Friday, September 30, 2011

20110930 1022 Global Market Related News.

Asian Stocks Swing Between Gains and Losses on Concerns Over U.S. Economy (Source: Bloomberg)
Asian stocks swung between gains and losses as the latest U.S. economic reports failed to soothe investors’ concern that growth in the world’s largest economic is faltering.  James Hardie Industries SE (JHX), the building materials supplier that counts the U.S. as its biggest market, fell 0.7 percent in Sydney as sales of previously owned American homes dropped. Promise Co. climbed 2.6 percent in Tokyo after the Nikkei newspaper reported that Sumitomo Mitsui Financial Group Inc. plans to make the consumer lending company a wholly-owned unit. Inpex Corp., Japan’s largest energy explorer, rose 1.5 percent as crude oil prices increased. “Concerns about the U.S. economic slowdown are lingering,” said Juichi Wako, a senior strategist at Tokyo- based Nomura Holdings Inc. “We need to see more U.S. reports.”

U.S. Consumer Confidence Slumps on Concern Financial Conditions Worsening (Source: Bloomberg)
Consumer confidence slumped last week to the second-lowest level on record as Americans grew more concerned with their financial situation and the buying climate worsened. The Bloomberg Consumer Comfort Index dropped to minus 53 in the period ended Sept. 25 from minus 52.1 the prior week. Another report showed the economy grew at a faster pace in the second quarter than previously estimated. The comfort gauge showed the share of households saying it was a bad time to buy needed goods and services climbed to the highest level in three years, raising the risk that the biggest part of the economy will slow heading into the holiday shopping season. A lack of jobs and growing concern that policy makers will be unable to spur the recovery may keep sentiment depressed.

U.S. Economy Grew at a Revised 1.3% Pace Last Quarter, More Than Estimated (Source: Bloomberg)
The U.S. economy grew at a 1.3 percent pace in the second quarter, faster than estimated last month and helped by exports and spending on services. The revised rise in gross domestic product compares with a 1 percent gain previously calculated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News was 1.2 percent, following a 0.4 percent increase in the first three months of the year. Slower global markets may limit growth in exports and business spending, which has bolstered U.S. manufacturing, a pillar of the expansion. The lack of hiring and depressed consumer confidence add to concerns the economy is facing “significant” risks, helping explain why Federal Reserve policy makers took another step this month to revive the recovery.

Pending U.S. Home Sales Decline 1.2% as Lower Prices Fail to Stoke Demand (Source: Bloomberg)
The number of contracts to purchase previously owned U.S. homes fell in August, a sign that lower prices and borrowing costs are doing little to stoke demand. The 1.2 percent decrease in the index of pending home sales followed a 1.3 percent drop the previous month, the National Association of Realtors said today in Washington. Economists forecast a 2 percent drop, according to the median of 43 estimates in a Bloomberg News survey. Unemployment at 9.1 percent and the acceleration of foreclosure processing indicate it may take years to clear the oversupply of houses, an obstacle for stabilizing the market. The prospect of contract cancellations due to stricter underwriting standards and low appraisals means some signings may not translate into closings.

Plosser Says Easing Moves May Hurt Fed’s Credibility, Fail to Boost Growth (Source: Bloomberg)
Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank may be undermining its own credibility by pushing forward with monetary easing that will do little to boost growth. “The actions taken in August and September tend to undermine the Fed’s credibility by giving the impression that we think such policies can have a major impact on the speed of the recovery,” Plosser said today in a speech in Radnor, Pennsylvania. “It is my assessment that they will not.” Plosser’s remarks are his first since he joined Fed district bank presidents Richard Fisher of Dallas and Narayana Kocherlakota of Minneapolis in dissenting from a Fed decision for a second straight month. The regional Fed bank presidents pose the most opposition within the Federal Open Market Committee in almost 19 years, opposing last week a plan to sell $400 billion of short-term Treasury securities and buy $400 billion of longer-term securities.

BofA Plans $5 Monthly Fee for Some Debit-Cards (Source: Bloomberg)
Bank of America Corp. (BAC), the biggest U.S. lender by assets, plans to announce a $5 monthly charge for some debit-card users to recoup revenue lost after new federal rules capped so-called swipe fees. Customers with lower-tiered accounts, including the firm’s online-banking option, may start getting assessed the fee for debit-card purchases in January, said Anne Pace, a Bank of America spokeswoman. Users won’t be charged for cash-machine withdrawals, and clients with premium accounts including those linked to the Merrill Lynch brokerage aren’t affected, she said. Bank of America, based in Charlotte, North Carolina, is joining rivals including JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and SunTrust Banks Inc. (STI) in rolling out new charges for debit- card users. The Federal Reserve’s rules limiting swipe fees, or interchange, take effect next month. Banking industry representatives have said the changes enrich merchants while penalizing lower-income consumers.

Initial Jobless Claims in U.S. Decline on Seasonal Adjustment Difficulties (Source: Bloomberg)
Claims for U.S. unemployment benefits fell more than forecast last week as an atypical calendar alignment made it more difficult for the government to adjust the data for seasonal changes. Applications for jobless benefits dropped by 37,000 in the week ended Sept. 24 to 391,000, the fewest since April, Labor Department figures showed today. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. An agency official said the data probably reflected a “slight mistiming” in the seasonal factors used to modify the figures. The pace of firings has remained little changed this year while companies are reluctant to hire at a time when the economy is slowing and concerns of a European default rise. Federal Reserve policy makers last week announced more unconventional measures to boost jobs and the economy.

U.S. Stocks Advance After Jobless Claims Offset Slump by Technology Shares (Source: Bloomberg)
U.S. stocks rose, rebounding from a 1 percent decline in the Standard & Poor’s 500 Index, as lower- than-estimated claims for unemployment benefits and helped offset losses by consumer and technology shares. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) climbed at least 3 percent as European lenders soared after German lawmakers backed an enhanced euro-region rescue fund. General Electric Co. (GE) gained 2.7 percent, while Hewlett-Packard Co. (HPQ) added 2.5 percent as jobless claims fell more than forecast and the U.S. economy’s second-quarter expansion topped projections. Advanced Micro Devices Inc. (AMD) slid 14 percent after the chipmaker cut its forecast. The S&P 500 added 0.8 percent to 1,160.40 at 4 p.m. New York time after rallying as much as 2.2 percent. The Dow Jones Industrial Average added 143.08 points, or 1.3 percent, to 11,153.98. The Nasdaq Composite Index fell 0.4 percent as Apple Inc. (AAPL) declined 1.6 percent, dropping for a fourth straight day.

Treasury Yields Set for Biggest Weekly Gain in Three Months on Policy Bets (Source: Bloomberg)
Treasury yields were set for the biggest weekly increase in three months on speculation policy makers will introduce more steps to stimulate growth, easing concern that advanced economies may slip back into recession. Ten-year Treasuries maintained five-days of losses before the European Central Bank’s policy meeting next week amid concern the euro region’s prolonged debt crisis will hurt the world economy. U.S. government debt failed to compensate investors for inflation, with 10-year yields lower than the rate of consumer price increases. “Yields have risen as there are expectations among investors that governments will come up with various economic measures,” said Hiromasa Nakamura, a senior investor in Tokyo at Mizuho Asset Management Co., which oversees the equivalent of $39 billion. “Speculation that the ECB will cut rates stokes expectations for recovery.”

China Growth Seen Less Than 5% by 2016: Poll (Source: Bloomberg)
Most global investors predict Chinese growth will slow to less than half the pace sustained since the government began dismantling Mao Zedong’s communist economy three decades ago, a Bloomberg poll indicated. Fifty-nine percent of respondents said China’s gross domestic product, which rose 9.5 percent last quarter, will gain less than 5 percent annually by 2016. Twelve percent see such a slowdown within a year, and 47 percent said it will occur in two to five years, the quarterly Bloomberg Global Poll of investors, analysts and traders who are Bloomberg subscribers showed. China, which saw its exports tumble the most since at least 1979 amid the 2008-09 global crisis, may not be able to rely on trade in any prolonged demand slump in Europe and the U.S., now battling to avoid returning to a recession. Managing the economic downshift would fall to the Communist Party’s next leaders, as President Hu Jintao and Premier Wen Jiabao begin their transition from power late next year.

Japan’s Industrial Output Rises Less Than Expected, Weighed by Strong Yen (Source: Bloomberg)
Japan’s industrial production rose less than expected in August, signaling that a strong yen and slowing growth abroad are dragging on the nation’s recovery from the March 11 earthquake and tsunami.   Factory output increased 0.8 percent in August from July, the trade ministry said in Tokyo today. The median estimate of 28 economists surveyed by Bloomberg News was for a 1.5 percent gain.   Today’s report, coming a day after data showed retail sales fell for a second month in August, adds to evidence that the expansion in the world’s third-largest economy is weakening. The International Monetary Fund cut its global growth forecast for this year and next, increasing challenges for Japanese exporters, whose profits are already being eroded by a currency near postwar highs against the dollar.

Japanese Stocks Swing Between Gains, Losses Amid U.S. Growth Concern (Source: Bloomberg)
Japanese stocks swung between gains and losses, with the Nikkei 225 (NKY) Stock Average struggling to extend a three-day winning streak, after U.S. economic reports failed to assuage concern the world’s largest economy is slowing. The Nikkei 225 advanced 0.4 percent to 8,735.72 as of 9:31 a.m. in Tokyo after dropping as much 0.3 percent. The broader Topix index gained 0.3 percent to 764.49 after declining 0.4 percent. “Concerns about the U.S. economic slowdown are lingering, and we need to see more U.S. reports,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

South Korea’s Industrial Output Expands Faster as Weakening Won Supports (Source: Bloomberg)
South Korea’s industrial production expanded at a faster pace in August as a weakening won helped exporters weather the global economic slowdown. Output rose 4.8 percent from a year earlier after gaining a revised 4 percent in July, Statistics Korea said today. The median estimate of 14 economists in a Bloomberg News survey was for a 6.1 percent gain. Production slid 1.9 percent from July, when it decreased a revised 0.3 percent. South Korea’s currency weakened more than 9 percent against the dollar this month as a deepening European debt crisis and signs of a U.S. slowdown increased concern about the global outlook. The won’s decline may prove inadequate to support exports as a slowing global economy lessens demand for the nation’s products, said economist Kong Dong Rak.

Korean Won Set for Biggest Monthly Loss Since February 2009; Bonds Fall (Source: Bloomberg)
South Korea’s won headed for biggest monthly loss since February 2009 as signs the global recovery is losing steam and Europe’s debt crisis prompted investors to favor the relative safety of the dollar. Bonds fell. The currency weakened today and stocks declined after a government report showed industrial production fell more than economists forecast in August. Overseas investors sold $1.5 billion more Korean stocks than they bought this month through yesterday, based on exchange figures. Data tomorrow is expected to show exports rose in September at the slowest pace in three months, according to a Bloomberg survey of economists. The won tumbled 9.5 percent this month to 1,178.65 per dollar as of 9:55 a.m. in Seoul, according to data compiled by Bloomberg. The currency fell 0.4 percent today, poised for a 9.4 percent drop this quarter, as Greece struggles to meet the terms of a bailout.

Europe Prepares Next Crisis Steps After Merkel Rescue-Fund Parliament Win (Source: Bloomberg)
European leaders are turning their focus to the next steps to stem the region’s debt crisis after German lawmakers approved an expansion of the euro-area rescue fund’s firepower. With the European Commission now expecting the overhauled 440 billion-euro ($599 billion) European Financial Stability Facility in place by mid-October, euro finance chiefs will next week discuss accelerating enactment of a permanent rescue fund that provides more capital and a tool for managing defaults. “I’m not convinced that this bailout package is going to be remotely enough for the euro zone itself,” Wilbur Ross, the billionaire chairman of private-equity firm WL Ross & Co., said yesterday in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “I think it should start with a ‘T,’ not a ‘B,’” he said, referring to trillions instead of billions.

Europe Financial Meltdown Converging With Slump Seen by Investors in Poll (Source: Bloomberg)
Global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year with 72 percent predicting a country abandoning the euro as a shared currency within five years, a Bloomberg survey found. About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking sector laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year.
More than a third of participants say deteriorating European debt will derail the world economy over the next year, with the pessimism highlighting the pressure European policy makers face as they try again to fix their 18-month sovereign crisis. Stocks last week tumbled into their first bear market in two years and foreign leaders, including President Barack Obama, are urging European leaders to intensify their rescue efforts.

European Stocks Advance on U.S. Economy; BNP Paribas, H&M Climb (Source: Bloomberg)
European stocks climbed for the fourth time in five days as U.S. employment and growth data exceeded forecasts and German lawmakers backed an enhanced euro- region rescue fund. BNP Paribas (BNP) SA and Deutsche Bank AG led gains in banking shares, rallying more than 3 percent. Hennes & Mauritz AB (HMB) surged 6.8 percent after Europe’s second-largest clothing retailer reported earnings that beat estimates. Swatch Group AG (UHR) led luxury-goods makers lower as a Bloomberg survey showed most global investors predict Chinese growth will slow to less than 5 percent by 2016. The Stoxx Europe 600 Index climbed 0.7 percent to 228.9 at the 4:30 p.m. close in London after swinging between gains and losses at least 15 times. The measure is heading for its worst quarter since 2008, having fallen 16 percent amid concern global economic growth is slowing and policy makers are struggling to contain the European debt crisis. The gauge has dropped 3.6 percent this month following a 10 percent slump in August.

New Zealand Loses AAA Ratings, Yields Jump (Source: Bloomberg)
New Zealand lost its AAA grades on local-currency debt at Fitch Ratings and Standard & Poor’s, which both cited concerns about the nation’s fiscal burden. Benchmark government yields rose the most this year. The outlook is stable after the long-term local-currency rating was reduced one level to AA+ and the foreign-currency rating was cut to AA from AA+, S&P said in a statement, matching actions announced yesterday by Fitch. New Zealand joins the U.S. to Italy among nations whose sovereign credit ratings have been cut this year, as governments’ struggles to cope with their debt burdens roil financial markets. Fitch’s downgrade may raise funding costs, adding to the case for Reserve Bank Governor Alan Bollard to keep interest rates at a record 2.5 percent low. Bond yields rose amid concern some overseas investors will sell their New Zealand holdings after the downgrades.

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