Asian Stocks Rise for Third Day on Global Outlook; Glitch Hits Tokyo Trade (Source: Bloomberg)
Asian stocks advanced for a third day, with the regional benchmark index heading for its highest close in three months, as manufacturing gained in the U.S. and Europe, boosting confidence the global economy is recovering. LG Electronics Inc. (066570), the world’s third-largest maker of mobile phones, climbed 5.9 percent in Seoul. James Hardie Industries SE, the building materials supplier that counts the U.S. as its top market, jumped 4.9 percent in Sydney as construction spending in America rose in December at the fastest pace in four months. Trading in 241 stocks including Sony Corp and Hitachi Ltd. was halted on the Tokyo Stock Exchange due to a technical glitch, bourse spokeswoman Yukari Hozumi said by phone.
“We got more confirmation that business confidence in the U.S. and Europe is improving” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “The European debt crisis is in a temporary lull, so stocks sensitive to the economy will have a chance to gain.”
Japan Stocks Rise as Manufacturing Gains in U.S., Europe Boost Confidence (Source: Bloomberg)
Japanese stocks rose, pushing the Nikkei 225 Stock Average toward a three-day gain, as expanding manufacturing in the U.S. and Europe boosted confidence in the global economic recovery. Canon Inc. (7751), a camera maker that gets 80 percent of its sales overseas, rose 0.8 percent. Honda Motor Co., Japan’s second-largest carmaker by revenue, gained 2.9 percent after a jump in U.S. sales following an eight-month slump. Nomura Holdings Inc. (8604) soared 6.8 percent after the brokerage posted an unexpected quarterly profit on asset sales even as trading commissions fell. “We have more confirmation that business confidence in the U.S. and Europe is improving,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “The European debt crisis is in a temporary lull, so stocks sensitive to the global economy will have a chance to gain.”
U.S. Stocks Advance Amid Optimism About Global Manufacturing (Source: Bloomberg)
U.S. stocks advanced, snapping a four-day decline in the Standard & Poor’s 500 Index, amid signs that manufacturing across the world is strengthening. Financial (S5FINL) and industrial shares in the S&P 500 rose at least 1.1 percent to lead gains among 10 groups. Morgan Stanley and Bank of America Corp. added more than 3.2 percent. Whirlpool (WHR) Corp. surged 13 percent as the appliance maker projected earnings that beat forecasts. Technology companies in the benchmark index rallied to an 11 year-high. Broadcom (BRCM) Corp. jumped 8.1 percent as it forecast sales that may top estimates. The S&P 500 increased 0.9 percent to 1,324.09 at 4 p.m. New York time, following the biggest January advance in 15 years. The Dow Jones Industrial Average rallied 83.55 points, or 0.7 percent, to 12,716.46, trimming an earlier 152-point gain that sent it above its highest close since May. The Russell 2000 Index of small companies jumped 2.1 percent to 809.66.
European Stocks Rise to a Six-Month High as Manufacturing Gauges Increase (Source: Bloomberg)
European (SXXP) stocks advanced to a six- month high, with the Stoxx Europe 600 Index extending its best start to a year since 1998, as gauges of manufacturing increased from America to the euro area to China. Banks and carmakers led gains. ICAP Plc (IAP) jumped 7.7 percent after saying annual pretax profit will be at the “upper end” of the range of analysts’ estimates. RWE AG (RWE) climbed 4.9 percent after Morgan Stanley added the stock to its best ideas list. The Stoxx 600 rose 2 percent to 259.51 at the close in London, its highest level since August. The benchmark gauge rallied 4 percent last month, the biggest January gain since 1998, as the U.S. economy maintained its recovery and speculation grew that European (SXXP) policy makers will contain the region’s debt crisis.
Global Strategists Abandoning Bearish Views After Missing Rally (Source: Bloomberg)
Strategists at the biggest banks are capitulating on their bearish forecasts after the best start to a year for global stocks since 1994 and gains of more than 7 percent in emerging-market currencies. Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS AG (UBSN), raised his recommendations on global shares and high-yield bonds in a Jan. 23 note to customers entitled, “Wrong, but not too late.” Royal Bank of Scotland Group Plc (RBS), and Benoit Anne, the global head of emerging-markets strategy at Societe Generale (GLE) SA, said their estimates for developing nations were proven wrong.
The MSCI All-Country World Index (MXWD) climbed 5.7 percent in January, surprising strategists at Bank of America Corp. (BAC), Goldman Sachs Group Inc. (GS) and Barclays Plc (BARC) who had forecast first-half losses because of Europe’s debt crisis. JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), which predicted the rally in stocks, say it will continue as the U.S. housing market rebounds and China eases lending restrictions to bolster economic growth.
Dollar at 3-mth lows on yen, euro under pressure
TOKYO, Feb 1 (Reuters) - The dollar hovered at three-month lows against the yen and looked poised to lose ground for a fifth straight day, pressured by the Federal Reserve's pledge last week that it would keep interest rates near zero at least until late 2014.
"The Fed's decision is being slowly priced in the market, and it seems the dollar may stay pressured around the current levels at least until Friday's U.S. jobs data," said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo.
Manufacturing Gains in U.S. Bolster Outlook for Global Expansion: Economy (Source: Bloomberg)
Manufacturing in the U.S. grew in January at the fastest pace in seven months, adding to signs of a global pickup from Germany to China. The Institute for Supply Management’s index climbed to 54.1, from 53.1 in December, the Tempe, Arizona-based group’s report showed today. Figures greater than 50 signal expansion. Other reports showed U.S. construction spending increased at the fastest pace in four months and companies added 170,000 workers to payrolls in January. Stocks rose on optimism the factory reports show the world economy is withstanding fallout from Europe’s debt crisis. Production, led by inventory rebuilding at the end of 2011, is poised to keep expanding in the U.S. as the need to update equipment drives orders at companies like Caterpillar Inc. (CAT) and demand for cars rises.
Fed Bank Presidents Reveal Assets From Ranchland to Inflation-Linked Bonds (Source: Bloomberg)
Federal Reserve regional bank presidents revealed unprecedented details about their personal wealth, disclosing Citigroup Inc. (C) shares bought by accident and ownership of a Missouri farm and Texas ranchland. The regional bank chiefs, who manage Fed operations across the country ranging from bank supervision to emergency lending, disclosed the documents yesterday in response to requests from Bloomberg News under the Freedom of Information Act. The Fed banks said they weren’t subject to the terms of the act, even as they responded to the requests. The 12 regional banks and their presidents aren’t held to the same level of public scrutiny as the Washington-based Federal Reserve Board and its governors. While Chairman Ben S. Bernanke and Fed governors disclose information about their finances and are subject to the FOIA, the regional banks don’t routinely make personal financial information public.
Companies in U.S. Added 170,000 Workers to Payrolls in January, ADP Says (Source: Bloomberg)
Companies added 170,000 workers in January, reflecting job gains in services and at small businesses, according to a private report based on payrolls. The increase was less than forecast and followed a revised 292,000 rise the prior month that was smaller than previously reported, the report from the Roseland, New Jersey-based ADP Employer Services showed today. The median estimate in a Bloomberg News survey of economists called for an advance of 182,000. “The job market continues to grow at a moderate pace,” Jonathan Basile, a senior economist at Credit Suisse in New York, said before the report. “We’re on a gradually improving path for the labor market.”
Negative Treasury Bill Auction Yields Would Avoid ‘Grab-a-Thon,’ CRT Says (Source: Bloomberg)
Letting investors buy short-term bills with negative yields at auction would make the market more efficient, according to CRT Capital Group LLC. The Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that the government allow for its auctions of bills to price at negative yields “as soon as logistically practical,” according to the group’s report yesterday to Treasury Secretary Timothy F. Geithner, released today. Investors bid a record 9.07 times the $30 billion in four-week bills sold by the Treasury Department on Dec. 20 at zero yield in one of 12 auctions since the beginning of September at which investors paid the full face value to own the shortest-maturity U.S. government debt. The average ratio of bids to debt sold, known as the bid-to-cover ratio, was 6.01 at the past 10 offerings, with the yield averaging 0.011 percent.
Treasuries Decline on Speculation U.S. Reports Will Show Jobs Improvement (Source: Bloomberg)
Treasuries fell for a second day before reports today and tomorrow that economist said will show U.S. employment grew in January. Government securities extended losses from yesterday in New York when industry figures showed manufacturing expanded in January at the fastest pace since June, crimping demand for the safety of sovereign debt. Ten-year yields rose two basis points to 1.85 percent as of 9:34 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent security due in November 2021 fell 5/32, or $1.56 per $1,000 face amount, to 101 3/8. The yield increased three basis points, or 0.03 percentage point, yesterday. It is 18 basis points away from the record low set in September.
Obama Plans Assistance for Refinancing (Source: Bloomberg)
President Barack Obama announced a package of proposals designed to jolt the housing market, his latest effort to reignite the economy after four years of foreclosures and falling home prices. “This housing crisis struck right at the heart of what it means to be middle class in America: our homes,” Obama said in a speech in the Washington suburb of Falls Church, Virginia. “We need to do everything in our power to repair the damage and make responsible families whole.” The president said his plan would make it easier for homeowners to refinance their mortgages into current low interest rates, which are now below 4 percent. Borrowers, even those who owe more than their homes are worth, would be able to refinance into loans guaranteed by the Federal Housing Administration.
Construction Spending in U.S. Climbs Most in Four Months in Stability Sign (Source: Bloomberg)
Construction spending in the U.S. rose in December at the fastest pace in four months, reflecting broad- based gains that signal the industry is stabilizing. Building outlays increased 1.5 percent, the biggest gain since August, Commerce Department figures showed today in Washington. The median estimate of 51 economists in a Bloomberg survey called for a 0.5 percent rise. A housing market that is gaining some steam as builders begin apartment projects may breathe life into the industry that’s struggled since triggering the recession in 2007. At the same time, decreased spending by the government may temper progress in construction as a whole.
Dollar Falls for Second Day Versus Euro on Stocks Rally, Before Jobs Data (Source: Bloomberg)
The dollar fell against the euro the euro for a second day as Asian stocks extended a global rally, damping demand for haven currencies. The yen maintained a decline from yesterday versus the 17- nation currency before U.S. data that economists said will show fewer Americans filed for jobless benefits, adding to evidence that the world’s largest economy is picking up. A gauge of volatility for the yen climbed to the highest this year amid speculation Japan’s government will intervene in the foreign- exchange market. “Risk appetite is fairly positive at the moment, and this could continue for a couple of weeks,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency-risk management company. “Typical safe-haven currencies have taken a step back now,” he said, referring to the dollar and yen.
Facebook Files to Raise $5B in Biggest Internet IPO (Source: Bloomberg)
Facebook Inc. (FB), the social-networking website that in eight years changed the way the world communicates, filed to raise $5 billion in the largest Internet initial public offering on record. Facebook, whose meteoric rise spawned an Oscar-winning film and captivated Wall Street, today named Morgan Stanley as the lead underwriter on the IPO, while reporting a 24-fold increase in sales over the past four years to $3.71 billion in 2011. The planned IPO dwarfs Google Inc. (GOOG)’s 2004 offering and tests whether social-networking providers deserve valuations that surpass such established companies as International Business Machines Corp. (IBM) and Procter & Gamble Co. The Menlo Park, California-based company is considering a valuation of $75 billion to $100 billion, two people with knowledge of the matter said last week.
China’s Manufacturing Industry Holds Up Against Global Slowdown: Economy (Source: Bloomberg)
Chinese manufacturing indexes rose in January as the world’s second-biggest economy withstood weaker exports driven by Europe’s debt crisis and a government-induced property slowdown. The official purchasing managers’ index increased to 50.5 from 50.3 in December, exceeding the median estimate in a Bloomberg News survey for a reading below the 50 level that divides expansion from contraction. The data may have been distorted by a weeklong holiday. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 48.8. India’s manufacturing grew at the fastest pace in eight months. Premier Wen Jiabao yesterday reiterated his government will “fine-tune” economic policies as needed after the central bank held off on a reduction in bank-reserve requirements that some analysts had forecast for January.
Indexes for export orders, imports and employment in the official PMI showed a deeper decline, underscoring an International Monetary Fund warning last week that the euro area’s crisis could trigger another global recession.
Hong Kong Homes Face 25% Drop in Year of the Dragon: Mortgages (Source: Bloomberg)
The Year of the Dragon, representing wealth and power in China, is shaping up to be the opposite for the world’s costliest housing market, Hong Kong. Mortgages (HKMGLEND) that need to be insured by the government because of risk experienced the steepest plunge in six years in 2011, a sign the biggest home price decline since the global credit crisis is accelerating. Property prices that have slid 6 percent since June may fall as much as 25 percent by 2013, estimates Andrew Lawrence of Barclays Capital, who predicted the initial slide in April. Asian real estate markets from Singapore to Beijing to Mumbai are stalling or have started declining as governments seek to curb the type of housing bubble that brought down the U.S. economy. In Hong Kong, rising borrowing costs, extra transaction taxes and higher down-payment requirements imposed by the government have fueled the slump.
ECB Plan for Loans as Collateral Said to Be Avoided by Some Euro Members (Source: Bloomberg)
The European Central Bank’s plan to accept more bank loans as collateral may not be used by all euro-region nations, threatening to fragment the rules applying to bank funding operations, said two euro-area officials with knowledge of the discussions. The initiative is likely to be implemented on a voluntary basis by national central banks and several of them may opt out, said the officials, who declined to be identified because the information is confidential. Germany’s Bundesbank has indicated it may be among those to shun the measure, arguing the country’s banks don’t need to borrow more from the ECB. An ECB spokesman declined to comment. “It contradicts the idea that all banks are treated equally in the euro area,” said Klaus Baader, co-head of economic research at Societe Generale SA in London. “It creates a two-class society. Central banks that take part are therefore identifying themselves as ones that are dealing with a weak banking system.”
Manufacturing Output in U.K. Unexpectedly Returns to Growth After Declines (Source: Bloomberg)
A U.K. manufacturing index jumped to an eight-month high in January and unexpectedly returned to growth after a quarter of contraction as production rebounded. The factory gauge, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, rose to 52.1 from a revised 49.7 in December, Markit said in a report on its website today. The median forecast of 28 economists in a Bloomberg News survey was for a reading of 50, the level that divides expansion from contraction. Separate reports today showed manufacturing indexes for Europe, China and India also rose in January. Still, the debt crisis in the euro area, the U.K.’s biggest export market, has dimmed the outlook for manufacturers, and Bank of England Governor Mervyn King said last week that policy makers can increase stimulus again if needed to aid the economy.
Spain Said to Plan to Buy CoCo Bonds From Banks as Part of Industry Revamp (Source: Bloomberg)
Spain will offer to inject funds into lenders that agree to merge as part of the government’s plan to overhaul the industry and shepherd weaker banks into tie-ups, said a person familiar with the process. The state will buy contingent convertible bonds, or CoCos, which convert to equity when banks’ capital ratio slips below a certain level, yielding 8 percent, said the person, who declined to be named because the plan hasn’t been made public. Spain, which pays about 5 percent to borrow for 10 years, will issue debt to buy the securities, even though the plan will have no impact on the budget deficit, the person said. Lenders that agree to merge will also have longer to apply new provisioning rules that the government will announce on Feb. 3 as part of the overhaul, the person said.
Fernandez Curbing Imports Leaves Argentines Searching in Vain for Fridges (Source: Bloomberg)
Retiree Teresa Teffer searched branches of Argentina’s leading appliance retailers for a fridge and oven she’d seen on display less than two months earlier. She gave up after finding neither. “They have nothing to offer me,” the 71-year-old said as she left an SACI Falabella (FALAB) store in Buenos Aires’s Alto Avellaneda shopping mall. “There are only a couple of lesser- known brands. The government is forcing me to buy what it wants and not what I want.” Consumers face fewer choices in everything from blenders to computer parts as President Cristina Fernandez de Kirchner curbs imports to shore up a dwindling trade surplus and protect manufacturers whose competitiveness is suffering from a peso that’s not weakening fast enough to offset inflation. The restrictions forced automaker Fiat SpA (F)’s local unit to suspend production this month and prompted Brazil’s Trade Minister Fernando Pimentel to say that neighboring Argentina is a “permanent problem.”
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