20110825 1022 Global Market Related News.

Asian Stocks Rise on U.S. Durable Goods (Source: Bloomberg)
Asian stocks rose for a second day this week after U.S. reports on durable-goods orders and home prices beat economists’ estimates, easing concern that the world’s biggest economy is slowing and boosting the earnings outlook for exporters. Toyota Motor Corp. (7203), the world’s largest carmaker, gained 2.3 percent in Tokyo. James Hardie Industries SE, the building materials supplier that gets 68 percent of sales from the U.S., jumped 3.6 percent. Samsung Electronics Co., the world’s second- biggest maker of mobile phones by sales, climbed 3.8 percent in Seoul after Steve Jobs resigned as chief executive officer of rival Apple Inc. The MSCI Asia Pacific Index added 0.8 percent to 120.12 as of 9:44 a.m. in Tokyo, with more than 10 stocks rising for each that fell. Global equities erased about $8 trillion in market value in the past four weeks amid worsening economic data in the U.S. and Europe’s smoldering sovereign-debt crisis.

Emerging-Market Stocks Decline on Economic Growth Concern, Lower Earnings (Source: Bloomberg)
Emerging-market stocks fell, with the benchmark index dropping for the fourth day in five, as companies reported disappointing results and investors weighed what the Federal Reserve may do to bolster the economy. The MSCI Emerging Markets Index retreated 0.8 percent to 978.21 at 4:31 p.m. in New York, following yesterday’s 2 percent gain. The Hang Seng China Enterprise Index declined 3.1 percent as China Life Insurance Co. tumbled on a drop in first-half earnings. India’s Sensex Index lost 1.3 percent. Brazil’s benchmark was little changed and Mexico’s fell 0.1 percent.
China Life, the nation’s biggest insurer, sank 12 percent in Hong Kong after reporting a 28 percent slump in earnings while Malaysian Airline System Bhd. (MAS), the national carrier, retreated 4.9 percent after posting a second-straight quarterly loss. Fed Chairman Ben S. Bernanke and other central bankers meet this week in Jackson Hole, Wyoming, amid signs of a slowing global recovery. Data today showed German business confidence fell to its lowest in more than a year.

GLOBAL MARKETS - Investors edgy ahead of Bernanke speech
LONDON, Aug 24 (Reuters) - World stocks were generally weaker on Wednesday and Wall Street looked set for losses as  investors shuffled positions ahead of a highly anticipated Jackson Hole speech by Federal Reserve Chairman Ben Bernanke.
"We think most people aren't looking for (a third quantitative easing programme) and are more bent towards an operation twist where the Fed would increase the maturity of its portfolio by buying longer-term assets," said Kiran Kowshik, currency strategist at BNP Paribas.

Investors trade in tight range ahead of Bernanke speech
LONDON, Aug 24 (Reuters) - World stocks fell as European investors shuffled positions ahead of a Jackson Hole speech by Federal Reserve Chairman Ben Bernanke and Japanese shares sold off following a Moody's downgrade.
"We think most people aren't looking for (a third quantitative easing programme) and are more bent towards an operation twist where the Fed would increase the maturity of its portfolio by buying longer-term assets," said Kiran Kowshik, currency strategist at BNP Paribas.

Orders for Durable Goods in U.S. Increase 4%, Twice as Much as Estimated (Source: Bloomberg)
Orders for U.S. durable goods climbed more than forecast in July as a surge in demand for aircraft and autos eclipsed a decrease in business equipment, including computers and machinery. Bookings for goods meant to last at least three years rose 4 percent, the most in four months, after falling a revised 1.3 percent in June, a Commerce Department report showed today in Washington. The median projection of 81 economists surveyed by Bloomberg News called for a 2 percent gain. Orders excluding the volatile transportation category, unexpectedly advanced 0.7 percent. Automakers last month rebounded from the slump caused by the Japanese earthquake, while some manufacturers like Deere & Co. (DE) continued benefit from growing sales in emerging markets. Nonetheless, regional factory surveys have shown demand plunged in August as concern over the European debt crisis mounted and stocks retreated, indicating the outlook may have since dimmed.

Home Prices Decline 5.9% in Second Quarter (Source: Bloomberg)
Home prices in the U.S. fell 5.9 percent in the second quarter from a year earlier, the biggest decline since 2009, as foreclosures added to the inventory of properties for sale. Prices dropped 0.6 percent from the prior three months, the Federal Housing Finance Agency said today in a report from Washington. In June, prices retreated 4.3 percent from a year earlier, while increasing 0.9 percent from the previous month. Foreclosures are boosting the supply of properties on the market and undercutting the confidence of homebuyers, sapping demand even as mortgage rates tumble to the lowest in more than half a century. The U.S. inventory of homes for sale averaged 3.7 million during the second quarter, the highest since the third quarter of 2010, data from the National Association of Realtors show. The mortgages on 6.5 million U.S. homes had late payments or were in foreclosure in June, according to Lender Processing Services Inc. in Jacksonville, Florida.

Dollar Declines as U.S. Durable Goods Orders Increase More Than Forecast (Source: Bloomberg)
The Swiss franc gained versus all of its most-traded counterparts as concern the euro-area debt crisis is getting worse and the U.S. economy may falter boosted demand for a refuge. The dollar slipped versus a basket of major U.S. trading partners as U.S. durable-goods orders rose more than forecast, briefly spurring risk appetite. The euro fell against the franc as German business confidence dropped to the lowest in more than a year. The yen rose toward a postwar high versus the dollar as Finance Minister Yoshihiko Noda announced a $100 billion effort to help businesses cope with strength in the currency, reducing speculation Japan will intervene to curb gains. “If you look at where to put your safe-haven flows, there really isn’t any place better than the Swiss franc,” said Elizabeth Gregory, market strategist at Swissquote Bank SA in Geneva.

Nasdaq-100 Futures Retreat After Jobs Resigns (Source: Bloomberg)
Nasdaq-100 Index futures declined after Steve Jobs resigned as chief executive officer of Apple Inc. (AAPL), the world’s second-largest company by market value. Futures on the index, which gets 66 percent of its value from computer-related companies such as Apple, fell 0.9 percent to 2,119.25 at 10:23 a.m. in Tokyo. Standard & Poor’s 500 Index futures pared their loss to 0.2 percent from 0.6 percent. Apple shares dropped 5.1 percent to $357.10. Jobs, 56, who has battled cancer and had a liver transplant, presided over a 9,020 percent surge in the stock since July 29, 1997, the day before the San Francisco Chronicle broke the news that he would be named interim CEO. Over the same period, the shares grew in value to $348.7 billion from $2.08 billion. Apple briefly surpassed Exxon Mobil Corp. (XOM) this month as the world’s most valuable company. Chief Operating Officer Tim Cook, 50, succeeded Jobs.

Treasuries Rally Before U.S. GDP Report, Bernanke's Jackson Hole Speech (Source: Bloomberg)
Treasuries rose, snapping a three- day decline, before a government report tomorrow on U.S. gross domestic product and Federal Reserve Chairman Ben S. Bernanke’s speech to central bankers in Jackson Hole, Wyoming. Benchmark 10-year yields were 30 basis points away from a record low, reflecting demand for the safest securities as the U.S. economy slows. At the Jackson Hole conference a year ago, Bernanke said the central bank would “do all that it can” to spur growth, raising speculation he will make similar comments tomorrow. The Fed went on to announce in November a $600 billion debt-purchase plan. “If he does nothing, that will be a problem for bonds,” said Kazuaki Oh’e, a debt salesman in Tokyo at CIBC World Markets Japan Inc., a unit of Canada’s fifth-largest lender. “He may not announce a round of debt purchases but he may use money from redemptions to buy longer-term bonds.”

Dollar Holds Gains Amid Speculation Before Bernanke Speech, German Data (Source: Bloomberg)
The dollar maintained yesterday’s gains against the majority of its most-traded peers amid speculation on what steps Federal Reserve Chairman Ben S. Bernanke will tomorrow outline to stimulate the U.S. economy. The greenback advanced yesterday as investors betted on whether Bernanke will signal a willingness to consider a third round of bond purchases, or quantitative easing, when he delivers a speech at Jackson Hole, Wyoming. The euro held declines versus the dollar before a private report forecast to show German consumer confidence will probably drop in September. The yen fell after Japan’s government announced yesterday a $100 billion fund designed to cope with strength in the currency. “I’d have a bias toward more U.S. dollar buying as I just don’t see Bernanke as coming out and delivering anything too dramatic on the QE3 front,” said Mike Burrowes, a currency strategist at Bank of New Zealand Ltd. in Wellington. “There’s been some reassessment of what Bernanke will deliver.”

Jobs Decision to Resign Erases $52 Billion From S&P 500 as Apple Tumbles (Source: Bloomberg)
Steve Jobs decision to step down as Apple Inc. (AAPL)’s chief executive officer erased as much as $52 billion from the benchmark gauge for U.S. stocks, futures trading shows. The September contract on the Standard & Poor’s 500 Index slumped up to 0.6 percent after Jobs released his statement at 6:34 p.m. in New York yesterday. The measure’s total market value was $9.34 trillion at the close of regular trading at 4 p.m., data compiled by Bloomberg show. Apple fell 5.1 percent. Jobs, 56, who has battled cancer and had a liver transplant, presided over a 9,020 percent surge in the stock since July 29, 1997, the day before the San Francisco Chronicle broke the news that he would be named interim CEO. Over the same period, the shares grew in value to $348.7 billion from $2.08 billion. Apple briefly surpassed Exxon Mobil Corp. this month as the world’s most valuable company. Chief Operating Officer Tim Cook, 50, succeeded Jobs.

Beijing Olympics Bill Due as Record Bonds Mature (Source: Bloomberg)
Beijing’s state-owned infrastructure companies face a record amount of bonds maturing next year as China’s capital city pays the bills for the $70 billion 2008 Olympic Games. Fifteen local government financing units based in Beijing must pay 16.2 billion yuan ($2.5 billion) next year plus interest to investors, breaking last year’s record 12 billion yuan, according to data compiled by Bloomberg. A further 11.6 billion yuan matures in 2013 and 37.6 billion yuan in 2014. The debt is coming due as government efforts to control inflation cause corporate borrowing costs in China to rise to a three-year high of 5.92 percent this month, double the rate in the U.S. How Beijing deals with the bill, which dwarfs the estimated $15.3 billion budget for next year’s London Games, may set a pattern for more than 10,000 local-government financing vehicles across China with about 10 trillion yuan of debt.

Contenders to Replace Kan Emerge in Japan (Source: Bloomberg)
The field of candidates competing to replace Japanese Prime Minister Naoto Kan will be set today, as the downgrade of the country’s credit rating puts pressure on his successor to deal with world’s largest public debt burden. The Democratic Party of Japan leadership candidates or their representatives meet today in Tokyo before an Aug. 29 vote for a new party chief. Kan, whose popularity has plunged after the March earthquake and nuclear crisis, will resign as early as tomorrow after passage of energy and funding bills. Former Foreign Minister Seiji Maehara and three Cabinet members will compete to become Japan’s sixth prime minister in five years. Political instability helped prompt yesterday’s credit rating downgrade by Moody’s Investors Service, and the next leader will face the same challenge that stymied Kan -- opposition to tax increases to rebuild disaster-ravaged areas and pay down debt.

Japan Unveils $100 Billion to Fight Surging Yen as Moody’s Lowers Rating (Source: Bloomberg)
Japan unveiled a $100 billion effort to help companies cope with a surging yen, signaling that officials may be resigned to the currency remaining high. The government will release foreign-exchange reserves to the state-run Japan Bank for International Cooperation for funding to aid exporters and spur purchases overseas, Finance Minister Yoshihiko Noda told reporters in Tokyo today. The announcement came hours after Moody’s Investors Service lowered the nation’s debt rating one step to Aa3, with a stable outlook. The yen was trading today at a level stronger than before officials last intervened to weaken the currency on Aug. 4. Its rise since the March 11 earthquake to post-World War II highs is undermining the nation’s recovery after three straight quarters of economic contraction, complicating the government’s efforts to tackle its debt burden.

Nikkei 225 Rises Most in Two Months as U.S. Data Boosts Earnings Outlook (Source: Bloomberg)
Japanese stocks rose, sending the Nikkei 225 (NKY) Stock Average toward its biggest rally in two months, after U.S. reports on durable-goods orders and home prices beat estimates, boosting the earnings outlook for exporters. Toyota Motor Corp. (7203), which gets 28 percent of its sales in the U.S. and Canada, rose 1.6 percent. Canon Inc. (7751), the world’s biggest camera maker, advanced 1.5 percent. Inpex Corp. (1605), the country’s No. 1 energy explorer, advanced 1.9 percent after the price of crude oil increased. The Nikkei 225 Stock Average gained 1.6 percent to 8,779.15 as of 9:35 a.m. in Tokyo, headed for its biggest gain since June 22. The broader Topix index gained 1.4 percent to 752.79. All 33 industry groups increased on the gauge.

South Korean Consumer Confidence Slides as Global Turmoil Impairs Outlook (Source: Bloomberg)
South Korean consumer confidence fell to a five-month low as stock market turmoil dented the outlook and accelerating inflation hurt purchasing power. The sentiment index fell to 99 in August from 102 in July, the Bank of Korea said in an e-mailed statement today. A reading below 100 indicates people are more pessimistic than the average between the first quarter of 1999 and the second quarter of 2008. The Bank of Korea left interest rates unchanged for a second straight month on Aug. 11 as faltering recoveries in Europe and the U.S. threaten to crimp demand for Asian exports. At the same time, inflation quickened in July and has exceeded the monetary authority’s 4 percent limit each month this year.

Thailand Raises Benchmark Interest Rate as Yingluck Vows to Boost Incomes (Source: Bloomberg)
Thailand raised interest rates for the seventh meeting as the government’s plans to boost wages and rice prices heighten inflation risks, even as the central bank signaled it may be nearing the end of monetary tightening. The Bank of Thailand increased its benchmark one-day bond repurchase rate by a quarter of a percentage point to 3.5 percent, it said in Bangkok today. The move was predicted by 16 out of 20 economists surveyed by Bloomberg News, with the rest expecting no change. The nation has boosted borrowing costs nine times since the start of July 2010, the longest tightening cycle since the 23 months ended June 2006. “We have paddled a long way and we are probably close to our shore now,” Assistant Governor Paiboon Kittisrikangwan told a news conference in Bangkok today. “But it also depends on the tide” on when Thailand will reach the target, he said.

U.K. Stocks Rally on U.S. Goods Orders; RBS, Glencore Advance (Source: Bloomberg)
U.K. stocks climbed for a third day, led by a rally in banks and basic-resources companies, after U.S. durable-goods orders data helped eased concern that the world’s largest economy is slipping into recession. Royal Bank of Scotland Group Plc (RBS) jumped 9.4 percent and Glencore International Plc, the world’s largest listed commodities trader, surged 6 percent. WPP Plc (WPP) advanced 7.4 percent after the world’s biggest advertising company reported better-than-estimated profit. The FTSE 100 Index (UKX) increased 76.43, or 1.5 percent, to 5,205.85 at the 4:30 p.m. close in London, after fluctuating between gains and losses more than 10 times. The gauge slumped 5.3 percent last week after European and U.S. reports trailed economists’ forecasts, adding to concern the global economy is at risk. The broader FTSE All-Share Index (ASX) climbed 1.4 percent today, while Ireland’s ISEQ Index gained 1.3 percent.

Sarkozy Defends Top French Credit Rating (Source: Bloomberg)
French President Nicolas Sarkozy bid to defend France’s top credit rating by raising taxes on companies and the wealthiest as he aimed to limit the fallout of budget cuts and a slowing economy in an election year. Prime Minister Francois Fillon yesterday announced 12 billion euros ($17 billion) of measures in 2011 and 2012 and cut growth forecasts, saying the euro region’s second-largest economy will expand less than 2 percent in each year. The deficit will be 4.5 percent of gross domestic product in 2012, beating the target, when Sarkozy seeks re-election. “There is a crisis of public debt in industrialized nations and the U.S. economic slowdown is slowing our own economy,” Fillon said late yesterday on TF1 television. “Eighty-three percent of the measures in this plan are aimed at big companies, owners of capital and wealthy households. We aimed for measures that were not going to break growth.”

Merkel Rejects Seeking Collateral in European Bailouts as Splits Emerge (Source: Bloomberg)
German Chancellor Angela Merkel rejected demands that Greece provide collateral for emergency loans as splits emerged in her Cabinet, reflecting euro-area divisions on the issue. Merkel told lawmakers from her Christian Democratic bloc that a call by Labor Minister Ursula von der Leyen for countries to put up gold as security for bailouts is “not the right way,” Ulrich Scharlack, a spokesman for the parliamentary group, said yesterday in Berlin after they were briefed by Merkel on the region’s debt crisis. The disagreement at the top of Europe’s biggest economy underscores risks over a second Greek aid package after the Finnish government said Aug. 16 that it secured a collateral arrangement to ensure its contribution would be repaid. Austria and the Netherlands, which both share Finland’s AAA rating, called for similar deals, as did Slovakia and Slovenia.

German Business Confidence Index Drops to Lowest Level in More Than a Year (Source: Bloomberg)
German business confidence fell to the lowest in more than a year as a global slowdown and Europe’s debt crisis damped the outlook for economic growth. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 108.7 in August from 112.9 in July. That’s the lowest since June 2010. Economists forecast a decline to 111, according to the median prediction of 37 economists in a Bloomberg News survey. The index reached a record high of 115.4 in February. Germany’s benchmark DAX Index (DAX) has plunged almost 25 percent since late July on fears that another global slump will sap demand for the country’s exports, the main driver of its economic expansion. The debt crisis is also curbing demand within the euro area as governments from Greece to Spain cut spending. German growth slowed to just 0.1 percent in the second quarter from 1.3 percent in the first, the Federal Statistics Office reported on Aug. 16.

European Stocks Climb on Better-Than-Estimated U.S. Durable-Goods Orders (Source: Bloomberg)
European stocks climbed for a third day after a report on U.S. durable-goods orders beat forecasts amid ongoing speculation that the Federal Reserve will act to bolster the economy. Daimler AG (DAI) and Fiat SpA (F) led a gauge of automakers to the biggest gain in 13 months. Ageas, the majority owner of Belgium’s largest life insurer, surged 21 percent after announcing a buyback. WPP Plc (WPP), the world’s largest advertising company, advanced 7.4 percent as profit beat estimates. Heineken NV (HEIA), the world’s third-biggest brewer by volume, tumbled the most since 2003 after saying earnings are unlikely to grow this year. The Stoxx Europe 600 Index rose 1.4 percent to 229.79 at the 4:30 p.m. close in London, extending the advance from the two-year low reached at the end of last week to 3 percent. The gauge has still fallen 21 percent from this year’s peak on Feb. 17 as European and U.S. economic data that trailed economists’ forecasts added to concern the global recovery is at risk.

Central Banks Seen Retaining Gold to Help Manage Debt as Bullion Advances (Source: Bloomberg)
Central banks, net buyers of gold for the first time in a generation, are likely to retain their holdings even if they need to raise cash to counter an escalating debt crisis, according to Morgan Stanley. “Once they’ve sold, that’s it, and buying back would be extremely expensive,” Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd., said in an interview. “They would rather have the backing of a rising asset within their reserve portfolios than use it to reduce debt.” Gold rallied to a record this week as rising government debt burdens and weakening currencies boosted demand for a haven. Central banks are the biggest gold holders, and Thailand, South Korea, Kazakhstan, Mexico and Russia added to reserves this year. The precious metal is the “currency of the world” amid the debt crisis, economist Dennis Gartman wrote Aug. 19.