Asia Stocks Rise on Europe Optimism (Source: Bloomberg)
Asian stocks rose, with a regional benchmark index poised for its highest close in a month, as a drop in Italian and Spanish borrowing costs added to optimism the European Central Bank is averting a credit crunch in financial markets. Canon Inc. (7751), a camera maker that gets a third of its sales in Europe, climbed 2.3 percent in Tokyo. Inpex Corp., Japan’s largest energy explorer, gained 1.6 percent after saying it and partner Total SA will build a $34 billion liquefied natural gas facility in Australia. BHP Billiton Ltd., the world’s largest mining company, rose 1.5 percent in Sydney after copper futures increased.
Once concern about Europe’s debt crisis is “lifted at least in the short-term, we should see some good performance in Asian equity markets,” said Diane Lin, a fund manager with Sydney-based fund Pengana Capital Ltd., which manages about $1.1 billion in global assets. ECB policy makers “have stabilized the whole situation. There’s a lot of bonds to be issued by European governments in the short-term. It is important for them to be able to refinance all those papers.”
U.S. Stocks Rise Amid Lower Borrowing Costs at Europe Auctions (Source: Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a fourth day, as a drop in borrowing costs at auctions in Europe overshadowed disappointing American jobless claims and retail sales data. Alcoa Inc. (AA) and Caterpillar Inc. rallied at least 2.3 percent, pacing gains among the biggest companies. Target Corp. (TGT) added 1.6 percent as the discount retailer said it will buy back as much as $5 billion of its shares. Energy companies slumped as oil sank and Chevron Corp. (CVX) lost 2.6 percent after reporting fourth-quarter profit was “significantly below” the previous period. Bank of America Corp. (BAC) dropped 1.2 percent. The S&P 500 rose 0.2 percent to 1,295.50 at 4 p.m. New York time, erasing a decline of as much as 0.5 percent. The benchmark gauge for American equities gained 1.4 percent in four days to the highest since July 28. The Dow Jones Industrial Average added 21.57 points, or 0.2 percent, to 12,471.02 today.
Retail Sales Miss Forecasts in Sign Further U.S. Job Gains Needed: Economy (Source: Bloomberg)
Sales (RSTAMOM) at U.S. retailers rose less than projected in December, confirming forecasts for a slowdown in consumer spending at the start of 2012. The 0.1 percent gain in purchases last month followed a 0.4 percent increase in November, according to figures from the Commerce Department released today in Washington. The median estimate in a Bloomberg News survey called for a 0.3 percent rise. Another report showed more Americans than projected filed claims for jobless benefits last week. Merchants like Williams-Sonoma Inc. (WSM) cut prices during the most important shopping season of the year amid concern stagnant wages and lower property values would hold customers back. The slowdown in demand means households are looking to rebuild savings after spending jumped early in the fourth quarter, showing further job gains are needed to fuel purchases.
U.S. Consumer Confidence at Highest in Six Months, Bloomberg Index Shows (Source: Bloomberg)
Consumer confidence in the U.S. last week reached the highest level since July as the improving job market helped allay pessimism. The Bloomberg Consumer Comfort Index (COMFCOMF) was minus 44.7 in the period ended Jan. 8 from minus 44.8 the prior week. As recently as October, the index registered its lowest readings since the 2007-2009 recession, making 2011 the second-worst year in 25 years of data. It’s since increased in four of the past five weeks. “Considering where it’s been, the trend is a welcome one,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. “Sentiment is hardly on a predictable path, given factors including the uncertainty of the 2012 presidential election, volatility in global markets and economic question marks from Europe to China.”
Jobless Claims in U.S. Rose More Than Forecast (Source: Bloomberg)
More Americans than forecast filed applications for unemployment benefits last week, raising the possibility that a greater-than-usual increase in temporary holiday hiring boosted December payrolls. Jobless claims climbed by 24,000 to 399,000 in the week ended Jan. 7, Labor Department figures showed today in Washington. The median forecast of 46 economists in a Bloomberg News survey projected 375,000. The number of people on unemployment benefit rolls rose, while those receiving extended payments decreased. Hiring by package delivery companies and retailers during the holidays to meet demand for gifts may now be giving way to an increase in dismissals. At the same time, claims figures are subject to greater volatility during this time of year, as the government has trouble adjusting the data for the seasonal swings in employment.
Fed Officials Divided Over Easing as They Prepare Interest Rate Forecasts (Source: Bloomberg)
Federal Reserve officials disagreed on the need for more easing amid signs of improvement in the economy that may shape the interest-rate forecasts they will reveal for the first time this month. Chicago Fed President Charles Evans in a speech yesterday said economic growth is modest and called for “substantial” accommodation. During the past week, New York Fed President William Dudley, Boston’s Eric Rosengren and San Francisco’s John Williams have also backed consideration of a third round of bond buying. The calls preceded release of the Fed’s Beige Book report on regional economies, which indicated the expansion improved last month in most of the U.S. on increased holiday retail sales, demand for services and oil and gas extraction. Other data in the past week showed the unemployment rate dropped to the lowest level in nearly three years and consumer credit jumped.
Geithner Gets Japan Backing on Iran After China Snub (Source: Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner’s efforts to tighten economic sanctions on Iran over its nuclear program won backing from Japan after China rejected limiting oil imports from the country. “We want to take concrete steps to reduce our share in an orderly way as soon as possible,” Finance Minister Jun Azumi said at a joint press conference in Tokyo yesterday with his U.S. counterpart. “The world cannot tolerate nuclear development.” Geithner’s meetings were part of a trip to Asia’s two largest economies aimed at building support for tighter Iranian economic sanctions after international monitors detected an acceleration in the nation’s nuclear development program. China, which counts Iran as one of its top petroleum suppliers, snubbed the U.S. this week, with a vice foreign minister saying his nation “opposes imposing pressure and sanctions.”
China Gets Cheaper Iranian Oil as U.S. Pays for Strait of Hormuz Patrols (Source: Bloomberg)
China stands to be the biggest beneficiary of U.S. and European plans for sanctions on Iran’s oil sales in an effort to pressure the regime to abandon its nuclear program. As European Union members negotiate an Iranian oil embargo and the U.S. begins work on imposing sanctions to complicate global payments for Iranian oil, Chinese refiners already may be taking advantage of the mounting pressure. China is demanding discounts and better terms on Iranian crude, oil analysts and sanctions advocates said in interviews. “The sanctions against Iran strengthen the Chinese hand at the negotiating table,” Michael Wittner, head of oil-market research for Societe Generale SA in New York, said in a phone interview. While there are no confirmed numbers, Chinese refiners are likely to win discounts on Iranian crude contracts as buyers from other nations halt or reduce their purchases of Iranian oil to avoid being penalized under U.S. and European sanctions, he said.
India Industrial Output Rebounds, Giving Central Bank Scope to Hold Rates (Source: Bloomberg)
India’s industrial production rebounded from the worst month since March 2009, a sign consumer demand is withstanding record interest-rate increases. Output (INPIINDY) at factories, utilities and mines increased 5.9 percent in November from a year earlier after a revised 4.7 percent decline in the previous month, the Central Statistical Office said in a statement in New Delhi today. The median of 27 estimates in a Bloomberg News survey was for a 2.1 percent gain. Manufacturing in India and China improved in December, according to the Purchasing Managers’ Index, showing the world’s fastest-growing major economies have so far been resilient to Europe’s debt crisis. Today’s data gives scope for the Reserve Bank of India to keep borrowing costs unchanged on Jan. 24 for a second straight month to help fight inflation.
Draghi Says Debt-Crisis Strategy Is Working as ECB Postpones ‘Armageddon’ (Source: Bloomberg)
European Central Bank President Mario Draghi says his strategy for battling Europe’s debt crisis is starting to work. The ECB’s massive injection of cash into the financial system last month is beginning to lubricate seized credit markets and there are “tentative signs” of economic stabilization in the euro area, Draghi said in Frankfurt yesterday. While “substantial downside risks” remain, he pointed to falling yields on Italian and Spanish debt this week. That may mitigate the need for further interest rate cuts in the short term and muffle calls for the ECB to step up its government bond purchases. While the 17-nation euro region is still in danger of sliding into recession after the debt crisis spread to Italy and Spain, driving up borrowing costs and hurting the export markets of stronger economies such as Germany, recent data suggest the worst may be over.
Draghi Says Europe Credit Crunch Averted as Signs of Stabilization Emerge (Source: Bloomberg)
European Central Bank President Mario Draghi said the bank has averted a serious credit shortage and there are signs the economy is stabilizing, signaling policy makers may resist cutting interest rates further for now. “According to some recent survey indicators, there are tentative signs of stabilization of economic activity at low levels,” Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark interest rate at 1 percent following two straight reductions. While the debt crisis poses “substantial downside risks” to the economic outlook and the ECB remains “ready to act,” Draghi gave no indication that another rate cut is imminent. With the euro area on the brink of a second recession in three years, some signs of economic resilience have given the ECB room to assess the impact of its stimulus measures to date, which include lending a record amount of cash to banks. Draghi said those loans prevented a “serious” credit contraction.
He also noted that borrowing costs for governments across the 17- nation region have dropped.
Spanish Banks Undermine Recovery With Discriminatory Home Loans: Mortgages (Source: Bloomberg)
Spain’s banks, saddled with 329,000 foreclosed homes, are still willing to provide mortgages, as long as the borrower wants to buy one of their properties, according to a consumer-rights group. That’s no help to homeowners and developers seeking to sell. Members of the group, Organización de Consumidores y Usuarios, or OCU, applied for mortgages at 46 bank branches in Spain in August and September to buy privately-owned homes. In every case, the lender tried to persuade the prospective borrower to purchase one of its own properties instead -- either by offering to finance 100 percent of the price or by refusing to lend for another home, spokeswoman Ileana Izverniceanu said. “People end up buying from the banks because they have no alternative,” Izverniceanu said in an interview at her office in Madrid.
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