20120801 1117 Global Markets & Commodities Related News.

GLOBAL MARKETS-Shares fall as stimulus hopes fade, eyes on China PMI
TOKYO, Aug 1 (Reuters) - Asian shares fell on Wednesday after four days of gains, as expectations of stimulus action this week by the U.S. Federal Reserve and the European Central Bank fade, and following signs of deepening Asian economic stress.
"We are looking for, at most, a chance in the Fed's language that extends low rates through at least early-2015, which won't be the stimulus bump market participants have been hoping for," said Christopher Vecchio, currency analyst at DailyFX.

ASEAN path to economic union muddied by South China Sea
JAKARTA, Aug 1 (Reuters) - Discord in Southeast Asia over how to deal with Beijing's claims in the South China Sea comes as the region struggles to overcome competing national interests and form a European Union-style economic community by 2015.
Political leaders and officials say the row may not directly affect plans by the Association of Southeast Asian Nations (ASEAN) for the economic integration of countries ranging from wealthy Singapore to impoverished Myanmar.

COMMODITIES-Big gains in July; focus on Fed/ECB moves next
NEW YORK, July 31 (Reuters) - Oil prices fell sharply on Tuesday as hopes for a quick U.S. stimulus faded, but commodities ended July with their biggest monthly gains since October, due to a broad rally over the past four weeks.
Analysts said investor confidence that has boosted commodities since the end of the second quarter was largely intact, although worries over the U.S. economy and global financial conditions could chip away at prices.

US crude stocks plunge nearly 12 million barrels-API
NEW YORK, July 31 (Reuters) - U.S. crude inventories plunged last week by the most since 2008, and oil product stocks also fell unexpectedly, data from the American Petroleum Institute showed on Tuesday.
Crude inventories fell by 11.6 million barrels in the week to July 27, the API reported, a far steeper drop than the 700,000 barrel decline forecast in a Reuters poll of analysts.

OIL-Oil down 2nd day as stimulus hopes falter
NEW YORK, July 31 (Reuters) - Oil prices fell for a second straight day on Tuesday on expectations that any central bank stimulus may be insufficient to revive economic growth, even as hopes dimmed that the U.S. Federal Reserve will act this week to boost the economy.
"Oil prices are lower on the paradox of slightly better economic data in the form of the Chicago PMI and the consumer confidence reading," said John Kilduff, a partner at Again Capital LLC in New York.

NATURAL GAS-Front-month U.S. natgas futures end down after 7-1/2-month high
NEW YORK, July 31 (Reuters) - Front-month U.S. natural gas futures ended slightly lower on Tuesday on profit-taking, but warm weather forecasts and expectations for another light weekly build in inventories helped limit the downside.
"The temperature outlook remains supportive, with warmer than normal temperatures forecast for most of the continent through August 14 that are likely to translate into below average storage injections," Tim Evans, analyst at Citi Futures Perspective, said in a report.

20120801 1006 Malaysia Corporate Related News.

George Kent: Bags Ampang LRT job. George Kent Bhd, a company specialising in mechanical and engineering work, has won a contract for the Ampang light rail transit (LRT) extension line project. The contract awarded by Syarikat Prasarana Negara Bhd is for engineering, procurement, construction, testing and commissioning of system works for the Ampang LRT line. (Source: Business Times)

Yinson: Will bid for more Vietnam O&G jobs. Yinson Holdings Bhd will continue to bid for new contracts in the Vietnamese O&G sector despite already having a MYR3.5b order book. Chairman and managing director Lim Han Weng said the company was confident of securing a part of projects worth USD400m which would be in the offing in Vietnam in the next 2 - 3 years. He said the company's first floating, storage and offloading (FSO) vessel worth US150m would be launched at a shipyard in South Korea next month. Lim said this would be followed by the USD400m production, floating, storage and offloading (PFSO) in Singapore either in the third or the fourth-quarter of next year. (Source: The Star)

MMC Corp: We'll steer Penang Port towards China-India routes. Seaport Terminal Sdn Bhd, the successful bidder for the privatisation of Penang Port, is poised to position the country's oldest port as the provider of shipping services to vessels plying the eastern and western routes of China and India respectively. "We will provide enough depth for vessels plying these routes as our study on the port's capabilities has convinced us that Penang Port is not in a position to compete with the likes of the Port of Singapore, Port of Tanjung Pelepas or Klang Port," Seaport Terminal port director Datuk Mohd Sidik Shaik Osman told Business Times. (Source: Business Times)

SILK Holdings: Gets Petrofac job. Silk Holdings Bhd has secured a MYR24m contract from Petrofac (Malaysia-PM304) Ltd, to provide an anchor-handling tug supply vessel. The contract commences immediately and is for 12 months, with an extension period of 12 months which is exercisable at the discretion of Petrofac. (Source: Bursa Malaysia)

Market: EPF buys MYR2.2b blue chip stocks. Over the past two months, the benchmark index rose by 3.3 per cent to 1,632.54, from 1,580.67 in June. EPF has turned net buyers of blue chip stocks, acquiring an estimated MYR2.2 b worth of stocks over the past two months.Analysts said that the latest accumulation spree has helped the benchmark FTSE Bursa Malaysia KLCI to achieve its all-time high of 1,645 points on July 18. Among notable purchases over the past two months include net buys of over 103 million shares in Maybank worth at least MYR893.5M, 42 million Axiata Group Bhd shares worth at least MYR223.44m, and over 80 million Telekom Malaysia shares worth over MYR441m. (Source: Business Times)

IPO: Risda eyes Bursa listing. The Rubber Industry Smallholders Development Authority (Risda) is reportedly eyeing an initial public offering but will have to get approval from the Government on the move due to the differing ownership structure of the land compared with Felda Global Ventures Holdings Bhd. According to information obtained from the Risda website, the land assets are managed by wholly owned subsidiary Estet Pekebun Kecil Sdn Bhd. Estet Pekebun Kecil manages about 78,000ha of oil palm and rubber plantations in Peninsular Malaysia. Risda also owns a 70% stake in Risda Plantation Sdn Bhd with the remainder equity being owned by Koperasi Pekebun Kecil Getah Nasional Bhd. (Source: The Star)

Media: Eight companies will fight for digital terrestrial television contract. Only 8 out of 60 companies that collected tender documents for the digital terrestrial television (DTTB) infrastructure build-up submitted their bids at the close of the tender last week, the 8 are said to be Astro Productions, Celcom Axiata Bhd, Sapura Group, iMedia, Packet One Networks (P1), REDtone International Bhd, DTV, and Puncak Semangat Sdn Bhd. The tender bid is for the building of a common integrated infrastructure for all the free-to-air TV stations to migrate to provide digital TV nationwide. The whole project is likely to cost over MYR1b. The company that wins will also have to supply set top boxes which could cost as much as MYR300m. (Source: The Star)

Autos: More opt for bikes amid tough car loan ruling. The Malaysia Motorcycle and Scooter Dealers Association is optimistic that the industry can achieve sales of 600,000 units this year against 542,000 units last year. Its chairman Wee Hong said the number of motorcycles and scooters registered between January and June 2012 rose to 315,714 units from 281,517 units in the same period last year. "The increase is in line with the growing number of buyers who opt to buy motorcycles as the new guidelines on financing makes it difficult for them to get car loans approved," he said. (Source: Business Times)          


AirAsia: CEO said Batavia deal is still on while regulators asked for more details
AirAsia’s acquisition of PT Metro Batavia is still on track despite possible review over the deal due to ownership concerns, said AirAsia CEO Aireen Omar.  Meanwhile, AirAsia and its partner PT Fersindo Nusaperkasa were required by the Business Competition  Supervisory Commission (KPPU) of Indonesia to give details on their controlling stake in Batavia Air. The Jakarta Post reported that the agency wanted to make sure that AirAsia would not violate Indonesia's 1999 Law on unlawful business practices and it also feared that AirAsia would control more than 50% of domestic market from the acquisition of Batavia Air. KPPU head Tadjuddin Noer Said said the agency will annul the acquisition if it has the potential to stop other carriers from growing in the country's aviation industry. He added that the agency wanted to determine whether the acquisition of Batavia Air was prompted by the possibility of the company going bankrupt or driven by AirAsia's intention to expand its Indonesian presence ahead of Asean Open Sky policy in 2015. (Financial Daily, Business Times)

K&N Kenanga Holdings: To spend up to RM250m on integration costs
K&N Kenanga Holdings expects to spend RM200m to RM250m in terms of integration costs once the deal to take over ECM Libra Financial Group’s investment banking arm is completed in November. Kenanga group MD, Chay Wai Leong said, in following the global benchmark, they should have about 30% savings over the next 3 years. (Financial Daily)

ECM Libra Financial Group: To diversify its portfolio
ECM Libra Financial Group, which will be left with some RM350m after the disposal of its investment banking unit to K&N Kenanga Holdings, is looking to acquire new businesses within and outside Malaysia to diversify its income stream. ECM Libra chairman Datuk Seri Kalimullah Hassan said the company is looking at opportunities in countries such as the UK and Myanmar. Kalimullah, who is also a shareholder of Tune Hotels, said ECM Libra may consider buying hotels abroad as there will be appreciation in foreign exchange rates and property values. (Financial Daily)

Malaysia Resources Corporation: Link with Nusa stirs excitement
Malaysian Resources Corp (MRCB) is being linked with a major property takeover deal, management changes and a RM1bn infrastructure deal although the company itself is tightlipped about its recent news flow. MRCB is controlled by the Employees Provident Fund (EPF), which has a 42.2% stake in the property and infrastructure developer. A business daily recently reported that MRCB was expected to land a RM1bn contract soon concerning the Klang Valley My Rapid Transit (MRT) project. This would substantially boost its order book, after the company won a RM1.33bn contract in August 2011 for the light rail transit extension of the Ampang line. Meanwhile, industry observers are also excited over a recent report by a financial weekly that MRCB was planning to take over private property developer Nusa Gapurna Development Sdn Bhd, which is 40% owned by EPF. The remaining 60% stake in Nusa Gapurna is held by businessman Datuk Mohamad Salim Fateh Din. (StarBiz)

KKB Engineering: Bags RM171m steel job
KKB Engineering has been awarded with a contract for the structural steel and cladding work at the proposed Ferro Alloy Complex, Bintulu, Sarawak, worth approximately RM171m. The contract was awarded by Pertama Ferroalloys Sdn Bhd, the employer of the complex. KKB Engineering said the completion time for the contract would be staggered within 15 months commencing from the third quarter of the year. (Financial Daily)

Patimas Computers: Accounts show RM21m unaccounted for
External auditors have found an accounting irregularity in Patimas Computers where RM21m of trade receivables could not be accounted for. The finding was the reason the stock was suspended on Tuesday and the company could not submit its audited financial statements for FY2012 by yesterday’s deadline. Patimas said its external auditors were unable to verify the veracity of sale and purchase transactions undertaken by Patimas with a group of customers/suppliers that owed the company approximately RM21m. (Financial Daily)

Shipping: Seaport Terminal to steer Penang Port towards China-India routes
Seaport Terminal Sdn Bhd - the successful bidder for the  privatization of Penang Port - is poised to position the country's oldest port as the provider of shipping services to vessels plying the eastern and western routes of China and India respectively. Seaport Terminal port director Datuk Mohd Sidik Shaik Osman said they will provide enough depth for vessels plying these routes as their study on the port's capabilities has convinced them that Penang Port is not in a position to compete with the likes of the Port of Singapore, Port of Tanjung Pelepas or Klang Port. He said Seaport Terminal is committed to improve the services offered by Penang Port and will position the port to handle the majority of transshipment cargo. He added that they would expect the services of Penang Port to be equal to that of regional ports like Port Klang and Luang Prabang Port in Thailand. (Business Times)

Steel: Kiswire to inject RM1.8bn to bolster Malaysian operations
Kiswire Malaysia, a division of South Korea’s major steel wire producer Kiswire Ltd, will inject RM1.8bn in fresh investments in Johor as it embarks on a mission to turn Malaysia into a production hub for high-carbon steel wire products in South-East Asia. Kiswire Ltd chairman Hong Yong Chul said the capital injection was to upgrade its operations with the aim of boosting its annual production capacity. He also said the new aim is to increase annual production capacity in Malaysia from the current 200,000 tonnes to 500,000 tonnes by 2020. The 300,000-sq-ft Kota Kiswire will operate as the regional headquarters for the South Korean steel wire producer’s operations in South-East Asia. (StarBiz)

20120801 1006 Global Economy Related News.

U.S: Consumer spending stagnates as Americans save more. Household purchases, which make up 70% of the economy, were unchanged in June after a 0.1% MoM decline in May. Incomes climbed 0.5% MoM, lifting the saving rate to 4.4%, the highest in a year. (Source: Bloomberg)

U.S: Business activity unexpectedly grows at faster pace in July as the economy weathered a slowdown in hiring and household spending. A barometer from the Institute for Supply Management-Chicago Inc. increased to 53.7, the highest since April from 52.9 in June. Readings greater than 50 signal growth. (Source: Bloomberg)

U.S: Home prices fell less than forecast in year to May. The S&P/Case-Shiller index of property values in 20 cities decreased 0.7% YoY from May 2011, the smallest 12-month fall since September 2010, after dropping 1.8% YoY in the year ended April. (Source: Bloomberg)

U.S: Consumer confidence unexpectedly climbed in July. The Conference Board's index increased to 65.9 this month from 62.7 in June. The report showed a gain in the share of consumers anticipating better labor and economic conditions in six months. (Source: Bloomberg)

U.S: Congress leaders and Obama agree on six-month spending bill. Congressional leaders said they and President Barack Obama have agreed on a USD 1.047t plan to fund the U.S. government from October through March. Lawmakers will vote on the measure in September, Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters in Washington. "This agreement reached between the Senate, the House and the White House provides stability for the coming months, when we will have to resolve critical issues that directly affect middle class families," Reid said. (Source: Bloomberg)

E.U: The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs. Unemployment in the economy of the 17 nations using the
euro held at 11.2% in June, the European Union's statistics office in Luxembourg said. That's the highest since the data series started in 1995. (Source: Bloomberg)

Germany: Retail sales unexpectedly declined for a third month in June amid uncertainty about the consequences of Europe's debt crisis. Sales, adjusted for inflation and seasonal swings, fell 0.1% MoM from May, when they slipped 0.3% MoM, the Federal Statistics Office in Wiesbaden said. That's the longest stretch of declines since the end of 2007, when they dropped four consecutive months. Sales rose 2.9% YoY. (Source: Bloomberg)

China: Pledges to ensure stable growth as local loans may rise. China's leaders pledged to keep adjusting policies to ensure stable economic growth this year as a state newspaper said some banks are telling branches to provide local-government loans. "The ongoing pace of economic growth is within expectations, but the external environment remains grim and poses difficulties and challenges," the official Xinhua News Agency said, citing a meeting of the Communist Party's Politburo. The meeting also determined that maintaining stable growth is still the top priority, Xinhua said. (Source: Bloomberg)

India: The Reserve Bank of India kept the repurchase rate at 8% while reducing the amount of deposits banks must hold in government bonds. Governor Duvvuri Subbarao said after the decision that the benchmark gauge of prices, which climbed 7.25% YoY in June, has stayed "sticky." (Source: Bloomberg)

S. Korea: Inflation moderated to slowest in 12 years in July. Consumer prices increased 1.5% YoY after a 2.2% YoY gain in June. Prices fell 0.2% MoM from the previous month. (Source: Bloomberg)

Taiwan: GDP fell 0.16% YoY in 2Q12, according to preliminary data released by the statistics bureau in Taipei. (Source: Bloomberg)

Singapore: Unemployment rate unexpectedly fell last quarter as construction companies and manufacturers increased hiring even as the economy contracted. The seasonally adjusted jobless rate fell to 2% in the three months through June from 2.1% the previous quarter, the Ministry of Manpower said in a statement. The economy added 29,200 jobs last quarter, compared with 27,200 in the previous period. (Source: Bloomberg)      

20120801 1004 Global Market Related News.

Asia FX By Cornelius Luca - Tue 31 Jul 2012 16:59:22 CT(Source:CME/www.lucafxta.com)
The appetite for risk soured a little on Tuesday ahead of the Federal Reserve policy decision tomorrow and the ECB meeting on Thursday. Traders hope for further easing, but these central banks have yet to answer these expectations. The foreign currencies made little progress, but the commodity currencies remained relatively strong. The US stock markets, gold, oil and silver fell. The short-term outlook for the foreign currencies is generally sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short only the euro and franc.  Good luck!

Overnight
US: The Conference Board's consumer confidence index climbed to 65.9 in July from an upwardly revised 62.7 in June.
US: The ISM Chicago's business barometer rose to 53.7 in July from 52.9 in June.
US: Personal income rose 0.5% in June from previous reading of +0.3%. Consumer spending fell 0.1% in June, down from +0.1% in May.
US: The S&P/Case-Shiller 20-City Composite Home Price Index rose by 2.2% in May following a 1.3% increase in April.
Canada: The GDP grew 0.1% in May, down from +0.3% in April.
Canada: The industrial product price index decreased 0.3% in June, more than -0.1% in May.

Today's economic calendar
Australia: AiG performance of manufacturing index for July
Australia: House Price Index for the second quarter
China: HSBC manufacturing PMI for July

Asian Stocks Head for First Drop in Five Days Before Fed (Source: Bloomberg)
Asian stocks fell, with the regional benchmark index heading for the first drop in five days, as investors await monetary policy decisions by the Federal Reserve and the European Central Bank. Japanese shares led declines on disappointing earnings reports. Komatsu Ltd. (6301), Japan’s largest construction machinery maker, plunged 9.4 percent after cutting its annual earnings forecast. Carmaker Honda Motor Co. (7267) dropped 5.7 percent in Tokyo after reporting profit that missed analyst estimates. Mobile phone maker LG Electronics Inc. (066570), which gets 45 percent of its sales in North America and Europe, fell 1.6 percent in Seoul. The MSCI Asia Pacific Index dropped 0.6 percent to 117.96 as of 10:07 a.m. in Tokyo before markets in Hong Kong and China opened. Almost three stocks fell for each that rose on the measure, which gained 1.3 percent in July, capping a second monthly gain. Shares of companies that do business in China may be active after the nation pledged to maintain stable growth.
“Investors have been in wait-and-see mode for the last two days ahead of key central bank announcements and that will continue today,” said Prasad Patkar, portfolio manager who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney.

Japan Stocks Fall on China Manufacturing; Honda Slumps (Source: Bloomberg)
Japanese stocks fell, with the Nikkei 225 (NKY) Stock Average declining the first time in five days, as companies from Honda Motor Co. and Komatsu Ltd. missed profit estimates and after China’s manufacturing output expanded at a slower pace than economists expected. Honda, Japan’s third-largest carmaker by sales, slipped 5.8 percent as it joined Nissan Motor Co. in reporting earnings that trailed estimates. Komatsu, which gets about 14 percent of sales from China, sank 9.7 percent after the world’s second-biggest maker of construction equipment cut its annual profit forecast. Nomura Holdings Inc. slid 2.9 percent as Japan’s No. 1 brokerage faces penalties after staff leaked information on at least three share sales in 2010.
“This quarter’s earnings have shown that Japanese exporters are badly affected by the slowdown in China, the recession in Europe and the yen’s appreciation,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “Given that the Chinese economy hasn’t bottomed yet, next quarter’s earnings could be even worse and share prices may keep sliding. It’s difficult to see a recovery by the end of the year.” The Nikkei 225 retreated 1.3 percent to 8,579.91 as of 10:17 a.m. in Tokyo, with five shares falling for each that rose. The broader Topix Index lost 1.2 percent to 727.45.

China’s Stocks Decline to 2009 Low; B Shares Slump on New Rules (Source: Bloomberg)
China’s stocks fell to the lowest level in more than three years amid concern the slowing economy will hurt earnings growth. Foreign-currency denominated B shares dropped for their biggest two-day loss in almost a year. Chinese steelmakers, including Baoshan Iron & Steel Co. and Angang Steel Co., slid after posting a 96 percent drop in first- half profit. Kama Co. led declines by B shares on concern stricter rules by the exchange may lead to companies being delisted. China Railway Group Ltd. (601390) gained after the government boosted investment in railways for the second time in a month. The Shanghai Composite Index (SHCOMP) fell 0.3 percent to 2,103.64 at the close, the lowest since March 2009. The gauge, Asia’s worst-performing gauge this month with a 5.5 percent loss, has tumbled 14.5 percent from this year’s high on March 2. The Shanghai B-Share Stock Price Index slumped 0.9 percent for a two-day, 6.5 percent loss, the most since Aug. 2011.
“The declining trend hasn’t changed, as the economy is bad,” said Tang Yonggang, an analyst at Hongyuan Securities Co. in Beijing. “We could see some short-term gains but in the mid- to-long term it’s going to continue to fall unless we see more policy loosening.” The CSI 300 Index (SHSZ300) fell 0.1 percent to 2,332.92. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, dropped 1.4 percent in New York. The Shanghai index is valued at 9.4 times estimated profit, compared with the three-year average of 14.7.

Hong Kong Stocks Rise 4th Day on Signs of China Stimulus (Source: Bloomberg)
Hong Kong stocks gained, with the Hang Seng Index capping its longest rising streak since March, on signs China is boosting infrastructure investment as it seeks to spur growth in the world’s second-largest economy. CSR Corp. (1766), a Chinese train maker, gained 4.2 percent after China boosted investment in railways for a second time in a month. Aluminum Corp. of China Ltd., the nation’s largest producer of the metal, rose 1.9 percent. Hang Lung Properties Ltd., a Hong Kong developer that derives 46 percent of its sales from the mainland, jumped 3.8 percent after reporting better than expected half-year results. The Hang Seng Index rose 1.1 percent to 19,796.81 at the close of trading in Hong Kong, with all but nine shares gaining on the 49-member gauge. The gauge last advanced for four days in March. It and increased 1.8 percent in July, a second straight advance. The Hang Seng China Enterprises Index (HSCEI) of mainland companies added 1.6 percent to 9,674.27.
“The question is when investors get bullish,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “They are looking for a strong reason to buy back into the market. There is encouraging progress being made.” The benchmark Hang Seng Index fell 8.7 percent from this year’s high in February through today on signs Europe’s debt crisis is worsening while growth slows in China and the U.S. The drop reduced the value of shares on the gauge to 10.4 times estimated earnings on average, compared with 13.5 for the Standard & Poor’s 500 Index and 11.2 for the Stoxx Europe 600 Index.

U.S. Stocks Decline as Investors Await Fed Decision (Source: Bloomberg)
U.S. stocks fell, trimming a second monthly advance in the Standard & Poor’s 500 Index, as investors awaited the Federal Reserve’s monetary-policy decision tomorrow. Coach Inc. (COH), the largest U.S. luxury handbag maker, tumbled 19 percent after reporting revenue that trailed analysts’ estimates. Humana Inc. (HUM) slumped 13 percent as the provider of Medicare benefits cut its 2012 profit forecast. Apple (AAPL) Inc. rose 2.6 percent as Sanford C. Bernstein & Co. said it is considering a stock split that could prompt the world’s most valuable company to be added to the Dow Jones Industrial Average. About five stocks fell for every three that rose on U.S. exchanges at 4 p.m. New York time. The S&P 500 (SPX) slid 0.4 percent to 1,379.32. The benchmark measure rose 1.3 percent in July. The Dow average slid 64.33 points, or 0.5 percent, to 13,008.68 today. Volume for exchange-listed stocks in the U.S. was 6.7 billion shares, or about in line with the three-month average.
“People are taking some chips off the table as they don’t expect the Fed to come up with any positive surprise,” said Michael Holland, chairman of New York-based Holland & Co. His firm oversees more than $4 billion. “In addition, you have a mixed bag of earnings and news out of Europe is not helping.” Equities fell on bets the Fed may forgo announcing a third round of large-scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt. Policy makers meeting today and tomorrow may wait for more employment data before deciding whether action is needed to boost an economy that’s slowed for two straight quarters.

Recap Stock Index Market Report (Source:CME)
The September S&P 500 trended lower throughout the session, marking its low of the day during the final hour. Some traders noted that trading volumes were very light, and that seemed to foster a choppy end-of month trade. The September E-mini Dow and S&P 500 registered a lower low on the session, while the September NASDAQ remained inside of the previous session's range. They major indices showed little reaction to this morning's flow of US economic data, which revealed an unexpected bounce in May home prices and unexpected gains in Chicago PMI and consumer confidence. Earnings this morning from Pfizer came in better than expected, and that offered a measure of support to the S&P and Dow Jones Index. Shares of Apple were up nearly 2.0% on talk that the company could be contemplating a stock split. Meanwhile, retail-related shares came under pressure following disappointing results from Coach. Most of the major S&P sectors were in negative territory, led by declines in consumer discretionary and energy-related shares.

Emerging Stocks Climb for a Fourth Day on Stimulus Speculation (Source: Bloomberg)
Emerging-market stocks rose for a fourth day on speculation central banks from the U.S. and Europe will take measures to bolster economic growth. The MSCI Emerging Markets Index added 0.4 percent to 952.49, the most since July 5. Brazil’s Bovespa stock index dropped from an 11-week high, pushed lower by phone company Tim Participacoes SA. Samsung Electronics Co. (005930), which gets more than a third of its sales in America and Europe, capped its biggest four-day rally this year. Policy makers at the U.S. Federal Reserve began a two-day meeting today, looking for new stimulus measures as the International Monetary Fund said Europe’s debt crisis is likely to be prolonged. Reports today showed South Korea’s industrial production fell for the first time in three months and Taiwan’s gross domestic product unexpectedly shrank. Last week, European leaders had resolved to do whatever it takes to protect the euro.
“The big signal for a risk rally will come from a strong policy response,” said Mohamed Saidi, a Brussels-based fund manager at Dexia Asset Management, which oversees about $860 million of equity assets in developing nations. “Emerging markets have been doing quite well on the back of more positive euro sentiment, starting with the words of Mario Draghi on Thursday. On top of that, there is expectation of monetary stimulus from the U.S.”

U.K. Stocks Retreat on BP Earnings, German ESM Comments (Source: Bloomberg)
U.K. stocks retreated, paring their second monthly advance, as BP Plc (BP/) reported results that missed estimates and Germany’s Finance Ministry said it sees no need to give Europe’s permanent bailout fund a banking license. BP lost 4.4 percent, the most in eight months, after Europe’s second-largest oil company posted a net loss for the second quarter. Barclays Plc (BARC) led a retreat in banks, falling 1.5 percent. CRH Plc (CRH) tumbled 5.8 percent, the most since November. The FTSE 100 Index (UKX) lost 58.35 points, or 1 percent, to 5,635.28 at the close in London, trimming this month’s gain to 1.2 percent. The gauge has climbed 7.1 percent from its 2012 low on June 1, boosted by pledges from European Central Bank President Mario Draghi to preserve the euro. The broader FTSE All-Share Index also fell 1 percent today, while Ireland’s ISEQ Index retreated 0.9 percent.
“Confidence and sentiment are being slowly eroded away by the dire state of affairs in the periphery” of Europe, said Simon Denham, managing director at Capital Spreads in London. “Despite the markets getting excited about the prospects of fresh stimulus, the trickle down to confidence and the man on the street won’t materialize for months to come.” Stocks extended losses after Germany’s Finance Ministry said the rules of the European Stability Mechanism don’t foresee a banking license to allow refinancing at the European Central Bank. They said they are holding no talks on the topic.

Treasury 5-Year Yield Near Record Low Amid Slowing Signs (Source: Bloomberg)
Treasury five-year note yields were six basis points from a record low as signs of an economic slowdown in the U.S. and Europe boosted demand for the securities as a haven. The notes remained higher following a two-day advance before reports today that economists say will show U.S. employers added the fewest workers in three months and that a gauge of euro-area manufacturing slid to a three-year low. The Federal Reserve will conclude a two-day policy meeting today. “Economies are weak globally, resulting in a flight to quality,” said Hiromasa Nakamura, who helps oversee the equivalent of $42 billion as an investor at Mizuho Asset Management Co. in Tokyo. “Treasury yields have more room to decline.”
The benchmark five-year yield was little changed at 0.59 percent as of 9:48 a.m. in Tokyo. It reached the all-time low of 0.53 percent on July 25, according to Bloomberg Bond Trader data The 0.5 percent security due July 2017 traded at 99 18/32 today. Ten-year yields were at 1.48 percent after falling eight basis points in the past two days to 1.47 percent yesterday. ADP Employer Services will probably say today that companies in the U.S. added 120,000 workers last month, according to the median estimate of economists surveyed by Bloomberg News. That would be the least since April and down from a 176,000 increase in June.

Euro Holds Gains Versus Dollar, Yen on ECB Stimulus Bets (Source: Bloomberg)
The euro remained higher against the dollar following an advance yesterday as optimism built that the European Central Bank will take steps at a meeting tomorrow to stem the region’s debt crisis. The 17-nation currency held gains against the yen after France’s President Francois Hollande and Italy’s Prime Minister Mario Monti said yesterday the countries are “determined” to do everything to protect the integrity of euro zone. The greenback maintained this week’s decline against the Japanese currency before the Federal Reserve concludes a two-day meeting today amid speculation the U.S. central bank will signal additional monetary easing. “I’m bullish on the euro in the near term,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The ECB is expected to show its resolve and act to preserve the currency.”
The euro bought $1.2295 as of 8:51 a.m. in Tokyo after climbing 0.4 percent yesterday to $1.2304. The shared currency traded at 96.06 yen from 96.12 yesterday, when it advanced 0.3 percent. The dollar was little changed at 78.13 yen, having fallen for the past two days. Spanish Economy Minister Luis de Guindos is pushing for additional budget cuts after his German counterpart, Wolfgang Schaeuble, signaled to him that such a move would be rewarded by bond market assistance, according to two people in Madrid familiar with his thinking.

Aussie Dollar Falls on Stocks Drop, China Manufacturing (Source: Bloomberg)
Australia’s dollar weakened after a manufacturing index in China, the nation’s biggest trading partner, slid to the lowest level this year, sapping demand for the South Pacific nation’s assets. The so-called Aussie slid versus all except one of its 16 major peers after a gauge of Australian manufacturing dropped last month to the lowest level in three years, while New Zealand’s currency remained lower against the yen after a two- day decline. Demand for the Australian and New Zealand currencies was tempered as technical indicators showed their recent gains may have been too rapid. “Investors are being a little bit more cautious,” said Callum Henderson, global head of currency research at Standard Chartered in Singapore. “We’ll see the dollar be a little bit stronger against the Group of 10 currencies, with the higher- yielding, higher-bet currencies such as the Aussie and kiwi giving up some of their recent gains.”
The Australian dollar lost 0.3 percent to $1.0473 as of 11:15 a.m. in Sydney from $1.0503 yesterday, when it touched $1.0538, the strongest level since March 27. It slid 0.5 percent to 81.67 yen. New Zealand’s currency was little changed at 80.93 U.S. cents. The so-called kiwi dropped 0.1 percent to 63.11 yen after falling 0.6 percent in the previous two days.

FOREX-Euro steady, investors nervous before ECB meeting
LONDON, July 31 (Reuters) - The euro was subdued against the dollar, trading below recent three-week highs on growing doubts the European Central Bank can meet market expectations of bold steps to combat the euro zone debt crisis.
"There is a clear danger that expectations might be too high...He's got to put his money where his mouth is, as there is a risk of disappointment around Thursday," said Nick Parsons, head of markets strategy at nabCapital in London.

Fed Seen Forgoing New Bond Buying Program Until September (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke will probably forgo announcing a third round of large- scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey. Eighty-eight percent of economists say the Federal Open Market Committee will refrain from starting new purchases at a two-day meeting that began today in Washington. Forty-eight percent say the FOMC will announce the buying at its Sept. 12-13 meeting, according to the July 25-27 survey of 58 economists.
The FOMC may take further action should the job market not make “sustained progress” in bringing down an unemployment rate stuck above 8 percent for 41 consecutive months, Bernanke said this month in congressional testimony. The FOMC wants to see more jobs data before beginning asset purchases aimed at holding down borrowing costs, spurring growth and reducing unemployment, said Michael Gapen, senior U.S. economist for Barclays Plc in New York. Policy makers “don’t need to do something immediately because the economy is basically treading water,” with a second quarter growth rate of 1.5 percent, Gapen said. “What gives the Fed the ability to sit tight for now is financial market conditions haven’t weakened that much.”

Consumer Spending in U.S. Was Unchanged in June (Source: Bloomberg)
Consumer spending in the U.S. stagnated in June as labor-market weakness prompted Americans to use the biggest gain in incomes in three months to build savings. Household purchases, which make up 70 percent of the economy, were unchanged last month after a 0.1 percent decline in May, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg News survey of economists called for a 0.1 percent rise. Incomes climbed 0.5 percent, lifting the saving rate to 4.4 percent, the highest in a year. Americans may be growing less pessimistic about job prospects later in the year, with another report today showing consumer confidence rose unexpectedly for the first time in five months. Federal Reserve policy makers meeting today and tomorrow may wait for more employment data before deciding whether action is needed to boost an economy that’s slowed for two straight quarters.
“There’s been some back-tracking in the labor market so consumers are choosing to save the income rather than spend it,” said Julia Coronado, chief economist for North America at BNP Paribas in New York, who correctly projected the stagnation in purchases. “The third quarter will be pretty subdued.”

Geithner Says 2-3 Years of Creative Housing Needed (Source: Bloomberg)
Treasury Secretary Timothy F. Geithner said two to three years of “aggressive, creative” programs are needed to help the U.S. recover from its housing crisis. “We’re going to keep at this as long as necessary,” Geithner said at an event in Los Angeles today. “We think there’s a very good case for people deeply under water, experiencing hardship, to modify their mortgages by reducing principal.” Government-sponsored enterprises Fannie Mae and Freddie Mac won’t forgive principal on delinquent mortgages they guarantee, the firms’ regulator said today. Months of analysis showed there would be no clear benefit to taxpayers if the Federal Housing Finance Agency were to change its policy barring the mortgage- finance companies from loan modifications that include debt writedowns, Edward J. DeMarco, the agency’s acting director, told reporters.
Geithner criticized the decision in a letter to DeMarco today. “I do not believe it is the best decision for the country,” Geithner wrote. “The use of targeted principal reductions by the GSEs would provide much-needed help to a significant number of troubled homeowners.”

U.S. Housing Recovery Tested as Economy Tempers Optimism (Source: Bloomberg)
Rob Gray moved his family of four from Massachusetts to Texas, where he bought a new five-bedroom, five-bath, two-fireplace home built by Toll Brothers Inc. (TOL) After completing the deal on July 26 for the $572,000 brick-and-stone house in Allen, about 30 miles (48 kilometers) north of Dallas, Gray and his wife Paula plan to spend about $30,000 on new furniture, appliances, window treatments and an outdoor grill. “We’re not afraid to roll the dice, to take a leap of faith on the U.S. economy,” Gray, 47, an insurance-company recruiter, said in a telephone interview. “Things are on the rebound, and we need to get off the sidelines.”
As the residential property market climbs back from the worst collapse since the Great Depression, homebuilders need more customers like the Grays for the industry to enter a sustainable recovery and help drive U.S. economic growth. While orders for new homes are rising at the fastest rate in two years and housing may be a net contributor to the economy’s expansion for the first time since 2005, slowing job growth, tight inventories and a backlog of foreclosures threaten to put the brakes on a comeback.

Consumer Confidence in U.S. Unexpectedly Climbed in July (Source: Bloomberg)
Confidence among U.S. consumers unexpectedly rose for the first time in five months as Americans became more upbeat about job prospects later this year. The Conference Board’s index increased to 65.9 this month from 62.7 in June, figures from the New York-based private research group showed today. Economists projected a reading of 61.5, according to the median estimate in a Bloomberg News survey. The report showed a gain in the share of consumers anticipating better labor and economic conditions in six months. A pickup in the housing market and decreases in fuel prices may also be helping sustain consumer sentiment. At the same time, faster job gains are needed to spur consumer spending, which grew in the second quarter at the slowest pace in a year.
“The increase was partly in expectations for business conditions and less pessimism on the future job market, but very little change in the outlook for household income and that is probably more important,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. Stocks held losses after the report. The Standard & Poor’s 500 Index fell 0.1 percent to 1,383.91 at 11:08 a.m. in New York.

Business Activity in U.S. Unexpectedly Grows at Faster Pace (Source: Bloomberg)
Business activity in the U.S. unexpectedly grew at a faster pace in July as the economy weathered a slowdown in hiring and household spending. A barometer from the Institute for Supply Management- Chicago Inc. increased to 53.7, the highest since April from 52.9 in June. Readings greater than 50 signal growth. The median forecast of 50 economists surveyed by Bloomberg News projected the purchasing managers’ gauge would decline to 52.5. The need to rebuild auto inventories may be giving a boost to manufacturing, which had been a key driver of the economic recovery. The Federal Reserve is meeting this week to determine if more stimulus is needed as Europe’s fiscal crisis and the threat of more than $600 billion in U.S. spending cuts and tax increases at year’s end curbed demand. Manufacturing is showing “modest improvement,’’ Harm Bandholz, chief U.S. economist at UniCredit Group in New York, said before today’s report. “It’s not great but it’s also not that bad.’’

Home Prices in U.S. Fell Less Than Forecast in Year to May (Source: Bloomberg)
Residential real estate prices declined less than forecast in the year ended May, another sign that the housing market is on the mend. The S&P/Case-Shiller index of property values in 20 cities decreased 0.7 percent from May 2011, the smallest 12-month fall since September 2010, after dropping 1.8 percent in the year ended April, the group said today in New York. The median forecast of 29 economists in a Bloomberg News survey projected a 1.4 percent fall. Stabilizing prices could help drive a housing market that’s starting to recover three years after the end of the recession. Federal Reserve policy makers have said residential construction is a bright spot in the recovery even as unemployment remains a concern to households.
“This is great news that certainly bucks the trend of other data that points to an economy that’s slowing,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York. “It’ll be a salve for a lot of U.S. households if we continue to see price gains in housing.”

Don’t Fight Fed as Decision Days Fuel Rally, Bespoke Says (Source: Bloomberg)
Investors should buy stocks before the Federal Reserve’s announcement tomorrow, if history is of any guide, according to Bespoke Investment Group LLC. The Standard & Poor’s 500 Index (SPX) has advanced in 20 out of the past 29 decision days since the Fed pledged to keep interest rates near zero in December 2008, a study from Harrison, New York-based Bespoke shows. While Fed days made up 3 percent of the trading days during the period, they accounted for about 38 percent of the equity gauge’s gain, the data show. “‘Don’t fight the Fed’ is one of the most well-known market axioms around, and these performance numbers couldn’t do a better job of highlighting why,” Justin Walters, Bespoke’s co-founder, wrote in a note today. The S&P 500 has rallied 10 percent this year amid speculation that worse-than-expected economic data will prompt the Fed to take more actions to spur growth. Chairman Ben S. Bernanke and other Federal Open Market Committee members began a two-day meeting today.
Bernanke will probably forgo announcing a third round of large-scale asset purchases, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.

China Reiterates Growth Chief Priority (Source: Bloomberg)
China’s leaders pledged to keep adjusting policies to ensure stable economic growth this year as a state newspaper said some banks are telling branches to provide local-government loans. “The ongoing pace of economic growth is within expectations, but the external environment remains grim and poses difficulties and challenges,” the official Xinhua News Agency said yesterday, citing a meeting of the Communist Party’s Politburo. The meeting also determined that maintaining stable growth is still the top priority, Xinhua said. The Politburo reiterated that China will pursue a “prudent” monetary policy and “proactive” fiscal policy, signaling that authorities are trying to stem a six-quarter slowdown in the world’s largest economy without resorting to the level of stimulus implemented after the global financial crisis.
“If the economic situation worsens, China can ease more,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. Options include further reductions in banks’ reserve requirements and in benchmark interest rates, he said.

China Manufacturing Slows to Eight-Month Low (Source: Bloomberg)
China’s manufacturing expanded at the slowest pace in eight months, adding to evidence Premier Wen Jiabao has yet to reverse the nation’s economic slowdown. The Purchasing Managers’ Index fell to 50.1 in July from 50.2 in June, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement today. That compares with the 50.5 median estimate in a Bloomberg News survey of 24 economists. A reading above 50 indicates expansion. Today’s data increase odds China will introduce more measures to stem a deceleration in the world’s second-biggest economy that may extend into a seventh quarter. Leaders of the ruling Communist Party pledged yesterday to keep adjusting policies to ensure stable growth, describing the external environment as posing “difficulties and challenges” as the jobless rate in the euro area reached the highest on record.
“The impact of policy easing is taking some time to show up,” Zhu Haibin, Hong Kong-based chief China economist with JPMorgan Chase & Co., said before the report. There is also “large uncertainty” in the global economy, he said. China may cut interest rates a third time this year and lower banks’ reserve requirements three more times, Zhu estimates.

South Korea’s Inflation Moderates to Slowest in 12 Years (Source: Bloomberg)
South Korea’s inflation moderated to a 12-year low in July as service-sector and communication prices fell, giving the central bank room to further ease borrowing costs as Europe weighs on growth. Consumer prices increased 1.5 percent from a year earlier, the slowest since May 2000, after a 2.2 percent gain in June, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 16 economists was for a 2 percent gain. Prices fell 0.2 percent from the previous month. South Korea’s economy grew at the slowest pace in almost three years in the second quarter and the central bank has pared its forecast for this year's expansion. Industrial production unexpectedly fell for the first time in three months in June, the government said yesterday. “This gives the central bank a big push to lower rates in the coming months, most likely in September,” said An Ki Tae, an economist at Woori Investment & Securities. “The inflation rate will stay low through this year.”
The won was little changed at the 9 a.m. open in Seoul, according to data compiled by Bloomberg, while the Kospi stock index fell 0.6 percent.

Korean Bonds Rise as Exports Plunge, Inflation Cools; Won Gains (Source: Bloomberg)
South Korea’s bonds rose, building on a run of four monthly gains, as data showing a slide in exports and the slowest inflation since 2000 fanned speculation the central bank will cut interest rates. The won climbed to a three-month high before a Federal Reserve meeting ends today. Overseas sales fell 8.8 percent in July from a year earlier, the biggest contraction since September 2009, the government reported today. The median estimate in a Bloomberg News survey was for a 3.7 percent decline. Consumer prices rose 1.5 percent, less than all 16 estimates in a Bloomberg survey. The Kospi Index (KOSPI) snapped a four-day rally even as overseas funds bought more Korean equities than they sold for a fourth day.
“With consumer-price gains falling to the 1 percent level and exports posting the biggest decline this year, there are expectations that the Bank of Korea will cut rates further,” said Travis Choi, a fixed-income analyst at Woori Investment & Securities Co. in Seoul. The Bank of Korea unexpectedly lowered its benchmark rate by a quarter of a percentage point to 3 percent last month. The yield on South Korea’s 3.25 percent notes due June 2015 slid three basis points, or 0.03 percentage point, to 2.82 percent as of 9:47 a.m. in Seoul, Korea Exchange Inc. prices show. That follows a 45 basis point drop in July that was the biggest decline for a benchmark three-year note since 2008. Three-year debt futures rose 0.11 to 106.08 and the one-year interest-rate swap slid four basis points to 2.84 percent.

Default Concerns Make Belize Bonds Worst in Emerging Markets (Source: Bloomberg)
Belize’s notes are the worst performers in emerging markets this month as the Central American nation’s budget deficit widens and concerns grow that the government will force holders of $544 million of bonds to take losses in a restructuring. Belize’s dollar bonds have fallen 2.5 percent this month, the most among 52 emerging-market countries tracked by JPMorgan Chase & Co’s EMBIG index. Brazilian and Indonesian bonds have gained 4.2 percent over the same period. Yields on Belize’s so- called superbond due in 2029 climbed 145 basis points, or 1.45 percentage point, to 20.08 percent this month as the country nears its second restructuring in five years.
Prime Minister Dean Barrow, who campaigned on a promise to restructure the bonds, told lawmakers in June that lowering the debt burden is “unavoidable.” The government faces an Aug. 20 payment of about $25 million and Barrow said Belize’s budget deficit will swell to 2.5 percent of gross domestic product next year from 1.1 percent this year. Investors are starting to “appreciate the difficulty” the government will have in meeting creditor demands, said Stuart Culverhouse, chief economist at Exotix Ltd.

IMF Urges Brazil to Guard Against Bubbles as Interest Rates Fall (Source: Bloomberg)
Brazil should boost supervision of its banking system to avoid against credit bubbles that could form as a result of fast credit growth and falling interest rates, the International Monetary Fund said. Credit that has doubled as a percent of gross domestic product in the last decade has helped spur economic growth but is also showing signs of straining households, the IMF said in a report today about the health of Brazil’s financial system. In prime housing markets like Sao Paulo and Rio de Janeiro, prices have jumped as much as 30 percent annually in recent years, the Washington-based lender said. “There is a risk that the financial system may become a victim of its own success,” Dimitri Demekas, head of the team that conducted the assessment, said in a statement on the IMF’s website.
Brazil has cut interest rates to record low this year and loosened reserve requirements to spur car purchases even as consumer default levels hover near a 30-month high and growth remains weak. Today, HSBC (HSBA) became the latest bank to reduce its 2012 growth forecast, to 1.7 percent from 2.5 percent. Consumer confidence in Brazil fell in July for the third month in a row, according to the Getulio Vargas Foundation.

Geithner Says Europe Committed to Resolving Crisis (Source: Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said Europe is “absolutely committed to doing what’s necessary” to resolve the continent’s debt crisis, one day after meeting with German Finance Minister Wolfgang Schaeuble and European Central Bank President Mario Draghi. “This is completely within their financial ability to solve,” Geithner said today at an event at the Los Angeles World Affairs Council. He added that “the politics of doing this are very hard.” German government bonds rose for a second day, and Spanish bonds slid for the first time in five days as German Chancellor Angela Merkel’s coalition rejected granting the permanent rescue fund access to European Central Bank liquidity, fueling doubts that Draghi will fulfill his pledge to “do whatever it takes to preserve the euro.”
“Both the economic reforms and those changes to the institutions of Europe are going to take a long time and going to take time to work,” Geithner said today. “What Europe’s trying to do now is make sure they do enough to hold things together, lay the foundation for growth in the short term, bring down interest rates.” Geithner held separate meetings yesterday in Germany with Schaeuble and Draghi. In a statement released after their meeting, Geithner and Schaeuble “took note” of comments made last week by European leaders to “take whatever steps are necessary to safeguard financial stability” in the 17-nation euro area.

Euro-Area Unemployment Rate Reaches Record 11.2%: Economy (Source: Bloomberg)
The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs. Unemployment in the economy of the 17 nations using the euro reached a revised 11.2 percent in May and held at that level in June, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. In Germany, unemployment climbed for a fourth straight month in July, a separate report showed. Policy makers are weighing options to counter the turmoil that has forced five euro-area nations to seek external aid, eroded investor confidence and pushed companies to trim their workforces. European Central Bank President Mario Draghi, who met with U.S. Treasury Secretary Timothy Geithner yesterday in Frankfurt, has pledged to do everything to preserve the euro.
“Companies generally are under serious pressure to keep their labor forces as tight as possible to contain their costs in the face of the current limited demand, strong competition and worrying and uncertain growth outlook,” said Howard Archer, chief European economist at IHS Global Insight in London. “There looks to be a very real danger that the euro-zone unemployment rate could reach 12 percent in 2013.”

Saudi $60 Billion Debt-Financed Hub Will Triple Traffic: Freight (Source: Bloomberg)
Saudi Arabia is spending more than $60 billion on a logistics hub, airport improvement and roads to reduce travel time in the Arab world’s biggest economy. The investments also yielded the largest sukuk, or Islamic bond, offered in the Middle East this year and an initial public offering on the stock exchange in June. “There is a large infrastructure boom happening in Saudi Arabia,” Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank, said in a phone interview on July 30. “Once they create these sukuk instruments, they cut their reliance on direct government funding and make it possible to buy into the projects. This policy benefits the government and investors.”
The world’s top oil exporter is spending $500 billion to build power plants, schools, roads and other facilities to modernize the country and create jobs for youth. Earlier this month, the kingdom’s Ministry of Transportation signed contracts valued at 4.4 billion riyals ($1.2 billion) to build new roads and maintain and operate existing ones. Saudi Arabia’s economy is forecast to expand 4.8 percent this year, the fastest rate after Qatar among the six Gulf Cooperation Council states, according to an April survey of economists compiled by Bloomberg. Net foreign assets of the kingdom’s central bank increased 20 percent in June to 2.2 trillion riyals from a year earlier, central bank data show. Under the $53 billion five-year aviation investment program, the government plans to triple passenger traffic at Riyadh’s King Khaled International Airport to 25 million people, build an airport in Jazan in the southwest and renovate other airports.

20120801 1003 Global Commodities Related News.

South America Readies Record Crops Amid U.S. Drought (Source: Bloomberg)
South American farmers are preparing to plant record grain and oilseed crops that may temper surging food inflation caused by the worst U.S. drought in a generation. Argentine farmers, buoyed by rains that alleviated a drought, will smash a previous corn harvest record of 22 million metric tons by reaping as much as 31 million tons in the 2012- 2013 season, growers group Crea said July 23. Brazil may harvest its biggest-ever soybean crop in 2012-13 to surpass the U.S. as the world’s biggest grower, according to Sao Paulo-based research Agroconsult. Corn rose to a record in Chicago yesterday, capping the biggest monthly gain since 1988, while soybeans reached a record on July 23 after surging 15 percent last month. The response from South American growers to the worst U.S. drought since 1956 will be the “turning point” in the corn and soybean rally, Wayne Gordon, the head of global agriculture markets research at UBS AG in New York, said in an interview yesterday.
“We are in a great situation,” said Martin Otero, the owner of Buenos Aires-based farm investment group Hillock Capital Management that owns and manages farmland in Argentina and Uruguay. “We have very high yield prospects, and there’s a high probability that prices will be very good.”

Wheat Market Recap Report September (Source:CME)
Wheat finished down 26 1/4 at 888 1/4, 31 1/4 off the high and 2 1/4 up from the low. December Wheat closed down 24 3/4 at 902 1/2. This was 2 up from the low and 29 off the high. September Chicago wheat traded sharply lower into the close of today's session as traders took profits following gains this week. The wheat market began the day weaker, but losses were accelerated after corn began to tumble from it's record highs. Russia's Agriculture Ministry may cut it's 2012 grain crop production forecast to 75 million tonnes from it's current estimate of 80 million tonnes but traders brushed off the news after the Prime Minister of Russia said he did not expect a domestic deficit for grain despite the lower production estimates. Jordan announced a purchase of 100,000 tonnes of wheat from their tender issued last week. The official origin is unknown, but traders believe the seller likely came from the Black Sea region. Outside markets were mixed with the US Dollar trading lower and crude oil trade sharply lower on the day. September Oats closed down 4 at 380 1/4. This was 2 1/4 up from the low and 5 off the high.

Corn Market Recap for 7/31/2012(Source:CME)
September Corn finished down 13 1/4 at 806 3/4, 18 1/4 off the high and 1 1/2 up from the low. December Corn closed down 8 at 806. This was 4 1/2 up from the low and 14 1/2 off the high. December corn traded slightly lower into the closing bell and managed to hold the 800 level on the day. The lower trade reflects profit taking following yesterday's sharply higher trade. The Midwest weather forecast remains unfavorable for fall crops, with 90-100 degree temperatures expected for growing areas in the Southwestern Corn Belt this week and part of next week. Scattered showers are also expected in the Midwest to finish out the week but soil conditions are so poor that the light rainfall will provide limited relief. Most of the corn crop is beyond repair at this point, but cooler temperatures may be able to stabilize yield loss for some areas. Taiwan reportedly bought 60,800 tonnes of Brazilian corn overnight, which may be adding pressure to the corn complex today. Argentina also announced that they would enact a new export policy that grants farmers permission to sell their whole corn harvest as they set single year export quotas, instead of the incremental quota system currently in place. The market is still trying to gauge yield and production expectations for this year's corn crop ahead of the USDA report next week. Current market conditions suggest a corn yield near 129 bushels/acre with some estimates coming in near 120-122. Outside markets were mixed today with the US Dollar trading lower and crude oil sharply lower on the day. September Rice finished down 0.22 at 15.615, 0.135 off the high and equal to the low.

GRAINS-Corn heads for biggest monthly gain in over 5 yrs
SINGAPORE, July 31 (Reuters) - Chicago soybeans edged lower giving back some of the previous session's strong grains, while corn was little changed following a rally as the worst drought since 1956 causes more damage to crops in the U.S. grain belt.
"I think the bullish tone in the agricultural markets is still intact," said Ker Chung Yang, commodities analyst at Phillip Futures in Singapore.

Drought could delay India fuel reforms - adviser
NEW DELHI, July 31 (Reuters) - The drought threatening India due to elusive monsoon rains will make it politically harder for the government to raise prices of subsidised fuel, delaying a reform urgently needed to rein in the country's fiscal deficit, a top policy adviser told Reuters.
So far India's summer monsoon rains are 22 percent below average and are unlikely to pick up enough to avert a drought, which could dent both crop output and rural incomes and increase reliance on subsidised fuel such as diesel to irrigate farmland.

Midday US weather updates drier than before
CHICAGO, July 30 (Reuters) - Midday weather updates indicated even drier weather than earlier forecasts in the U.S. Midwest for the next week or two which will increase stress on corn and soybean crops that already have been slashed due to the worst drought in over 50 years, an agricultural meteorologist said on Monday.
"It doesn't look good for crops at all, now it's a matter of just how bad it's going to get," said Andy Karst, meteorologist for World Weather Inc.

SOFTS-Sugar, coffee, cocoa ease as dollar firms
LONDON, July 31 (Reuters) - Raw sugar, arabica coffee and cocoa futures on ICE dipped in early trading pressured by a firm dollar and weak financial and commodity markets.
Sugar was supported by poor monsoon rains in major growing areas of number two producer India, while robusta coffee was underpinned by a steady drawdown of certified stocks.

Oil Declines for a Third Day as Fed May Forgo Stimulus (Source: Bloomberg)
Oil dropped for a third day as speculation the Federal Reserve may not announce additional stimulus measures for the economy outweighed a drop in U.S. crude stockpiles. Futures slid as much as 0.4 percent in New York, extending a 1.9 percent decline yesterday. The Fed will probably forgo announcing a third round of asset purchases after a two-day meeting ends today, according to 88 percent of economists in a Bloomberg News survey. Crude inventories shrank 11.6 million barrels last week, the most since September 2008, an industry report showed. Oil for September delivery slipped as much as 33 cents to $87.73 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.76 at 9:42 a.m. Sydney time. The contract yesterday dropped $1.72 to $88.06, the lowest close since July 13. Prices gained 3.7 percent last month and are 11 percent lower this year.
Brent crude for September settlement fell $1.28, or 1.2 percent, to $104.92 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark’s premium to West Texas Intermediate closed at $16.86, the widest gap since May. U.S. crude stockpiles slid to 369.7 million barrels, the American Petroleum Institute said in its report. The Energy Department may say today that supplies fell 1 million barrels to 379.1 million, a Bloomberg News survey showed. Gasoline inventories decreased 1.3 million barrels last week, according to the API. The government report may show supplies rose 800,000 barrels.

OIL-Oil slips below $106; stimulus hopes fade
LONDON, July 31 (Reuters) - Oil slipped below $106 a barrel as investors grew less convinced that new stimulus measures from central banks in the United States and Europe would be enough to revive fragile economies and boost oil demand.
"For the moment, the economy remains the main focus for most investors; that isn't to say that the situation in Iran and the Middle East isn't of concern," said Ric Spooner, chief market analyst at CMC Markets.

Turkey's Iranian crude imports hold steady in June
DUBAI, July 31 (Reuters) - Turkey's Iranian crude oil imports stopped falling in June, according to official data, before reaching its pledge to cut imports by 20 percent to win a waiver from U.S. sanctions.
But traders said they expected to see lower imports from July onwards as state refiner Tupras is having difficulty lifting Iranian crude with Turkish tankers due to sanctions in shipping insurance, leaving Tehran scrambling to sell its oil stuck in storage tanks in Egypt.

Silver Market Recap Report(Source:CME)
Like gold, the silver market tried to rally early in the session and it generally outperformed the gold market. However, silver generally seemed to be disappointed with the flow of scheduled US data and it is also possible that silver was undermined by news of rising silver production from Mexico for the month of May. While silver hasn't paid that much attention to classic supply side developments lately seeing Mexican silver production increase by double digits probably discouraged some would be longs, especially with the outlook for the global economy in a constant state of flux.

20120801 1103 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap(Source:CME)
August Soybeans finished down 4 3/4 at 1721, 21 off the high and 9 1/2 up from the low. November Soybeans closed down 2 1/2 at 1641. This was 11 1/4 up from the low and 22 1/4 off the high. August Soymeal closed down 1.4 at 544.9. This was 3.5 up from the low and 9.3 off the high. August Soybean Oil finished down 0.02 at 52.55, 0.51 off the high and 0.4 up from the low. November soybeans traded slightly lower into the close but traded both sides of the unchanged today. Early pressure was seen just prior to the start of pit trading, but the market found good support near the lows of the day. A late day sell off was linked to spillover pressure from a sharply lower wheat market and profit taking in corn. The Midwest weather outlook for the next 2 weeks is offering support. Scattered showers are expected in the northern plains, parts of the central Midwest, and the eastern Corn Belt over the next week. Accumulation is expected to be light and be of very little benefit to soybean crops. Blistering temperatures will move into the Southwestern Corn Belt today and tomorrow. Cooler temperatures are expected early next week, which may provide some relief to crops. Another round of above normal temperatures is forecasted for later next week. Current price levels and crop reports suggest the market is trading a yield between 38-39 bushel/acre. Without cooler and wetter conditions in the next two weeks, soybean crops are susceptible to further yield deterioration. Outside markets were mixed today with the US Dollar trading lower and crude oil sharply lower on the day.

VEGOILS-Palm oil posts 3rd straight monthly loss as exports weaken
SINGAPORE, July 31 (Reuters) - Malaysian crude palm oil edged lower posting its third successive monthly loss, as weak July exports offset a downgrade of soy crop conditions by the U.S. Department of Agriculture that fed fears of tighter global oilseed supplies.
"Exports are worse than expected," said a dealer with a foreign commodities brokerage in Kuala Lumpur.

US soy yields risk further fall if no rain -FCStone
MELBOURNE, July 31 (Reuters) - U.S. soybean yields may fall to as low as 34-35 bushels per acre if no rains fall on the drought-stricken crop in the next two weeks, an official at New-York based trading firm INTL FCStone said on Tuesday.  
U.S. soybean yields were currently forecast at between 37-38 bushels per acre, Peter Nessler Jr., executive vice president commodities, told Reuters at a grains conference in Melbourne.

Brazil forward soy sales climb, physical biz stalls-Celeres
SAO PAULO, July 30 (Reuters) - Strong Brazilian soybeans prices were driving aggressive forward sales of next crop, but volatile markets have paralyzed sales in physical, old-crop beans, local grains analysts Celeres said on Monday.  
Brazilian soybean producers are selling the 2012/13 crop earlier than ever before with 41 percent of next season's output already sold, two months before planting starts. That is up from the 39 percent last week. Celeres said 10 percent of the then-new crop was sold by the week of July 27, 2011.