Wednesday’s remark by ECB President Mario Draghi that the Eurozone debt crisis has begun to affect the German economy was validated on Thursday.
After the major European stock indices took a hard fall on Wednesday, following the publication of a statement by European Central Bank President Mario Draghi emphasizing how the data suggest that the Eurozone debt crisis is starting to affect the German economy, the warning proved true on Thursday.
A report released by Destatis on Thursday revealed that German exports declined on a monthly basis by 2.4 percent in September, despite economists’ expectations for a less-significant, 1.5 percent drop (NYSEARCA:EWG). On a year-over-year basis, exports fell 3.4 percent. The news followed a report on Wednesday that the nation’s industrial production declined 1.8 percent in September.
German x-ray machine manufacturer and industrial heavyweight, Siemens reported a whopping, 27-percent decline in quarterly profits as a result of weakening global demand. The company announced plans to cut €6 billion in costs during 2013.
On the morning after the Greek Parliament narrowly approved an €18.5 billion package of budget cuts while anti-austerity demonstrations escalated into riots involving the arrests of more than 20 people, the nation’s government reported more bad news. The Greek unemployment rate increased to a record high of 25.4 percent in August from 24.8 percent in July. The unemployment rate in Greece is more than double that of the Eurozone average (NYSEARCA:GREK).
Spain held a successful auction of €4.8 billion of bonds, which raised more than the target amount of €4.5 billion (NYSEARCA:EWP). Nevertheless, yields increased as a result of the fact that so much new debt had been issued by the Spanish government.
Spain’s ten-year bond yield spiked to 5.84 percent on Thursday from Wednesday’s closing level of 5.68 percent. Spain’s two-year bond yield jumped to 3.16 percent on Thursday from Wednesday’s closing level of 3.09 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield rose to 5.03 percent on Thursday from Wednesday’s closing level of 4.94 percent (NYSEARCA:EWI).
As of 11:17 EST, the Euro STOXX 50 Index advanced 0.17 percent to 2,485 (NYSEARCA:VGK). The FTSE 100 Index dropped 0.34 percent to 5,771 (NYSEARCA:EWU). The German DAX Index fell 0.48 percent to 7,198 (NYSEARCA:EWG). France’s CAC 40 Index crept upward by 0.04 percent to 3,410 (NYSEARCA:EWQ). Spain’s IBEX 35 Index declined 0.29 percent to 7,638 (NYSEARCA:EWP). Italy’s FTSE MIB Index fell 0.67 percent to 15,190 (NYSEARCA:EWI). Trend Shift Underway for Emerging Markets
As of 11:27 EST, the euro declined 0.20 percent against the dollar, trading at $1.2746 (NYSEARCA:FXE).
On London’s ICE Futures Europe Exchange, December futures for Brent crude oil declined by 22 cents (0.21 percent) to $105.78/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
In China, stocks took a hard fall in response to Wednesday’s statement by ECB President Mario Draghi that the Eurozone debt crisis has begun to affect the German economy. The Shanghai Composite Index dropped 1.63 percent to 2,071 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index collapsed 2.41 percent to 21,566 (NYSEARCA:EWH).
In Japan, stocks declined as the yen strengthened following the gloomy remarks by ECB President Mario Draghi, which sent the euro falling (NYSEARCA:FXY). The Nikkei 225 Stock Average sank 1.51 percent to 8,837 (NYSEARCA:EWJ).
American stock index futures were in positive territory ahead of Thursday’s opening bell, as a result of a better-than-expected report on initial unemployment claims (with one state not reporting). The December 12 Dow Jones Industrials future advanced 0.21 percent to 12,890 as of 9:12 EST. The December 12 S&P 500 future rose 0.17 percent to 1,391 (NYSEARCA:SPY). The December 12 Nasdaq 100 future climbed 0.23 percent to 2,616.
Bottom line: ECB President Mario Draghi’s statement about the impact on the German economy from “difficulties elsewhere” was proven true on Thursday as one report indicated an enormous, 2.4 percent decline in Germany’s exports during September and German industrial titan, Siemens reported a whopping, 27-percent decline in quarterly profits .