Posted on Tuesday, January 22nd, 2013 | In Exchange Traded Funds
German investor sentiment becomes the latest sign that economic recovery could be underway.
German investor sentiment took an enormous jump as the ZEW Indicator of Economic Sentiment increased by a whopping 24.6 points in January (from 6.9 in December) to reach 31.5 points, its highest level since May of 2010 NYSEARCA:EWG). The revelation comes at a point when a spate of recent economic reports suggests that the Eurozone recession is finally catching up with the region’s strongest economy. Surging investor confidence in the face of such data could be a signal that the global economic recovery is underway.
Meanwhile, the United Kingdom’s economic austerity program does not appear to be going too well. Britain’s Office for National Statistics reported that the nation’s public sector current budget deficit was £13.0 billion in December 2012, representing a £0.5 billion increase from December of 2011, when there was a deficit of £12.5 billion (NYSEARCA:EWU).
As of 11:19 EST, the Euro STOXX 50 Index declined 0.26 percent to 2,719 – staying well above its 50-day moving average of 2,613. After struggling since the beginning of the new year, the STOXX 50 is finally breaking above its resistance level of 2,700. Its Relative Strength Index is 66.67 (NYSEARCA:FEZ). The FTSE 100 Index advanced 0.05 percent to 6,183 (NYSEARCA:EWU). The German DAX Index dropped 0.57 percent to 7,704 (NYSEARCA:EWG). France’s CAC 40 Index fell 0.42 percent to 3,747 (NYSEARCA:EWQ). Spain’s IBEX 35 Index dropped 0.27 percent to 8,642 (NYSEARCA:EWP). Italy’s FTSE MIB Index advanced 0.54 percent to 17,727 (NYSEARCA:EWI).
As of 11:26 EST, the euro declined 0.13 percent against the dollar, trading at $1.3296 (NYSEARCA:FXE). EURUSD Weekly Outlook: The Bullish, Bearish & Lucky Drivers
Spain’s ten-year bond yield declined to 5.13 percent on Tuesday from Monday’s closing level of 5.15 percent. Spain’s two-year bond yield dipped to 2.55 percent on Tuesday from Monday’s closing level of 2.56 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield declined to 4.23 percent on Tuesday from Monday’s closing level of 4.25 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced by 16 cents (0.14 percent) to $111.87/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
February Gold futures advanced by $4.50 (0.27 percent) to $1,695.30 per ounce (NYSEARCA:GLD). More Precious than Gold – Last Chance to Buy Platinum
In Japan, stocks retreated as the yen advanced following a decision by the Bank of Japan to delay implementation of its aggressive monetary easing plan until January of 2014 (NYSEARCA:FXY). The Nikkei 225 Stock Average declined 0.35 percent to 10,709 (NYSEARCA:EWJ).
In China, the Shanghai Composite Index retreated after China Securities Regulatory Commission Chairman Guo Shuquing remarked that government intervention in the stock market can become necessary at “key moments”. The Shanghai Composite declined 0.56 percent to 2,315 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index advanced 0.29 percent to 23,658 (NYSEARCA:EWH).
Tuesday’s American stock index futures trading remained relatively stagnant ahead of the opening bell, as investors cautiously monitored quarterly earnings reports. The March 13 Dow Jones Industrials future remained unchanged from Monday’s closing level of 13,576 as of 9:13 EST. The March 13 S&P 500 future rose 0.01 percent to 1,479 (NYSEARCA:SPY). The March 13 Nasdaq 100 future advanced 0.15 percent to 2,737.
Bottom line: German investor sentiment took a huge leap in January, despite the recent spate of economic reports, demonstrating that the Eurozone recession is beginning to impact the region’s strongest economy. Surging German investor confidence in spite of that data could signal that the global economic recovery could be underway.
About John Nyaradi (http://www.wallstreetsectorselector.com)
John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.