Friday, 18 April 2014

Japanese consumer confidence falls, economic assessment lowered

Japan has been hit by bad news for its economy.

On Thursday, the Cabinet Office reported that its consumer confidence index fell to 37.5 in March, the lowest level since August 2011, from 38.5 in February.

On the same day, the government cut its assessment of the economy in April, the first lowering since November 2012.

On Friday, the Ministry of Economy, Trade and Industry reported that its tertiary industry index fell 1.0 percent in February, more than reversing the 0.9 percent increase in January.

Thursday, 17 April 2014

US stocks rise for third day on positive economic data, China's economy slows

US stocks rose on Wednesday, with the S&P 500 rising 1.1 percent to cap its best three-day rally in two months.

The higher stock prices were supported by economic reports on Wednesday.

The Federal Reserve's latest Beige Book released on Wednesday reported that the US economy continued to expand recently.

Other US economic data on Wednesday supported that view. Factory production rose 0.5 percent in March, helping to push total industrial production up 0.7 percent. Housing starts rose 2.8 percent in March but building permits fell 2.4 percent.

Earlier on Wednesday, China reported that its economy grew 7.4 percent in the first quarter from the previous year, down from 7.7 percent in the fourth quarter.

However, March data showed that industrial production rose 8.8 percent year-on-year, up from a combined January-February increase of 8.6 percent, while retail sales rose 12.2 percent last month, up from a 11.8 percent increase in January-February.

Wednesday, 16 April 2014

Stocks rise for second day in US, fall in Europe and China

US stocks rose for a second consecutive day on Tuesday, the S&P 500 gaining 0.7 percent after climbing 0.8 percent on Monday.

The gain on Monday had been accompanied by a positive economic report in the form of a 1.1 percent rise in US retail sales.

The gain on Tuesday was accompanied by somewhat more mixed economic data. The consumer price index rose 0.2 percent in March, up from 0.1 percent in February, suggesting a possible end to the disinflationary trend.

However, the NAHB/Wells Fargo housing market index rose only a point to 47 in April while the New York Federal Reserve's Empire State general business conditions index fell to a five-month low of 1.29 in April from 5.61 in March.

European stocks fell on Tuesday, the STOXX Europe 600 falling 1.0 percent and erasing its gain for the year amid tension in Ukraine.

Earlier on Tuesday, Asian stocks had been mixed. While Japanese stocks rose 0.6 percent, Chinese stocks fell, the Shanghai Composite Index losing 1.4 percent.

The People's Bank of China had reported on Tuesday that bank lending surged to 1.05 trillion yuan in March from 644.5 billion yuan in February the previous month. However, lending was down 12.4 billion when compared to a year earlier.

Monday, 14 April 2014

US stocks could crash...but maybe not yet

After another week of losses for the US stock market, Henry Blodget at Business Insider wrote at the end of last week that this could be the start of a stock market crash.

[S]ome signs suggest that this pullback — or another one sometime soon — could get much more severe.

Why?

Three basic reasons:

• Stocks are still very expensive
• Corporate profit margins are at record highs, and
• The Fed is now tightening

However, responding to Blodget, James Gruber at Asia Confidential wrote that stocks will not crash for now.

Asia Confidential believes Blodget makes a number of valid arguments and could end up being right. But he’s way too early with the call. And the principal reason is that history shows Fed tightening has been bullish for stocks, at least initially.

Joshua Brown at The Reformed Broker had also asked at the end of last week: Is this the beginning of a crash?

His answer:

It certainly could be, but the odds do not favor it. Statistically speaking, it is far more likely that a run-of-the-mill correction is now underway and working its way through each sector of the market, to varying degrees of severity. Counter-trend rallies are sharp and short (think Wednesday), which is fairly characteristic of a defined downtrend. The 200-day moving average is rising up just beneath us and it may offer some solid support, just as it had in December of 2012.

Saturday, 12 April 2014

US stocks fall as consumer confidence rises

US stocks fell again on Friday. The S&P 500 declined 0.9 percent to complete its worst weekly loss since 2012. The Nasdaq Composite Index fell 1.3 percent.

Stocks fell despite a rise in US consumer confidence. A report on Friday showed that the preliminary April reading of the Thomson Reuters/University of Michigan consumer sentiment index was 82.6, up from a four-month low of 80.0 in March.

Another report on Friday showed that US producer prices also rose in March. The producer price index rose 0.5 percent last month, the most since June, after falling 0.1 percent in February.

China also showed signs of accelerating inflation on Friday. Its consumer price index rose 2.4 percent in March from a year ago, faster than the 2.0 percent increase in February.

Friday, 11 April 2014

US stocks fall could turn into '87-type crash

US stocks fell on Thursday, with the Nasdaq Composite Index tumbling 3.1 percent to a two-month low. The S&P 500 fell 2.1 percent.

Marc Faber, editor and publisher of the Gloom, Boom & Doom Report, told CNBC that the stock market is setting up for a decline more painful than the sudden crash of 1987.

"This year, for sure—maybe from a higher diving board—the S&P will drop 20 percent," Faber said, adding: "I think, rather, 30 percent. Who knows. But all I'm saying is that it's not a very good time, right now, to buy stocks."

The STOXX Europe 600 fell 0.5 percent on Thursday.

European stocks were not helped by the Bank of England, which left its key interest rate unchanged at 0.5 percent at its monetary policy meeting on Thursday. The BoE also maintained its stock of asset purchases from its quantitative easing programme at 375 billion pounds.

Possibly raising concerns for investors in Europe though were trade data earlier on Thursday from China. China reported that its exports fell 6.6 percent in March from the previous year while imports slumped 11.3 percent.

Despite the unexpectedly weak trade data, China's stock market led Asian shares up on Thursday after a plan was announced allowing cross-trading between Hong Kong and Shanghai's stock markets.