Friday Morning Cheat Sheet: 3 Stories Moving Markets
The markets were mixed in Asia overnight. The Nikkei fell 1.80 percent to close down for the the week for the first time since November. Investors seem keen to take profits after 13 weeks of gains, and the yen cooled off to 92.51 versus the dollar. The Hang Seng climbed 0.16 percent, while the S&P/ASX 200 increased 0.72 percent.
The markets were up in Europe at mid-day as beleaguered traders reacted warmly to positive news out of China. London’s FTSE 100 was up 0.44 percent, Germany’s DAX climbed 0.23 percent, and the STOXX 50 increased 0.55 percent.
U.S. futures at 8:35 a.m.: DJIA: -0.09%, S&P 500: +0.01%, NASDAQ: +0.13%.
1) Chinese exports, imports, and new lending surged in January, sounding an optimistic note for the beginning of 2013 that was felt in markets around the world. Exports grew 25 percent year over year, ahead of expectations for 17 percent growth. Imports increased 28.8 percent, ahead of expectations for 23.3 percent, and a particularly satisfying growth rate because it outpaces exports.
These results are buoyed by expectations for at least 7.5 percent GDP growth and a PMI index that broke above 50 just at the end of 2012, finally indicating growth after nearly a year of slight contraction. Economists are expecting inflation in the country to approach 3.5 percent, which may lead the government to approach its monetary policy more cautiously.
2) Japan has made no secret about its intent to weaken the yen, but the rapid fall of the currency recently may have been more than the country bargained for. After falling to a 34-month low against the euro and a 33-month low against the dollar on Wednesday, finance minister Taro Aso suggested that the speed of the currency’s movement was faster than intended. This has helped settle concern that the Japanese government would try and force the currency all the way to 100 versus the dollar. The yen is currently trading at 92.51 to the dollar and 124.06 to the euro.
3) The Congressional Budget Office reported that the federal budget deficit for the first fourth months of fiscal 2013 was $295 billion, $54 billion less than the period last year. So far, this is in line with projections for a full-year deficit of $845 billion, a 23.2 percent reduction from the 2012 deficit of $1.1 trillion. The projected 2013 deficit represents 5.3 percent of GDP, while the 2012 deficit was 7.0 percent of GDP.
Thanks to the tax agreement reached at the beginning of the year, total government receipts for the period were up $96 billion to $886 billion. The majority of this increase, nearly 80 percent, came from individual income and payroll taxes, which grew 11 percent compared to the period last year. Corporate income tax climbed 10 percent. Total spending was about 1 percent higher.
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