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Lunchtime in Europe, BedTime in Asia and Breakfast in America

By:
Barry Norman
Updated: Jan 1, 2011, 00:00 UTC

In the far east today, the markets were fairly quiet as Lunar New Year was still being celebrated in China, Taiwan and Vietnam,  although the FTSE Asia

Lunchtime in Europe, BedTime in Asia and Breakfast in America

In the far east today, the markets were fairly quiet as Lunar New Year was still being celebrated in China, Taiwan and Vietnam,  although the FTSE Asia Pacific index rose 0.3 per cent, aided by a 0.3 per cent surge in Hong Kong as the just returned from the holiday.

South Korea’s Kospi index added 0.4 per cent as sentiment was supported by record fourth-quarter profits from  electronics manufacturer Samsung as sales of its Galaxy Series of mobile devices climbed.

The Nikkei Stock Average dipped  by 0.1% to 8,841.22 in Tokyo, as Hong Kong’s Hang Seng climbed 0.3% to 20,501.67 and South Korea’s Kospi rose 0.4% to 1,964.83. Accompanied by Australia’s S&P/ASX 200  as it advanced by 0.4% to 4,288.40.

As the lights went out in Asia, Europe woke up with a bang.

Spain reported a huge increase in unemployment, pushing the level over the 22% range, even after promises from the new government that they would find a way to add jobs. The Institute for National Statistics said Spain’s jobless level reached 5.27 million in the fourth quarter, a gain of 295,300 persons. The unemployment rate now stands at 22.85%, up 1.33 points from the third quarter.

As could be predicted retail sales fell 6.2% on an annual basis in December, and fell 5.8% as a whole for 2011. Spain is beginning to collapse in on itself.

While Spain is implodeing, across the map in Italy, the government bond sale was quite successful. Italy saw short-term borrowing costs drop as it sold 11 billion euros ($14.4 billion) in bills at auction. Bids exceeded supply 1.35 times, down from a bid-to-cover ratio of 1.69 in December. The Treasury also sold 3 billion euros of flexible BOTs maturing in December at an average yield of 2.21%.

As continued worries bother investors with no final word on Greece and Portugal developing into a crisis, the markets showed the jitters.

The stock markets traded down on Friday, headlined  by banks and mining stocks in the wake of mixed data from the U.S. the prior day. On Thursday, the US reported a  rise in unemployment, a drop in housing sales but in the bright spot, durable good sales were way above forecast, which is good for manufacturing, and will eventually creat jobs and increase home saels. The French CAC 40 dropped 0.4% to 3,348.15. The Stoxx Europe 600 drifted down 0.3% to 257.17. The German DAX 30 dropped 0.3% to 6,517.96. The FTSE 100 flowed downhill by 0.6% to 5,759.84

Futures in the US have been declining this morning, after the worrisome reports yesterday and continued worries about Greece. Yes Greece, over and over Greece.

There are two important reports due out this morning before the markets open. These are forth-quarter gross domestic product at 8:30 a.m. Eastern time and the University of Michigan/Thomson Reuters consumer sentiment gauge for January at around 10 a.m. Eastern.

In a breakfast statement this morning,  Richmond Federal Reserve President Lacker said  that he dissented from the Fed’s decision this week to keep interest rates low until 2014 because an increase in rates may be needed before late 2014. He said he expects that as economic expansion continues, even if only at a moderate pace, the federal funds rate will need to rise in order to prevent the emergence of inflationary pressures.

Back over the Europe where US Treasury Secretary Timothy Geithner is attending the World Economic Forum, he stated that the outlook for U.S. growth and jobless levels depends on the resolution of that crisis, along with developments in the Gulf due to oil supplies and the direction of U.S. politics. 

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