Global equity markets have been delivered a mild shock to the system this morning in the form of official data that did not conform with the predictions the economists polled had suggested. Once again these poor figures illustrate that the recoveries, in many of the key developed countries and the Eurozone overall, do not have the implied strength many in the mainstream financial press would like their readers and investors to believe.
Australia’s latest unemployment figures have been published in the overnight session and a fall of 10.8K employed saw the unemployment rate rise to 5.8%. Employment decreased to 11,648,300. Unemployment increased to 712,400. Participation rate was steady at 65.1% from a revised July 2013 estimates. Aggregate monthly hours worked increased to 1,647.3 million hours.
Italy’s official stats department, Istat, published the latest figures for Italian industrial production and a disappointing fall of 1.1% was unexpected by the economists polled. The majority had predicted a rise consistent with the previous month of circa 0.3%.
Germany’s wholesale prices have decreased year on year. The index of selling prices in wholesale trade was down 1.7% in August 2013 on August 2012, as reported by the Federal Statistical Office (Destatis). Compared with July 2013, the index of wholesale prices fell by 0.6% in August 2013.
France’s consumer price index is still low suggesting that France has kept a lid on inflation. The Consumer Price Index (CPI) was up 0.5% in August 2013 after a decrease by 0.3% in July 2013. Seasonally adjusted, the CPI increased by 0.2% in August 2013. The CPI annual growth rate was 0.9 % in August 2013, down from + 1.1 % in July 2013. Excluding tobacco, the CPI grew by 0.4% in August 2013 and by 0.7% compared with the same month one year ago.
The ECB has published its monthly bulletin this morning. Based on its regular economic and monetary analyses, the Governing Council decided at its meeting on 5 September to keep the key ECB interest rates unchanged. Incoming information and analysis have further underpinned the Governing Council’s previous assessment. Underlying price pressures in the euro area are expected to remain subdued over the medium term.
Market snapshot at 10:00 am UK time
The Nikkei closed down 0.26% in the overnight session, whilst the Hang Seng closed up 0.07% and the CSI closed up 0.99%. The ASX 200 closed up 0.16%.
European indices are experiencing mixed fortunes in the early part of the European/London session. The STOXX index is down marginally by 0.09%, the FTSE up 0.04%, the CAC down 0.14% and the Italian index has broke its two day secular rally to be down 0.53% with poor industrial production figures contributing towards the fall. The Athens exchange is up 0.54% and the Istanbul exchange is down 0.32%
ICE WTI oil is up 0.16% at $107.56 per barrel, whilst NYMEX natural is down 0.53% at $3.55 per therm. COMEX gold is down 1.55% at $1342.70 per ounce whilst silver is down 2.22% at $22.68 per ounce.
Looking towards the New York open the DJIA equity index future is currently down 0.05%, the SPX down 0.12% and the NASDAQ down 0.04%. A retracement after the significant rally over recent days was not unexpected.
Yen rose 0.4 percent to 99.54 per dollar early in the London session after depreciating to 100.61 yesterday, which was the weakest level seen since July 22nd. The yen advanced 0.5 percent to 132.31 per euro after strengthening 0.2 percent yesterday. The dollar was little changed at $1.3296 per euro. Yen strengthened for a second day versus the dollar after Japan’s machinery orders remained static in July amidst concerns that the proposed sales-tax increase will stunt growth. As a consequence demand for the currency increased as a safe haven option.
Yen has slumped by over 11 percent this year, the worst performer of the ten developed-nation currencies tracked by Bloomberg’s Correlation-Weighted Indexes. The dollar gained 3.8 percent and the euro advanced 4.8 percent.
Australia’s dollar fell versus all of its 16 major counterparts after the statistics bureau said the number of people employed in the country fell 10,800 last month, following a decline of 11,400 in July. Economists polled had predicted a 10,000 increase in August. Australia’s currency dropped 0.9 percent to 92.46 U.S. cents after rising to 93.54 cents, the strongest level seen since June 19th. The kiwi leapt by 0.8 percent to 81.43 U.S. cents after rising to 81.51 cents, the strongest level seen since Aug 19th.
Sterling was little changed at $1.5821 early in the London session after earlier reaching $1.5832, the strongest level witnessed since Feb 8th.