DJIA chart reading : upside biased with possible pullback correction.
Hang Seng chart reading : side way range bound.
Asia Stocks Swing Between Gains, Losses (Source: Bloomberg)
Asian stocks swung between gains and losses as Hynix Semiconductor Inc. slumped in Seoul after a collapsed takeover bid by Hyundai Heavy Industries Co., offsetting gains by commodity producers on higher oil prices. Hynix dropped 4.3 percent, leading South Korean stocks lower. Hyundai Heavy jumped 5.3 percent after saying it won’t bid for a controlling stake in Hynix. BHP Billiton Ltd., the world’s biggest mining company and Australia’s No. 1 oil producer by market value, climbed 0.3 percent after oil traded near a three-week high. Toyota Motor Corp. slipped 0.6 percent after saying it would suspend output in Brazil and Argentina.
Shares stabilise; euro off 1-mth high
LONDON, July 5 (Reuters) - World stocks steadied below a recent 4-1/2 month high while the euro fell as worries about further monetary tightening in China and caution over the euro zone and U.S. economic outlook made investors hesitant.
A pick up in demand for risky assets from last week softened a bit on speculation about a possible rate rise in China this weekend, as well as a Moody's report saying the scale of problem loans at local governments in China may be much bigger than previously thought.
U.S. Factory Orders Rose 0.8% in May as Manufacturing Shows Recovery Signs (Source: Bloomberg)
Orders placed with U.S. factories increased in May, indicating manufacturing may rebound from a slowdown in economic growth in the first half of 2011. Bookings for manufacturers’ goods rose 0.8 percent, less than forecast, after a revised 0.9 percent decline in April that was smaller than previously estimated, figures from the Commerce Department showed today in Washington. Demand for durable goods that are meant to last at least three years increased 2.1 percent, while unfilled orders climbed the most since September.
U.S. Stocks Fall as Moody’s Cuts Portugal Rating, Offsetting Energy Rise (Source: Bloomberg)
U.S. stocks fell, ending the Standard & Poor’s 500 Index’s five-day winning streak, as a Moody’s Investors Service downgrade of Portuguese debt rekindled concern the economy will slow and offset gains by energy producers. Bank of America Corp. (BAC), the biggest U.S. lender, and General Electric Co. (GE) lost 0.8 percent as shares of financial and industrial companies led losses in the S&P 500. A gauge of banks dropped the most in the S&P 500 within 24 groups, falling 1.2 percent, as Citigroup Inc. said 2012 industry earnings estimates may be too high. Energy companies in the S&P 500 advanced 0.5 percent, the most among 10 groups.
Best Consumer Credit Scores Since 2006 Reveal Lending Rebound Across U.S. (Source: Bloomberg)
Michael Busick says his credit union “was shocked” to discover his credit score was 812 of a possible 850 when he applied for a $19,500 new-car loan. The loan officer told Busick he rarely sees scores so close to perfect, said the Charlotte, North Carolina, math teacher, who added that he always pays his bills on time and doesn’t “overextend.” He got the funds in May. The average U.S. credit score -- a predictor of the likelihood lenders will be paid back -- rose to 696 in May, the highest in at least four years, according to Equifax Inc. (EFX), a provider of consumer-credit data. The ratio of consumer-debt payments to incomes is the lowest since 1994, and delinquencies have dropped 30 percent in two years, Federal Reserve data show.
Treasuries Snap Advance as Economists Say U.S. Economic Growth to Quicken (Source: Bloomberg)
Treasuries snapped yesterday’s biggest gain in a week as economists said U.S. gross domestic product growth is poised to quicken this quarter to the fastest pace since the start of 2010. The difference between two- and 30-year yields widened to 3.95 percentage points, the most in three months. Investors are demanding a greater premium to buy the longest maturities as protection against the threat of quickening inflation. “I expect yields to keep rising at a moderate pace,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s third-largest publicly traded bank by assets. “The U.S. economy is on a recovery track.”
China Bank Outlook May Be Souring on Local Government Loans, Moody’s Says (Source: Bloomberg)
Chinese banks’ loans to local governments are about 3.5 trillion yuan ($540 billion) more than the national auditor’s estimate, and the industry’s credit outlook could decline, Moody’s Investors Service said. “The Chinese audit agency could be understating banks’ exposure to local governments,” Yvonne Zhang, a Moody’s analyst in Beijing, said in the report today. The “apparent absence of a clear master plan to deal with this issue” is likely to exacerbate problems and lenders may be left to manage a portion of the souring loans on their own, it said.
China Discusses Allowing SEC Probes (Source: Bloomberg)
U.S. and Chinese officials will meet next week to discuss giving American securities regulators the right to investigate companies within China for the first time, said two Chinese officials with direct knowledge of the plans. Representatives from the Securities and Exchange Commission and the Public Company Accounting Oversight Board will meet with counterparts from the China Securities Regulatory Commission in Beijing from July 11 to 12, said the officials, who asked not to be named because the talks are private.
China c.bank says to stick to prudent monetary policy
BEIJING, July 4 (Reuters) - China's central bank pledged on Monday to keep its "prudent" policy to wrestle inflation under control, but signalled some concerns over slowing growth by stressing policy "stability".
"China's economy continues to grow at a stable and relatively fast pace, but inflation pressures remain high," the central bank said in a statement to summarize its monetary policy meeting for the second quarter.
China local govt debt $540 bln understated-Moody's
BEIJING, July 5 (Reuters) - China's local government debt may be 3.5 trillion yuan ($540 billion) larger than auditors estimated, potentially putting banks on the hook for deeper losses that could threaten their credit ratings, Moody's said on Tuesday.
China's mountain of local government debt has long been seen as a major risk by investors. The worry is that slower growth in the world's second-biggest economy could set off a wave of loan defaults and hobble its banking system.
Kan Proposes $25 Billion Earthquake Budget That May Pave Way for His Exit (Source: Bloomberg)
Japanese Prime Minister Naoto Kan proposed a 2-trillion yen ($25 billion) extra budget, spending that would fall short of what’s needed to rebuild after a record earthquake and the worst nuclear accident in more than 20 years. The spending plan, to be submitted to parliament, is half the size of outlays allocated in May. The government won’t rely on new bond sales to fund the package because it will use leftover funds from last year’s budget, according to a statement released in Tokyo today.
Japanese Stocks Swing Between Gains, Losses, Pausing After Six-Day Rally (Source: Bloomberg)
Japanese stocks swung between gains and losses, after a six day rally that yesterday pushed the Topix index to its highest level in two months. Nippon Paper led gains by makers of cardboard and pulp products, rising 4.6 percent after the company said it will raise prices. Nintendo Co. rose 4.2 percent after a report the game maker is expanding into smartphone games. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender by market value, led banks lower, falling 1 percent as lenders gave up gains made in the past six trading days.
Temasek’s Assets Set to Top Peak After ‘Trailblazing’ in Emerging Markets (Source: Bloomberg)
Temasek Holdings Pte’s assets probably reached a new peak after making “trailblazing” bets in emerging markets that outperformed global equities for a second year. The Singapore state investment company may say the value of its assets rose to about S$200 billion ($163 billion) when it reports results for the 12 months to March 31, surpassing the S$186 billion record a year earlier, according to Victoria Barbary at Monitor Group and Song Seng Wun at CIMB Research Pte. Temasek trimmed its stakes in two of China’s three biggest banks, according to data compiled by Bloomberg today, after raising its holdings in the world’s fastest growing major economy in the past year.
Temasek Sells $3.63B of BofC, CCB Shares (Source: Bloomberg)
Temasek Holdings Pte, Singapore’s state-owned investment company, raised HK$28.2 billion ($3.63 billion) selling stakes in China Construction Bank Corp. (939) and Bank of China Ltd., two of the mainland’s three biggest banks. Temasek sold about HK$18.8 billion of shares in Bank of China and about HK$9.4 billion in an offering of China Construction Bank stock, according to data compiled by Bloomberg. Overseas investors including Bank of America Corp. (BAC) have trimmed more than $20 billion in holdings in Chinese lenders since 2009. Chinese bank stocks fell yesterday after Moody’s Investors Service said problem loans to local governments may exceed official estimates. Temasek, which has focused on emerging markets investments, will probably say in its annual report the value of its assets rose last year, analysts said.
Euro Trades Near One-Week Low on Region’s Debt Crisis, Slow U.S. Recovery (Source: Bloomberg)
The euro was 0.2 percent from a one- week low against the dollar on speculation Europe’s debt crisis will worsen and the U.S. economic recovery will slow, damping demand for higher-yielding assets. The 17-nation currency maintained yesterday’s 0.4 percent loss against the yen after Moody’s Investors Service cut Portugal’s government bond rating to junk and before Greece’s bondholders meet with officials in Paris today to discuss their role in a second Greek rescue. A report this week is forecast to show the U.S. unemployment rate held at 9.1 percent. The Australian dollar ended two days of losses before a government report tomorrow projected to show the nation added jobs.
Portugal Rating Cut on Possible Greek Follow (Source: Bloomberg)
Moody’s Investors Service cut Portugal’s credit rating to below investment grade on concern the southern European country will need to follow Greece in seeking a second international bailout.
Portugal Government-Bond Ratings Cut to Junk by Moody’s on Financing Risk (Source: Bloomberg)
Portugal’s credit rating was cut to below investment grade by Moody’s Investors Service on concern the country will need to follow Greece in seeking a second bailout. The euro dropped for the first time in seven days. The long-term government bond ratings were lowered to Ba2, or junk, from Baa1, and the outlook is negative. Discussions to involve private investors in a new rescue plan for Greece make it more likely that the European Union will require the same pre-conditions in the case of Portugal, Moody’s said in a statement.
Greek Banks Ready for Debt Rollover as Investors Meet to Discuss Aid Plan (Source: Bloomberg)
Greek banks are willing to roll over their government bonds as part of a European Union aid plan, Finance Minister Evangelos Venizelos said, as debt-holders meet in Paris today to discuss their role in rescuing the country.
Cameron Presses on With U.K. Budget Cuts as Consumers Suffer, Stores Close (Source: Bloomberg)
Prime Minister David Cameron’s refusal to compromise on the most ambitious fiscal squeeze since World War II is testing Britain’s recovery as consumers lose faith in the economy. As he implements six years of spending cuts -- no postwar British government has managed more than two -- Britons’ confidence is waning and inflation is accelerating.
RBA Holds Key Rate at 4.75%, Sees 2011 Growth Slower Than Prior Forecast (Source: Bloomberg)
The Reserve Bank of Australia left its benchmark interest rate unchanged and said the nation’s growth pace may be weaker than previously forecast, triggering the local currency’s biggest drop in about three weeks. Governor Glenn Stevens held the overnight cash rate target at 4.75 percent in Sydney for the seventh straight meeting, as forecast by all 28 economists surveyed by Bloomberg News. He said in a statement that inflation is expected to near the RBA’s 2 percent to 3 percent target in the next year.
FOREX-Euro slips vs Swiss franc, dollar; investors cautious
LONDON, July 5 (Reuters) - The euro fell against the dollar and the Swiss franc on Tuesday as deteriorating euro zone data and concerns over the health of the Chinese economy pushed investors away from riskier currencies back towards those perceived to offer safety.
Growth in the euro zone's dominant services sector slowed for a third straight month in June and by more than an initial estimate with sluggish new orders dimming the outlook, Purchasing Managers Index data showed, while retail sales numbers were also weaker than forecasts.
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