20110727 1005 Global Market Related News.

DJIA chart reading :  correction range bound upside biased.

Hang Seng chart reading :
side way range bound little upside biased.

Asian Stocks Fall on U.S. Debt Concern (Source: Bloomberg)
Asian stocks dropped, led by exporters and banks, on concern the global economic recovery will stall as a political stalemate continued over raising the U.S. debt ceiling. Samsung Electronics Co., the South Korean consumer and industrial electronics maker which gets about 85 percent of its revenue abroad, lost 1.3 percent in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s biggest listed lender, slumped 1.7 percent. Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping line by market value, declined 0.4 percent after the Nikkei newspaper reported the company is likely to post a loss as a stronger yen hurts profits. BHP Billiton Ltd. (BHP), Australia’s No. 1 oil producer, fell 1 percent after crude prices declined. The MSCI Asia Pacific Index lost 0.4 percent 138.61 as of 9:26 a.m. in Tokyo. About four stocks fell for each that rose on the gauge.
The measure is on course for a decline this week as U.S. lawmakers struggle to reach an agreement to raise the federal debt limit before an Aug. 2 deadline, increasing concern that the government of the world’s biggest economy may default on its debt.

U.S. June New-Home Sales Fall More Than Estimated to 312,000 Annual Pace (Source: Bloomberg)
Sales of new U.S. homes unexpectedly fell for a second month and a gauge of property values also dropped, showing the industry that sparked the recession is stagnating. Purchases dropped 1 percent in June to a 312,000 annual pace, a three-month low, figures from the Commerce Department showed today in Washington. Prices in 20 cities dropped 4.5 percent in the year ended May, the most since November 2009, according to a report from S&P/Case-Shiller. An expanding pipeline of foreclosures and a lack of demand will probably keep home values depressed this year, discouraging construction and delaying a rebound in housing. Another report showed consumer confidence unexpectedly recuperated in July from an eighth-month low, led by an improvement in the employment outlook for the next six months.

Rating Downgrade for U.S. Is Now ‘Base Case’ Amid Budget Impasse, ISI Says (Source: Bloomberg)
The odds of the U.S. failing to reach a budget deal by Aug. 2 are about 40 percent, and a reduction of the nation’s credit rating “now seems the base case,” according to Andrew Laperriere, a managing director at International Strategy & Investment in Washington. Laperriere said in a note to clients today that there are “strong policy and political incentives” for President Barack Obama and House Speaker John Boehner to reach a deal. “That’s still possible, but a deal that would alter the trajectory” of the ratio of federal debt to gross domestic product “now appears unlikely,” he wrote. Standard & Poor’s placed the U.S. AAA rating on “CreditWatch” July 14, saying there is a 50 percent chance it would be cut in the next 90 days even if an agreement is reached by Aug. 2.

Obama Threatens to Veto Boehner’s Debt Plan (Source: Bloomberg)
A House vote on Speaker John Boehner’s two-step plan to raise the U.S. debt ceiling was postponed amid growing Republican opposition to the measure that the Obama administration has threatened to veto. The plan, which would cut $3 trillion in government spending, was faced with new questions about its impact. House Rules Committee Chairman David Dreier, a California Republican, said he adjourned his panel tonight “to ensure the product we have is in full compliance” with the pledge Boehner has made to cut spending more than the increase in borrowing authority. The latest development cast new doubt on whether lawmakers and Obama could agree on a plan raising the nation’s debt limit before an Aug. 2 deadline when the U.S. could default on some of its obligations. The House vote had been scheduled for tomorrow and was called off late today.

Declining Growth Projections for U.S. Economy Mean Fed May Keep Rates Down (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) is among major banks cutting their forecasts for third-quarter U.S. growth as business inventories swell and consumer confidence declines. Goldman Sachs, JPMorgan Chase & Co. (JPM) and Bank of America- Merrill Lynch said the economy will expand at a 2.5 percent pace, down from earlier projections of as much as 3.25 percent. A more-muted rebound from a slow first half would keep pressure on the Federal Reserve to hold interest rates near zero, according to the banks’ economists. “The soft patch is giving way to a spongy patch,” said Michael Feroli, chief U.S. economist at JPMorgan in New York, who cut his third-quarter forecast from 3 percent on July 14.

Consumer Confidence in U.S. Unexpectedly Increased in July on Jobs Outlook (Source: Bloomberg)
Confidence among U.S. consumers unexpectedly rose in July from an eight-month low, led by a rebound in the outlook for jobs over the next six months. The Conference Board’s index climbed to 59.5 from a revised 57.6 reading in June that was lower than previously estimated, figures from the New York-based private research group showed today. Economists predicted the July gauge would fall to 56, according to the median forecast in a Bloomberg News survey. Easing fuel prices may make households more comfortable opening their wallets in the second half of the year. At the same time, Federal Reserve Chairman Ben S. Bernanke told Congress earlier this month that unemployment above 9 percent and falling home values are a concern for Americans, which may restrain any recovery in consumer spending.

Home Prices in 20 U.S. Cities Fell 4.5% in Year (Source: Bloomberg)
Home prices in 20 U.S. cities dropped in the year ended May by the most in 18 months, adding to evidence the housing market is struggling. The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent from May 2010, the group said today in New York. The decline matched the median forecast of 32 economists surveyed by Bloomberg News. A pipeline of foreclosures and uneven demand will keep prices from rising this year, discouraging new-home construction and delaying a rebound in housing. Shrinking home equity and an unemployment rate at 9.2 percent are weighing on consumer spending, which accounts for about 70 percent of the economy.

U.S. Stocks Decline Amid Debt Concerns, Disappointing Forecast From 3M (Source: Bloomberg)
U.S. stocks fell for a second day amid wrangling between lawmakers over plans to raise the federal debt limit and forecasts from 3M Co. (MMM) and United Parcel Service Inc. (UPS) that disappointed investors. 3M lost 5.4 percent, the most in the Dow Jones Industrial Average, after projecting full-year earnings that trailed analysts’ estimates. UPS, the world’s largest package-delivery company, dropped 3.3 percent after saying the third quarter will be “fairly slow.” AK Steel Holding Corp. (AKS) tumbled 17 percent, the most since 2008, as the steelmaker’s profit missed the average analyst estimate. Lexmark International Inc. (LXK) rose 18 percent after reporting better-than-estimated earnings. The S&P 500, which rallied 2.2 percent last week, dropped 0.4 percent to 1,331.94 at 4 p.m. in New York. The Dow lost 91.50 points, or 0.7 percent, to 12,501.30.

US lawmakers deadlock over debt as default looms
WASHINGTON, July 26 (Reuters) - The United States edged closer on Tuesday to a devastating default as Republicans and Democrats deadlocked over competing plans to raise the debt ceiling, one week before a deadline to act.
President Barack Obama, in a televised address aimed at rallying public support for a package proposed by Democrats, warned that failure to increase the U.S. borrowing limit would severely hurt the nation.

U.S. debt stalemate hits dollar; no stocks panic
LONDON, July 26 (Reuters) - The dollar fell across the board as a speech by U.S. President Barack Obama gave no sign of a swift breakthrough in deadlocked talks to raise the U.S. debt ceiling, while a run of strong earning reports supported world stocks.
"Equity traders clearly remain concerned over the lack of a debt deal out of the U.S., but it's looking increasingly academic after rival sides tabled competing proposals and President Obama urged them to find a compromise," said Chris Weston, trader at IG Markets.

Dollar Close to Record Low Against Franc Before House Vote on Debt Ceiling (Source: Bloomberg)
The dollar was 0.2 percent from a record low against the Swiss franc before the U.S. House votes on a plan to cut government spending in exchange for lifting the so-called debt ceiling. The greenback was within 0.4 percent of its weakest level against New Zealand’s dollar as a U.S. report is forecast to show demand for durable goods grew at a slower pace in June. The yen reached a four-month high versus the dollar amid speculation Japan’s authorities will sell the nation’s currency to prevent its strength from derailing an export-led recovery. Australia’s currency was within 0.5 percent of a record high against the dollar ahead of a report today on the nation’s inflation. “The weaker dollar direction is a more powerful influence than strong gains in growth-oriented currencies,” said Greg Gibbs, a foreign-exchange strategist in Sydney at Royal Bank of Scotland Group Plc. “The market is certainly factoring in higher risk of a downgrade” of the U.S.’s credit rating.

Treasuries Decline as Obama Threatens to Veto House Speaker’s Debt Plan (Source: Bloomberg)
Treasuries fell, eroding a gain from yesterday, as President Barack Obama threatened to veto House Speaker John Boehner’s plan to raise the U.S. debt ceiling and cut $3 trillion in spending. The U.S. government’s credit rating will probably be lowered because politicians are unlikely to agree on a plan to cut spending, according to Kathleen Gaffney, co-manager of the $21 billion Loomis Sayles Bond Fund. The Treasury is scheduled to sell $35 billion of five-year debt today, the second of three note auctions this week. “There’s a concern, not only for a downgrade, but also for a default,” said Hideo Shimomura, who helps oversee the equivalent of $77 billion in Tokyo as chief fund investor at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest bank. “If there’s no accord, yields are going to rise.”

Apple Tops $400, Chases Exxon as Most Valuable (Source: Bloomberg)
Apple Inc., a week after reporting record sales and profit, surpassed $400 a share for the first time and is gaining ground on Exxon Mobil Corp. to become the world’s most valuable company.

Japanese Stocks Decline as U.S., European Debt Concern, Yen Hits Exporters (Source: Bloomberg)
The Nikkei 225 (NKY) Stock Average fell for the third time in seven days as wrangling between U.S. lawmakers over plans to raise the federal debt limit and falling demand for European debt increased concern the global recovery may stall. Sony Corp., a consumer electronics exporter that earns about a half of its revenue from the U.S. and Europe, lost 0.7 percent. Nissan Motor Co., a carmaker that gets about 80 percent of its revenue overseas, sank 1.2 percent after the dollar weakened against the yen, cutting the earnings outlook for the exporter. Hino Motors Ltd., a maker of trucks and busses, slid 1.6 percent after posting a first-quarter loss on earthquake- related charges and lower sales. The Nikkei 225 Stock Average fell 0.6 percent to 10,041.70 as of 9:03 a.m. in Tokyo. The broader Topix lost 0.7 percent to 859.82, with about five shares dropping for each that gained.

South Korea’s Economy Grows at Slower Pace (Source: Bloomberg)
South Korea’s economy expanded at a slower pace in the second quarter as a stronger won and Europe’s fiscal crisis weighed on exports. Gross domestic product rose 0.8 percent from the previous quarter, when it advanced 1.3 percent, the Bank of Korea said in Seoul today. That matched the median estimate of 10 economists in a Bloomberg News survey. The economy grew 3.4 percent from a year earlier, slower than estimates of a 3.5 percent expansion. Heightened global uncertainty driven by fiscal woes in the U.S. and Europe hasn’t deterred South Korean policy makers from fighting inflation. Bank of Korea Deputy Governor Kim Jae Chun said on July 25 that price gains remain the central bank’s biggest concern and that the economy will rebound in the second half of the year.

India Signals Tougher Inflation Resolve to Avert ‘Hard Landing’ of Economy (Source: Bloomberg)
The Reserve Bank of India signaled it’s prepared to accept a slower expansion to pull down an inflation rate that risks causing a crash in the pace of growth in Asia’s third-largest economy if left unchecked. The RBI yesterday surprised all 22 economists surveyed by Bloomberg News with a half-point boost in the repurchase rate to 8 percent. The bank said in a statement that stronger action was needed in the absence of government steps to damp demand or efforts to address the nation’s supply bottlenecks. Governor Duvvuri Subbarao was forced to escalate what was already the steepest increase in borrowing costs among major Asian economies, after household expectations for inflation exceeded 12 percent, above the 9.44 percent current pace. The bank will add another half point to the benchmark rate by the end of 2011, the median of 11 estimates in a Bloomberg survey yesterday showed.

India Raises Interest Rates More Than Estimates, Spurring Slide in Stocks (Source: Bloomberg)
India’s central bank raised its benchmark interest rate more than forecast to quell the fastest inflation among major economies, spurring a slide in stocks and gain in the rupee. The Reserve Bank of India increased the repurchase rate to 8 percent from 7.5 percent, it said in a statement in Mumbai today. None of the 22 economists surveyed by Bloomberg News predicted today’s decision. Twenty estimated a quarter-point rise, while the remainder expected no change. Governor Duvvuri Subbarao acted as the central bank elevated its inflation forecast for the year through March by 1 percentage point, to 7 percent. With rising rural wages and a lack of corporate investment growth straining capacity, India’s price pressures mean it lacks the leeway in setting monetary policy afforded to counterparts in South Korea, Malaysia and Indonesia, which kept borrowing costs unchanged this month.

India central bank surprises with 50 bps rate rise
MUMBAI, July 26 (Reuters) - India's central bank stunned investors by raising interest rates by 50 basis points on Tuesday, showing unexpected resolve in fighting persistently high inflation despite slowing growth in Asia's third-largest economy and uncertainty about global demand.
The Reserve Bank of India (RBI) increased the repo rate  at which it lends to banks to 8 percent, topping forecasts that it would raise rates by 25 basis points.

U.K. Growth Slows, Reinforcing Low-Rates Case (Source: Bloomberg)
The U.K. economy barely grew in the second quarter, suggesting the Bank of England will continue to keep rates at a record low to boost a flagging recovery. Gross domestic product rose 0.2 percent from the first quarter, when it increased 0.5 percent, the Office for National Statistics said today. That matched the median forecast of 32 economists in a Bloomberg News survey. Manufacturing output fell 0.3 percent. Excluding factors such as the impact on production from the Japanese earthquake and the extra public holiday for the royal wedding, the economy could have grown as much as 0.7 percent, the statistics office estimates. The pound jumped against the dollar after the report. Prime Minister David Cameron yesterday said Britain is facing a “difficult” recovery as budget cuts bite. Consumers are spending less as the fiscal squeeze undermines confidence and inflation erodes incomes at the fastest pace since the 1970s.
Bank of England officials said this month the economic weakness may persist “for longer than previously thought.”

U.K. Economy Probably Barely Grew in 3 Months (Source: Bloomberg)
The U.K. economy probably barely grew in the second quarter, supporting the arguments of a majority of Bank of England policy makers that interest rates should be kept at a record low. Gross domestic product climbed 0.2 percent from the first quarter, when it increased 0.5 percent, according to the median of 32 forecasts in a Bloomberg News survey. The Office for National Statistics will publish the data at 9:30 a.m. today in London. Bank of England officials said this month that the weakness in the economy may persist “for longer than previously thought” as they kept the benchmark interest rate at 0.5 percent. While the effects of the earthquake in Japan and U.K. public holidays in April and May probably disrupted supply in the second quarter, consumers are spending less as the government’s fiscal squeeze undermines confidence and inflation erodes incomes at the fastest pace since the 1970s.

IMF Chief Lagarde Sees ‘Level of Uncertainty’ in Reaction to Greek Rescue (Source: Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said today that she sees a “level of uncertainty” in the market reaction to the rescue plan for Greece. She was speaking at the Council on Foreign Relations in New York.

European Stocks Drop for Second Day; BP, UBS Fall After Earnings Reports (Source: Bloomberg)
European stocks retreated for a second day as companies from BP Plc (BP/) to UBS AG reported earnings that missed analysts’ estimates and concern grew that U.S. lawmakers may fail to increase the nation’s debt limit. BP, Europe’s second-biggest oil company, and UBS, Switzerland’s largest bank, slid more than 2.5 percent. STMicroelectronics NV (STM), Europe’s biggest semiconductor maker, sank the most in almost 10 years after saying there will be a “correction” in sales. The benchmark Stoxx Europe 600 Index slid 0.4 percent to 270.08 at the 4:30 p.m. close in London. The gauge has retreated 7.2 percent from this year’s high in February amid concern that Europe’s fiscal crisis will derail the economic recovery and speculation that U.S. lawmakers will fail to agree on increasing the nation’s debt ceiling by next week’s deadline.

U.K. Stocks Slide; BP Falls as Profit Misses Estimates, BG Group Advances (Source: Bloomberg)
Most U.K. stocks retreated as BP Plc (BP/) reported earnings that missed analysts’ estimates and concern mounted that U.S. lawmakers will fail to increase the federal debt limit. BP, Europe’s second-largest oil company, dropped 2.6 percent, the most in three months. BG Group Plc (BG/), the U.K.’s third-biggest natural gas producer, surged 4.3 percent after saying that profit doubled in the second quarter. The benchmark FTSE 100 Index (UKX) gained 4.47, or less than 0.1 percent, to 5,929.73 at the 4:30 p.m. close in London as two stocks fell for each that advanced. The gauge has still dropped 2.7 percent since this year’s high on Feb. 8 as investors speculated that Europe’s sovereign-debt crisis will spread. The broader FTSE All-Share Index also rose less than 0.1 percent today, while Ireland’s ISEQ Index retreated 0.6 percent.

FOREX-Debt jitters slam dollar, Swiss franc rallies
LONDON, July 26 (Reuters) - The dollar plumbed a record low against the Swiss franc and suffered broadly on Tuesday as ongoing political wrangling about raising the U.S. debt ceiling kept investors jittery about the possibility of a debt default, which could trigger more losses in the U.S. currency.
The greenback fell as low as 0.7997 francs  as options-related barriers were taken out at the psychologically key 0.8000 level, and traders said the dollar could fall "another 2-3 big figures" if U.S. lawmakers are unable to agree on raising the debt ceiling by an Aug. 2 deadline.