Another Warning on European Industrial Production
Sixteen of the 27 European Union nations reported declines in industrial production from November of 2011 through November of 2012.
After last week’s reports of decreased industrial production in Spain, Britain and Germany, Eurostat reported that European industrial production during November declined by 0.3 percent in both the Eurozone and the broader, 27-
nation European Union. On a year-over-year basis industrial production fell by 3.7 percent in the Eurozone and by 3.3 percent in the EU27. Among the member states from which information was available, industrial production fell in sixteen and rose in five during the one-year period (NYSEARCA:VGK).
A January 14 report from BDO revealed declining business confidence within Britain (NYSEARCA:EWU). England Swings Worse yet, the report discussed the possibility of continuing economic contraction toward a triple-dip recession:
Following a marginal improvement in Q4 2012, the Output Index – which predicts short-run turnover expectations – decreased to 93.1 from a reading of 93.4 last month. This suggests that the UK may experience further contraction in Q1 2013, potentially resulting in a triple-dip recession, following the anticipated negative growth of Q4 2012.
The picture two quarters ahead is equally bleak, with BDO’s Optimism Index dropping to a lowly 90.3 from 91.4 in December’s report.
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BDO’s Employment Index, which measures businesses’ hiring intentions over the next two quarters, also remained subdued this month. The Index fell to 93.0, and has been below the crucial 95.0 level which would indicate employment growth for eight consecutive months.
As of 11:17 EST, the Euro STOXX 50 Index declined 0.12 percent to 2,714 – staying well above its 50-day moving average of 2,589. The STOXX 50 is holding above its March 19 high of 2,608 and it appears to be experiencing resistance at the 2,700 level, as its Relative Strength Index is 69.27. Most analysts consider an RSI above 70 as an “overbought” signal (NYSEARCA:FEZ). The FTSE 100 Index declined 0.10 percent to 6,115 (NYSEARCA:EWU). The German DAX Index advanced 0.17 percent to 7,728 (NYSEARCA:EWG). France’s CAC 40 Index rose 0.12 percent to 3,710 (NYSEARCA:EWQ). Spain’s IBEX 35 Index fell 0.37 percent to 8,632 (NYSEARCA:EWP). Italy’s FTSE MIB Index sank 0.86 percent to 17,351 (NYSEARCA:EWI). Some Emerging Markets ETFs Could Surge in 2013
As of 11:24 EST, the euro advanced 0.11 percent against the dollar, trading at $1.3358 (NYSEARCA:FXE).
Spain’s ten-year bond yield jumped to 5.03 percent on Monday from Friday’s closing level of 4.88 percent. Spain’s two-year bond yield rose to 2.19 percent on Monday from Friday’s closing level of 2.13 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield climbed to 4.22 percent on Monday from Friday’s closing level of 4.15 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced by 29 cents (0.26 percent) to $110.13/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
February Gold futures advanced by $5.20 (0.31 percent) to $1,665.80 per ounce (NYSEARCA:GLD). Can Gold ETFs Push Through?
China enjoyed a nice rally on Monday after Guo Shuqing, chairman of the nation’s Securities Regulatory Commission, hinted that China may increase by ten times the limit by which Renminbi Qualified Foreign Institutional Investors and Qualified Foreign Institutional Investors could invest in Chinese stocks. The Shanghai Composite Index skyrocketed 3.06 percent to 2,311 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index advanced 0.64 percent to 23,413 (NYSEARCA:EWH).
In Japan, the Tokyo Stock Exchange was closed on Monday. The yen continued to sink to its lowest level against the dollar since June of 2010 (NYSEARCA:FXY).
American stock index futures were in negative territory ahead of Monday’s opening bell following reports that consumer apathy about the iPhone 5 resulted in a decision to reduce production by Apple, which continues its decline (NASDAQ:AAPL). The March 13 Dow Jones Industrials future declined 0.10 percent to 13,419 as of 9:10 EST. The March 13 S&P 500 future fell 0.12 percent to 1,465 (NYSEARCA:SPY). The March 13 Nasdaq 100 future dropped 0.56 percent to 2,728.
Bottom line: Monday brought some scary news about the European economy, with industrial production falling in sixteen EU nations while BDO reported increased possibilities of a triple-dip recession in Britain.
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