DJIA chart reading : pullback correction upside biased.
Hang Seng chart reading : side way range bound.
Citigroup Cuts Forecast for Emerging-Market Stock Index, Stays ‘Bullish’ (Source: Bloomberg)
Emerging-markets stocks are likely to rise less than previously forecast this year as weaker sentiment means that developing-nation equities may be unable to achieve a “clear valuation premium,” Citigroup Inc. said. The brokerage cut its end-2011 forecast for the MSCI Emerging Markets Index to 1,400, compared with an earlier estimate of 1,500 and the July 8 close of 1,163.93, analysts led by New York-based Geoffrey Dennis wrote in a July 8 report. They reiterated their “bullish” stance on developing-nation shares.
Retail Sales in U.S. Probably Slowed by Unemployment, Weaker Auto Demand (Source: Bloomberg)
Sales at U.S. retailers probably stagnated in June, reflecting declining auto demand and rising unemployment, economists said before reports this week. The projected unchanged reading in purchases would follow a 0.2 percent May decrease, according to the median forecast in a Bloomberg News survey ahead of Commerce Department figures July 14. Another report may show the cost of living decreased for the first time in a year as fuel prices retreated.
Geithner Wants Biggest Budget-Deficit Cut Possible Now, No Short-Term Deal (Source: Bloomberg)
Treasury Secretary Timothy F. Geithner said the Obama administration wants the most comprehensive deficit-cutting deal possible and reiterated that failing to raise the debt limit could have “catastrophic” consequences. “We have to find a way to pass an agreement, but the president is going to keep working toward the largest deal we can do, because that’s the right thing for the country,” Geithner said today on NBC’s “Meet the Press” program. Obama and congressional leaders are seeking a deficit- slashing deal to pave the way for a vote in Congress to increase the government’s $14.3 trillion debt limit, a move the Treasury Department says is needed by Aug. 2 to avert a default on the nation’s financial obligations.
U.S. Payrolls Grow at Slowest Pace in Nine Months as Jobless Rate Climbs (Source: Bloomberg)
American employers added jobs at the slowest pace in nine months in June and the unemployment rate unexpectedly climbed to 9.2 percent, sending global stocks sliding on concern the world’s biggest economy is faltering. Employers increased payrolls by 18,000 workers, less than the most pessimistic forecast in a Bloomberg News survey of economists, which called for growth of 105,000. The increase followed a 25,000 gain that was less than half the initial estimate. Hiring by companies was the weakest since May 2010. “This is a very fragile state for the U.S. labor market,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “It suggests that the overall recovery remains somewhat tenuous.
Treasuries Rise on Speculation Unemployment Curbed June Consumer Spending (Source: Bloomberg)
Treasuries rose for a second day, pushing yields to the lowest level this month, on speculation a government report this week will show U.S. retail sales failed to grow in June as unemployment rose. Thirty-day federal funds futures contracts for delivery in December 2012 yielded 0.50 percent, indicating investors expect the Federal Reserve will wait until then to raise interest rates. The yield has declined from 1 percent in May as traders bet the central bank will postpone increasing borrowing costs.
Payrolls Grow at Slowest Pace in Nine Months as Unemployment Rate Climbs (Source: Bloomberg)
The U.S. unemployment rate rose for a third straight month in June, hiring slowed and earnings stagnated, pointing to an economy lacking momentum entering the second half of the year. The 9.2 percent jobless rate in June was the highest this year, Labor Department figures showed yesterday. Employers added 18,000 workers to payrolls, the fewest in nine months and less than the most pessimistic forecast in a Bloomberg News survey of economists.
China’s CPI Jump Won’t Derail Three-Week Stocks Rally, Shenyin, BofA Say (Source: Bloomberg)
The jump in Chinese inflation last month is unlikely to derail a three-week rally in the nation’s equities, according to Shenyin & Wanguo Securities Co. and Bank of America-Merrill Lynch. China’s consumer prices climbed to a three-year high of 6.4 percent in June, the statistics bureau said on July 9. That exceeded the previous month’s 5.5 percent and the government’s full-year target of 4 percent. The benchmark Shanghai Composite Index advanced for a third week, erasing most of this year’s losses, on speculation the government will refrain from further monetary tightening as the economy slows after boosting interest rates last week for the third time this year.
China Inflation Surging Past 6% Leaves Wen With ‘Delicate’ Balancing Act (Source: Bloomberg)
China’s inflation accelerated to the fastest pace in three years, highlighting the challenge for policy makers of sustaining growth while taming prices. The consumer price index increased 6.4 percent in June, the National Bureau of Statistics said yesterday, exceeding the 6.2 percent median estimate of economists surveyed by Bloomberg News. The world’s second-biggest economy is already cooling after the government curbed lending by boosting lenders’ reserve requirements to a record and raising interest rates five times since September, most recently on July 6. A deeper-than- anticipated slowdown in China would curtail a global expansion imperiled by a potential default by Greece and signs the U.S. recovery is faltering.
China Trade Surplus Climbs to Seven-Month High as Import Growth Moderates (Source: Bloomberg)
China’s trade surplus widened more than forecast to $22.3 billion in June, the highest level in seven months, as imports grew at the slowest pace since 2009. The gap exceeded all the 21 estimates in a Bloomberg News survey of economists, with the median projection at $14.2 billion. The surplus was $13.1 billion the previous month and $20 billion a year earlier. The customs bureau released the data in an online webcast today.
China Inflation Surging to Fastest in 3 Years Weakens Case for Rate Pause (Source: Bloomberg)
China’s inflation rose to a three- year high of 6.4 percent in June, a level that some analysts said may represent the peak for 2011 as price gains moderate in the second half. The pace exceeded the 6.2 percent median estimate in a Bloomberg News survey of 19 economists. Producer prices were unchanged from the previous month, a report on the statistics bureau website showed today.
Slow Growth Leaves Wen With Few Options (Source: Bloomberg)
China’s economy probably grew the least in almost two years last quarter, contributing to a global weakening that Premier Wen Jiabao confronts with more limited scope for policy response than during the 2008 world recession. The government is forecast to report July 13 gross domestic product rose 9.3 percent from a year before, according to the median estimate in a Bloomberg survey, down from 9.7 percent the previous quarter. With data two days ago showing consumer prices climbed the most in three years in June, any easing in the central bank’s monetary stance risks escalating price pressures.
Shanghai Stocks Drop as U.S. Jobs Slump, China Inflation Data Hurt Outlook (Source: Bloomberg)
China’s stocks fell for the third time in four days on concern slumping U.S. jobs growth, Europe’s worsening debt crisis and faster Chinese inflation may hurt the global economic recovery. Industrial & Commercial Bank of China (601398) Ltd. and Poly Real Estate Group Co. paced declines among financial companies on speculation the government will intensify monetary tightening measures after consumer prices surged to a three-year high in June. SAIC Motor Corp. led an advance for automakers after China’s passenger-car sales climbed last month.
China may cut spending on strategic industries
BEIJING, July 7 (Reuters) - China may rein in plans to invest heavily in seven new strategic industries, including high speed rail and wind power, scaling back cutting-edge projects for industries suffering from old-fashioned problems such as corruption and overcapacity, sources said.
Beijing originally planned to invest up to $1.5 trillion over the next five years in the seven sectors, hoping they would grow into a pillar of economic growth and help shift the world's second-largest economy away from one centered on manufacturing cheap goods.
Japanese Stocks Fall on U.S. Hiring Data (Source: Bloomberg)
Japanese stocks fell the most in two weeks as U.S. unemployment unexpectedly increased, dimming the outlook for a global economic recovery, driving down exporters’ shares and pushing down the price of commodities. Toyota Motor Corp. (7203), which counts North America as its largest market, dropped 0.4 percent after U.S. payrolls grew at the slowest pace in nine months. Canon Inc., a camera maker that gets more than 80 percent of its revenue outside Japan, retreated 0.6 percent, after the yen strengthened. Mitsubishi Corp., Japan’s largest commodities trader, sank 0.3 percent after oil and metal prices dropped.
Indonesia May Avoid Rate Increase as Slowing Inflation Gives ‘Wiggle Room’ (Source: Bloomberg)
Indonesia’s central bank will probably keep interest rates unchanged for a fifth month after inflation eased, delaying an increase as risks emerge of a slowdown in global growth. Bank Indonesia will hold its reference rate at 6.75 percent, according to all 14 economists surveyed by Bloomberg News ahead of a decision due in Jakarta tomorrow. Policy makers last increased borrowing costs in February, the only move this year.
Europe Needs Options to Cut Greek Debt-Service Costs, Sweden’s Borg Says (Source: Bloomberg)
The European Union needs to look for ways of reducing Greece’s debt servicing costs, Swedish Finance Minister Anders Borg said, suggesting a shift in focus as the bloc begins considering additional aid for the country. More than a year after the EU and the International Monetary Fund extended Greece 110 billion euros ($157 billion) in aid, they’re considering options for additional support as the country’s borrowing costs and indebtedness continue to grow.
Euro Falls to Two-Week Low on Debt Concern (Source: Bloomberg)
The euro fell to a two-week low against the dollar and yen on concern that Europe’s sovereign- debt crisis may spread to Italy as policy makers remain split on how to structure aid for Greece. The euro dropped against most of its major peers after Die Welt reported that the European Central Bank is seeking to expand a fund to include help for Italy, following a coordinated rescue for Greece by the European Union and International Monetary Fund. The Australian and New Zealand dollars declined as investors shunned higher-yielding assets amid concern China will take further action to cool growth.
ECB signals more rate rises to come, helps Portugal
FRANKFURT, July 7 (Reuters) - The European Central Bank raised interest rates for the second time in three months on Thursday and signalled a further hike is likely this year to tackle inflation despite the intensifying euro zone debt crisis.
The ECB also offered help to hard-pressed Portugal after ratings agency Moody's downgraded its debt to junk status this week, pledging to keep providing it with liquidity regardless of ratings.
Greece Gets Approval for $4.6 Billion IMF Disbursement Under Joint Bailout (Source: Bloomberg)
Greece won approval from the International Monetary Fund for a 3.2 billion-euro ($4.6 billion) payment under a joint loan with the European Union, buying policy makers time to craft a second rescue package and avert the first sovereign default in the euro region. Greek commitments made to secure the loan are “delivering important results,” IMF Managing Director Christine Lagarde said yesterday in statement from Washington. Still, “a durable fiscal adjustment is needed, lest the deficit get entrenched at an unsustainably high level, and productivity-enhancing reforms should be accelerated, lest growth fail to recover.” The decision follows last week’s authorization by European finance ministers to unblock 8.7 billion euros as talks continue on how to include banks and insurers in a new package for Greece, which can’t return to international financial markets next year because of surging borrowing costs.
The option of involving the private sector has been criticized by the European Central Bank because it could trigger a partial default.
Italy Moves to Curb Short Selling After Contagion Concerns Slam Markets (Source: Bloomberg)
Italy’s financial-market regulator moved to curb short selling after the country’s benchmark stock index fell the most in almost five months and bonds tumbled on investor concern Italy would be the next victim of the region’s debt crisis. The regulator known as Consob ordered last night that short sellers must reveal their positions when they reach 0.2 percent or more of a company’s capital and then make additional filings for each additional 0.1 percent. The measure takes effect today and lasts until Sept. 9.
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