Asian Stocks Rise, Set for Ninth Weekly Rally (Source: Bloomberg)
Asian stocks rose, with the regional benchmark index set to equal its longest ever streak of weekly advances, after U.S. economic reports beat estimates and optimism increased that Greece will get a second debt bailout, boosting demand for riskier assets. Honda Motor Co. (7267), Japan’s second-largest carmaker by market value that generates 44 percent of its revenue in North America, rose 2.3 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, led financial companies higher. Billabong International Ltd. (BBG), a global surfwear maker, surged 47 percent in Sydney after confirming a takeover approach. The MSCI Asia Pacific Index gained 0.9 percent to 126.97 as of 9:39 a.m. in Tokyo. The measure has advanced 1.7 percent this week, extending its winning streak to the longest since December 2005. The gauge has advanced for nine consecutive weeks only three previous times since its inception at the start of 1988.
“It’s a distinct improvement from the fourth quarter last year from the perspective of investor confidence and risk appetite,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “The European news flow still seems to be determining the direction of the markets. So, when there’s a bit of relief from the European front, the markets can focus on fundamentals, which seem to be improving by the day.”
Japanese Stocks Advance on U.S. Economic Data, Optimism for Greek Bailout (Source: Bloomberg)
Japanese stocks rose to a six-month high after U.S. economic reports beat expectations and optimism rose that Greece will secure a second debt bailout, boosting demand for riskier assets. Honda Motor Co. (7267), a carmaker that generates 44 percent of its revenue in North America, rose 2.6 percent. Sumitomo Mitsui Financial Group Inc. (8316), the nation’s second-biggest lender by market value, gained 2.9 percent after banks in the U.S. rebounded. Bridgestone Corp. (5108), the world’s biggest tiremaker by market value, climbed 4.1 percent after forecasting a 63 percent surge in net income this year. The Nikkei 225 Stock Average rose 2 percent to 9,419.75 as of 9:04 a.m. in Tokyo, set for the highest close since Aug. 4. The broader Topix Index gained 1.8 percent to 814.29, with about nine times as many shares rising as falling.
“It’s a distinct improvement from the fourth quarter last year from the perspective of investor confidence and risk appetite,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “The European news flow still seems to be determining the direction of the markets. So when there’s a bit of relief from the European front, the markets can focus on fundamentals, which seem to be improving by the day.”
U.S. Stocks Advance on Economic Reports, Optimism Over Greece Bailout (Source: Bloomberg)
U.S. stocks advanced, sending the Standard & Poor’s 500 Index near the highest level in about three years, amid better-than-estimated economic reports and optimism that Greece will receive a second bailout. Financial (S5FINL) shares rebounded from earlier losses as Bank of America Corp. (BAC) rose 4 percent. Microsoft (MSFT) Corp. climbed 4.1 percent on a report that S&P is likely to increase its weighting in the S&P 500. General Motors Co. (GM) jumped 9 percent after the automaker posted the biggest annual profit in its 103-year- history. NetApp (NTAP) Inc. increased 7.2 percent as the maker of data- storage products reported revenue that beat analysts’ estimates. The S&P 500 rose 1.1 percent to 1,358.04 at 4 p.m. New York time. The benchmark gauge for American equities is 0.4 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The Dow (INDU) Jones Industrial Average increased 123.13 points, or 1 percent, to 12,904.08.
“I don’t see what the case is for the market collapsing,” Brian Barish, who helps oversee about $7 billion as Denver-based president of Cambiar Investors LLC., said in a phone interview. “The U.S. economy is doing pretty well. Taking the possibility of a euro-Lehman type of event off the table, that has a big effect on sentiment.”
European Stocks Are Little Changed as U.S. Economic Data Outweigh Greece (Source: Bloomberg)
European (SXXP) stocks were little changed, paring earlier losses, as better-than-estimated U.S. economic data outweighed a delay in the bailout of Greece. Banco Santander SA led Spanish lenders lower after the nation’s regulator removed a ban on short sales of financial shares. ABB Ltd. (ABBN) tumbled 3.6 percent after earnings missed estimates. Renault SA rose 4.5 percent after posting 2011 free cash flow that exceeded the company’s target. The Euro Stoxx 50 Index dropped 0.2 percent to 2,489.35 at the close of trading. Stocks pared earlier losses of as much as 1.6 percent after U.S. housing, manufacturing and jobless claims data beat estimates. The gauge has still rallied 7.5 percent this year amid optimism that the euro area will contain its debt crisis and as the U.S. economy continued its recovery.
“Greek concerns appear to be weighing down on markets,” said Peter Dixon, global equities economist at Commerzbank AG. “It’s beginning to look as though the end game may be a lot more messy than anticipated. A Greek exit is certainly no longer off the table,” he said, referring to the possibility of the nation leaving the currency union.
Emerging Stocks Drop Most This Week as Greece Delay Dims Outlook (Source: Bloomberg)
Emerging-market stocks sank, pushing the benchmark index down the most this week, as a delay on Greece’s second bailout and less foreign investment in China dimmed the outlook for the global economy and riskier assets. The MSCI Emerging Markets Index (MXEF) fell 0.9 percent to 1,049.24 at the close in New York, the biggest drop since Feb. 10. Metals companies led declines, as Aluminum Corp. of China Ltd. and Jiangxi Copper Co. (600362) fell the most in at least a week, and AngloGold Ashanti Ltd. (AGL) dropped to a four-month low. OAO Mechel (MTLR), Russia’s largest coking coal producer, hit a one-month low. Brazil’s Bovespa index reached the highest since April after companies reported profit that exceeded estimates.
European governments are considering reducing rates on emergency loans to Greece and using contributions from the European Central Bank to augment a second bailout for Athens, two people familiar with the discussions said. Finance ministers are looking for solutions after seeing estimates that Greece’s debt would fall to 129 percent of gross domestic product in 2020, missing the 120 percent target. Foreign direct investment into China fell in January for the third month, Commerce Ministry data showed.
Euro falls to 3-week low vs dollar on Greece delay
LONDON, Feb 16 (Reuters) - The euro fell to a three-week low versus the dollar as euro zone officials put off agreeing further aid for Greece, sparking fears of a chaotic default and leaving the euro vulnerable to more falls.
"The talk of delaying the bailout package is raising uncertainty. It's not clear whether Athens will be able to secure funds needed to redeem bonds on March 20," said Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
RDQ’s Ryding Calls Bernanke’s 2014 Low-Rate Pledge Misguided: Tom Keene (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke’s pledge to keep rates exceptionally low through late 2014 is a mistake with the U.S. economy gaining steam, said John Ryding, chief economist and co-founder of RDQ Economics. “Why are we still having crisis policy and committing to it for another two and a half years when the economy is getting better and we are not in crisis?” Ryding said in an interview today on Bloomberg Television’s “Surveillance Midday” with Tom Keene. Ryding said Fed policy makers are trying to rescue the housing market, which is showing signs of recovery on its own. Bernanke, in a speech to homebuilders in Orlando, Florida, on Feb. 10, urged additional steps to heal residential real estate. He repeated that because of slow construction, recovery has been “frustratingly slow.”
Drop in Jobless Claims Points to Spending Gains (Source: Bloomberg)
Americans filed the fewest claims for jobless benefits since 2008, surprising forecasters and signaling that an improving labor market will give the world’s largest economy a boost. Claims dropped by 13,000 in the week ended Feb. 11 to 348,000, less than the most optimistic estimate of 45 economists surveyed by Bloomberg News. Other reports today showed consumer confidence improved, housing starts climbed and manufacturing in the Philadelphia area accelerated. Stocks rose on evidence that the U.S. expansion is gaining strength in the face of the European crisis and a slowdown in China. The decline in claims for jobless benefits coincides with a pickup in hiring that pushed the unemployment rate down to a three-year low last month, giving consumers the confidence to increase spending.
Consumer Comfort Rises to Highest Level in Year (Source: Bloomberg)
Consumer confidence in the U.S. increased for a fourth straight week to reach the highest level in a year as more households believe the economy is improving. The Bloomberg Consumer Comfort Index rose to minus 39.8 in the period ended Feb. 12 from minus 41.7 the previous week. It marked just the third time since April 2008 that the gauge has climbed above minus 40, a reading consistent with recessions or their aftermath. The monthly expectations gauge climbed to minus 7 in February, also a 12-month high. Sentiment among those without a job was the strongest since April 2008, showing news of payroll gains and fewer job cuts is even lifting the spirits of households that have yet to benefit from the recovery. Higher stock prices so far this year may also be giving confidence a boost, helping offset rising fuel prices.
“Rising incomes, a slower pace of firings in the economy and a modest wealth effect due to the near bull market in equities likely combined to create the conditions that sent economic pessimism to its lowest reading in over a year,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
January Wholesale Prices in U.S. Rise 0.1% (Source: Bloomberg)
Wholesale prices in the U.S. rose less than forecast in January as food and energy costs dropped, a sign inflation pressures may remain subdued. The producer price index rose 0.1 percent following a 0.1 percent decrease the prior month, Labor Department figures showed today in Washington. Economists projected a 0.4 percent gain, according to the median estimate in a Bloomberg News survey. The core measure excluding volatile food and energy rose 0.4 percent, more than projected, led by a surge in drug prices. At the start of a new year, companies may try to test the economy’s ability to absorb price increases in order to recover higher raw-material expenses. Nonetheless, slowing growth from Europe to Asia signal commodity costs will probably stabilize, while a U.S. unemployment rate exceeding 8 percent means households will resist attempts to charge more for goods.
Housing Starts in U.S. Rise Above Forecasts (Source: Bloomberg)
Builders broke ground on more homes than forecast in January, helped by warmer weather and adding to signs the U.S. residential real estate market is stabilizing. Starts rose 1.5 percent to a 699,000 annual rate from December’s 689,000 pace that was stronger than previously reported, Commerce Department figures showed today in Washington. The median estimate in a Bloomberg News survey called for a rise to 675,000. Building permits, a proxy for future construction, also climbed. Beazer Homes USA Inc. (BZ) and D.R. Horton Inc. (DHI) are among builders reporting more orders as a pickup in hiring, cheaper properties and borrowing costs close to a record low attract buyers. At the same time, the glut of foreclosed houses remains a restraint on construction, one reason the Obama administration and the Federal Reserve are taking steps to bolster the industry.
China 2012 Plan May Target Growth Below 8%, State Economist Fan Predicts (Source: Bloomberg)
China may set its lowest annual growth target in eight years as authorities place less emphasis on the pace of expansion and the global economy remains weak, Fan Jianping, chief economist at the government-run State Information Center, said. Premier Wen Jiabao may announce a 7 percent or 7.5 percent target for economic growth this year at the annual National People’s Congress meetings that convene in March, Fan said in an interview today. The last time China set a growth target below 8 percent was in 2004, when the goal was 7 percent. “A lower target will act as a guidance for local authorities to not focus on chasing speed,” said Fan, who is head of the Economic Forecasting Department at the center which is controlled by China’s top economic planning agency. “Growth will slow because the world outlook remains weak while a lot of things also need to be done domestically in terms of economic rebalancing,” he said.
Average annual growth of 10 percent in the past three decades that transformed China into the world’s second-largest economy also made it the world’s biggest polluter and spurred a widening income gap. Premier Wen last year unveiled a five-year plan for the period through 2015 that targeted annual expansion of 7 percent and said the government’s emphasis would be on ensuring the “quality and benefits” of growth.
Europe Said to Weigh ECB Role to Narrow Gap in Financing for Greek Bailout (Source: Bloomberg)
European governments are considering cutting interest rates on emergency loans to Greece and using contributions from the European Central Bank to plug a new financing gap in the second bailout program for Athens, two people familiar with the discussions said. Finance ministers wrangled over how to close the funding hole in a teleconference last night after seeing estimates that Greece’s debt would fall to 129 percent of gross domestic product in 2020, missing a target of 120 percent, said the people, who declined to be named because the talks are still in progress. Last year, the level was about 160 percent. Overcoming the final obstacles and Greece meeting the conditions set by euro finance chiefs yesterday may enable the ministers’ next meeting on Feb. 20 to approve both the 130 billion-euro ($170 billion) lifeline and a bond exchange with private investors that is critical to staving off a Greek default in March, the German finance ministry told coalition lawmakers in Berlin today, three officials said.
Germany Eyes Approval for Greek Rescue (Source: Bloomberg)
Germany wants euro-area finance chiefs to avoid splitting consideration of a 130 billion-euro ($171 billion) Greek rescue and a bond swap to cut the nation’s debt load at a meeting next week, coalition lawmakers were told by German government officials in a briefing. As long as Greece meets conditions for the aid, the finance chiefs will probably approve the package along with the debt exchange, three German officials involved in the telephone briefing yesterday said. A Finance Ministry spokesman declined to comment. Wrangling among euro-area finance ministers on a Feb. 15 conference call over how to reduce Greece’s debt load and tighten control of the aid raised the prospect of a two-step process, according to two people familiar with the talks. In that scenario, the ministers’ Feb. 20 gathering in Brussels would be limited to kicking off the bond exchange and deferring decision on the rest of the bailout funds.
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