20110726 1025 Global Market Related News.

Asian Stocks Rise as Canon Leads Gains (Source: Bloomberg)
Asian stocks rose as forecasts for higher earnings at companies from Canon Inc. (7751) to Kao Corp. (4452) countered concerns the deadlock on the U.S. debt ceiling could derail the global economic recovery. Canon, the world’s largest camera maker, led exporters higher as it advanced 2.8 percent after boosting its profit forecast on higher sales. Kao, a maker of household products, jumped 4 percent after raising its full-year earnings forecast on higher sales in Asia. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company by market value, advanced 0.5 percent as copper and gold prices rose. “Japanese companies begin in earnest with reporting April-June earnings this week, and we got a good start,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. “Investors increasingly expect good earnings, and that will probably encourage them to buy stocks in advance.”

Reid Offers Rival Debt Plan as Obama Prepares to Address Nation (Source: Bloomberg)
House Speaker John Boehner and Senate Majority Leader Harry Reid attacked each other’s plans for Congress to lift the U.S. $14.3 trillion debt ceiling and avert default before an Aug. 2 deadline. President Barack Obama plans to address the nation from the White House at 9 p.m. Washington time on the partisan standoff, with Boehner responding in a separate appearance. Boehner’s two-step plan would raise the U.S. borrowing limit by up to $1 trillion, with larger spending cuts, and require a new vote on more reductions before an additional $1.6 trillion debt-limit increase next year. It could be voted on in the House within two days. Obama and Senate Democrats oppose a short-term extension, which could lead to another debt standoff next year.

Dollar, U.S. Futures Decline as Obama Warns on Debt; Asian Stocks Rebound (Source: Bloomberg)
The dollar weakened against most of its major peers while U.S. equity-index futures fell as President Barack Obama warned the nation’s burgeoning debt may do “serious” damage to the economy. Asian stocks rebounded from the biggest drop in two weeks. The U.S. currency slid 0.4 percent against the Swiss franc and weakened 0.3 percent against the yen as of 10:10 a.m. in Tokyo. Standard & Poor’s 500 Index futures lost 0.3 percent. The MSCI Asia Pacific Index gained 0.4 percent, following a 1 percent drop yesterday. Oil slid 0.2 percent in New York, while gold traded near a record high. Obama called on lawmakers to put politics aside to reach a deal on a “balanced approach” after Republicans and Democrats attacked each others’ plans for the lifting of the nation’s $14.3 trillion debt ceiling. Canon Inc. and Kao Corp. paced gains among Japanese companies that forecast improving earnings, while in the U.S., Broadcom Corp. and Baidu Inc. rallied in extended trading on the outlook for sales.

Obama Urges Compromise as Debt May Cause ‘Serious’ Damage to U.S. Economy (Source: Bloomberg)
President Barack Obama warned that the nation’s burgeoning debt threatens to do “serious” damage to the economy and that Congress must compromise to address future deficits. “If we stay on the current path our growing debt could cost us jobs and do serious damage to the economy,” Obama said in a prime-time address from the White House. He called on lawmakers to put politics aside to reach a deal on a “balanced” approach and blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases.

U.S. Can Avoid Default at Least Until September, Wells Fargo’s Silvia Says (Source: Bloomberg)
The U.S. government can avoid a default for at least a month after the Aug. 2 deadline to lift the debt ceiling set by the Treasury Department, said John Silvia, chief economist at Wells Fargo Securities LLC. “The Federal Reserve and the Treasury can work together to generate enough cash probably for the next two or three months to avoid any kind of automatic default on the Treasury debt,” Silvia, who is based in Charlotte, North Carolina, said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “There’s a way of getting around this issue for at least another month or two.” Political party leaders are preparing dueling plans for raising the U.S. debt ceiling, unable to break a partisan stalemate over how to tackle the nation’s $14.3 trillion debt by Aug. 2. That is the date when the Treasury Department says its borrowing authority will end.

Boehner’s Two-Step Plan to Seek $1 Trillion, $1.6 Trillion Debt Increases (Source: Bloomberg)
House Speaker John Boehner said his two-step plan to raise the U.S. debt ceiling and cut and cap discretionary spending is a “responsible, common-sense proposal that meets our obligations to the American people and preserves the full faith and credit” of the U.S. The Republican plan would allow a debt-limit increase of $1 trillion, to be followed later by about $1.6 trillion, while larger spending cuts would be required. “This plan is far from perfect, but it adheres to our principles of ensuring that spending cuts are greater than any debt hike and it includes no tax increases,” Boehner, an Ohio Republican, said in a statement.

Pimco’s El-Erian Says U.S. Vulnerable to Downgrade Even If Default Avoided (Source: Bloomberg)
The U.S. government may lose its AAA credit rating even if lawmakers reach a plan to avoid a default, said Mohamed A. El-Erian, whose Pacific Investment Management Co. is the world’s largest manager of bond funds. “In most likelihood, a last-minute political compromise will avoid a default but will leave the AAA rating extremely vulnerable,” El-Erian, 52, the Newport Beach, California-based chief executive officer and co-chief investment officer at Pimco, wrote in an e-mail. “Stock markets around the globe will look to price in a greater uncertainty premium on account of political squabbles in the world’s largest economy and the increasing risk that it may lose its sacred AAA rating.”

Treasuries Drop After Pimco’s El-Erian Says U.S. May Lose Rating (Source: Bloomberg)
Treasuries fell, pushing 30-year yields to a two-week high, after Mohamed A. El-Erian at Pacific Investment Management Co. said the U.S. may lose its AAA debt rating even if lawmakers reach a plan to avoid a default. The long bond led declines. El-Erian, whose firm runs the world’s biggest bond fund, said a compromise on raising the borrowing limit this close to the Aug. 2 deadline will leave the rating “extremely vulnerable.” President Barack Obama and House Speaker John Boehner are in a stalemate over how to increase the ceiling so the U.S. can keep servicing its debt. The Treasury will sell $99 billion of notes this week. “It’s all about what’s going on in D.C.,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “It’s the concerns over no resolution to the debt ceiling issue. Every time we get new concerns over it, the long bond underperforms. The longer we wait, the greater the chance of a downgrade of U.S. debt.”

Reid Offers Rival Debt Plan as Obama Prepares to Address Nation (Source: Bloomberg)
House Speaker John Boehner and Senate Majority Leader Harry Reid attacked each other’s plans for Congress to lift the U.S. $14.3 trillion debt ceiling and avert default before an Aug. 2 deadline. President Barack Obama plans to address the nation from the White House at 9 p.m. Washington time on the partisan standoff, with Boehner responding in a separate appearance. Boehner’s two-step plan would raise the U.S. borrowing limit by up to $1 trillion, with larger spending cuts, and require a new vote on more reductions before an additional $1.6 trillion debt-limit increase next year. It could be voted on in the House within two days. Obama and Senate Democrats oppose a short-term extension, which could lead to another debt standoff next year.

No endgame in sight as US default looms
WASHINGTON, July 25 (Reuters) - A bitterly divided Congress set the United States on a collision course with financial markets on Monday as Democrats and Republicans pursued rival plans unlikely to generate the broad support needed to avert a catastrophic and unprecedented debt default.
With an Aug. 2 deadline little more than a week away, lawmakers have steadfastly refused to compromise and talks have once again collapsed in finger pointing and acrimony.

Caterpillar profit misses, hit by costs; stock off
NEW YORK, July 22 (Reuters) - Heavy machinery maker Caterpillar Inc  disappointed Wall Street with a second-quarter earnings miss on Friday, hurt by higher costs, and its shares fell 5.5 percent, dragging down the U.S. stock market.
The maker of equipment used in mining and construction also said economic growth in the United States and other developed economies was weaker than expected and reported signs of a slowdown in China.

U.S. Stocks Extend Declines as Lawmakers Wrangle Over Federal Debt Plans (Source: Bloomberg)
U.S. stocks retreated, pulling the Standard & Poor’s 500 Index down from a two-week high, as Republicans and Democrats wrangled over separate plans to raise the federal debt limit and avoid a government default. Phone companies led losses among 10 groups in the S&P 500, losing 1.4 percent. Kimberly-Clark Corp. slipped 2.1 percent after reporting a decline in second-quarter profit, hurt by higher commodity prices. E*Trade Financial Corp. jumped 5.6 percent after agreeing to hire Morgan Stanley to explore a sale. The S&P 500 fell 0.6 percent to 1,337.43 at 4 p.m. in New York after slumping as much as 1 percent. The index rallied to within 1.4 percent of a three-year high last week. The Dow Jones Industrial Average lost 88.36 points, or 0.7 percent, to 12,592.80 today.

Singapore Inflation Accelerates to Fastest Since January on Food, Housing (Source: Bloomberg)
Singapore’s inflation accelerated to the fastest pace since January as food and housing costs increased, sustaining pressure on the central bank to allow the currency to appreciate and contain price gains. The consumer price index rose 5.2 percent last month from a year earlier, the Department of Statistics said in a statement today. That matched the median estimate of 13 economists surveyed by Bloomberg News. Inflation was 4.5 percent in May, according to previously reported data. The Monetary Authority of Singapore raised its inflation forecast for 2011 last week, citing higher home rental and transportation costs. The island’s currency has appreciated to unprecedented levels since the central bank said in April it would allow further appreciation to tame price gains, the third monetary tightening in a year.

Economic Climate Still ‘Challenging’: GIC (Source: Bloomberg)
The Government of Singapore Investment Corp., the city’s sovereign wealth fund, said the investment environment remains “challenging” as developed countries recover and emerging markets pose inflation risks. GIC, manager of more than $100 billion of Singapore’s reserves, said in its annual report today that it boosted investments in emerging economies to tap their potentially higher returns and improved macroeconomic fundamentals. It expanded the number of countries it invests in as well as its range of investment tools, it said. “The sustainable recovery of the developed economies remains uncertain, while the emerging economies face challenges in restraining inflationary pressure and currency appreciation,” Chief Investment Officer Ng Kok Song said in an e-mailed statement today that accompanied the report. “GIC will continue to respond nimbly to this challenging environment.”

Emerging-Market Stocks Fall on U.S. Debt Talks; Shanghai Composite Tumbles (Source: Bloomberg)
Emerging-market stocks declined, with the benchmark index falling for the first time in a week, as a stalemate over raising the U.S. debt limit raised concerns of a default that could threaten the global recovery. The MSCI Emerging Markets Index retreated 0.4 percent to 1,148.18 as of 4:28 p.m. in New York. The Shanghai Composite Index tumbled 3 percent, the most since January, after a high- speed train collision killed at least 36 people. Mexico’s IPC index dropped 0.8 percent, Taiwan’s Taiex Index lost 0.9 percent and Brazil’s Bovespa index slid 0.5 percent. “It seems like there’s going to be a deal” on the debt ceiling, said Uri Landesman, who oversees about $1 billion as managing general partner of New York-based hedge fund Platinum Partners LLP. “But if there isn’t and the U.S. defaults, it’s going to be cataclysmic, and emerging-markets are the high-beta play on the S&P right now.”

India Central Bank Says Taming Inflation Is Unfinished Task as Pressure Persists (Source: Bloomberg)
India’s central bank said curbing inflation remains an “unfinished task” even as economic growth slows, signaling it may raise interest rates today. “The policy exigency at this juncture warrants continuation of anti-inflationary stance,” the Reserve Bank of India said in a report yesterday before its policy meeting in Mumbai. The RBI cited a high share of production capacity in use, risk of a “wage-price spiral” and “stickiness” in food costs adding to price pressures. The report followed signs of a clash between economists and bond traders over whether the RBI would keep increasing borrowing costs after today’s projected move of a quarter point in the benchmark rate. Swap traders last week bet that Governor Duvvuri Subbarao was approaching the end of India’s fastest credit tightening since 1974.

Reliance Profit May Have Peaked as Ambani Struggles to Increase Gas Output (Source: Bloomberg)
Reliance Industries Ltd., India’s biggest company by market value, may struggle to increase profit after reporting its best quarter in more than three years as natural gas production at the country’s largest field declines.

Bank of Korea’s Deputy Kim Sees Rebound Even as Debt Crisis Clouds Outlook (Source: Bloomberg)
Bank of Korea Deputy Governor Kim Jae Chun said the economy’s growth will pick up in the second half and exports are “pretty strong,” leaving room to concentrate on quelling inflation. “A possible economic slowdown is not in our list of policy concerns,” Kim, 57, said in an interview in his office in Seoul yesterday. “The economy will pace up in the second half on a year-on-year basis.” Kim’s comments underscore the likelihood that Asian policy makers will focus on inflation even as export growth moderates and Europe’s debt crisis clouds the outlook for the world economy. Chinese Premier Wen Jiabao said July 12 that stabilizing prices remains his nation’s top priority.

Growth May Slow in S. Korea, Taiwan on Exports (Source: Bloomberg)
Growth in South Korea and Taiwan likely slowed in the second quarter as the debt crisis in Europe and faltering U.S. growth weighed on Asia’s exports. South Korea’s gross domestic product expanded 3.5 percent from a year earlier, less than the 4.2 percent gain in the previous quarter, according to the median estimate in a Bloomberg News survey of 11 economists. Taiwan’s growth likely slowed to 4.5 percent from 6.55 percent, a separate survey showed. This week’s reports may add to signs that growth across Asia is cooling after China reported a smaller expansion, India’s industrial production eased and Singapore’s economy contracted. The forecast moderations in Taiwan and South Korea may not be enough to discourage policy makers from raising interest rates during the second half to counter inflation.

Yields Fall to 14-Month Low Versus U.S. as Growth Slows: Australia Credit (Source: Bloomberg)
Australian government bond yields are trading at their lowest levels in 14 months relative to those in the U.S., underscoring concern that a slowdown in the world’s fastest-growing economy may spread. The benchmark 10-year yield fell six basis points to 4.92 percent yesterday, or 193 basis points more than similar- maturity Treasuries, the least since May 2010 and down from 234 as recently as June 1. Australia’s bonds have returned 1.5 percent in July, including reinvested interest, more than the U.S.’s 1 percent, Bank of America Merrill Lynch indexes show. Australian government borrowing costs have plunged as investors cut growth expectations, with economists forecasting a report tomorrow will show second-quarter inflation slowed to less than half the pace of the prior period. The central bank has kept rates unchanged since November, saying this month that a “multi-speed” economy and strong currency were blunting a mining boom.
Investors also bought Australian debt as U.S. lawmakers were deadlocked over the  $14.3 trillion debt limit.

U.K. House Prices Decline 0.1% as Downward Trend Continues, Hometrack Says (Source: Bloomberg)
U.K. house prices fell for a third month in July and are likely to continue on a “downward trend,” property researcher Hometrack Ltd. said. The average cost of a home slipped 0.1 percent from June and was down 3.9 percent from a year earlier, the London-based firm said in an e-mailed report today. London prices increased 0.3 percent on the month. In a separate report, Rightmove Plc, the U.K.’s biggest property website, said a growing proportion of consumers expect prices to stabilize over the next 12 months. Home values have fallen this year as weak demand undermined prices, Hometrack said. While the market is now in “broad equilibrium” and the Bank of England’s key interest rate remains at a record low, prices will remain under pressure, it said. A separate report from Markit Economics showed Briton’s finances weakened in July at the fastest pace since March 2009.

Moody's warns Greek default almost certain
ATHENS, July 25 (Reuters) - Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.
It was the second rating agency to warn of a default after euro zone leaders and banks agreed last week that the private sector would shoulder part of the burden of a rescue deal that offers Greece more cash and easier loan terms to keep it afloat and avoid further contagion.

Greece Rating Cut to Second-Lowest Level by Moody’s on ‘Orderly Default’ (Source: Bloomberg)
Greece’s credit rating was cut three steps by Moody’s Investors Service, which said the European Union’s rescue for the debt-laden nation will cause substantial losses for investors and amount to a default. Greece’s long-term foreign currency debt was downgraded to Ca, its second-lowest rating, from Caa1, the company said in a statement in London today. Moody’s said it will reassess the risk profile of any outstanding or new securities issued by Greece after the debt exchange that’s part of the new rescue plan has been completed. “The combination of the announced EU program and the debt exchange proposals by major financial institutions imply that private creditors will experience substantial losses on their holding of Greek government bonds and this is something we need to reflect in the rating,” Moody’s senior analyst Sarah Carlson said in an interview.

Dollar Falls to March Low Versus Yen, Record Against Franc as Obama Speaks (Source: Bloomberg)
The dollar fell against the yen to the lowest level since March 17 as U.S. President Barack Obama addressed the nation on the economy. The greenback dropped to as low as 77.98 yen before trading at 78.15 at 10:10 a.m. in Tokyo.

FOREX-Dollar hits all-time low vs CHF on debt issues
LONDON, July 25 (Reuters) - The dollar hit a record low versus the Swiss franc and a four-month trough against the yen on Monday as the impasse over raising the U.S. debt ceiling unsettled financial markets and fueled demand for perceived safe-haven currencies.
The Swiss franc was the biggest beneficiary of the demand for safe havens, pushing the dollar nearly 2 percent lower to an all-time low of 0.8021 franc on trading platform EBS . The euro  fell the same amount versus the Swiss currency.