Monday, November 5, 2012
FCPO closed : 2411, changed : -85 points, volume : lower.
Bollinger band reading : side way range bound little downside biased.
MACD Histogram : falling lower, seller testing market.
Support : 2400, 2350, 2300, 2250 level.
Resistance : 2450, 2490, 2520, 2550 level.
FCPO closed recorded substantial loss with slower volume exchanged. Soy oil price currently trading weaker by 1% after last Friday closed plunged 2% lower while crude oil price currently trading lower.
Continue higher inventories level concern and weaker soy oil price development sent crude palm oil price 3.4% lower.
FCPO daily chart study revised to suggesting a side way range bound little downside biased market development with MACD indicator having negative crossed down.
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
FKLI closed : 1647.5 changed : -1.5 point, volume : higher.
Bollinger band reading : pullback correction little downside biased.
MACD Histogram : falling lower, seller taking exposure.
Support : 1645, 1640, 1635, 1627 level.
Resistance : 1651, 1657, 1660, 1670 level.
FKLI closed recorded small loss with improving volume transacted doing 6.5 points discount compare to cash market that also closed little weaker. Last Friday U.S. markets fell lower and today Asia markets ended lower while European markets currently having negative development.
Global market traded weaker on struggling Greece bailout development, China HSBC Services purchasing managers’ index dropped and investors choose to stay sideline ahead of U.S. presidential election and China leader transition meetings.
Daily chart reading adjusted to suggesting a pullback correction little 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 5:20 PM
STOCKS: European shares looked set to open lower and Asian shares fell as investors shied away from risk ahead of the closely fought U.S. presidential election, the result of which could define a clear direction for broader markets. U.S. stocks ended an unusual storm-shortened trading week with a selloff on Friday. (Reuters)
FOREX-Dollar index hits 2-month high after U.S. job data
TOKYO, Nov 5 (Reuters) - The U.S. dollar hit a two-month high against a basket of major currencies after job reports last week highlighted relatively solid U.S. economic fundamentals.
"After the dollar/yen has tested a key Fibonacci level, it needs a bit of consolidation in the very near-term," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
Politics call the tune in U.S, China and Europe
LONDON, Nov 4 (Reuters) - In the politically packed days ahead, an election, a coronation and a two-part parliamentary vote each has the potential to alter the course of the global economy for years to come.
The election, of course, is on Tuesday for the White House and Congress. Two days later, C hina's ruling Communist party begins the 18th congress in its history.
U.S. fiscal cliff, Europe's debt woes worry G20 (Reuters)
Leading world economies pressed the United States on Sunday to act decisively to avert a rush of spending cuts and tax hikes, warning that the so-called fiscal cliff is the biggest short-term threat to global growth.
GRAINS: Chicago soy extended losses, sliding to its lowest in more than two weeks, while corn was little changed after dropping for two consecutive sessions under pressure from private forecasters raising their estimates for U.S. crops. Wheat edged higher, rising for three out of four sessions as dryness in U.S. Plains and forecasts of rains at the time of harvest in Australia threatened to tighten global supplies. (Reuters)
Informa raises U.S. 2012 soy crop estimate, lowers corn (Reuters)
Private analytics firm Informa Economics raised its estimate of the U.S. 2012 soybean crop to 2.925 billion bushels, from 2.86 billion previously, trade sources said Friday.
Oil trader nightmare: regulated like a bank (Reuters)
Tougher global regulations on derivatives and capital requirements might put small oil traders out of business in the next few years and increase the dominance of just a few major houses, something the regulators might ultimately regret. For the full story, click here
NJ Bayway refinery may be shut for weeks; Hess still idle (Reuters)
Phillips 66's Bayway refinery in New Jersey, the second largest in the region, could be shut for weeks due to heavy damage caused by salt water flooding, a source familiar with operations said on Friday.
Euro Coal-Prices dip with Asia on low demand
LONDON, Nov 2 (Reuters) - Prompt South African coal prices eased below the $81 per tonne mark on Friday amid few signs of demand in an oversupplied market.
One January-loading South African cargo traded today at $80.95 a tonne FOB, down 5 cents from the previous day's deal level as sellers continued to outnumber buyers.
Asia Coal-Australia coal prices sluggish at $82/tonne
PERTH, Nov 2 (Reuters) - Australia's thermal coal price benchmark dropped to around $82 per tonne this week, down from over $84 per tonne last week as demand continued to fall short of supply, with Chinese buyers continuing to be relatively well-stocked ahead of winter.
Australia's Newcastle spot index for the week closed at $82.26 per tonne on Wednesday, down from $84.03 last week, data from online trading platform globalCOAL showed.
OIL: Brent crude hovered around $106 per barrel as a more than 2 percent drop on Friday attracted some buyers, although investors remained focused on the U.S. presidential elections and demand worries. (Reuters)
US regulation may prompt iron ore swaps volume migration (Reuters)
New regulation is likely to deter U.S. investors in iron ore swaps from using the Singapore Exchange, the leading clearer of the product, scattering business to other exchanges and reducing liquidity in this fledgling market.
Iron ore seen steady near $120 this week, China transition eyed
SINGAPORE, Nov 5 (Reuters) - Spot iron ore prices are likely to stabilise around current levels near $120 a tonne this week, with Chinese steel mills continuing to pick up cargoes, but perhaps unwilling to pay too big a premium, given a slow, steady recovery in steel demand.
Market participants are also waiting for the once in a decade leadership transition that China kicks off on Thursday, hoping for policy signals from the new government to aid the world's second-largest economy after a seven-quarter slowdown.
METALS-Copper falls to 2-mth low; U.S. elections, China transition eyed
SHANGHAI, Nov 5 (Reuters) - Copper hit two-month lows as investors shied away from risk with the U.S presidential election, China's leadership transtion and two central banks meetings this week stoking uncertainty over global economic growth.
"The markets did not pick up despite Friday's positive U.S. nonfarm payrolls data, which underlined how cautious everyone is before the U.S. elections and China's Party Congress," said CIFCO Futures analyst Zhou Jie, referring to signs U.S. employers stepped up hiring in October.
PRECIOUS-Gold firms but gains limited by strong dollar
SINGAPORE, Nov 5 (Reuters) - Gold nudged a touch higher paring falls after stronger-than-expected U.S. jobs data sent gold to a two-month low in the previous session, but a stronger dollar curbed the rebound.
"In the short term gold may hover around Friday's low, but there isn't much room on the downside as easing monetary policy is still a global trend," said Li Ning, an analyst at Shanghai CIFCO Futures.
The Baltic index down as capesize rates fall
Nov 2 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Friday as capesize rates continued to drop.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 1.4 percent to 986 points.
Posted by MW Chong at 4:26 PM
VEGOILS-Palm oil drops to 3-week low as stock concerns linger
Mon Nov 5, 2012 12:59am EST
* Market players expect Malaysian stocks at record high in
* Prices fall to 2,396 ringgit, level last seen on Oct 12
* Palm oil eyes 2,379-2,417 ringgit zone -technicals
* India should tax crude palm oil imports at 10 pct -Mistry
(Updates prices, adds details)
By Chew Yee Kiat
SINGAPORE, Nov 5 (Reuters) - Malaysian palm oil futures
tumbled to their lowest in more than three weeks on Monday, as
traders continued to worry over large stockpiles in the world's
No.2 producer of the tropical oil.
Traders and analysts expected inventories in Malaysia to
reach a fresh record high in October on the back of strong
production, which added to pressure from declines in other
"The market's dragged down by soybean oil and soybeans, and
local sentiment is also not good," said a trader with a foreign
commodities brokerage in Malaysia.
"The question for oilseeds, especially palm oil, is
basically Malaysia's end-stocks figures for October. Exports may
be good, but end-stocks are not coming down. The question is how
much, and we are looking at 2.5 million or 2.6 million tonnes."
By the midday break, the benchmark January contract
on the Bursa Malaysia Derivatives Exchange had lost 4 percent to
2,397 ringgit ($782) per tonne, just off its intraday low at
2,396 ringgit, a level last seen on Oct. 12.
Total traded volumes stood at 18,471 lots of 25 tonnes each,
much higher than the usual 12,500 lots, as traders rushed to
liquidate their positions.
Technicals showed palm oil is poised to break two supports
at 2,497 ringgit and 2,469 ringgit per tonne and fall towards a
range of 2,379-2,417 ringgit, Reuters market analyst Wang Tao
Concerns remained that strong exports of 1.6 million tonnes
in October would do little to counter healthy production that
may swell stockpiles. Industry regulator the Malaysian Palm Oil
Board (MPOB) releases data on October inventory levels on Nov.
"We expect the upcoming MPOB data to be uninspiring, as
inventory is poised to increase further, to another record high
of 2.65 million tonnes," Alan Lim Seong Chun, a research analyst
with Malaysia's Kenanga Investment Bank, said in a note on
"However, the high inventory should have already been
reflected in the very high discount of crude palm oil against
soybean oil, at more than $250 per tonne."
The steep discount between palm and soybean oil could
trigger higher purchases from India, the world's biggest
vegetable oil importer, and top analyst Dorab Mistry called for
the country to impose an import duty of 10 percent on crude palm
oil to protect its farmers.
In related markets, Brent crude edged above $106 per barrel
on Monday as a steep drop on Friday attracted some buyers,
although investors remained focused on the U.S. presidential
elections and demand worries.
In other vegetable oil markets, U.S. soyoil for December
delivery slipped 1.1 percent in early Asian trade. The
most active May 2013 soybean oil contract on the Dalian
Commodity Exchange slumped 2.8 percent.
Posted by MW Chong at 2:46 PM
Malaysia palm oil futures down over 3 pct on stocks worries FCPOc3 - RTRS
SINGAPORE, Nov 5 (Reuters) - Malaysian palm oil futures tumbled more than 3 percent to the lowest in more than three weeks on Monday, as market participants continued to worry over high stocks in the world's No.2 producer.
By 0300 GMT, the benchmark January contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had lost 3.4 percent to trade at 2,410 ringgit ($787) per tonne, a level unseen since Oct. 12.
The market was also under pressure from declines in other vegetable oil markets. By 0300 GMT, U.S. soyoil for December delivery BOZ2 slipped 0.9 percent, while the most active May 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange also fell 2.7 percent.
Posted by MW Chong at 11:27 AM
GLOBAL MARKETS-Asian shares ease on caution before U.S. elections
TOKYO, Nov 5 (Reuters) - Asian shares fell, tracking a sell-off in global shares late last week, as investors continued to shed risk ahead of the closely fought U.S. presidential election and looked past a strong U.S. jobs data to fragile economic growth worldwide.
"Investors hate uncertainty, so there will be a sigh of relief when the election is over. Provided there is a clear election result and no change in the divided Congress, then traders and investors will see it as 'business as usual'," said Craig James, chief economist at CommSec.
OIL-Oil falls as U.S. acts to boost East Coast fuel supply
NEW YORK, Nov 2 (Reuters) - Crude oil and gasoline futures fell more than 2 percent on Friday after Washington issued a waiver allowing foreign tankers to bring fuel to the East Coast from U.S. ports, holding out some promise of relief from supply disruptions caused by superstorm Sandy.
"I think economic uncertainty and next week's (U.S.) elections are weighing on oil prices. You also have the statement that the Jones Act is going to be waived for a week, suggesting some supplies are going to return," said analyst Gene McGillian at Tradition Energy in Stamford, Connecticut.
U.S. gasoline prices post biggest fall in nearly 4 years-survey
NEW YORK, Nov 4 (Reuters) - The average U.S. price for a gallon of regular gasoline took its biggest drop since 2008 in the past two weeks, due to lower crude oil prices, a big price drop in pump prices in California and Hurricane Sandy, according to a widely followed survey released on Sunday.
Gasoline prices averaged $3.5454 per gallon on Nov. 2, down 20.75 cents from Oct. 19 when drivers were paying $3.7529 at the pump, Lundberg said.
U.S. government tries to get fuel to storm-hit Northeast
WASHINGTON, Nov 2 (Reuters) - The U.S. government on Friday sought to ease the fuel crunch paralyzing the storm-struck Northeast saying the military would buy motor fuel and truck it there and allow foreign tankers from the Gulf of Mexico to deliver oil products.
The Department of Homeland Security waived the Jones Act, a law that normally prohibits foreign-flagged vessels from shipping gasoline, diesel and other petroleum products, from the Gulf of Mexico to Northeastern ports. The waiver, effective immediately, requires shipments to leave the Gulf region by Nov. 13 and arrive in the Northeast within a week.
NATURAL GAS - US natgas futures end down 4 pct, forecasts turn milder
NEW YORK, Nov 2 (Reuters) - U.S. natural gas futures ended lower on Friday as widespread power outages from Hurricane Sandy slowed demand and weather forecasts for late next week turned milder despite the outlook for some near-term cold that should stir more heating load.
"It looks like the weather is going to warm up a little late next week. We already have record high storage, and we don't have enough (cold) weather yet to see (inventory) withdrawals," said Steve Mosley at SMC Advisory Services in Arkansas.
EURO COAL-Prices dip with Asia on low demand
LONDON, Nov 2 (Reuters) - Prompt South African coal prices eased below the $81 per tonne mark on Friday amid few signs of demand in an oversupplied market.
One January-loading South African cargo traded today at $80.95 a tonne FOB, down 5 cents from the previous day's deal level as sellers continued to outnumber buyers.
Posted by MW Chong at 11:10 AM
Massive Equity: Offer for KFC and QSR fair
Massive Equity SB, the special purpose vehicle set up to take over KFC Holdings (M) and QSR Brands, has maintained its view that its proposed offer price is fair and reasonable. The statement came after a foreign news wire reported that the company, which is owned by Johor Corp, the Employees Provident Fund and CVC Capital Partners, may face some opposition from minority shareholders over its proposed takeover offer in the upcoming EGM, scheduled for today and tomorrow. (BT)
Iskandar Malaysia enters the fast lane
The chief of Iskandar Investment (IIB) is bullish on the outlook for Iskandar Malaysia in Johor, attributing his optimism to various projects like the high-speed rail (HSR) plan and the transformation of Desaru. "Hopefully, it (HSR) can come earlier. Iskandar Malaysia will benefit from the MRT link between JB Sentral and Woodlands in Singapore," said IIB president and chief executive officer Datuk Syed Mohamed Syed Ibrahim. Khazanah Nasional recently said plans are underway to transform Desaru, starting with Phase 1 that carries a gross development value of RM5bn. The transformation will be carried out in three phases over 15 to 20 years. (BT)
AirAsia X IPO to sell 33.3% of shares
AirAsia X, the medium haul budget carrier of AirAsia, is offering for sale 790.1m shares, or 33.3% of the company, in an initial public offering (IPO). The IPO will comprise 592.6m new shares and 197.5m existing shares, with the new shares representing 75% of the IPO proceeds while the remainder of the proceeds will go to its promoters. Based on Reuters report, the total IPO of 790.1m shares could be worth 97 sen per share. However, AirAsia X has given no information on pricing, size of the listing or a timeframe for the IPO. (StarBizweek)
KLIA2 expects 20m passengers in first year
20m passengers are expected at the new low-cost carrier terminal (KLIA2) in its first year of operation, said Malaysia Airports Holdings general manager of construction Mohd Zaifuddin Idris. He said another two low-cost airlines, in addition to the 10 budget carriers presently operating from the LCCT (low cost carrier terminal), were expected to operate from KLIA2, once it officially opens on 1 May 2013. The two airlines are Firefly and Malindo Air. Mohd Zaifuddin said Firefly had asked for space at KLIA2. He said the RM4bn KLIA2 was 70% complete, adding that the completion of its RM150m skybridge was a major milestone. (StarBizWeek)
U Mobile scales new heights with 3G network expansion
U Mobile SB is expanding its network across Peninsular Malaysia and will now offer 3G coverage and high- speed Internet services in every state. This followed the activation of its 3G Radio Access Networks (RAN) sharing with Maxis, a statement from the telecommunication company said last Friday. The 3G network expansion through the 3G RAN sharing represented a major milestone for the local telecommunications industry and was the first such initiative in Asia, it said. This not only reinforces U Mobile's commitment to expand its network coverage but positions U Mobile amongst the top three 3G telcos in Malaysia. (StarBizweek)
WCT agrees deal with Medini
WCT Acres SB, a unit of WCT Bhd, has entered into a 99-year lease purchase agreement with Medini Land SB, a subsidiary of Iskandar Investment (IIB), for an 18.1-acre land for RM99.5m. The land, situated in Medini North in Johor, will be used for a proposed mixed commercial development with an estimated gross development value of approximately RM1.5bn. The development which comprises offices, retail spaces and apartments will be carried out over the next five years. WCT managing director Taing Kim Hwa said works for the land would commence after the completion of the deal and expected it to be in another six to 12 months. (StarBizweek)
UEM Land plans Auto City in Nusajaya
UEM Land Holdings is working on plans to build a "Auto City", a dedicated zone for motoring enthusiasts, in Nusajaya. Chairman Tan Sri Dr Ahmad Tajuddin Mohamed Ali said on Friday the city would be developed on a 32ha site near Gerbang Nusajaya. "We've many development projects to be implemented in Nusajaya. There will be, hopefully before not too long, something we call Auto City related to auto enthusiasts," he said. Ahmad Tajuddin also said UEM Land has plans to build a uniqe shopping complex in Nusajaya and other development projects. (StarBizWeek)
Datasonic signs MoU with SCPP to implement smartcard projects
Datasonic Group, an information, communication and technology (ICT) services provider, signed a memorandum of understanding (MoU) with Sudan Currency Printing Press Co Ltd (SCPP) to jointly work on smartcard projects in Sudan. The MoU, signed between Datasonic Technologies SB, involves joint cooperation and implementation of electronic national identity card, e-passport and land transportation ICT and smartcard systems there, said Datasonic. The MoU will take effect from 1 Nov 2012 for 12 months. (Malaysian Reserve)
Sime sells JV unit to Sirim for RM10m
Sime Darby's wholly-owned subsidiary Sime Darby Energy SB is selling its entire equity interest in the joint-venture (JV) company Sime-Sirim Technologies SB to Sirim for RM9.9m. Sime did not rationalize the proposed disposal other than saying it is expected to be completed by 2 Jan 2013. Sime-Sirim Technologies is principally involved in the business of establishing and operating commercial laboratories providing calibration, measurement and other related services. (Malaysian Reserve)
Lin to stay another term in Gamuda?
Gamuda group managing director Datuk Lin Yun Ling's decision to raise his stake in the construction firm was meant to send a clear signal to the market of his commitment to the group, which he has served for the last 34 years. Executives close to Gamuda said Lin in fact plans to accept a renewal of his employment contract for another term, if offered. Lin sees potential, particularly in Gamuda's property development and construction operations. Citing examples, the executive said Gamuda's annual new property sales stood at RM600m five years ago but has now increased to RM1.5bn. (Financial Daily)
CHINA: Non-manufacturing gains bolster signs economy to rebound
China’s non-manufacturing industries rebounded from the slowest expansion in at least 19 months, adding to manufacturing gains that indicate the world’s second- biggest economy is recovering from a seven-quarter slowdown. The purchasing managers’ index rose to 55.5 in October from 53.7 the previous month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on 3 Nov. The growth follows two reports last week that showed a pickup in manufacturing industries. (Bloomberg)
AU: Swan says G-20 views global recovery as ‘fragile’
Australian Treasurer Wayne Swan said most of his Group of 20 counterparts see the global recovery as “fragile” and called on Europe to press ahead with closer financial integration and the US to cut its budget deficit. “From my initial meetings, it’s clear most of my G-20 colleagues view the global recovery as fragile,” Swan said in his weekly economic note yesterday. “It’s critical that leaders of many major economies now get on with the necessary structural reforms needed to underpin growth.” (Bloomberg)
US: Services probably sustained expansion
Service industries in the US probably kept growing in October, lifted by gains in consumer spending that are helping bolster the expansion, economists said before a report this week. The Institute for Supply Management’s non-manufacturing index, which covers almost 90% of the economy, was at 54.5 last month, little changed from 55.1 in September, according to the median forecast in a Bloomberg survey before tomorrow’s figures. Readings above 50 signal growth. Another report this week may show the trade deficit widened in September as exports cooled. (Bloomberg)
EU: Euro area resolve to secure single currency faces Greek test
European leaders’ determination to keep Greece in the euro area will be tested this week as Prime Minister Antonis Samaras struggles to secure political support for measures to assure the country’s financial lifeline. Samaras pledged on Saturday that the raft of wage and pension cuts in the latest austerity package will be the last and that Greek society won’t tolerate any more, according to comments made to lawmakers of his New Democracy party. The first parliamentary vote in Athens may come as early as 7 Nov. (Bloomberg)
EU: Debt crisis seen hindering closer trade ties with Asia
European and Asian leaders will this week discuss a stalled trade agenda between the world’s fastest and slowest-growing regions, as the debt crisis undermines expansion of commercial ties. Europe’s economic woes may exacerbate protectionist tendencies that make it harder to expand trade with its biggest commerce partner at a time when the US and Australia are forging new agreements, according to Fredrik Erixon, head of the European Centre for International Political Economy in Brussels. (Bloomberg)
US Equity-index futures slip while gold snaps two-day decline
US equity futures fell, signaling the Standard & Poor’s 500 Index may erase last week’s advance, while gold rose for the first time in three days. S&P 500 slipped 0.9% to 1,414.20, while the Dow Jones slid 1.1% to 13,093.16 last Friday. European and Asian leaders will discuss a stalled trade agenda between the world’s fastest and slowest-growing regions as the debt crisis undermines expansion of commercial ties. Data released over the weekend showed China’s non-manufacturing industries rebounded from the slowest expansion in at least 19 months. (Bloomberg)
Asian Stocks Decline as South Korean Carmakers Slide (Bloomberg)
Asian stocks fell, led by South Korean carmakers, on findings they overstated claims about gas mileage. Losses were limited as Samsung Electronics Co. advanced on a report it may release a new smartphone. Hyundai Motor Co. and Kia Motors Corp. (000270) each slumped more than 5 percent in Seoul after saying they will compensate U.S. customers for overstating the fuel efficiency of their latest models. Japanese rival Toyota Motor Corp., which gets about a quarter of its sales in North America, gained 1.9 percent. Samsung advanced 1.4 percent after South Korea’s Maeil Business Newspaper said the company may offer a new Galaxy smartphone as early as the second quarter next year.
The MSCI Asia Pacific (MXAP) Index slid 0.2 percent to 122.30 as of 10:01 a.m. in Tokyo before the open of markets in China and Hong Kong. The regional benchmark gained 7.6 percent this year through the end of last week as central banks in Europe, the U.S., Japan and China added stimulus measures to counter a global economic slowdown and the European debt crisis. “This could be a game-changing event in Hyundai’s success story,” said James Yoon, a Seoul-based analyst at BNP Paribas SA. “The financial loss is immaterial compared to the potential reputational loss” to its brand. Futures on the Standard & Poor’s 500 Index rose 0.2 percent ahead of the U.S. presidential election tomorrow. The gauge dropped 0.9 percent on Nov. 2 as the Thomson Reuters/Jefferies CRB Index of raw materials retreated 1.6 percent, the biggest slide in a month.
Shares declined in the U.S. even after the Labor Department said 171,000 workers were added to payrolls last month and September’s gain was more than first estimated. The increase surpassed the most optimistic forecast in a Bloomberg survey in which the median called for an advance of 125,000. Unemployment rose to 7.9 percent. Japan’s Nikkei 225 Stock Average (NKY) lost 0.2 percent and South Korea’s Kospi slid 0.4 percent. Australia’s S&P/ASX 200 Index retreated 0.1 percent.
Japanese Stocks Decline on Commodities, Sharp Bailout (Bloomberg)
Japanese stocks fell, halting a three-day gain, as commodity prices slid and Sharp Corp. dropped on speculation the electronics maker will seek a bailout after forecasting a record loss. Mitsui & Co., a trading house that counts commodities as its biggest source of revenue, fell 1.6 percent as oil and metals fell. Sharp lost 3.6 percent. Yamada Denki Co. (9831) plunged 5.4 percent after the electronics retailer cut its earnings forecast. Utilities fell after a regulator delayed a decision on whether to take reactors at a Kansai Electric Power Co. plant offline. “In Japan, many companies cut their earnings forecasts, discouraging investors to buy shares,” said Kenichi Hirano, general manager and strategist at Tachibana Securities in Tokyo. “Judging from the current real economy, the conditions aren’t there for commodity prices to rise.”
The Nikkei 225 Stock Average (NKY) fell 0.5 percent to 9,010.89 as of 9:22 a.m. in Tokyo, with volume 8.9 percent below the 30- day average. The broader Topix (TPX) Index lost 0.4 percent to 749.20, with more than two shares dropping for each that gained. The Topix rose 4.6 percent through Nov. 2 from Sept. 6 after the European Central Bank started a global wave of stimulus to boost growth, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the equity gauge traded at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index. Futures on the Standard & Poor’s 500 Index were little changed ahead of the U.S. presidential election tomorrow. The gauge dropped 0.9 percent on Nov. 2 as the Thomson Reuters/Jefferies CRB Index of raw materials retreated 1.6 percent on Nov. 2, the biggest slide in a month.
Recap Stock Index Market Report (CME)
The December S&P 500 broke out to a new eight day high during the morning hours, supported by a better than expected increase in October Non-Farm Payrolls. However, early optimism seemed to evaporate as the session drew on. Some traders indicated that while the jobs data was positive, there remained uncertainty over the outcome of next week's presidential election. Further weakness in the stock market came from a selloff in commodity markets, which weighed on energy and material-related shares. Shares of Chevron were down more than 2.5% on the session in reaction to Q3 results that came in below estimates and showed a significant decline in net income compared to the year ago quarter.
S&P 500 Advances in Shortened Week Ahead of Elections (Bloomberg)
The Standard & Poor’s 500 Index rose in a three-day trading week, as the market reopened after Hurricane Sandy caused the longest weather-related shutdown since 1888, and American voters prepared to choose a president. Equities retreated on the last day of the week as a better- than-forecast payrolls report failed to keep technology and commodity shares from slumping. Visa Inc. (V) and General Motors Co. (GM) climbed at least 3.6 percent as earnings beat projections. Macy’s Inc. rallied 5.5 percent after raising its sales forecast. Apple Inc. (AAPL) sank 4.5 percent, capping a sixth weekly decline, the longest losing streak since October 2008. The S&P 500 rose 0.2 percent to 1,414.20 for the week. The Dow Jones Industrial Average slid 14.05 points, or 0.1 percent, to 13,093.16. The equity market was closed Oct. 29 and 30.
“You have the hurricane, the election, the employment report and the earnings numbers all impacting the market,” David Sowerby, a fund manager at Boston-based Loomis Sayles & Co., said in a telephone interview. His firm oversees about $175 billion. “Earnings continue to surprise on the upside. We’ve had a slight improvement in manufacturing. That’s favorable for stocks.” The S&P 500 gained as 71 percent of companies that released quarterly results have beaten analysts’ estimates, according to data compiled by Bloomberg. Reports showing better-than-forecast manufacturing data and a surge in consumer confidence gave benchmark indexes their biggest gains in seven weeks on Nov. 1. Hiring in the U.S. increased more than forecast in October as employers looked past slowing global growth and political gridlock at home.
European Stocks Advance as U.S. Jobs Data Beat Forecasts (Bloomberg)
European stocks advanced this week as companies from Royal Dutch Shell Plc to Deutsche Bank AG (DBK) reported earnings that topped estimates, American jobs data beat forecasts and U.S markets reopened after Hurricane Sandy forced their closure for two days. UBS AG, Switzerland’s biggest bank, jumped to a 15-month high after saying it will cut about 10,000 jobs to boost profitability. Shell, Europe’s biggest oil company, and Deutsche Bank AG, Germany’s largest lender, advanced more than 3 percent. Air France-KLM Group (AF) and Deutsche Lufthansa AG (LHA) surged after posting earnings that beat analyst estimates. BG Group Plc (BG/) tumbled 18 percent after it said growth next year will be flat.
The Stoxx Europe 600 Index added 1.6 percent to 274.85 this week. The benchmark completed its fifth monthly rally on Wednesday and has surged 18 percent from this year’s low on June 4 as European Central Bank President Mario Draghi pledged to defend the euro at all costs and Federal Reserve Chairman Ben S. Bernanke announced a third round of quantitative easing. “The non-farm payroll figures confirm a U.S. private sector that is printing jobs year-on-year at the same pace as back in 2004-05, which is good.” Peter Garnry, an equity strategist at Saxo Bank A/S in Copenhagen wrote in a message. “The job report was better than expected, which adds to the other good reports this week, and it will likely carry the momentum for the week all the way home to show solid gains in stocks across the board.”
Emerging Stocks Rise to Best Week Since September After Payrolls (Bloomberg)
Emerging-market stocks rose, adding to the benchmark index’s biggest weekly gain in almost two months, as industrial and technology companies’ profits beat estimates and hiring in the U.S. increased more than forecast. Samsung Heavy Industries Co., the world’s second-largest shipbuilder, rallied the most in eight months and Wipro Ltd. (WPRO), India’s third-largest software-services exporter, rose for a fifth day after earnings topped analysts’ forecasts. OAO Gazprom, the world’s biggest natural gas producer, snapped a five-day decline after quarterly earnings exceeded estimates. The MSCI Emerging Markets Index advanced 0.5 percent to 1,004.68 at the close of trading in New York. The gauge climbed 1.4 percent this week, the most since the period ended Sept. 14. Its 30-day historical volatility, a measure of price swings, fell to a six-year low of 8.9 yesterday after data on U.S. manufacturing and employment topped forecasts.
A net 171,000 workers were added to payrolls after a 148,000 gain in September, Labor Department figures showed today in Washington. “The job creation was stronger than we anticipated, and that’s certainly a positive sign for the U.S. economy,” Nick Chamie, global head of foreign-exchange strategy and emerging markets research at Royal Bank of Canada, said in a phone interview from Toronto. “The data is consistent with a mild basing out of the growth slowdown, and with relatively weak growth moving forward. The market is pricing out a little bit of the more dire scenarios.” The median forecast on U.S. payrolls from 91 economists surveyed by Bloomberg called for an advance of 125,000. The jobless rate rose to 7.9 percent from 7.8 percent as more people entered the labor force.
Treasuries Snap Gain Before U.S. Service Industries Data (Bloomberg)
Treasuries snapped a gain from last week before a data economists said will show service industries in the U.S. expanded in October, while China also reported faster growth in non-manufacturing businesses. Benchmark 10-year yields were 34 basis points from the record low as Americans prepared to choose a leader who will face unprecedented debt levels and the so-called fiscal cliff, which threaten to slow the economy. President Barack Obama and challenger Mitt Romney are each trying to convince voters he can best create jobs before tomorrow’s vote. “Investors should be cautious on Treasuries,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s third-largest publicly traded bank by assets. “We’re seeing signs of recovery in the two largest economies,” he said, referring to the U.S. and China. U.S. 10-year notes yielded 1.72 percent as of 9:47 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.625 percent note due in August 2022 was 99 1/8.
The yield declined three basis points, or 0.03 percentage point, last week. The record low was 1.38 percent set July 25. The Institute for Supply Management’s non-manufacturing index, which covers almost 90 percent of the economy, was probably 54.5 last month, little changed from 55.1 in September, according to the median forecast in a Bloomberg News survey before today’s figures at 10 a.m. New York time. Readings above 50 signal growth. An index of China’s non-manufacturing industries rose to 55.5 in October from 53.7 the month before, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on Nov. 3.
Treasuries Rise for Second Week Before Economy-Themed Election (Bloomberg)
Treasuries rose for a second week as Americans prepared to choose a president who will face unprecedented debt levels and the so-called fiscal cliff, which threaten to derail an economy hobbled by elevated unemployment. Benchmark 10-year note yields traded close to a two-week low on concern Hurricane Sandy has disrupted business and will hinder the economic recovery. Pacific Investment Management Co.’s Bill Gross said the Federal Reserve will continue its monetary stimulus, even with the nation adding more jobs than forecast last month. The U.S. will sell $72 billion in notes and bonds next week. “There is a lot of uncertainty in the market -- the election being a contributing factor -- and whoever wins will have their plate full of all of the things that have kept rates low,” said Jay Mueller, who manages about $2 billion of bonds at Wells Capital Management in Milwaukee. “The theme for next week will be politics, written large.”
The yield on 10-year notes fell three basis points, or 0.03 percentage point, this week to 1.72 percent in New York. It touched 1.68 percent, the least since Oct. 16. The 1.625 percent note due in August 2022 fell 9/32, or $2.81 per $1,000 face amount, to 98 6/32. Thirty-year bond yields finished the week little changed at 2.91 percent.
Pound Rises Versus Euro for Second Week on Waning Stimulus Bets (Bloomberg)
The pound strengthened against the euro for a second week, touching a one-month high, as signs of improvement in the U.K. economy damped expectations for more monetary stimulus. Sterling fell for the fifth week in six against the dollar after a report yesterday showed the U.S. economy added more jobs than expected last month. The Bank of England’s Monetary Policy Committee meets on Nov. 7-8 to decide whether to extend its asset-purchase program, known as quantitative easing, beyond 375 billion pounds ($601 billion). Gilts were little changed after a report yesterday showed the construction industry unexpectedly expanded last month. “We’ve had more supportive news for the U.K. economy from the U.K. construction survey,” said Audrey Childe-Freeman, head of foreign-exchange strategy at Bank of Montreal (BMO) in London. “Sterling should continue to benefit against the euro as long as we see the economy hanging on. The market is not now expecting more QE next week and that should come as a relief for sterling.”
The pound rose 0.3 percent in the week to 80.12 pence per euro at 5 p.m. London time yesterday, when it advanced to 79.97 pence, the most since Oct. 3. Sterling fell 0.5 percent to $1.6031.
Payroll Growth Shows U.S. Labor Market Healing Before Election (Bloomberg)
American employers hired more workers than forecast in October while an influx of people joining the labor force pushed the jobless rate higher, according to the last job market report before the presidential election. Payrolls expanded by 171,000 workers following a 148,000 gain in September that was bigger than first estimated, figures from the Labor Department showed yesterday. October’s increase exceeded the highest forecast in a Bloomberg survey with a median projection of 125,000. Unemployment rose to 7.9 percent. The broad-based job gains -- from positions at car dealers and hospitals to factories and construction sites -- indicate consumers will likely spend more freely, shoring up the three- year expansion in the face of a global economic slowdown and political gridlock in Washington over taxes and spending.
“This was a solid report,” said Dean Maki, chief U.S. economist at Barclays Plc in New York. “What was striking is that jobs grew in all the major sectors. The U.S. economy is better equipped to handle shocks now than it would have been this summer, when growth was slowing down and job growth was weakening.” Stocks slipped yesterday, trimming a weekly gain. The Standard & Poor’s 500 Index fell 0.9 percent to 1,414.19 at 4 p.m. in New York. President Barack Obama campaigned yesterday in Ohio, one of the battleground states that will decide the outcome of the Nov. 6 election. Noting that private-sector firms hired the most employees in eight months, he told a campaign rally in Hilliard, Ohio, that the country has “made real progress.”
U.S. jobless rate seen rising, offering Obama no relief (Reuters)
The U.S. unemployment rate probably rose in October as employers stepped up hiring only slightly, underscoring President Barack Obama's vulnerability in next week's presidential election.
Economy Set for Better Times Whether Obama or Romney Wins (Bloomberg)
Mitt Romney says Barack Obama’s policies will consign the U.S. to an extended period of sluggish economic growth, at best. The president says his Republican challenger’s plans will sow the seeds of another mammoth recession. Both are wrong. No matter who wins the election tomorrow, the economy is on course to enjoy faster growth in the next four years as the headwinds that have held it back turn into tailwinds. Consumers are spending more and saving less after reducing household debt to the lowest since 2003. Home prices are rebounding after falling more than 30 percent from their 2006 highs. And banks are increasing lending after boosting equity capital by more than $300 billion since 2009. “The die is cast for a much stronger recovery,” said Mark Zandi, chief economist in West Chester, Pennsylvania, for Moody’s Analytics Inc. He sees growth this year and next at about 2 percent before doubling to around 4 percent in both 2014 and 2015 as consumption, construction and hiring all pick up.
The big proviso, according to Zandi and Yale University professor Ray Fair, is how the president-elect tackles the task of shrinking the $1.1 trillion federal-budget deficit. The Congressional Budget Office has warned that the U.S. will suffer a recession if more than $600 billion in scheduled government- spending reductions and tax increases -- the so-called fiscal cliff -- take effect next year.
Fiscal Fears Flip to U.S. From Europe as G-20 Sees Modest Growth (Bloomberg)
The focus of global finance chiefs pivoted toward fiscal challenges in the U.S. after three years of pressuring Europe to restore budget control. Two days before the U.S. presidential election, Group of 20 finance ministers and central bankers meet in Mexico City today with the U.S. facing a larger budgetary pullback than Europe in 2013 regardless of whether President Barack Obama or Republican nominee Mitt Romney wins the White House. How deep the U.S. will cut is a worry for foreign officials concerned that global growth will be hammered if the world’s largest economy topples over the so-called fiscal cliff of tax increases and spending cuts that will take effect next year unless Congress acts. The International Monetary Fund already forecasts the richest G-20 economies will pare deficits an average 1.1 percentage points of gross domestic product next year, up from this year’s 0.7 point.
“Those watching the clock on attempts to deal with very difficult economic problems are now seeing the clock tick down more quickly on the United States than on Europe, where there is a bit more breathing space,” said Daniel Price, a former G-20 adviser to President George W. Bush and now managing director of Rock Creek Global Advisors LLC, a Washington-based consultancy. A draft of the statement to be issued by the G-20 tomorrow identifies the potential for sharp fiscal tightening in the U.S. and Japan as dangers to already modest growth, according to an official from one of the countries who declined to be identified because the text hasn’t been finalized.
Services Probably Sustained Expansion: U.S. Economy Preview (Bloomberg)
Service industries in the U.S. probably kept growing in October, lifted by gains in consumer spending that are helping bolster the expansion, economists said before a report this week. The Institute for Supply Management’s non-manufacturing index, which covers almost 90 percent of the economy, was at 54.5 last month, little changed from 55.1 in September, according to the median forecast in a Bloomberg survey before tomorrow’s figures. Readings above 50 signal growth. Another report this week may show the trade deficit widened in September as exports cooled. Retailers Macy’s Inc. (M) and Kohl’s Corp. (KSS) may keep benefitting from a pickup in hiring and consumer sentiment heading into the holiday shopping season, while homebuilders enjoy a rebound in demand. Meanwhile, manufacturing is being restrained by a global slowdown and a lack of clarity on U.S. fiscal policy that is preventing the economy from strengthening further.
“The non-manufacturing part of the economy, which is the bulk of the economy, is a lot less weak,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics LLC in Valhalla, New York. “The manufacturing sector is more exposed to the weakening in foreign growth and exports. When you add it all up it’s still pretty sluggish growth.” The Tempe, Arizona-based ISM’s services report will be the last piece of economic data before the Nov. 6 election, when voters decide between giving President Barack Obama another four years and changing course with Republican challenger Mitt Romney.
China’s Non-Manufacturing Industries Signal Rebound Ahead (Bloomberg)
China’s services industries rebounded from the slowest expansion in at least 19 months, adding to manufacturing gains that indicate the world’s second-biggest economy is recovering from a seven-quarter slowdown. The purchasing managers’ index rose to 55.5 in October from 53.7 the previous month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on Nov. 3. The growth follows two reports last week that showed a pickup in manufacturing industries. The improvements may ease pressure on China’s leaders to roll out more stimulus as they start a once-a-decade power transfer this week. The nation’s central bank said the economy is expected to maintain “steady and relatively rapid growth” as earlier government policies to support expansion take effect.
“Investors expecting a big stimulus package after the Party Congress will likely be disappointed, although the new leaders will probably introduce some new projects,” said Huang Yiping, chief economist for emerging Asia at Barclays Plc in Hong Kong. Indicators including employment and inflation “suggest that even today, growth is probably not significantly below its potential,” he said. A separate services index will be released by HSBC Holdings Plc and Markit Economics in Beijing at 9:45 a.m. today. China’s economic expansion cooled to a three-year low of 7.4 percent in the third quarter as Premier Wen Jiabao’s campaign to curb consumer and property prices damped domestic demand and a sluggish global recovery capped the nation’s exports.
Hidden Billionaire in Indonesia Reaps Gains From Palm Oil (Bloomberg)
Gains from a share sale of Bumitama Agri (BAL) Ltd., an Indonesian palm oil producer, and the growth of mining in Southeast Asia’s largest economy have made Lim Hariyanto Wijaya Sarwono a billionaire. The 84-year-old chairman of Harita Group, a closely held conglomerate based in Jakarta, is worth at least $1.8 billion, according to the Bloomberg Billionaires Index. The billionaire and his son, Lim Gunawan Hariyanto, own about 53 percent of Bumitama Agri, whose shares have outpaced other companies that raised at least $50 million in an initial public offering in Singapore this year. Lim had also planned to sell shares in its nickel mining business in the city-state’s stock exchange.
“Driven by demand from Asia and principally China and India, the natural resources boom has created significant wealth both for established ultra-high net worth families already in the natural resources business, as well as for new fortune hunters riding on the commodities boom,” said Noor Quek, previously the head of business development in Southeast Asia at Citigroup Inc.’s private-banking unit, who now runs Singapore- based family office adviser NQ International Pte. The richest man in Indonesia is Eka Tjipta Widjaja, whose most valuable asset is his family’s 50 percent stake in Golden Agri-Resources Ltd., the world’s second-largest palm oil grower, according to the Bloomberg ranking. The country may surpass Germany and the U.K. by 2030 to be the world’s seventh-largest economy, generating $1.8 trillion in annual sales from agriculture, consumer and energy companies by that year, McKinsey & Co. said in a report in September.
Lim, whose family declined to comment on his net worth, has never appeared on any international wealth ranking.
Australian Services Industry Shrank for Ninth Month in October (Bloomberg)
Australia’s services industry contracted in October for a ninth straight month, reinforcing the central bank’s decision last month to cut its benchmark interest rate, a private survey showed. The performance of services index was 42.8 in October compared with 41.9 in September, Commonwealth Bank of Australia (CBA) and the Australian Industry Group said in Sydney today. Fifty is the dividing line between expansion and contraction. The Reserve Bank of Australia last month ended a three- meeting pause in rate reductions as it seeks to revive demand in industries outside a resource boom that policy makers say may crest at a lower level than previously expected. The strength of mining investment has boosted the local currency, which in turn has hurt tourism, education and retail industries.
The survey reflects the economy’s “significant structural adjustment due to the high Australian dollar, very cautious consumers, and the substantial fiscal tightening under way,” John Peters, senior economist economist in Sydney at Commonwealth Bank, said in a statement. RBA Governor Glenn Stevens and his board lowered the overnight cash-rate target by a quarter percentage point last month to 3.25 percent. Traders are pricing in a 49 percent chance policy makers will do so again tomorrow, according to swaps data compiled by Bloomberg. Today’s report showed the index’s gauge for sales edged down to 37.6 from 37.8, and the reading for new orders rose to 40.9 from 36.9. The employment indicator slid to 44.1 from 48.4, the report showed. Selling prices climbed to 44.7 from 43.7, while the wages measure dropped to 54.3 from 58.4, the report showed.
Today’s report, based on a poll of about 200 companies, is similar to the U.S. non-manufacturing ISM index. The report measures sales, new orders, deliveries, inventories and employment for companies such as banks, real-estate agents, insurers, restaurants, transport firms and retailers to compile the overall performance of services index.
Bunds Gain Second Week as Europe’s Economic Slump Deepens (Bloomberg)
German government bonds rose for a second week as reports showed Europe’s economic slump is deepening and Spain delayed asking for a bailout that may help reduce borrowing costs across the region. Germany’s two-year note yield dropped to the lowest in eight weeks yesterday as data revealed manufacturing in Spain and Italy contracted in October. Spanish bonds fell after the nation said a debt sale next week will include the longest maturity it has auctioned in 18 months. Bunds pared gains after hiring in the U.S. jumped more than economists predicted last month. Greece’s bonds slid as coalition government lawmakers squabbled over austerity demanded by its creditors. “The bund market is well supported given the prevarication by the Spanish about the sovereign bailout,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “The Greek negotiations are dragging on with no sign of a solution at the moment. That’s keeping bunds pretty well underpinned in the short term.”
Germany’s 10-year bund yield dropped nine basis points, or 0.09 percentage point, this week to 1.45 percent at 5 p.m. London time yesterday. The 1.5 percent security maturing in September 2022 gained 0.79, or 7.90 euros per 1,000-euro ($1,284) face-amount, to 100.46. Two-year yields fell five basis points from a week earlier to zero, the least since Sept. 6.
European Debt Crisis Seen Hindering Closer Trade Ties With Asia (Bloomberg)
European and Asian leaders will this week discuss a stalled trade agenda between the world’s fastest and slowest-growing regions, as the debt crisis undermines expansion of commercial ties. Europe’s economic woes may exacerbate protectionist tendencies that make it harder to expand trade with its biggest commerce partner at a time when the U.S. and Australia are forging new agreements, according to Fredrik Erixon, head of the European Centre for International Political Economy in Brussels. Apart from a trade deal with South Korea, the 27-member European Union has seen talks lag with China, Japan, India and Southeast Asian countries since 2007. “Europe needs to improve its policy toward the entire Asian region in order to take up a greater part of Asia’s economic expansion, but we’re not really seeing it,” he said by phone. “The train is about to leave the station and Europe certainly isn’t on it.”
Europe’s leaders face pressure to boost ties with Asia after U.S. President Barack Obama declared a pivot to the region and Australian Prime Minister Julia Gillard unveiled a strategy last week to make her country “a winner in the Asian century.” At stake is safeguarding links that European economies are increasingly counting on, with the 19 Asian nations participating in a summit starting in Laos today accounting for 38 percent of the EU’s total trade last year, up from 30 percent a decade ago.
Euro Area Resolve for Single Currency Faces Greek Test (Bloomberg)
European leaders’ determination to keep Greece in the euro area will be tested this week as Prime Minister Antonis Samaras struggles to secure political support for measures to assure the country’s financial lifeline. Samaras pledged yesterday that the raft of wage and pension cuts in the latest austerity package will be the last and that Greek society won’t tolerate any more, according to comments made to lawmakers of his New Democracy party. The first parliamentary vote in Athens may come as early as Nov. 7. “The Greek risk could come to a head this week,” Holger Schmieding, chief economist at Berenberg Bank AG, wrote in a Nov. 2 note. “Greece matters as a trigger of potential contagion to the much bigger economies of Italy and Spain.”
Negotiations between Greece and its troika of international creditors have sought to keep the country inside the 17-member monetary union. In Athens, coalition leaders are squabbling over the terms of the latest package, while in other European capitals politicians are debating how to ease the country’s debt burden. As Samaras delivered his warning, he urged lawmakers to cast their votes with the nation in mind. An exit from the euro area would lead to an 80 percent drop in living standards from 2009 levels, while passage of the measures will free Greece from an investment “quarantine,” the prime minister said. “Those betting that we would fail, those betting on the drachma, for the first time are seeing that they are losing that bet,” he said, according to an e-mailed transcript.
Hedge Funds Reduce Bullish Bets Most in Five Months: Commodities (Bloomberg)
Hedge funds cut bullish wagers on commodities by the most since June as prices retreated to a three-month low on mounting concern that Europe’s debt crisis will worsen and U.S. growth slow. Money managers reduced combined net-long positions across 18 U.S. futures and options in the week ended Oct. 30 by 11 percent to 1.05 million contracts, the lowest since July 10, Commodity Futures Trading Commission data show. Copper holdings fell to an eight-week low, and gold wagers are now the smallest since September. Gasoline bets declined for a fourth week, and those in oil reached the lowest level in four months as Hurricane Sandy forced U.S. East Coast refineries to shut. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell a third week, the longest contraction since June. Greece cut its economic outlook for 2013 on Oct. 31, and Spain delayed asking for a bailout. U.S. lawmakers are at an impasse over tax rises and spending cuts, and the presidential election takes place tomorrow.
Sales trailed analyst estimates at 59 percent of U.S. companies that released third-quarter results through Nov. 2, data compiled by Bloomberg show. “It’s hard to see upward price pressures in commodities when we’re still seeing such slow growth,” said Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management in Seattle, which oversees about $111 billion in assets. “Supplies are sufficient for current demand.” The S&P GSCI retreated 2 percent last week, with 15 of 24 components declining, led by gasoline and heating oil. The MSCI All-Country World Index of equities advanced 0.6 percent, and the dollar climbed 0.7 percent against a basket of six major currencies, strengthening for a second week. Treasuries returned 0.1 percent, a Bank of America Corp. index shows.
DTN Closing Grain Comments 11/02 14:39 Corn, Beans Sharply Lower; Wheat Holds Up Well (CME)
Corn and bean contracts were hit hard by commercial selling and spillover pressure from bearish outside markets. Wheat held up extremely well in comparison as sell orders seemed to dry up, with the Kansas City market even able to close with fractional gains.
Corn Market Recap for 11/2/2012 (CME)
December Corn finished down 11 1/2 at 739 1/2, 12 off the high and 3 1/2 up from the low. March Corn closed down 11 at 742 1/2. This was 3 1/2 up from the low and 11 1/2 off the high. December corn closed 11 1/2 cents lower on the session but managed to close up 1 3/4 cents higher for the week. Sluggish export demand and weakness in gold and crude oil plus a surge higher in the US dollar helped to drive corn market sharply lower on the day. Instead of positioning for the market fundamentals ahead, hedge funds seem to be more concerned with getting out of the way of potential financial instability into the elections and markets like corn where funds hold a hefty net long position were under pressure. With trend-following fund traders holding a net long position of 222,932 contracts as of October 23rd and open interest up another 16,000 contracts since that report, traders appear concerned over the possibility of long liquidation selling ahead.
The market consolidated in a relatively tight trading range in October and consolidation is normally a continuation pattern. Weekly export sales came in at just 167,900 metric tonnes. Cumulative corn sales stand at 37.4% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 43.2%. Average weekly sales over the past four weeks are just 120,300 tonnes as compared with 411,900 tonnes as an average necessary each week to reach the USDA projection. Talk of the potential for higher production for the report next week helped to pressure the market as well. November Rice finished down 0.055 at 14.71, equal to the high and 0.02 up from the low.
Wheat Market Recap Report (CME)
December Wheat finished down 4 at 864 1/2, 9 1/4 off the high and 5 3/4 up from the low. March Wheat closed down 4 3/4 at 878 1/2. This was 5 up from the low and 10 off the high. December Chicago wheat closed 4 cents lower on the session but managed to close 3/4 of a cent higher for the week. The market jumped more than 14 cents off of the early lows to trade moderately higher on the day into the mid-session. At one point, July KC wheat was up 14 1/4 cents on the session and up to a 17-month high. Deteriorating crop conditions in the plains, a forecast for warm and dry weather over the next week and news of another downgrade in Argentina production were all seen as positive forces which helped to support. Kansas City wheat gained on Chicago wheat today; especially for the new crop. Weekly export sales came in at 362,900 metric tonnes which was near the low end of trade expectations.
As of October 25, cumulative wheat sales stand at 47.0% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 y ear average of 62.2%. Sales of 530,000 metric tonnes are needed each week to reach the USDA forecast. December Oats closed down 13 1/4 at 367. This was 1 1/2 up from the low and 13 3/4 off the high.
China’s Cotton Reserves Enough to Meet Deficit for Six Years (Bloomberg)
Cotton stockpiles in China, the world’s biggest importer, are set to climb to about 9 million metric tons this season, enough to cover the country’s deficit for the next six years, according to Allenberg Cotton Co. Inventories are rising as the government boosts purchases to support domestic prices and lift farmer incomes, Joe Nicosia, chief executive officer of world’s largest cotton trader, said at a conference in Hong Kong today. The country may buy 5 million tons for reserves this year, up from 3.2 million tons a year earlier, he said. “As long as China maintains this regime to subsidize cotton farmers, the world will be prone to overproduction,” he said. “Can you imagine a world without China importing any cotton for six years? They hold all the cards.”
Cotton plunged 68 percent from a record last year as farmers expanded output. Global stockpiles will reach a record 16.4 million tons in the year started Aug. 1, increasing 17 percent from a year earlier, according to the International Cotton Advisory Committee. The slump in prices has curbed costs at companies such as Levi Strauss & Co. and Gap Inc. (GPS) “Outside of China the world has 13.9 million bales of surplus,” said Nicosia, who is also executive vice president of Louis Dreyfus Commodities BV. “How much of this surplus China decides to absorb will determine the cotton market’s direction.” Each bale weighs 480 pounds (218 kilograms).
Oil Trades Near Four-Month Low as Storm-Hit Refineries Stay Shut (Bloomberg)
Oil traded near the lowest level in almost four months in New York as refineries in New Jersey remained shut after Hurricane Sandy, curbing demand for crude. Futures were little changed after falling 2.6 percent on Nov. 2 to cap a third weekly decline. Hess Corp. (HES)’s 70,000 barrel-a-day Port Reading refinery won’t resume until after full power has been restored, which will take several days, the company said in an e-mailed statement dated yesterday. Phillips 66’s 238,000 barrel-a-day Bayway refinery stayed shut as of Nov. 3, the company said on its website. Crude for December delivery was at $84.79 a barrel, down 7 cents, in electronic trading on the New York Mercantile Exchange at 8:01 a.m. Singapore time. The contract slid 1.7 percent last week to $84.86 a barrel, the lowest close since July 10. Prices have dropped 14 percent this year.
Brent oil for December settlement on the London-based ICE Futures Europe exchange was down 22 cents at $105.46 a barrel. The European benchmark crude was at a premium of $20.67 to New York-traded West Texas Intermediate grade. The spread narrowed for a fourth day on Nov. 2 to $20.82.
Gold Falls Most Since June to Below $1,700 on U.S. Payroll Data (Bloomberg)
Gold futures tumbled the most in more than four months to below $1,700 an ounce as U.S. payrolls in October rose more than forecast, easing pressure on the Federal Reserve to expand monetary stimulus. A government report showed a net 171,000 workers were hired after a 148,000 gain in September that was more than estimated. The dollar headed for the biggest gain since July 20 against a basket of currencies, eroding the appeal of gold as an alternative investment. “People are concerned that easy money will not be available for long since the economy is showing some signs of recovery,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. Gold futures for December delivery tumbled 2.3 percent to settle at $1,675.20 at 1:49 p.m. on the Comex in New York, the biggest drop for a most-active contract since June 21. Earlier, the metal touched $1,674.80, the lowest since Aug. 31.
This week, gold fell 2.1 percent, the fourth straight decline and the longest slump since September 2011. Gold reached a 10-month high approaching $1,800 on Oct. 5 on speculation that fiscal stimulus in the U.S., Europe and Japan enhanced the appeal of the metal as an alternative to currencies. Silver futures for December delivery plunged 4.3 percent to $30.857 an ounce in New York, the biggest fall since June 21. Earlier, the price touched $30.815, the lowest since Aug. 30. Platinum futures for January delivery fell 1.8 percent to $1,544.90 an ounce on the New York Mercantile Exchange.
Palladium futures for December delivery slumped 2.1 percent to $599.65 an ounce.
Gold Traders Most Bullish in 10 Weeks on Stimulus: Commodities (Bloomberg)
Gold traders are the most bullish in 10 weeks and investors are hoarding a record amount of bullion as central banks pledge to do more to spur economic growth. Eighteen of 27 analysts surveyed by Bloomberg expect prices to rise next week and five were bearish. A further four were neutral, making the proportion of bulls the highest since Aug. 24. Holdings in gold-backed exchange-traded products gained the past three months, the best run since August 2011, data compiled by Bloomberg show. They reached a record 2,588.4 metric tons yesterday, valued at $140 billion, the data show.
The Bank of Japan (8301) expanded its asset-purchase program on Oct. 30 for the second time in two months, increasing it by 11 trillion yen ($137 billion). The Federal Reserve said last week it plans to continue buying bonds and central banks from Europe to China have pledged more action to boost economies. 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. “Central banks are all very concerned about a depression, so they’re keeping monetary policies as loose as possible,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. “People are buying gold as a store of value to protect against currency depreciation.”
Silver Market Recap Report (CME)
The big range down washout in silver prices probably kicked off some technically related selling today. With the slide today, December silver prices fell down to the lowest level since the end of August. Like gold, silver was pressured by declining US easing hopes, concerns ahead of the election and perhaps even fears that the fiscal cliff will soon become a headline story. Adverse currency market action and spill over selling from other markets clearly left the bear camp with the edge today.
Gold Market Recap Report (CME)
The gold market forged a sharp range down washout today in the wake of better than expected US scheduled data. Adverse currency market action, pressure on physical commodities and weakness in equities seemed to shift an initial risk on vibe into a risk off vibe. It is also likely that technical violations of key chart support levels in gold contributed to the downward motion in gold prices. In the end the decline in the US equity markets was probably the biggest influence on gold prices today.
Soybean Complex Market Recap (CME)
November Soybeans finished down 31 1/2 at 1527, 31 off the high and 2 1/4 up from the low. January Soybeans closed down 33 1/4 at 1526 3/4. This was 2 1/2 up from the low and 33 1/4 off the high. December Soymeal closed down 8.4 at 475.9. This was 0.4 up from the low and 8.3 off the high. December Soybean Oil finished down 1.17 at 49.26, 1.37 off the high and 0.15 up from the low. January soybeans closed 33 1/4 cents lower on the session and down 37 cents for the week. The market turned sharply lower into the pit opening as a bearish and "risk off" tone emerged from hedge funds with the market down 22 cents into the mid-session. After bullish and "risk on" news over employment, very few commodity markets saw much is the way of support. The surge in the US dollar continued after the news was release but gold and crude oil turned sharply lower on the day and a general long liquidation selling trend emerged from fund traders. Talk that China crush margins are sluggish and ideas that the South America weather is shifting from threatening weather of the past week to improving crop condition weather for the next week helped to pressure. Central and Northern Brazil weather is cooling with more rain for the region and southern Brazil and Argentina looks to receive relief from the wet pattern over the next week which could boost planting progress. Weekly export sales for soybeans came in at 741,200 metric tonnes for the current marketing year and 19,400 for the next marketing year for a total of 760,600 which was higher than expected. Cumulative soybean sales stand at 74.8% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 51.7%. Sales of just 195,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 73,200 metric tonnes which was below trade expectations. Cumulative soybean meal sales stand at 52.8% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 33.6%. Sales of 66,000 metric tonnes are needed each week to reach the USDA forecast. Oil sales came in at 28,500 metric tonnes. Sales of 6,000 metric tonnes are needed each week to reach the USDA forecast. Aggressive long liquidation selling in a wide range of commodity markets appears to be the key negative force today. Talk of the potential for higher yields for next week's report helped to pressure the market as well.
EDIBLE OIL: Malaysian palm oil futures edged down and were on track to post a weekly loss, as investors remained cautious on market expectations of record-high stocks in October. (Reuters)
India Must Tax Palm Oil Imports to Aid Farmers, Godrej Says (Bloomberg)
India, the biggest palm oil buyer, needs to impose a duty on imports to protect oilseed growers from cheaper overseas supplies as a surge in inventories in Southeast Asia lowers prices. India should levy a tax of 10 percent on crude palm oil, Dorab Mistry, director at Godrej International Ltd., said in New Delhi today. Palm oil comprises almost 80 percent of India’s cooking-oil imports. Palm oil, used in everything from biofuels to candy to noodles, has fallen 21 percent this year as inventories surge in Indonesia and Malaysia, which account for 87 percent of world supply, and a global economic slowdown curbs demand. The plunge may cut revenues for producers including Sime Darby Bhd. (SIME) and IOI Corp. (IOI) and cap increases in food costs.
“The government should impose a duty on imports of crude palm oil to protect farmers and use the money in long-term development of oilseed cultivation,” said Davish Jain, managing director of Prestige Group of Industries, one of India’s biggest processors of soybean and exporters of soybean meal. “Unbridled imports would be counter-productive for the growth of indigenous oilseed production.” Palm oil for January delivery dropped 1.6 percent to 2,496 ringgit ($817) a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur on Nov. 2. Inventories jumped to an all-time high of 2.48 million tons in September, while output gained to 2 million tons, according to the Malaysian Palm Oil Board.
Cooking-oil imports by India, the second-largest buyer, are set to surpass 10 million tons for the first time after dry weather damaged India’s oilseed crops and as demand climbs, GG Patel & Nikhil Research Co. Managing Partner Govindlal G. Patel said in September. Purchases may gain 5.4 percent to 10.3 million tons in the year ending Oct. 31 from about 9.78 million tons a year earlier, said Patel, who’s traded cooking oils for more than three decades. Mistry outlined what he described as an optimistic scenario for an importing nation in 2013. Indonesia and Malaysia will have record stockpiles of palm oil at the beginning of next year, while production of soybeans will climb in the first quarter of 2013 in South America along with excellent harvests of sunflower in Argentina and mustard in India, said Mistry, who has traded palm oil for 35 years. This may be followed by a switch in some plantings from corn to soybeans in the U.S., he said.