Asia Stocks Decline as Yen Climbs to Record (Source: Bloomberg)
Asian stocks fell, with the MSCI Asia Pacific Index trimming its biggest monthly advance in two years, as the yen rose to a record ahead of a U.S. Federal Reserve meeting this week, hurting the outlook for Japanese exporters. Honda Motor Co., Japan’s second-largest carmaker by market value that gets 83 percent of its revenue abroad, dropped 3 percent. Lynas Corp., an Australian rare earths producer, sank 3 percent in Sydney following a delay in the construction of a facility in Malaysia. Qantas Airways jumped 6.5 percent as it plans to resume flights today after a labor regulator barred work stoppages that had prompted Australia’s biggest carrier to ground its fleet. The MSCI Asia Pacific Index fell 0.3 percent to 124.36 as of 9:30 a.m. in Tokyo. The measure has gained 9.9 percent this month, the most since May 2009, after a breakthrough in Europe boosted confidence the region’s sovereign-debt crisis will be contained, U.S. economic growth accelerated and China hinted at easing monetary policy.
Employment Probably Cooled in October, Showing U.S. Recovery Must Quicken(Source: Bloomberg)
Employment probably cooled in October, indicating the U.S. recovery remains too weak, economists said before reports this week. Payrolls climbed by 95,000 workers after a 103,000 September increase, according to the median forecast of 65 economists surveyed by Bloomberg News ahead of Nov. 4 data from the Labor Department. The jobless rate was 9.1 percent for a fourth consecutive month, the report may also show. Hiring slowed even as the economy grew in the third quarter at the fastest pace in a year, showing why some Federal Reserve policy makers have said in advance of their meeting this week that the central bank should be prepared to do more. While retailers like Macy’s Inc. (M) are boosting staff ahead of the holidays, bigger job gains are needed to spur consumer spending.
U.S. Stock Futures Drop as S&P 500 Index Heads for Best Month Since 1974(Source: Bloomberg)
U.S. stock futures fell, following a fourth straight weekly advance that left the Standard & Poor’s 500 Index poised for the biggest monthly rally since 1974. Futures on the S&P 500 expiring in December fell 0.5 percent to 1,274.70 at 9:15 a.m. Tokyo time. The benchmark measure for U.S. stocks advanced 3.8 percent last week and has climbed 14 percent this month. Stocks gained last week after the European rescue fund was boosted to 1 trillion euros ($1.4 trillion) and investors agreed to a voluntary writedown of 50 percent on Greek debt. The S&P 500 had fallen five consecutive months, driven lower by concern the debt crisis would curb global growth, before starting to rebound on Oct. 3. The stock index recovered as better-than- estimated U.S. reports pushed the Citigroup Economic Surprise Index above zero for the first time since April.
Treasuries Rise on Speculation U.S. Job Growth Slowed; Monthly Loss Pared(Source: Bloomberg)
Treasuries rose, trimming their steepest monthly loss this year, on speculation a government report this week will show U.S. employment growth slowed in October, easing expectations for a faster economic expansion. Benchmark 10-year yields were 63 basis points away from the record low set last month. Some Federal Reserve policy makers have said before a two-day meeting that starts tomorrow the Fed should increase its debt purchases to support the economy. “Yields suggest that people still fear there is a downside risk in the U.S.,” said Hideo Shimomura, who helps oversee the equivalent of $79.2 billion in Tokyo as chief fund investor at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest publicly traded bank. “The U.S. economy could grow well in one to two quarters, but after that I think it will decline.”
MF Global Faces Pivotal Days as Firm Mulls Sale(Source: Bloomberg)
MF Global Holdings Ltd., the company run by Jon Corzine that last week reported a record loss, had two of its credit ratings cut to junk and drained bank lines, faces a pivotal few days as the futures broker pitches itself to potential buyers to avert failure. The firm’s board met through the weekend in New York to consider options, according to a person with direct knowledge of the situation. MF Global has hired Weil, Gotshal & Manges LLP for a London affiliate, another person said. The law firm currently represents Lehman Brothers Holdings Inc., which in 2008 filed the biggest bankruptcy in U.S. history.
Pressure is mounting on Corzine, the former governor of New Jersey and U.S. senator, after MF Global declined 67 percent last week and its bonds started trading at distressed levels amid its disclosures of bets on European sovereign-debt. MF Global was in discussions with five potential buyers for all or parts of the company, including banks, private-equity firms and brokers, said the person, who asked not to be identified because the talks are private.
Best Month Since July 2009 Driven by Tech, Oil Earnings: China Overnight(Source: Bloomberg)
China’s stock-index futures fell, signaling the benchmark index may decline for the first time in six days, after Premier Wen Jiabao said the government should “firmly” maintain property curbs. Futures on the CSI 300 Index expiring in November, the most active contract, lost 0.4 percent to 2,700.20 as of 9:16 a.m. local time. China Vanke Co., the nation’s biggest developer by market value, may pace declines after the government said local authorities should continue to strictly implement tight policies in the property industry in the coming months. Baoshan Iron & Steel Co. and China Railway Group Ltd. may drop after third- quarter profit slumped.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, climbed 37.80 points, or 1.6 percent, to 2,473.41 on Oct. 28. The gauge advanced 6.7 percent last week, the biggest gain since the period ended Oct. 15, 2010, after Premier Wen said on Oct. 25 the government will fine-tune economic policies at an “appropriate time.” The CSI 300 Index rose 1.9 percent to 2,709.02 on Oct. 28.
China to ‘Firmly’ Maintain Property Curbs: Wen(Source: Bloomberg)
China will “firmly” maintain its property curbs and “fine tune” other economic policies at an appropriate time, according to a statement following a State Council meeting chaired by Premier Wen Jiabao. Local authorities should continue to strictly implement the central government’s real-estate policies in the coming months to let the citizens see the results of the curbs, according to the statement on Oct. 29. The government will “fine tune” its economic policies by “an appropriate degree and at an appropriate time,” it said. “It demonstrates to local governments and developers the central government’s determination to tighten the property market,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. “With inflation still at a high level, it’s unlikely the government will take a big step to loosen its policy, but only a partial easing.”
China Shuffles Financial, Securities Regulators(Source: Bloomberg)
China moved its securities regulator Shang Fulin to head the nation’s banking watchdog, overseeing a 106 trillion-yuan ($17 trillion) industry that includes four of the world’s 10 largest lenders by market value. Shang’s appointment as chairman of the China Banking Regulatory Commission to replace Liu Mingkang is part of the biggest reshuffle of financial officials in a decade. China Construction Bank Corp. Chairman Guo Shuqing will become head of the securities watchdog and Agricultural Bank of China Ltd. Chairman Xiang Junbo will take the top job at the insurance regulator, the government said on Oct. 29.
Shang, 59, takes over at the watchdog for an industry whose assets have more than tripled over the past eight years as China’s economy became the world’s second largest. After almost nine years as the securities regulator, Shang will be in charge of curbing a potential surge in bad loans following a record $2.7 trillion two-year credit boom that propelled China’s expansion after the global financial crisis.
China Online Sales Triple; Warehouses Surge(Source: Bloomberg)
China’s largest online retailers expect sales to as much as triple next year, setting off a rush for warehouse space that’s pushing up rents in the world’s fastest-growing major economy. “Everyone wants more warehouses,” Ji Wenhong, chief executive officer of luxury goods seller xiu.com, said in an interview. “Any warehouse bigger than 20,000 square meters will be leased the second it’s out on the market.” Wal-Mart Stores Inc (WMT).-backed Yihaodian is looking for more space in anticipation of need. 360buy.com, China’s second- largest e-commerce company by sales, plans to invest as much as 6 billion yuan ($943 million) over the next three years to build seven distribution centers as the Beijing-based company expects 2011 sales to triple from last year to 30 billion yuan.
Japanese Stocks Gain, Reversing Losses, as Yen Weakens Against Dollar(Source: Bloomberg)
Japanese stocks fell for the first time in three days, as the yen rose to a record amid speculation the U.S. Federal Reserve will embark on another round of asset purchases. Sony Corp., Japan’s biggest exporter of consumer electronics, slid 0.7 percent. Honda Motor Co. fell 3.1 percent after the Nikkei newspaper reported the carmaker may take six months to resume production at a flooded factory in Thailand. Ebara Corp., a pump maker, tumbled 9.2 percent after cutting its full-year profit forecast. The Nikkei 225 Stock Average declined 0.4 percent to 9,018.85 as of 9:33 a.m. in Tokyo. For the month, the gauge is headed for a 3.6 percent gain. The broader Topix index retreated 0.3 percent to 769.06. The yen’s surge to a record “weighs on exporters,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. Investors are likely to lock in their profits after the market surged last week, he said.
Yen Falls Amid Speculation of Japan Intervention(Source: Bloomberg)
The yen plunged against the dollar and euro amid speculation Japan intervened in markets to weaken its currency. The yen sank 3.2 percent to 78.30 per dollar as of 10:34 a.m. in Tokyo. It lost 2.8 percent to 110.38 per euro. Japanese Finance Minister Jun Azumi said earlier today he’s ready to take “determined” steps in the currency market if needed after the yen rose to a fresh post-World War II high against the dollar. He told reporters in Tokyo today that speculative activity is strong in the currency market, adding that the yen’s moves don’t reflect Japan’s economic fundamentals.
Yen Climbs to Postwar Record Versus Dollar as Traders See No Intervention(Source: Bloomberg)
The yen rose to a post-World War II record against the dollar as traders speculated Japanese officials are wary of selling the local currency. The yen surpassed the previous high set last week, prompting Japanese Finance Minister Jun Azumi to say he’s ready to take “determined” steps in the currency market. The dollar dropped versus all of its 16 major peers this month amid speculation the Federal Reserve may add to stimulus measures. The euro weakened before figures that may show the region’s inflation slowed in October, spurring prospects of an interest- rate cut by the European Central Bank this week. “The Bank of Japan didn’t intervene in currency markets last week and that’s been taken by the market as a signal to further strengthen the yen,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington.
South Korea’s Industrial Output Rises as Exports Withstand Global Slowdown(Source: Bloomberg)
South Korea’s industrial production rose last month after two straight declines as exports of cars and semiconductors withstood the global slowdown. Output gained 1.1 percent last month from August, when it decreased 1.9 percent, Statistics Korea said today. The median estimate of eight economists in a Bloomberg News survey was for a 0.4 percent decline. Production rose 6.8 percent from a year earlier after gaining a revised 4.7 percent gain in August. South Korea’s economic growth slowed in the third quarter as Europe’s debt crisis and a faltering U.S. recovery prompted companies to reduce spending. The deceleration may pressure the Bank of Korea to hold off from raising interest rates even as inflation remains above its target ceiling.
Thai ‘Credibility’ at Stake as Factories Soak(Source: Bloomberg)
Hana Microelectronics Pcl is among the thousands of Thai companies with factories swamped by record floods calling on the government to help ensure it never happens again as waters slowly recede north of Bangkok. “Thailand’s credibility is on the line here,” said Hana Chief Executive Richard Han, whose Bangkok-based company makes parts used in digital music players and mobile phones. “A complete review of how to protect these industrial estates needs to be conducted and it needs government support.” More than 9 billion cubic meters of water released this month from dams filled to capacity have swept down a river basin the size of Florida, inundating seven industrial parks that helped transform Thailand from an agriculture-based economy to a manufacturing hub since the first one was built four decades ago. The worst floods since 1942 have shuttered 10,000 factories, put 660,000 jobs at risk and caused damage of 140 billion baht ($4.6 billion), government figures show.
European Stocks Surge for Fifth Week After Leaders Strike Debt-Crisis Deal(Source: Bloomberg)
European stocks climbed for a fifth week, the longest stretch of gains in 18 months, after the region’s leaders struck a deal to enact measures to contain the sovereign debt crisis following months of negotiations. An index of banks surged the most since July 2010 as Credit Agricole SA and Deutsche Bank AG jumped more than 19 percent. Kazakhmys Plc, Kazakhstan’s biggest copper producer, and SSAB AB, the Stockholm-based steelmaker, led basic-resources companies to the largest gain in more than two years. BP Plc, Merck KGaA and Renault SA rallied at least 6 percent after results topped analyst estimates. The Stoxx Europe 600 Index climbed 4.2 percent to 249 this past week. The gauge has surged 10 percent in October, heading for its biggest monthly advance since April 2009, amid speculation the economy will evade another recession and Europe will avoid the worst effects of the region’s debt crisis. The measure has risen 16 percent from this year’s low on Sept. 22.
Sarkozy Criticized for Seeking China’s Help(Source: Bloomberg)
French President Nicolas Sarkozy came under fire from opposition leaders for seeking China’s help to resolve the euro area’s debt crisis. “It’s shocking,” Martine Aubry, the general secretary of the Socialist Party, said in the Sunday newspaper, Journal du Dimanche. “The Europeans, by turning to the Chinese, are showing their weakness. How will Europe be able to ask China to stop undervaluing its currency or to accept reciprocal commercial accords?” Sarkozy reached out last week to his Chinese counterpart Hu Jintao to build support for an enlarged rescue fund designed to solve the region’s sovereign-debt crisis. The leaders talked just hours after a euro-region summit on Oct. 27 ended with an agreement to boost the European Financial Stability Facility to about 1 trillion euros ($1.4 trillion), leveraging existing guarantees by as much as five times.
Europe Seeking Crisis-Fighting Funds Faces Resistance Before Cannes G-20(Source: Bloomberg)
European governments are running into initial resistance as they seek to use this week’s Group of 20 summit to turn early praise for their revamped crisis- fighting strategy into financial support. The G-20 leaders convene Nov. 3-4 in Cannes, France, a week after euro-area authorities pledged to magnify the capacity of their rescue fund to 1 trillion euros ($1.4 trillion) and look beyond their borders for help in doing so as they combat the debt turmoil posing the biggest threat to global growth. While the help of China and cooperation of the International Monetary Fund were immediately sought, pledges of hard cash are proving hard to come by as G-20 members press for more details of the plan. In an indication Europe may eventually prevail, an official in Brazil’s government said it’s in talks with Russia, India, China and South Africa -- the so-called BRICS -- about possible joint assistance.
“Unless European leaders can flesh out some of these details very quickly, it’s hard to see the rest of the G-20 coming on board with very great enthusiasm,” said Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a former IMF economist.
Draghi Takes ECB Helm in Battle Mode as Debt Crisis Torments Policy Makers(Source: Bloomberg)
Jean-Claude Trichet had almost four years to settle into the role of European Central Bank president before being thrown into crisis-fighting mode. Mario Draghi goes to battle on day one. Draghi, who succeeds Trichet tomorrow, becomes chief guardian of the euro with its 17-nation economy facing the risk of recession, a victim of the two-year-old sovereign debt crisis politicians are struggling to fix. As ECB president, he will be the second most powerful central banker in the world after Federal Reserve Chairman Ben S. Bernanke, and a key figure in the struggle to restore investor confidence in Europe’s monetary union. “This will be a baptism of fire for Draghi,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “It is challenging to be ECB president in any environment, let alone in the midst of a serious crisis.”
EU May Struggle to Keep Euphoria as Scrutiny Deepens Following Debt Summit(Source: Bloomberg)
European leaders may struggle to maintain the euphoria that drove the euro to its biggest one-day gain in more than a year as scrutiny deepens on their latest attempt to stem the region’s turmoil. European Central Bank President Jean-Claude Trichet called for “swift implementation” if financial stability is to be restored, Germany’s Bild Zeitung reported in an extract of an interview to be published tomorrow. The weaknesses of Europe’s common currency area, ranging from its design to a persisting dearth of bank funding and anemic economic growth, weren’t properly addressed in this week’s accord to stem investor panic, said Harvard University economist Kenneth Rogoff and Jonathan Loynes at Capital Economics Ltd. in London. “My read of this is that the markets are cheered that they’re still alive,” Rogoff, a former International Monetary Fund chief economist, said as a compensated speaker at the Bloomberg FX11 Summit in New York Oct. 27. “Even in a fairly short period, doubts will start to grow again.”
RBA Rate-Cut Bets Waver Amid 2011’s Steepest Bond Rout: Australia Credit(Source: Bloomberg)
Bond investors are showing doubts the Reserve Bank of Australia will cut the developed world’s highest benchmark interest rate as progress on solving Europe’s debt crisis spurs the biggest debt-market sell-off this year. Yields on Australian three-year notes rose 35 basis points since Oct. 7, the most in a three-week period since December, and exceeded 4 percent the first time since Aug. 4. They grew 24 basis points this month to 3.45 percentage points more than similar U.S. Treasuries, the biggest increase since April. Wagers that RBA Governor Glenn Stevens will lower borrowing costs for the first time in 31 months gyrated last week as data showing the slowest underlying inflation in 14 years was offset by optimism global financial turmoil will subside after European leaders expanded a bailout fund to aid heavily indebted nations. Cash-rate futures show a 74 percent chance the RBA will cut its 4.75 percent benchmark tomorrow, down from a 100 percent probability on Oct. 26.
Philippines May Keep Official Rates Steady for Near Term, Tetangco Says(Source: Bloomberg)
The Philippines can keep its benchmark interest rates steady for the “near term” given a “manageable” inflation outlook and barring surprises that may be caused by recent natural disasters in the region, central bank Governor Amando Tetangco said. “Right now, policy settings are appropriate,” Tetangco said in an e-mail reply to questions. Philippine monetary authorities will monitor the “process and speed of the resolution of the debt crisis in Europe, policy responses in other advanced economies to deal with unemployment” as well as growth and inflation prospects in China to “see how these would tip the balance of risks to inflation,” Tetangco said.
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