Asian Stocks, U.S. Futures Rally as Greece Lawmakers Approve Budget Cuts (Source: Bloomberg)
Asian stocks and U.S. futures climbed after the Greek parliament approved austerity measures to secure a second bailout package, helping the nation to avoid a debt default. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, gained 1.3 percent in Tokyo. Nitto Denko Corp. rose 4.8 percent as Nomura Holdings Inc. upgraded its rating on the electronics parts maker’s shares. Fortescue Metals Group Ltd. gained 3.8 percent in Sydney amid a report Canada’s Teck Resources Ltd. has acquired a stake in the iron-ore producer. The MSCI Asia Pacific Index rose 0.2 percent to 125.1 at 9:41 a.m. in Tokyo after falling 1.4 percent at the end of last week. Futures on the Standard & Poor’s 500 Index rose 0.4 percent, indicating the gauge may rebound from its first weekly decline in six. Japan’s Nikkei 225 Stock Average gained 0.4 percent and Australia’s S&P/ASX 200 Index rose 0.2 percent.
Japanese Stocks Advance After Greek Austerity Vote Outweighs Drop in GDP (Source: Bloomberg)
Japanese stocks climbed as the Greek parliament approved austerity measures needed to secure a debt bailout, outweighing a report that Japan’s economy contracted more than expected. The Nikkei 225 Stock Average rose 0.3 percent to 8,976.88 as of 9:12 a.m. in Tokyo. The broader Topix Index added 0.2 percent to 780.51 after swinging between losses of as much as 0.2 percent and gains of as much as 0.3 percent.
Retail Sales in U.S. Probably Rose by Most in Four Months on Automobiles (Source: Bloomberg)
Sales at U.S. retailers probably increased in January by the most in four months, spurred by the biggest gain in auto purchases since 2009, economists said before a report this week. The projected 0.8 percent gain in retail receipts would follow a 0.1 percent advance in December, according to the median forecast of 65 economists surveyed by Bloomberg News before Commerce Department figures on Feb. 14. Industrial production jumped and the cost of living increased in January, other data may show. The drop in unemployment to a three-year low is evidence of an improving job market that’s essential to sustaining purchases, which account for about 70 percent of the world’s largest economy. Gains in consumer and business spending and the need to replenish inventories are bolstering production at a time when Europe’s slowdown poses a risk for factories.
Lew Says Infrastructure Spending Still Needed to Keep U.S. Economy Growing (Source: Bloomberg)
White House Chief of Staff Jack Lew said hundreds of billions of dollars in spending for roads and bridges, education and manufacturing are necessary to keep the U.S. economy growing. “Most Americans understand that a crumbling infrastructure is not the way to build an economy that can last,” Lew, the former White House budget director, said on CNN’s “State of the Union” program. “We need to make sure we have a manufacturing base in this country” and workers with appropriate skills. Election-year sparring over the budget begins tomorrow as President Barack Obama submits the fourth spending blueprint of his presidency, a multitrillion-dollar package that calls for $350 billion in short-term spending to create jobs and a $476 billion, six-year highway bill, while saying it will cut $4 trillion from the deficit over a decade, partly by raising taxes on the wealthy.
Consumer Sentiment Falls More Than Forecast (Source: Bloomberg)
Confidence among U.S. consumers declined more than forecast in February as growing optimism about job prospects failed to ease concern wages will stagnate. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to 72.5 from 75 in January, a one-year high. The median estimate in a Bloomberg News survey called for 74.8. Another report showed the nation’s trade gap widened in December. A 22-cent increase in the price of a gallon of gasoline this year is pinching household finances, serving as a reminder that the pickup in hiring has yet to boost incomes. Consumer spending may hold up as the report showed more Americans believed the jobless rate will drop than at any time in the past three decades.
Bernanke Says Housing Market Holds Back Fed Efforts to Boost U.S. Economy (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said the central bank’s efforts to spur economic growth are being blunted by impediments to mortgage lending, and he called for further steps to heal the housing market. “We have helped lower mortgage rates to the lowest point in many, many decades,” Bernanke told homebuilders today in Orlando, Florida. “Yet we are not seeing as much activity as we would like to see.” Bernanke, who repeated that the pace of the recovery has been “frustratingly slow,” didn’t discuss the outlook for monetary policy. He devoted part of his speech to recommendations from a Fed study on housing that was sent to Congress last month and which prompted criticism from some lawmakers, who said the Fed has overstepped its authority.
China Should Fine-Tune Policy Early as Q1: Wen (Source: Bloomberg)
Chinese Premier Wen Jiabao said the nation should take preemptive measures and start “fine-tuning” economic policies as early as in the first quarter, according to Xinhua News Agency. Economic conditions in January and the first quarter deserve attention, Wen told business executives last week in Beijing as he sought opinions on a government report, the official news agency reported yesterday. “We have to make a proper judgment as early as possible when things happen and take quick action,” Wen was cited as saying by Xinhua. China’s exports and imports fell for the first time in two years in January and lending grew less than estimated, adding to signs growth is weakening in the world’s second-largest economy. The nation’s expansion may be cut almost in half if Europe’s debt crisis worsens, a scenario that would warrant “significant” fiscal stimulus from the government, the International Monetary Fund said in a Feb. 6 report.
Consumer Confidence Increases as China and U.S. Rise, Nielsen Survey Shows (Source: Bloomberg)
Global consumer confidence rose in the December quarter as improving sentiment in the U.S. and China, the world’s largest economies, outweighed deterioration in Europe, according to a survey by Nielsen Holdings NV (NLSN). Nielsen, an analytics and information company, said yesterday its index of consumer confidence rose one point in the period to 89. The company surveyed more than 28,000 online consumers in 56 countries from Nov. 23 to Dec. 9 with sentiment falling compared to the September quarter in 30 of those markets, according to an e-mailed statement. North America posted the biggest regional gain, rising five points to 84 in the period, as measures for personal finance and employment improved. The Asia-Pacific region remains the most optimistic, with seven of the 10 highest scores, while 24 of the 27 markets in Europe posted declines in the quarter.
Japan’s Economy Shrinks More Than Forecast (Source: Bloomberg)
Japan’s economy contracted more than economists forecast in the fourth quarter as exports slid on weakness in global demand and strength in the yen. Gross domestic product shrank an annualized 2.3 percent in the three months ended Dec. 31, following a revised 7 percent expansion in the previous quarter, the Cabinet Office said today in Tokyo. The median forecast of 26 economists surveyed by Bloomberg News was for a 1.3 percent decline. A pick-up in earthquake reconstruction work may aid a return to growth this quarter even as gains in the currency pare export earnings, worsening losses for companies such as Sony Corp. (6758) The Bank of Japan may refrain from additional easing tomorrow as officials assess a mixed global picture, from improved U.S. employment to weaker Chinese trade and Europe’s progress in taming its debt crisis, according to a Bloomberg News survey of economists.
Japan Earnings Gloom Fades as Stocks Rally (Source: Bloomberg)
Panasonic Corp. (6752) had its best week in more than two years of Tokyo trading, following its forecast for a record $10 billion loss, showing some investors are betting Japan’s biggest exporters have hit bottom. Sony Corp. (6758) had its biggest weekly gain in more than three months, after more than doubling its net loss forecast to 220 billion yen ($2.8 billion) for this fiscal year, the most since listing in 1958. Toyota Motor Corp. (7203), which expects less than half as much profit this year as last, surged 5.6 percent, the biggest gain in more than two months.
The rally signals investors expect the nation’s exporters of cars, televisions, phones and chips to bounce back after a year that combined the worst earthquake in Japan’s history, a months-long flood in Thailand that disrupted output and a currency that’s surged to a postwar high. The catastrophes and yen gains are being offset as investors bet a broader rise in global trade will allow Japan’s exporters to revive profit, said Nicholas Smith, a Japan strategist at CLSA Asia-Pacific Markets Ltd.
Papademos Has Votes to Win Austerity Motion (Source: Bloomberg)
Greek Prime Minister Lucas Papademos won parliamentary approval for austerity measures to secure an international bailout after rioters protesting the measures battled police and set fire to buildings in downtown Athens. A total of 199 lawmakers voted in favor and 74 against, Parliament Speaker Filippos Petsalnikos said in remarks carried live on state-run Vouli TV. When, on Nov. 16, Papademos won a mandate from the Parliament to implement budget measures and secure the bailout of 130 billion euros ($172 billion) he received the support of 255 lawmakers in the 300-strong chamber. “It is up to us, our vote, whether the country will remain in the euro or be led to a disorderly default,” Papademos told parliament. “Voting for the economic program and opening the road for a loan accord sets the basis for the modernization and recovery of the economy.”
Papademos Gets Cabinet Approval for 2nd Bailout (Source: Bloomberg)
Greek Prime Minister Lucas Papademos won Cabinet approval for deeper budget cuts needed to secure a second package of international aid, preparing the way for parliamentary vote in his race to prevent financial collapse. The 287-page document was approved unanimously, said a government official who declined to be named. The backing means parliament will probably vote tomorrow on budget measures equal to 7 percent of gross domestic product over the next three years and a debt swap to cut 100 billion euros ($132 billion) off more than 200 billion euros of privately-held debt. “The social cost this program implies will be limited compared to the economic and social catastrophe that would follow if we don’t adopt it,” Papademos told his ministers earlier, according to a transcript of his comments. “The completion of the program and financial support will cement our country’s future in the euro area.”
Euro Gains After Greek Parliament Approves Austerity Measures for Bailout (Source: Bloomberg)
The euro strengthened after Greek Prime Minister Lucas Papademos won approval from parliament for austerity measures to secure a second package of aid from the European Union and International Monetary Fund. The 17-nation currency rose against most major peers after Parliament Speaker Filippos Petsalnikos said in remarks carried on state-run Vouli TV that a total of 199 lawmakers voted in favor of the measure. The dollar slid versus 12 of its 16 most- traded counterparts before data tomorrow forecast to show U.S. retail sales rose in January by the most in four months. The yen fell against the greenback after a report showed Japan’s economy contracted last quarter by more than economists had predicted.
The Greek vote “takes some of the downside out of euro for the short-term,” said Sacha Tihanyi, Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia. “It certainly was helpful and positive for the currency. It probably induced some short-covering.” A short position is a bet that an asset will decline in value.
U.K. Inflation Probably Slowed to 14-Month Low in January, Economists Say (Source: Bloomberg)
U.K. inflation probably slowed in January to its weakest pace in more than a year as the impact of a sales-tax increase a year earlier faded and retailers cut prices to lure shoppers. Consumer prices rose an annual 3.6 percent after a 4.2 percent gain in December, the median forecast of 36 economists in a Bloomberg News survey showed. That’s the weakest since November 2010. The Office for National Statistics in London will publish the data at 9:30 a.m. on Feb. 14. A day later, the Bank of England will release new economic and inflation forecasts, which Governor Mervyn King will present at a press conference. The central bank said Feb. 9 it will pump another 50 billion pounds ($79 billion) into the economy, adding to the 275 billion pounds of bond purchases it has implemented since March 2009. The stimulus is aimed at preventing inflation falling below the bank’s 2 percent target amid what it says is a “weak outlook” for growth.
European Stocks Slide as Greeks Fail to Agree on Austerity Deal (Source: Bloomberg)
European stocks fell from a six month-high this past week, as Greece’s coalition government failed to agree on the remaining spending cuts needed to obtain financial aid from the European Union and stave off a default. Xstrata Plc (XTA) fell 6.6 percent as some investors opposed Glencore International Plc’s $39 billion takeover proposal. Credit Suisse Group AG (CSGN) sank 8.1 percent after posting a loss when analysts had predicted a profit. Vestas Wind Systems A/S (VWS) dropped 23 percent as the wind-turbine maker reported a full- year loss four times wider than analysts had forecast. The Stoxx Europe 600 Index fell 1.3 percent to 261.24 this week, retreating from its highest level since July 29. The benchmark measure has still rallied 22 percent from its two-year low on Sept. 22 and 6.8 percent from the start of this year as the European Central Bank lent 489 billion euros ($645 billion) to banks and investors speculated that the currency area would contain its sovereign-debt crisis.
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