Eurozone Recession Strikes Germany
The impact of the Eurozone recession was reflected in two economic reports released by Germany on Tuesday as exports and factory orders declined.
Germany’s latest economic data revealed how the Eurozone recession is impacting the strongest economy of the 17-nation group (NYSEARCA:EWG). Destatis reported that Germany’s exports fell by 3.4 percent in November on a 
month-over-month basis. Economists had been expecting a decline of only 0.5 percent. Imports were down by 3.7 percent, indicating that demand within Germany was weakening along with the demand levels of the nation’s trading partners.
Destatis also reported that German factory orders declined by 1.8 percent in November after jumping 3.8 percent in October. Economists had been expecting a less-significant 1.4 percent drop.
Eurostat provided more bad news about the Eurozone recession on Tuesday with its report that unemployment within the 17-nation euro area increased from 11.7 percent in October to 11.8 percent in November. Within the broader 27-nation European Union, unemployment held at October’s 10.7 percent rate (NYSEARCA:VGK). ETFs for 3 of the Cheapest Markets in the World
Eurostat also reported that although retail sales rose 0.1 percent within the Eurozone and by 0.2 percent in the EU27 between October and November, on an annual basis (November 2011 – November 2012) retail sales declined by 2.6 percent in the Eurozone and by 1.3 percent in the EU27.
As of 11:13 EST, the Euro STOXX 50 Index declined 0.14 percent to 2,691 – staying well above its 50-day moving average of 2,573. The STOXX 50 is holding above its March 19 high of 2,608 and its Relative Strength Index is a healthy 65.99 (NYSEARCA:FEZ). The FTSE 100 Index dipped 0.08 percent to 6,059 NYSEARCA:EWU). The German DAX Index fell 0.60 percent to 7,686 (NYSEARCA:EWG). France’s CAC 40 Index advanced 0.09 percent to 3,707 (NYSEARCA:EWQ). Spain’s IBEX 35 Index rose 0.34 percent to 8,447 (NYSEARCA:EWP). Italy’s FTSE MIB Index climbed 0.28 percent to 16,943 (NYSEARCA:EWI).
As of 11:23 EST, the euro declined 0.42 percent against the dollar, trading at $1.3061 (NYSEARCA:FXE).
Spain’s ten-year bond yield declined to 5.07 percent on Tuesday from Monday’s closing level of 5.11 percent. Spain’s two-year bond yield dipped to 2.42 percent on Tuesday from Monday’s closing level of 2.46 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield declined to 4.32 percent on Tuesday from Monday’s closing level of 4.38 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced by 24 cents (0.22 percent) to $110.66/bbl. (NYSEARCA:BNO, NYSEARCA:USO). Weekly Gasoline Update: Very Little Change
February Gold futures advanced by $8.40 (0.51 percent) to $1,654.70 per ounce (NYSEARCA:GLD).
In China, stock declines were led by the insurance sector, after the Carlyle Group sold a $796 million stake in China Pacific Insurance. Carlyle still has over $5 billion invested in China Pacific. The Shanghai Composite Index declined 0.41 percent to 2,276 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index dropped 0.94 percent to 23,111 (NYSEARCA:EWH).
In Japan, stocks declined as the yen advanced, based on assumptions that the full impact of the Bank of Japan’s monetary stimulus measures had already been priced-in to the exchange rate (NYSEARCA:FXY). The Nikkei 225 Stock Average declined 0.86 percent to 10,508 (NYSEARCA:EWJ).
American stock index futures were in negative territory ahead of Tuesday’s opening bell in anticipation of a disappointing earnings season which begins after the closing bell. The March 13 Dow Jones Industrials future declined 0.17 percent to 13,285 as of 9:13 EST. The March 13 S&P 500 future fell 0.14 percent to 1,453 (NYSEARCA:SPY). The March 13 Nasdaq 100 future dipped 0.05 percent to 2,716.
Bottom line: Evidence of the Eurozone recession is beginning to appear in Germany’s economic data as factory orders, exports and imports declined during November.
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