Saturday, 1 June 2013

Markets fall amid mixed data

Markets ended the week on a negative note with both stocks and bonds falling on Friday.

The S&P 500 fell 1.4 percent while the STOXX Euro 600 fell 0.9 percent. The US 10-year Treasury yield rose two basis points after rising as much as 10 basis points earlier.

Selling had begun in Asia, where most markets fell. In particular, stocks in India fell 2.3 percent after a report showed that the economy grew 5.0 percent in the financial year 2012/13, the slowest rate in a decade.

A notable exception to the falls in Asia was the Nikkei 225, which rebounded 1.4 percent amid mostly positive Japanese economic data on Friday.

Japanese industrial output rose 1.7 percent in April, its fifth consecutive increase. However, manufacturers surveyed by the government forecast production to be flat in May and fall 1.4 percent in June.

Also pointing to an improvement for Japanese manufacturing was a rise in the Markit/JMMA manufacturing PMI to 51.5 in May, the highest since August, from 51.1 in April.

Meanwhile, there was less deflation in Japan in April. Consumer prices excluding volatile fresh food fell 0.4 percent from a year earlier compared with a 0.5 percent fall in March.

Japan's jobless rate was unchanged at 4.1 percent in April.

However, growth in household spending slowed to 1.5 percent in April from 5.2 percent in March.

US data on Friday were also mostly positive.

Consumer spending fell 0.2 in April while income was flat. However, with consumer prices falling 0.3 percent, real consumer spending was up 0.1 percent.

And consumer sentiment appears to be improving. The Thomson Reuters/University of Michigan consumer sentiment index increased to 84.5 in May, the highest since July 2007, from 76.4 in April.

In another positive sign for the US economy, the MNI Chicago Report’s business barometer jumped to 58.7 in May, the highest since March 2012, from 49.0 in April.

There were more gloomy data from the euro area on Friday though.

The unemployment rate in the euro area rose to 12.2 percent in April from 12.1 percent in March. Inflation accelerated to 1.4 percent in May from 1.2 percent in April.

And the region's largest economy, Germany, saw retail sales fall 0.4 percent in April, its third monthly decline.

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