Wednesday, September 12, 2012
FCPO closed : 2930, changed : +11 points, volume : higher.
Bollinger band reading : correction range bound.
MACD Histogram : falling lower, seller taking exposure.
Support : 2920, 2900, 2850, 2800 level.
Resistance : 2950, 2970, 3020, 3050 level.
FCPO closed recorded small gain with rising volume participation. Soy oil currently rebounding higher after overnight closed lower by more than 1% while crude oil price trading firmer.
Worries on seasonal picking up production will outpace export and focus to tonight USDA grains crop data resulted crude palm oil price trading mostly in negative zone through out the day followed by last hour recovery.
Daily chart analysis continue to suggesting a correction range bound 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 10:35 PM
FKLI closed : 16006 changed : +2.5 points, volume : lower.
Bollinger band reading : pullback correction downside biased.
MACD Histogram : turned upward, seller taking profit.
Support : 1600, 1595, 1590, 1575 level.
Resistance : 1615, 1623, 1630, 1640 level.
FKLI closed recorded small gain having technical rebound with slower volume transacted doing 7.5 points discount compare to cash market that ended marginally lower. Overnight U.S. market closed higher and today Asia markets ended in positive zone while European markets currently trading higher.
World market's sentiment turned positive after China Premier Wen statement signals potential more stimulus measure to be introduce, speculation on U.S. Federal Reserve will announce further easing after 2 days meeting that ends tomorrow and positive development over Europe Union on sovereign debt issue (Germany court constitutional condition approvals) while Japan reported beat estimate machinery orders.
Daily technical chart reading adjusted to calling a pullback correction downside biased market development.
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 5:24 PM
DJIA chart reading : little upside biased with MACD crossed up.
Hang Seng chart reading : side way range bound with MACD crossed up.
KLCI chart reading : pullback correction downside biased.
Posted by MW Chong at 5:04 PM
GLOBAL MARKETS-Asian shares edge up before German ruling, Fed meeting
TOKYO, Sept 12 (Reuters) - Asian shares edged higher as investors remained cautiously optimistic a German court would approve the legality of the euro zone's bailout fund later in the day and the U.S. Federal Reserve may deliver further stimulus measures this week.
"Regarding the two major events this week, we believe that the ESM and the Fiscal Pact should pass the German constitutional test, but the court may require clarification on technical modalities for its operation," Barclays Capital analysts said in a research note.
GLOBAL MARKETS: Asian shares rose to three-week highs on optimism that a German court will approve the legality of the euro zone's bailout fund later and the U.S. Federal Reserve may ease this week. European stock index futures signalled a mixed open as investors await a German Constitutional Court ruling on the euro zone's new bailout fund before committing more money to equities and extending the market's three-month rally.The Dow industrials closed at the highest level in nearly five years on Tuesday in a lightly traded session before key decisions in Germany and the United States that could give markets a further boost. (Reuters)
FOREX: The dollar hit a four-month low against a basket of currencies, hurt by expectations of more U.S. monetary easing and a warning from Moody's the previous day that it could cut the credit rating of the United States.(Reuters)
FOREX-Dollar near 4-mth lows after Moody's U.S. warning
TOKYO, Sept 12 (Reuters) - The U.S. dollar hovered near four-month lows against a basket of major currencies on Wednesday after Moody's warned it could cut the credit rating of the United States and on expectations of more stimulus measures from the U.S. Federal Reserve.
"Although everyone has been aware of the potential risks in the U.S. fiscal situation, a warning at this time was a bit of surprise and triggered fresh selling," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
German court seen okaying EU bailout fund, strings attached (Reuters)
Germany's Constitutional Court is expected to give its approval on Wednesday to the euro zone's new bailout fund while insisting on guarantees to safeguard German parliamentary sovereignty and limit Berlin's financial exposure.
U.S. faces rating cut if 2013 budget talks fail-Moody's(Reuters)
The United States may lose its top credit rating if next year's budget talks do not produce policies that gradually decrease the country's debt, Moody's Investors Service said on Tuesday.
France pushes for strategic food stocks to cool prices(Reuters)
French President Francois Hollande has launched a global campaign to win support for creating strategic stockpiles of agricultural commodities, he said on Tue sday, one of the boldest measures yet to tame volatile food prices.
GRAINS: Chicago soybeans rose after hitting a three-week low, while corn gained following two straight days of losses in positioning ahead of key U.S. reports which will shed light on damage caused by a historic Midwest drought. (Reuters)
U.S. crude stocks up slightly, gasoline falls-API(Reuters)
Rising imports boosted U.S. crude stocks, which rose slightly last week instead of falling as forecast, while gasoline stocks fell by a sharp 4.2 million barrels, data from the American Petroleum Institute showed on Tuesday.
OIL: Brent crude was steady after four days of gains, staying above $115 a barrel as investors remained cautiously optimistic a German court would approve the legality of the euro zone's bailout fund. (Reuters)
Euro Coal-Prices fall $1/T as more cargoes offered
LONDON, Sept 11 (Reuters) - Physical coal prices fell by $1.00 a tonne on Tuesday as more prompt cargoes were offered amid slack demand.
More South African cargoes are being offered into the European market to compete with the Colombian coal which has dominated imports because spot interest from key South African consuming markets such as India remains slow.
Japan end-Aug aluminium stocks up 11 pct m/m -Marubeni
TOKYO, Sept 11 (Reuters) - Aluminium stocks held at three major Japanese ports stood at 261,000 tonnes at the end of August, up 11 percent from 235,100 tonnes a month earlier, trading house Marubeni Corp said on Tuesday.
The stocks at the end of August were up 8.2 percent from 241,200 tonnes in the same month in 2011. Marubeni collects data from the key ports of Yokohama, Nagoya and Osaka.
India's steel imports to rise in 2012/13 as local supplies stall
NEW DELHI, Sept 11 (Reuters) - India's finished steel imports could rise to around 8 million tonnes in 2012/13, a top industry executive said, up about 18 percent, as a lack of domestic supplies means India bucks a global trend of weak demand for the construction material.
Imports have already soared 53 percent in April to July as local steelmakers, scrambling for raw materials like iron ore due to environmental and legal delays, run below capacity and are unable to meet demand in Asia's third-largest economy.
China's iron ore miners cut output as prices fall
SINGAPORE/SHANGHAI, Sept 11 (Reuters) - A slide in iron ore prices to three-year lows is forcing many high-cost miners in top consumer China to curb output, industry sources say, in a move that could reduce the surplus in a market weighed down by near record Chinese stocks.
China produces about 1 billion tonnes a year of iron ore and buys 60 percent of the steelmaking raw material traded globally. But a slowdown in its economic growth has undermined demand assumptions and hit prices hard: iron ore fell last week to $86.70 a tonne, a level unseen since October 2009.
Baosteel keeps main steel product prices steady in October
BEIJING/SHANGHAI, Sept 11 (Reuters) - Baoshan Iron and Steel , China's largest listed steelmaker, will roll over its September steel prices to October after three straight months of cuts, a move some analysts said was aimed at stabilising a market hit by weak demand.
Baosteel's pricing decisions usually set the tone for the rest of the market, and its cuts last month were matched by most other big steelmakers which have been hit by the slowdown in the world's second largest economy.
Iron ore back above $100, but steady steel may stall rally
SINGAPORE, Sept 12 (Reuters) - Shanghai steel futures steadied as excitement over the $158 billion worth of infrastructure projects approved by China began to lose steam, possibly stalling a rebound in iron ore prices that have surged 15 percent over three sessions.
The projects which involve building highways, ports and airport runways are likely to take years, which means steel demand from China, the world's top consumer, could remain sluggish at least for the rest of this year.
Shanghai rebar drops, iron ore buyers cautious
SINGAPORE, Sept 11 (Reuters) - Shanghai steel futures retreated on Tuesday, after two days of steep gains, amid concern a slew of Chinese infrastructure projects may not be enough to sustain a pickup in demand in a sector still saddled by excess production.
The drop in Chinese steel prices could limit the recovery in iron ore which climbed nearly 7 percent on Monday, on expectations that Beijing's approval of more than $150 billion in infrastructure projects would revive steel demand.
BNP Paribas cuts 2012 base metals demand growth outlook(Reuters)
Global banker BNP Paribas lowered its world base metals demand growth forecast to 3 to 4 percent from 4 to 5 percent in 2012, and expects growth to accelerate modestly to about 5 percent in 2013.
BASE METALS: London copper snapped three sessions of gains to inch lower as some investors took profit on concerns that the contract had risen too quickly, but hopes of more economic stimulus kept prices hovering near a four-month high. (Reuters)
PRECIOUS METALS: Gold hovered near a six-month high as investors stayed put ahead of a German court ruling on the euro zone's rescue fund and the Federal Reserve's policy meeting, while a weaker dollar lent support. (Reuters)
METALS-LME copper snaps gains; German ruling, U.S. Fed eyed
SHANGHAI, Sept 12 (Reuters) - London copper snapped three sessions of gains to inch lower on Wednesday as some investors took profit on concerns that the contract had risen too quickly, but hopes of more economic stimulus kept prices hovering near a four-month high.
"Despite recent optimism over stimulus programmes by major economies, investors are getting a little panicky at these high copper prices. Copper demand by downstream industries in China is still weak after all," said CIFCO Futures analyst Zhou Jie.
PRECIOUS-Gold steady before euro zone fund ruling, Fed meeting
SINGAPORE, Sept 12 (Reuters) - Gold hovered near a six-month high on Wednesday as investors stayed put ahead of a German court ruling on the euro zone's rescue fund and the Federal Reserve's policy meeting, while a weaker dollar lent support.
"The market has fully priced in a positive outcome from the German court," said Nick Trevethan, senior commodity strategist at ANZ in Singapore. "It has also priced in fairly substantial expectations for QE."
Baltic index falls on lower panamax, capesize rates
Sept 11 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Tuesday due to lower rates across its larger vessel segments.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, fell 4 points or 0.6 percent to 662 points.
Posted by MW Chong at 4:16 PM
VEGOILS-Palm oil down on rising stocks, USDA in focus
Wed Sep 12, 2012 1:25am EDT
Palm oil futures down on rising stockpile concerns in September
Production seen up 10 percent, stocks could surge more than 2.2 mln tonnes
Prices likely to drop to 2,869 ringgit per tonne-technicals
Markets eye U.S. Agriculture report that may show tightening soy supply
By Anuradha Raghu
KUALA LUMPUR, Sept 12 (Reuters) - Malaysia crude palm oil
futures dipped on Wednesday on expectations of higher production
this month could lead to a stock build up although agriculture
markets were waiting for a key U.S. report on soybean supply
later in the day.
Palm oil prices have lost nearly 9 percent so far this year
on concerns of slowing global economic growth that could crimp
commodity demand. But losses have been limited by a shortfall in
soybean supply thanks to drought in the U.S. Midwest.
"I think market is expecting a higher inventory in
September. My view is that production should continue to outpace
exports," said Kenanga Investment analyst Alan Lim.
"Seasonally September is a higher production month than
August. I think production should be higher by at least 10
percent and it's possible that stocks level go above 2.2 million
tonnes," he added.
By the midday break, the benchmark November contract
on the Bursa Malaysia Derivatives Exchange slipped 0.9
percent to close at 2,894 ringgit ($942) per tonne. Prices on
Tuesday had fallen to 2,874 ringgit, the lowest level since Aug.
Total traded volume stood at 14,104 lots of 25 tonnes each,
higher than the usual 12,500 lots.
Reuters technicals market analyst Wang Tao said palm oil is
likely to drop to 2,869 ringgit per tonne, driven by a downward
wave. A rebound from the current level will be limited to 2,947
Palm oil stocks in August surged to a 10-month high of 2.1
million tonnes, exceeding market expectations, the Malaysian
Palm Oil Board (MPOB) said earlier in the week.
While production is expected to be stronger, cargo surveyors
have pointed to stronger demand this month. For the first ten
days of September, Malaysian palm oil exports jumped more than
30 percent as the country shipped out more crude to India thanks
to a bigger tax free quota of the grade.
India's palm oil imports in the new marketing year will rise
7.9 percent to 7.5 million tonnes as the world's top edible oil
buyer struggles to meet demand due to faltering local oilseed
output, an industry official told Reuters.
Brent crude was steady on Wednesday after four days of
gains, staying above $115 a barrel as investors remained
cautiously optimistic a German court would approve the legality
of the euro zone's bailout fund.
In other vegetable oil markets, U.S. soyoil for December
delivery rose 0.7 percent with some traders expecting the
U.S. Department of Agriculture to slash soybean production
estimates following a crop-damaging historic Midwest drought.
The most active January 2013 soyoil contract on the
Dalian Commodity Exchange fell 0.4 percent.
Posted by MW Chong at 2:56 PM
OIL-Oil rises awaiting Fed meeting, German court
NEW YORK, Sept 11 (Reuters) - Oil prices rose on Tuesday in choppy trading as expectations that the U.S. Federal Reserve will act to bolster the economy and that a German court will approve a euro zone rescue plan put pressure on the dollar and boosted crude futures.
"Moody's downgrade pressured the dollar and added support for crude, but markets are waiting for the German court and Fed decisions," said Phil Flynn, an analyst at Price Futures Group in Chicago.
POLL-US crude stocks seen falling for 2nd week after Isaac
Sept 11 (Reuters) - U.S. crude oil stockpiles likely fell last week for the second straight week, pressured by lower production and imports on the U.S. Gulf Coast after Hurricane Isaac, an expanded Reuters poll showed on Tuesday.
Crude inventories are forecast to have fallen by 2.6 million barrels in the week to Sept. 7, according to the survey of 14 analysts. 12 analysts projected a draw in inventories.
US sees tighter oil market; OPEC disagrees
NEW YORK/LONDON Sept 11 (Reuters) - The U.S. government and OPEC offered differing outlooks for global oil markets on Tuesday, with Washington ratcheting up price forecasts for oil on stronger demand while OPEC highlighted rising output from the exporter group.
In separate monthly reports, both emphasized the possibility that a worsening European crisis could still drag down oil prices, warnings that may complicate deliberations over whether to tap into strategic oil reserves again.
NATURAL GAS-Technical buying drives US natgas futures up 6 pct
NEW YORK, Sept 11 (Reuters) - U.S. natural gas futures ended sharply higher on Tuesday for a second straight day, driven by technical buying and expectations for another light weekly inventory build despite moderating U.S. weather this week that should slow air-conditioning demand.
"I think there's been a lot of technical buying this week," a Pennsylvania-based trader said, noting recent shorts, now out of the money, were likely getting "squeezed" by the move up.
EURO COAL-Prices fall $1/T as more cargoes offered
LONDON, Sept 11 (Reuters) - Physical coal prices fell by $1.00 a tonne on Tuesday as more prompt cargoes were offered amid slack demand.
"You could expect a rise of a few dollars over the next few months and into 2013 but $110, $105 or anything over $100 isn't looking very likely," one Pacific-based producer said.
Global Oil Prices Seen Slipping in 2013, Says Energy Department By U.S. Energy Information Administration - Tue Sep 11 17:00:00 CDT 2012 CT
Tepid Outlook for U.S., Europe Demand
Benchmark Brent and West Texas Intermediate (WTI) crude oil prices in 2013 are expected to be higher than previously forecast, though still down from 2012 levels amid increasing production and weaker consumption in industrialized countries, the Energy Information Administration said in its latest monthly Short-Term Energy Outlook.
WTI spot prices will average an estimated $92.63 a barrel next year, down 3.2% from a projected $95.66 this year but up from $90.25 in the EIA’s previous 2013 forecast. Brent is forecast to average $103.38 in 2013, down 7.5% from $111.81 in 2012. Last month, the EIA estimated Brent would average $100 in 2013.
EIA figures suggest sluggish economies in the U.S. and Europe will dampen energy demand into next year. Projected crude and liquid fuels consumption in Organization for Economic Cooperation and Development countries is expected to decline 0.4% in 2013, to 45.21 million barrels a day, though total global consumption is seen rising 1.1%, led by China.
WTI’s discount to Brent is expected to shrink to an average of about $9 a barrel by the end of 2013 from $17 during the fourth quarter this year.
In natural gas, growth in U.S. consumption is expected to weaken as projected higher prices relative to coal slows the trend toward substituting gas for coal to fire electric power plants. Coal-fired electricity generation is projected to rise 9% next year while gas generation falls 10%
Recap Energy Market Report(CME)
October crude oil prices rallied for the third session in a row and settled above the $97.00 level. Early support for the crude oil market came from continued weakness in the US dollar, which fell to a new four month low, and improvement in risk-taking sentiment. While the market turned choppy during the later morning hours, the latest monthly report from the EIA raised their 2012 and 2013 global oil demand forecasts. Still some traders were looking for a current read on the US supply situation in the wake of Hurricane Isaac. Expectations for this weeks EIA report are for draw of around 2.5 barrels, which would be the seventh consecutive weekly decline.
Thomson Reuters: Crude Update By Thomson Reuters - Tue 11 Sep 2012 07:51:04 CT
Brent crude futures fell for the first time in four sessions as investors took profits, though they remained above $114 a barrel with declines limited by hopes the U.S. Federal Reserve would unveil further steps to stimulate the economy this week.
Chart Reading :
Bollinger band reading : correction range bound market within an uptrend market.
MACD Histogram : recovering, buyer still in.
Support : 97, 94, 92 level.
Resistance : 100, 103, 106 level.
Idea : Long at support or break up above resistance, must set stop loss few points below support. Short at resistance, must set stop loss few points above support.
Posted by MW Chong at 1:08 PM
Gold Market Recap Report(CME)
The gold market was able to overcome early pressure to post moderate gains by the close of Tuesday's session. A major credit agency's warning of a potential US credit downgrade led to a sharp selloff in the Dollar, which many traders feel was the major facto with gold prices climbed back into positive territory later in the trading day. In addition, reports that labor problems are beginning to spread within the South African mining industry were also seen as a key positive factor for the gold market. Some traders felt that caution in front of tomorrow's German ESM court ruling and this week's FOMC meeting weighed on gold prices kept further gains in check.
Gold gains on hopes for Fed easing, Moody's warning on U.S. ratings (Source: www.forexpros.com)
Forexpros - Gold prices inched up in Asian trading on Wednesday after investors took up long positions in the yellow metal to ahead of a two-day monetary policy meeting at the U.S. Federal Reserve that begins later today.
Weak jobs data released in the U.S. last week bolstered expectations that the Fed will announce monetary stimulus measures on Thursday, which would send gold rising.
A Moody's warning that the U.S. may see its triple-A rating stripped if it doesn't get is fiscal house in order also sent the metal climbing.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery were up 0.02% at USD1,732.65 a troy ounce, up from a session low of USD1,737.85 and down from a high of USD1,726.65 a troy ounce early during the session.
Gold futures were likely to test support at USD1,724.55 a troy ounce, Monday's low, and resistance at USD1,740.75, Monday's high.
Chart Reading :
Bollinger band reading : pullback correction upside biased.
MACD Histogram : weakening, buyer profit taking.
Support : 1700, 1675, 1650 level.
Resistance : 1750, 1785, 1800 level.
Remark : Gold price is having a tight congestion range between 1727 and 1740.
Idea : Long at congestion break up above 1740, set stop loss below 1725. Not encourage to short unless for a quick scalp to short at congestion break down below 1727, set stop loss above 1740 with profit target near 1700 level.
Posted by MW Chong at 1:02 PM
PT Lion Grup signed a joint venture agreement with National Aerospace & Defence Industries (Nadi) to form Malindo Airways. Being a low-cost carrier, Malindo Airways is expected to give a good fight to AirAsia. Nadi will hold 51% equity interest in the JV, while Lion Grup owns the remaining 49%. Lion Grup runs Lion Air in Indonesia. Rusdi Kirana, president of PT Lion Grup, said that Malindo Airways is not meant to be in direct competition with AirAsia and Malaysian Airlines (MAS) domestically."Malindo will serve the middle between a low-cost model and a full service model. Our pricing will be as competitive as AirAsia but all our flights will be equipped with in-flight entertainment system, WiFi, and passengers can make and receive calls when on board," said Rusdi. The airline will start operations in May 2013, out of the new KLIA2 terminal with 12 B737-900ER planes. The new airline plans to add 12 aircraft each year and targets to have a fleet of 100 planes in a decade. By 2015, Malindo will receive five B787-8 Dreamliners to serve long haul routes such as Europe and Australia. Tan Sri Tony Fernandes has welcomed the new low-cost airline in Malaysia, dismissing talk the new budget carrier is a potential threat to AirAsia. He said the formation of Malindo Airways clearly indicates the growing importance of budget carriers, particularly in Malaysia and the Asean region, in tandem with the Asean Open Skies Policy which will come into force in 2015. (Financial Daily, Bernama)
Tenaga Nasional Bhd (TNB) wants to nearly triple the revenue of its non-regulated business to RM5bn from RM1.8bn. Regulated business includes the sale of electricity to public and private users. TNB's non-regulated business includes maintenance of power plants, equipment manufacturing, provision of cable services and other operational activities within the generation, transmission and distribution segments. TNB CEO Datuk Azman Mohd said the non-regulated business can be carried out here as well as overseas where TNB may have presence in the future. These include India, Iraq, Bangladesh and North African countries.(BT)
The Works Ministry hopes the 2013 Budget will introduce tax incentives for heavy machinery and automation in the construction industry. "This will help the construction industry move towards greater mechanisation and automation, and reduce foreign labour dependency," Works Minister Datuk Seri Shaziman Abu Mansor said. The 2010/2011 Economic Report states that out of the 1.8m registered migrant workers in Malaysia, some 16% are employed in the construction sector. There are plenty of opportunities driven by the Economic Transformation Programme (ETP). There is the MRT projects worth RM36.6bn, and the refinery and petrochemical integrated development (Rapid) project in Pengerang, Johor, that is worth RM62bn. (BT)
Berjaya Corp Bhd's 80% owned unit Bermaz Motor Sdn Bhd has signed a joint venture agreement with Mazda Motor Corp to undertake a manufacturing programme in Malaysia. Bermaz announced its plans to commission the assembly of Mazda CX-5 SUV at a plant owned by Inokom Corp Sdn Bhd in Kulim, Kedah, in 2013. Prior to this, the company commissioned the assembly of the Mazda 3 sedan at the same facility. (Financial Daily)
Shareholders of Glenealy Plantations (M) Bhd will receive a special dividend of 52.75 sen per share as a sweetener to Samling Global Ltd's offer to privatise the company. The dividend would amount to RM60.1m that the company would need to fork out from the RM95m odd it had in cash reserves as at June 30, 2012. (StarBiz)
IJM Land Bhd is undertaking a property development via a joint venture with Amona Development Sdn Bhd in the Kerinchi/Pantai Dalam corridor here. It said its unit, Murni Lapisan Sdn Bhd had inked a JV agreement with Amona to develop about 234,000sqm (57.8 acres) of leasehold land. The joint venture shall be known as Amona-Murni Lapisan JV. Amona had on June 21, entered into a privatisation agreement with the landowner Datuk Bandar Kuala Lumpur to build residential and commercial units on the site. Under the JV, Amona and Murni Lapisan would make available funds in proportion to the profit sharing ratio of 60:40 to pay for all costs of the project.This would include payments to Datuk Bandar, comprising of the project land value and the minimum guaranteed profit of RM331m, or RM391m for the project land value and the minimum guaranteed profit if project land value to be paid within three years from the date of the PA. (Starbiz)
Boustead Holdings Bhd’s subsidiary Boustead Naval Shipyard Sdn Bhd has been awarded a RM70m job from the defence ministry. The company received a letter of award for the supply and delivery of spare parts, maintenance services and training for the Navy over three years. A formal contract agreement between the government and Boustead Naval Shipyard will be signed at a later date, (BT)
Bursa Malaysia Securities has approved the listing and quotation of Pesona Metro Holdings Bhd's 463.8m shares which will replace the soon-to-be delisted Mithril Bhd. The proposed restructuring scheme involved the issuance of new Pesona Metro shares, a 5-into-1 share capital reduction of Mithril and the consolidation of Mithril shares. After the consolidation of the Mithril shares, they would be exchanged for Pesona Metro shares. (Starbiz)
PAAB will start the development of the controversial RM3bn Langat 2 water treatment plant by issuing its first tender document today for the building of the plant despite the protracted talks over the project between the Federal Government and the Selangor state government. The tender, which will be the biggest package estimate d at RM1.2bn will be for the construction and completion of the 1,130MLD Langat 2 water treatment plant, which is the most important component of the Langat 2 project. The Selangor state government has been reluctant to issue a development order for the treatment plant. The Federal Government would still pursue the project although there was no development order from the Selangor government. (Star)
Axiata issues CNY sukuk valued at RM489m
Axiata Group announced yesterday it is issuing a two-year sukuk valued at RMB1bn (RM489m). This is the first time that the company is issuing sukuk in the Chinese currency. The sukuk has a coupon rate of 3.75% payable semi-annually. It will be listed on both Bursa Malaysia and Singapore stock exchange on 19 Sept. (Malaysian Reserve)
Crest Builder: Targets MYR200m-400m in new contracts. Construction firm Crest Builder Holdings Bhd aims to secure MYR200m to MYR400m worth of new contract by the end-2012, and to commerce the development of its two mixed use high-rise property projects with a total value of MYR2.4b in 2013. (Source: The EdgeDaily)
The government will narrow its deficit target in the 2013 budget from about 4.7% of GDP this year, said Second Finance Minister, Ahmad Husni Mohamad Hanadzlah. The government wants to reduce the deficit to 3% of GDP by 2015, Ahmad Husni said. (BT)
The upcoming Budget 2013 will not only be annual budgetary allocation but instead will create a concrete base to develop longer term plans and policies to ensure sustainable economic growth for the future, said Minister in the Prime Minister’s Department, Tan Sri Nor Mohamed Yakcop. The government, through the Finance Ministry, was considering all focus areas in the budget very seriously, taking into account all external factors such as the economic slowdown in the US and Europe, he said. “I am positive and optimistic that this budget will feed the needs of the day and times,” he said. (Starbiz)
The Works Ministry is proposing to the government to reduce tax on heavy and automatation equipment for the construction sector in the 2013 Budget, said its minister Datuk Seri Shaziman Abu Mansor. He said the reduction of taxes was required to reduce the dependence of the construction sector on foreign workers by using the latest equipment. (Bernama)
Moody's Moody's warned Tuesday it could strip the US of its coveted triple-A credit rating if Congress fails to produce a budget that will bring down the federal debt burden. (AFP)
US job openings - a measure of labor demand - dropped to 3.66m in Jul from 3.72m in Jun, the Labor Department said in its monthly Job Openings and Labor Turnover Survey. The hiring rate, however, was steady at 3.2% in Jul.(Reuters)
The US trade deficit widened to US$42.0bn in Jul from a revised US$41.9bn in Jun. Analysts had forecast a deficit of US$44.3bn. (Bloomberg)
The US ICSC-Goldman Store Sales index gained 1.0% wow in the 8 Sep week (-0.4% in the earlier week), whilst on a yoy basis, the measure rose 3.4% (3.7% in the prior week). (Bloomberg)
The US NFIB small-business optimism index rose to 92.9 in Aug from 91.2 in Jul, exceeding consensus of 91.5. (Bloomberg)
The European Union today will unveil proposals for euro-area bank oversight that require unprecedented cooperation between the European Central Bank and national regulators. (Bloomberg)
China is on course to meet its 2012 growth target of 7.5% despite recently slowing, Premier Wen Jiabao said. (AFP)
China’s Manpower Survey for 4Q12 fell to 17% from 16% indicating a dimmer hiring outlook for the country. The measure for Singapore fell to 19% from 23%. (Bloomberg)
China’s government has Rmb100bn (US$16bn) in a fiscal stabilization fund and that can be appropriately used for preemptive policy and fine-tuning to propel stable economic growth. (Bloomberg)
The Bankcard Consumer Confidence Index (BCCI) in China, retreated 0.5 pt from Jul to 86.21 pts in Aug. (Xinhua)
China invested Rmb820bn (US$129.4bn) in building affordable housing units for low-income groups in the first eight months of this year. (Xinhua)
China’s auto output in Aug rose 4.48% mom to 1.5m vehicles, while auto sales climbed 8.4% mom to reach 1.49m units. On a yoy basis, auto output and sales in Aug increased 7.78% and 8.26%, respectively. (Xinhua)
China’s new yuan loans totaled Rmb703.9bn in Aug (Rmb540.1bn in Jul), and ahead of consensus forecasts of Rmb600bn. Money supply (M2) rose 13.5% yoy in Aug (13.9% in Jul). (Bloomberg).
The preliminary reading of Japan’s machine tool orders fell in Aug by 2.6% yoy (-6.7% in Jul). (Bloomberg)
India's oil minister has sent a note to a cabinet panel to seek approval for an increase in diesel and cooking fuel prices. (Bloomberg)
The Philippines’ exports rose 7.8% yoy in Jul (4.3% in Jun) to US$4.81bn, defying market expectations of a 1% decline. (Bloomberg)
Bank lending in the Philippines rose 15.2% yoy in Jul, quicker than the 12.2% pace in Jun. (Bloomberg)
Vehicle sales in the Philippines as of Aug increased by 6% yoy to 98,725 (93,108 in Aug 2011). (Philippine Daily Inquirer)
BP Migas admits that it will be difficult to achieve Indonesia’s oil lifting target of 930,000 bpd by the end of the year. Oil lifting is estimated to reach only 900.000 bpd, or 96.7% of the target in the 2012 Revised State Budget. (IFT)
Vietnam’s textile and garment sector achieved a trade surplus of US$5.3bn in the first eight months of 2012, a 24% yoy increase. (Vietnam News)
Liquefied petroleum gas prices in the transport sector will likely increase this weekend in line with the government's policy of floating energy prices, says Thai Energy Minister Arak Chonlatanon. (Bangkok Post)
Asia FX By Cornelius Luca - Tue 11 Sep 2012 16:55:21 CT (Source:CME/www.lucafxta.com)
The appetite for risk rose on Tuesday after Germany's Constitutional Court said that it would not postpone its long-awaited ruling on the legality of the Eurozone's bailout fund. The foreign currencies advanced across the board after most of the European and commodity currencies slipped on Monday. This strength should persist on Wednesday as well, as German politicians will play ball. The US stock markets advanced. Gold and oil closed slightly higher. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is long on all foreign currencies. Good luck!
US: The trade deficit expanded slightly to $42.0 billion in July from $41.9 billion in June.
Canada: Housing starts rose to 224.9K in August from 208.0 in July.
Canada: International merchandise trade showed a deficit of C$2.34 billion in July, wider than -C$1.93 billion in June.
Today's economic calendar
Japan: Domestic corporate goods price index for August
Japan: Machinery orders for July
Japan: Tertiary industry index for July
Australia: Westpac consumer confidence index for September
Asian Stocks Rise on Bets China, U.S. to Stimulate Growth(Bloomberg)
Asian stocks rose, with the regional benchmark index headed for the longest winning streak in two months, on speculation China and the U.S. will take more measures to spur growth in the world’s two biggest economies. Electronics maker Samsung Electronics Co. (005930), which gets 48 percent of its revenue in China and America, rose 1 percent in Seoul. Fanuc Corp., the world’s biggest maker of industrial robots, gained 1.6 percent after Japan’s machinery orders increased more than estimated in July. BHP Billiton Ltd. (BHP), Australia’s No. 1 oil producer, added 1 percent as crude advanced. The MSCI Asia Pacific Index gained 0.7 percent to 120.19 as of 10:19 a.m. in Tokyo, headed for a five-day advance, the longest winning streak since July. Markets in Hong Kong and China have yet to open. More than six stocks advanced for each that fell on the measure, with nine of 10 industry groups rising.
“The market is getting confident that governments won’t let economies get worse, as expectations are mounting in the U.S. for more monetary easing and China expands public investment,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The market won’t see a clear direction as investors are still sitting on the fence.” The MSCI Asia Pacific Index gained 1.8 percent this quarter through yesterday as expectations of further stimulus measures overshadowed signs of a global economic slowdown. The Asian benchmark traded at 12.4 times estimated earnings, compared with 13.9 times for the Standard & Poor’s 500 Index (SPXL1) and 12 times for the Stoxx Europe 600 Index.
Japan Stocks Gain on Stimulus, Machine Orders(Bloomberg)
Japanese stocks climbed, with the Nikkei 225 Stock Average (NKY) heading to its highest close in two weeks, on speculation policy makers in the U.S. and China will announce plans to stimulate the world’s largest economies and as machinery orders in Japan beat expectations. Fanuc Corp. (6954), a maker of industrial robots used in Chinese factories, gained 1.3 percent. Canon Inc., a camera maker that relies on the Americas for 27 percent of its revenue, advanced 1.8 percent. Mitsubishi Heavy Industries Ltd. gained 1.6 percent after Japan’s machinery orders rose more than estimated in July. Oki Electric Industry Ltd. slumped 13 percent to lead declines on the Nikkei 225 after saying improper accounting at its Spanish unit will cut profit by 30.8 billion yen ($395 million). The Nikkei 225 gained 1.4 percent to 8,928.57 as of 10:09 a.m. in Tokyo. Trading volume was 20 percent above the 30-day average. The broader Topix Index rose 1.2 percent to 741.14, with about four stocks advancing for each that fell.
“We’re going to see something coming through from the Fed,” said Chris Weston, a Melbourne-based trader at IG Markets Ltd. “The signs that we got from China that they’ll meet their targets are also positive. The market’s being supported by central banks and there’s some juice left in these markets.” The Topix dropped 15 percent from this year’s peak on March 27 through yesterday on concern Europe’s debt crisis is deepening and as growth slows in China and the U.S. The gauge trades at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index. A number below one means companies can be bought for less than the value of their assets.
U.S. Stocks Advance Amid Speculation Over Fed Decision(Bloomberg)
U.S. stocks rose, after yesterday’s drop in the Standard & Poor’s 500 Index, amid speculation the Federal Reserve will act to stimulate the economy. Alcoa Inc. (AA) and Caterpillar Inc. (CAT) climbed at least 1.7 percent, pacing gains among the biggest companies. Eight out of 10 groups in the S&P 500 rose. Morgan Stanley (MS) jumped 3.9 percent after saying it will purchase the rest of its brokerage joint venture from Citigroup Inc. (C) Ralph Lauren Corp. (RL) led declines among luxury goods companies as Burberry Group Plc said profit will be at the lower end of estimates. The S&P 500 added 0.3 percent to 1,433.56 at 4 p.m. in New York. The Dow Jones Industrial Average gained 69.07 points, or 0.5 percent, to 13,323.36 today. Volume for exchange-listed stocks in the U.S. was 5.9 billion shares, or almost in line with the three-month average.
“The market is anticipating that there will be some stimulus move on the part of the Fed,” John Praveen, chief investment strategist at Prudential International Investments Advisers, a unit of Newark, New Jersey-based Prudential Financial Inc., which manages about $960 billion, said by telephone. “The market is grinding higher on liquidity because of what central banks have done and on hopes of further stimulus from the Fed and positive moves from European policy makers.” The S&P 500 is less than 10 percent from its record closing high after rising 14 percent this year. The equities index is 20 percent above its level on Sept. 15, 2008, the first trading day after Lehman Brothers Holdings Inc. filed the world’s biggest bankruptcy and prompted a 46 percent drop through March 9, 2009. The benchmark gauge fell 0.6 percent yesterday as concern Greece’s debt crisis will worsen overshadowed speculation that central banks will take steps to support the global economy.
European Stocks Advance on German Court, Fed Speculation(Bloomberg)
European stocks climbed as Germany’s top constitutional court said it will proceed with a ruling on the country’s role in the euro-area bailout fund and speculation grew that the Federal Reserve will boost stimulus. Deutsche Bank AG (DBK), Europe’s biggest lender by assets, advanced 4.1 percent after saying it will cut jobs and review pay practices to boost profitability. IG Group (IGG) Holdings Plc jumped 6.5 percent after saying first-quarter sales were in line with forecasts. Burberry Group Plc plunged by a record 21 percent after forecasting full-year profit will be at the lower end of analyst estimates. The benchmark Stoxx Europe 600 Index (SXXP) added 0.3 percent to 272.58 at the close of trading, the highest level in three weeks. The measure has surged 11 percent this year as European Central Bank policy makers agreed on an unlimited bond-buying program and speculation grew that the Fed will announce a third round of quantitative easing.
“Central banks seem to be more committed to do what it takes to provide the stimulus required both in Europe and the U.S.,” said Henk Potts, an equity strategist at Barclays Plc’s wealth-management division in London, which oversees $239 billion. “We expect to see a commitment to another round of QE from the Fed.” The Fed will give its latest policy statement on Sept. 13, following a two-day Federal Open Market Committee meeting. On Aug. 31, Chairman Ben S. Bernanke said the U.S. central bank will provide further stimulus as needed to cement a recovery, citing his concern about the jobless rate.
Emerging Stocks Gain on Stimulus Expectations(Bloomberg)
Emerging-market stocks gained for a fourth day amid expectations that U.S., Chinese and Indian central banks will act to stimulate their economies. The MSCI Emerging Markets Index (MXEF) added 0.3 percent to 973.09 at 5:01 p.m. in New York for its longest streak of gains in a month. Brazil’s Bovespa (IBOV) index rose as homebuilder Gafisa SA (GFSA3) surged to a five-month high after saying it’s considering selling a stake in its Alphaville unit. Equity gauges in Chile, Hungary and Poland advanced. India’s Sensitive Index (SENSEX) climbed the most in Asia on speculation the government will cut borrowing costs.
The Federal Open Market Committee will discuss additional measures to stimulate the U.S. economy at a two-day meeting starting tomorrow while Chinese Premier Wen Jiabao said the country has “ample strength” to take monetary or fiscal steps to meet its economic goals. Germany’s Federal Constitutional Court said it will issue a ruling tomorrow on whether to allow the country to ratify the 500 billion-euro ($643 billion) European Stability Mechanism. “With the ECB announcement last week, the likelihood the Fed will do something on Thursday and some possibility China will do the same, there is quite a lot of potential stimulus on the table,” John Lomax, an emerging-markets strategist at HSBC Holdings Plc, said in a phone interview from London. “When you’ve seen that collection of announcements, particularly on the monetary side, emerging markets have responded strongly over a period of time.”
The MSCI gauge has rallied 3.6 percent from a six-week low on Sept. 5 after China unveiled new spending plans for roads and subways and the European Central Bank announced a bond-buying program to support growth in the European Union, which purchases about 30 percent of exports from nations in the MSCI gauge. The Standard & Poor’s 500 (SPX) Index added 0.3 percent to 1,433.56.
Dollar Is Near 4-Month Low Versus Euro Before Fed Meets(Bloomberg)
The dollar was 0.1 percent from a four-month low against the euro before the Federal Reserve starts a two-day policy meeting today amid speculation it will decide to buy bonds to boost the economy. The U.S. currency remained lower versus all of its 16 major counterparts following a decline yesterday after Moody’s Investors Service said the country’s Aaa rating may be cut if it doesn’t reduce its ratio of debt to gross domestic product. The euro was near a two-month high against the yen before Germany’s Federal Constitutional Court issues its ruling today on the country’s participation in Europe’s bailout fund. “The market is discounting another tranche of money printing from the Fed,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk-management company. “That would be negative for the dollar.”
The dollar traded little changed at $1.2852 per euro as of 9:13 a.m. in Tokyo after weakening as much as 0.9 percent to $1.2871 yesterday, the lowest since May 14. It was little changed at 77.80 yen after losing 0.7 percent at the close in New York. The euro bought 99.99 yen from 99.97. It reached 100.43 on Sept. 7, the strongest since July 4. The Fed bought $2.3 trillion of securities from 2008 to 2011 in two rounds of so-called quantitative easing. In an Aug. 31 speech, Fed Chairman Ben S. Bernanke said weak hiring and unemployment exceeding 8 percent posed a “grave concern” and that bond purchases are a policy option.
Aussie Nears 3-Week High as Fed Bets Boost Risk Demand(Bloomberg)
The Australian dollar touched an almost three-week high as demand for riskier assets rose amid speculation the Federal Reserve will implement a third round of quantitative easing, or QE, at a meeting that begins today. Australia’s currency gained against most major counterparts as Germany’s constitutional court is set to decide on the country’s participation in Europe’s bailout fund. The so-called Aussie and New Zealand’s dollar strengthened versus the greenback yesterday after Moody’s Investors Service said the U.S.’s Aaa rating may be cut. A private report today showed an improvement in Australian consumer confidence. “If the Fed decides to conduct QE3 as the markets expect, it’s likely to lead to a risk-on sentiment,” Junichi Ishikawa, a Tokyo-based analyst at IG Markets Securities Ltd. said. “The Aussie and kiwi are supported on the back of the U.S. dollar’s broad weakness.”
The Australian dollar added 0.1 percent to $1.0445 as of 10:58 a.m. in Sydney after earlier touching $1.0452, the strongest level since Aug. 23. New Zealand’s dollar, known as the kiwi, added 0.1 percent to 81.81 U.S. cents, following a 1.1 percent advance yesterday. Australian government bonds declined, with the yield on 10- year notes rising five basis points, or 0.05 percentage point, to 3.17 percent. The MSCI Asia Pacific Index of stocks gained 0.7 percent. The MSCI World Index rallied 0.4 percent yesterday.
Trade Gap in U.S. Widens as Exports Start to Wane: Economy(Bloomberg)
The U.S. trade deficit widened in July for the first time in four months as the global economic slowdown took a toll on American exports. The gap grew to $42 billion from a revised $41.9 billion in June, Commerce Department figures showed today in Washington. The deficit with China climbed to a record, and it was the widest in almost five years with the European Union. Another report showed job openings in July declined. A stagnant Europe and cooling emerging markets may further limit shipments from America’s shores, removing a source of strength for the three-year expansion. The figures coincide with a recent deceleration in U.S. manufacturing and indicate the economy will rely on consumer spending, business investment and housing to pick up the slack.
“Global demand is weakening,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “The second-half outlook is going to depend a lot on the consumers, and that means more than ever we have to stay focused on the labor data and also the confidence numbers.” Stocks climbed amid speculation the Federal Reserve will act to stimulate the economy at a meeting of policy makers Sept. 12-13. The Standard & Poor’s 500 Index climbed 0.3 percent to 1,433.56 at the close in New York. Job openings in the U.S. dropped in July, indicating employment growth may be hard-pressed to pick up through year- end. The number of positions waiting to be filled fell by 58,000 to 3.66 million, the Labor Department said today.
U.S. Said Set to Target First Non-Bank Firms for Scrutiny(Bloomberg)
Regulators are poised to choose the first U.S. non-bank companies that are likely to be branded potential risks to the financial system, according to two people with knowledge of the plans. The Financial Stability Oversight Council plans to request confidential data from as many as five firms at a meeting this month, said the people, who declined to be identified because the plans aren’t public. The request is a step toward deciding whether the companies should be subject to Federal Reserve supervision, including stress tests, higher capital levels and tougher liquidity requirements.
Regulators want to ensure that no firm posing a potential risk to the financial system escapes scrutiny, while non-bank financial firms argue that designation would burden them with unnecessary costs and economic stability wouldn’t be threatened if they failed. Bailed-out insurer American International Group Inc. (AIG) has said it meets thresholds the council set to decide which firms require further evaluation. GE Capital, a unit of General Electric Co. (GE), has said it expects to be named systemically important. If the council “identifies companies this month, it means that the first FSOC train is leaving the station and final designations could be made by the end of the year,” said Thomas Vartanian, a partner at law firm Dechert LLP in Washington whose clients may be affected by FSOC. “This new systemic oversight could have a significant impact on them if they cannot rebut designation.”
Bernanke Proves Like No Other Fed Chairman on Joblessness(Bloomberg)
When it comes to achieving his mandate for full employment, Ben S. Bernanke’s willingness to undertake more bond buying shows yet again that he’s the most aggressive and experimental Federal Reserve chairman in history. Unemployment that’s stalled above 8 percent for 43 consecutive months has prompted Bernanke to make the case for adding to his record monetary stimulus because it would provide a benefit, even if small, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. Bernanke defended his use of unorthodox policies in Jackson Hole, Wyoming, last month, and signaled a third round of so-called quantitative easing might be needed to lower joblessness. “He wants to do whatever it takes,” said Feroli, a former Fed economist. Bernanke’s message was “let’s get away from the squabbling” over the pros and cons of different strategies and “remember that we’ve got a huge problem here, so let’s do something.”
The policy-setting Federal Open Market Committee will weigh additional accommodation at its Sept. 12-13 meeting. Economists doubt a third round of bond buying would have much impact: Decision Economics Inc. and IHS Global Insight forecast $600 billion in purchases will boost growth in 2013 from less than 0.1 percentage point to no more than 0.4 point. “Even if Bernanke felt the numbers were small, he would still feel a need to act because he is not meeting the dual mandate on either side,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts. “We are below 2 percent inflation,” the Fed’s target, and “we are far from full employment.” The personal-consumption-expenditures price index climbed 1.3 percent in the 12 months through July.
Wen Signals China Has Ample Policy Room to Meet Growth Target(Bloomberg)
Wen Jiabao, China's premier, during the opening plenary session of the World Economic Forum (WEF) Annual Meeting of the New Champions in Tianjin, China, on Sept. 11, 2012. Chinese Premier Wen Jiabao signaled there’s more room for fiscal and monetary policy to support growth, saying the nation has full confidence it will meet its economic goals for the year. “Be it monetary or fiscal, we still have ample strength,” Wen said yesterday at the World Economic Forum in the Chinese city of Tianjin. The government has 100 billion yuan ($16 billion) in a fiscal stabilization fund and “we will appropriately use that for preemptive policy and fine-tuning to propel stable economic growth,” he said. The government is trying to prevent growth this year from slipping below the 7.5 percent target set in March, which would already be the weakest since 1990. Economists at Barclays Plc and UBS AG lowered expansion forecasts as Wen grapples with slowing industrial output and export gains, increasing pressure to ease policy.
“The government has fiscal and monetary war chests to revive growth but there does not seem to be much appetite to roll out a large-scale stimulus package,” said Wang Qinwei, a London-based economist with Capital Economics who previously worked at the People’s Bank of China. The country will continue to place more emphasis on ensuring stable growth, Wen said. He reiterated that China will maintain a proactive fiscal policy and prudent monetary policy and said the nation has implemented a series of steps to promote domestic demand.
Jump in Japan Machinery Orders Aids Efforts to Avoid Contraction(Bloomberg)
Japan’s machinery orders rose more than forecast in July even as weakness in exports and waning subsidies for auto purchases threaten to stifle economic growth. Orders climbed 4.6 percent from the previous month, after gaining 5.6 percent in June, the Cabinet Office said today in Tokyo. The median estimate of 29 economists surveyed by Bloomberg News was for a 2 percent increase. Large orders can cause volatile results. Today’s reading and a pick-up in manufacturers’ confidence signal some resilience in an economy that Bank of America Merrill Lynch says is at risk of contracting this quarter. Japanese exports may benefit from U.S. and Chinese efforts to spur demand, with the Federal Reserve meeting this week and Premier Wen Jiabao saying yesterday that his nation has ample fiscal and monetary room to support growth.
The yen has climbed about 7 percent against the dollar since mid-March, while still remaining below the post-war high reached in October last year. The currency traded at 77.76 per dollar as of 9:03 a.m. local time in Tokyo today. Japan’s largest manufacturers turned optimistic for the first time in four quarters, according to a government index released yesterday, even as subsidies for consumers’ purchases of energy-efficient vehicles wind down and a stand-off in parliament over government financing threatens to limit fiscal stimulus. Japan’s central bank is due to meet Sept. 18 and 19 to decide whether the economy needs more monetary support. Growth was an annualized 0.7 percent in the second quarter, after a 5.3 percent expansion in the first three months of the year.
Japan Cost-Cutting Leaves Compensation Nearing Crisis Low(Bloomberg)
Cost-cutting by Japanese companies is dragging on wages, resulting in weaker consumer demand and a stronger case for monetary easing to counter deflation. Nationwide compensation fell to 243.5 trillion yen ($3.1 trillion) in the second quarter, according to a government report in Tokyo yesterday. The number, which is seasonally adjusted, was only 0.7 percent above the level in the final quarter of 2009, which was the lowest since 1991. Sharp Corp. (6753) today unveiled additional wage cuts, joining fellow exporter Panasonic Corp., and Tokyo Electric Power Co. (9501), the operator of the nuclear plant destroyed by the 2011 tsunami, in compressing costs. The moves risk prolonging the deflation that’s plagued Japan since the 1990s, and hurting consumption already facing a threat from a sales-tax boost looming in 2014.
“As long as wage deflation continues, there will be no doubt that the Bank of Japan will have to continue monetary easing,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “There won’t be an end.” Second-quarter economic growth was yesterday revised down to an annualized 0.7 percent from 1.4 percent, fueling concern a contraction is possible in the three months ending September. The Nikkei 225 Stock Average (NKY) closed 0.7 percent lower today, paring this year’s gain to 4.2 percent, as investors focused on Europe’s debt crisis, including the struggle by Greece to qualify for aid.
Korea Seen Cutting Rates to Spur Growth as Election Looms(Bloomberg)
South Korea’s weakest inflation in 12 years may encourage the central bank to cut interest rates tomorrow for the second time this year, bolstering growth as a presidential election looms. Fifteen of 16 economists in a Bloomberg News survey say the seven-day repurchase rate will fall to 2.75 percent from 3 percent. One forecasts no change. Elections due in December may be increasing pressure on policy makers to support a slowing economy, with the government this week announcing 5.9 trillion won ($5.2 billion) of spending and tax relief. Subsidies for child care have helped to drag down inflation, leaving rooom to loosen monetary policy even as Indonesia and the Philippines are forecast to hold rates at record lows tomorrow on rising prices.
“The Bank of Korea was concerned by a review of growth in June that showed slack opening up in the economy,” said Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore who expects a rate reduction. “On the fiscal side, the government wants to fully employ all the budgeted money that’s available to prevent any slippage in job creation, ahead of elections.” South Korea’s central bank lowered its main rate a quarter percentage point on July 12, joining a global stimulus push from Europe to China. Consumer prices increased 1.2 percent from a year earlier in August, the least since the year 2000. Along with prices, Asian policy makers are assessing the threat to exports and confidence from Europe’s debt turmoil, and the likely effect of any easing by the U.S. Federal Reserve, which meets this week.
South Korea’s Workforce Expands as Unemployment Rate at 3.1%(Bloomberg)
South Korea’s workforce expanded last month, with the unemployment rate unchanged from July even as Europe’s debt crisis capped demand for exports. The jobless rate was at 3.1 percent in August, unchanged from the previous month, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 14 economists was for a rate of 3.2 percent. The number of employed people increased by 364,000 or 0.2 percent, to 24.9 million last month from a year earlier. South Korea’s government this week announced 5.9 trillion won ($5.2 billion) of measures to support growth as Europe’s sovereign-debt crisis and a slowdown in China drive down exports. The Bank of Korea will give the economy an additional boost by cutting the benchmark by a quarter point to 2.75 percent on Sept. 13, according to the median estimate in a Bloomberg News survey of economists.
“It is necessary for policy makers to reignite growth,” Ronald Man, a Hong Kong-based analyst at HSBC Holdings Plc, said before today’s release. The won rose 0.1 percent to close at 1,128.15 against dollar in Seoul yesterday, according to data compiled by Bloomberg. The benchmark Kospi stock index fell 0.2 percent. This week’s measures included extra spending and tax cuts intended to boost the housing market and car sales. Some 4.6 trillion won is allocated for this year, without any expansion of the government’s budget, and 1.3 trillion won for 2013. South Korea’s government is holding off from larger fiscal stimulus to preserve ammunition for any deeper global slowdown. Asia’s fourth-largest economy expanded 2.3 percent in the second quarter from a year earlier, the slowest pace in almost three years, and exports fell 6.2 percent in August. The seasonally unadjusted jobless rate was 3 percent in August, from 3.1 percent in July, today’s report showed.
EU Recruits ECB to Lead National Regulators in Bank-Crisis Fight(Bloomberg)
The European Union today will unveil proposals for euro-area bank oversight that require unprecedented cooperation between the European Central Bank and national regulators. The Frankfurt-based ECB should expand its role as financial-system guardian by becoming the top-level supervisor of every lender in the 17-nation currency region, EU officials said in interviews. At the same time, the central bank would depend on national regulators for day-to-day supervision and ensuring that banks comply with European rules, according to the proposals. Safeguards for the U.K. and the other 9 nations that don’t use the euro are included, to protect them from being drowned out by their neighbors during rulemaking. Today’s plans aim to phase in the new system by Jan. 1, 2014, and all 27 EU members will need to sign off.
“What’s good about this proposal is it puts some distance between the cops and the gangsters,” Philippe Lamberts, a lawmaker in the European Parliament, said in a telephone interview. “There initially won’t be that coziness between banks and their regulator that has encouraged the regulator to turn the other way.” EU leaders decided to press for a single bank supervisor in June as a condition of allowing euro-area banks direct access to the zone’s firewall fund. EU taxpayers have provided 4.5 trillion euros ($5.8 trillion) in capital injections, guarantees and other forms of support to their lenders since 2008, exacerbating strains on public finances that have led Greece, Portugal, Ireland, Spain and Cyprus to seek aid.
Germany's constitutional court won't delay bailout fund ruling (Reuters)
Germany's Constitutional Court said it would not postpone its long-awaited ruling on the legality of the euro zone's bailout fund, despite a last-minute legal challenge by a eurosceptic lawmaker.
Commodity investors should demand benchmark change
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, Sept 10 (Reuters) - For the last two decades, the diversified approach to commodity investing encapsulated by the Dow Jones-UBS Commodity Index has outperformed the more production-weighted system employed by the Standard and Poor's Goldman Sachs Commodity Index.
While the GSCI remains popular with asset managers because it is easier to beat, institutional investors concerned about absolute rather than relative performance, should insist on using the DJUBS rather than the GSCI as a benchmark.
Stimulus to Reverse Commodity Bull-to-Bear Fastest Since 2008(Bloomberg)
Commodities surged from a bear to a bull market in anticipation of economic stimulus measures from the Federal Reserve, completing the fastest turnaround since the depths of the financial crisis starting in 2008. Within 11 weeks the Standard & Poor’s GSCI spot index rose 22 percent from its 2012 low, stoked by falling supplies of oil and grains and speculation that the European Union will successfully end its sovereign debt crisis. The gauge of 24 raw materials soared to a record high four years ago before plunging as the U.S. slid into the deepest recession since the 1930s. After the jobless rate stayed at more than 8 percent for 43 months, traders are speculating that Fed Chairman Ben S. Bernanke will unveil a third round of so-called quantitative easing as soon as this week. Corn prices advanced to an all-time high last month after the worst U.S. drought since 1956 and oil is climbing amid mounting tension over Iran’s nuclear program.
“There have been a lot of moving parts within the commodities markets this year,” Jim Paulsen, chief investment strategist in Minneapolis at Wells Capital Management, which oversees $320 billion, said in a telephone interview. “We are turning a corner. The surprise is going to be that global growth is going to accelerate.”
DTN Closing Grain Comments 09/11 14:31 Grains Extend Losses Ahead of USDA Reports
Grain contracts, led by soybeans, continued to sell off ahead of Wednesday morning's supply and demand and crop production reports. Corn, beans, and wheat are all growing more bearish technically.
GRAINS: Chicago soybeans slid to a two-week low falling for a fifth consecutive session, while corn hovered near its lowest in six weeks as investors moved out of bullish bets ahead of key U.S. government reports. Wheat also eased, tracking the weakness in corn and soy, but analysts said the market could move higher with dryness hurting crops in Australia and lower output in the Black Sea region. (Reuters)
Pro Farmer: After the Bell Wheat Recap(CME)
Wheat futures were choppy today and most contracts ended mid- to low-range. Chicago and Minneapolis wheat ended with slight losses in most contracts while Kansas City wheat settled narrowly mixed. Wheat traders worked to even positions ahead of USDA's Supply & Demand Report tomorrow morning. Pre-report expectations are for USDA to raise its 2012-13 carryover estimate by 11 million bu. from last month to 709 million bushels.
Wheat Market Recap Report(CME)
December Wheat finished down 6 at 883 3/4, 14 1/2 off the high and 1 1/2 up from the low. March Wheat closed down 5 3/4 at 895 3/4. This was 1 3/4 up from the low and 13 3/4 off the high. December Chicago wheat traded slightly lower in the close. Kansas City and Minneapolis traded weaker for most of the day but KC managed marginal gains in July 2013 contract, perhaps due to drier than normal conditions in the western plains. The sharply lower US Dollar offered marginal support in early trade but pressure from the soybean and corn markets spilled over to wheat. ABARES cut their Australian wheat production estimate overnight to 22.5 million tonnes vs. 24.1 in June. The trade expects the USDA to cut production by 2-3 million tonnes in tomorrow's report. Most traders feel the USDA could cut 2012/13 world ending stocks to 174.5 million tonnes vs. the current estimate of 177.17. Egypt announced a wheat purchase of 235,000 tonnes of Ukrainian, Russian, and French wheat today. Price spreads between Russian and French wheat continue to narrow signaling tight supply and less aggressive offers by Russian shippers. The negative tone to wheat was also linked to profit taking and repositioning ahead of tomorrow's USDA report. December Oats closed up 1 at 387 1/2. This was 3 1/2 up from the low and 1 off the high.
Pro Farmer: After the Bell Corn Recap(CME)
Corn futures closed 4 to 6 cents lower in the December through September 2013 contracts, with September 2012 ending 1 1/4 cents higher. Traders rushed to the exits in late trade, working to lighten their long exposure to the market ahead of tomorrow morning's key USDA reports as they realize a sharp drop in the size of the crop is already factored into prices. While traders look for USDA to trim the size of the corn crop to 10.403 billion bu. from 10.779 billion bu. in August, they also expect USDA to lower its usage estimates.
Corn Market Recap for 9/11/2012(CME)
December Corn finished down 5 1/2 at 777 3/4, 10 3/4 off the high and 2 1/2 up from the low. March Corn closed down 6 at 781 1/4. This was 2 1/4 up from the low and 11 off the high. December corn traded slightly lower into the closing bell after being pressured by a sharply lower soybean market and on thoughts that current price levels are rationing enough demand. Demand for corn remains weak in export markets on slow demand as harvest moves across the US Corn Belt. Central Midwest weather conditions this week should promote good harvest activity but dry conditions in central and northern Brazil are being watched carefully. Some traders are also suggesting that the recent flooding in Argentina has resulted in minor corn acreage losses. The trade is expecting an average US corn yield for tomorrow's USDA report of just over 120 bushels per acres and production near 10.4 billion bushels. Traders took profits ahead of the USDA report on fears that the USDA might surprise the market with a slightly higher corn yield. The US Dollar traded sharply lower on the day which provided limited support to the grain markets. November Rice finished down 0.05 at 14.72, 0.07 off the high and 0.04 up from the low.
Egypt to lift ban on rice exports in October – paper (Reuters)
Egypt will resume exports of rice in October, lifting a ban imposed since 2008 to protect the domestic market, daily newspaper al-Borsa cited the agriculture minister as saying.
US Corn harvest slowed by moisture; soy ahead of expectations (Reuters)
U.S. farmers made slow progress in the fields in the past week but harvest of both corn and soybeans was at a record pace because the crops matured earlier than ever, government data released on Monday showed.
Vietnam's 2012/2013 coffee production(Reuters)
Harvesting of Vietnam's 2012/2013 coffee crop is due to begin next month, with farmers expecting output to ease by as much as a fifth in the key growing province of Daklak, following a record season.
SOFTS: Arabica coffee futures steadied digesting the previous session's sharp gains after speculators covered short positions, while raw sugar and ICE cocoa futures nudged higher. (Reuters)
OIL-Oil rises above $115 ahead of Fed meeting
LONDON, Sept 11 (Reuters) - Oil rose above $115 a barrel, lifted by expectations the U.S. Federal Reserve would unveil further steps to stimulate its economy this week.
"Prices have barely moved, suggesting the market is in waiting mode (ahead of the Fed gathering)," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investment.
Oil Trades Near Three-Week High on Stimulus Outlook(Bloomberg)
Oil traded near the highest level in three weeks amid speculation China and the U.S. will add stimulus to their economies, sustaining demand for fuel in the world’s biggest crude users. Futures were little changed after rising for a fifth day yesterday, the longest run of gains since July. Chinese Premier Wen Jiabao signaled the government has more room for fiscal and monetary policy to support growth. The Federal Open Market Committee starts a two-day meeting today where it may announce measures to stimulate the U.S. economy. The nation’s crude stockpiles probably shrank 2.9 million barrels last week, according to a Bloomberg News survey before an Energy Department report today. “The market is waiting on the outcome of the FOMC meeting and data from the Energy Department,” said David Lennox, an analyst at Fat Prophets in Sydney.
Oil for October delivery was at $97.04 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 11:42 a.m. Sydney time. The contract yesterday rose 0.7 percent to $97.17, the highest close since Aug. 22. Prices are 1.8 percent lower this year. Brent oil for October settlement fell 1 cent to $115.39 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $18.35, from $18.23 yesterday.
Oil Declines From Three-Week High as U.S. Crude Stockpiles Climb(Bloomberg)
Oil fell from the highest closing price in three weeks in New York after an industry report showed stockpiles climbed in the U.S., the world’s biggest crude user. Futures slipped as much as 0.5 percent, dropping for the first time in six days. Crude inventories rose 221,000 barrels last week, data from the American Petroleum Institute showed. An Energy Department report is forecast to show they slipped by 2.9 million, according to a Bloomberg News survey. Oil supplies are abundant and consumption will slow next year, the Organization of Petroleum Exporting Countries said yesterday. Oil for October delivery decreased as much as 46 cents to $96.71 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.78 at 9:16 a.m. Sydney time. The contract yesterday rose 0.7 percent to $97.17, the highest close since Aug. 22. Prices are 2.1 percent lower this year.
Brent oil for October settlement climbed 59 cents, or 0.5 percent, to $115.40 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $18.23. World oil consumption will rise by an average 800,000 barrels a day to 89.55 million a day in 2013, OPEC said in its monthly market report. Demand is forecast to increase by 900,000 barrels a day to 88.74 million this year. The group estimates its 12 members will need to pump an average of 29.5 million barrels a day next year, or 1.9 million less than current output. WTI will average $93.67 a barrel during the final three months of this year, the Energy Department said in its Short- Term Energy Outlook yesterday. Prices will average $92.63 a barrel next year, the department said.
Brent-WTI Oil Gap Sliding as North Sea Output Rebounds(Bloomberg)
The difference between the world’s two most-traded grades of oil is narrowing as North Sea production rebounds from the lowest level in five years. Brent crude on the ICE Futures Europe exchange in London cost about $18 a barrel more than West Texas Intermediate on the New York Mercantile Exchange yesterday, down from $21.92 on Aug. 15, the widest in almost 10 months. Daily exports of the four crude grades comprising the Dated Brent benchmark will rise 24 percent in October, the biggest monthly increase in two years, as offshore maintenance work ends, according to data compiled by Bloomberg. “It is when we fully exit maintenance in the North Sea that the impact of additional barrels will be felt,” Harry Tchilinguirian, BNP Paribas SA’s head of commodity-markets strategy in London, said in an interview yesterday. “The market tends to look at the difference in price between these two crudes as it tends to guide arbitrage activity across the Atlantic.”
The recovery in North Sea supply is combining with a slew of refinery repairs that are sapping demand for Brent just as new rail links and pipelines are cutting a glut of WTI stored in the U.S. Midwest. Goldman Sachs Group Inc. has stuck this year to a forecast that the difference between the two grades, the most-traded spread on energy exchanges, will shrink to $5 a barrel. BNP says it may drop to between $13 and $14 after staying at $20 until the maintenance period ends.
POLL – U.S. crude stocks forecast down for 2nd week after Isaac
Sept 10 (Reuters) - U.S. crude oil stockpiles likely fell last week for the second straight time, with U.S. Gulf Coast oil production and imports still reeling after Hurricane Isaac, a preliminary Reuters poll showed on Monday.
Crude inventories are forecast to have fallen by 2.1 million barrels in the week to Sept. 7, according to the survey of seven analysts. Five analysts projected a draw in inventories.
Iran says oil prices too low, may rise more
DUBAI, Sept 11 (Reuters) - Crude oil prices are still low and could rise further, Iranian Oil Minister Rostam Qasemi said on Monday, the same day Saudi Arabia said prices are too high and would work to moderate them.
"In our view, the price of oil is still low and has the potential to rise further," Qasemi was quoted as having said on Monday by Iran's oil ministry news website on Tuesday.
Gold Advances on Outlook for Further Stimulus From Fed(Bloomberg)
Gold rose for the third time in four sessions as prospects for more U.S. stimulus from the Federal Reserve spurred demand for the metal as a store of value. The policy-setting Federal Open Market Committee may consider asset purchases at its two-day meeting staring tomorrow. Chairman Ben S. Bernanke signaled last month that a third round of so-called quantitative easing may be needed to reduce joblessness. Germany’s Federal Constitutional Court in Karlsruhe will decide tomorrow whether to halt the country’s participation in the 500 billion-euro ($640 billion) European Stability Mechanism, the euro area’s permanent bailout fund. “More and more people are gravitating toward the metal in anticipation of events over the next 48 hours,” Adam Klopfenstein, the senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The market is already pricing in a QE3, and uncertainty over the European vote is helping gold.”
Gold futures for December delivery added 0.2 percent to settle at $1,734.90 an ounce at 1:38 p.m. on the Comex in New York. Bullion touched a six-month high on Sept. 7 after U.S. job growth in August trailed estimates, adding to speculation that the Fed will announce more stimulus measures this week. The metal surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. Assets in gold-backed exchange-traded products expanded to a record 2,480.43 metric tons yesterday, data compiled by Bloomberg show. Silver futures for December delivery fell 0.2 percent to $33.566 an ounce in New York.
Soybeans Extend Slide on Speculation Rain Aids Crop; Corn Falls(Bloomberg)
Soybean futures fell, capping the longest slump in 10 months, on speculation that rain in the past three weeks boosted U.S. crops as demand eases in China, the world’s biggest consumer. Corn declined to a six-week low. About 32 percent of U.S. soybeans were rated good or excellent as Sept. 9, up from 30 percent a week earlier, government data showed yesterday. In August, China’s imports posted the biggest drop since February 2011. Futures have surged 27 percent since the end of May as drought scorched U.S. crops. “The rains probably helped to marginally boost soybean yields,” Jack Scoville, a vice president at Price Futures Group in Chicago, said in a telephone interview. “There are some signs of slowing Chinese demand for U.S. soybeans because of the elevated price levels.”
Soybean futures for November delivery declined 1 percent to close at $17.015 a bushel at 2 p.m. on the Chicago Board of Trade, dropping for a fifth straight session, the longest slide since late October. Earlier, the price touched $16.9875, the lowest since Aug. 21. Macquarie Group Ltd. cut its 2012 economic growth estimate for China to 7.7 percent from 8.1 percent. Banks and brokerages including Barclays Plc and Nomura Holdings Inc. also have reduced their forecasts, partly because of a decline in industrial production. Corn futures for December delivery fell 0.7 percent to settle at $7.7775 a bushel. Earlier, the most-active contract touched $7.7525, the lowest since July 27. In the U.S., corn is the biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
Soybean Reserves Smallest in Four Decades After Drought(Bloomberg)
The smallest U.S. soybean harvest in nine years will leave inventories in the world’s largest exporting nation at the lowest in four decades. U.S. farmers will reap 13 percent less than a year earlier after the worst Midwest drought in 76 years, according to the average of 34 analyst estimates compiled by Bloomberg. Reserves will be the lowest since 1973 by March, estimates INTL FCStone Inc., which handled $75 billion of physical commodities in 2011. Futures will advance 18 percent to an all-time high of $20 a bushel in three months, Goldman Sachs Group Inc. predicts.
Crop prices surged to records this year as drought parched fields across the U.S., South America and Russia. The U.S. Department of Agriculture cut its forecasts the past two months and the Bloomberg survey indicates the agency will do so again tomorrow, leaving Brazil as the top soybean supplier for the first time. Feed costs are rising for meat producers including Tyson Foods Inc. (TSN), the largest in the U.S., and three United Nations agencies said Sept. 4 that swift action is needed to avert a food crisis. “The U.S. will simply run out of soybeans” for exports on March 1, said Doug Jackson, an FCStone vice president in West Des Moines, Iowa, who has been a grain-industry analyst since 1974. “The supply situation is unprecedented. The theoretical maximum South American shipping capacity may fall short, leaving world buyers wanting.”
Pro Farmer: After the Bell Soybean Recap(CME)
Pressure on soybeans built as the day progressed and futures ultimately finished with losses of 13 3/4 to 17 1/2 cents. Soymeal and soyoil also ended with losses for the day. Traders focused on removing risk ahead of what in the past has been "surprising" September USDA reports. Pre-report expectations are for USDA to trim its national average yield projection to 35.5 bu. per acre for a crop of 2.638 billion bushels.
Soybean Complex Market Recap(CME)
November Soybeans finished down 17 1/4 at 1701 1/2, 27 1/2 off the high and 2 3/4 up from the low. January Soybeans closed down 17 1/2 at 1700 3/4. This was 2 3/4 up from the low and 27 1/2 off the high. December Soymeal closed down 3.5 at 515.9. This was 0.9 up from the low and 6.4 off the high. December Soybean Oil finished down 0.68 at 55.88, 1.15 off the high and 0.08 up from the low. November soybeans traded sharply lower on the day and traded under $17.00 for the first time since August 21st. Thoughts that the USDA could revise soybean yields higher, along with profit taking, forced soybeans sharply lower for the second day in a row. The market is expecting an average US soybean yield near 35.7 bushels per acre and production near 2.66 billion bushels in tomorrow's USDA report. Better rainfall in August for the eastern Corn Belt has benefited soybean conditions however some of this is being offset by the a continued pattern of warm and dry conditions in the western Corn Belt. Some traders suggest soybeans look good from afar but low pod counts and plants that have aborted pods could mean this year's production is lower than the August USDA estimate of 2.69 billion bushels. Furthermore, open interest and long positions held by funds remains historically high which added to the downside momentum as traders headed to the sidelines. The US Dollar traded sharply lower today but offered minimal support to prices.
Forward sales of Brazil soy advance as farmers await rain (Reuters)
Forward sales of Brazilian soybeans advanced one percentage point last week while farmers waited for rain to be able to start planting what is expected to be a record crop, local analyst Celeres said on Monday.
EDIBLES: Malaysian crude palm oil futures slipped to their lowest in nearly a month, as traders turned cautious about high stocks and ahead of key reports by the U.S. Department of Agriculture due this week.(Reuters)
Posted by MW Chong at 10:16 AM