The World Bank slashed its global growth forecasts during the Asian trading session, to 2.5 percent in 2012 and 3.1 percent in 2013 (down from 3.6 percent for both years published in June). The Bank also warned that the downturn in Europe and softening growth in developed economies could force an even deeper downgrade. It estimated Europe was already in recession.
Elsewhere, in data news, Australian consumer confidence recovered mildly in January after a sharp fall in December. The confidence index rose 2.4 percent m/m after an 8.3 percent decline and is still holding above the weak August reading. The survey was taken in the week ended January 15 with sentiment remaining depressed by global and local economic concerns, a softening labour market alongside ongoing market volatility stemming from Europe’s still unresolved debt crisis.
And China’s National Bureau of Statistics noted that new residential apartments across 70 major cities continued to show higher prices from a year ago, but the trend continued to slow. The number of cities posting gains fell to 62 from 66 in November having peaked at 70 in August. For existing apartments, gains were more balanced with 36 registering higher prices and the rest either lower or unchanged. On a month-by-month basis, the slowdown was more marked with 52 cities indicating lower prices in new housing and 51 for existing homes. Chinese authorities may be comforted that their targeted measures on house prices may be having some effect.
The net result was that Asian trading was relatively quiet and orderly, with the EUR, and risk, making a gradual grind higher during the session.
Looking to the day ahead, Greek PSI talks resume with Fitch and S&P commenting overnight that a default appears to be an almost foregone conclusion with the question remaining whether it will be orderly or disorderly. March 20 remains a key date with a Greek €14.5 bln bond repayment due.
In Tuesday’s European and US sessions the EUR and risk were generally on an upward path following the China data, the trend extended after both German and Eurozone ZEW surveys showed surprising strength. The current situation index for Germany rose to 28.4 from 26.8 with the economic sentiment index posting a more vigorous rebound to -21.6 from -53.8. From the Eurozone, the economic sentiment index rose to -32.5 from -54.1. But the rally soon looked tired and ran out of steam just above the 1.28 mark versus the greenback and we reverted back to Asia’s closing levels. Elsewhere, UK CPI data was bang in line with expectations and lower than last month on an annualized basis with falls led by fuel and clothing.
US data was again better than expected with the Empire Manufacturing Index jumping to 13.48 from a revised 8.19 and above a consensus forecast of 11.0. In the breakdown, new orders index rose to +13.7 from +6.0, employment index rose to +12.1 from +2.3 and shipments up to +21.7 from +20.1. Wall St was encouraged by the better data from both sides of the Atlantic and posted modest gains though the S&P failed to cling on to the 1,300 handle and a late sell-off saw the close at 1,293.
Data Highlights
GE Jan. ZEW Survey (Current Situation) out at 28.4 vs. 24.0 expected and 26.8 prior
GE Jan. ZEW Survey (Econ. Sentiment) out at -21.6 vs. -49.4 expected and -53.8 prior
EU Jan. ZEW Survey (Econ. Sentiment) out at -32.5 vs. -54.1 prior
CA Nov. Int’l Securities Transactions out at C$14.99 bln vs. revised C$3.85 bln prior
US Jan. Empire Manufacturing out at 13.48 vs. 11.0 expected and revised 8.19 prior
CA Bank of Canada leaves rates unchanged, as expected
NZ Dec. REINZ House Price Index out at -0.1% m/m vs. +1.1% prior
AU Jan. Westpac Consumer Confidence out at +2.4% m/m vs. -8.3% prior
AU Dec. New Vehicle Sales out at -2.9% m/m, -3.0% y/y vs. -0.6%/+2.6% prior resp.
China Dec. Actual FDI out at -12.7% y/y vs. -9.8% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
JP Industrial Production (0430)
JP Capacity Utilization (0430)
UK Unemployment Data (0930)
UK ILO Unemployment Rate (0930)
UK Avg. Weekly Earnings (0930)
EU Construction Output (1000)
Swiss ZEW Survey (1000)
US MBA Mortgage Applications (1200)
US PPI (1330)
US Net Long-term TIC Flows (1400)
US Industrial Production (1415)
US Capacity Utilization (1415)
US Fed’s Tarullo to testify (1430)
US NAHB Housing Market Index (1500)
CA BOC Monetary Policy Report (1530
EU ECB’s Weidmann to speak (1830)
Andrew Robinson,
SAXO BANK