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News : International Last Updated: Aug 20, 2010 - 9:27:00 AM


Markets News Thursday: UK retail sales rise in July; German producer prices up 3.7% in year to July
By Finfacts Team
Aug 19, 2010 - 11:11:10 AM

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During August, we will not be providing the 'Markets Afternoon' report due to holiday and site development work. Use the relevant links below for the latest data.

UK retail sales volumes in July jumped 1.1%, official figures showed today. The better than expected performance represented the highest monthly rise since February, the Office for National Statistics (ONS) said in London. A strong rise in volumes for a broad mix of retailers, including sports equipment and jewellery shops, offset a flat month for department stores and lower household goods sales, the ONS said.The value of retail sales in July 2010 was 2.8% higher than in the same month a year earlier.

The monthly sales values: i) for predominantly food stores was 0.8% higher than a year ago; ii) for predominantly non-food stores was 3.7% higher than a year ago - - within predominantly non-food stores, the largest rise was in non-specialised stores which increased by 9.2%. Other stores rose by 4.1%. Textile, clothing and footwear stores rose by 3.1%. Household goods stores decreased by 0.3% over the period; iii) for the non-store retailing sector was 15.4% higher than a year ago; iv) for predominantly automotive fuel was 1.3% higher than a year ago; v) for the 2.8% year on year movement in the all retailing series was approximately comprised of: 0.4 percentage points from predominantly food stores, 1.6 percentage points from predominantly non-food stores, 0.7 percentage points from non-store retailing and 0.1 percentage points from automotive fuel.

German Producer Prices: Germany's federal statistics office, Destatis, today reported that the index of producer prices for industrial products (domestic sales) for Germany rose by 3.7% in July 2010 from the corresponding month of the preceding year. In June and May 2010, the annual rates of change were +1.7% and +0.9%, respectively. Compared with the preceding month, the index rose by 0.5% in July 2010 (+0.6 % in June 2010)

Economic View: Rents stabilising despite a large stock still on the market; Goodbody's chief economist, Dermot O’Leary, commented - - "After falling by 26% from the peak in 2008, the latest report from Daft.ie this morning indicates that residential rents have stabilised over recent months. However, with c.20,000 properties available for rent, relative to 5,000 in 2007, it is unlikely that there will be anything in the way of upward pressure on rents for some time to come. While further falls cannot be ruled out, if one assumes that rents remain at the current level, have house prices fallen to a sufficient extent to return the rental yield from residential property to a more appropriate level?

Based on the latest official data on house prices from the ESRI/permanent tsb index, the answer would have to be no. On the basis of the reported 40% decline in house prices, we estimate the rental yield nationally stood at 4.7% in Q3. Both relative to history and to funding for a property investment, this is too low. It can be reasonably argued though that prices have already fallen by more than the official index suggests. If prices are already down 50%, then the rental yield is estimated at 5.5%, which appears to us to be a reasonable medium-term target for the rental yield (and indeed is central to our view that prices do indeed need to fall 50% from the peak on average). A cautionary note though – in housing cycles, prices often overshoot and then undershoot 'fundamentals' and judging by the number of properties for rent and for sale, residential markets in some areas of the country still look vulnerable."

"The big fear from here is that of a jobless recovery," Virginie Maisonneuve from Schroders told CNBC Thursday. "Hiring is happening offshore for the most part," she added.

Bank of England meeting minutes show careful policy balance; Irish Central Bank Governor Honohan supports fiscal austerity; Davy's Aidan Corcoran, commented - - "The minutes of the monetary policy committee meeting of August 4th and 5th show the Bank of England refusing to become complacent on the news that core inflation slowed sharply in July.

UK monetary policy makers are walking a tightrope, with appreciable risks of both inflation slipping out of control and economic activity lagging over a sustained period. In normal circumstances, growth in economic activity moves together with prices – the presence of high inflation together with economic stagnation is a formidable challenge to monetary policy.

But high inflation in recent months can be largely ascribed to factors unrelated to underlying demand, such as the VAT increase in January of this year. The sharp fall in core CPI in July supports Governor King's position that underlying price pressure remains muted. Unfortunately, the uncomfortably high headline inflation limits any potential for the bank to ease the pain from UK fiscal austerity.

In an address to Renmin University, Beijing, on Tuesday August 17th, Irish Central Bank Governor Patrick Honohan discussed the funding situation of countries, including Ireland, which have found themselves running large fiscal deficits. Some commentators had suggested that rising debt levels should be addressed only after the ailing consumer had returned to health. Honohan took the opposite view, claiming that fiscal consolidation programmes must be adhered to.

In the context of stubbornly high spreads on the debt of several sovereigns, Honohan came down clearly in favour of fiscal belt-tightening, claiming that "the impact on funding costs and confidence surely more than offsets any short-term adverse impact on domestic demand from lower net public spending".

The prospect of some relief on funding costs is in tune with the relatively well-received issue of €1.5bn in Irish government debt on Tuesday. The total bids received of €5.085bn, or 3.4 times the maximum amount on offer, might be viewed as encouragement for Ireland's early and deep spending cuts."

NBC's Phil LeBeau discusses the details of GM's filing to offer 500 million common and preferred shares of stock:

Elan (Reduce, Closing Price $4.90); Five more cases of PML in July brings total up to 63; Goodbody's Ian Hunter commented  - - "In their monthly update, Biogen Idec and Elan last night announced that there were a further five cases of PML confirmed in July, bringing the total up to 63. No further patients died over the month, the total remaining on 12.

Three of the cases were in the US, bringing the total to 25, with the other two in Europe (total now 34). Having dipped in the previous month to 1.71 in a thousand, the incidence rate ticked up again this quarter, returning to 1.76 in a thousand (as in May) for patients that have received 24 or more infusions. In patients having received 30 or more infusions, the rate continued to moderate, slipping to 1.40 from 1.46 in June and 1.50 in May. Seven months into the year, there have been 35 cases reported, averaging five a month. Encouragingly, the incidence rates in those upper treatment levels which encompass significant numbers of patients, would appear to be stabilising and/or moderating."

The decline of the Western economic model will bring about hyperinflation and decades of painful readjustment, Egon von Greyerz, founder of gold investment intermediary Goldswitzerland.com told CNBC:

US Markets

On Wednesday in New York, the Dow Jones rose 10 points or 0.09% to 10,415.

The S&P 500 added 0.15% and the Nasdaq rose 0.28%.

Asia Markets

The MSCI Asia Pacific index gained 0.7% Thursday - - its fifth straight rise.

The Nikkei added 1.32%; China's Shanghai Composite rose 0.81%; Australia's S&P/ASX 200 Index gained 0.09% and India's Sensex Index advanced 1.15%.

Asia benchmarks

Finfacts Reports

The World's Best Countries: Finland at No. 1; Ireland at 17th rank; Cowen hailed as 'fiscal taskmaster'
Debt and growth revisited; The impact on growth of public debt/GDP ratios above 90%
Irish residential rents fell by less than 1% between April and June; Student rents are down for third straight year
India's growth paradox
National Economic and Social Council says euro has been beneficial for Ireland

In Europe, the Dow Jones Stoxx 600 rose 0.10% Thursday.

The ISEQ has declined 0.32% in Dublin.

CRH is off 1.03%; Elan is up 0.61%; AIB is off 3.18%.

European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies 

The euro is trading at $1.2832 and at £0.8205.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.

On Thursday, July 15, 2010, the index  fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the 35-session losing streak; on Wednesday this week, the BDI rose 43 points or 1.71% to 2,558.

Crude oil for September 2010 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $75.81 per barrel up 39 cents from Wednesday's close. In London, Brent for September delivery is trading on the International Commodities Exchange at $76.87.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,228.80, down 50 cents from Wednesday's close.

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