Contagious German Confidence (EWG, EWP, FXI, EWU, SPY)
Surprise advance in German business confidence index lifts stocks across the Eurozone.
Spain took center stage again on Friday, as the meeting of the G-20 finance chiefs in Washington focused on Europe’s sovereign debt crisis. The yield on Spain’s 10-year bond rose above 6% on Friday, for the first time since Monday. The spread on credit-default swaps insuring Spanish debt rose to a record 513.5. Nevertheless, Spain’s IBEX 35 Index made a whopping advance of 1.46% to 7,009 as the surging German business confidence index apparently inspired hope for an economic recovery (NYSEARCA:EWP).
In Germany, the Ifo Institute released April’s business climate index, which surprisingly rose to 109.9 from last month’s 109.8, despite economists’ expectations for a decline. The nation’s Producer Price Index advanced by 0.6% during march, which translated to an advance of 3.3% on a year-over-year basis. Germany’s DAX Index broke above the 6,750 level before settling back to 6,731 for a gain of 0.90% (NYSEARCA:EWG).
Unusually warm weather in England brought a huge boost for the nation’s retail sales, which rose by 1.8% during March (NYSEARCA:EWU).
In China, stocks rallied following a story in the China Securities Journal which referenced hints from an unidentified government source that the government would take proactive steps to maintain liquidity with monetary easing. China’s Shanghai Composite Index jumped by 1.19% to 2,406 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index hovered around Thursday’s closing level, with an advance of 7 basis points (0.07%) to 21,010.
Japanese stocks lost ground again on Friday. The Nikkei 225 Stock Average declined by 0.28 percent to 9,561 in reaction to Thursday’s revelation of a record trade deficit (NYSEARCA:EWJ).
As of 8:50 EDT, the Euro STOXX 50 Index advanced by 0.63% to 2,299 (NYSEARCA:VGK). The FTSE 100 rose by 0. 44% to 5,770 (NYSEARCA:EWU). The German DAX Index advanced by 0.69% to 6,717 (NYSEARCA:EWG).
The euro advanced against dollar by 0.34% trading at $1.3183 (NYSEARCA:FXE).
American futures trading posted solid gains as positive earnings reports from several companies including GE and Microsoft continue to offset disappointing news on unemployment. The June 12 Dow Jones Industrials future advanced by 0.55% to 12,073 as of 9:10 EDT. The June 12 S&P 500 future rose by 0.44% to 1,378 (NYSEARCA:SPY). The June 12 Nasdaq 100 future advanced by 0.39% to 2,694.
June futures for Brent Crude Oil advanced by 13 cents to $118.13/bbl. (NYSEARCA:USO)
June gold futures declined by $3.00 to $1644.00 per ounce (NYSEARCA:GLD)
Bottom line: Europe’s stock indices continue to advance despite heavy publicity concerning the focus of the G-20 finance chiefs on the European sovereign debt crisis.
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