Asian growth was the focus for markets this morning with Japan and Singapore both producing above-forecast results. However, the effect across the region was dampened by gloomy near-term outlooks and the ongoing Greek pressures. See more about particularly the outlook for Japan in the coming quarters in my latest video: Asian Focus: Dim Japan outlook as rebuilding post quake wears off.
Japan’s provisional GDP rose 1.0 percent q/q in the first quarter, following an upwardly-revised flat reading for Q4 2011, with strong contributions from private consumption and household spending while the contribution from net merchandise trade was a lowly 0.1 percent. There was no reaction in the USDJPY, which traded in an 80.20-40 range throughout the session.
Singapore also reported mild upward revisions to earlier Q1 GDP estimates with 10.0 percent q/q growth (9.9 percent first estimate) with a slight downward adjustment to the contribution from the manufacturing and construction sectors (-2.0 percent from -1.0 percent and +6.2 percent from +7.2 percent respectively) compensated by a upward revision to the service sector (+2.9 percent from +2.2 percent). The slightly better numbers helped lift the local bourse in contrast to action in the Nikkei and ASX but had little impact on the currency.
A Nilson report released today showed that Chinese consumers were less-inclined to spend on discretionary items in Q1 despite an increase in its measure of consumer confidence over the period to its highest since 2005. The report ties in nicely with recent data which showed retail sales growth falling to a 14 month low in April. There were differing results from urban and rural areas with confidence and the economic outlook higher in the latter compared to the former.
The minutes of the April 24-25 FOMC meeting showed members expecting the near- to medium-term growth to remain moderate but eventually accelerating. Even under this scenario inflation pressures are seen “roughly balanced” while the possibility of an additional round of stimulus was dependent on “if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run.” The same theme/wording was used in the previous meeting.
The minutes had enough about possible stimulus to knock the US dollar off its lofty perch having posted net gains on the USD index for the previous 4 sessions. Elsewhere, GBP suffered from a more-dovish Bank of England quarterly inflation report with lower growth and inflation forecasts. EUR saw choppy markets with early weakness to a fresh 4-month low on rumours that the ECB had cut Greek banks off from emergency funding but a recovery came soon after as the ECB clarified the situation.
US data was generally better than expected with industrial production gaining 1.1 percent m/m versus 0.6 percent consensus and capacity utilization rising to 79.2 percent from 78.4 percent. Housing starts rebounded to +2.6 percent m/m from -2.6 percent but building permits were a disappointing -7.0 percent m/m.
Data Highlights
CA Mar. Manufacturing Sales out at +1.9% m/m vs. 0.4% expected and revised -0.2% prior
US Apr. Housing Starts out at +2.6% m/m vs. 4.7% expected and revised -2.6% prior
US Apr. Building Permits out at -7.0% m/m vs. -4.5% expected and revised 8.8% prior
US Apr. Industrial Production out at +1.1% m/m vs. 0.6% expected and revised -0.6% prior
US Apr. Capacity Utilization out at 79.2% vs. 79.0% expected and revised 78.4% prior
JP Q1 GDP out at +1.0% q/q vs. +0.9% expected and revised flat prior
SI Q1 Final GDP out at +10.0% q/q, +1.6% y/y vs. 10.6%/1.8% expected and 9.9%/1.6% prior resp.
SI Apr. Non-oil Domestic Exports out at +13.1% m/m, +8.3% y/y vs. 5.7%/5.9% expected and -16.8%/-4.3% prior resp.
SI Apr. Electronics Exports out at +1.0% y/y vs. 4.0% expected and 2.8% prior
AU May Consumer Inflation Expectation out at 3.1% vs. 3.3% prior
NZ May Consumer Confidence out at -0.1% m/m vs. +3.4% prior
AU Feb. Avg. Weekly Wages out at +1.1% q/q, +4.4% y/y vs. 1.0%/4.1% expected and 0.5%/4.3% prior resp.
Upcoming Economic Calendar Highlights
(All Times GMT)
JP Industrial Production (0430)
JP Capacity Utilization (0430)
JP machine Tool Orders (0600)
US Initial Jobless Claims (1230)
US Bloomberg Consumer Comfort Index (1345)
US Bloomberg Economic Expectations Index (1345)
US Philadelphia Fed Index (1400)
US Leading Indicators (1400)
US Fed’s Bullard to speak (1630)
Andrew Robinson,
SAXO BANK