DJIA chart reading : side way range bound little upside biased.
Hang Seng chart reading : correction range bound downside biased.
Asian Stocks Rise as Fed Signals Low Rates (Source: Bloomberg)
Asian stocks rose for a second straight day after the U.S. Federal Reserve signaled interest rates will remain low, and metals advanced on bets Chinese demand will escalate, boosting confidence in a global economic recovery. LG Electronics Inc. (066570), the world’s third-largest mobile phone maker, climbed 1.8 percent in Seoul. Canon Inc. (7751), the biggest manufacturer of cameras, gained 0.5 percent in Tokyo. BHP Billiton Ltd. (BHP), the No.1 global mining company and an Australian oil producer, rose 0.9 percent in Sydney as crude prices also jumped in New York. Rival Rio Tinto Group advanced 1.3 percent.
Fed Favors Exit Strategy of Higher Rates Before Asset Sales, Minutes Show (Source: Bloomberg)
Federal Reserve policy makers began to coalesce last month on a strategy to reverse record monetary stimulus by first ending their reinvestment policy and later raising interest rates and selling assets. Almost all officials agreed that the “first step toward normalization” should be ceasing reinvestment of principal payments on mortgage debt that began in August, the Federal Open Market Committee said in records of its April 26-27 session, released today in Washington. A majority preferred to sell the Fed’s securities after raising short-term interest rates, and most wanted to put asset sales on a preannounced schedule while using federal-funds rate increases as an “active tool.”
U.S. economic data suggests soft patch continues
WASHINGTON, May 17 (Reuters) - U.S. factory output slipped for the first time in 10 months in April as a shortage of parts from Japan crimped activity and home building slumped, showing the economy got off to a weak start in the second quarter.
Signs of lackluster economic activity were also evident in declining sales at Wal-Mart Stores , which said its customers were still living from paycheck to paycheck. Home Depot also reported a drop in sales while Hewlett-Packard cut its 2011 profit forecast.
U.S. factory, services revenue to rise in 2011 -ISM
NEW YORK, May 17 (Reuters) - The U.S. manufacturing and services sectors will continue to grow this year as revenues rise, but prices for materials are seen climbing further, according to an industry forecast released on Tuesday.
The Institute for Supply Management in its semi-annual forecast found purchasing and supply executives expect manufacturing revenue will rise 7.5 percent this year. That is modestly slower than the 7.9 percent rise seen last year.
Policy curbs ease China property inflation in April
BEIJING, May 18 (Reuters) - China's annual housing inflation slowed slightly in April with prices rising 4.3 percent, data showed on Wednesday, a further sign that forceful policy tightening is helping to cool exuberant price rises.
The gains in April compares with an annual 5.2 percent rise in March, and should assuage worries that the world's second-biggest economy faces an imminent collapse in its property market.
China Unlikely to Allow ’Jump’ in Yuan, Former Central Bank Adviser Says (Source: Bloomberg)
China is unlikely to allow a “jump” in the value of the yuan because it needs to protect jobs, said Fan Gang, a former adviser to the country’s central bank. There is also still “very strong” opposition in China for even a small revaluation, he said at a forum in Beijing today. “Big fluctuations in the exchange rate regime and big volatility will really kill China’s industries,” said Fan, who now heads the National Economic Research Institute of the China Reform Foundation. “A gradual approach will give Chinese companies some room, some time for adjustment.”
China Winning Big-Ship Deal May Threaten South Korea Grip: Freight Markets (Source: Bloomberg)
Yangzijiang Shipbuilding Holdings Ltd. (YZJ) may become the first Chinese yard to win an overseas order for 10,000-container vessels as the Asian nation challenges South Korea’s dominance in building more profitable types of ships. The shipbuilder is in discussions with Seaspan Corp. (SSW) on an order, it said by e-mail yesterday without elaboration. Hong Kong-based lessor Seaspan said in a filing earlier this month that it had signed a letter of intent for a “significant number” of 10,000-box ships with a Chinese yard it didn’t name.
Japan’s Economy Shrinks More Than Forecast (Source: Bloomberg)
Japan’s economy shrank more than estimated in the first quarter after the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending, sending the nation to its third recession in a decade.
Japanese Stocks Rise as U.S. Fed Signals Continued Low Rates; Inpex Climbs (Source: Bloomberg)
Japan’s Nikkei 225 (NKY) Stock Average rose for a third day after the Federal Reserve signaled U.S. interest rates will remain low and commodities advanced, boosting confidence in the global economic recovery. Fanuc Corp. (6954), Japan’s biggest maker of industrial robots that gets 75 percent of its sales abroad, climbed 1.2 percent. Inpex Corp. (1605), Japan’s largest energy exploration company, increased 2 percent. Tokyo Tatemono Co., a property developer, jumped 5.2 percent after JPMorgan Chase & Co. raised its rating on the company.
Greek Restructuring Rejected by ECB Officials in Clash With EU Politicians (Source: Bloomberg)
European Central Bank officials ruled out a Greek debt restructuring, clashing with political leaders over a solution to the sovereign financial crisis. “A Greek debt restructuring is not the appropriate way forward -- it would create a catastrophe” because it would damage the banking system, ECB Executive Board member Juergen Stark said today in Lagonissi, Greece. Fellow board member Lorenzo Bini Smaghi said in Milan that “a solution for reducing debt but not paying for it will not work.”
U.K. Consumer Confidence Falls as Economic Concerns Damp Spending Plans (Source: Bloomberg)
U.K. consumer confidence fell in April as Britons grew more pessimistic about the outlook for the economy and spending, Nationwide Building Society said. An index of sentiment slipped to 43 from a revised 45 in March, when it rebounded from a record low, the customer-owned lender said in an e-mailed report today. A gauge of whether now is a good time to make major purchases dropped 5 points to 62.
Unemployment Claims Rise Most Since January 2010 as Recovery Stays Fragile (Source: Bloomberg)
U.K. unemployment claims rose in April at the fastest pace since January 2010, underlining the fragility of the recovery as government spending cuts and accelerating inflation sap consumer confidence. Jobless benefit claims increased by 12,400 from March to 1.47 million, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg News Survey was for no change. Unemployment measured by International Labour Organization methods fell 36,000 to 2.46 million people in the quarter through March.
Goldman Lowers Dollar Forecasts Versus Euro on Weak U.S. Growth Prospects (Source: Bloomberg)
Goldman Sachs Group Inc. lowered its forecasts for the U.S. dollar, citing poor growth prospects for the world’s largest economy. The greenback will fall to $1.45 per euro over three months from an earlier projection for it to trade at $1.40, the bank said. It will decline to $1.50 in six months and $1.55 in 12 months, analysts led by London-based Thomas Stolper wrote in an e-mailed note dated yesterday. The dollar will trade at 82 yen in three months and 86 over a year compared with an earlier prediction for it to buy 84 and 90 yen respectively, they wrote.
Dollar drop? You ain't seen nothin' yet if yuan jumps
NEW YORK, May 17 (Reuters) - Americans worried about a weaker dollar may want to get used to it. Whatever Treasury Secretary Timothy Geithner may say about a strong dollar being in U.S. interests, the likelihood is that the currency will fall sharply in the next few years. And you don't have to go much further than the pressure Washington is putting on China to revalue the yuan to explain why.
If the yuan appreciates between an annual 5-7 percent against the dollar over the next five years, as some analysts and traders expect, then the dollar is likely to slide anywhere between 20 to 30 percent on trade weighted and other indexes based on baskets of currencies.
FOREX-Euro clings to gains, USD risks FOMC selling
LONDON, May 18 (Reuters) - The euro struggled to hold gains against the dollar on Wednesday after early demand ran into technical resistance but the single currency may catch fresh bids if Federal Reserve meeting minutes suggest U.S. interest rates will stay low.
The euro traded at $1.4245, little changed on the day. Traders said early sovereign demand took the single currency to a session high of $1.4287, but additional gains were blocked by its 55-day moving average around $1.4290.
Stock, euro price falls prompt investors to buy
LONDON, May 18 (Reuters) - World stocks climbed off four-week lows and the euro recovered some ground against the dollar as investors sought bargains in recently hard-hit markets.
The hunt for cheaper assets, however, was tempered by disappointing U.S. economic data and continuing concerns about the euro zone's struggle to control debt in its peripheral economies, particularly Greece.
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