20120131 1002 Global Market Related News.

Asian Stocks Swing Between Gains, Losses on Europe, Japan Production Data (Source: Bloomberg)
Asian stocks swung between gains and losses as European leaders failed to complete a Greek rescue program, U.S. consumer spending stalled and Japan’s industrial production grew faster than estimated last month. Canon Inc., the world’s biggest camera maker, sank 4.5 percent after its president resigned amid forecasts for slowing net income growth to miss estimates. Daewoo Shipbuilding & Marine Engineering Co., a South Korean shipbuilder, gained 4.2 percent after winning a $556 million contract to supply tankers to Kuwait Oil Tanker Co. The MSCI Asia Pacific Index (MXAP) added 0.2 percent to 122.39 as of 9:41 a.m. in Tokyo, having swung between gains and losses at least eight times. The measure has risen the past six weeks, the longest streak since a seven-week stretch that ended Oct. 15, 2010, amid bets China will ease lending curb, the U.S. economy is improving and Europe is containing its debts crisis.

Japanese Stocks Snap Three-Day Drop as Greece Makes Progress in Debt Talks (Source: Bloomberg)
Japanese stocks rose, snapping a three-day losing streak, after Greece’s Prime Minister said major progress had been made in debt talks with bondholders. Mazda Motor Corp. (7261), a carmaker that gets almost a fifth of its sales from Europe, climbed 1.6 percent. Advantest Corp. (6857), the world’s biggest maker of memory-chip testers, jumped 5 percent after Daiwa Securities Group Inc. raised the stock’s rating. Fanuc Corp. (6954), Japan’s top manufacturer of factory robots, rose 1.4 percent after the nation’s industrial production increased more than expected. The Nikkei 225 Stock Average rose 0.3 percent to 8,820.29 as of 10:07 a.m. in Tokyo. The broader Topix Index added 0.1 percent to 757.80, after falling as much as 0.3 percent earlier as European leaders yesterday struggled to complete a Greek rescue package.

U.S. Stocks Decline Amid Concern About Greek Debt Negotiations (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as European leaders sparred with Greece over a second rescue program. Equities pared declines as some of the biggest technology companies rallied. Apple Inc. (AAPL) and Microsoft Corp. (MSFT) added at least 1.2 percent. Bank of America Corp. (BAC) fell 3 percent after Goldman Sachs Group Inc. cut its recommendation. Halliburton Co. (HAL) and Chesapeake Energy Corp. dropped more than 1.1 percent as oil slumped. Gannett Co. (GCI), the owner of 82 newspapers including USA Today, tumbled 6.9 percent as its profit plunged 33 percent. The S&P 500 decreased 0.3 percent to 1,313.01 at 4 p.m. New York time. The benchmark index for American equities trimmed a decline of as much as 1.2 percent. The Dow Jones Industrial Average retreated 6.74 points, or 0.1 percent, to 12,653.72.

European Stocks Fall Most in Six Weeks; BNP Paribas Tumbles on French Tax (Source: Bloomberg)
European stocks dropped the most in six weeks as Portuguese bonds sank amid concern a meeting of the region’s leaders will fail to draw a line under the sovereign- debt crisis. BNP Paribas SA (BNP) tumbled 7.1 percent, leading French banks lower, as President Nicolas Sarkozy said he will unilaterally impose a financial-transaction tax. Royal Philips Electronics NV (PHIA) fell 2.2 percent after reporting a larger-than-estimated loss. Hochtief AG (HOT) slid 5.8 percent after saying it will post a wider annual loss than previously anticipated. The Stoxx Europe 600 Index retreated 1.1 percent to 252.52 at the close of trading, the largest slide since Dec. 14. The benchmark gauge has still rallied 18 percent from its Sept. 22 low as the U.S. economy maintained its recovery and speculation grew that the euro area will contain the sovereign-debt crisis.

U.S. Lowers First-Quarter Borrowing Estimate (Source: Bloomberg)
The U.S. Treasury Department lowered its borrowing estimate for the current quarter by 18 percent to $444 billion, reflecting higher receipts and lower spending. The Treasury reduced its net borrowing estimate for January through March by $97 billion from a projection of $541 billion three months ago. U.S. Treasury officials also see net borrowing of $200 billion in the second quarter. The estimates set the stage for the Treasury’s quarterly refunding announcement on Feb. 1. An accelerating economy is boosting tax revenue, helping the administration of President Barack Obama control a budget deficit it forecasts will narrow to $956 billion this fiscal year. Gross domestic product expanded at a 2.8 percent annual pace in the fourth quarter of last year, the most since the second quarter of 2010.

U.S. Consumer Spending Stalls as Savings Rise (Source: Bloomberg)
Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1 percent the prior month, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high. The data illustrate the importance of sustained gains in jobs and wages to ensuring the growth of household purchases, the biggest part of the economy. The weak end to the quarter makes it more likely that consumer spending will cool early this year, underscoring the Federal Reserve’s decision to leave interest rates low until 2014.

Longest S&P 500 Valuation Slump Since Nixon Discounts Profit (Source: Bloomberg)
Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market. Analysts estimate profits in the Standard & Poor’s 500 Index will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P 500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.
Battered by the 14 percent decline in the S&P 500 since 2000, the worst financial crisis since the Great Depression and the so-called flash crash 21 months ago, investors are staying away from stocks, even after record profits, 10 quarters of U.S. economic growth and promises by the Federal Reserve to keep interest rates near zero through 2014. Of the $37 trillion erased from global equities in the credit crisis, $24 trillion has been restored.

Fed Says Business-Loan Demand Climbed Last Quarter as Economy Accelerated (Source: Bloomberg)
Demand for business loans increased in the fourth quarter as economic growth accelerated, according to a Federal Reserve survey of senior loan officers at banks. Seventeen of 56 banks reported stronger demand among companies with $50 million in annual sales or more, according to the survey released today in Washington, while six reported weaker demand. Demand among small businesses for loans increased by the most in any quarter since 2005. Economic growth accelerated last quarter to a 2.8 percent annual rate, the fastest pace since the second quarter of 2010. The expansion still isn’t strong enough to push down an unemployment rate that has been at 8.5 percent or higher for 34 consecutive months, prompting the Fed last week to say its benchmark interest rate will be kept near zero until at least the end of 2014.

WTO Rejects Chinese Appeal of Ruling Against Mineral Curbs (Source: Bloomberg)
World Trade Organization judges rejected China’s appeal of a ruling that found restrictions on exports of nine raw materials break global rules and give the country’s manufacturers an unfair edge over competitors. The WTO concluded on July 5 that Chinese quotas, export duties and license requirements on overseas shipments of industrial ingredients including coke, zinc and bauxite are discriminatory. The restrictions have stoked tensions between China and its trading partners, which accuse the Chinese government of having unfair commerce and currency policies. U.S. Trade Representative Ron Kirk called the Appellate Body report a “tremendous victory,” particularly for manufacturers and workers. The decision “ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field,” Kirk said in an e-mailed statement from Washington.

South Korea’s Industrial Output Declines as Europe’s Crisis Saps Demand (Source: Bloomberg)
South Korea’s industrial production fell for a third month in December as Europe’s sovereign-debt crisis hurt exports and business confidence. Output (KOIPIMOM) declined 0.9 percent from November, when it dropped a revised 0.3 percent, Statistics Korea said today, missing all 11 economist forecasts in a Bloomberg News survey. The median estimate was a 1.1 percent gain. Production rose 2.8 percent from a year ago after gaining a revised 5.8 percent in November, compared with a 4.1 percent rise estimated by economists. South Korea, which grew the least in two years in the fourth quarter, is facing increased uncertainty from Europe’s debt crisis, Finance Minister Bahk Jae Wan said yesterday. The Bank of Korea refrained from raising interest rates for a seventh month on Jan. 13 to support growth amid faltering global expansion and signs of easing inflation.

Japan Jobless Rate Rises on Strong Yen (Source: Bloomberg)
Japan’s unemployment rate unexpectedly rose last month as the strong yen continues to squeeze manufacturers. The jobless rate was 4.6 percent in December, the statistics bureau said in Tokyo today. The median forecast of 30 economists surveyed by Bloomberg News was for the rate to remain at 4.5 percent. The government has approved four supplementary budgets worth about 20 trillion yen ($262 billion) to stoke demand and rebuild after the March 11 earthquake and tsunami. Those funds are helping support the labor market, offsetting planned job reductions at manufacturers including NEC Corp. (6701)
“Labor offers in the devastated areas have been quite strong, and this will continue to support the labor market.” Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo, said before the report. “Manufacturers have become cautious about hiring people in the context of global growth, the yen’s appreciation and uncertainty surrounding electricity supply” stemming from the shutdown of nuclear reactors since the disaster, he said.

Japan Industrial Output Increases Most in 7 Months (Source: Bloomberg)
Japan’s industrial output increased the most in seven months in December as manufacturers made up for disruptions caused by Thailand’s worst floods in 70 years. Factory production rose 4 percent from November, when production slid because of supply disruptions, the trade ministry said in Tokyo today. The median estimate of 30 economists surveyed by Bloomberg News was for a 3 percent gain. Manufacturers from Honda Motor Co. to Toyota Motor Corp. are optimistic about demand as they recover from a year of natural disasters at home and in Thailand. A stronger currency and a slowing global economy weighed down by Europe’s fiscal woes are risks for growth in Japan.

Confidence in Euro Area Increases at Slower Pace Than Estimated: Economy (Source: Bloomberg)
Euro-area confidence in the economic outlook improved less than forecast in January as the region’s leaders struggled to stamp out a two-year-old financial crisis and revive growth. An index of executive and consumer sentiment in the 17- nation euro area rose to 93.4 from a revised 92.8 in December, the European Commission in Brussels said today. That’s the first increase since February 2011, though it’s less than the median prediction of 93.8 in a Bloomberg survey of 30 economists. European Union leaders convene for their first summit of 2012 in Brussels today as a deteriorating economy and the struggle to complete a Greek debt swap risk undermining their crisis-fighting efforts. European Central Bank (EURR002W) President Mario Draghi said on Jan. 19 that 2012 will be a “much better” year for the single-currency area, though the International Monetary Fund forecast a recession.

Sarkozy Transaction Tax May Drive Investors Away From French Stock Market (Source: Bloomberg)
The French stock market, Europe’s second-biggest by value, may fall out of favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally impose a 0.1 percent tax on financial transactions. “Even if the tax isn’t high, market participants who have a choice of stocks trading in Paris or elsewhere will go elsewhere,” said Yves Maillot, the Paris-based head of investments at Robeco Gestions SA, which oversees $6.8 billion. “That’s what we can fear.” Sarkozy, 57, who faces elections in a two-round vote in April and May, wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries. He said Jan. 29 that France will impose the levy starting in August in spite of opposition from banks. The tax will apply to share purchases, including high frequency trading, and credit default swap transactions.

Euro-Area Debt Sales Top $43 Billion in Week as Fitch Threatens Sentiment (Source: Bloomberg)
European nations including Italy, Belgium and Spain may sell more than 33 billion euros ($43.3 billion) of securities this week as credit-rating cuts risk upending optimism the region’s debt crisis is being contained. Italy sold 5.574 billion euros out of a target of 6 billion euros of five- and 10-year debt today, and issued 1.9 billion euros out of a maximum goal of 2 billion euros of securities due in April 2016 and March 2021. Belgium sells as much as 3 billion euros of bills tomorrow, with Spain, Portugal, Germany and France issuing 13 different maturities in the five days.
While Italian and Spanish 10-year yields have fallen more than 1 percentage point from November highs as the European Central Bank offered banks unlimited three-year loans and Greek debt-swap talks pressed on, Fitch Ratings joined Standard & Poor’s this month in downgrading the nations’ credit. European Union leaders are meeting today in Brussels in a bid to wrap up a deficit-control treaty aimed at stemming the crisis, now in its third year.

Merkel Signals Greece Debt Deal Delay (Source: Bloomberg)
European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. “What the Greeks have to do is show they are ready to implement the package,” Dutch Prime Minister Mark Rutte told reporters as he arrived for a European Union summit in Brussels today. “We can help Greece through this difficult phase, but then Greece has to execute all agreements they made with us.”

EU Nears Confrontation Over Greek Rescue (Source: Bloomberg)
European governments moved toward a confrontation over a second rescue package for Greece, just as a dimming fiscal outlook in Portugal opened a new front in the debt crisis. Euro leaders left a Brussels summit late yesterday with no accord over how to plug Greece’s widening budget hole and German Chancellor Angela Merkel voicing frustration with the Athens government’s failure to carry out an economic makeover. “Greece’s debt sustainability is especially bad,” Merkel told reporters. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.”