Friday, August 24, 2012
Bollinger band reading : pullback correction upside biased.
MACD Histogram : rising higher, buyer in control.
Support : 3050, 3020, 2970, 2950 level.
Resistance : 3070, 3100, 3150, 3200 level.
FCPO closed marginally higher with descreasing volume exchanged. Soy oil price currently trading higher after overnight corrected little lower while crude oil price having small retreat after yesterday closed firmer.
Price traded in positive zone through out the day on higher crude oil price and better exports anticipation ahead on next Monday export data.
Chart wise, market continue to have pullback correction within an upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
Posted by MW Chong at 6:12 PM
Bollinger band reading : pullback correction upside biased.
MACD Histogram : turned downward again, buyer seller less participation.
Support : 1640, 1630, 1623, 1615 level.
Resistance : 1650, 1660, 1670, 1680 level.
FKLI closed declined lower with slightly better volume traded almost on par with cash market closed little lower. Overnight U.S. markets closed recorded loss and today Asia markets ended in negative territory while European markets currently trading mixed.
Overnight higher jobless claim, slower America income data with no stimulus measure implemented left global investors dissapointed and reducing speculation position exposure ahead of the weekend.
FKLI daily chart reading revised to calling a pullback correction upside biased market development with MACD indicator crossing up and down.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.
Posted by MW Chong at 5:45 PM
GLOBAL MARKETS: Asian shares retreated from a two-week high as investors scaled back their expectations of strong stimulus from the U.S. Federal Reserve and fretted about economic growth after manufacturing surveys from the euro zone and China depicted a bleak outlook. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 1.2 percent and was set for a weekly loss of 0.5 percent. European stock index futures pointed to further losses, hurt by worries over global growth and as investors scale back expectations of a new round of stimulus from the Federal Reserve following comments made by a Fed member. U.S. stocks fell on Thursday as expectations for quick stimulus action from the Federal Reserve faded and Chinese and euro zone data pointed to a stalling global economy.
FOREX:The euro eased versus the dollar but still held near a 7-week high hit the previous day, its downside seen limited in the near term by the potential for the further unwinding of euro short positions.
FOREX-Euro eases, support seen from trimming of bearish bets
SINGAPORE, Aug 24 (Reuters) - The euro eased versus the dollar on Friday but still hovered near a 7-week high hit the previous day, its downside seen limited in the near term by the potential for the further unwinding of euro short positions.
"The moves that have taken place are nothing more than position unwinding," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, referring to the trimming back of euro-bearish bets.
OIL: Brent futures fell below $115 per barrel in Asia on signs of economic weakness across the globe, while doubts about more easing by the Federal Reserve and renewed worries over Europe's debt crisis also weighed.
Euro Coal-prices drop on improving Colombian exports
LONDON, Aug 23 (Reuters) - Physical prompt coal prices continued this week's downward trend on Thursday as prospects for rising Colombian exports and weak European demand pulled down the market, traders said.
A Colombian rail strike led to a supply squeeze in the Atlantic basin early in August, but analysts said the seaborne Atlantic coal market would return to a surplus by the end of August as Colombia ramps up exports.
Indian coal imports seen rising as global prices fall
NEW DELHI, Aug 22 (Reuters) - Indian coal imports are expected to rise in the financial year through March 2013 as more end-users turn overseas, prompted by a narrowing gap between the domestic and international prices of thermal coal.
Excess supply has hammered international thermal coal prices in recent months, with top exporter Indonesia cutting its output forecast to around 360 million tonnes from 390 million to 400 million for 2012.
Spain in talks with euro zone over sovereign aid -sources
Spain is negotiating with the euro zone over conditions for international aid to bring down its borrowing costs though the country has not made a final decision to request a bailout, three sources with knowledge of the matter said on Thursday.
U.S. data point to slow pace of healing in economy
Growth in the U.S. manufacturing sector picked up i n August, a sign the economy is resisting the global economic chill although a rise in new jobless claims last week pointed to a still-sluggish labor market.
Grain body slashes crop forecasts as droughts bite
Devastating droughts in the United States and Russia are set to drive global stocks of maize (corn) and wheat to multi-year lows, a world cereal body said on Thursday, heightening fears of a food price crisis on a scale last seen in 2008.
GRAINS: Chicago soybeans bounced back and were on track for their biggest weekly gain in a month, supported by higher-than-expected U.S. exports which showed a drought-fed rally has done little to temper demand.
Texas refiners thirsty for Eagle Ford crude
Two U.S. refiners on Thursday unveiled plans that will allow them to use more of the lower-cost crude oil from the prolific Eagle Ford shale play in South Texas.
Iron Ore-Slump extends, ore below $100, Shanghai rebar at record low
SINGAPORE, Aug 24 (Reuters) - Shanghai steel futures stretched their losing streak to a 10th day running on Friday, hitting a record low and giving steel producers more reason to shun iron ore cargoes as prices of the raw material dropped below $100 for the first time since 2009.
A slowing economy in China, the world's biggest consumer of iron ore and steel, is squeezing demand for these commodities and traders are worried the price slide would extend unless Beijing revives steel demand via stronger stimulus steps.
China steel mills skip iron ore cargoes as prices slide
SINGAPORE/SHANGHAI, Aug 22 (Reuters) - China's steel mills have defaulted on supply contracts or deferred shipment of up to 4 million tonnes of iron ore this month, traders said, the latest evidence that a slowdown in the country's economy is hurting the world's top steel market.
The wave of defaults and deferrals, the second this year, comes on the heels of a 23 percent drop in iron ore prices so far in 2012. Iron ore has perhaps been the hardest hit commodity as economic growth in top buyer China slows to what is expected to be its weakest pace in more than a decade.
BASE METALS: Copper dropped, coming off one-month highs hit in the previous session as hopes for more U.S. stimulus measures faded and on worrying signs that Spain, the fourth-largest economy in the euro zone, could need sovereign aid.
PRECIOUS METALS: Gold hovered near a 4-1/2 month high, poised for its biggest weekly rise in more than two months, as investors pondered the possibility of imminent bond buying by the U.S. Federal Reserve.
Indian gold buyers refrain as prices hit record high
MUMBAI, Aug 23 (Reuters) - India's benchmark gold futures rose 1.26 percent on Thursday to hit a new peak, driving away physical traders seeking to stock the yellow metal in the middle of the festive season.
The key gold for October delivery on the Multi Commodity Exchange (MCX) hit its peak at 30,699 rupees per 10 grams, before trading 1.09 percent higher at 30,646 rupees, backed by overseas leads, though a stronger rupee kept the upside limited.
METALS-Copper eases as US stimulus hopes fade; Spain eyed
"Base metal prices rose on stimulus hopes yesterday, powering copper above $7,600, but the upward momentum proved to be short-term when those hopes were not followed up with real policies," said an analyst with an international trading firm, who declined to be identified as he was not authorised to speak to the media.
"With stimulus hopes still priced in at these levels, there is more downside room in copper as these hopes fade."
PRECIOUS-Gold eases from 4-1/2 month high, Fed eyed
SINGAPORE, Aug 24 (Reuters) - Gold eased from a 4-1/2 month high on Friday but was still poised for its biggest weekly rise in more than two months as investor expectations of imminent bond buying by the U.S. Federal Reserve cooled slightly.
"Gold has already priced the expectation for QE3 (a third round of quantitative easing), and short-covering related to the minutes has also helped gold rally over the past few days," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
Baltic index up on higher capesize rates
Aug 23 (Reuters) - The Baltic Exchange's main sea freight index, which measures rates for ships carrying dry commodities, was up on Thursday for the second straight day on higher rates seen in the capesize sector.
The overall index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, rose 0.42 percent or 3 points to 715 points.
Asia Dry Bulk-Rates to hover near 2012 low on ample supplies
SINGAPORE, Aug 23 (Reuters) - Rates for dry bulk ships on key Asian dry bulk freight routes are expected next week to hover within striking distance of this year's lows as ample vessel supplies limit support from strong Chinese coal imports, ship brokers said on Thursday.
China's coal imports in July dropped 10.3 percent from the record high purchases of June, but shipments by the world's top producer and consumer of the fuel were still up from year-ago levels, official customs data showed on Tuesday.
Posted by MW Chong at 4:17 PM
GLOBAL MARKETS-Asian shares retreat on dim outlook for growth, Fed stimulus
TOKYO, Aug 24 (Reuters) - Asian shares retreated from a two-week high on Friday on scaled back expectations of more stimulus from the U.S. Federal Reserve and growth concerns after manufacturing surveys from the euro zone and China depicted a bleak outlook.
"Expectations for fresh stimulus action have been largely reflected in shares, so shares will continue to take a breather next week," said Kim Young-joon, an analyst at SK Securities.
OIL-Brent crude pares gain as stimulus hopes ease
NEW YORK, Aug 23 (Reuters) - Brent crude pared gains on Thursday as revived hopes for more stimulus from the U.S. Federal Reserve faded and doubts about Europe's ability to address its debt crisis crept back in focus.
"The market was looking exhausted at these higher levels after rallying for almost two months," said Michael Korn, energy broker at Skokie Energy in Princeton, New Jersey.
NATURAL GAS-US natgas futures trim loss, end down on bearish EIA
NEW YORK, Aug 23 (Reuters) - U.S. natural gas futures lost ground on Thursday, pressured by a bearish government report on inventories, but concerns about a storm in the Caribbean prompted some shorts to cover and helped lift prices from morning lows.
"The fact that Tropical Storm Isaac is still aimed at Florida is a mixed bag of concern. There are still limits to going short against tropical activity going into a weekend," Gelber & Associates analyst Patrick Saunders said, noting shorts likely opted to take profits at the lows because of the storm.
EURO COAL-prices drop on improving Colombian exports
LONDON, Aug 23 (Reuters) - Physical prompt coal prices continued this week's downward trend on Thursday as prospects for rising Colombian exports and weak European demand pulled down the market, traders said.
"The return of Colombian exports is colliding with ongoing weakness in European demand, so prices are going down every day as long as Colombian exports are going up," one coal trader said. "But this trend will stop soon, once Colombian exports are back to normal at some point next week."
Posted by MW Chong at 11:19 AM
Malaysia is set to gain in technology transfer and growth opportunities from the recent establishment of a joint-venture between Bluescope and Nippon Steel Corporation (NSC) of Japan. The 50:50 joint venture will open up new investment opportunities for Malaysia through NSC‟s technological development capabilities and substantial research and development base. (Bernama)
The residential property market may be cooling down in terms of actual sales due to credit tightening measures by banks. The loan approvals percentage for residential properties declined to 46.8% in 1H12 from 50.1% in the same period in 2011. The number of loans applied increased by 2.9% yoy in 1H12. (StarBiz)
The US FHFA house price index gained 0.7% mom in Jun (a revised 0.8% in May), overshooting consensus of 0.6%, whilst on a yoy basis, the measure increased 3.6% (a revised 3.8% in May). (Bloomberg)
US President Barack Obama wants Congress to agree to extend middle-class tax cuts now to take the edge off the looming "fiscal cliff" and leave tougher fiscal decisions for after November's election, the White House said. (Reuters)
US new-home sales grew 3.6% mom in Jul to hit an annualised 372,000 rate, 10,000 above consensus (a revised 359,000 in June). (Bloomberg)
US jobless claims gained 4,000 in the 18 Aug week to 372,000 (a revised 368,000 in the prior week), the second straight week of increase and exceeding consensus of 365,000. (Bloomberg)
The flash reading of the US manufacturing PMI stood at 51.9 in Aug (51.8 in Jul), above consensus of 51.0. (Bloomberg)
The Conference Board leading index for China 0.7% mom to 236.4 rose in Jul, after a little-changed June reading, signalling that the nation‟s economy may be stabilizing. (Bloomberg)
China aims to turn a trickle of cross-border trade that is settled in yuan into a stream, with Latin America and the Middle East as the next possible focal points, Hong Kong's US-based commissioner for economic and trade affairs Donald Tong said. (WSJ)
The People's Bank of China injected a net Rmb278bn (US$43.77bn) into the interbank money market this week, the largest net injection since early Jan. (Reuters)
The preliminary HSBC China Manufacturing Purchasing Managers Index fell to a nine-month low of 47.8 in Aug, compared with a final reading of 49.3 in Jul. (WSJ)
The flash reading of the eurozone’s manufacturing PMI came in at 45.3 in Aug from 44.0 in Jul, whilst the services PMI fell to 47.5 from 47.9. The composite PMI rose to 46.6 from 46.5 in Jul, whilst economists surveyed expected an unchanged reading. (Bloomberg)
The flash reading of the Eurozone consumer confidence stood at -24.6 in Aug, down from a revised -21.5 in Jul. Economists had expected confidence to stand at -21.75. (Reuters)
German Chancellor Angela Merkel said she and French President Francois Hollande will coordinate on their approach to Greece to keep pressure on the country at the heart of Europe‟s debt crisis to overhaul its economy. (Bloomberg)
Spain will empower its banking authorities to swoop in on lenders that appear to be heading to trouble and if necessary liquidate them, Spanish media said. (AFP)
EU: Euro-area services, manufacturing contracted in August
Euro-area services and manufacturing output contracted for a seventh straight month in August, adding to signs of a deepening economic slump as European leaders struggle to contain the fiscal crisis. A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area rose to 46.6 from 46.5 in July, London-based Markit Economics said on Thursday in an initial estimate. A reading below 50 indicates contraction. Economists had forecast an unchanged reading, the median of 19 estimates in a Bloomberg News survey showed. (Bloomberg)
UK: BBA July mortgage approvals rise 9.6% from June to 28,441
UK mortgage approvals rose 9.6% in July from the previous month to 28,441, the British Bankers Association said in an e-mailed statement on Thursday. Approvals are down from 34,125 a year earlier. (Bloomberg)
Germany: Quarterly growth driven by exports, households
Germany’s economic expansion in 2Q 2012 was driven by exports and household spending, a breakdown of the data shows. Exports rose 2.5% from the first quarter and private consumption increased 0.4%, the Federal Statistics Office in Wiesbaden said today. Economic growth slowed to 0.3% from 0.5% in the first three months of the year, the office said, confirming an initial estimate published Aug 14. (Bloomberg)
Australia’s Resources and Energy minister Martin Ferguson declared that “the resources boom is over,” adding that after having netted A$270bn in investment, the going “got tougher in the last six to 12 months.” (Reuters)
The Indian government's efforts to push forward reforms that are key to stimulating economic growth are getting delayed due to frequent disruptions in parliament proceedings, Trade Minister Anand Sharma said. (WSJ)
South Korea has for the first time recognised damages arising from its free trade agreement with the European Union which took effect last year, state-run Korea Trade Commission officials said. (AFP)
Singapore’s inflation rate slowed to 4% in Jul (5.3% in Jun), below market expectations of 4.5%. (Bloomberg)
Thailand‟s general public and businessmen gave the government a passing score for its one-year administration, a failing grade for solving corruption and an incomplete for flood management, says a survey. (Bangkok Post)
Thailand’s Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong remarked that the economic figures in 2Q12 are in line with the government’s work while indicating the government‟s readiness to further stimulate domestic spending. (Thai Financial Post)
The Anti-Corruption Network indicates that the Thai corruption problem has been worsening despite the government‟s effort to tackle it. (Thai Financial Post)
The Philippines’ budget deficit widened to PP39.2bn in Jul (-PP11.7bn in Jun), the widest since Dec 2011 as the government stepped up its spending to support the economy's strong growth momentum. (Bloomberg, Reuters)
Bangko Sentral ng Pilipinas (BSP) announced that it would impose limits to housing loans extended by banks to individual borrowers and to investments by banks in securities sold by real estate firms. BSP is maintaining the maximum allowable “real estate exposure” of a bank at 20% of total loan portfolio, but is expanding the components of “real estate exposure.” (Philippine Daily Inquirer)
Standard & Poor’s revised Vietnam’s economic outlook to „BB-/Stable/B‟ from „BB-/Negative/B‟, and “in line with this, it raised its ASEAN scale long-term rating on Vietnam to „axBB+‟ from „axBB‟” in reflection of the firm‟s assessment of a reduction in the risks like high inflation, trade deficit and foreign exchange reserves to Vietnam‟s macroeconomic and financial stability. (The Saigon Times)
Felda Global Ventures Holdings, the world's third largest palm oil company by hectarage, plans to buy 150,000 hectares estate land over five years to realise its cherished vision to emerge as the world leader in the oil palm industry. Its president and CEO Datuk Sabri Ahmad said the purchase would however depend on global market prospects for oil palm. Sabri said: "Felda Global Ventures aims to be the world's No. 1 player in the oil palm industry in the next eight years. By acquiring another 150,000 hectares, our company's total land bank will touch one million hectares," he added. (Bernama)
Indonesia may cut its tax on crude palm oil exports to 13.5% in September, Susanto, head of marketing at the nation‟s palm oil association, said. The base price for calculating the levy exporters must pay may be cut to US$920 per metric ton, Susanto said. CPO tax for August is 15% and base price is US$950 per tonne. (Bloomberg)
WCT is buying a plot of commercial land with an abandoned shopping mall in Johor Baru for RM180m cash, in a deal that potentially gives it recurring income. The deal nets the seller, Malaysia Building Society (MBSB), a one-time profit of about RM55m. WCT, which won a public tender, intends to undertake a mixed development project on the land situated "in a mature area of Johor Baru", the company said. The freehold land, measuring 5 ha with a four-storey vacant retail podium and a two-level car park, is situated in Jalan Skudai, the main road linking the North-South Expressway to Johor Baru city centre. The price WCT is paying MBSB, is 1.45x the property's net book value and 1.13x the RM160m value ascribed by valuer Messrs Jordan Lee & Jaafar on Feb 15 this year. (Financial Daily)
Scomi Group's oilfield services business has secured a contract from Qatar Petroleum in Qatar to supply drilling fluids and engineering services over three years. It said the contract was awarded to Scomi Oiltools (Cayman) Ltd, Qatar branch. The tendered value for this contract was RM130m. “The contract, which is a milestone for our drilling fluids business in the Middle East, requires Scomi Oiltools to formulate solutions for challenging drilling environments onshore as well as providing drilling fluids services for an initial four rigs with more rigs anticipated towards the end of the year," said Scomi Group. (StarBiz)
Bumi Armada and M3Nergy have been shortlisted by Oil and Natural Gas Corp of India (ONGC) for the development of several offshore marginal fields via a FPSO vessel. Bumi Armada is understood to be partnering India's Shapoorji Palonji. Industry players said Bumi Armada is the front runner to bag the job. (Financial Daily)
The recent hike in cement prices will only have a minimal impact on house prices, says Selangor Bumiputera Real Estate Developers Association president Mohammad Sahar Mat Din. He said cement usage in housing projects usually accounts for 2% of building cost and should not affect overall house prices. Mohammad Sahar that if the price of a 50kg cement bag rises by RM1, houses between RM200K and RM500K should increase by less than RM5K. As such, he said, developers should not take advantage of the situation to increase prices indiscriminately. Cement prices were increased by RM1 to RM17.75 a 50kg bag and by RM20 to RM340 a tonne bag on 1 Aug. (Bernama)
PAN Pacific KLIA, a hotel owned by Malaysia Airports Holdings, has started a RM56m makeover that will see the property incorporate hi-tech gadgets and digital components. "What we are doing is bringing the hotel to a 21st Century state by taking advantage of modern technology," GM Hans Winsnes said. The 442-room airport hotel commenced the upgrade in June this year and expects it to be completed by March next year. Winsnes expects return on investment on the RM56m makeover to take 11 years. (BT)
Subang Skypark is set to embark on a RM420m infrastructure development plan to transform into a full-fledged aerospace city by 2015. Its executive director, Tan Sri Ravindran Menon, said the company was planning to build a boutique hotel, an aviation museum and a theme park as part of a retail mall. The development, named Skypark Nexus, will have a built-up area of one million sq ft which would be completed in 24 months, budgeted to cost between RM300m and RM350m. (Bernama)
MRCB: More downgrade for Southern Link
RAM Ratings has further downgraded Malaysian Resources Corp (MRCB) unit MRCB Southern Link Bhd’s debts on the premise of the company’s significant liquidity stress. Following the opening of the Eastern Dispersal Link Expressway (EDL) in Johor Baru, which was funded by MRCB Southern Link, the Government had announced in March that the highway would not commence tolling, as set out in the concession agreement. Furthermore, MRCB Southern Link had surprisingly paid RM40m to the engineering procurement and construction (EPC) contractor. This led RAM to further downgrade MRCB Southern Link’s RM845m secured senior sukuk (2008/2025) to BB3 from A2. The RM199m junior sukuk (2008/2027) was downgraded to C1 from BBB2 as well. (StarBiz)
Telecommunication: High-speed broadband links in Penang by 2014
Malaysia's "Silicon Island", Penang, is set to bring high-speed broadband capability to its residents and investors by 2014 as the state ramps up its Internet connectivity. Penang Development Corporation (PDC) Telecommunications Services Sdn Bhd chairman Jeff Ooi said the upgrading exercise, known as the Next Generation Network (NGN), will see connectivity at a speed of 50 megabits per second (Mbps), which is more than 12 times the current speed of 4Mbps. He said the project will be carried out in 2 phases, with the first on the island and then Seberang Prai. He added that it will be funded via internal resources within PDC Telco and its network partners. Ooi said key consultants for the NGN are Malaysia Neutral Transmission Sdn Bhd, which is made up of its founder and former Jaring Communications Sdn Bhd CEO Dr Mohd Awang Lah and Penang-born Dr Bernard Lee, who consults for national broadband projects in Australia and New Zealand. The first phase of the project was tagged at RM50m. (Business Times)
O&G: Petronas all set to award Tembikai and Cenang prizes. Petronas is expected to reveal as early as late August the winners of two further risk service contracts that will cover development of the Tembikai and Cenang marginal fields off Peninsular Malaysia. The Malaysian state company is understood to have held technical reviews with the shortlisted bidders for three further RSCs to be awarded by the end of 2012. Sources said at least two separate RSCs will be awarded after the Muslim new year, for the development of the Tembikai and Cenang discoveries near Talisman Energy-operated Block PM 314. The bidder list for the two fields is said to include international oilfield services providers including Baker Hughes, Haliburton and Petrofac as well as Australia-based oil and gas independents, AWE and Hydra Energy. (Source: Upstream)
O&G: Bumi Armada, M3Nergy shortlisted. Two Malaysian O&G outfits, Bumi Armada and M3Nergy, have been shortlisted by ONGC for an FPSO. Industry players said Bumi Armada is the front runner to bag the job. "Yes we know both the companies Bumi Armada and us- are in but we are not sure who else is", an executive from M3Nergy told The Edge yesterday. (Source: Business Times)
Asia FX By Cornelius Luca - Thu 23 Aug 2012 17:11:11 CT (Source:CME/www.lucafxta.com)
The appetite for risk diminished considerably on Thursday after St. Louis Fed President James Bullard tamed expectations for further Fed easing, saying current economic conditions are not weak enough. The markets were buoyant on hopes for Fed easing and miracle work from the ECB. But in reality Spain is rumored to discuss terms of vital support from the ECB and Greece remains an expensive weight on the Eurozone. The risk remains on the downside and the US stock indexes peaked on Tuesday. The European currencies remained firm overall, but the commodity currencies tumbled on piling evidence that the Chinese economy is slowing down. The US stock markets fell, while the gold/oil ratio rose. The short-term outlook for most foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long across the board. Good luck!
US: The initial jobless claims edged up to 372,000 from the previous week's revised figure of 368,000 (from the 366,000 originally reported).
US: New single-family home sales rose 3.6% to a seasonally adjusted annual rate of 372,000 in July from the upwardly revised rate of 359,000 in June from the 350,000 initially reported.
US: The Markit manufacturing PMI advanced to 51.9 in August from 51.4 in July.
Today's economic calendar
Japan: Corporate service price for July
Australia: Leading index for June
Asian stocks fell from the highest level since May amid concern that European leaders aren’t making progress in solving the region’s debt crisis, damping the earnings outlook for exporters across the region. (Source: Bloomberg)
Makita Corp. (6586), a maker of power tools that gets more than 40 percent of its sales in the debt stricken region, slid 1.4 percent. BHP Billiton Ltd. (BHP), the world’s largest mining company, declined 1.6 percent as metals prices dropped. Woolworths Ltd. retreated 1.5 percent as Australia’s biggest retailer posted full-year earnings that missed estimates. The MSCI Asia Pacific (MXAP) Index slid 0.9 percent to 120.74 as of 9:42 a.m. in Tokyo, erasing this week’s advance, before the open of markets in China and Hong Kong. The gauge yesterday closed at the highest level since May 4. “We remain quite cautious,” said Daphne Roth, Singapore- based head of Asia equity research at ABN Amro Private Banking, where she helps oversee about $207 billion. “In Europe, while they are moving in the right direction, the pace is slower than the market expects.”
Asia’s equity benchmark climbed 12 percent from a June low through yesterday on bets monetary authorities in the U.S., Europe and China would take action to boost slowing economic growth. Stocks on the index were valued at 12.6 times estimated earnings on average, compared with 13.7 for the Standard & Poor’s 500 Index and 11.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japanese Stocks Decline Amid Euro Debt-Crisis Concern (Source: Bloomberg)
Japanese stocks declined, with the Nikkei 225 Stock Average falling the most in a month, amid concern European leaders aren’t making progress in solving the region’s debt crisis, curbing the earnings outlook for exporters. Ricoh Co., an office-equipment maker that gets more than 20 percent of its revenue in Europe, sank 2.7 percent. Japan Tobacco Inc. (2914), Asia’s largest listed cigarette maker by market value, lost 2 percent after BNP Paribas SA advised selling the stock. Steelmakers led declines among the Topix Index’s 33 group after the sector was downgraded by Dahlman Rose & Co., saying prices may be at a peak. Osaka Securities Exchange Co. plunged 8.3 percent after Tokyo Stock Exchange Group Inc.’s tender offer for the rival bourse succeeded. The Nikkei 225 fell 1.4 percent to 9,052.74 as of 9:19 a.m. in Tokyo, heading for a weekly drop of 1.2 percent. Volume on the gauge was more than 10 percent below the 30-day average.
The broader Topix Index lost 1.2 percent to 755.43, with almost six times as many shares declining as advancing. “Most of the risk still comes from Europe,” said Stan Shamu, a market strategist at IG Markets Ltd. in Melbourne, a provider of trading services for stocks, bonds, currencies and commodities. “There’s still skepticism that European leaders can come up with a solution.”
S&P 500 Falls Most in One Month Amid Concern Over Europe (Source: Bloomberg)
U.S. stocks fell, as the Standard & Poor’s 500 Index posted its biggest decline in a month, amid investor concern that European leaders aren’t making progress in solving the region’s debt crisis. Hewlett-Packard Co. (HPQ) dropped 8.2 percent after forecasting full-year earnings that missed analysts’ estimates as demand slumped. Big Lots Inc. (BIG) tumbled 21 percent after lowering its annual earnings projection. Boeing Co. retreated 3.4 percent after losing 35 orders for 787-9 planes, the biggest Dreamliner cancellation. Alcoa Inc. (AA) erased 2.7 percent, pacing declines among raw-material stocks. The S&P 500 (SPX) slumped 0.8 percent to 1,402.08 at 4 p.m. in New York. The benchmark index for American equities is heading for its first weekly decline in almost two months, with a four- day drop of 1.1 percent. The Dow Jones Industrial Average lost 115.3 points, or 0.9 percent, to 13,057.46 today. Volume for exchange-listed stocks in the U.S. was 5.3 billion shares, 16 percent below the three-month average.
“We’re tipping over into a corrective phase in stocks,” Barry James, who helps oversee $3.3 billion as president of James Investment Research in Xenia, Ohio, said in a telephone interview. “Europe is the key driver in the world right now. European leaders aren’t really addressing the root problems.” German Chancellor Angela Merkel said Europe is in one of its deepest crises, and while the path to a solution is “arduous,” the euro region will emerge stronger. She hosted French President Francois Hollande today as the leaders of Europe’s two biggest economies seek common ground on Greece and the wider debt crisis. Greece’s prime minister, Antonis Samaras, will follow Hollande to Berlin tomorrow and travel on to Paris on Aug. 25.
U.K. Stocks Little Changed as Investors Weigh Stimulus (Source: Bloomberg)
U.K. stocks were little changed as speculation that central banks will ease monetary policy offset a report showing the number of Americans filing applications for unemployment benefits climbed last week to a one-month high. Randgold Resources Ltd. (RRS) and Fresnillo Plc (FRES) each advanced more than 3.5 percent. Anglo American Plc (AAL) climbed 1.7 percent as the mining company reached an agreement to end a 10-month dispute over a copper mine in Chile. Petropavlovsk Plc (POG) plunged 16 percent, its biggest slump in more than 3 1/2 years.
The benchmark FTSE 100 Index (UKX) gained 2.4 points, or less than 0.1 percent, to 5,776.6 at the close in London, after earlier rising as much as 0.6 percent. Stocks retreated the most in a month yesterday, led by a selloff in mining companies, as BHP Billiton Ltd. put $68 billion of projects on hold and Japan reported a wider-than-estimated trade deficit. The broader FTSE All-Share Index also rose less than 0.1 percent today, while Ireland’s ISEQ Index declined 0.3 percent. “I’ve always taken the view that there is a very high probability of QE3,” said Robert Parker, a senior adviser at Credit Suisse Asset Management in London, in a Bloomberg TV interview, referring to a third round of quantitative easing. “Politically, I think that has to be in September.” Minutes from the Federal Open Market Committee’s July 31- Aug. 1 meeting showed that many members decided that they would soon need to opt for further stimulus.
“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” according to the record of the gathering.
European Stocks Fall on Schaeuble Comments (Source: Bloomberg)
European stocks dropped for a second day as German Finance Minister Wolfgang Schaeuble damped optimism that Greece will get more time to cut its debt and as bond yields climbed in Spain. Banco Bilbao Vizcaya Argentaria SA (BBVA) slid 1.8 percent as lenders retreated across Europe. Royal Ahold NV lost 3.6 percent after the retailer reported earnings that missed some analysts’ estimates. Petropavlovsk Plc (POG) tumbled 16 percent after the miner of gold in Russia reported a slump in profit. The Stoxx Europe 600 Index (SXXP) retreated 0.6 percent to 267.69 at the close. The gauge earlier advanced as much as 0.6 percent on speculation central banks from the U.S. to China will further ease monetary policy to support growth. The equity benchmark has still rallied 14 percent from this year’s low on June 4.
“There are many negative factors weighing on the market, notably the uncertainty associated with the sovereign-debt crisis and a weak outlook for earnings,” Nathalie Benatia and Christopher Jeffery, strategists at BNP Paribas, wrote in a report to clients. “However, these are currently being offset by market anticipation of further policy assistance. We expect this anticipation to build over the coming weeks.” Stocks fell as Germany’s Schaeuble said that allowing Greece more time to meet its debt obligations would not solve the country’s problems and would increase costs for creditors. He spoke on SWR2 radio.
Emerging-market stocks rose as investors speculated Chinese and U.S. policy makers will take steps to boost growth in the world’s largest economies as applications for U.S. unemployment benefits climbed. (Source: Bloomberg)
The MSCI Emerging Markets Index (VXEEM) climbed 0.5 percent to 974.09. Russia’s Micex Index added 0.5 percent with United Co. Rusal, the world’s biggest aluminum producer, leading the gains. Chinese shares posted the biggest advance in almost three weeks. Brazil’s Bovespa stock index slid with Vale SA, the world’s largest iron-producer, among the decliners. Chinese data signaled the nation’s manufacturing may contract at a faster pace this month, fueling speculation the People’s Bank of China will ease monetary policy a day after Governor Zhou Xiaochuan said adjustments to borrowing costs can’t be ruled out. Federal Reserve Bank of Chicago President Charles Evans, speaking to reporters in Beijing, urged looser monetary policy around the world. Jobless claims in the U.S. climbed to a one-month high last week.
“The optimism in the market carries from expectation that central banks are moving toward a position of policy easing and stimulus support,” Aryam Vazquez, an economist for global emerging markets at Wells Fargo & Co., said by phone from Miami. “The job number today was far from great, and that plays into the very dovish tone from the Fed.”
Recap Stock Index Market Report (Source:CME)
The September S&P 500 registered an outside day reversal to the downside on the session. The market traded higher during the early morning hours, fueled by ideas that more central bank support could be on its way. However, a round of disappointing earnings, weak Chinese and European manufacturing data and comments from a Fed official tamping down hopes for more QE turned markets lower. Shares of Hewlett-Packard were down more than 8.0% during the session after reporting their largest quarterly loss in history and lowering their full year guidance. There was more disappointment in the retail sector, with weaker than expected results from Big Lots and Guess. Talk that the US Fed might not pursue more quantitative easing at the September meeting seemed to turn sentiment in the market negative and inspire a round of profit-taking.
Treasuries Gaining Most on Week in Almost 3 Months (Source: Bloomberg)
Treasuries headed for their biggest weekly gain in almost three months on speculation the Federal Reserve will increase its efforts to cap borrowing costs as soon as its Sept. 12-13 meeting to support the economy. Bonds rose yesterday as a jump in initial claims for jobless benefits boosted speculation the central bank will act. Fed Bank of Chicago President Charles Evans said today there are reasons for the Fed to “do more,” in an interview on CNBC. Fed Bank of St. Louis President James Bullard told CNBC yesterday signs of improvement in the economy would prompt him to oppose any Fed program to buy bonds to lower borrowing costs. “Treasury yields will decline,” said Hiromasa Nakamura, who invests in U.S. debt from Tokyo at Mizuho Asset Management Co., which oversees the equivalent of $41.9 billion and is part of Japan’s third-biggest bank. “The employment situation is not so good. The Fed may take action fairly soon.”
Benchmark 10-year yields were little changed at 1.69 percent as of 9:42 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 1.625 percent security due in August 2022 was 99 14/32. The rate has risen from the record low of 1.38 percent set July 25. It compares with the average of 3.73 percent for the past decade. The yield fell 12 basis points, or 0.12 percentage point, this week, the largest drop since the period ended June 1. Many Fed policy makers said additional stimulus would probably be needed soon unless the economy shows signs of a durable pickup, according to minutes of their July 31-Aug. 1 meeting released Aug. 22.
FOREX-Euro hits 7-week high vs dollar after Fed, PMIs
LONDON, Aug 23 (Reuters) - The euro rose to a seven-week high against the dollar, after business activity surveys in France and Germany were not as bad as feared, lifting some of the pessimism surrounding the region's economy.
"The French PMIs were a bit better while the German one was at best mixed," said George Saravelos, currency strategist at Deutsche Bank. "Still, at the margins they are supportive and we expect the euro has a bit more to go towards $1.27. Markets are also starting to put a bit more risk premium on the Fed."
Korean Won Falls, Bonds Gain as Fed Stimulus Bets Weaken (Source: Bloomberg)
South Korea’s won dropped from a one-week high and bonds advanced as expectations for further monetary stimulus by the U.S. faded after a policy maker said he would resist more Federal Reserve action. Federal Reserve Bank of St.Louis President James Bullard said yesterday that recent signs of improvement in the economy would prompt him to oppose any new Fed program to buy bonds, known as quantitive easing. The central bank said in minutes released this week that many participants at the latest meeting favored more stimulus measures. The Kospi Index (KOSPI) of shares dropped as overseas investors sold more of the nation’s equities than they bought for the first time since Aug. 3. “There are increased doubts whether the Fed will actually perform a third round of quantitative easing or not,” said Cho Young Bok, a Seoul-based currency dealer for Daegu Bank. “Still, we may see South Korean exporters selling the dollar as the won weakens, which will limit won’s losses.”
The won weakened 0.3 percent to 1,134.10 per dollar as of 9:44 a.m. in Seoul, data compiled by Bloomberg show. It touched 1,129.35 yesterday, the strongest level since Aug. 14, and was little changed for the week. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, fell 20 basis points, or 0.20 percentage point, to 7.15 percent. The yield on the government’s 3.25 percent bonds due June 2015 slid two basis points to 2.86 percent, the lowest since Aug. 13, Korea Exchange Inc. prices show. The rate dropped seven basis points this week. Three-year debt futures rose 0.08 to 105.98 and the one-year interest-rate swap fell two basis points to 2.91 percent.
Euro Set for Weekly Advance as Europe Leaders Meet (Source: Bloomberg)
The euro was set for its biggest weekly advance in six months on speculation European leaders meeting this week are making progress in containing fiscal turmoil in the region, boosting demand for the currency. The 17-nation euro strengthened versus all but one of its 16 major counterparts in the past five days after German Chancellor Angela Merkel said she and French President Francois Hollande will coordinate on their approach to Greece. Merkel is set to meet Greek Prime Minister Antonis Samaras today. The dollar headed for its biggest five-day slide in 12 weeks against the yen as an increase in jobless claims spurred speculation the Federal Reserve will add to stimulus measures. “The general risk from Europe has definitely been reduced,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “I think we’ve got further to run in the phase of unwinding bets for a euro collapse.”
The euro was at $1.2555 at 9:48 a.m. in Tokyo from $1.2564 yesterday in New York, when it touched $1.2590, the highest since July 4. Europe’s shared currency bought 98.63 yen from 98.62. The dollar traded at 78.56 yen from 78.49 yesterday. The euro has risen 1.8 percent since Aug. 17, the best weekly performance since the period ended Feb. 24. The dollar has weakened 1.3 percent versus its Japanese counterpart, set for the biggest five-day drop since June 1.
HSBC in Settlement Talks With U.S. Over Money Laundering (Source: Bloomberg)
HSBC Holdings Plc (HSBA), which is under investigation by U.S. regulators for laundering funds of sanctioned nations including Iran and Sudan, is in talks to settle the matter, two people with knowledge of the case said. The bank, Europe’s largest by market value, made a $700 million provision in July for any U.S. fines after a Senate Committee found it had given terrorists and drug cartels access to the U.S. financial system. That sum might increase, Chief Executive Officer Stuart Gulliver has said. An HSBC settlement regulators and the Manhattan District Attorney were aiming to conclude as early as September may have been slowed when New York’s banking superintendent accused Standard Chartered of laundering $250 billion for Iran. Regulators had been talking with both banks about universal accords when Benjamin Lawsky on Aug. 6 threatened to revoke Standard Chartered’s license.
Deals with the London-based banks next month are still possible, said the people, who asked not to be identified because the investigations are confidential. “This is an epidemic of banks willfully, consistently violating economic sanctions,” Jimmy Gurule, a former undersecretary for enforcement at the U.S. Treasury, said of sanctioned-nation money laundering. “It calls for more serious sanctions than a monetary fine for an individual bank that does nothing more than harm shareholders.”
Fed looks set to ease fairly soon barring swift rebound (Reuters)
The Federal Reserve is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes from the U.S. central bank's latest meeting suggested.
Jobless Claims in U.S. Climb for Second Week to One-Month (Source: Bloomberg)
Applications for U.S. unemployment benefits climbed last week to a one-month high, showing scant progress in the labor market that’s left Americans more pessimistic about the economy. Jobless claims rose by 4,000 for a second week to reach 372,000 in the period ended Aug. 18, Labor Department figures showed today in Washington. Consumer confidence dropped last week to the lowest level since January, according to the Bloomberg Consumer Comfort Index. Companies are keeping payrolls lean as a weaker global economy and lack of clarity on U.S. tax policy next year cloud the demand outlook, one reason the Federal Reserve may be closer to further monetary stimulus. Residential real estate is a source of strength for the expansion, according to a report that showed new-home sales matched a two-year high in July.
“The economy is growing, but it’s still moderate growth, and the labor market is still weak,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “We’re also getting better numbers in terms of building activity. That’s certainly adding to growth and offsetting some of the weakness we’re seeing from the consumer.”
U.S. Incomes Fell More in Recovery, Sentier Says (Source: Bloomberg)
American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC. Median household income fell 4.8 percent on an inflation- adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote. “Almost every group is worse off than it was three years ago, and some groups had very large declines in income,” Green, who previously directed work on the Census Bureau’s income and poverty statistics program, said in a phone interview today. “We’re in an unprecedented period of economic stagnation.”
While gains in hourly earnings and average hours worked per week may have had “a minor mitigating effect” on income declines, they couldn’t offset a jobless rate that hasn’t fallen below 8 percent since February 2009 and a record duration of unemployment, according to the Annapolis, Maryland-based firm. The average duration of unemployment increased to a record 41 weeks in November and remains at 39 weeks, Labor Department data show. Almost 5.2 million Americans have been out of work for at least six months.
Sales of New U.S. Homes Increase to Match Two-Year High (Source: Bloomberg)
Purchases of new U.S. homes rose more than projected in July to match a two-year high, a sign the industry that helped trigger the recession is recovering. Sales climbed 3.6 percent to a 372,000 annual pace, following a 359,000 rate in June that was higher than previously estimated, figures from the Commerce Department showed today in Washington. Last month’s rate was the same as in May, which was the strongest since April 2010. The median forecast of 72 economists surveyed by Bloomberg called for a rise to 365,000. Buyers are returning to the market to take advantage of cheaper properties and record-low mortgage rates, helping to boost orders at builders like Toll Brothers Inc. (TOL) Competition from foreclosures, unemployment exceeding 8 percent and limited credit pose hurdles to a more pronounced rebound, one reason Federal Reserve policy makers are monitoring housing data.
“The new-home market is clearly signaling a steady and fairly strong recovery,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. “Demand should continue to climb right on into 2013.” Stocks held earlier losses after the report. The Standard & Poor’s 500 Index fell 0.6 percent to 1,404.73 at 10:17 a.m. in New York. Estimates of economists surveyed ranged from 340,000 to 400,000. June’s reading was previously reported as 350,000.
Consumer Comfort in U.S. Slumps to Lowest Level Since January (Source: Bloomberg)
Consumer confidence in the U.S. fell last week to the lowest level since January as Americans’ held more pessimistic views on their finances. The Bloomberg Consumer Comfort Index decreased to minus 47.4 in the period ended Aug. 19, the sixth consecutive drop, from a minus 44.4 the prior period. The series of declines is the longest since 2008, when the U.S. was in recession. Higher gasoline prices are taking a bigger chunk out of Americans’ paychecks, and an increase in food prices caused by a drought in parts of the country may further hurt finances. In addition, job growth hasn’t proceeded fast enough to bring the unemployment rate below 8 percent, indicating incomes may fail to keep pace with escalating expenses.
“Rising food and gas prices have stoked a bout of discomfort among a broad section of the American public,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The pain has been especially evident down the income ladder in households that will bear the disproportionate burden of adjustment to higher prices. The result will likely be a net slowing in discretionary spending.” Readings below minus 40 put the comfort gauge “in the zone associated with deep economic discontent,” according to Gary Langer, president of New York-based Langer Research Associates, which compiles the index for Bloomberg. The index has lost 16 points since peaking this year in April.
Fed’s Bullard Says FOMC Minutes ‘Stale,’ Economy Stronger (Source: Bloomberg)
Federal Reserve Bank of St. Louis President James Bullard said the Federal Open Market Committee minutes released yesterday are no longer as relevant because the U.S. economy has picked up in the past month. “The minutes are a bit stale,” Bullard said in a CNBC interview. “We have some data since then that is stronger.” Bullard said he opposes a new asset-purchase program right now. In contrast, many Fed policy makers said additional stimulus would probably be needed soon unless the economy shows signs of a durable pickup, according to minutes of their most recent meeting released yesterday. Fed Chairman Ben S. Bernanke, who last month said a third round of bond buying was an option, will update his policy outlook on Aug. 31 with a speech to the Kansas City Fed’s annual symposium at Jackson Hole, Wyoming. “It would be unusual for the Fed to take action based on this data constellation,” Bullard said. U.S. equity markets are “looking at all-time highs.”
Bullard, who doesn’t vote on monetary policy this year, was the first Fed official in 2010 to call for a second round of asset purchases. In speeches this year, he has said he sees no need for additional easing and urged the FOMC to “pause” to assess developments. The St. Louis Fed official said the he and other Fed policy makers were disappointed in growth of about 1.5 percent in the first half of the year. A resumption of 2 percent or greater growth seems likely in the second half, he said.
Bullard Opposes Fed Bond Buying as U.S. Economy Improves (Source: Bloomberg)
Federal Reserve Bank of St. Louis President James Bullard said recent signs of improvement in the economy would prompt him to oppose any new program by the Fed to buy bonds to reduce borrowing costs. “I wouldn’t do it right now,” Bullard said today in a CNBC interview. “If it was just me and we just have the data up until today I wouldn’t take a decision right now.” Many Fed policy makers said additional stimulus would probably be needed soon unless the economy shows signs of a durable pickup, according to minutes of their July 31-Aug. 1 meeting released yesterday. Bullard said “the minutes are a bit stale” because “we have some data since then that is stronger.” Retail sales increased 0.8 percent in July, more than forecast by economists, and companies hired 163,000 workers, the most in five months. “It would be unusual for the Fed to take action based on this data constellation,” said Bullard, 51, who doesn’t vote on policy this year.
A report today showing the number of Americans filing applications for unemployment benefits rose to a one-month high last week is “consistent with moderate payroll growth” and doesn’t indicate a deterioration, Bullard said. U.S. and European stocks fell as investors weighed whether central banks will ease monetary policy further amid concern over the euro-area crisis. The Standard & Poor’s 500 Index fell 0.5 percent at 10:07 a.m. New York time.
Fed Signals Readiness to Ease Without U.S. Growth Pickup (Source: Bloomberg)
Federal Reserve policy makers signaled readiness to boost record stimulus unless they are convinced the economy is poised to rebound. Recent signs of strength may not be enough to satisfy them. Many members of the policy-setting Federal Open Market Committee said further action would probably be needed “fairly soon” without evidence of “substantial and sustainable” improvement in the recovery, according to minutes of the July 31-Aug. 1 meeting released yesterday in Washington. “The burden of proof is to see a sustained pickup in growth and I don’t think we’re going to get that,” said Eric Green, a former economist at the Federal Reserve Bank of New York who is now global head of rates and foreign exchange research at TD Securities Inc. in New York.
U.S. stocks reversed losses yesterday and gold rose to a 16-week high on expectations of further easing by the central bank. Attention now turns to Fed Chairman Ben S. Bernanke’s Aug. 31 speech in Jackson Hole, Wyoming, where he may clarify his thinking on the need for stimulus in view of recent reports showing gains in retail sales and housing. Many participants at the Fed’s meeting said a new large- scale asset-purchase program “could provide additional support for the economic recovery,” according to the minutes. Policy makers said in a statement after the meeting that they will step up record stimulus if needed to spur growth and cut a jobless rate stuck above 8 percent since February 2009.
Money Funds Test Geithner, Bernanke Resolve as Schapiro Defeated (Source: Bloomberg)
Money-market mutual funds, an alternative to bank accounts for individuals and companies, will test the resolve of the U.S. Federal Reserve and Treasury Department to prevent another financial crisis after the $2.6 trillion industry successfully lobbied against more regulation by the Securities and Exchange Commission. Fed Governor Daniel Tarullo has said the central bank could tighten rules on banks’ borrowing from money-market funds, and Boston Fed President Eric Rosengren has said officials have the option to force banks to back their money funds with capital. The Fed and the Treasury could also work through the Financial Stability Oversight Council, a new regulatory panel formed under the Dodd-Frank Act, to seize oversight of money funds from the SEC and grant that power to the Fed. “There’s real unanimity in the bank regulatory arena about the need to do something about money-market funds,” Karen Shaw Petrou, managing partner of Washington-based Federal Financial Analytics Inc., said in an interview.
“What the Fed can do, and I think will try to, is put the funds back in a much more limited corner, by isolating them from integration with the banking sector.” SEC Chairman Mary Schapiro this week abandoned a four-year effort to adopt tougher rules for money funds as three fellow commissioners said they wouldn’t support her proposal. The announcement marks a victory for the fund industry, which had lobbied against the plan.
POLL-Euro zone flash PMIs signal recession (Reuters)
The euro zone looks destined for its second recession in three years, according to business surveys that showed the economic rot is even spreading through Germany, the region's largest and strongest economy.
Merkel Seeks to Keep Greece on Reform Path in Hollande Talks (Source: Bloomberg)
German Chancellor Angela Merkel said she and French President Francois Hollande will coordinate on their approach to Greece to keep pressure on the country at the heart of Europe’s debt crisis to overhaul its economy. Merkel, speaking to reporters in Berlin before hosting a working dinner with the French president, said they will discuss “how to receive our colleague,” Greek Prime Minister Antonis Samaras, who visits the German capital today and Paris tomorrow. “It’s important to me that we all stand by our obligations and wait for the troika report and see what the result is,” Merkel said in a prepared statement late yesterday, referring to a report due next month on Greece’s progress in meeting its bailout terms. “We, and I, will encourage Greece to pursue the path of reform that demands a lot from the people.”
Samaras has used interviews this week with German and French newspapers to call for more time to meet program targets as European officials look for ways to stave off an immediate crisis after the country’s international creditors report on the health of its finances. Greece is dependent upon receiving outside funds to remain in the 17-nation euro. “We want, I want, Greece to be in the euro zone,” Hollande said. “It’s up to the Greeks to make responsible efforts to achieve this objective.” Merkel and Hollande both said there was a need to implement the agreements made at a June summit of European Union leaders, including plans for closer cooperation between banking authorities.
DTN Closing Grain Comments 08/23 14:40 : Long Day for Market Bulls (Source:CME)
The grain complex came under increased pressure Thursday as contracts across the board closed sharply lower. Selling came from both sides of the market with investors pulling money off the table following the early-week rally.
Wheat Market Recap Report (Source:CME)
December Wheat finished down 22 1/4 at 894 3/4, 29 1/4 off the high and 1 3/4 up from the low. March Wheat closed down 21 at 904 1/4. This was 3 up from the low and 27 1/4 off the high. December Chicago wheat saw massive losses today and closed near the lows of the day. Kansas City and Minneapolis wheat traded sharply lower as well. Early morning gains were wiped away after technical selling commenced in the corn market. Sell pressure was also linked to unwinding of calendar spreads. The wheat market saw support, early in the day after a private Russian grain analyst pegged Russian wheat production at 39 million tonnes. The International Grains Council also cut their wheat production forecast for Russia by 4 million tonnes to 41 million tonnes. Both estimates are near the low end of trader estimates. Russian wheat yields have fallen 31.5% from last year to 2.07 tonnes per hectare as of August 23rd. Export sales fell in line with market expectations with total net weekly sales of 474,800 tonnes. As of August 16, cumulative wheat sales stand at 32% of the USDA forecast for 2012/2013 vs. a 5 year average of 40.5%. The US Dollar traded lower on the day but offered no support to the grain complex. December Oats closed down 4 1/2 at 391. This was 1 1/2 up from the low and 4 3/4 off the high.
Pro Farmer: After the Bell Wheat Recap (Source:CME)
Wheat futures fell victim to spillover from neighboring corn and soybean markets around midday, posting double-digit losses in the 20-cent range at all three exchanges. Futures started the day choppy but as selling picked up in the corn and soybean markets, sell stops were eventually triggered to sharply extend losses in the wheat pit as wheat remains in a follower's role.
Corn Market Recap for 8/23/2012 (Source:CME)
December Corn finished down 20 at 814 3/4, 24 off the high and 2 1/2 up from the low. March Corn closed down 19 at 814 1/4. This was 2 1/2 up from the low and 23 off the high. December corn traded sharply lower into the close after a closely followed crop tour reported better than expected corn yields in Illinois and Indiana the last two days. The tour made their way through Minnesota today and reports were worse than expected but technical selling and unwinding of calendar spreads forced December corn to a fresh 3 day low. The corn market saw positive news after the International Grains Council cut its forecast for global corn production by 26 million tonnes to 838 million tonnes. The cut in production is 11 million tonnes lower than the current USDA estimate. Net weekly export sales were in line with market estimates. Corn came in at 108,400 tonnes for the current marketing year and 217,000 for the next marketing year for a total of 325,400. As of August 16, cumulative corn sales stand at 24% of the USDA forecast for 2012/2013 vs. a 5 year average of 19%. Outside markets offered no direction today with the US Dollar trading lower, metals higher, and crude oil lower. November Rice finished down 0.16 at 15.705, 0.045 off the high and 0.025 up from the low.
Pro Farmer: After the Bell Corn Recap (Source:CME)
Corn futures posted a low-range close to finish 15 3/4 to 21 1/2 cents lower in the September through July contracts. Far deferred futures ended mostly around 6 to 9 cents lower. Traders continue to be disappointed by yield results from the Pro Farmer Midwest Crop Tour, although yield reports this morning out of Minnesota and Iowa were better. Early losses turned sharp as sell stops were triggered. Tonight, results from Iowa and Minnesota will be released on www.profarmer.com.
GRAINS: Chicago soybeans hit a contract high, rising for a fourth session out of five, after a group of experts painted a bleak supply picture for the crop that has been scorched by the worst drought across the U.S. Midwest in 56 years. Corn also edged up after yields in Illinois were pegged at their lowest in 17 years by the Pro Farmer Midwest Crop Tour. Wheat dipped on better U.S. planting conditions and forecasts for a big Canadian wheat crop. (Reuters)
Corn Production Forecast Cut to 838 Million Tons by IGC (Source: Bloomberg)
World corn production will be smaller than estimated a month ago after dry weather damaged crops in the U.S., the International Grains Council forecast. Farmers across the world will harvest 838 million metric tons of corn in the 2012-13 crop year, down 3 percent from 864 million tons forecast on July 26 and below last year’s output of 875 million tons, the London-based council wrote in an e-mailed report today. Corn prices surged 64 percent since mid-June on the Chicago Board of Trade, touching a record $8.49 a bushel on Aug. 10, as the worst U.S. drought in a half century cut yields. “Drought has further stressed crops across the Northern Hemisphere,” the IGC said. “Exportable supplies in the U.S. and Ukraine have tightened and while the next crops in Brazil, Argentina and South Africa may be large, harvests are still several months away.”
Higher corn prices have boosted costs for ethanol makers including Archer Daniels Midland Co. and meat producers including Tyson Foods Inc. (TSN) and Smithfield Foods Inc. (SFD), which use grains and soybean meal in animal feed. The United Nations estimated that global food costs surged 6.2 percent in July, the most since November 2009, because of rising grain prices. Corn production in the U.S., the world’s biggest grower and exporter, may total 275 million tons, down from 300 million estimated last month, the IGC said. The U.S. Department of Agriculture has predicted a U.S. harvest of 273.8 million tons, the smallest in six years, and global production of 849 million tons.
Iran Curbs Drive Rice Exporter to Africa: Corporate India (Source: Bloomberg)
KRBL Ltd. (KRB), India’s biggest basmati rice exporter, plans to seek new markets in Africa to counter international sanctions against Iran and revive profit amid sliding grain prices. Rising demand among Indian immigrants and natives of Kenya, Senegal, Nigeria and Ethiopia for the aromatic, long variety may help reverse two years of decline in earnings, Chairman Anil Mittal said in a phone interview. Net income may almost double to 1.25 billion rupees ($23 million) in the year ending March 31, from 730 million rupees in the previous 12 months, he said. The cereal is used to make dishes including biryani and pilaf “For us, the new market will be east and west Africa as rising income there drives demand for these products,” Mittal said, without elaborating on the potential volume. “If the entire continent is covered, it will be a big quantity.”
A 25 percent drop in prices of basmati rice in the 12 months to March eroded earnings of the New Delhi-based company, while its shares have plunged 70 percent from a record high reached in October 2010. Trade restrictions on Iran, the world’s biggest buyer of the grain, have resulted in payment hurdles for Indian shippers, prompting KRBL to look elsewhere for growth. The All India Rice Exporters’ Association expects basmati exports to increase 25 percent this year.
Russia cuts 2012 grain crop forecast to 75 mln T (Reuters)
Russia's Agriculture Ministry cut its 2012 grain crop forecast to 75 million tonnes from 75-80 million tonnes, minister Nikolai Fyodorov said on Thursday.
Canada set for big wheat crop; canola view smaller (Reuters)
Canadian farmers are on track to harvest the second-largest wheat crop since 1996, while record canola output will fall short of what traders had expected, Statistics Canada data showed on Wednesday in its first production forecast of the year.
SOFTS: Raw sugar futures on ICE eased to an 11-week low, as favourable weather anticipated to expedite Brazil's harvest weighed on prices. Cocoa on ICE was firm, as technicals indicated the market could extend its recent correction lower, while arabica coffee was steady. (Reuters)
China issues more cotton quotas, plans reserve sales-sources (Reuters)
China, the world's top cotton buyer, has recently issued an additional 400,000 tonnes of cotton import quotas to textile mills to help them source more cheap international supplies, industry sources said on Thursday.
Ethanol Stays in Gasoline Even If Mandate Ends (Source: Bloomberg)
Ethanol, the best-performing energy commodity this year, is cheaper than gasoline, encouraging refiners to use the biofuel even if President Barack Obama’s administration ends a requirement to do so. A 48 cent-per-gallon discount to gasoline provides companies including Exxon Mobil Corp. and Valero Energy Corp. (VLO) an opportunity to profit by blending the corn-based additive into fuel, while easing prices at the pump for consumers. Marketers may use ethanol as they look for the cheapest way to boost engine performance and reduce pollution. The most severe U.S. drought in 56 years has prompted lawmakers from both parties to ask the Obama administration to suspend the mandate because of the potential impact on food costs. Ethanol will consume 42 percent of this year’s corn crop, according to government estimates, up from 41 percent last year. The biofuel has been blended into more gasoline than ever this year, Energy Department data show.
“It’s just ingrained in the supply and distribution and it’s having a moderating effect on pump prices,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “As long as they were still allowed to use it, most would. The lower price and just the logistics of taking it out, most would still use it.” Denatured ethanol for September delivery slipped 2.7 cents, or 1 percent, to $2.637 a gallon at 12:28 p.m. on the Chicago Board of Trade. It’s climbed 20 percent this year, more than the 16 percent gain for gasoline on the New York Mercantile Exchange.
S.Korea imports Iran oil in July despite EU insurance bar
SEOUL, Aug 23 (Reuters) - South Korea imported crude from Iran in July, an unexpected move put down to shipment delays in June cargoes, after Seoul had previously said there would be no imports because of EU sanctions restricting insurance on tankers carrying Iranian oil.
Asia's fourth-largest economy imported 137,400 barrels per day (bpd), 42 percent lower than a year earlier, data from the state-run Korea National Oil Corp showed on Thursday.
Oil Falls a Second Day on U.S. Jobless Claims, European Crisis (Source: Bloomberg)
Oil declined for a second day amid concern that European leaders aren’t making progress on resolving the region’s debt crisis and as U.S. jobless claims rose to a one-month high. Futures fell as much as 0.4 percent after sliding 1 percent yesterday. Claims for unemployment benefits increased by 4,000 for a second week to 372,000 in the period ended Aug. 18, Labor Department data showed. German Chancellor Angela Merkel said she and French President Francois Hollande will coordinate their approach to Greece to keep pressure on the country at the heart of Europe’s debt crisis to overhaul its economy. Oil for October delivery fell as much as 41 cents to $95.86 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.89 at 10 a.m. Sydney time. The contract yesterday dropped 1 percent to $96.27, the lowest close since Aug. 20. Prices are little changed for the week and 3 percent lower this year.
Brent oil for October settlement rose 10 cents to $115.01 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $18.74. New York crude may rise next week on speculation that the Federal Reserve will boost stimulus and on concern Middle East tension will disrupt supplies, according to a Bloomberg News survey. Twenty-seven of 47 analysts, or 57 percent, forecast oil will increase through Aug. 31. Fifteen respondents, or 32 percent, predicted that futures will fall and five said there will be little change in prices.
OIL-Oil tops $116 on Fed stimulus hopes
LONDON, Aug 23 (Reuters) - Oil prices rose by more than a dollar to top $116 a barrel on renewed hopes for a third round of monetary stimulus by the U.S. Federal Reserve despite weak economic data from China.
"Market sentiment after the Fed minutes suggests we'll see further price gains today," said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt.
Gold Bulls Strongest in Nine Months as Hoard Builds: Commodities (Source: Bloomberg)
Gold traders are the most bullish in nine months after investors’ bullion holdings expanded to a record on mounting speculation that central banks will do more to bolster economic growth. Twenty-nine of 35 analysts surveyed by Bloomberg expect prices to rise next week and three were bearish. A further three were neutral, making the proportion of bulls the highest since Nov. 11. Investors bought 46.9 metric tons valued at $2.5 billion through gold-backed exchange-traded products this month, the most since November, overtaking France as the world’s fourth-largest hoard when compared with national reserves.
Data released yesterday showed Chinese manufacturing at its weakest since November, signaling the nation may need more action to rebound from six quarters of slowing growth. European leaders are still struggling to contain the debt crisis. Minutes of the Federal Reserve’s most recent meeting showed many policy makers favor more stimulus. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. “Additional stimulus is inevitable, the question is how it comes,” said Charles Morris, who oversees about $2.5 billion of assets at HSBC Global Asset Management in London. “There’s no doubt about it, this is gold’s moment. All the long-term trend signals suggest that gold is in a very strong bull market.”
Heavy Shipping Poised for Takeovers as Financing Fades: Freight (Source: Bloomberg)
Shipping lines that carry generators and giant trucks for General Electric Co. (GE) and BHP Billiton Ltd. (BHP) are becoming takeover targets amid a lack of funding for the vessels needed to tap one of the most resilient cargo markets. The withdrawal of lenders such as Commerzbank AG, Lloyds Banking Group Plc (LLOY) and Societe Generale SA (GLE) from maritime finance as credit policies tighten is making life tougher for specialist lines that dominate heavy-lift shipping, while arousing interest from potential consolidators including private-equity firms. A merger last week between U.S-based Intermarine LLC, owned by New York buyout specialist New Mountain Capital, and Scan- Trans Holding of Denmark created the world’s No. 2 heavy-lift shipper and may herald a spate of takeovers in the sector, according to Al Stanley, who will head the enlarged company.
“If you’ve got a strong balance sheet and the ability to act quickly, opportunities come up when you’re in a turbulent industry,” Stanley, currently Intermarine’s chief executive officer, said in a phone interview from its base in Houston. Heavy-lift shippers, which transport everything from giant trucks used in Colombian mines to General Electric generators and 75-meter (245-feet) blades for Siemens AG (SIE) wind turbines, are luring investors as big-ticket items prove less dependent on the economy than the container market, which varies according to demand for Asian consumer goods in Europe and North America.
Soybean Complex Market Recap (Source:CME)
November Soybeans finished down 12 3/4 at 1715, 29 3/4 off the high and 10 3/4 up from the low. January Soybeans closed down 9 at 1706. This was 12 up from the low and 26 1/2 off the high. December Soymeal closed down 4.4 at 515.3. This was 4.3 up from the low and 10.8 off the high. December Soybean Oil finished down 0.06 at 56.77, 0.43 off the high and 0.42 up from the low. November soybeans closed sharply lower on the day but off session lows. Soybean meal traded weaker, in line with soybeans, however soybean oil only saw marginal loses. Pressure came from technical selling and profit taking in calendar spreads. Spot basis bids for soybeans softened at processing facilities in the Midwest after farmer selling increased as futures rose earlier this week. A large crop tour continues to report below average pod counts and poor plant conditions today. Crop scouts are citing small plants and aborted pods. Net weekly export sales for soybeans totaled 718,700 tonnes which was in line with market estimates. As of August 16, cumulative soybean sales stand at 56% of the USDA forecast for 2012/2013 versus a 5 year average of 26%. The strong pace of sales reflects the robust demand from China in the last month. Total net meal sales came in at 345,400 tonnes and net oil sales totaled 5,200 tonnes. Outside market offered no direction with crude oil trading lower along with the US Dollar.
Pro Farmer: After the Bell Soybean Recap (Source:CME)
September soybeans ended 20 3/4 cents lower and November closed 12 3/4 cents lower -- both a low-range finish. But the rest of the market came off the lows to end 4 1/4 to 9 cents lower. Early losses were limited by fresh demand news, but that gave way to profit-taking pressure and sell tops being triggered.
EDIBLES: Malaysian crude palm oil futures were almost flat after hitting a one-month high earlier, with traders turning a little cautious as the worst drought in the U.S. Midwest in 56 years pushes oilseed prices higher. (Reuters)