We start with a title which should remind those investors and traders, who have been seduced by many of the bullish statements from the E.U. and ECB over recent weeks, that the recovery in the Eurozone and as a consequence the wider European region, is far from certain and certainly isn’t underpinned by solid foundations. Germany is without a doubt the powerhouse of European manufacturing and various reports over recent weeks have suggested that Europe’s (partially) export driven recovery is well under way. Even yesterday we had Greek govt. officials claiming that Greece would move back into growth in 2014, this despite record levels of unemployment, particularly youth unemployment, which will leave a permanent and slow healing scar across its society for decades to come…
Destatis, the official German stats office, cites that Germany exported goods to the value of 85.3 billion euros and imported goods to the value of 72.2 billion euros in August 2013, based on provisional data, the Federal Statistical Office (Destatis) also reports that German exports decreased by 5.4% and imports by 2.2% in August 2013 on August 2012. Looking at calendar and seasonal adjustments, exports increased by 1.0% and imports by 0.4% compared with July 2013. The foreign trade balance showed a surplus of 13.1 billion euros in August 2013. In August 2012, the surplus had amounted to 16.3 billion euros.
Japan’s service-sector sentiment improves in Sept
Japan’s service sector sentiment index rose to 52.8 in September, the first rise in six months, despite the impending rise in sales tax planned for 2014. The survey of workers such as; taxi drivers, hotel workers and restaurant staff, revealed their confidence over current economic conditions as the index rose from 51.2 in August. The outlook index, which indicates the level of confidence in future conditions, stood at 54.2, up from 51.2 points from the previous month. It’s not all good news from Japan; Japan’s current account surplus fell nearly 64 per cent in August, versus forecasts expecting an 18 per cent gain.
HSBC China Services PMI slows marginally
Output growth eased across both the manufacturing and service sectors in September. HSBC China Composite PMI data (which covers both manufacturing and services) signalled a further expansion of output in September. Output growth has now been recorded for two successive months. The rate of expansion remained modest, despite having eased since August, with the HSBC China Composite Output Index posting at 51.2 in September, down from 51.8 in August. Output levels increased across both the manufacturing and service sectors during September.
APEC warns over slower than previously predicted growth from the region
In Bali, world leaders from across the Asia Pacific region are meeting, whilst warning that economic conditions are weakening. The Asia Pacific Economic Cooperation (APEC) issued a joint statement pledging responsible macro-economic policies, however, they’re bracing for tough conditions. World economic growth remains subdued, with a greater risk that conditions will deteriorate rather than improve.
[quote]”Global growth is too weak, risks remain tilted to the downside, global trade is weakening and the economic outlook suggests growth is likely to be slower and less balanced than desired. We will implement prudent and responsible macroeconomic policies to ensure mutually reinforcing effect of growth and to maintain economic and financial stability in the region, and prevent negative spillover effect.”[/quote]
Market snapshot at 10:00 am UK time
The Nikkei index closed up 0.30%, Hang Seng up 0.89% and the CSI closed up 1.36%, the ASX 200 closed down 0.23%. European markets are mainly in the red in the morning European session; STOXX down 0.26%, FTSE down 0.40%, CAC down 0.36%, DAX 0.15%, the Athens exchange is flat.
Commodities are mostly positive at the time of writing; ICE WTI oil is up by 0.27% at $103.31 per barrel, NYMEX natural is up 0.30% at $3.64 per therm. Gold on COMEX is priced at $1323.30 per ounce, down 0.14%, silver on COMEX is down 0.18% at $22.34 per ounce.
Looking towards the USA markets opening the DJIA equity index FUTRE is currently down 0.90%, the SPX is down 0.85%, with the NASDAQ down 0.98%, suggesting that the USA markets will open in negative territory given the lack of progress on the debt ceiling impasse.
Forex focus
The yen fell versus all its 16 major peers, retreating from an eight-week high versus the dollar. The yen fell 0.4 percent to 97.11 per dollar early in London after reading 96.57, the strongest level seen since Aug. 12th. It lost 0.3 percent to 131.73 per euro. The greenback gained 0.1 percent to $1.3565 per euro.
The Australian dollar was at 91.26 early in in Sydney from 91.18 yesterday when it slid by 0.9 percent, the most since Sept. 27th. The Aussie rose 0.1 percent to 94.35 U.S. cents. New Zealand’s kiwi dollar was little changed at 83.01 U.S. cents. It traded at 80.34 yen, little changed from yesterday when it declined 1 percent.
Bonds
Yields on Treasury bills rose as investors sought compensation for the risk of a U.S. default should Congress fail to increase the borrowing limit by Oct. 17th. Benchmark 10-year yields were little changed at 2.64 percent in the London session, The price of the 2.5 percent note due August 2023 was 98 27/32.
