Friday, November 11, 2011

20111111 0948 Global Market Related News.

Asia Stocks Rise on U.S. Jobless Claims (Source: Bloomberg)
Asian stocks rose after U.S. jobless claims fell to the lowest level in seven months and the selection of a new Greek premier tempered concern about Europe’s debt crisis, boosting investor demand for riskier assets. LG Electronics Inc. (066570), the South Korean handset maker that counts North America as its biggest market, gained 1.8 percent in Seoul. Hynix Semiconductor Inc. advanced 2.8 percent after SK Telecom Co., South Korea’s No. 1 mobile-phone company, offered to buy 20 percent of the world’s second-largest memory-chip maker. Rio Tinto Group, the world’s No. 2 mining company by sales, slipped 0.9 percent in Sydney as copper futures extended losses.
“The news headlines have been all about Europe, and behind the scenes, the U.S. economy has significantly improved with increasing positive economic data,” said Stan Shamu, a strategist at IG Markets in Melbourne. “Some companies with established earnings will get a bit of traction from investors who are looking into gaining a bit of value, but at the same time, the headline risk is still very high.”

U.S. Stocks Rise on Jobless Claims Drop as Europe Concern Eases (Source: Bloomberg)
U.S. stocks advanced, rebounding from yesterday’s tumble, as jobless claims declined while a retreat in Italian bond yields and the selection of a new Greek premier tempered concern about Europe’s debt crisis. Energy shares had the biggest gain in the Standard & Poor’s 500 Index among 10 groups, rising 1.8 percent as oil rallied. Cisco Systems Inc. (CSCO), the largest maker of networking equipment, climbed 5.7 percent as profit and sales beat estimates. Merck & Co. jumped 3.5 percent after raising its dividend. Apple Inc. (AAPL) slumped 2.6 percent amid concern that the company may ship fewer units of its iPad tablet this year due to supply constraints. The S&P 500 added 0.9 percent to 1,239.70 as of 4 p.m. New York time. The benchmark gauge for American equities lost 3.7 percent yesterday as one out of 500 stocks in the index gained, the fewest since June 2010. The Dow Jones Industrial Average advanced 112.92 points, or 1 percent, to 11,893.86.

Japan Stocks Rise as U.S. Jobless Claims Fall, Europe Debt Concern Eases (Source: Bloomberg)
Nov. 11 (Bloomberg) -- Japanese stocks rose, rebounding from a five-week low, after U.S. jobless claims fell to the lowest level in seven months while concern eased about Europe’s debt crisis, boosting investor demand for riskier assets. Fanuc Corp. (6954), a maker of factory robotics that gets 75 percent of its sales abroad, rose 2.1 percent. Inpex Corp. (1605), Japan’s No. 1 energy explorer, advanced 1.2 percent after oil rose to a three-month high. Olympus Corp. (7733), an endoscope maker, slumped 9.3 percent after the firm was placed on Tokyo Stock Exchange Group Inc.’s so-called watchlist for possible delisting after admitting to hiding losses. The Nikkei 225 (NKY) Stock Average gained 0.7 percent to 8,557.15 as of 9:17 a.m. in Tokyo. The broader Topix index advanced 0.3 percent to 732.46, set for a 2.6 percent loss this week. For the week, the Nikkei has fallen 2.8 percent. The gauge has swung between weekly gains and losses for 10 weeks, the longest up- and-down period since at least February 1989.

Stocks, Euro Advance as Greece Names Premier (Source: Bloomberg)
Stocks rose, with the Standard & Poor’s 500 Index rebounding from its worst drop since August, as jobless claims fell while a retreat in Italian bond yields and the selection of a new Greek premier tempered concern about Europe’s crisis. The euro gained and Treasuries slid. The S&P 500 rose 0.9 percent to close at 1,239.7 at 4 p.m. in New York. Italy’s 10-year bond yield, which surged to a record yesterday, dropped 36 basis points to 6.89 percent today as the European Central Bank bought the country’s debt and the nation sold all the bills planned at an auction. The euro appreciated 0.4 percent to $1.3601. Cotton and oil rose at least 1.8 percent to lead commodities higher. Ten-year Treasury yields lost six basis points.
U.S. equities resumed gains after falling earlier amid a surge in French bond yields. Stocks recovered as S&P said it did not cut France’s credit rating, clarifying a statement that suggested the rating had changed. Equities rallied as U.S. initial jobless claims decreased to the lowest level in seven months, Italy sold 5 billion euros ($6.8 billion) of one-year bills and former vice president of the European Central Bank Lucas Papademos was named Greece’s interim leader.

Bernanke Says Treasuries Remain ‘Safe Haven’ After S&P’s August Downgrade (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said U.S. Treasury securities remain a “safe haven” for investors after Standard & Poor’s lowered its credit rating on the nation’s debt in August. “The downgrade didn’t scare off any investors,” and the action, along with the prospect of other downgrades, hasn’t done “significant damage” to the economy, Bernanke said today in response to a question at a town-hall-style event in El Paso, Texas. At the same time, the nation must take measures to establish a sustainable path for the national debt amid rising Social Security and health-care costs, he said. Treasuries rallied after the Standard & Poor’s rating cut, sending the government’s borrowing costs to record lows, as investors disregarded the firm’s warning about increased risks in U.S. debt to seek safety from Europe’s credit turmoil. Treasuries returned 6.4 percent in the third quarter, the most since 2008, compared with a 14 percent drop in the benchmark S&P 500 Index.

U.S. Trade Gap Narrows, Jobless Claims Fall in Signs of Improving Growth (Source: Bloomberg)
The U.S. trade deficit unexpectedly narrowed in September on record exports and jobless claims fell to a seven-month low, indicating the world’s largest economy may be poised to strengthen. The trade shortfall shrank 4 percent to $43.1 billion from a revised $44.9 billion in August that was smaller than initially reported, the Commerce Department said in Washington. First-time applications for unemployment benefits declined by 10,000 to 390,000 last week, the Labor Department said. The smaller trade bill may contribute more to the rebound in third-quarter growth than first estimated as overseas demand encourages U.S. factories to boost production. A sustained decline in applications for unemployment benefits may be the first step to a pickup in hiring that’s needed to spur household purchases, the biggest part of the economy.
“The economy is clearly regaining its footing,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York, who predicted the trade deficit would shrink and jobless claims would decline. “While global economic activity is slowing, it hasn’t collapsed, so the U.S. will be able to sustain healthy gains in exports. The deceleration in the pace of layoffs is positive for the outlook on consumer spending.”

U.S. Budget Gap Narrowed to $98.5 Billion in October on More Tax Receipts (Source: Bloomberg)
The U.S. government’s budget deficit narrowed in October, the first month of the new fiscal year, reflecting a calendar-related reduction in spending and an increase in tax receipts. The $98.5 billion shortfall is smaller than the $140.4 billion deficit posted in the same month last fiscal year, according to Treasury Department data issued today in Washington. Economists projected a $102.5 billion gap, according to the median estimate in a Bloomberg News survey. The narrowing comes as a 12-member congressional supercommittee of Democrats and Republicans tries to find $1.5 trillion in savings over the next decade before an approaching deadline triggers spending cuts. America’s budget deficit was 8.7 percent of gross domestic product in fiscal 2011, the third- highest since 1945.

Sinochem Plans China’s Biggest IPO This Year (Source: Bloomberg)
Sinochem Corp. plans to raise as much as 35 billion yuan ($5.5 billion) in an initial public offering to fund an oil refinery project, in what would be China’s sixth-biggest IPO.  The country’s largest supplier of chemical products aims to sell as much as 26.5 billion new shares in Shanghai, according to a statement posted on the Ministry of Environmental Protection’s website yesterday. The unit of Sinochem Group will use the proceeds for a refinery in Fujian, the statement said.  Companies have raised $37 billion in IPOs in China this year, more than double the proceeds in Hong Kong, according to data compiled by Bloomberg. The Sinochem IPO comes less than a month after Sinohydro Group Ltd., the country’s largest builder of hydroelectric dams, raised 13.5 billion yuan in what was the largest offering this year, Bloomberg data show.

Analysts See Biggest Gain in China Property (Source: Bloomberg)
Analysts’ forecasts show real-estate stocks will rally more than any other industry in China during the next year, even as wagers on declines climb to the highest level since at least 2008. Developers in the MSCI China Index will surge 46 percent on average by November 2012, the most among 21 groups in the equity gauge, based on analysts’ estimates compiled by Bloomberg. At the same time, bearish bets on property companies have doubled to 12 percent of shares available for trading this year, according to Data Explorers, a London-based research firm. Bulls say speculation about the bursting of an asset bubble in China’s property market is overblown and the shares are cheap after the average price-earnings ratio for the group fell 44 percent from an April peak to 5.77. Bears say real-estate stocks will extend this year’s slump after housing transactions in October fell for the first time in three months and government officials pledged to maintain real-estate curbs.

Japan’s Exit From Slump May Be Short-Lived (Source: Bloomberg)
Nov. 11 (Bloomberg) -- Japan’s economy probably expanded at the fastest pace in more than a year last quarter, a rebound that may not be sustained as Europe’s debt crisis sends stocks plunging and boosts the yen. Gross domestic product grew at an annual 5.9 percent in the three months ended Sept. 30, reversing three consecutive quarters of contraction, according to the median forecast of 24 analysts surveyed by Bloomberg News. The Cabinet Office will release the report at 8:50 a.m. in Tokyo on Nov. 14. A resurgence in production and exports by companies including Toyota Motor Corp. (7203) is showing signs of waning as a yen trading near postwar highs against the dollar forces companies to cut their profit forecasts. A report on machinery orders yesterday indicated companies may pare spending into next year as they brace for a slowdown in global demand.

Japan’s Azumi on Guard Against Yen Moves (Source: Bloomberg)
Japanese Finance Minister Jun Azumi said he’s on guard against speculative yen trades while declining to comment on whether the nation has been selling the currency this month. “I’m watching markets with great interest for speculative trading and excessive movements,” Azumi told reporters in Tokyo today. “I think unstable factors for markets including stocks are increasing since last week because of Europe, especially after problems emerged in Italy.” The yen has strengthened more than 2 percent against the dollar from a low of 79.53 on Oct. 31 after Japan’s third publicly announced intervention this year. Azumi may have ordered more yen sales since then, Totan Research Co. said Nov. 9, citing analysis of the Bank of Japan’s current account and bond holdings.

Indonesia Bets on Rate Cuts Aiding Growth as Euro Crisis Defuses Inflation (Source: Bloomberg)
Indonesia’s central bank is betting the threat to economic growth from the European debt crisis outweighs the risk that yesterday’s cut in interest rates to a record low will fuel inflation. Bank Indonesia lowered the reference rate by half a percentage point to 6 percent, it said in a statement in Jakarta, confounding all 19 economists surveyed by Bloomberg News. Eight had predicted a quarter-point reduction after a similar move last month, and the rest no change. The cut is the biggest since March 2009. The world’s fourth-most populous nation is among countries from Brazil to Australia that have lowered borrowing costs as the global economy falters. The rupiah extended its decline after the decision, highlighting concern that a weakening currency may boost import costs.

Recession Risk Grows for Euro Region as Commission Reduces 2012 Forecast (Source: Bloomberg)
The European Commission cut its euro-region growth forecast for next year by more than half and said it sees the risk of a recession as leaders struggle to contain the fiscal crisis. Gross domestic product may grow 1.5 percent this year and 0.5 percent in 2012, the Brussels-based commission said today. It had earlier projected the 17-nation region to expand 1.6 percent and 1.8 percent this year and next, respectively. In 2013, the economy may expand 1.3 percent, the commission said. The euro-area economy is edging toward recession as governments are seeking ways to end the turmoil that has rattled global equity markets. In Italy, Prime Minister Silvio Berlusconi failed to convince investors that his country can slash the region’s second-largest debt burden. The commission said the risk of an economic contraction is “not negligible” and identified the fiscal crisis among the main threats.

Bank of England Keeps Asset Purchase Program Steady, Holds Benchmark Rate (Source: Bloomberg)
The Bank of England maintained its target for asset purchases as policy makers gauged the capacity of their second round of stimulus to ward off the danger posed by Europe’s debt crisis. The nine-member Monetary Policy Committee led by Governor Mervyn King held the ceiling for so-called quantitative easing at 275 billion pounds ($438 billion), as forecast by all 38 economists in a Bloomberg News survey. The bank, which expanded QE by 75 billion pounds last month, said the current purchases will take another three months to complete and the “scale of the program will be kept under review.” Europe’s debt turmoil has spread to Italy, further threatening Britain’s recovery, and the European Commission said today there’s a risk of a contraction in the U.K. economy in “at least one of the next few quarters.” The Bank of England may lower growth projections in its Inflation Report next week, which King will present at a press conference.

ECB’s Policy Makers Say They Can’t Do Much More to Stem Financial Crisis (Source: Bloomberg)
European Central Bank policy makers said the bank can’t do much more to stem the region’s sovereign debt crisis, suggesting they are reluctant to significantly ramp up bond purchases to lower Italy’s borrowing costs. “Not much more can be expected from us, it’s up to the governments,” Governing Council member Klaas Knot, who heads the Dutch central bank, told lawmakers in The Hague today. Three other policy makers have also publicly rejected calls for more ECB intervention and two further officials, who spoke on condition of anonymity, said the central bank has no plans to make its purchase program unlimited.
Bond yields in Italy, the third-largest economy in the 17- nation euro region, have surged above the 7 percent level that led Greece, Portugal and Ireland to seek bailouts from the European Union and International Monetary Fund. With politicians still unable to find a solution to the debt crisis that has raged for two years, the ECB is being asked to step into the breach to hold Europe’s monetary union together.

Italy Bond Attack Breaches Euro Defenses as Crisis Worsens (Source: Bloomberg)
The euro region’s defenses are being breached. Investors yesterday propelled Italy’s 10-year bond yield to close at a euro-era high of 7.25 percent after the promised exit of Prime Minister Silvio Berlusconi failed to convince them that his country can slash Europe’s second-largest debt burden. The biggest signal yet that the single currency’s third- largest economy is falling prey to its two-year debt crisis forces German Chancellor Angela Merkel, European Central Bank President Mario Draghi and their peers to decide just how far they’re willing to go to defend the euro. “The market is testing the commitment of the euro zone’s stewards,” said Eric Chaney, Paris-based chief economist at insurer AXA SA and a former official in the French Finance Ministry. “Italy is the real crisis battleground.”

Greek Unity Government Led by Lucas Papademos Will Seek to Avoid Collapse (Source: Bloomberg)
The new Greek unity government led by Lucas Papademos, former vice president of the European Central Bank, will face the task of securing funds to avert the country’s economic collapse. President Karolos Papoulias gave Papademos the mandate to form a government after receiving proposals from Prime Minister George Papandreou, Antonis Samaras, leader of the opposition New Democracy party, and opposition LAOS party leader George Karatzaferis, according to an e-mailed statement from the president’s office in Athens. The new government will be sworn in today at 2 p.m. “I am not a politician but I have dedicated the biggest part of my professional life to economic policy both in Greece and Europe,” Papademos told reporters after being named. “The Greek economy still faces huge problems despite the huge efforts that have been made for fiscal consolidation and to improve competitiveness. Greece is at a critical crossroads.”

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