St George Economics economy and finance update
The French and German equity markets were flat overnight with little reaction to trade and industrial production data.
The FTSE100, however, rose 0.3%. In the US, the Dow edged higher yet again carried by the momentum of easy money and improved job growth.
In line with the demand for US equities, US long bond prices edged lower and yields rose. Australian 10 year bond yields are once again approaching 3.6% having fallen below 3.0% in October last year.
The AUD gained ground on the USD and the euro overnight despite a lack of hard data in the US and modest European data. The AUD also gained on the yen and is at its strongest against the yen since mid-2008.
Commodity prices moved marginally higher overnight in line with broadening optimism towards the US economy.
Gold and copper are well off their highs of a year or two ago but did nudge upwards as did the price of West Texas crude oil.
No data released yesterday. Today the NAB survey of business confidence and conditions will point towards the state of play within the Australian business community.
German exports rose 1.4% in January, following a 0.2% rise in December, the first back to back monthly export gains since Q1 last year.
Imports bounced 3.3% in January after falling more than 5% in the last two months of 2012. These outcomes suggest the German economy will at least partially reverse its slump in GDP seen in the last quarter of 2012.
Separately, growth in German labour costs was steady at 2.9% in the year to December 2012 and down from the 3.1% reported in the year to December 2011.
French industrial production fell 1.2% in January, its fourth fall in five months, to be down 3.5% over the year. This result adds weight to the view that the French economy is back in recession, with Q4 GDP down 0.3% and Q1 likely to show a further contraction.
Machine orders were weaker than expected, falling 13.1% in January, following three consecutive monthly increases.
This saw the annual rate fall to -9.7% in the year to January, from -3.4% in the year to December.
No data released. To date the impact of automatic government spending cuts (sequestration) have yet to be seen in data released.
These will act as a break on the economy and are expected to be more apparent towards the end of March.
Please read the disclaimer below (to enlarge, press ctrl-+ on modern browsers)
The information contained in this report (the Information) is provided for, and is only to be used by, persons in Australia. The information may not comply with the laws of another jurisdiction. The Information is general in nature and does not take into account the particular investment objectives or financial situation of any potential reader. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the Information without first seeking expert financial advice. For persons with whom St.George has a contract to supply Information, the supply of the Information is made under that contract and St.George's agreed terms of supply apply. St.George does not represent or guarantee that the Information is accurate or free from errors or omissions and St.George disclaims any duty of care in relation to the Information and liability for any reliance on investment decisions made using the Information. The Information is subject to change. Terms, conditions and any fees apply to St. George products and details are available. St.George or its officers, agents or employees (including persons involved in preparation of the Information) may have financial interests in the markets discussed in the Information. St.George owns copyright in the Information unless otherwise indicated. The Information should not be reproduced, distributed, linked or transmitted without the written consent of St.George.