Tuesday, February 28, 2012

20120228 1015 Global Market Related News.

Most Asia Stocks Fall for Second Day; Chipmakers Rise on Elpida Bankruptcy (Source: Bloomberg)
Japanese stock futures fell as gains in the yen cut the earnings outlook for exporters and after Elpida Memory Inc. (6665) filed for the nation’s biggest bankruptcy in two years. American depositary receipts of Honda Motor Co. (7267), a carmaker that gets more than 80 percent of its revenue overseas, lost 1 percent from the closing share price in Tokyo. Shares of Elpida were poised to plunge today after the chipmaker filed for bankruptcy protection with more than $5 billion in liabilities. Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in March closed at 9,590 in Chicago yesterday, compared with 9,620 in Osaka, Japan. They were bid in the pre-market at 9,580 in Osaka, at 8:05 a.m. local time.
“Investors may rush to sell shares due to negative factors such as the yen’s strength,” said Takero Inaizumi, head of equity research in Tokyo at Mizuho Investors Securities Co. “Investors may temporarily avoid buying electronics parts makers or companies with weak financial conditions after Elpida’s failure.”

Japanese Stocks Decline After Elpida Bankruptcy (Source: Bloomberg)
Japanese stocks fell after Elpida Memory Inc. filed for the biggest bankruptcy in two years and the yen strengthened. Oil declined and South Korea’s won advanced. The Nikkei 225 Stock Average (NKY) slid 0.9 percent as of 9:49 a.m. in Tokyo. The MSCI Asia Pacific Index slid less than 0.2 percent and Standard & Poor’s 500 Index futures were little changed. The won added 0.2 percent against the U.S. dollar, while the euro held a decline against most of its major peers. Oil dropped 0.5 percent to $107.99 a barrel. Elpida, unprofitable in each of the past five quarters, filed for bankruptcy yesterday as semiconductor prices plunged and it failed to win a second government bailout. Standard & Poor’s cut Greece’s credit ratings to “Selective Default” after it negotiated the biggest sovereign debt restructuring in history. Sun Hung Kai Properties Ltd., PCCW Ltd. and Sino Land Co. are among Hong Kong companies set to report earnings today.

S&P 500 Rises on Home Data as Banks Rally (Source: Bloomberg)
The Standard & Poor’s 500 Index (SPX) rose to an almost four-year high, rebounding from earlier losses, on better-than-estimated housing data as financial shares rallied. A measure of banks advanced the most in the S&P 500 among 24 industries, rallying 1.9 percent. JPMorgan Chase & Co. (JPM) climbed 2 percent after CLSA Ltd. analyst Mike Mayo said it should consider breaking up and selling businesses. Lennar Corp. (LEN) and D.R. Horton Inc. (DHI) rallied more than 1.8 percent to pace gains in homebuilders. Micron (MU) Technology Inc., the largest U.S. maker of computer-memory chips, surged 7.7 percent after Japan-based rival Elpida Memory Inc. filed for bankruptcy.
The S&P 500 gained 0.1 percent to 1,367.59 at 4 p.m. New York time, erasing a drop of 0.8 percent. The Dow Jones Industrial Average lost 1.44 points, or less than 0.1 percent, to 12,981.51. The gauge turned lower at the close of trading after failing to hold above 13,000 (INDU) for the third session in the past week. The Dow last closed above that level in May 2008.

European Stocks Drop as G-20 Rebuffs Boosting IMF Resources; HSBC Declines (Source: Bloomberg)
European stocks declined, extending last week’s retreat, as the Group of 20 nations rejected calls from the euro area to increase the International Monetary Fund’s lending resources. HSBC Holdings Plc (HSBA) lost 3.7 percent after pretax profit at Europe’s largest bank missed analysts’ estimates. A.P. Moeller- Maersk (MAERSKB) A/S slipped 3.7 percent after saying that its container division will make a loss this year. Airlines fell as crude oil traded near a nine-month high. The Stoxx Europe 600 Index (SXXP) slid 0.3 percent to 263.86 at the close, after earlier falling as much as 1.2 percent. The benchmark measure extended last week’s 0.4 percent retreat. The gauge has still climbed 7.9 percent this year buoyed by U.S. economic reports and as investors speculated that the euro area will contain its sovereign-debt crisis.
“I don’t think the market really anticipated the G-20 would come up with anything different,” said Jeremy Batstone- Carr, head of research at Charles Stanley & Co. in London. “The fact of that matter is -- as it stands -- the firewall is still insufficient. The higher oil price is another uncertainty in investors’ minds and it is contributing to this slightly risk- off day today.”

Oil hurts stocks, Europe hopes underpin euro
TOKYO, Feb 27 (Reuters) - Asian shares fell as high oil prices raised concerns about global growth, while signs of fresh steps from major economies to contain the euro zone debt crisis and expectations for the European Central Bank's funding underpinned the euro.
"A rise in oil prices drags the economy and weighs on growth around the world," said Bob Takai, general manager of Sumitomo Corp's energy division.

Yen’s Worst Slump Since 2009 Shows Intervention No Match for BOJ Purchases (Source: Bloomberg)
Bank of Japan Governor Masaaki Shirakawa’s inflation goal is succeeding where record intervention failed, as the yen heads for its steepest monthly drop in two years. The currency reached an almost nine-month low after the BOJ, which has struggled for more than a decade against deflation, said on Feb. 14 it aimed for 1 percent annual gains in consumer prices and would add 10 trillion yen ($124 billion) to the economy. Traders are paying record premiums for options to buy the dollar versus the yen for three, six and 12 months. Bullish bets on Japan’s currency have fallen 70 percent from the end of last month. Shirakawa needs a weaker yen to help Japan export its way out of a recession made deeper by last year’s earthquake and the worst nuclear crisis in a generation. Energy imports to replace lost capacity have reversed trade surpluses that made the currency a refuge in a slowing global economy. Prospects of higher inflation are driving it down, at least for now.

Yen Gains Versus Euro, Dollar as Asian Stocks Decline for a Second Day (Source: Bloomberg)
The yen advanced versus the euro and dollar as Asian stocks slid for a second day, boosting demand for the Japanese currency as a haven. The yen gained 0.3 percent to 107.63 per euro as of 9:59 a.m. in Tokyo and rose 0.4 percent to 80.32 against the greenback. The MSCI Asia Pacific Index of shares dropped 0.3 percent, after declining 0.5 percent yesterday.

Pending U.S. Home Resales Show Housing Market Regaining Footing: Economy (Source: Bloomberg)
More Americans than forecast signed contracts to buy previously owned homes in January, indicating the industry that sparked the last recession is improving. The index of pending home resales climbed 2 percent after a 1.9 percent decrease the prior month that was smaller than previously estimated, the National Association of Realtors said today in Washington. The median forecast of 44 economists surveyed by Bloomberg News called for a 1 percent advance. Buyers are returning to the real estate market on the heels of faster job gains for three straight months, falling home prices and record-low borrowing costs. At the same time, foreclosures are weighing on property values and construction, slowing the housing recovery.

Bernanke Pessimism Drives Easy Credit With Forced Government Spending Cuts (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke is trying to compensate for the damage lawmakers threaten to inflict on the U.S. economy, even as Republicans skewer his stimulus efforts for risking inflation. The potential drag from fiscal restraint contributed to the rationale behind policy makers’ reduced forecasts for growth this year and in 2013, according to the minutes of their Jan. 24-25 meeting. They also decided to extend their commitment to keep interest rates near zero through at least late 2014 instead of mid-2013 to provide “more accommodative financial conditions,” the minutes said.
Bush-era tax cuts and expanded unemployment benefits are set to expire at the end of the year, and a deficit-reduction law requiring $1 trillion of cutbacks also kicks in if lawmakers can’t agree on a new plan. The Fed may keep rates low for longer because the budget-balancing measures slated for 2013 -- including those automatic cuts, known as sequestration -- threaten to weigh on expansion, said Ward McCarthy, chief financial economist at Jefferies & Co.

South Korea Posts Current-Account Deficit For the First Time in Two Years (Source: Bloomberg)
South Korea posted its first current-account deficit in nearly two years as exports dropped due to Europe’s debt crisis and the Lunar New Year holiday. The deficit was $772.2 million in January, the first shortfall since February 2010, compared with a revised surplus of $2.8 billion in December, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income. Signs of an improving U.S. economy and progress toward a Greek bailout have cut external risks for Asia’s fourth-largest economy while rising oil prices pose a fresh threat, Finance Minister Bahk Jae Wan said last week. The Bank of Korea kept its benchmark interest rate unchanged for an eighth month on Feb. 9, the longest pause since tightening began in July 2010.
“Korea’s trade account should post a deficit in the first quarter, suggesting negative GDP growth for the quarter,” Kwon Young Sun, a Hong Kong-based economist at Nomura Holdings Inc., said before the release. “But this should be temporary as we expect a modest recovery in global demand in the second half.”

Thailand Manufacturing Output Decline Eases as Factories Resume Production (Source: Bloomberg)
Thailand’s industrial output fell the least in four months in January as companies resumed operations and supply-chain disruptions eased after the nation’s worst floods in almost 70 years. The industrial production index dropped for a fifth straight month, slipping 15.15 percent from a year earlier, after a 25 percent contraction in December, the Office of Industrial Economics said in a statement in Bangkok today. The median of five estimates in a Bloomberg News survey was for a 14 percent decline. Southeast Asia’s second-largest economy may expand by as much as 6.5 percent this year on reconstruction activities after the floods, the National Economic and Social Development Board said earlier this month. The central bank cut interest rates in the last two meetings to aid recovery and cushion the impact of Europe’s debt crisis, which has hurt Asian exporters from Singapore to Taiwan.
“All companies are at full speed to rebuild after the floods,” Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok, said before the report. “We expect the manufacturing sector to return to normal as early as the second quarter.”

Merkel Wins Greek Aid Vote After Warning (Source: Bloomberg)
Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk “incalculable” damage, defying a public backlash against more bailout funds. In a vote that showed dissent in her coalition growing, 496 members of the lower house, or Bundestag, voted in favor of the 130 billion-euro ($174 billion) package yesterday in Berlin; 90 voted against and five abstained. While questions on Greece’s remaining in the euro “have their justification,” Merkel warned that a failure of the euro might endanger the Europe Union and the global economy. “I think those risks are incalculable, and therefore indefensible,” Merkel told lawmakers in the Bundestag. As chancellor, “I should and have to take risks, but I cannot embark on adventures. My oath forbids that,” she said.
Merkel’s government pushed through the measure to stave off a collapse of the Greek economy amid signs of growing resistance and as one of her Cabinet ministers said Greece should leave the single currency. Euro leaders will now shift their focus on whether to bolster the region’s bailout firewall as they prepare for a summit meeting in Brussels on March 1-2.

Nobel Winner Krugman Says Greece Running Out of Alternatives to Euro Exit (Source: Bloomberg)
Nobel-prize winning economist Paul Krugman said Greece is “close” to having no option but to quit the euro as austerity measures imposed on the nation hamper its economic recovery. “If I were running a peripheral country I would say that you cannot leave” the 17-nation currency region, Krugman said at an event in Lisbon today. While it would be “extremely disruptive,” Greece is ‘very close to running out of alternatives,’’ he said. Germany’s parliament approved a second Greek aid package in Berlin today, part of a plan agreed on this month to stem the euro-area debt crisis. Still, finance officials from the Group of 20 nations meeting in Mexico over the weekend rebuffed pleas for additional funding through the International Monetary Fund until the currency region first ratchets up its own resources. European leaders are scheduled to meet in Brussels on March 1-2.

G-20 Rebuffs Europe’s Call for Help (Source: Bloomberg)
European leaders shift their focus this week to bolstering the euro region’s debt-crisis firewall after the Group of 20 nations rebuffed their call for help. The decision by G-20 finance ministers to fend off pleas for assistance pending an increase in the euro-area backstop puts the onus on Germany, the biggest national contributor to bailouts, to overcome its resistance to doing more. With a parliamentary vote on a second Greek aid package looming in Berlin today, German Chancellor Angela Merkel’s government must decide next month whether to back plans to combine rescue funds and produce a potential firewall of 750 billion euros ($1 trillion). European Union leaders convene for a summit meeting in Brussels on March 1-2. Europe “doesn’t really need any outside money,” Jim O’Neill, chairman of Goldman Sachs Asset Management, said in an e-mail. “It needs their own policy makers, especially Germany, to show leadership.”

Europe Focus Shifts to Debt-Crisis Firewall (Source: Bloomberg)
European leaders will shift their focus this week from a Greek bailout to the prospect of bolstering the region’s firewall against debt-crisis contagion as they ready for their latest summit. After lawmakers in Germany and Finland vote on approving the second Greek rescue package today and Feb. 29, European Union heads of government will turn to their March 1-2 summit in Brussels. Leaders of the 17-member monetary union have said they’ll decide in March whether to lift a 500 billion-euro ($672 billion) limit to bailout funding. As the European Central Bank prepares a second round of cash lending to help shore up the region’s banks, policy makers are focused on preventing a Greek collapse in order to take advantage of signs of an improved global economy.
The latest Greek bailout “gives the opportunity of euro- zone leaders to put a better, more organized and larger firewall in place,” William Rhodes, chief executive officer of William R. Rhodes Global Advisors, said in a Feb. 24 interview on Bloomberg Radio’s “The Hays Advantage.”

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