The markets consolidated after the large run up on Friday, on low volume and very little volatility. The range for the day on the S&P 500 Index was 4 points and the market settled down .20 points to 1138.50. Today is what most analyst consider the 1 year anniversary of the bull run in equities as the market seem to bottom 1 year ago today. Implied volatility which is a measure of how much traders believe the markets will move over the course of a year also hit a 52 week low today.
In economic news in Asia, a record rise in exports helped Japan’s current-account balance swing back to surplus in January, government data showed, adding to hopes that overseas demand will continue to support the nation’s economic recovery. January’s current account surplus, or Japan’s net earnings from international trade and investment, stood at ¥899.8 billion ($9.95 billion) compared with a ¥132.7 billion deficit a year earlier, data from the Finance Ministry showed Monday. The result represents the 12th straight month of surplus, while the rebound from the previous year ¥1.033 trillion is the largest since a ¥1.222 trillion recovery in March 1992, according to the finance ministry.
Meanwhile, the nation’s bank lending in February—excluding that by Shinkin, or credit-union banks dropped 1.6% from a year earlier, according to the BOJ. Bank lending fell for the third month in a row in February as businesses continued to shy away from making new investments. The figure improved on a 1.7% fall in January, but still marks the third-straight month of decline. Weak lending highlights that while Japan’s economic recovery continues, it still lacks the necessary strength to prompt companies to borrow more to expand their operations. Firms have also reduced their reliance on bank lending as improving financial market conditions make it easier for them to raise money through selling bonds or issuing stocks if needed. The BOJ also said Japan’s money stock increased 2.7% on year in February, compared with a revised 3.0% rise in January. M2 includes cash currency in circulation and deposits held by the BOJ and other financial firms in Japan, excluding Japan Post Bank.
Markets will be very focused on the China data deluge this week. Despite the PBOC’s tightening measures seen earlier this year, the risk to the February economic data for China is to the upside since it will take some time for the January and February reserve requirement hikes to work through the economy. Indeed, officials have already said that Q1 GDP growth is expected to come in around 11% y/y vs. 10.7% y/y in Q4 and so the economy is still accelerating at the start of the year. State think tank added that 10% growth is expected for all of 2010, so some slowing is seen over the course of the year. February money supply and loan data week are likely to be key indicators, but there is no exact release date this week. M2 growth is expected to ease to 25% y/y from 26% y/y in January, while new loans are expected at CNY 600 billion vs. CNY 1.4 trillion in January and would represent a -44% y/y decline and fourth straight month of decline. CPI and PPI data due out Thurs will be watched too, with market expecting inflation to pick up to 2.5% y/y from 1.5% y/y in January.
