Thursday, July 14, 2011

20110714 1105 Global Market Related News.

DJIA chart reading :  correction range bound upside biased.


Hang Seng chart reading : side way range bound little downside biased. 

Asian Stocks Swing Between Gains, Losses on Moody’s Review of U.S. Credit (Source: Bloomberg)
Asian stocks swung between gains and losses after Moody’s Investors Service put the U.S. under review for a credit-rating downgrade, hurting the outlook for exporters. Commodity producers climbed after prices advanced yesterday.

Moody’s Places U.S. on Review for Downgrade (Source: Bloomberg)
Moody’s Investors Service raised the pressure on U.S. lawmakers to increase the government’s $14.3 trillion debt limit by placing the nation’s credit rating under review for a downgrade. The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt threshold will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said in a statement yesterday.
The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured. President Barack Obama is considering summoning congressional leaders to Camp David this weekend to work on a plan to raise the debt ceiling after yesterday’s negotiations on a deficit-cutting plan of at least $2 trillion stalled, according to two people familiar with the matter. A failure to raise the debt limit that causes a default may lead to slower economic growth and another financial crisis.

Fed Ready With Stimulus If Needed: Bernanke (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke told Congress the central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling. “The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” Bernanke told the House Financial Services Committee in Washington today. The Fed “remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.”

U.S. Budget Deficit Narrowed to $43.1 Billion in June on Slower Spending (Source: Bloomberg)
The U.S. posted a monthly budget deficit of $43.1 billion in June, smaller than a year earlier and reflecting a decline in spending. In June 2010, the shortfall was $68.4 billion, according to the Treasury Department’s monthly budget statement, released today in Washington. A slowing economy and restrained job growth may limit tax receipts for the government, raising the risk that the budget deficit will reach a record this fiscal year. The shortfall underscores the urgency surrounding budget negotiations between President Barack Obama and Congress as the U.S. approaches a $14.3 trillion statutory debt limit.

U.S. Import Prices Drop for First Time in a Year on Lower Oil, Food Costs (Source: Bloomberg)
Prices of goods imported into the U.S. dropped in June for the first time in a year as oil and food expenses retreated. The 0.5 percent fall in the import-price index followed a revised 0.1 percent gain in May, Labor Department figures showed today in Washington. Economists projected a 0.6 percent decrease for June, according to the median estimate in a Bloomberg News survey. Prices excluding petroleum fell 0.2 percent, the first decline since July 2010.

S&P 500 Futures Drop as Moody’s Reviews U.S. Credit Rating for Downgrade (Source: Bloomberg)
U.S. stock-index futures fell after Moody’s Investors Service said the American government may lose the Aaa credit rating it’s held since 1917. Standard & Poor’s 500 Index futures expiring in September dropped 0.4 percent to 1,306.60 at 7:25 a.m. in Tokyo. Moody’s began its first U.S. review since 1995 as talks to raise the $14.3 trillion debt limit stall, adding to concern political gridlock will lead to a default. Even a temporary default would likely have “large systemic effects” on the economy and Treasury finances by disrupting money funds, the repurchase-agreement market and foreign investor willingness to buy the government’s debt, according to JPMorgan Chase & Co.

California May Sell Notes Before Federal Debt-Limit Deadline, Lockyer Says (Source: Bloomberg)
Moody’s Investors Service placed 7,000 municipal ratings on review for possible downgrade after it warned the U.S. may lose its Aaa investment grade. The ratings company said in a note that potential downgrades would affect $130 billion in municipal debt including mortgage-backed bonds secured by the U.S. or agencies such as Fannie Mae and Freddie Mac. Moody’s said any downgrade to the U.S.’s Aaa investment grade would automatically cut those 7,000 municipal ratings by the same degree. A second category of municipal lenders, those whose repayment is less directly linked to the federal government, also would be reviewed for possible action, Moody’s said.

China May Sustain 9% Growth on Inland Shift (Source: Bloomberg)
China may maintain growth of about 9 percent this year, avoiding a “hard landing,” as spending on low-cost homes and developing inland provinces counters the impact of Europe’s debt crisis and monetary tightening. Investment by local governments and private businesses helped drive a 9.5 percent gain in second-quarter gross domestic product from a year earlier, the National Bureau of Statistics said in Beijing yesterday. That was faster than estimated as growth in industrial output and retail sales accelerated and copper and aluminum production reached records. Investment accounted for more than half of the nation’s expansion in the first six months of the year and may offset threatened weakness in exports in the second half. At the same time, dependence on fixed-asset spending highlights limited progress in shifting to a more consumption-driven model that would play a bigger role in supporting global demand.

China Cities Sell Land With Bonds Seen Toxic (Source: Bloomberg)
Workers toil by night lights with hoes, carving out the signs for Olympic rings in front of an unfinished 30,000-seat stadium, bulb-shaped gymnasium and swimming complex in a little-known Chinese city. Loudi, home to 4 million people in Chairman Mao Zedong’s home province of Hunan, is paying for the project with 1.2 billion yuan ($185 million) in bonds, guaranteed by land valued at $1.5 million an acre. That’s about the same as prices in Winnetka, a Chicago suburb that is one of the richest U.S. towns, where the average household earns more than $250,000 a year.

China Bank Stocks Seen Extending Slump (Source: Bloomberg)
Chinese banks, the cheapest among major emerging markets' lenders, may drop lower as overseas banks and funds trim stakes to meet capital rules and curb risks amid concerns that the nation’s record credit boom will unravel. The country’s five biggest banks trade at an average 7.7 times forecast earnings, according to data compiled by Bloomberg. That compares with 8.09 for Brazil’s largest banks, 8.11 for Russia and 14.8 for India. Standard Chartered Plc (STAN) and Qatar’s sovereign fund are among investors that will be allowed to sell their holdings in the banks starting July 16.

China Q2 growth tops forecast
BEIJING, July 13 (Reuters) - China's economy grew faster than expected in the second quarter, easing fears of a hard landing and strengthening Beijing's resolve to fight persistently high inflation.
China's statistics office said on Wednesday that stabilising prices remained the top priority, even though a "complex and volatile" global economy posed a threat to growth, complicating the policy choices.

China Wen says to keep policies, warns over-tightening
BEIJING, July 12 (Reuters) - Beijing will continue to put taming inflation at the top of its agenda by keeping a prudent monetary policy stance, but it will try to avoid any big swings in economic growth caused by excessive tightening, Chinese Premier Wen Jiabao said in comments published on Tuesday.
"We must avoid the combination of lagging effects of monetary policy and other factors to cause big impacts on future real economic operation," Wen said in a statement published on the central government Internet portal.

China soothes, but euro zone crisis still haunts
LONDON, July 13 (Reuters) - Soothing data about China's economy provided some succour to investors on Wednesday although Europe's debt crisis rolled on with Irish government bond yields hitting record highs after a downgrade to junk.
European shares were higher after the previous session's losses and the euro reversed some of its recent weakness against the dollar.

Japanese Stocks Fall as Moody’s Threat Drives Down Dollar; Nissan Declines (Source: Bloomberg)
Japanese stocks fell for the third time this week after Moody’s Investors Service threatened to cut the U.S.’s credit rating, driving down the dollar against the yen and hurting the outlook for Asian exporters.

Bank of Korea Maintains Interest Rate at 3.25% After Last Month’s Increase (Source: Bloomberg)
The Bank of Korea kept interest rates unchanged after raising them in June, a likely temporary suspension of its efforts to tame inflation by increasing borrowing costs. Governor Kim Choong Soo and his board held the benchmark seven-day repurchase rate at 3.25 percent, the central bank said in a statement in Seoul today. The decision was predicted by 13 of 14 economists surveyed by Bloomberg News. It raised rates by a quarter-percentage point each in January, March and June.

Greece Gets World’s Lowest Rating From Fitch in Catch-up Downgrade to CCC (Source: Bloomberg)
Greece’s credit rating was cut three levels to Fitch Ratings’ lowest grade for any country in the world as the company followed rivals and said that a default is a “real possibility.” The move to CCC from B+ “reflects the absence of a new, fully funded and credible” program by the International Monetary Fund and the European Union, the ratings company said yesterday in a statement in London. It also reflects “heightened uncertainty surrounding the role of private creditors in any future funding, as well as Greece’s weakening macroeconomic outlook.”

Italy Braves Yield Surge With $7 Billion Bond Sale as Senate Votes on Cuts (Source: Bloomberg)
Italy taps bond markets today as the Senate votes on budget cuts to tame a debt burden that is the second largest in Europe and has prompted investors to drive borrowing costs to a 14-year high. The treasury plans to sell as much as 5 billion euros ($7 billion) of four different bonds with maturities ranging from five to 15 years. It’s the first sale of longer-term debt since the country’s 10-year yield reached 6.02 percent on July 12, the highest since 1997. The yield fell from that peak after Italy successfully sold treasury bills the same day.

Pound Declines as Jobless Claims Soar, Denting Prospects for U.K. Recovery (Source: Bloomberg)
The pound fell against the euro as a report showed the number of Britons filing jobless-benefit claims increased at the fastest pace in more than two years, fueling concern that the economic recovery is stalling. Sterling snapped three days of gains versus the 17-nation currency. Jobless claims rose by 24,500 last month, the biggest increase since May 2009, the Office for National Statistics said today in London. The median forecast of 21 economists in a Bloomberg News Survey was for a gain of 15,000. The pound surged against the dollar after Federal Reserve Chairman Ben S. Bernanke said policy makers will provide stimulus if needed.

Euro zone May output edges up, consumer goods weak
BRUSSELS, July 13 (Reuters) - Euro zone industrial output rose by far less than expected in May, data showed, appearing to confirm the economy went through a soft patch in the second quarter with declines in production of consumer goods.    
Industrial production, a key component of gross domestic product (GDP), rose 0.1 percent month-on-month for a 4.0 percent year-on-year gain in the 17 countries using the euro, the European Union's statistics office, Eurostat, said on Wednesday.

FOREX-Euro extends bounce, but contagion risk to check gains
LONDON, July 13 (Reuters) - The euro bounced on Wednesday, taking a breather from this week's selloff, while commodity currencies rose after upbeat Chinese data comforted investors worried that the euro zone debt crisis could trigger a global slowdown.
But concerns about the crisis spreading further across the euro area are likely to keep gains in the single currency in check, with the focus shifting to an emergency summit of European Union leaders expected on Friday.

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