Wednesday, January 4, 2012

20120104 1012 Global Market Related News.

Global Manufacturing Displays Resilience to Europe’s Debt Crisis: Economy (Source: Bloomberg)
Manufacturing from the U.K. to India showed improvement in December, suggesting production is weathering strains from Europe’s sovereign debt crisis. Purchasing manager indexes for the U.K., Switzerland, China, India and Australia rose in December, while German unemployment fell more than economists forecast as exports of cars and machinery boomed, reports today showed. U.S. manufacturing growth (NAPMPMI) accelerated more than economists forecast to the fastest pace in six months. The factory production data indicate some resilience in the industry as European leaders work to flesh out their plan to end the debt turmoil that’s threatening to drag the region back into recession. The International Monetary Fund may cut its 2012 global growth forecast this month after lowering it to 4 percent in September, when it predicted “severe” repercussions if Europe fails to contain its crisis.

Global Growth Slows to 3.9% (Source: Bloomberg)
A year ago, Catherine Liu employed more than 2,000 people at her five Shanghai luggage-making factories. Now, as the dwindling supply of low-paid young workers forces wages and costs higher, she has 1,200 left. “Local workers are getting much older,” said Liu, owner of Shanghai Worldwide Trading Co. “If you want to train them, they must be young. It’s very difficult to survive.” Aging and shrinking labor pools are also poised to curb expansion across the other so-called BRIC nations that contributed almost half of global growth in the past decade. With fewer youths keeping factories going and more pensioners to support in those markets, the world economy is set to slow, Goldman Sachs Group Inc. (GS) says.
The number of people older than 65 in Brazil, Russia, India and China will rise 46 percent to 295 million by 2020 and to 412 million by 2030, according to United Nations projections. The pool of 15 to 24-year-olds, the mainstay for factories like Liu’s that drove China’s boom for three decades, will fall by 61 million by 2030, about the population of Italy.

Asian Stocks Rise for Second Day on Optimism (Source: Bloomberg)
Asian stocks (MXAP) rose for a second day after U.S. manufacturing increased at the fastest pace in six months. Gold climbed for a fourth day, while the dollar was little changed after falling the most in a month yesterday. The MSCI Asia Pacific Index advanced 1 percent as of 9:26 a.m. in Tokyo. Standard & Poor’s 500 Index futures gained less than 0.1 percent after the U.S. equity benchmark closed at a two-month high. Gold for immediate delivery rose 0.2 percent to $1,606.15 an ounce. The dollar held at $1.3052 per euro following a yesterday’s 0.9 percent drop. The Institute for Supply Management’s report on U.S. manufacturing yesterday added to data showing stronger factory activity in China, the U.K., India and Australia. Bookings (TMNOCHNG) for U.S. factory goods probably climbed 2 percent in November, the most in four months, according to a Bloomberg survey of economists taken before the report is released today.

H.K. Keeps Ban on Some Poultry Imports (Source: Bloomberg)
Poultry imports from the part of southern China where a man died from the H5N1 virus remain banned in Hong Kong after genetic tests linked the man’s strain of the disease to the version found in wild birds in the city. The import of live, chilled and frozen poultry, and eggs, from within a 13-kilometer (8-mile) radius of the man’s home in Shenzhen were suspended for 21 days starting Jan. 1, according to a Centre for Food Safety statement posted on New Year’s Day. “It’s always the wild birds, then the poultry, then the humans,” Yuen Kwok-yung, chairman of infectious diseases at the University of Hong Kong’s department of microbiology, said in a phone interview yesterday. Events are following the typical sequence for a zoonosis, a disease that jumps to humans from animals, he said.

European Stocks Rise to Highest Since August on U.S. Manufacturing Growth (Source: Bloomberg)
European stocks rose for a fourth day, pushing the Stoxx Europe 600 Index to its highest level in five months, as a report showed that manufacturing in the U.S. (NAPMPMI) expanded in December at the fastest pace in six months. BHP Billiton Ltd. (BHP) and Rio Tinto Group jumped more than 6 percent, leading gains by commodity producers as copper increased in London. Automakers rallied as R.L. Polk & Co. said the number of cars and light trucks sold globally will grow 6.7 percent this year. The benchmark Stoxx 600 (SXXP) rose 1.6 percent to 251.06 at the close, its highest level since Aug. 3. The gauge has risen for four days, its longest winning streak since November. The U.K., the U.S. and Swiss markets were closed for a holiday yesterday.

U.S. Stocks Advance Amid Signs of Growth in Global Manufacturing (Source: Bloomberg)
U.S. stocks climbed, sending the Dow Jones Industrial Average to the highest level since July, amid signs that manufacturing output is increasing from China to Australia and America. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) added more than 4.3 percent as financial shares had the second-biggest gain among S&P 500 industries. Alcoa Inc. (AA) and Caterpillar Inc. (CAT) advanced at least 3.7 percent, pacing increases among the largest U.S. companies. Chevron Corp. (CVX) climbed 3.7 percent as the price of oil rose. Cisco Systems Inc. surged 3.4 percent after JPMorgan recommended investors buy the shares. The Standard & Poor’s 500 Index rallied 1.6 percent to close at 1,277.06 at 4 p.m. New York time, the highest level since Oct. 28. The Dow jumped 179.82 points, or 1.5 percent, to 12,397.38, adding to its 5.5 percent advance in 2011.

Japanese Stocks Advance on Signs Global Growth Weathering Europe Crisis (Source: Bloomberg)
Japanese stocks (TPX) rose, with the Topix Index headed for its biggest gain in four weeks, after reports in the U.S. and Germany added to signs the global economy is weathering Europe’s debt crisis. Sony Corp. (6758), which earns 70 percent of its revenue overseas, gained 1.4 percent. Komatsu Ltd. (6301) jumped 1.7 percent after the Nikkei newspaper reported the construction machinery maker will invest as much as 15 billion yen ($195 million) in factories. Inpex Corp. (1605), the nation’s largest oil explorer by market value, added 2.1 percent after crude prices advanced. The Topix rose 1.4 percent to 738.63 as of 9:15 a.m. in Tokyo, set for the biggest advance since Dec. 7. The Nikkei 225 Stock Average (NKY) climbed 1.2 percent to 8,557.65.

Fed to Make Benchmark Rate Forecasts Public (Source: Bloomberg)
Federal Reserve officials will start announcing their own forecasts for the central bank’s key interest rate in the latest step in Chairman Ben S. Bernanke’s drive for greater transparency. FOMC “participants decided to incorporate information about their projections of appropriate monetary policy” into their Summary of Economic Projections starting with their next meeting on Jan. 24-25, according to minutes from last month’s Federal Open Market Committee released today. By releasing their forecasts, central bankers are likely to alter expectations for the timing of the first increase in their benchmark rate, which has been kept near zero since December 2008. Last month, Fed officials repeated their view that economic conditions would warrant “exceptionally low levels for the federal funds rate at least through mid-2013.”

U.S. Manufacturing Expands by Most in Six Months (Source: Bloomberg)
U.S. factories expanded in December at the fastest pace in six months, adding to evidence manufacturing is improving from India to the U.K. entering 2012. The Institute for Supply Management’s factory index climbed to 53.9 last month from 52.7 in November, the Tempe, Arizona- based group’s data showed today. Fifty is the dividing line between growth and contraction, and economists surveyed by Bloomberg News forecast the gauge would rise to 53.5. Stocks surged and commodities rose as the data showed factory orders and production grew at the strongest rates in eight months while inventories were cut. Combined with another report showing construction spending (CNSTTMOM) climbed in November, the figures indicate the world’s largest economy accelerated in the final months of 2011.

Construction Spending in U.S. Beats Forecast (Source: Bloomberg)
Construction spending in the U.S. rose in November for a third time in four months, indicating the industry helped boost growth at the end of 2011. Building outlays increased (CNSTTMOM) 1.2 percent, exceeding the median estimate of 46 economists in a Bloomberg survey that called for a 0.5 percent gain, Commerce Department figures showed today in Washington. The October reading was revised down to show a 0.2 percent drop from a previously projected 0.8 percent increase, showing the initial data are susceptible to swings in direction. Recent gains in the housing market, spurred in part by mortgage rates near record lows, are helping the construction industry recover from the 18-month recession that ended in June 2009. Public expenditures also climbed during the month, a sign that budget constraints may be easing.

World’s Biggest Economies Face $7.6 Trillion Bond Tab as Rally Seen Fading (Source: Bloomberg)
Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs. Led by Japan’s $3 trillion and the U.S.’s $2.8 trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show. Investors may demand higher compensation to lend to countries that struggle to finance increasing debt burdens as the global economy slows, surveys show. The International Monetary Fund cut its forecast for growth this year to 4 percent from a prior estimate of 4.5 percent as Europe’s debt crisis spreads, the U.S. struggles to reduce a budget deficit exceeding $1 trillion and China’s property market cools.

China’s Wen Foresees ‘Relatively Difficult’ Q1 (Source: Bloomberg)
Chinese Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter and monetary policy will be fine-tuned as needed. “We see downside pressure on our economy and elevated inflation at the same time,” Wen said during a two-day trip to Hunan province, according to a statement on the government’s website yesterday. “We also face problems of weakening external demand and rising costs for companies.” Economists at Barclays Capital and Bank of America Corp. say the central bank will cut lenders’ reserve requirements (CHRRDEP) before a weeklong Chinese New Year holiday starts on Jan. 23, the second reduction since 2008. The ruling Communist Party is shifting focus to supporting growth rather than damping inflation as Europe’s debt crisis threatens to curb exports.

Spanish Unemployment Rises for Fifth Straight Month as Economy Contracts (Source: Bloomberg)
Registered unemployment (SPUECHNG) in Spain, where almost half of young people are out of work, rose for a fifth month in December as the euro area’s fourth-largest economy contracted. The number of people registering for unemployment benefits rose 1,897 to 4.42 million, the Labor Ministry in Madrid said in an e-mailed statement today. In November, it surged 59,536. Spain’s economy contracted in the final months of the year as tourism and exports, the drivers of its first-half recovery from a three-year slump, weakened, the Bank of Spain said on Dec. 29. Labor Minister Fatima Banez met union leaders and employers last week. Prime Minister Mariano Rajoy asked both sides to reach agreement by around Jan. 6 on changes to collective wage-bargaining rules and ways to resolve labor conflicts outside the courts.

German Unemployment Drops More Than Forecast as Mild Winter Fuels Building (Source: Bloomberg)
German unemployment (GRUECHNG) fell more than forecast in December as exports of cars and machinery boomed and one of the mildest winters on record helped support jobs in construction. The number of people out of work fell a seasonally adjusted 22,000 to 2.89 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, the median of 20 estimates in a Bloomberg News survey showed. The adjusted jobless rate (GRUEPR) dropped to 6.8 percent. German companies, working off orders for exports and investment goods, have so far defied a debt crisis the European Commission says risks triggering a recession in the euro area. The Munich-based Ifo institute’s measure of business confidence rose unexpectedly in December, and polls show most Germans see their job as secure even as Europe’s biggest economy slows.

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