DJIA drops 279.65 on economic worry
US stocks suffered their biggest declines since the middle of last year, as several downbeat reports prompted fears the economic recovery is running out of steam. Stocks plunged on Wednesday, suffering their biggest drop in almost a year, as a slew of downbeat reports prompted fears the economic recovery was running out of steam. The Dow Jones Industrial Average closed down 279.65 points, or 2.2%, to 12290.14, the biggest point drop since 4 June 2010. All 30 of the blue-chip components finished in negative territory. The Dow, which snapped a four-day winning streak, fell by more than 2% for only the second time this year. The Standard & Poor's 500-stock index fell 30.65 points, or 2.3%, to 1314.55, its biggest drop since 11 August.. Only 10 stocks in the S&P 500 finished in positive territory. The technology-oriented Nasdaq Composite fell 66.11 points, or 2.3%, to 2769.19. (Bloomberg)
Thailand: Raises rate fourth time in 2011 to fight inflation
Thailand raised interest rates for the fourth time this year to damp accelerating inflation, as parties contesting the general election next month pledge to counter the impact of higher costs. The Bank of Thailand voted unanimously to boost the one-day bond repurchase rate by a quarter of a percentage point to 3%, it said in Bangkok today, adding to increases of the same amount each in January, March and April. Prime Minister Abhisit Vejjajiva’s Democrats and the main opposition party have promised to raise wages and extend caps on food and diesel costs as they vie for votes. (Bloomberg)
Vietnam: Lifts dollar reserve ratio to damp prices, steady Dong
Vietnam’s central bank ordered lenders to set aside more dollars as reserves for the second time in less than two months, escalating the nation’s fight to steady the dong and quell the highest inflation in Asia. The reserverequirement ratio on U.S. dollar deposits will rise by 1 percentage point to a range from 4% to 7%, effective this month, the State Bank of Vietnam said on its website yesterday, without specifying an exact date. Earlier yesterday, it ordered state-owned firms to sell all the foreign currency they collect to banks from 1 July. (Bloomberg)
Australia: GDP shrinks on exports as spending buoys currency
Australia’s economy shrank in the first quarter by the most in 20 years as floods hurt exports, even as stronger business investment underscored the central bank’s forecast for a rebound in the second half of the year. Gross domestic product fell 1.2% from the previous three months, when it rose a revised 0.8%, the Bureau of Statistics said in Sydney yesterday. Exports slumped 8.7%, subtracting 2.1 percentage points from GDP growth, yesterday’s report showed, while machinery and equipment spending jumped 6%, adding 0.4 point. (Bloomberg)
Greece: Default risk raised to 50% at Moody’s as bond aid readied
Greece’s risk of default was raised to 50% by Moody’s Investors Service as European officials rushed to put together the second bailout plan in two years to stave off renewed financial turmoil in the region. Moody’s downgraded Greece to Caa1 from B1, putting it on a par with Cuba, according to a report published late yesterday. The move came after policy makers considered asking investors to reinvest in new Greek debt when existing bonds mature. Twelve years after the currency was started, European leaders are trying to prevent the euro area’s first sovereign default. A EUR110bn (USD158bn) rescue in 2010 failed to prevent an investor exodus from Greece, and the country now faces a funding gap of EUR30bn of bonds next year with yields on its 10 year bonds above 16%. (Bloomberg)
EU: ECB said to favor Greek bond rollover as EU fights crisis
The European Central Bank may back a plan encouraging investors to buy new Greek bonds to replace maturing securities, said two officials familiar with the situation, softening the ECB’s opposition to any restructuring to fix the country’s debt crisis. The ECB is examining that step because it could ease Greece’s funding squeeze without technically constituting a default, the officials said on condition of anonymity. The Frankfurt-based Executive Board is still opposed to any extension of maturities, said one of the officials. (Bloomberg)
US: Factories, employers pull back as costs climb
Manufacturing in the US grew at the slowest pace in a more than a year and employers added fewer jobs than forecast, sending share prices lower on concern a slowdown in the world’s largest economy will extend into the second quarter. The Institute for Supply Management’s factory index fell more than projected to 53.5 last month, the lowest level since September 2009, from 60.4 in April, the Tempe, Arizona-based group said yesterday. Companies added 38,000 workers to payrolls, the fewest since September, according to ADP Employer Services. (Bloomberg)
E.U: Factory growth slows in May, adding to signs that momentum is weakening in a global economy facing headwinds from rising commodity costs and regional shocks. In the 17-nation euro region, a gauge of manufacturing slipped to 54.6 from 58 in April. Thats below an initial estimate of 54.8 released on May 23 with countries from Germany to Spain showing declines. (Source: Bloomberg)
China: Manufacturing in May expands at slowest pace in nine months as the government extended a campaign to cool inflation and the property market, a survey of companies indicated. The Purchasing Managers Index was at 52 from 52.9 in April. The index has a seasonal pattern of falling in May, economists said before the release. (Source: Bloomberg)
India: May manufacturing grows at slowest pace in four months as inflation above 8% and nine interest-rate increases since mid-March 2010 crimped output. The Purchasing Managers Index fell to 57.5 in May from 58 in April. A number above 50 indicates expansion. (Source: Bloomberg)
Indonesia: Inflation slows in May, easing pressure to raise rates. Consumer prices in Southeast Asias biggest economy rose 5.98% YoY last month compared with a 6.16% YoY gain for April. (Source: Bloomberg)
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