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Prospects Daily: Egypt’s equities rally, US factory orders rise, Brazil’s industrial output slows

Global Macroeconomics Team's picture
Financial Markets…Japanese stocks advanced for a fourth day on Tuesday as the country’s exporters gained on a weaker yen. Positive U.S. manufacturing and construction data also boosted overall investor sentiment. The benchmark Nikkei 225 index gained 1.8% to close above 14,000 levels for the first time in five weeks, while the broader Topix index climbed 1.8% to extend its four-day gains to 9.6%.

Gold fell for the first time in three trading sessions as a stronger dollar reduced demand for bullion as a store of value. Gold futures for August delivery dropped 0.3% to $1,252.10 an ounce on Tuesday after gaining 3.6% in the past two days. The metal plunged to a 34-month low of $1,180.50 an ounce on June 28, erasing $66 billion from the value of investor holding.

Egypt’s shares climbed the most in a year, with the benchmark EGX 30 Index surging 4.9% in early afternoon trading, after the military gave President Mohamed Mursi an ultimatum to resolve the current political crisis by Wednesday. The yield on the country’s benchmark notes maturing in 20 years declined 22 basis points to 9.89%.

High-income EconomiesAustralia’s central bank kept its benchmark rate on hold at a record low of 2.75% for the second month to help support a slowing economy adjusting to lower levels of mining investment.  The bank has reduced the rate by a cumulative 200 basis points since the end of 2011.

US factory orders, a key gauge of future investment plans, rose by 2.1% (m/m sa) in May following an upwardly revised 1.3% increase in May. However, excluding a 10.9 % increase in orders for transportation equipment, factory orders rose by 0.6 % (m/m) in May after edging up by 0.2% in April, and on a 3m/3m saar basis fell 5% in May. Separately, construction spending rose 0.5% (m/m) to its highest level in three years, to an annual rate of $874.9billion in May.
Eurozone producer prices continued to decline in May, down 0.1% (y/), after falling 0.2% in April led by declining energy prices. Month-on-month, producer prices fell 0.3% after a 0.6% decline the previous month. 

Developing EconomiesEurope and Central Asia: Romania’s retail sales contracted 3.3% (y/y) in May, down from 1.3% (y/y) growth in April. Retail sales also contracted on m/m basis by 3%, down from 1.9% growth in April. Separately, the statistical office reported that the producer prices increased 2.6% (y/y) in May following a 3% (y/y) gain in April.

Latin America and the Caribbean: Brazil’s industrial output growth slowed to 1.8% (y/y) in May, down from a revised 3.4% (y/y) growth in April. On m/m basis, industrial output contracted by 2% led by slowdown in production of capital goods (-3.5% m/m), which contracted for the first time this year.

Sub-Saharan Africa: Kenya’s GDP growth accelerated to 5.2% (y/y) 2013Q1, up from 4.6% and 5.1% in the third and fourth quarters of 2012 respectively. However, growth in the quarter was largely driven by the agricultural sector with expansion by 8.3% y/y from 5.8% and 4.8% in the preceding quarters, on the back of significant growth in tea and horticulture production, which was severely hampered by frost in the first quarter of 2012. The improved agricultural output, accounting for roughly 20% of GDP, was partly offset by weaker readings for the industrial and service sectors.

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