Thursday, 19 January 2006

Mixed economic news from US and Europe, Nikkei plunges 2.9 percent

Reuters provides a wrap-up of the economic news from the US, including news on inflation:

The Labor Department's report on consumer prices in December offered mixed inflation signals. Overall prices declined 0.1 percent last month, bucking Wall Street expectations for a 0.2 percent rise, as a drop in the cost of energy, transportation and apparel more than offset increases in education, food and shelter...

The closely watched core Consumer Price Index...rose, climbing 0.2 percent in December, matching market forecasts.

...weekly earnings:

In a separate report, the Labor Department said real average weekly earnings rose 0.1 in December after a 0.8 percent gain the prior month.

Average weekly earnings are up 3.1 percent from December 2004, but since prices have risen even faster, real earnings were down 0.4 percent from a year earlier. flows:

A separate report on Wednesday showed net flows of capital into U.S. assets fell to $89.1 billion in November, in line with market forecasts and more than enough to cover the trade deficit...

The report on capital inflows, released by the Treasury Department, showed net capital inflows slipped from October's revised record high $104.2 billion. Excluding foreign stocks and bonds, inflows declined slightly in November to $103.2 billion from a revised $107.3 billion in October.

...retail sales:

The International Council of Shopping Centers and UBS Securities LLC said chain store sales dropped 1.4 percent last week as higher gasoline prices and weaker consumer confidence cut into shopping.

Sales were up 3.1 percent compared with the same week a year ago, the report showed.

Redbook Research, an independent company, said chain store sales were down 0.6 percent so far in January, although they were up 3.1 percent last week from the same week a year ago.

...and mortgage application activity:

A separate report showed U.S. mortgage applications last week rose for a second straight week, driven by a surge in home refinancings as long-term interest rates fell to their lowest level since October.

A separate Reuters story covered the Federal Reserve beige book.

U.S. economic activity increased across the country in the last several weeks of 2005, but rising energy costs worried businesses in some areas, particularly factories, the Federal Reserve said on Wednesday.

Overall, a mixed bag of news.

It was also mixed news over in Europe where industrial production was up in November:

Seasonally adjusted industrial production rose by 1.3% in the euro-zone in November 2005 compared to October. Production fell by 0.7% in October and by 0.2% in September. In the EU25 output grew by 1.0% in November 2005, after a decrease of 0.6% in October and an increase of 0.2% in September.

...but unemployment rose in the UK:

The jobless rate spiked to a two-year high of 5.0 percent while...annual average earnings growth slowed to 3.4 percent [in the three months to November] from 3.6 in the prior three-month period -- the weakest gain in 2-1/2 years and in line with economists' forecasts.

The real excitement for markets came from Japan. AFP/CNA reports:

A scandal rocking Japanese Internet pioneer Livedoor has erupted, sparking a stampede out of the stock market that forced Asia's largest bourse to close early for the first time ever.

Investors took fright at fresh allegations that Livedoor cooked the books to hide losses -- leading the market to question the very foundations of the boom in Japan's Internet trailblazers...

The benchmark Nikkei-225 index tumbled by almost five percent in early afternoon trading before clawing back to end the day down 464.77 points or 2.94 percent at 15,341.18 as the bourse shut 20 minutes early...

The Tokyo bourse, which in November suffered its worst-ever technical crash, announced a halt to trading in a totally unprecedented move for fear that the huge volumes going through could bring down the system.

The Japanese stock market has been doing very well for the past few months, but it sure is getting jittery.

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