Spreading Hope over Greece Lifts Equities

June 23, 2015

Negotiators claim to have reached an agreement on the main principles regarding a Greek debt accord and express hope that a full deal can be worked out this week.

Share prices are up 3.9% in Greece, 1.0% in Germany, 1.2% in France, 0.9% in Spain and Italy, 1.1% in Switzerland but just 0.1% in Britain.

Around the Pacific Rim, stocks advanced 3.2% in China, 1.5% in Hong Kong, 1.9% in Japan, and 1.3% in South Korea and Australia.

10-year sovereign debt yields rose four basis points in Japan, three bps in Germany, and two bps in Greece but slid a basis point in Great Britain.

The dollar appreciated 1.1% against the Swiss franc, 1.0% versus the euro, 0.5% relative to the kiwi, 0.3% vis-a-vis the yen and sterling, and 0.2% against the loonie and Australian dollar.  The yuan again remained steady.

Commodities are comparatively stable, with a 0.1% dip in gold to $1,183.20 per ounce and a 0.1% uptick in oil to $60.14 per barrel.

Preliminary purchasing managers surveys for June were reported for the eurozone, Germany, France, Japan, and China.

  • Euroland’s composite PMI printed at a higher-than-forecast 54.1 in June, up 0.5 points and representing a 49-month peak.  The strengthening uptrend, which suggests first-quarter GDP growth of 0.4%, was broadly based, with manufacturing rising 0.3 points to a 14-month high of 52.5 and services up 0.6 points to a 49-month high of 54.4.
  • Germany had a composite PMI of 54.0, a 2-month high.  Output growth quickened, though orders slowed.  Services were at a 3-month high of 54.2, and manufacturing rose to a 2-month high of 51.6.
  • Previously Euroland’s weak link, France seems to be coming around.  The composite PMI was at a 46-month high of 53.4.  Manufacturing (50.5, a 14-month high) has stabilized, and services hit a 46-month high of 54.1.
  • Japan’s manufacturing PMI relapsed a full point to 49.9 in June as output slowed a point to 50.5 and new orders shrank.
  • HSBC’s China manufacturing purchasing managers index was below the 50 no change level for a fourth consecutive month but at a 3-month high of 49.6.  Jobs contracted at a faster rate.

The British industrial trends index compiled by the Confederation of British Industries fell two points in June to -7, a 23-month low.

Australia’s indices of leading (-0.3%) and coincident (0.1%) economic indicators did more poorly in April than March.  Australian house prices last quarter rose 1.6% from 4Q14 and 6.9% from a year earlier.

Italian retail sales advanced 0.7% on month and 0.3% on year in April.  Industrial orders rose 5.4% in April following a dip of 0.2% in March and a rise of 0.9% in February.  The 12-month rate of orders growth accelerated to 7.9% from 2.7%.

Business sentiment among French manufacturers fell back three points to a reading of 100 in June.  Analysts were looking for another reading of 103.

South Africa’s current account deficit narrowed 0.3 percentage points to 4.8% of GDP last quarter from 5.1% in 4Q14.  The South African indices of leading and coincident economic indicators respectively rose by 0.7% and 1.0% in April.

Consumer prices in Singapore fell 0.4% between May 2014 and May 2015.

Turkey’s central bank left its 1-week repo rate, which had been sliced 75 bps earlier in 2015, unchanged at 7.50%.  Overnight lending and borrowing rates will stay at 10.75% and 7.25%.  Hungary’s central bank is holding a policy meeting today as well.

Scheduled U.S. data arriving today include durable goods orders, the FHFA house price index, new home sales, Markit Economics’ PMI, weekly chain store sales, and the Richmond Fed manufacturing index.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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