December.

Britain’s Halifax house price index jumped more than anticipated in February, climbing 2.4% on month and accelerating to a 12-month 7.9% advance from 7.3% over the year to January.

French unemployment slid to 10.2% last quarter from 10.3 previously. Greek unemployment dipped to 27.5% in December from 27.6% the month before.

Euroland’s retail purchasing managers index crossed back under 50 to 48.5 in February from 50.5 in January and a 4Q average reading of 47.8.  The German (52.1) and French (48.4) measures were at 2-month lows, while Italy’s retail PMI dropped to 43.1, a 3-month trough.

GDP growth in the Czech Republic last quarter was revised to 1.9% on quarter and 1.3% on year from initial estimates of 1.6% and 0.8%.  GDP previously was contracting and posted an average 0.9% decline in 2013.  Hungarian industrial output recorded a 6.1% on-year increase in January after 6.8% in December.

Dutch CPI inflation slowed to 1.1% in February from 1.4% in January.  Consumer prices in Cyprus slumped 2.6% between February 2013 and February 2014. 

Stock and bond transactions between Japan and the outside world generated a 1.089 trillion yen outflow in the week to March 1, a JPY 1.711 adverse shift from the previous week.

Thai consumer confidence weakened 1.6 points to a 12-year low of 69.9 in February.

Scheduled U.S. data today are quarterly productivity and unit labor costs, monthly factory orders, and weekly jobless insurance claims.  Canada’s IVEY-PMI index will also be released.  Dudley, Lockhart, Fisher, Williams and Plosser of the Federal Reserve speak publicly.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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