Is the pain in Spain falling?
The GDP figure for Spain's economy has been published this morning and it reveals a very slowly healing economy according to the latest GDP number. However, the majority of analysts are still adopting a glass half empty position where Spain is concerned, given that the country has now been mired in recession (negative growth) for over two years.
Spain's GDP fell by 0.1%
According to data released by the Spanish National Statistics Institute Spanish GDP fell by 0.1% between April and June. That's the eighth quarterly contraction in a row although the pace of the decline slowed, following the 0.5% contraction suffered in the first three months of 2013. Year on year the Spanish economy has shrunk by 1.7%.
Eurozone retail PMI reaches a 21 month high
The data from Markit Economics, covering the retail performance for Europe, has been published in the morning session and on the face of it the figures lend optimism to the belief that the retail sector is continuing to improve, although it must be recognised that this 'recovery' started from an extremely low base and at 49.5 the figure is still below the median 50 line that represents the difference between contraction and expansion in an industry.
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The eurozone retail sector neared stabilisation in July, Markit’s retail PMI data showed. The value of retail sales fell for the twenty-first month running, but at the slowest rate over that period. Germany and France posted higher sales during the month, with the latter recording the first expansion since March 2012. The main negative finding from the latest survey was a sharper decline in Italian retail sales. The Eurozone Retail PMI is a seasonally adjusted indicator of changes in the value of sales at retailers. Any figure greater than 50.0 signals growth compared with one month previous. Commenting on the data,
Trevor Balchin, senior economist at Markit and author of the Eurozone Retail PMI, said:
“We may soon see an end to the current survey record stretch of falling retail sales in the eurozone. Unless Italy’s decline moderates, an overall rise in sales looks likely to hinge on growth in France being sustained in the coming months, as strengthening growth in German retail sales has so far not been enough to wholly offset the ongoing collapse in Italian revenues. Throughout the survey history, German sales growth alone has never translated into an overall increase at the eurozone level.”
Australia's boom; is it over?
The much anticipated building approvals data was published in Australia during the overnight/early morning session and the headline figure was quite a shock. The anticipation was for a recovery to a positive 2.2% figure versus a negative print of -4.3% the previous month. The actual figure printed came in at negative -6.9% and down 13.0% year on year. Private sector building approvals excluding houses fell by a substantial 37.4% year on year.
Market overview at 10:15 AM (UK Time)
In the overnight early morning session the main indices in Asia recovered from their poor weekly start. The Nikkei closed much of its 3%+ loss on Monday to close up 1.53%. The CSI closed up 0.62% whilst the Hang Seng closed up by 0.48%. European markets are showing modest gains in the early part of the session. The UK FTSE is up 0.21%, the DAX is up 0.29%, the CAC is flat, whilst the IBEX, despite slightly more encouraging data from Spain regarding its GDP figure, is down 0.03%. The DJIA equity index future is currently up moderately at 0.06% positive, whilst the NASDAQ is up 0.17%, suggesting a positive opening for New York.
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ICE Brent crude is down 0.55% at $103.98 per barrel, NYMEX natural is down 0.72% at $3.45. Spot COMEX gold is down 0.47% at $1323.3 per ounce whilst COMEX silver spot is down 1.35% at $19.6 per ounce.
Focus on FX
The Bloomberg Dollar Index, tracking the USD versus the ten other major developed nation currencies, rose 0.2 percent to 1,025.81 after dropping to 1,021.21 yesterday, the lowest level witnessed since June 19th.
Sterling fell in early trading to the weakest level versus the euro in two weeks before the central banks of the Bank of England, the Federal Reserve and the European Central Bank announce their continued policy decisions this week.
The U.K. currency was little changed at 86.56 pence per euro early in the London session after depreciating to 86.59, the weakest level witnessed since July 17th. The pound was at $1.5329 after sliding 0.3% during the previous two days.
Sterling has fallen by 0.9 percent over the past month, according to the Bloomberg Correlation-Weighted Index, tracking the 10 developed-nation currencies. The euro added 0.5 percent and the dollar has slumped by 3.7 percent.
Yen dropped versus 12 of its 16 major counterparts, a rally in Asia and European shares overnight affecting demand for safe haven assets. Australia’s dollar slumped after the Reserve Bank Governor, Glenn Stevens, stated in his address that the inflation outlook did in fact provide room for lower interest rates if and when required. The Aussie slid 1.6 percent to 90.63 U.S. cents after Stevens' statement, declining to 90.53 cents, the weakest level the Aussie has reached versus the USD since July 15th.
The yen fell 0.2 percent to 98.17 per dollar early in the London session after strengthening 2.4 percent over the previous three days. Japan’s currency dropped 0.3 percent to 130.28 per euro. The dollar weakened 0.1 percent to $1.3270 per euro.
