German economic woes erode market gains
LONDON — Stock markets mostly slipped on Tuesday after new figures pointed to Germany’s economy contracting in the last three months of 2012 and as investors awaited U.S. retail sales figures for the holiday month of December.
Investors will be scrutinizing the U.S. data as well as more company earnings results to assess whether the drawn-out “fiscal cliff” debate had an impact on U.S. consumer spending. A series of tax hikes and spending cuts, due to come into effect Jan. 1, were only averted by a last-minute deal.
In Europe, Germany’s DAX fell 0.1 percent to 7,719.96 after new figures showed Europe’s largest economy contracted in the fourth quarter. The government said the economy grew only 0.7 percent in 2012, which indicates activity dropped in the last three months of the year by as much as 0.5 percent according to some experts. The government did not break out the quarterly figure.
Analysts say the country is unlikely to fall into recession, defined as two consecutive quarters of economic contraction.
“The German economy will continue to steer its course this year — despite a very weak year-end 2012,” said Andreas Rees, chief German economist at UniCredit.
Elsewhere, Britain’s FTSE 100 was flat at 6,109.63 while France’s CAC-40 up nearly 0.1 percent at 3,711.46. Wall Street was set for a weak open, with Dow futures flat at 13,429 and the broader S&P 500 futures shedding 0.1 percent to 1,462.20.
Earlier in Tokyo, the Nikkei 225 rose 0.7 percent to finish at 10,879.08, its highest close in nearly three years, after Masaaki Shirakawa, governor of Japan’s central bank, pledged to take action to combat the country’s deflationary slump.
In a boost for Japanese exporters, the yen has slid against the U.S. dollar and euro since the Liberal Democratic Party returned to power in national elections last month. Its leader, Shinzo Abe, has been lobbying the central bank for aggressive action to end Japan’s years of deflation, demanding that it meet an inflation target of about 2 percent.
In announcing a 20 trillion yen ($225 billion) economic stimulus package last Friday, Abe reiterated his calls for the Bank of Japan to do more to boost growth.
Monetary stimulus programs in major economies have helped buoy stock markets over the past year and Federal Reserve Chairman Ben Bernanke was careful this week not to suggest his own central bank’s efforts were ending.
In a speech in the U.S. on Monday, Bernanke made no mention of winding down the Fed’s bond-buying program, dubbed quantitative easing, even though some Fed officials recently said they favor doing that.
The Fed has been buying $85 billion a month in Treasurys and mortgage bonds to try to keep borrowing costs low and encourage more spending.
Analysts at Credit Agricole CIB in Hong Kong said in an email commentary that markets found some relief in Bernanke’s speech as it did not repeat the views of some Fed officials in hinting at an early ending of quantitative easing.
Looking ahead, investors will on Friday assess a slew of data for signs of growth in China, the world’s second-largest economy. China will issue fourth-quarter growth data for 2012 as well as GDP growth for the year. Factory output, investment and retail sales will also be released.
Elsewhere in Asia, Australia’s S&P/ASX 200 fell 0.1 percent to 4,716.60 and South Korea’s Kospi dropped 1.1 percent to 1,986. Hong Kong’s Hang Seng shed 0.1 percent to 23,381.51.
Benchmarks in Indonesia, mainland China and New Zealand rose while the Philippines, Taiwan and Singapore fell.
Benchmark oil for February delivery was down 10 cents to $94.04 per barrel in electronic trading on the New York Mercantile Exchange.
In currencies, the euro fell to $1.3345 from $1.3378 late Monday in New York. The dollar fell against the Japanese yen to 88.70 yen from 89.41 yen.