Resurgent Chinese Economic Data Lift Global Markets

Bikram Pandey
10 Dec, 2012
New York City

Stocks in New York gained following resurgent economic data from China. Growth in exports fell in November but retail sales and industrial production were sharply rebounded. Euro declined after the unexpected resignation from Italian prime minister.

[R]4:00 PM, New York – Stocks in New York gained following resurgent economic data from China. Growth in exports fell in November but retail sales and industrial production were sharply rebounded. Euro declined after the unexpected resignation from Italian prime minister.[/R]

Stocks in New York shrugged off early declines and gained higher after China reported better than expected economic data and politicians worked weekend to negotiate budget deal.

President Barack Obama and U.S. House leader John Boehner met on Sunday at the White House. Leaders of both parties made conciliatory statements but did not provide any details about the possible compromise.

Investors largely ignored the news from Europe and focused on the improving economic data from China. Prime Minster of Italy announced his resignation and the nation will head to general election in February. Italian bond yield spreads widened after the surprise resignation and also raised the prospect of government veering off the fiscal austerity plan.

China’s industrial production rose 10.1% from a year ago in November, the largest monthly increase since March and retail sales jumped by 14.9%, the most in eight months.

The latest data indicated a reversal in economic expansion after seven consecutive quarterly economic growth decline. The economy expanded at the slowest pace in more than three years in the third quarter by 7.4%.

The international trade data reported by the statistics bureau highlighted the economic struggle faced by the second largest economy in the world.

Exports rose from a year ago 2.9% in November and imports were flat. The sharp decline in the month was followed by jump of 11.6% and 9.9% in previous two months. The fixed investment in the month was also ahead of expectations on the rising confidence in the property market.

In U.S. corporate news, AIG agreed to sell up to a 90% stake in ILFC for $5.28 billion. Ingersoll-Rand plans to spin-off its commercial and residential security businesses. Honeywell agreed to acquire Intermec for $600 million.

The European indexes traded sideways after Italian premier Mario Monti resigned ahead of schedule. The euro zone investor confidence improved in December and Greek output rose in October. The Italian economy contracted in the third quarter, fifth quarterly shrinkage in a row.

STMicroelectronics decided to exit ST-Ericsson. Air France-KLM traffic rose 2.2%. BMW worldwide sales increased 26.4% in November. Rentokil completed acquisition of Western Exterminator Company and Eden Advanced Pest Technologies.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.61% and on 30-year bond gained to 2.80%.

The U.S. dollar inched higher to $1.293 to a euro and increased against the Japanese yen to 82.43 yen.

Immediate delivery futures of Texas crude oil increased 27 cents to $86.21 a barrel and Brent crude gained 85 cents to $107.87, futures of natural gas decreased 11 cents to $3.44 per mbtu and gasoline traded up 1.34 cents to 261.10 cents a gallon.

In metals trading, gold increased $9.60 to $1,715.10 per ounce and silver increased 24 cents to $33.35 and copper closed up 4.50 cents to $3.70 a pound.