Asia Stock Snap 2-Day Loss on Bernanke, German Confidence (Source: Bloomberg)
Asian stocks rose, snapping a two- day loss, after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed and a report showed German business confidence unexpectedly gained, improving the earnings outlook for Asian exporters. Honda Motor Co. (7267), Japan’s second-largest carmaker by market value that gets 83 percent of its sales abroad, added 2.4 percent. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- biggest lender by market value, added 1.7 percent after German Chancellor Angela Merkel signaled she stands ready to do more to tame Europe’s debt crisis. Korea Gas Corp. (036460) advanced 6 percent after a group including the company made a new gas discovery in Mozambique. The MSCI Asia Pacific Index gained 0.9 percent to 126.84 as of 9:47 a.m. in Tokyo, paring its monthly loss to 1.7 percent. The measure has added 11 percent in the three months ending this week, headed for the biggest rally since the third quarter in 2010.
Fed policy makers “still have an option of doing more, but I think it was just reinforcing the view that they are not going to reverse policy quickly,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “There’s going to be a lot of liquidity provided for the market and economy. Obviously equity investors are taking it in a positive way.”
Japan Stocks Rise on Bernanke Comments, German Confidence (Source: Bloomberg)
Japanese shares rose after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed and a report showed German business confidence unexpectedly gained, improving the earnings outlook for exporters. Honda Motor Co. (7267), a carmaker that gets more than 80 percent of its sales abroad, rose 2.5 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s top bank by market value, gained 1.9 percent after German Chancellor Angela Merkel signaled she stands ready to do more to tame Europe’s debt crisis. Kawasaki Heavy Industries Ltd. (7012), a transport equipment maker, gained 4.4 percent after Nomura Holdings Inc. recommended its shares on a weaker yen and recovery in U.S. motorcycle demand. The Nikkei 225 Stock Average (NKY) rose 1.6 percent to 10,182.67 as of 9:25 a.m. in Tokyo, headed for its highest close since March 11. The broader Topix Index increased 1.6 percent to 865.24, with more than 14 shares gaining for each that declined.
Trading volume on the gauge was 4.4 percent above the 30-day average. Fed policy makers “still have an option of doing more, but I think it was just reinforcing the view that they are not going to reverse policy quickly,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “There’s going to be a lot of liquidity provided for the market and economy. Obviously, equity investors are taking it in a positive way.”
U.S. Stocks Advance Following Bernanke’s Comments (Source: Bloomberg)
U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level since May 2008, after Federal Reserve Chairman Ben S. Bernanke said that accommodative monetary policy is still needed to spur jobs. The Morgan Stanley Cyclical Index of companies most-tied to the economy rose 1.3 percent. Apple Inc. (AAPL) jumped 1.8 percent to a record as the world’s most-valuable technology company said it plans to increase investment in China. Amazon.com Inc. (AMZN) and JPMorgan Chase & Co. (JPM) climbed at least 2.2 percent to pace gains among the largest companies. Pfizer Inc. (PFE) added 1.6 percent as health-care shares rose the most among 10 S&P 500 groups. The S&P 500 advanced 1.4 percent to 1,416.51 at 4 p.m. New York time, erasing last week’s loss and posting the fourth- biggest gain of 2012. The Dow Jones Industrial Average added 160.90 points, or 1.2 percent, to 13,241.63 today. The Russell 2000 Index (RTY) of small companies rallied 1.9 percent to 846.13, the highest level since July.
About 6.2 billion shares changed hands on U.S. exchanges, or 6 percent below the three-month average. “Bernanke is in a difficult situation because the Federal Reserve is mostly relying on the Fed’s speech as opposed to money to move markets,” said David Kelly, who helps oversee about $394 billion as chief market strategist at JPMorgan Funds in New York. “What he’s trying to say is that they’re going to be pretty slow to remove stimulus.”
Stocks Rise on Euro Optimism, Fed; Treasuries Pare Loss (Source: Bloomberg)
Stocks rose, rebounding from last week’s losses, as Federal Reserve Chairman Ben S. Bernanke said accommodative policy is still needed and investors speculated the European Union will increase the size of its bailout fund. Treasuries pared losses, while commodities climbed. The Standard & Poor’s 500 Index rallied 1.4 percent to close at 1,416.51 at 4 p.m. New York time, returning to its highest level in almost four years. The Stoxx Europe 600 Index (SXXP) added 0.9 percent. Treasury 10-year yields climbed two basis point to 2.25 percent after increasing as much as six points earlier. Oil increased 16 cents to $107.03 a barrel. The Dollar Index, a gauge of the U.S. currency against six major peers, fell for a second day while gold and silver rallied.
Bernanke said that while he’s encouraged by the unemployment rate’s drop to 8.3 percent, further improvement in the job market will require continuing the central bank’s stimulative monetary policies. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall. “Bernanke made it clear that while the Fed is not going to be revving the engine anytime soon, they are going to keep their foot on the gas,” Stephen Wood, the New York-based chief market strategist for Russell Investments, said in a telephone interview. His firm oversees $140.8 billion. “At the same time, the Europeans appear to be more serious about addressing risks. They’ve addressed shorter-term liquidity, but solvency remains an issue.”
India Stock Futures Drop as Monti Revives Europe Concerns (Source: Bloomberg)
Indian stocks dropped the most in Asia, extending the longest weekly losing stretch since August, amid concern the government will find it difficult to rein in the fiscal deficit, and as the rupee weakened to a 10-week low. Tata Consultancy Services Ltd. (TCS), the country’s biggest software exporter, which gets more than 90 percent of its sales from abroad, fell 2 percent. Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, lost 1.9 percent. ICICI Bank Ltd. (ICICIBC), the second-biggest lender, tumbled 4.2 percent.
The BSE India Sensitive Index (SENSEX), or Sensex, sank 1.8 percent to 17,052.78 at the close, the lowest level in two months. The government needs to take tough decisions in coming months and raise additional funds to fill a budget gap, Finance Minister Pranab Mukherjee said over the weekend. The monetary authority on March 15 indicated that measures to pare the deficit would boost its scope to cut interest rates, while flagging inflation risks from oil prices and a weaker rupee. “A depreciating rupee will lead to higher inflation as we are a net importer, and higher inflation leads to a slowdown in the economy that makes managing the deficit very challenging,” Arun Khurana, a fund manager at UTI Asset Management Co., which has $11.3 billion in assets, said by phone from Mumbai. “These imbalances would keep interest rates in a higher trajectory. The likelihood of a rate cut looks remote, or it may be academic in nature, or 50 basis points for the whole year.”
GLOBAL MARKETS-Stocks, euro rise on robust German morale
LONDON, March 26 (Reuters) - European shares were higher and safe-haven government debt pared gains after a key German sentiment index rose unexpectedly, but Spanish stocks weakened after an election result that could hamper the ruling party's austerity plans.
"The data was cautiously positive. After the rather disappointing purchasing manager indices (PMI) of last week many did not reckon with such a good Ifo index. So the euro is benefiting from," said Antje Praefcke at Commerzbank.
Hedge Funds Capitulating Buy Most Stocks Since 2010 (Source: Bloomberg)
Hedge funds trailing the Standard & Poor’s 500 (SPX) Index for the last five months are giving up on bearish bets and buying stocks at the fastest rate in two years. A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 48.6 last week from 42 at the end of November 2011, the biggest increase since April 2010, according to data compiled by the International Strategy & Investment Group. The Bloomberg aggregate hedge fund index gained 1.4 percent last month, lagging behind the Standard & Poor’s 500 Index by 2.65 percentage points. Money managers struggling to catch up with the gains have contributed to the rally that pushed the S&P 500 up 29 percent since October as economic reports beat estimates. Market bulls say they are a continuing source of cash that can move stocks higher.
Bears say capitulating hedge funds are further evidence that equities have risen too far, too fast as economic growth remains sluggish, warning that the pool of potential buyers is being dep leted. “It’s encouraged me to gradually increase my exposure to stocks,” Barton Biggs, founder of hedge fund Traxis Partners LP in New York, said in a March 23 phone interview, referring to an improving economic outlook. “The shift has occurred gradually in the six or so months since the beginning of October. I’d be inclined to raise my net long further because the potential to the upside would be greater” should the S&P 500 fall 5 percent to 7 percent, he said.
Services Displace Factories in Driving U.S. Expansion: Economy (Source: Bloomberg)
Service producers are taking over from manufacturing as the driver of the almost three-year-old U.S. expansion. The end of the recession in June 2009 triggered the biggest surge in production in a decade, propelled by rising demand from overseas and the need to replenish inventories and upgrade equipment. That is now giving way to increasing sales at places like restaurants, transportation companies and temporary-help agencies, leading to gains in employment that have bolstered the world’s largest economy. “The pickup in services provides a broader base for the economic expansion and actually is a source of more sustainable growth,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston and the third-best forecaster of gross domestic product in the two years to February, according to data compiled by Bloomberg News. “We’re going to continue to see job gains close to the magnitude we’ve seen in recent months, with services likely contributing a large share.”
The economy has created more than 200,000 jobs in each of the past three months, and the increase in payrolls since September has been the biggest since 2006, according to figures from the Labor Department. The Institute for Supply Management’s services index, which includes mining and construction companies and tracks about 88 percent of the economy, has exceeded its factory gauge in seven of the last eight months, opening the biggest advantage in three years in February.
Bernanke Says Accommodative Policy Needed (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said while he’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will be needed to make further progress. The drop in unemployment may reflect “a reversal of the unusually large layoffs that occurred” in 2008 and 2009, and this process may now be over, Bernanke said in a speech today in Arlington, Virginia. Reducing the jobless rate further will probably require a quicker expansion of business production and consumer demand, which “can be supported by continued accommodative policies,” he said. Stocks rallied as some investors bet Bernanke’s comments indicate further policy easing is still under consideration. The Federal Open Market Committee on March 13 raised its assessment of the economy while repeating that interest rates are likely to stay low at least through late 2014.
“The bar is, and has been, pretty low for additional action,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “The narrative is, while we have had some improvement, it is not that great, and it’s not clear it is going to last. Now is not the time to be thinking about taking back any of the accommodation.”
Pending Sales of US Existing Homes at Near Two-Year High (Source: Bloomberg)
The number of Americans signing contracts to buy previously owned homes held in February near an almost two-year high, a sign that the real estate market may be stabilizing. The index of pending home purchases fell 0.5 percent to 96.5 after a 2 percent increase the prior month, the National Association of Realtors said today in Washington. January’s reading of 97 was the highest since April 2010. The median forecast of 41 economists surveyed by Bloomberg News called for a 1 percent rise. Residential real estate is recovering even amid the threat of more foreclosures, which are weighing on property values. A pickup in hiring, growing incomes and mortgage rates near a record low are making houses more affordable, driving demand. “Demand is gradually improving,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York. “It’s really a problem of oversupply in the housing market. A lot will depend on how fast the foreclosures are being processed.”
Bernanke Hesitates to Extol Economy to Keep Reputation (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke may be hesitating to extol the improving economy -- in part to preserve the central bank’s own reputation. While Fed policy makers upgraded their assessment of the outlook at their March 13 meeting after the most-robust six- month period of job growth since 2006, they reiterated their plan to keep interest rates near zero until at least late 2014, citing still “elevated” unemployment and “significant downside risks.” Bernanke said today that continued accommodative policy will be needed to make further progress. Bernanke’s caution is “appropriate,” said Peter Hooper, chief economist at Deutsche Bank Securities Inc. The Fed chairman risks damaging his credibility by being too optimistic so soon after adopting the 2014 pledge in January and before having conviction about the economy’s momentum, Hooper said.
Policy makers fueled speculation in 2011 that monetary tightening was coming by laying out their exit strategy, and they don’t want to guide the market prematurely again, he added. “They were not at all discouraging some talk about the exit” a year ago, Hooper said in an interview from his New York office. “They’re not going to make that mistake twice. Bernanke is going to be very patient.”
Fed’s Inflation Gauge Reveals 2008 High a Distant Threat (Source: Bloomberg)
Even after the worst rout since 2010, the U.S. bond market shows the economy is unlikely to maintain its strength without help from the Federal Reserve. While the Fed triggered this month’s 2.2 percent loss in 10-year Treasuries when policy makers raised their assessment of the economy following a March 13 meeting, everything from derivatives to mortgage securities indicates that investors don’t expect a repeat of the bear markets seen in 1994 and 2009, two of the worst years ever for bonds. Declining unemployment, rising consumer confidence and strength in manufacturing may give way to more sluggish growth as George W. Bush-era tax breaks end and $1 trillion of mandatory federal budget cuts kick in. Even with oil back above $100 a barrel, the Fed’s preferred measure of gauging the outlook for inflation shows consumer prices will rise at half the pace of 2008 when it accelerated to 5.6 percent.
“We’ve seen this story in 2010 and 2011, where it looks pretty good in the first half and then we have to change our tune in the second half,” said Robert Tipp, the chief investment strategist in Newark, New Jersey, at Prudential Financial Inc., which oversees $300 billion in bonds.
Plosser Sees No Need for More Stimulus as Economy Recovers (Source: Bloomberg)
Philadelphia Federal Reserve Bank President Charles Plosser said he doesn’t currently see any need for additional monetary stimulus as the economy recovers. “The economy’s doing better, we’re gaining some traction,” Plosser said in an interview with Bloomberg Television in Paris today. “We’re not entirely out of the woods. But I’ve got some cautious optimism. If the economy evolves as I think it will, barring some extraordinary events, I don’t think there’ll be any need for further accommodation or further QE.” Plosser said on Feb. 29 that he believes the U.S. economy will improve this year and that the Fed, which has committed to keeping its key rate near zero through 2014, may need to raise borrowing costs “sooner than people expect.” Economic growth accelerated to 3 percent in the fourth quarter and the unemployment rate fell last month to an almost three-year low of 8.3 percent.
Under Chairman Ben S. Bernanke, the Fed has purchased $2.3 trillion of Treasuries and mortgage debt in two rounds of so- called quantitative easing, known as QE1 and QE2.
Dollar Trades Near Lowest This Month Versus Euro on Fed (Source: Bloomberg)
The dollar traded 0.1 percent from its lowest level this month against the euro after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed, reducing demand for U.S. assets. The greenback has weakened against all but one of its 16 major counterparts this year and Bernanke’s comments added to speculation the Fed will embark on a third round of quantitative easing, or QE3. The yen weakened as Asian stocks extended a global rally in equities. The euro remained higher after a two- day advance against the yen amid optimism European finance ministers will agree to bolster the region’s debt-crisis firewall when they meet March 30. “The U.S. dollar is going to find it difficult to rally,” said Andrew Salter, a strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) Bernanke’s comments “were taken to mean the chances of QE3 were more likely,” Salter said.
The dollar traded at $1.3362 per euro at 10:05 a.m. in Tokyo, little changed from $1.3359 yesterday, when it touched $1.3368, the weakest since Feb. 29. The greenback has declined 3 percent this year against the common currency.
Berkshire’s NetJets Forms China Venture on Luxury Demand (Source: Bloomberg)
NetJets Inc., the business-jet operator owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), will form a venture in China as rising wealth and trade spurs demand for luxury flights. The China operations will be part-owned by investors including Hony Capital and Fung Investments, according to a statement yesterday. NetJets, once Buffett’s “No. 1 worry,” is expanding in China as the country’s growing economy stokes flights by local and overseas customers, the company said. “The aviation industry is really picking up now in China,” Ernie Edwards, president of Embraer SA’s executive-jet division, said in an interview at a trade show in Shanghai. NetJets agreed in 2010 to buy as many as 125 Phenom 300 business jets from the Brazilian planemaker.
Expansion in Asia builds on NetJets’ decision in January to deepen a partnership with Germany’s Deutsche Lufthansa AG (LHA) for private-jet services to 3,000 North American airports. The deals allow NetJets, which serves business customers and wealthy families, to nurture ties with clients flying outside the U.S.
MF Global’s Counsel Resisted Giving Assurances on Transfers (Source: Bloomberg)
MF Global Holdings Ltd. (MFGLQ) General Counsel Laurie Ferber twice resisted providing assurances to JPMorgan Chase & Co. (JPM) that the broker was complying with rules to segregate customers’ collateral, saying language in a draft provided by the bank was too broad. Ferber said JPMorgan was “specifically interested in two transfers” that occurred the morning of Oct. 28. The first was a $200 million transfer from a segregated customer funds account at MF Global Inc., the firm’s brokerage, to a “house” account, followed by a second transfer of $175 million from the house account to a London subsidiary’s account at JPMorgan. “Although I had no reason to believe that any non- compliant transfers from segregated accounts had occurred or would occur, I did not think that any individual officer or employee should be asked to issue such a broad certificate,” Ferber said in testimony prepared for a House Financial Services subcommittee hearing tomorrow.
Any employee making such an assurance, she said, would have had to personally handle all the transfers or been able to review all the transactions within the available timeframe. Representative Randy Neugebauer, a Texas Republican who leads the Financial Services investigations subcommittee, will hold a third hearing on the bankruptcy that left a customer funds shortfall estimated at $1.6 billion.
Japan Revival to Cap BOJ Stimulus as Tankan May Rebound (Source: Bloomberg)
The Bank of Japan’s Tankan survey is likely to show that big manufacturers have become less pessimistic, adding to signs of an economic revival that will bolster the case for capping stimulus measures this year. The quarterly index of sentiment will rise to minus 1, the best reading since September, according to the median forecast of 20 economists surveyed by Bloomberg News. The gauge was at minus 4 in December, with the negative number meaning pessimists still outnumber optimists. The data is due April 2. Improving sentiment in Japan, signs the European debt crisis is easing, and better economic data from the U.S may signal that the world is nearer to returning to sustainable growth. At the same, any limiting of bond purchases by the Japanese central bank will fuel criticism from lawmakers who want Governor Masaaki Shirakawa’s board to do more to end decade-long deflation.
“Legislators are likely to keep pushing for more easing because deflation won’t go away even if the BOJ eases further in April,” said Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo and a former central bank official.
Indonesia Fuel-Price Rise Needed to Protect Growth, Basri Says (Source: Bloomberg)
Indonesia must raise fuel prices to curb a subsidy bill that threatens to sap funds from pivotal health, education and road and port building programs, an adviser to President Susilo Bambang Yudhoyono said. Maintaining subsidies “would have a really bad impact” on growth by causing the fiscal deficit to exceed the legal limit of 3 percent of gross domestic product, forcing cuts in more productive spending, National Economic Committee Vice Chairman M. Chatib Basri said in an interview with Bloomberg Television in Hong Kong on March 23. Surging oil prices led China to boost fuel costs the most in more than two years this month and has added pressure on nations from Indonesia to India to raise tariffs. A proposed 33 percent increase being debated by the Indonesian parliament may cause inflation to double to 7 percent by year-end, Basri said.
“The hike is necessary because more than 90 percent of the subsidy is enjoyed by the middle class” and thus “mistargeted,” Fauzi Ichsan, senior economist at Standard Chartered Plc in Jakarta, said in an e-mail yesterday. “The bigger the gap between domestic and global fuel prices, the more widespread will hoarding and smuggling be, bloating the subsidy.”
BOE Says European Debt Concerns Persist as Yields Stay Elevated (Source: Bloomberg)
The Bank of England said investors remain concerned about the euro-area outlook even after measures by policy makers helped reduced some tensions in markets. “Concerns about the indebtedness and competitiveness of some euro-area countries persisted and remained a key influence on financial markets,” Chief Economist Spencer Dale wrote in the bank’s Quarterly Bulletin, published in London today. Still, in the three months to March 9, “financial-market sentiment improved considerably over this period amid a range of actions by policy makers, both in the U.K and abroad.” Italian Prime Minister Mario Monti said over the weekend that Spain’s struggle with its finances could revive contagion in Europe as finance ministers prepare a deal to strengthen the region’s firewall. The Bank of England noted in the bulletin that sovereign bond yields in some countries remain “elevated.” It also said that the European Central Bank’s three-year loans, or Long-Term Refinancing Operation, helped ease bank funding pressures.
Orban Punished by Investors as Hungary Retreats From IMF Talks (Source: Bloomberg)
Hungarian Prime Minister Viktor Orban is pushing back as investors and European officials renew their drive to force him to relax his hold on power in return for financial aid. Pressed by a resurgent opposition party calling for Hungary to pull out of the European Union, and looking to protect his expansion of authority, Orban is retreating from a Jan. 6 pledge to meet EU preconditions to negotiate financial help from the International Monetary Fund. Investors are punishing the premier by driving up bond yields and pushing down the forint, busting a rally that began with the promise of a swift bailout deal. The loan talks have yet to begin and Orban, 48, has yet to make the necessary legal changes to reverse the greater influence his government has asserted over the judiciary and the central bank.
“The reason there hasn’t been a deal with the EU and the IMF is because the political cost is deemed to be too high for the prime minister,” Gabor Orban, who helps manage $2.5 billion at Aegon Fund Management in Budapest and is not related to the premier, said in a phone interview. “The government is playing for time and is trying to avert compromising to ensure Hungary’s financing.”
Monti Signals Spanish Euro Risk as EU to Bolster Firewall (Source: Bloomberg)
Italy’s Prime Minister Mario Monti warned that Spain could reignite the European debt crisis as euro-area ministers this week prepare a deal to strengthen the region’s financial firewall. Monti pointed to Spain’s struggle to control its finances ahead of a finance ministers meeting in Copenhagen starting on March 30, where officials will seek agreement to raise a 500 billion-euro ($664 billion) ceiling on bailout funding. “It doesn’t take much to recreate risks of contagion,” Monti said during the weekend at a conference in Cernobbio, Italy. Days after his Cabinet approved a bill to overhaul Italy’s labor laws, Monti praised Spain’s efforts to loosen work regulations while advising it to focus on cutting the national budget. Spain “hasn’t paid enough attention to its public accounts,” he said.
The euro crisis has eased after the European Central Bank last month boosted liquidity through three-year loans to banks, while European Union leaders this month sealed a second Greek bailout package. Italian and German confidence indexes rose today as Spanish and Italian bonds gained.
Citigroup Says Dutch No Longer Part of Euro-Area Core (Source: Bloomberg)
The Netherlands, the fifth-largest euro economy, shouldn’t be counted in the core of the common currency as its borrowing costs climb, Citigroup Inc. said. “The poor performance of the Dutch economy should make it very difficult for the country to reduce its general government deficit,” Juergen Michels, chief euro-area economist at Citigroup in London, and three other economists said in a March 23 note to investors. The Netherlands is in a weaker position than Germany, Finland and Luxembourg, he said. Prime Minister Mark Rutte’s minority coalition must find at least 9 billion euros ($12 billion) in budget cuts this year, equal to 1.5 percent of gross domestic product, to meet European Union deficit rules by 2013 and protect the top credit grade that France and Austria lost in January. The Dutch budget shortfall is forecast at 4.6 percent of GDP in 2013, exceeding the 3 percent EU limit for a fifth year.
“Financing conditions in the Netherlands have tightened, creating pressure on the country’s highly leveraged households, which is likely to lead to further contractions in house prices and domestic demand,” Michels said. The Dutch economy entered its second recession in three years during the second half of 2011 and unemployment has risen for two quarters to 6 percent.
Australian Mortgage Arrears Rise Unexpectedly as Housing Stalls (Source: Bloomberg)
Australian home loan delinquencies rose unexpectedly as a stalling housing market kept a lid on financing options for homeowners, Fitch Ratings said. Mortgage payments overdue by more than 30 days rose to 1.57 percent of the value of loans in the three months ended Dec. 31, from 1.52 percent in the third quarter, according to the London- based ratings firm’s Australian residential mortgage performance index. “Stagnation in the housing market limits the refinance and sale options for borrowers in financial distress,” James Zanesi, an analyst at Fitch, wrote in the statement. “The increase in mortgage rates and the usual Christmas spending are likely to lead to an increase in arrears during the first quarter of 2012.” The number of “low-doc” loans more than 30 days late climbed to 6.6 percent in the third quarter from 6.3 percent in the previous three months.
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