European exchanges closed higher on Thursday as encouraging sales figures from retailers Carrefour and Associated British Foods helped offset losses in the mining sector. US Stocks ended sharply higher Thursday, with the S&P 500 at its best level in more than five years, as Wall Street cheered a pair of encouraging data and largely shrugged off weakness in financials. Asian markets are climbing this morning as the JPYcontinues to weaken and on positive data from China.
The rebound in U.S. homebuilding accelerated in December, capping the best year for the industry since 2008 and adding to signs residential real estate is contributing to economic growth. Manufacturing in the Philadelphia region unexpectedly contracted in January, an indication companies are becoming more concerned about across-the-board U.S. government spending cuts that could slow growth. The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market. Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12.
Federal Reserve officials are voicing increased concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases.
The euro approached a 10-month high against the dollar as Spain’s borrowing costs fell at a 4.5 billion-euro ($6 billion) sale of bonds, underscoring increased confidence in European debt markets. The International Monetary Fund agreed to disburse 839mn Euros ($1.1bn) to Portugal under a loan with the European Union and said the country needs a public debate on ways to further reduce its deficit.
China released its monthly data dump with most reports printing above expectations. Chinese GDP reported at 7.9% against expectations of 7.8%, while industrial production and retail sales soared above forecast. The Chinese economy expanded more than expectations in calendar 2012, according to data from the National Bureau of Statistics of China. Despite the result, annual growth has now slowed for a second straight year in the face of weakness at home and in key overseas markets. The data showed gross domestic product (GDP) in the year grew a seasonally adjusted 7.8 per cent.
The statistics bureau also released other key indicators this morning. Industrial production grew 10.0 per cent in 2012 and 10.3 per cent in December year-on-year. Retail sales, China’s main gauge of consumer spending, increased 14.3 per cent in 2012 and 15.2 per cent in December.
A decade and a half after Japan slumped into deflation; the central bank is set to signal its strongest effort yet to reverse the trend. The biggest challenge may be that the nation has come to rely on falling prices. More than 80 percent of respondents in a Bank of Japan survey released this month who noticed rising prices last year said it was bad.
Prime Minister Abe said yesterday that he is seeking a “soul mate” to head the Bank of Japan, someone who sees the future of the Japanese economy in the same frame as he does. This is interpreted to mean ongoing monetary stimulus.
A key address by Prime Minister Cameron on the relationship between the UK and the Eurozone has been postponed due to the terrorist acts in Algeria as Ministers prepare a joint statement today.