Thursday, April 26, 2012

20120426 1019 Global Market Related News.

Asian Stocks Rise on Bernanke Remarks, South Korean GDP (Source: Bloomberg)
Asian stocks rose, with the regional benchmark index heading for its second day of gains, after Federal Reserve Chairman Ben S. Bernanke said he’s prepared to do more to stimulate U.S. growth and South Korea’s economy expanded at the fastest pace in a year. Samsung Electronics Co., South Korea’s biggest consumer electronics maker, gained 1.5 percent. Honda Motor Co. (7267), a carmaker that counts North America as its largest market, increased 1.1 percent in Tokyo. Hitachi Chemical Co. jumped 6.8 percent as Credit Suisse Group AG raised its rating to outperform, the equivalent of buy, after the company forecast higher profits in the year ending March 2013. “The Federal Reserve didn’t rule out the possibility of additional monetary easing,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That’s leading to confidence among investors.”
The MSCI Asia Pacific Index increased 0.5 percent to 124.18 as of 10:23 a.m. in Tokyo, with more than two shares rising for each that fell. Asian stocks extended a global rally spurred by better-than-estimated profits at companies from Apple Inc. to Boeing Co.

Japanese Stock Futures Gain on U.S. Home Sales, Earnings (Source: Bloomberg)
Japanese stocks gained for a second day, with the Nikkei 225 (NKY) Stock Average heading for a one-week high, after Federal Reserve Chairman Ben S. Bernanke said he’s prepared to do more to stimulate U.S economic growth. Gains were limited as Fanuc Corp. slid the most in eight months.  Honda Motor Co. (7267), a carmaker that gets almost 45 percent of its sales in North America, gained 1.6 percent. Canon Inc. added 0.7 percent after the camera maker raised its earnings forecast. Fanuc Corp., the second-heaviest weighted stock on the Nikkei, plunged 5.7 percent after the maker of factory robots forecasted lower operating profit. The Nikkei 225 rose 0.5 percent to 9,604.15 as of 9:22 a.m. in Tokyo, heading for the highest close since April 18. Volume on the gauge was almost a quarter below the 30-day intraday average. The broader Topix Index gained 0.7 percent to 814.88, with almost three times as many shares advancing as declining.
“The Federal Reserve didn’t rule out the possibility of additional monetary easing,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That’s leading to confidence among investors.”

Nasdaq-100 Has Biggest Advance in 2012 as Apple Jumps (Source: Bloomberg)
U.S. stocks advanced, giving the Nasdaq-100 Index (NDX) its biggest gain this year, as Apple Inc.’s earnings almost doubled and Federal Reserve Chairman Ben S. Bernanke said he’s prepared to do more to stimulate growth. Apple, the most valuable company, surged 8.9 percent for the biggest gain since November 2008. Boeing Co. (BA) added 5.3 percent as earnings beat estimates after the company delivered more commercial jets while pushing production to record levels. Caterpillar Inc. (CAT), the world’s largest maker of construction equipment, slumped 4.6 percent as revenue missed projections. The Nasdaq-100 Index jumped 2.7 percent to 2,709.62 at 4 p.m. New York time. The Standard & Poor’s 500 Index added 1.4 percent to 1,390.69. The Dow Jones Industrial Average rose 89.16 points, or 0.7 percent, to 13,090.72. Apple (AAPL) is not a member of the 30-stock gauge. About 6.8 billion shares changed hands on U.S. exchanges, almost in line with the three-month average.
“It’s encouraging,” James Swanson, who oversees about $250 billion as chief investment strategist at Boston-based MFS Investment Management, said in a telephone interview. “The earnings season shows that companies can have good profitability in a low growth environment. As long as these earnings hold up, I’d say that’s a bright sign for the market.”

Stocks Advance on Earnings, Fed as Treasuries Trim Drop (Source: Bloomberg)
Stocks (MXWD) rose for a second day as earnings beat estimates at companies from Apple Inc. (AAPL) to Boeing Co. (BA), while Federal Reserve Chairman Ben S. Bernanke said he remains prepared to do more to stimulate growth if needed. Treasuries pared earlier losses and the dollar weakened. The Standard & Poor’s 500 Index jumped 1.4 percent to close at 1,390.69 at 4 p.m. in New York. The Nasdaq-100 Index (NDX) rallied 2.7 percent, the most in 2012, with Apple surging 8.9 percent for its best gain in more than three years. Ten-year Treasury note yields added one basis point to 1.99 percent after gaining six points earlier. The dollar fell versus 13 of 16 major peers. Cattle rebounded after tumbling yesterday following the first U.S. case of mad-cow disease in six years.
Apple late yesterday posted earnings that almost doubled, reflecting growing demand for the iPhone in China and helping the most-valuable company rebound following a 12 percent slide from its record on April 9. The Fed said policy makers expect the economy to accelerate gradually, increasing forecasts for 2012 growth and reducing projections for the jobless rate. Bernanke said the central bank remains prepared to take additional action if needed to boost the economy.

European Stocks Advance; Swedbank, Electrolux Rally (Source: Bloomberg)
European stocks advanced for a second day as companies from Apple Inc. to Swedbank AB (SWEDA) and Electrolux AB (ELUXB) reported earnings that beat estimates. A gauge of European bank shares climbed, with Swedbank AB jumping to its highest price in almost a month. Electrolux AB, the world’s second-biggest appliance maker, rallied 6.5 percent. Temenos Group AG (TEMN) soared 19 percent as the Swiss banking-software maker’s first-quarter sales beat estimates and it confirmed its full-year outlook. The benchmark Stoxx Europe 600 Index (SXXP) gained 1 percent to 256.96 at the close of trading. The measure has advanced 5.1 percent this year as the European Central Bank disbursed more than 1 trillion euros ($1.3 trillion) to the region’s lenders to spur the availability of credit and boost the economy.
“Strong results from Apple and other European companies are helping the market today,” said Otto Waser, chief investment officer at Research & Asset Management AG in Zurich. “We’re in an environment where market participants buy and sell depending on the newsflow, but the market still lacks a clear trend. We’ve seen stronger moves and bigger changes of direction lately, leaving some investors nervous.”

Treasuries Snap Decline on Forecasts for Slowing Growth (Source: Bloomberg)
Treasuries snapped a two-day decline on speculation a report tomorrow will show U.S. economic growth slowed, after Federal Reserve Chairman Ben S. Bernanke said he is ready to do more to spur expansion. Treasuries have returned 1.3 percent this month as decelerating growth and Europe’s debt crisis increased demand for the relative safety of U.S. debt, based on Bank of America Merrill Lynch indexes. Corporate bonds in the nation returned 0.8 percent, the figures show. The U.S. is scheduled to sell $29 billion of seven-year notes today. “The Fed is very determinedly accommodative,” said Jay Mueller, who manages about $3 billion of bonds at Wells Capital Management in Milwaukee. “They’re going to stay accommodative.” Benchmark 10-year yields were little changed at 1.98 percent as of 9:22 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent security due in February 2022 changed hands at 100 1/8.

FOREX-Euro near 3-wk high on Dutch debt sale, Apple results
TOKYO, April 25 (Reuters) - The euro hovered near a three-week high against the dollar on Wednesday after euro zone sovereign debt attracted decent demand and strong earnings from Apple boosted risk appetite, while focus turned to the outcome of a Federal Reserve meeting.
"Ahead of the Fed FOMC outcome today trading is likely to be relatively restrained, with the risk rally struggling to make much headway," said Mitul Kotecha of Credit Agricole Corporate and Investment Bank.

Dollar Stays Lower on Fed Easing Speculation Before GDP (Source: Bloomberg)
The dollar remained lower against its peers before data tomorrow that may show U.S. growth slowed in the first quarter, fueling speculation the Federal Reserve will consider additional stimulus. The euro traded within 0.1 percent of a three-week high as Asian stocks extended gains to a second day after Fed Chairman Ben S. Bernanke said he’s prepared to “do more” to spur the economy, boosting demand for higher-yielding assets. Demand for the yen was limited amid speculation the Bank of Japan (8301) will add to easing measures at its meeting tomorrow. New Zealand’s dollar rose even after the nation’s Reserve Bank left interest rates at a record low. “Certainly, the underlying trend in the dollar is softness,” said Andrew Salter, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Sydney. “Bernanke’s statement was perceived to be dovish by the market.”
The dollar traded at $1.3229 per euro at 9:29 a.m. in Tokyo from $1.3217 at the New York close yesterday, when it touched $1.3237 , the weakest since April 4. The U.S. currency was little changed at 81.35 yen. The yen bought 107.61 per euro from 107.51, after sliding 0.2 percent yesterday.

China Sets Strongest Yuan Reference Rate Since July 2005 (Source: Bloomberg)
China’s central bank set the yuan’s reference rate 0.15 percent higher at 6.2829 per dollar today, the strongest level since July 2005.

Aussie Dollar Remains Higher; N.Z. Swaps Drop After RBNZ Meeting (Source: Bloomberg)
Australia’s dollar remained higher after gaining yesterday as Asian stocks extended a global rally, boosting demand for riskier assets. New Zealand’s two-year swap rate slid to the least in 12 weeks after the nation’s Reserve Bank left interest rates at a record low. Demand for the Australian and New Zealand currencies was supported after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank stands ready to introduce more stimulus measures if necessary. “Global sentiment has been strong for the past two days, and that’s helped high-beta currencies like the Aussie and kiwi rise,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. The Reserve Bank of New Zealand meeting “was a bit more dovish than we would’ve expected, and we note that New Zealand interest rates have fallen, and that makes a lot of sense to us.”
Australia’s dollar was at $1.0361 at 10:27 a.m. in Sydney after having gained 0.4 percent to $1.0353 yesterday. New Zealand’s currency rose 0.3 percent to 81.54 U.S. cents. Two- year swap rates in the smaller nation slid as much as 9 1/2 basis points to 2.76 percent, the lowest since Feb. 2.

Bernanke Says ‘Prepared to Do More’ as Policy Unchanged (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said the central bank stands ready to add to its stimulus if necessary even after leaving its policy unchanged today and upgrading its view of the economy for this year. “We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target,” he said at a press conference today following a meeting of the Federal Open Market Committee in Washington. Additional bond-buying is still “very much on the table.” Treasuries pared losses after Bernanke kept speculation alive that the Fed might embark on a third round of monetary easing after expanding its balance sheet to a record of almost $3 trillion. Central bankers today raised their forecasts for growth and the labor market this year while repeating that borrowing costs are likely to remain “exceptionally low” at least through late 2014.
The FOMC “expects economic growth to remain moderate over coming quarters and then to pick up gradually,” it said in a statement after a two-day meeting. The statement pointed to “some signs of improvement” in housing while saying the industry at the heart of the financial crisis “remains depressed.”

Drop in U.S. Durables Orders Masks Investment Gain: Economy (Source: Bloomberg)
Orders for U.S. durable goods fell in March by the most in three years, depressed by a pullback in demand for aircraft that masked gains in business investment. Bookings for goods meant to last at least three years dropped 4.2 percent, more than forecast and the biggest decrease since January 2009, Commerce Department data showed today in Washington. Sales of non-military capital equipment excluding planes climbed for a second month, prompting some economists to raise first-quarter forecasts for gross domestic product. Demand for cars and auto supplies is supporting companies from 3M Co. (MMM) to Texas Instruments Inc., showing manufacturing will underpin the world’s largest economy. At the same time, factories may give way to service industries as a pillar of the expansion as a slowdown in global growth curbs exports.
“There’s some caution looking ahead,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC in New York. “The new orders would suggest that there’s perhaps a modest reassessment taking place.” The shipments figure “actually bodes well for GDP” in the first quarter, he said.

Geithner Says Economy Faces Risk From Europe Crisis, Iran (Source: Bloomberg)
Treasury Secretary Timothy F. Geithner said the U.S. faces risks from the crisis in Europe while the confrontation with Iran has helped drive up oil prices. “We still face some risks ahead,” Geithner said to the Portland City Club today. “We still live in a dangerous and uncertain world, with Europe confronting a severe and protracted crisis. The world is engaged in a critical struggle with Iran, which has added to upward pressure on oil prices.” Geithner’s comments in Oregon come as Federal Reserve Chairman Ben S. Bernanke said today that he remains prepared to do more to stimulate growth if needed. Federal Reserve policy makers said they expect growth to gradually accelerate, while refraining from new actions to lower borrowing costs. Crude oil for June delivery rose 57 cents to $104.12 a barrel on the New York Mercantile Exchange, a one-week high. Prices have advanced 1.8 percent in the past four days, the longest rally since the period ended Feb. 24.

Bernanke Rejects Criticism He Ignores His Own Policy Advice (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said pushing up inflation to cut joblessness would be “reckless,” and he rejected criticism that he isn’t following his own advice to the Bank of Japan more than a decade ago on how to avert economic stagnation. “The question is, does it make sense to actively seek a higher inflation rate in order to achieve” a slightly faster reduction in the unemployment rate, Bernanke said today to reporters after a Federal Open Market Committee meeting. “The view of the committee is that that would be very reckless.” Paul Krugman, a Princeton University economist and Nobel laureate, said in an April 24 New York Times Magazine article that the Fed should raise its 2 percent inflation target to reduce unemployment. Such a policy shift would align with Bernanke’s comment in 2000 that the BOJ should pursue faster inflation to curb the risk of deflation, he said.
“While the Fed went to great lengths to rescue the financial system, it has done far less to rescue workers,” Krugman said. “Many economists, ranging from the chief economist of the International Monetary Fund to one of Mitt Romney’s top economic advisers, have argued, as I have, that higher expected inflation would aid an economy” because it would persuade investors and businesses “that sitting on cash is a bad idea,” Krugman said.

Bernanke Says Fed May Name Officials Making Rate Forecasts (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said the central bank is considering identifying the interest-rate forecasts of individual policy makers as it reviews ways to improve its communications with the public. The Fed is looking “for ways to improve transparency, and we’re looking at everything,” Bernanke said at a press conference today following a meeting of the Federal Open Market Committee in Washington. Giving the names of the individuals making forecasts is “on the table.” The Fed currently releases a chart showing dots which correspond to the interest-rate forecasts of its 17 policy makers and a table showing the range of their forecasts for inflation, growth and unemployment. The chart doesn’t give the names of the policy makers. Only 10 of them are voting members of the FOMC in any given year, and the chart and table do not explain the preferences of the FOMC’s voting membership.
The FOMC’s committee on communications discussed providing more information that “could convey a sense of how the committee might adjust policy in response to changes in the economic outlook,” according to minutes of the Fed’s March meeting.

China Helps First-Home Buyers as Market Cools: Mortgages (Source: Bloomberg)
Kevin Xi had no trouble getting a mortgage to buy a 1.53 million yuan ($242,563) one-bedroom apartment in Beijing last month, even as China’s government tries to cool the housing market. He even got a 10 percent reduction on interest. “I didn’t expect to get such a good rate,” said Xi, 27, an employee of a property company whose 960,000 yuan mortgage loan with Bank of China Ltd. was approved within five working days. “I thought only employees from government agencies or state-owned companies qualified.” The government is pushing in two directions as it seeks to slow price growth while avoiding a collapse. It’s lowering borrowing costs for first-time homebuyers to encourage purchases while Premier Wen Jiabao keeps curbs in place to stem the speculators who have helped drive home prices up by as much as 140 percent since 1998. China’s 18 percent first-quarter drop in home sales contributed to the slowest economic growth in almost three years.
“Property is an important sector for China’s economy,” said Jack Gong, a Hong Kong-based property analyst at Jefferies Group Inc. “The central government will not forcefully crack down on the market even if it is not supporting it. Fine-tuning the mortgage policies shows the government’s clear intention to uphold economic growth.”

South Korea’s Economy Expands at Fastest Pace in a Year (Source: Bloomberg)
South Korea’s economy expanded at the fastest pace in a year even as austerity measures in Europe and a slowdown in China cloud the outlook for exports. Gross domestic product rose 0.9 percent in the first quarter from the previous three months, when it gained 0.3 percent, the Bank of Korea said today. That matches the median estimate of 13 economists surveyed by Bloomberg News. The U.K. sinking into its first double-dip recession since the 1970s highlights the risk of slumping demand for Asian exports as governments in developed nations cut spending to improve their finances. Bank of Korea Governor Kim Choong Soo said last week that “downside risks are expected to remain high for some time” due to volatile oil prices and Europe’s sovereign-debt crisis.
“The biggest challenge facing South Korea’s economy now is weakening export momentum, with Europe suffering a slump and many emerging countries slowing,” said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. “The central bank is unlikely to raise interest rates for an extended period.”

Cameron Braces for U.K. Confidence Shock as Recession Returns (Source: Bloomberg)
Prime Minister David Cameron’s government is bracing itself as the first U.K. recession since he took office threatens to deliver a shock to confidence. As the premier persists with the fiscal squeeze that has defined his administration, he now faces twin dangers from political fallout and economic damage. While Cameron insists his austerity program has kept U.K. government bond yields low and aided the economy, he said yesterday that a 0.2 percent first- quarter contraction was “very disappointing.” “The headlines all over the place will do damage to confidence,” said Brian Hilliard, an economist at Societe Generale in London, who was the only one of 40 economists in a Bloomberg News survey to correctly forecast the outcome. “It will increase the pressure on Cameron at a time when he’s making many missteps on other issues.”
News of a double-dip recession and the threat it poses to sentiment among consumers and businesses risks compounding the woes of the Conservative premier after a month when the opposition Labour Party increased its lead in opinion polls. Cameron is nursing the fallout from negative reaction to his tax cuts for the rich and countering suggestions that the government improperly favored News Corp. in a takeover battle.

Europe Shifts Crisis Focus to Growth as Merkel Backs Draghi Call (Source: Bloomberg)
Europe may add an annex to its budget treaty spelling out how countries can boost growth as the bloc shifts its emphasis on tackling the debt crisis, a German government official said. Steps to raise competitiveness along with structural reforms are likely to feature in the prescriptions for growth, with a target date for completion by the June 18-19 Group of 20 leaders’ summit in Mexico, the official said on condition of anonymity because the discussions are private and not complete. The change in tack was signaled yesterday by European Central Bank President Mario Draghi, whose call for a “growth compact” was quickly endorsed by German Chancellor Angela Merkel. Francois Hollande, the French presidential election front-runner, seized on Draghi’s remarks as evidence of the need for treaty changes to promote growth.
Draghi’s comment “illustrates the depth of concern felt by the ECB about the weak outlook for the euro area economy,” said Julian Callow, chief European economist at Barclays Capital. “It perhaps could be a closet call for Germany to provide greater fiscal stimulus given its low budget deficit.”

Draghi Softens Tone on Inflation, Calls for Growth Compact (Source: Bloomberg)
European Central Bank President Mario Draghi softened his tone on the inflation outlook and called for a “growth compact” as the sovereign debt crisis weighs on the euro-area economy. While inflation will remain above the ECB’s 2 percent limit this year, it will slow in 2013 and “underlying price pressures should remain modest,” Draghi told lawmakers in Brussels today. That’s a contrast to the “upside risks” to inflation he warned of three weeks ago. Risks to the economic outlook remain on the downside, Draghi said. Since the ECB lifted its 2012 inflation forecast to 2.4 percent in March, the debt crisis has worsened, threatening to derail a fragile economic recovery. Spending cuts across the region are already damping growth, prompting a backlash against the German-led austerity drive in countries such as France. Draghi, whose call for a fiscal compact to toughen budget rules was adopted by European Union leaders, today urged them to take similar steps to foster growth.

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