Fundamental Analysis
EUR
“We would not exclude the possibility of a sharp reversal in September”
- Martin van Vliet, an economist at ING
Output at Eurozone factories rose unexpectedly last month, as demand for food and cars was strong, the European statistics office, Eurostat, said on Friday. Eurozone industrial output rose to a seasonally adjusted 0.6 per cent in August from July, beating expectations of a 0.4 per cent fall. At the same time production of durable goods soared 4 per cent, while non-durable goods output jumped 1.3 per cent.
“We would not exclude the possibility of a sharp reversal in September,” said Martin van Vliet, an economist at ING in Amsterdam. “With the global economy slowing and the fiscal squeeze in the euro zone continuing, any upturn in euro-zone industrial activity will likely be modest.”
“A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said.
The Stoxx Europe 600 Index erased 0.52 per cent to 269.43. Germany’s DAX Index inched lower 0.68 per cent to 7,232.49 and France’s CAC 40 Index fell 0.72 per cent to 3,389.08.
USD
“Members generally continued to anticipate that, with longer-term inflation expectations stable and given the existing slack in resource utilization...”
- U.S. Federal Reserve
Wholesale prices rose in the world’s biggest economy rose more than initially expected last month, as fuel costs jumped. According to the Labor Department, U.S. PPI climbed to a seasonally adjusted 1.1% in September, after a 1.7% gain in the preceding month. The rate came better than a consensus estimate of analysts’ who has predicted a 0.8% gain.
“Members generally continued to anticipate that, with longer-term inflation expectations stable and given the existing slack in resource utilization, inflation over the medium term would run at or below the Committee’s longer-run objective of 2 percent,” according to the Federal Reserve.
Also Friday, the University of Michigan said confidence among U.S. consumers rose surprisingly in October, reaching the highest level since December 2007, a sign that retailers may see sales improvement soon. U.S. consumer sentiment jumped to a seasonally adjusted 83.1, up from 78.3 in the prior month, beating analysts’ expectations of a fall to 78.0.
The Standard & Poor's 500 erased 0.30 per cent to 1,428.59. The Dow Jones Industrial Average climbed 0.02 per cent to 13,328.85. The Nasdaq Composite fell 0.17 per cent to 3,044.12.
GBP
“We have to find creative ways forward which as best possible both increase resilience and support lending and as a result, maintain nominal demand”
- Financial Services Authority Chairman Adair Turner
Britain’s £375 billion stimulus program has run out of steam and fresh measures to stimulate economic growth must be found, according to Financial Services Authority Chairman Adair Turner. The central bank has already injected money into the economy by buying government bonds, while further cut of interest rates may have no significant impact, as they are already close to zero.
“We have to find creative ways forward which as best possible both increase resilience and support lending and as a result, maintain nominal demand,” said Financial Services Authority Chairman Adair Turner .
“The rules on bank capital and liquidity were woefully deficient - an entire global banking system allowed to run with equity capital resources and liquidity buffers which we now believe were a small fraction of safe levels.”
The FTSE 100 Index turned lower 0.62 per cent to 5,793.32. The broader FTSE All-Share Index declined by 0.59 per cent to 3,025.62.
CHF
“In an average year, Switzerland refines about 70 per cent of world gold”
- Frédéric Panizzutti, spokesman of MKS (Switzerland) SA
Almost all gold produced in the world was transited physically through Switzerland during the 2011, the data from the U.S. Geological Survey showed Friday. Over 2600 metric tons, out of the 2700 tons which were mined in the world last year, with a total value of $103 billion were refined in Switzerland, as it is the only country in the world, where gold purity is regulated by law.
“In an average year, Switzerland refines about 70 per cent of world gold,” according to Frédéric Panizzutti, spokesman of MKS (Switzerland) SA, a Geneva-based company, which specialises in gold trading and which owns the Pamp refinery in Castel San Pietro, Ticino.
“A refinery produces not just gold bars, but semi-finished products, like coins and medals, which require a high degree of precision. Switzerland has always maintained itself at the top as regards quality and there is no reason why that should change now.”
The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, rose 0.02 per cent to 6,655.20. The broader Swiss Performance Index remained unchanged at 6,139.18.
JPY
“The economic recovery has had a weak tone recently due to a slowdown in the global economy, although some steadiness is still seen”
- Japanese government
Japanese government downgraded its growth forecast for the third consecutive month in October, amid deepening concerns that European debt crisis and China’s slowdown intensified. It is the longest streak of downgrades since 2008, and the chance of further stimulus measures for the Bank of Japan has increased. Japanese economy expanded by 0.2% in April-June period.
“A further slowdown in global growth and volatility in financial markets may hurt Japan's economy, which are risks we must be vigilant to,” said Economics minister Seiji Maehara.
“The economic recovery has had a weak tone recently due to a slowdown in the global economy, although some steadiness is still seen,” the Japanese government said in its latest monthly report released on Friday.
The Nikkei 225 Stock Average added 0.51 per cent, or 43.81 points, to 8,577.93. The broader Topix Index advanced 0.65 per cent, or 4.67 points, to 722.99.
