Scoreboard: Chinese check

Global stocks were mixed as strong Chinese growth data and a Greek surplus helped offset a spike in the US deficit.

Stocks on both sides of the Atlantic were little different to zero overnight, with not much in the way of news or data. About the only data out came from the US Treasury when it announced a deficit of $97 billion ($105.27 billion) for the month of July, up from $69 billion. The bigger picture is that the US is raking in record revenues, which at $2.3 trillion are 14 per cent higher than a year ago. Year-to-date, the US budget deficit is $607 billion, which is down almost 40 per cent from the same period last year. All good, but most of this would be priced in.

With little else to go on, the S&P500 was off 0.1 per cent at the close (1689), the Dow lost almost 6 points (15,419) and the Nasdaq was up 0.3 points, getting a boost I suppose from news that a new iPhone is to be released later this year. Also helping would have been a court decision to ban some imports from Samsung (on patent concerns), but Cisco and IBM also had a good session.

Over in Europe, mining stocks got another boost from the recent run of Chinese data which showed continued strong growth. There was also a surge in precious metal prices – gold rose $23 for the session to $1335 and silver was up 4.6 per cent. That was about the only area of strength though, with equities broadly flat or weaker. At the bell, the Dax was up 0.3 per cent, the CaC fell 0.1 per cent and the FTSE100 was also off about 0.1 per cent.

There wasn’t too much news flow out of Europe – nothing major, anyway. There was some good news on Greece, I guess – well, good and bad news. The bad news is that the Greek economy shrank at an annual pace of 4.6 per cent in the June quarter following a fall of over 5 per cent in the first quarter. However the good news is that the government managed to achieve a primary surplus (ex-interest and social security payments) of €2.6 billion ($3.76 billion) – a landmark, as it’s the nation’s first primary surplus for more than a decade. There’s talk around that Greece may need another debt restructure early this year, but how much of that is true or not I don’t know. Germany seems to think the Greeks don’t need it, as they are meeting all their targets and otherwise managing to sort out their affairs.

Price action otherwise was fairly boring – on the commodities side crude was up 0.2 per cent ($106) and copper also rose 0.2 per cent. The on the rates side, US 10-year bond yield was up 4 bps to 2.62 per cent. Finally for forex, the Australian dollar was about 40 pips lower from 1630 AEST to 0.9148; the euro was off about 20 pips to 1.3304; the British pound lost about 30 pips to 1.5465; while the yen is at 96.85 from 96.48.

That’s pretty much it for the session. The news and data-flow today consists of business confidence for Australia at 1130 AEST (July reading), and confidence, as we know, is abysmal despite the lowest rates since the 1960s and a 12 per cent slump in the Australian dollar. Treasury’s pre-election outlook is also out, and the wide expectation is that this document will forecast a slowing in economic growth.

The only noteworthy international data out incudes the final estimate of German CPI this afternoon, the ZEW survey tonight and, still in Europe, industrial production. The UK then puts out inflation numbers and house prices, while for the US, the key data will be retail sales and business inventories.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

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