Asia Stocks Rise on U.S. Confidence (Source: Bloomberg)
Asian stocks rose for a third day after confidence among U.S. homebuilders beat estimates and the International Monetary Fund said it plans to expand its lending resources to counter Europe’s debt crisis. Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, advanced 1 percent. Komatsu Ltd. (6301), Japan’s largest construction machinery maker that generates 23 percent of its revenue in China, rose 2.4 percent on speculation China may relax capital requirements for lenders. Commonwealth Bank of Australia, the nation’s No. 1 lender by market value, climbed 0.6 percent after Goldman Sachs Group Inc. reported profit that exceeded analysts’ estimates. The MSCI Asia Pacific Index advanced 0.6 percent to 118.93 as of 9:13 a.m. in Tokyo, with more than three stocks gaining for each that fell. The measure is headed for the highest close since Nov. 9.
S&P 500 Caps Best Start to Year Since 1987 on Economic Optimism (Source: Bloomberg)
U.S. stocks rose, giving the Standard & Poor’s 500 Index its best start to a year since 1987, after confidence among homebuilders topped forecasts, Goldman Sachs (GS) Group Inc. rallied and concern about Europe eased. Goldman Sachs climbed 6.8 percent as earnings beat estimates amid lower compensation costs. Bank of America Corp. (BAC) and JPMorgan (JPM) Chase & Co. jumped at least 4.6 percent, leading the gains in the Dow Jones Industrial Average. PulteGroup Inc. (PHM) and Lennar Corp. added more than 4.3 percent, pacing an advance in homebuilders. A measure of chipmakers rose the most in the S&P 500 among 24 industries, rallying 3.9 percent. The S&P 500 increased 1.1 percent to 1,308.04 at 4 p.m. New York time, closing above 1,300 for the first time since July. The Dow advanced 96.88 points, or 0.8 percent, to 12,578.95. The Nasdaq Composite Index climbed 1.5 percent to 2,769.71. The Russell 2000 Index jumped 1.8 percent to 779.26.
Euro debt fears pressure euro, shares retreat
LONDON, Jan 18 (Reuters) - The euro came off its recent highs and European shares started lower with investors nervous about Greek bond talks and government debt sales, a day after economic data had raised hopes the global economy wouldn't slowdown
as much as feared.
"Greek bond negotiations could trigger more euro weakness as they have to close a deal soon, before Greek debt repayments are
due in March, Richard Falkenhall, currency strategist at SEB in Stockholm said.
Most European Stocks Gain as IMF Seeks Boost to Resources; Accor Advances (Source: Bloomberg)
Most European stocks rose as the International Monetary Fund said it plans to raise as much as $500 billion to expand its lending resources and Greece neared a debt deal with its private creditors. Accor SA advanced 4.3 percent as the French hotelier said sales increased in 2011 and confirmed its profit forecast. Commerzbank AG (CBK) declined 1.7 percent as Moody’s Investors Services lowered the financial-strength rating of Germany’s second-biggest lender. The Stoxx Europe 600 Index gained less than 0.1 percent to 253.48 at the close of trading, extending a five-month high. More than three shares climbed for every two that dropped. The benchmark gauge has increased 3.7 percent so far this year.
Japanese Stocks Advance on U.S. Homebuilder Confidence, IMF Resource Boost (Source: Bloomberg)
Japanese shares rose, with the Nikkei 225 (NKY) Stock Average heading toward its highest close in more than a month, after confidence among U.S. homebuilders topped estimates and the International Monetary Fund said it plans to expand its lending resources to counter Europe’s debt crisis. Canon Inc. (7751), a Japanese camera maker that gets more than 80 percent of its revenue overseas, gained 1.1 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s top publicly traded bank, rose 1.5 percent after profit at Goldman Sachs Group Inc. exceeded analysts’ expectations. Komatsu Ltd. (6301), a construction machinery maker that generates 23 percent of its sales in China, climbed 2.3 percent on speculation capital requirements for mainland lenders may be relaxed. The Nikkei 225 rose 0.9 percent to 8,622.98 as of 9:17 a.m. in Tokyo, set for its highest close since Dec. 12. The broader Topix (MXAP) Index climbed 0.7 percent to 740.36, with about five stocks rising for every two that fell.
Emerging Stocks Head for Two-Month High (Source: Bloomberg)
Emerging-market stocks rose to a two-month high on speculation Greece is nearing a deal to renegotiate its debt. The MSCI Emerging Markets Index (MXEF) climbed 0.9 percent to 980.93 at the close of trading in New York, the highest since Nov. 8. The Shanghai Composite index lost 1.4 percent after rallying the most since October 2009 yesterday. Hungary’s BUX Index (BUX) advanced for a fifth day, the longest streak of gains in a year. Brazil’s Bovespa added 1.8 percent. The Greek government may reach a deal with private creditors to write down some of its debt by the end of this week, a Finance Ministry official who asked not to be identified told reporters in Athens. The International Monetary Fund is proposing to raise its lending capacity by $500 billion to insulate the global economy against any worsening of Europe’s debt crisis, according to a person familiar with the discussions.
World Bank Cuts Global Growth Forecast as Euro Region Contracts: Economy (Source: Bloomberg)
The World Bank cut its global growth forecast by the most in three years, saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets such as India and Mexico. The world economy will grow 2.5 percent this year, down from a June estimate of 3.6 percent, the Washington-based institution said. The euro area may contract 0.3 percent, compared with a previous estimate of a 1.8 percent gain. The U.S. growth outlook was cut to 2.2 percent from 2.9 percent. “Even achieving these much weaker outturns is very uncertain,” the World Bank said in its Global Economic Prospects report released today in Asia and yesterday in the U.S. “The downturn in Europe and weaker growth in developing countries raises the risk that the two developments reinforce one another, resulting in an even weaker outcome.”
Factory Production in U.S. Climbed by Most in a Year Last Month: Economy (Source: Bloomberg)
Factories in the U.S. churned out more computers, cars and construction material in December as manufacturing remained at the center of the expansion. Output (IPMGCHNG) climbed 0.9 percent last month, the biggest gain since December 2010, according to Federal Reserve data issued today in Washington. Other reports showed homebuilder confidence jumped and wholesale prices unexpectedly dropped. Gains in consumer and business spending, combined with lean inventories, may prompt factories to continue to boost payrolls and hours, bolstering economic growth. Additionally, more demand from emerging markets may help shield American industry from a slowdown in exports to Europe as the region’s financial crisis and a weaker euro threaten to restrain sales.
U.S. Wholesale Prices Decreased in December (Source: Bloomberg)
Wholesale prices in the U.S. unexpectedly dropped in December, consistent with the Federal Reserve’s assessment that inflation remains tame. The producer price index fell 0.1 percent, the second decrease in the past three months, Labor Department figures showed today in Washington. Economists projected a 0.1 percent gain, according to the median estimate in a Bloomberg News survey. The core measure excluding volatile food and energy rose 0.3 percent as the cost of light trucks climbed. Cooling global demand, which has reduced the cost of commodities and hurt profits at companies like aluminum producer Alcoa Inc. (AA), signals price pressures may dissipate. Less inflation offers Fed officials room for more policy steps should they need to boost the world’s largest economy.
Fed Officials Open to Additional Easing as They Monitor Risks to Economy (Source: Bloomberg)
Federal Reserve officials are staying open to further monetary easing this year as they monitor risks that threaten to move the economy further away from their mandate for stable prices and full employment. Atlanta Fed President Dennis Lockhart told reporters Jan. 9 that he hadn’t closed out “the option” for more stimulus, while New York Fed President William C. Dudley said in a Jan. 6 speech that it’s “appropriate” to evaluate whether the Fed could do more to boost growth. Both are voting members of the Federal Open Market Committee. Among the possible triggers for action, according to Ethan Harris, co-head of global economic research at Bank of America Merrill Lynch in New York: a slump in U.S. gross domestic product caused by a European recession, a more rapid slide in U.S. inflation than anticipated, and deteriorating U.S. payroll growth.
Confidence Among U.S. Homebuilders Climbs to Highest Since 2007 (Source: Bloomberg)
Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved. The National Association of Home Builders/Wells Fargo sentiment gauge increased to 25 this month, exceeding the median forecast of economists surveyed by Bloomberg News and reaching the highest level since June 2007, the Washington-based group said today. Readings lower than 50 mean more respondents still said conditions were poor. Record-low borrowing costs, a growing population and reduced prices may drive demand for homes this year even as another round of foreclosures threatens to weigh on the market. The confidence measure, which increased for a fourth straight month, improved in all four regions of the U.S.
Goldman Shares Rise as Profit Beats Estimates on Lower Compensation Costs (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) climbed 6.8 percent in New York trading after the bank reported profit that exceeded analysts’ estimates, helped by a reduction in compensation costs. The shares rose $6.63 to $104.31 at 4:15 p.m., after reaching $105.83 earlier today. Fourth-quarter net income at the New York-based company dropped 58 percent to $1.01 billion, or $1.84 a share, beating the $1.23 average estimate of 26 analysts surveyed by Bloomberg. Chief Executive Officer Lloyd C. Blankfein, 57, cut compensation 21 percent in 2011 as he reduced costs and focused on international growth to offset a slowdown in trading, which contributes most of the firm’s revenue. Goldman Sachs’s higher- than-estimated earnings contrasted with previous reports from Citigroup Inc. (C), which fell short of analysts’ estimates, and JPMorgan Chase & Co., which matched projections.
China Said to Allow Banks to Increase First-Quarter Lending by 5% Over ’11 (Source: Bloomberg)
China’s central bank is said to be allowing a limited increase in first-quarter lending by the nation’s five biggest banks to support growth as the economy's expansion moderates. The lenders can increase new loans by a maximum of about 5 percent from a year earlier, according to two people at state lenders who have knowledge of the matter. Separately, the China Banking Regulatory Commission (CBRZ) has told lenders to contain local government debt risks, a person with knowledge of the matter said. The central bank won’t comment on anything related to credit quotas, a press official said in Beijing yesterday. China’s economic growth cooled to 8.9 percent in the fourth quarter, the slowest pace since the first half of 2009, as Europe’s debt crisis curbed export demand and the housing market weakened. Premier Wen Jiabao aims to sustain the expansion without re-inflating property-price bubbles or driving up consumer prices.
China’s Foreign Direct Investment Declines for Second Consecutive Month (Source: Bloomberg)
Foreign direct investment in China fell for the second straight month in December as global financial turmoil dimmed companies’ appetite for spending. Investment from overseas fell 12.73 percent to $12.24 billion last month from a year earlier, the Ministry of Commerce said in a statement in Beijing today. For the full year, spending rose 9.72 percent to a record $116 billion, the data showed. Investment fell 9.8 percent in November, the first decline since 2009. China announced amendments to policies to attract foreign funds last month, changes that may weigh on spending in some industries this year. Europe’s debt crisis and anticipated weaker growth in the U.S. this year may also limit investment, with central bank Governor Zhou Xiaochuan warning this month a global downturn could lead to “large” capital withdrawals from the country.
China Developers Ease Home Sales (Source: Bloomberg)
China’s biggest developers slowed home sales toward the end of 2011, bracing for the worst property market in three years as the government vows to keep real-estate curbs. Contract sales, or sales booked before apartments are completed, dropped 30 percent last month at China Vanke Co. (000002), as the country’s biggest developer by market value offered fewer homes from November. Evergrande Real Estate Group Ltd. (3333), the second-biggest Chinese developer by revenue, said sales in November and December were the lowest for the year. Developers are looking for ways to preserve record sales last year as the impact of purchase limits and tighter mortgage requirements imposed by the government spreads. China’s home transactions will fall 10 percent this year, according to Daiwa Securities Capital Markets, while UBS AG says the curbs may boost supply to the highest in a decade.
Indonesia Wins Second Rating Upgrade in a Month as Investment Gets Boost (Source: Bloomberg)
Indonesia won its second credit rating upgrade in five weeks as Moody’s Investors Service returned the country to investment level for the first time since the Asian financial crisis. The foreign- and local-currency rating was increased to Baa3 from Ba1, Moody’s said in a statement yesterday. The outlook is stable. The upgrade brings Southeast Asia’s largest economy to the lowest investment grade, the same level as India, according to data compiled by Bloomberg. Emerging-market economies from Brazil to Turkey and the Philippines are winning rating upgrades as governments take steps to contain budget deficits and bolster growth, even as Europe’s debt crisis prompted Standard & Poor’s to cut the credit ratings of nine members of the 17-nation euro area on Jan. 13. Yesterday’s decision may aid President Susilo Bambang Yudhoyono’s efforts to spur expansion by boosting investment.
Brazil Cuts Interest Rate to 10.5% to Shield Economy From European Crisis (Source: Bloomberg)
Brazil’s central bank cut borrowing costs by half a point for a fourth straight policy meeting, continuing a cycle of monetary easing it began in August to shield the world’s second-largest emerging market from the European debt crisis. The bank’s board, led by President Alexandre Tombini, today voted unanimously to reduce the benchmark Selic rate to 10.5 percent from 11 percent, as forecast by all 67 analysts surveyed by Bloomberg.
The bank, in a statement identical to that after its previous meeting, said that “moderate adjustments” in the rate were consistent with reducing inflation to its 4.5 percent target in 2012. Brazil has taken the lead among emerging markets in cutting borrowing costs as the economy shrank in the third quarter for the first time since 2009. With inflation slowing in line with the central bank’s forecasts, and Europe struggling to dispel investor doubts over its debt crisis, Brazil will cut rates another half point in March, said Luciano Rostagno, chief strategist at CM Capital Markets.
South Africa May Keep Lending Rate at 30-Year low to Spur Growth (Source: Bloomberg)
South Africa will probably keep its benchmark lending rate at a 30-year low today to support the recovery in Africa’s biggest economy as inflation accelerated less than forecast. The Monetary Policy Committee, led by Governor Gill Marcus, will leave the repurchase rate at 5.5 percent for a seventh consecutive meeting, according to all 21 economists surveyed by Bloomberg. Marcus will announce the decision at a televised press conference at 3 p.m. local time in the capital, Pretoria. The benchmark rate “is still pretty expansionary,” Sian Fenner, an economist at Lloyds Banking Group Plc in London, said in a telephone interview. “There are cost pressures there, but they are keeping an eye on what is happening with the economy.”
The Reserve Bank kept its key rate unchanged in 2011 as concerns that a worsening European debt crisis will derail the global recovery outweighed price risks. The inflation rate was unchanged at 6.1 percent in December, exceeding the central bank’s target range of 3 percent to 6 percent for a second month, according to data published by the statistics office yesterday.
IMF Seeks to Raise Lending Power by Up to $500 Billion Amid Europe Crisis (Source: Bloomberg)
The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to insulate the global economy against any worsening of Europe’s debt crisis. The Washington-based lender is aiming to increase its resources after identifying a potential need for $1 trillion in financing in coming years, an IMF spokesman said in a statement. The IMF is studying options and will not comment further until it has consulted its members, the fund said. To incorporate a cash buffer, the lender is seeking a total $600 billion. IMF Managing Director Christine Lagarde said yesterday her staff is looking at ways to expand the fund’s war-chest, which currently has about $385 billion available. While euro-region nations have already pledged to contribute 150 billion euros ($192 billion), the U.S. has said it has no plans to make new bilateral loans and leaders of Group of 20 nations ended last year at odds over the issue.
Sarkozy Promises $550 Million to Fight ‘Worsening’ French Unemployment (Source: Bloomberg)
French President Nicolas Sarkozy unveiled 430 million euros ($550 million) of measures to promote job creation and said he’ll make more structural proposals later this month. The measures announced after a so-called “Crisis Summit” with unions and business leaders today include more retraining, reduced charges for small companies hiring young workers and 1,000 new employees for job centers. The proposals, to be presented in a televised speech before the end of January, may include shifting some employee costs to value-added taxes from labor charges, overhauling retraining for the unemployed and creating a new partnership between the state and banks to finance industry, Sarkozy said after the meeting.
“We all agreed that in a serious economic situation and a worryingly worsening job market, we need strong and rapid responses,” said Sarkozy, who faces re-election in three months and is trailing in polls. He said the money promised today will be redeployed from elsewhere in the state’s budget, and won’t add to the deficit.
N.Z. Consumer Prices Unexpectedly Fall (Source: Bloomberg)
New Zealand consumer prices unexpectedly fell in the fourth quarter, giving the central bank scope to hold interest rates at a record-low until growth accelerates. The local currency dropped. Consumer prices declined 0.3 percent from the third quarter, when they advanced 0.4 percent, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 15 economists was for a 0.4 percent increase. None forecast a decline. Prices rose 1.8 percent in the year ended Dec. 31, the slowest annual pace since September 2010. The first quarterly drop in prices since 2009 reflects an economy struggling to rebound from earthquakes in the past 16 months, even with a tourism boost from the Rugby World Cup. The inflation report sent the nation’s dollar falling from a 2 1/2- month high as investors increased bets central bank Governor Alan Bollard will keep the official cash rate at 2.5 percent until the second half of 2012.
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