DJIA chart reading : pullback correction upside biased.
Hang Seng chart reading : side way range bound little downside biased.
Asian Stocks Rise Before China Growth Report (Source: Bloomberg)
Asian stocks rose for the first time in three days before China releases an economic-growth report and as investors weigh efforts to contain Europe’s debt crisis. Raw material producers gained as oil and copper futures rebounded. Komatsu Ltd. (6301), the world’s second-largest maker of construction machinery that counts China as its biggest market, rose 1.4 percent in Tokyo. Mitsubishi Corp. (8058), the Japanese trading house that gets about 43 percent of its revenue from commodities, climbed 1.4 percent in Tokyo. Newcrest Mining Ltd. (NCM), Australia’s No. 1 gold producer, advanced 1.7 percent after the price of the precious metal rose to a record as Europe’s escalating debt crisis boosted demand for safe-haven investments.
The MSCI Asia Pacific Index rose 0.3 percent to 134.86 as of 10:03 a.m. in Tokyo, with two stocks rising for each that fell. The gauge last week extended its rally for a third week as European Union leaders hammered out proposals to roll over debt to prevent Greece from defaulting and after reports showed retail sales in the U.S. increased in June, and initial claims for unemployment benefits declined.
Emerging-Market Stocks Plunge Most Since May; Currencies, Bonds Retreat (Source: Bloomberg)
Emerging-market stocks tumbled the most in seven weeks, currencies weakened and borrowing costs rose as Europe’s debt crisis worsened. The MSCI Emerging Markets Index sank 1.9 percent to 1,121.27 at 4:40 p.m. in New York, the biggest loss since May 23. China’s benchmark equity index slid the most in seven weeks while India’s Sensex Index fell to a three-week low after factory production growth slowed. Brazil’s equities fell for a sixth day. Poland’s zloty weakened 1.3 percent and Hungary’s forint slid to the lowest level since March versus the dollar.
U.S. Stocks Decline as Cut of Ireland’s Credit Rating Smothers Late Rally (Source: Bloomberg)
A late rally in U.S. stocks faded, dragging the Standard & Poor’s 500 Index to a third straight loss, after Ireland’s downgrade to junk added to concern Europe is losing control of the credit crisis and overshadowed evidence the Federal Reserve hasn’t ruled out more stimulus. Semiconductor-related shares slumped, with Intel Corp. falling 1.8 percent after Novellus Systems Inc. (NVLS) forecast lower- than-estimated third-quarter earnings. Alcoa Inc. (AA) slipped 1.3 percent after second-quarter profit missed analyst estimates. Cisco Systems Inc. (CSCO) jumped 1.1 percent after two people familiar with the matter said it would announce job cuts.
U.S. Fed Officials Divided on Further Stimulus (Source: Bloomberg)
Federal Reserve policy makers disagreed on whether additional monetary stimulus will be needed even if the outlook for economic growth remains weak, minutes of their meeting last month showed. “A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run,” the Federal Open Market Committee said in the minutes of its June 21-22 meeting, released today in Washington. “On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant” the FOMC “taking steps to begin removing policy accommodation sooner than currently anticipated.”
Bernanke ‘Lays Down Law’ on Fed Public Statements Before Policy Meetings (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke offered this communications tip to his central bank colleagues: Watch what you say. The Fed, in a document released today, provided some parameters on talking about the business of the central bank. The guidelines called for Fed policy makers to refrain from characterizing the views of other members of the Federal Open Market Committee, the central bank’s main decision-making group, and from publicly discussing the contents of meetings beyond what is eventually published in minutes of the closed-door sessions. The guidelines also called on Fed officials to observe a “blackout period” during which they will not offer their views on monetary policy and economic conditions. The time span will begin on Tuesday the week before scheduled Fed meetings, and end on the Thursday following the gatherings.
Federal Reserve Needs QE3 to Boost Economic Growth, Berkeley’s DeLong Says (Source: Bloomberg)
The Federal Reserve should engage in another round of quantitative easing as growth in the U.S. economy remains slow and inflation concern remains low, according to Bradford DeLong of the University of California at Berkeley. “I don’t see any argument against QE3,” Delong said during an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “The worry is always that it will destabilize inflation expectations, that they’ll lose their anchor, and yet when you look out as far as you can at the prices of the TIPS and of the 30-year Treasuries, you see no sign at all that there’s been any loss of confidence that the Fed will keep inflation under control.”
Trade Deficit of U.S. Unexpectedly Surges on Increase in Crude-Oil Imports (Source: Bloomberg)
The trade deficit in the U.S. widened in May to the highest level in almost three years, reflecting a surge in the cost of imported crude oil. The gap grew 15 percent to $50.2 billion, exceeding all forecasts of 73 economists surveyed by Bloomberg News and the biggest since October 2008, Commerce Department figures showed today in Washington. Exports held near April’s record. A weaker U.S. dollar and growing economies overseas may keep bolstering demand for American-made products, benefiting companies like Smithfield Foods Inc. (SFD) The deficit may narrow as the recent drop in oil costs and a slowdown in consumer spending curb imports, indicating trade will help prop up the world’s largest economy.
Obama Presses for Grand Bargain on Deficit as Republicans Resist on Taxes (Source: Bloomberg)
The top Senate Republican attacked the credibility of President Barack Obama’s efforts to forge a “grand bargain” of spending cuts and tax increases, saying the president himself was an obstacle to an agreement on the debt. Senator Mitch McConnell and other Republican leaders said Obama is putting an expansion of government ahead of the goal of reaching a bipartisan accord to cut the U.S. deficit. He said Democrats’ “smoke and mirrors” proposals prevented the type of $4 trillion deficit reduction that Obama is seeking. “As long as this president is in the Oval Office, a real solution is unattainable,” McConnell of Kentucky said on the Senate floor today in his toughest comments about the negotiations since bipartisan talks began.
China bank lending quickens; fans rate risk
BEIJING, July 12 (Reuters) - China's bank lending and money growth expanded faster than expected in June as loan demand remained buoyant, adding to the case for further monetary policy tightening.
Coming days after news that China's inflation hit a three-year peak in June, Tuesday's data also showed the country's foreign exchange reserves soaring to a record $3.2 trillion at the end of the second quarter.
Singapore Growth Stalls as Asia Recovery Slows (Source: Bloomberg)
Singapore’s expansion probably stalled last quarter as manufacturing declined, presaging easing growth across Asia as rising U.S. joblessness and a widening European debt crisis undermine the global recovery. Gross domestic product was unchanged in the second quarter from the previous three months, when it climbed an annualized 22.5 percent, according to the median estimate of 13 economists surveyed by Bloomberg News. The trade ministry will release its advanced estimates for growth at 8 a.m. tomorrow. Asia’s rebound from the 2009 global recession also faces threats from within the region, as a report today may show China’s growth slowing in the second quarter after higher interest rates curbed consumption. The risks have prompted Malaysia and the Philippines to refrain from raising interest rates in recent weeks, and may put pressure on Singapore to hold off on allowing faster currency gains at its next policy review.
BOJ holds fire, more optimistic on economy
TOKYO, July 12 (Reuters) - The Bank of Japan kept monetary policy on hold and gave a brighter assessment of the economy on Tuesday, encouraged by a rebound in factory output and increasing signs that the recovery from the devastating March earthquake is broadening.
But it warned of risks to the country's outlook such as the global economic slowdown and the chance nuclear plant shutdowns could prolong power shortages and hurt Japan's potential growth.
Japanese Stocks Rise as Trading House Gain Outweighs Europe Debt Concern (Source: Bloomberg)
Trading houses led Japanese stocks higher for the first time in three days after oil prices rose and Credit Suisse Group AG initiated coverage of the sector with an “overweight” rating. Exporters pared declines on speculation Japan will intervene to stop the yen’s rise. Mitsubishi Corp., Japan’s largest commodities trader, rose 1.4 percent. Inpex Corp., the country’s biggest energy explorer, advanced 2.2 percent after oil prices gained the most in two weeks. Toyota Motor Corp. erased declines of as much as 0.8 percent after the yen retreated from its strongest level in almost four months amid speculation Japan will sell its currency to support exporters.
S. Korea Unemployment Rate Remains at Low (Source: Bloomberg)
South Korea’s unemployment rate stayed at the lowest level in half a year as the economic expansion spurred hiring in the manufacturing sector. The jobless rate was at 3.3 percent in June, unchanged from May, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 12 economists was for a rate of 3.4 percent. Sustained job growth is fueling inflation that’s exceeded the central bank’s target since January, prompting the bank to raise the benchmark interest rate three times this year. The Finance Ministry said on June 30 that the nation may add 330,000 jobs this year, more than the earlier estimate of 280,000.
Deepening euro crisis hits stocks, bonds, euro
LONDON, July 12 (Reuters) - Investors dumped the euro, peripheral euro zone government debt and European shares on Tuesday as officials struggled to contain fears that the euro zone debt crisis was spreading to Italy and Spain.
In a bid to keep Italy and Spain from the same fate as Greece, Portugal and Ireland, euro zone finance ministers promised on Monday cheaper loans, longer maturities and a more flexible rescue fund.
ECB’s Bond-Buying Pause Tested as Italy Prepares Debt Auction: Euro Credit (Source: Bloomberg)
The European Central Bank’s resolve in staying out of the bond market since March is being tested as soaring interest rates endanger the funding programs of Europe’s most indebted nations. Italian 10-year yields surged above 6 percent this week on concern that Europe’s third-largest economy may fail to implement a 40 billion-euro ($56 billion) austerity package. Borrowing costs for the nation, which plans to sell more than 3 billion euros of bonds in four auctions with maturities from 2016 to 2026, retreated yesterday amid speculation about ECB purchases. The Frankfurt-based central bank declined to comment.
EU Officials Flail About for Solution to Debt Crisis, Revive Buyback Plan (Source: Bloomberg)
European finance chiefs hunted for ways to cut Greece’s debt burden, floating ideas from bond buybacks to a temporary default in an overhaul of a strategy that has failed to contain the debt panic. As a surge in bond yields in Italy and Spain brought the crisis closer to the heart of the euro area, Europe dusted off previously discarded plans under the glare of markets that have lost confidence in governments’ ability to still the turmoil. “They are taking it one step a time and you never get ahead of the snowball,” said Matt King, Citigroup Inc.’s global credit strategy head in London. “You need a fundamental shift that deals with the whole crisis.”
Ireland Cut to Junk Rating by Moody’s (Source: Bloomberg)
Ireland joined Portugal and Greece as the third euro-area nation to have its credit rating reduced to below investment grade as European Union finance ministers struggle to contain the region’s sovereign debt crisis. Moody’s Investors Service cut Ireland to Ba1 from Baa3, citing the probability that Ireland will need additional official financing and for investors to share in losses before it can return to the private market to borrow. The outlook remains “negative,” Moody’s said in a statement yesterday. The euro fell to a four-month low against the dollar as European finance ministers failed to present a solution to the financial contagion that’s threatening to spread to Italy from Greece, Ireland and Portugal. In Spain, Finance Minister Elena Salgado said the nation might need to endure even deeper spending cuts in 2012 than those currently planned. Ireland, which had a top A
Deepening euro crisis hits stocks, bonds, euro
LONDON, July 12 (Reuters) - Investors dumped the euro, peripheral euro zone government debt, and European shares as officials struggled to contain fears that the euro zone debt crisis was spreading to Italy and Spain. Oil prices also fell.
In a bid to keep Italy and Spain from the same fate as Greece, Portugal and Ireland, euro zone finance ministers promised on Monday cheaper loans, longer maturities and a more flexible rescue fund. But they said new measures would be announced "shortly" and set no deadline.
Australian Consumer Confidence Falls to Two-Year Low on EU, Rate Concerns (Source: Bloomberg)
Australian consumer confidence fell for a third month in July to the lowest level in more than two years as households’ views about their finances deteriorated. The sentiment index dropped 8.3 percent to 92.8 from a month earlier, the lowest since May 2009 and the biggest decline since October 2008, according to a Westpac Banking Corp. (WBC) and Melbourne Institute survey of 1,200 consumers taken July 4-9 and released today in Sydney. Reserve Bank of Australia Governor Glenn Stevens this month held the overnight cash rate target at 4.75 percent for the seventh straight meeting, and said the nation’s growth pace may be weaker than previously forecast. Stevens said July 5 a European debt crisis had “added to uncertainty” about the outlook for the world economy.
Kiwi, Aussie Dollars Strengthen as Asian Stock Gains Boost Yield Demand (Source: Bloomberg)
New Zealand’s dollar rose, paring yesterday’s steepest drop against the yen in almost five months, as a rally in Asian shares supported higher-yielding currencies.
Yen Falls Versus Euro on Concern Japan Will Intervene to Weaken Currency (Source: Bloomberg)
July 13 (Bloomberg) --The yen declined against the euro on speculation Japan will intervene to weaken its currency. The yen dropped to 111.12 per euro as of 8:42 a.m. in Tokyo from 110.74 yesterday in New York.
FOREX-Euro slides as Italy, Spain bond yields jump
LONDON, July 12 (Reuters) - The euro stumbled to an all-time low against the Swiss franc on Tuesday as euro zone government bond yields vaulted higher due to deepening concerns about the region's debt crisis, prompting investors to dump the single currency for safer ones.
The euro sank 1 percent on the day to 1.1550 Swiss francs on electronic platform EBS. Against the dollar, it hit a four-month trough of $1.3837.
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