In overnight news Japan took centre stage with a poor consumer sentiment publication, the index falling to 40.5. But this medium impact news release was overshadowed by the high impact news release revealing that Japan’s record balance of payments deficit came in ahead of the last print, but just short of the prediction made by analysts. For 2013, Japan posted a current-account surplus of 3.3 trillion yen, the smallest on record. It registered an income surplus of 16.5 trillion yen for the year, the highest in the comparable data.
However, the print brings into question the wisdom of the so called Abenomics programme in which the plan wasn’t for exports to fall and imports rise exponentially. The ‘big idea’ was for a much weakened yen to stimulate exports. And in terms of domestic demand Japan’s sales tax will rise to 8 percent in April from 5 percent now and pending a decision by the prime minister, to 10 percent in Oct. 2015, as the government aims to raise revenue to improve its finances.
In Europe the industrial production figures for France and Italy are out, showing Italy falling to -0.9% in January, however, for the latest quarter growth is up 0.7%. France’s growth was flat and both readings for the countries were in line with expectations.
Swiss unemployment appears to have remained static at 3.5%, this comes after the Swiss referendum on immigration was positive for the motion, potentially incurring the wrath of the EU and wider EA members. The Sentix index came in positive; at 13.3.
The Asia-Pacific markets started the new week in optimistic sentiment after Wall Street shrugged off Friday’s disappointing US jobs report, despite this HSBC’s composite emerging markets index of manufacturing and services purchasing managers’ surveys slipped for the second month in series to 51.4 in January. It stayed under the 2013 average of 51.7 and well below the score of 64.1 posted last January. Japan posted its smallest current account surplus on record in 2013 in a worrying trend that sluggish exports and the rising cost of energy imports will hamper economic growth.
Japan’s Consumer Sentiment Weakens For Second Month
Confidence among Japanese households deteriorated for a second successive month in January, figures released by the Cabinet Office showed Monday. The seasonally adjusted consumer confidence index fell to 40.5 in the beginning of 2014 from 41.3 in December last year. In November, the reading was 42.5. Among the sub-components, the overall livelihood index dropped to 37.5 in January from 37.8 in the prior month. The measure of income growth eased to 38.6 from 39. The indicator of consumers’ willingness to buy durable goods came in at 36.4, down from December’s score of 40.
Japan’s December Current-Account Deficit Widens to Record
Japan’s current-account deficit widened to a record in December on soaring imports, adding to Prime Minister Shinzo Abe’s challenges as he tries to drive a recovery in the world’s third-biggest economy. The 638.6 billion yen ($6.2 billion) shortfall surpassed November’s gap of 592.8 billion yen, the finance ministry said in Tokyo today. The deficit was smaller than the 685.4 billion yen median forecast of 27 economists in a Bloomberg survey.
Euro zone counters global drop in sentiment
The Sentix economic index (composite index) for the euro area continues its upward trend in February, rising by 1.4 to 13.3 points. It is mainly the current situation which is assessed in a better way than in the previous month by the almost 1,000 individual and institutional investors in the Sentix survey. The correspondent index now reaches positive territory for the first time since August 2011.
Swiss unadjusted jobless rate steady at 3.5% in Jan
The Swiss unemployment rate was steady at a non-seasonally adjusted 3.5 percent in January from the previous month, the State Secretariat for Economic Affairs said on Monday. When adjusted for seasonal factors, the unemployment rate stood at 3.2 percent, also unchanged from the previous month.
French Industrial production index – December 2013
In December 2013, manufacturing output was stable (0.0%, after +0.2% in November). Output decreased slightly in industrial production as a whole (–0.3%, after +1.2% last month). During the last quarter, manufacturing output improved by +0.5%. During the last quarter (q-o-q), output improved moderately in the manufacturing sector (+0.5%), as well as in industry as a whole (+0.3%).
Italian Industrial production falls 0.9%
The index measures the monthly evolution of the volume of industrial production (excluding construction). With effect from January 2013 the indices are calculated with reference to the base year 2010 using the Ateco 2007 classification (Italian edition of Nace Rev. 2). In December 2013 the industrial production index seasonally adjusted decreased by 0.9% compared with the previous month. The percentage change of the average of the last three months with respect to the previous three months was +0.7.
Market overview at 10:00 am UK time
The ASX 200 closed up 1.08%, the CSI up 2.49%, Hang Seng down 0.27%, and the Nikkei up 1.77%. Euro STOXX is up 0.07%, CAC up 0.20%, DAX up 0.16%, FTSE up 0.10%. Looking towards the New York open the DJIA equity index future is down 0.18%, SPX future down 0.27%, NASDAQ down 0.11%.
NYMEX WTI oil is currently down 0.28% at $99.60 per barrel, nat gas on NYMEX down 0.20% at $4.70 per therm. COMEX gold is up 0.58% at $1273.20 per ounce with silver on COMEX up 0.95% at $20.12 per ounce.
Forex focus
The pound dropped 0.1 percent to $1.6403 early London time after rising 0.6 percent in the previous two days. The U.K. currency weakened 0.1 percent to 83.14 pence per euro. The pound snapped a two-day advance versus the dollar before the Bank of England updates its forecasts for economic growth and consumer prices in its quarterly Inflation Report this week.
The euro was at $1.3625 mid-afternoon in Tokyo. The pound bought $1.6412. Sterling has appreciated 8.1 percent in the past 12 months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 6 percent and the dollar strengthened 3.7 percent.
Bonds briefing
The benchmark UK 10-year debt gilt yield was at 2.71 percent after dropping to 2.64 percent on Feb. 5th, the lowest since Nov. 5th. The price of the 2.25 percent bond due in September 2023 was 96.145. The benchmark U.S. 10-year yield dropped two basis points, or 0.02 percentage point, to 2.67 percent early in London. The 2.75 percent note due in November 2023 rose 5/32, or $1.56 per $1,000 face amount, to 100 23/32.
