Friday, September 10, 2010
Germany's exports dropped in July as the global economic momentum lost pace, data released by the Federal Statistical Office. The reading on exports came in below consensus expectations. German exports had surged in the second quarter, leading to the fastest pace of economic expansion in two decades. There are two major risks to German exports going ahead - slower global demand and fiscal consolidation in other euro-zone countries.
Overseas sales, adjusted for working days and seasonal changes, declined 1.5% after growing by a revised 3.7% in June, the Federal Statistics Office in Wiesbaden said. Economists had forecast exports to remain unchanged. Imports dropped 2.2% from June, when they increased 1.6%. In calendar and seasonally adjusted terms, Germany posted a trade surplus of 12.7 billion euros in July.
Germany's exports rose 18.7% in July from a year earlier, today’s report showed. Exports to countries outside the European Union increased 25.1% and sales to countries within the euro region rose 15.1%. German factory orders unexpectedly fell in July and manufacturing activity eased in August, indicating that the largest euro-zone economy may slow on the back of moderating expansion in the US and China.
The US dollar fell to a fresh 15-year low against the Japanese yen as investors flocked to safe haven assets amid persistent worries that the global economic rebound could be losing steam. The dollar eased to the lower 83-yen level, and set a fresh 15-year low of ¥83.34 before recovering. Japan's finance minister Yoshihiko Noda said that the government stands ready to take steps against the rising yen, if necessary, and that the steps could include exchange market intervention. Separately, the Bank of Japan Governor Masaaki Shirakawa said today that the central bank is prepared to announce additional quantitative easing measures if economic conditions deteriorate.
Global investors continued to be risk averse in late August through early September amid growing trepidation about a discernible slowdown in key regions such as the US, China and the euro-zone, according to the latest funds flow data from EPFR Global. As has largely been the case since mid-June, emerging markets equity funds fared better than their developed markets counterparts while bond funds fared best of all, EPFR said.
Shares of cement majors like ACC, Ambuja Cement, UltraTech, India Cement and others surged amid reports that cement prices in South India have risen by Rs25 to Rs40 per 50-kg bag. Cement prices (gross retail) have risen by Rs15-20/bag in Hyderabad with effect from 7th September, according to reports. The revised prices in Hyderabad stand at Rs165-170/bag as versus Rs145-150/bag the previous week. Cement prices in other regions in the South (Tamil Nadu and Karnataka) have also risen by Rs5-7/bag with effect. The ruling price in Karnataka and Tamil Nadu stands at Rs195-200/bag as against Rs175-180/bag in the previous week. In its reaction to the news, IIFL today said in a note to its clients that the development seems like the south based players are taking a conscious effort to shore up the prices in spite of new supplies hitting the market. It called the move as sort of a quasi cartelisation. "However, our earnings estimate still remains unchanged in spite of this price hike as the fall in price this year has been much sharper than expected (30% in last one year in Southern region)," IIFL said.
Next week may turn out to be an eventful one with a spate of key global as well as local events lined up. First up is the IIP data, which will be released on Friday. The weekend will also see China come out with lots of important economic statistics. Besides, new capital rules for global banks are slated to be approved by the central bank governors and senior regulators in Basel, Switzerland on Sunday. The recommendations, which include a sharp increase in the amount of capital banks must hold in reserve, will be presented to the G20 nations when they meet in November. It will be interesting to see how various markets react to the news.
Risk appetite flips back in the markets on steady US cues
Asian markets witnessed steady gains today, following the US markets higher as the risk appetite flipped back in the markets and commodities stabilized. After sell-off in the previous session, the investors picked some of the offerings today though the pace of gains was limited. European debt concerns eased a wee-bit following solid demand for Portugal's bonds in the previous session. In overnight trades, US stocks rose by solid margins amid some relief buying following news of slower US economic recovery as seen by the Federal Reserve and solid demand for Portugal's bond offerings. The Dow gained 46.32 points or 0.4 percent to end at 10,387.01.