St George Economics economy and finance update
Global equity markets were positive on Friday but followed that with a flat session on Monday. The Dow rose 0.5% on Friday on the back of good earnings results.
To date, 76% of company earnings have exceeded analysts' earnings expectations.
On Monday night the Dow was flat despite some good economic news (see below).
On Friday the German Dax index closed at its highest level in five year but fell 0.3% in the Monday session.
Bond yields moved higher in the US and Germany on the back of better economic news (see below).
Comments from ECB President Draghi that Europe was on a path of recovery added to the appetite for risk and away from safe haven bonds.
The AUD continued to slip against the USD over the long weekend falling into the US$1.03 range on Monday night before moving back into the 1.04 range at the open today.
Oil was stronger on the back of good US durable goods numbers and on news of the closure of a New Jersey oil refinery. Gold was a touch softer ahead of this week's FOMC monetary policy announcements.
No data on Friday and closed for the Australia Day public holiday on Monday.
The German IFO survey headline result rose to 104.2 in January, the highest reading since June, its third consecutive increase.
The survey adds to the evidence that the German economy is on course to bounce back after the large contraction in Q4 with improvements also seen in the PMI and ZEW surveys released earlier in the week.
National CPI fell 0.1% in the year to December, indicating that Japan remains in deflation. On the core measures, prices also remained in decline. Excluding fresh food, CPI fell 0.2% in the year to December, while excluding food and energy, CPI fell 0.6% in the year.
The NZ Performance of Services index fell from 54.2 in November to 51.5 in December. Growth is still suggested but at a slower pace.
UK GDP is estimated to have contracted by 0.3% in the preliminary reading for Q3, leaving the annual rate at flat.
The breakdown revealed service sector output was unchanged over the quarter with manufacturing down 1.5%.
The data remains distorted following the Queen's Jubilee holiday earlier in the year followed by the Olympics but the underlying picture remains weak.
US New Home Sales fell 7.3% in December taking the annualised rate to 369k from 398k previously. November's print was revised up from 377k accounting for most the decline over December.
Over the course of the year, sales posted the first annual gain for seven years.
US Durable goods orders increased by a larger than expected 4.6% in December despite concerns over the US 'fiscal cliff'.
A lot of the rise in the headline was due to defence aircraft orders which were up 56.4% on the month as well as 10% rise in commercial aircraft bookings and a large rise in transportation orders.
Excluding transportation, orders still managed a solid 1.3% rise. Non-defence capital goods orders excluding aircraft rose 0.2% while shipments were up just 0.3%.
US pending home sales contracted 4.3% in December following a 1.6% increase in November. The annual rate slowed to 4.9% from 8.8%. Declines were reported in three of four regions with only the Midwest managing a gain.
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