Asian Stocks Rise as Greek Bailout Progress, Yen’s Slide Boost Optimism (Source: Bloomberg)
Asian stocks rose, trimming yesterday’s losses, as optimism Greece will commit to austerity measures and the yen’s drop to a three-month low against the dollar boosted the earnings outlook for Asian exporters. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics that gets 21 percent of its revenue in Europe, rose 2.6 percent after the Bank of Japan boosted its asset purchase program yesterday, pushing down the yen. Hynix Semiconductor Inc. (000660), a maker of semiconductors gained 5.4 percent in Soul after the Philadelphia Semiconductor Index, which tracks the performance of 30 industry stocks, gained. Medipal Holdings Corp. (7459), advanced 5.4 percent in Tokyo after the maker of medical tools and equipment said it will spend as much as 10 billion yen to buy back as many as 11 million shares. The MSCI Asia Pacific Index gained 0.6 percent to 125.72 as of 9:26 a.m. in Tokyo after falling 0.6 percent yesterday. Seven of the 10 industry groups on the measure advanced.
“Expectations are mounting that another bailout for Greece will be executed soon,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The yen is retreating and the world is moving toward more monetary easing as shown by the BOJ, supporting equities.”
Japanese Stocks Rise as Yen’s Slide Lifts Earnings Outlook for Exporters (Source: Bloomberg)
Japanese stocks rose, sending the Nikkei 225 (NKY) Stock Average toward a six-month high, as a falling yen boosted the earnings outlook for exporters and on optimism Greece will commit to austerity measures. The Nikkei 225 gained 0.9 percent to 9,128.92 as of 9:08 a.m. in Tokyo, heading for its highest close since Aug. 5. The broader Topix Index increased 0.9 percent to 793.57.
U.S. Stocks Pare Losses on Greece Optimism (Source: Bloomberg)
Most U.S. stocks retreated as an advance in the final half hour spurred by optimism that Greece will commit to budget cuts stopped short of erasing a decline in the Standard & Poor’s 500 Index. Bank of America Corp. slid 3.3 percent as Citigroup Inc. cut its recommendation. Yahoo! Inc. (YHOO) slumped 4.7 percent as talks on an Asia asset swap are said to have stalled. Masco (MAS) Corp. tumbled 12 percent after the home improvement and building products maker reported a wider-than-projected loss. Boeing Co. (BA) added 1 percent after signing a 230-aircraft order worth $22.4 billion, setting a record for the planemaker. The S&P 500 decreased 0.1 percent to 1,350.50 at 4 p.m. New York time, trimming an earlier decline of as much as 0.8 percent. The Dow Jones Industrial Average rose 4.24 points, or less than 0.1 percent, to 12,878.28 today. Almost two stocks declined for each that rose on U.S. exchanges.
European Stocks Decline as Moody’s Downgrades Italy, Spain; Shell Advances (Source: Bloomberg)
European (SXXP) stocks declined, paring the Stoxx Europe 600 Index’s biggest rally in a week, after Moody’s Investors Service downgraded six euro-area countries, including Italy, Spain and Portugal. ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, fell 3.8 percent after posting a first-quarter loss following project delays. Royal Dutch Shell Plc (RDSA) gained 1.5 percent, limiting the Stoxx 600’s decline. Nokia Oyj (NOK1V), the biggest maker of mobile phones, rose 2.1 percent after Nokia Siemens Networks’ Chief Executive Officer, Rajeev Suri, was reported to say that he doesn’t rule out holding an initial public offering. The Stoxx 600 declined 0.2 percent to 262.56 at the close. The gauge rallied 0.7 percent yesterday and has still advanced 7.4 percent this year amid optimism that the euro area will contain its sovereign-debt crisis and as U.S. economic reports beat forecasts.
Yen extends drop as BOJ boosts asset buying
SINGAPORE, Feb 14 (Reuters) - The yen extended losses as the Bank of Japan eased monetary policy by expanding its asset buying scheme, but analysts said the impact on the yen may prove short-lived.
"Short-term impact, yes is yen weakness. But I'm not sure that will be sustained," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
Multifamily Buildings to Lead U.S. Construction Gains: Economy (Source: Bloomberg)
Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen. Work will begin on about 260,000 apartment buildings and townhouse developments in 2012, up 45 percent from last year and the most since 2008, according to Meyer, a senior economist at Bank of America Corp. in New York. Chen, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, is even more optimistic, projecting a record 74 percent jump to 310,000. Home ownership rates, which have declined to the lowest levels since 1998, may keep dropping as the foreclosure crisis turns more Americans into renters. In addition, household formation will probably accelerate as an improving economy and growing employment embolden more people to stop sharing residences and strike out on their own.
Obama Aims $1.4 Trillion Tax Increase at Highest U.S. Earners (Source: Bloomberg)
President Barack Obama called for $1.4 trillion in fresh revenue from Americans at the top of the income scale, proposing higher taxes on wages and investments and limiting breaks for retirement savings and health insurance. The tax proposals in the administration’s fiscal 2013 budget plan, released yesterday, were immediately rejected by business groups and congressional Republicans, who said the ideas are part of Obama’s re-election strategy and gave them little chance of advancing into law in 2012. “Whether this occurs in Congress this year or this is the tax platform for this year’s election, it’s disconcerting for businesses,” said Caroline Harris, chief tax counsel at the U.S. Chamber of Commerce, the nation’s largest business group.
Bernanke Labor Pessimism Seen Misplaced as U.S. Expands in 2012 (Source: Bloomberg)
In his six years as Federal Reserve Chairman, Ben S. Bernanke has sometimes proved too sanguine about the U.S. economy, declaring the impact of bad subprime mortgages on the financial markets “contained” in 2007 and being too optimistic about growth last year. Now that employment is accelerating, economists wonder if the central bank again will prove to be mistaken, this time by being pessimistic about the outlook. An improving job market, stepped-up U.S. bank lending and resurgent financial markets all could combine to boost demand. The jobless rate fell to the lowest level in three years in January, while consumer credit racked up its biggest two-month gain in a decade at the end of 2011. The stock market had its best January in 15 years, with the Standard & Poor’s 500 Index now up 6.8 percent since the start of 2012.
“The turn in the economy right now is very positive,” said Allen Sinai, president of Decision Economics Inc. in New York, who forecasts growth of 2.5 percent to 3 percent this year and a year-end jobless rate of 7.7 percent, compared with 8.3 percent last month. “We’re going to have a better year than a lot of people thought.”
U.S. Retail Sales Trail Estimates as Automobile Purchases Decline: Economy (Source: Bloomberg)
Sales at U.S. retailers rose less than forecast in January, reflecting an unexpected drop in purchases of automobiles. The 0.4 percent gain reported by the Commerce Department today in Washington was half the 0.8 percent rise median forecast of economists surveyed by Bloomberg News. Purchases excluding car dealers climbed 0.7 percent, more than projected and the biggest gain since March. Retailers like Target Corp. (TGT) and Limited Brands Inc. topped analysts’ sales forecasts last month, when many companies offered incentives to bring back shoppers after holiday sales stagnated. Further gains in employment are needed to bolster wages and underpin confidence, ensuring that demand can be sustained.
Japan Swings to Contraction as Yen Undermines Exports: Economy (Source: Bloomberg)
Japan’s economy shrank an annualized 2.3 percent in the fourth quarter, more than economists estimated, as slumping exports undermine a recovery from last year’s record earthquake. The contraction compared with the median forecast for a 1.3 percent decline in a Bloomberg News survey of 26 economists. Growth was a revised 7 percent in the previous quarter, the Cabinet Office said today in Tokyo. Today’s report underscores pressure on Bank of Japan officials meeting today and tomorrow to consider more monetary easing as gains in the yen worsen losses for companies from Sony Corp. (6758) to Panasonic Corp. (6752) At the same time, the world’s third- biggest economy may get a boost this quarter from more reconstruction work, fading disruptions from floods in Thailand, and signs of improvements in the U.S.
BOJ Unexpectedly Adds Stimulus as It Sets 1% Target for Inflation: Economy (Source: Bloomberg)
Japan’s central bank unexpectedly added 10 trillion yen ($128 billion) to an asset-purchase program and set an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. An asset fund increased to 30 trillion yen, with a credit lending program staying at 35 trillion yen, the Bank of Japan said in Tokyo today. The BOJ also said that it will target 1 percent inflation “for the time being.” Stocks rose and the yen weakened against the dollar as the central bank expanded stimulus for the first time since October to revive an economy that shrank an annualized 2.3 percent last quarter. Lawmakers had urged extra efforts to counter deflation after the Federal Reserve adopted a 2 percent inflation target and the European Central Bank expanded its balance sheet.
European Leaders ‘Confident’ Greece Meeting Bailout Demands (Source: Bloomberg)
Germany and the European Commission welcomed Greek approval of the austerity steps demanded for a financial lifeline, suggesting euro finance chiefs will pull Greece back from the brink when they meet in two days. The Greek parliament’s backing “is a crucial step forward toward the adoption of the second program,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels today. “I’m confident that the other conditions, including for instance the identification of the concrete measures of 325 million euros ($430 million), will be completed by the next meeting” of finance ministers. Euro-area finance chiefs will convene in Brussels on Feb. 15 for their second extraordinary meeting on Greece in a week. Frustrated after two years of missed budget targets, ministers declined to ratify the 130 billion-euro package in a special session on Feb. 9, demanding that Greek officials put their verbal commitments into law.
European Banks Losing Trading Share to U.S. as Debt Crisis Erodes Revenue (Source: Bloomberg)
The biggest U.S. banks captured the highest share of global trading revenue in at least two years as their counterparts across the Atlantic reduced risk in the fourth quarter amid a worsening sovereign-debt crisis. U.S. banks’ share of the total reported by the nine largest investment banks rose to 66 percent from 56 percent a year earlier and 60 percent in the third quarter. The increase occurred as revenue from trading stocks, bonds and derivatives at the five U.S. banks -- JPMorgan Chase & Co., Goldman Sachs Group Inc. (GS), Morgan Stanley, Citigroup Inc. (C) and Bank of America Corp. (BAC) -- fell for the sixth time in the past seven quarters. Investment banks in Europe have been aggressive in shrinking risk-weighted assets and shutting units. Deutsche Bank AG (DBK) brought its trading risk down to the lowest since 2003, while Zurich-based Credit Suisse Group AG took a charge of 469 million Swiss francs ($512 million) to cut assets and exit some fixed- income trading businesses.
Greece Struggles to Win Aid Package (Source: Bloomberg)
European officials ratcheted up the pressure on the Greek government to deliver budget cuts in exchange for a second bailout as they insisted that default is not an option. Finance ministers canceled a Brussels meeting slated for today and will hold a teleconference instead to prod Greece to do more to clinch an aid package worth 130 billion euros ($170 billion) along with about 100 billion euros of debt relief from private bondholders. Greece needs the aid to make a 14.5 billion-euro bond payment on March 20. “The risk of a disorderly default has risen,” Thomas Costerg, a London-based economist at Standard Chartered Bank, said yesterday in an e-mail. “The timetable is already over- stretched to cover the March redemption and gives no room for maneuver or additional delay. The question remains whether we have reached the point of no return for Greece. I don’t think it’s the case yet, but we’re dangerously close to it.”
Schaeuble: Europe Better Prepared if Greece Defaults (Source: Bloomberg)
German Finance Minister Wolfgang Schaeuble said Europe is better prepared for a Greek default than two years ago, jacking up pressure on Greece to hold to its pledges and find the savings needed to win a second bailout. Euro-area governments will decide “soon” on the new aid program, European Union Economic and Monetary Commissioner Olli Rehn said. Finance ministers are due to convene in Brussels tomorrow for their second extraordinary meeting in a week after telling Greek officials to identify additional cuts of 325 million euros ($428 million). The measures are among conditions that must be met by tomorrow for Greece to secure a 130 billion- euro rescue needed to avert financial collapse.
“We want to do everything to help Greece master this crisis,” Schaeuble said in an interview with ZDF television late yesterday. “What we’re experiencing at the moment is much less bad than what may happen to Greece if the attempts to keep Greece in the euro zone failed.” Yet if everything fails, “we’re better prepared than two years ago,” he said.
Australian December Home Loans Jump by Most in Seven Months (Source: Bloomberg)
Australian home-loan approvals jumped in December by the most in seven months and exceeded economists’ forecasts as buyers responded to central bank interest-rate reductions. The number of loans granted to build or buy houses and apartments increased 2.3 percent to 48,453, the highest in almost two years, from a revised November increase of 1.8 percent, the statistics bureau in Sydney today. The median estimate in a Bloomberg News survey of 20 economists was for a 1.8 percent gain in approvals. Reserve Bank of Australia Governor Glenn Stevens lowered borrowing costs in November and December to 4.25 percent to buttress the housing market, support employment and boost confidence among consumers who are saving more. The RBA unexpectedly held its benchmark last week as signs mount that Europe is beginning to contain its sovereign-debt crisis and the U.S. recovery is gaining strength.
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