Markets buoyed by China easing, Greece hopes
TOKYO, Feb 20(Reuters) - Markets rose across the board as policy easing by China and expectations that Greece will secure a second bailout buoyed investor appetite for riskier assets, sending U.S. crude up nearly 2 percent and copper nearly 3 percent higher.
"While the cut suggests that policymakers may be mildly concerned over the slowing pace of economic activity, overall, we think the RRR cut will most likely result in an acceleration of economic activity and that China's Q1 growth is likely to surprise us on the upside," said ANZ in a research note.
China’s Stock Index Climbs on Reserve-Ratio Cut; ICBC Advances (Source: Bloomberg)
China’s benchmark stock index rose, extending its longest weekly winning streak since 2010, after the central bank announced a cut in reserve requirements for the first time this year to bolster economic growth. Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. (3988) paced gains for financial stocks after reserve ratios were lowered by a half percentage point. China Vanke Co. led a gauge of real-estate companies to a one-week high after a central bank adviser said the nation needs targeted “fine- tuning” of its property market. China CNR Corp., the nation’s second-biggest train maker, dropped after the regulator approved a plan to sell new shares. “The market will react positively to the reserve-ratio cut,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The turning point for liquidity has appeared. What we want to see next is if the slowdown in economic growth can be halted after these measures are implemented.”
China acts to crank up credit as lending, economy slow
SHANGHAI/BEIJING, Feb 19 (Reuters) - China's central bank cut the amount of cash banks must hold in reserves on Saturday, boosting lending capacity by an estimated 350-400 billion yuan ($55.6-$63.5 billion) in a bid to crank up credit creation as the world's second-biggest economy faces a fifth successive quarter of slowing growth.
The People's Bank of China (PBOC) is on the course of gentle policy easing to cushion the world's fastest-growing major economy against stiff global headwinds as Europe's debt crisis grinds on, although it has been treading warily.
Emerging-Market Stocks Head for 6-Month High as China Cuts Reserve Ratios (Source: Bloomberg)
Emerging-market stocks rose, with the benchmark index poised to close at a six-month high, as European finance ministers moved toward a second rescue of Greece and after China cut banks’ reserve requirements. The MSCI Emerging Markets Index (MXEF) increased 0.4 percent to 1,066.39 at 12:28 p.m. in New York, which would be the strongest close since Aug. 4. The Shanghai Composite Index (SHCOMP) added 0.3 percent. The Micex (MICEX)rose 0.6 percent in Russia after Iran halted some oil exports to France and the U.K. Mexico’s benchmark added 0.6 percent and Chile’s fell 0.2 percent. Financial stocks were among the biggest gainers in MSCI’s developing-nation index after the People’s Bank of China said it will reduce the amount of cash lenders must set aside by half a percentage point beginning Feb. 24. European leaders are meeting in Brussels today to discuss a 130 billion-euro ($170 billion) Greek rescue package.
“What this reserve requirement cut shows is the commitment of the Chinese authorities toward monetary easing, and that should secure a soft landing for the Chinese economy,” John Lomax, an emerging-markets strategist at HSBC Holdings Plc, said by phone from London. The European meeting raises the “possibility of some kind of Greek deal,” he said.
Japanese Stocks Fall on Signs Market Overbought, Greek Rescue Negotiations (Source: Bloomberg)
Feb. 21 (Bloomberg) -- Japanese stocks retreated from a six-month high as technical indicators signaled the market was overbought and investors awaited the outcome of negotiations by European finance ministers over a bailout for Greece. JFE Holdings Inc. led steelmakers lower after jumping 8.4 percent yesterday. Kyocera Corp. (6971), an electronics maker that gets almost 17 percent of its revenue in Europe, lost 0.6 percent. Kansai Electric Power Co. fell 2.5 percent after halting a nuclear reactor for maintenance. Inpex Corp. (1605), Japan’s biggest energy explorer, led mining companies higher after oil and metal prices increased. The Nikkei 225 Stock Average (NKY) fell 0.2 percent to 9,468.31 as of 9:22 a.m. in Tokyo, and the broader Topix Index dropped 0.1 percent to 818.27. “It will take a few days before overheating of the market cools down,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. in Tokyo. “Investors won’t chase higher prices aggressively until that happens.”
FTSE 100 Stocks Post Advance After China Cuts Banks’ Reserve Requirements (Source: Bloomberg)
U.K. stocks rose to a seven-month high as China cut banks’ reserve requirements to spur growth and euro-area finance ministers met to discuss a Greek bailout. Rio Tinto Group and BHP Billiton Ltd. (BHP) advanced more than 2 percent as China’s decision boosted demand for base metals. CSR Plc (CSR), the U.K. maker of chips used in Nokia Oyj mobile phones, jumped 21 percent after reporting a narrower-than-estimated loss. Misys Plc (MSY) soared 6.6 percent after attracting a bid from Vista Equity Partners. The benchmark FTSE 100 Index gained 40.18, or 0.7 percent, to 5,945.25 at the close in London, the highest level since July 8. The gauge has advanced 20 percent from its low in October as the European Central Bank increased lending to banks and U.S. economic reports exceeded estimates. The FTSE All-Share Index also rose 0.7 percent today and Ireland’s ISEQ Index advanced 0.9 percent.
“The Chinese central bank cutting reserve requirements for China’s banks has fueled speculation that this will help industrial production, boosting U.K. commodity shares,” said David Jones, the chief market strategist at IG Index in London. “Although we can all be allowed a degree of skepticism regarding an imminent solution to the Greek bailout, investors still seem happy to look for excuses to buy, and stock markets still seem to have plenty of momentum, even considering how far they have come in recent months.”
European Stocks Rise as Ministers Discuss Greek Bailout; TNT Express Gains (Source: Bloomberg)
European (SXXP) stocks rose for a fourth day, extending a six-month high, as euro-area finance ministers met in Brussels to discuss a Greek bailout and China cut banks’ reserve requirements to boost growth. TNT Express NV surged 60 percent after rejecting a takeover offer from United Parcel Service Inc. PostNL NV, a shareholder in TNT, jumped 50 percent. BP Plc (BP/) advanced after an Oppenheimer & Co. analyst said the company may reach a settlement this week on the Gulf of Mexico oil spill. The Stoxx Europe 600 Index (SXXP) climbed 0.8 percent to 268.16 at the close of trading. The benchmark gauge has rallied 9.7 percent this year amid optimism that the euro area will contain its debt crisis and as the U.S. economy continued its recovery.
Dollar, Yen Advance on Concern that Greece Bailout Talks May Stumble (Source: Bloomberg)
The dollar and yen gained versus most major peers as concern a meeting of euro-area finance ministers will struggle to agree on terms for Greece’s second bailout spurred investor demand for haven currencies. The 17-nation euro fell for the first time in four days against the yen as a majority of euro nations pushed for bondholders to accept greater losses, a European diplomat said on condition of anonymity because the talks are ongoing. The Australian and New Zealand dollars weakened as Asian stocks fell, damping the allure of higher-yielding assets. “Markets aren’t optimistic about the outlook for the euro, and the fact that they are easily swung by headlines emphasizes deep-rooted concern,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “The dollar is entering a rising trend.”
The yen advanced 0.2 percent against Europe’s common currency to 105.21 as of 9:18 a.m. in Tokyo. The dollar climbed 0.2 percent to $1.3212 per euro. The U.S. currency was little changed at 79.64 yen.
Euro up on China easing, Greece prospect; yen 6-mth low
SYDNEY/TOKYO, Feb 20 (Reuters) - The euro and commodity currencies rose on chances Europe will sign off on a rescue deal for Greece and after China's central bank joined counterparts globally in acting to stimulate growth.
"While the actual RRR cut was as expected, the PBoC clearly supporting economic growth in the world's second-largest economy is positive for the AUD, NZD and risk assets more broadly," said Annette Beacher, head of Asia-Pacific research at TD Securities.
China Cuts Reserve-Ratio for Growth as Inflation Deters Interest-Rate Move (Source: Bloomberg)
China is seen making more cuts to banks’ reserve requirements to fuel lending and sustain economic growth as the housing market cools and Europe’s sovereign-debt crisis weighs on exports. The proportion of cash that lenders must set aside will fall half a percentage point from Feb. 24, the central bank said Feb. 18 on its website. Standard Chartered Plc forecasts at least three more reductions this year, while HSBC Holdings Plc (HSBA) sees a minimum of two. The ruling Communist Party aims to sustain the nation’s expansion without undermining a campaign to tame inflation that saw home prices drop in 47 of the 70 biggest cities in January. Policy makers may refrain from interest-rate cuts until nearer mid-year when consumer-price gains have slowed to below 3 percent from 4.5 percent last month, HSBC economist Qu Hongbin said yesterday in Hong Kong.
“We expect further easing measures from Beijing in the coming months, such as bigger new loans and at least two additional 50 basis point reserve-ratio cuts,” Qu said. Interest rates will “remain a secondary monetary policy tool.”
Japan’s Trade Deficit Widens to a Record as Export Slump Deepens: Economy (Source: Bloomberg)
Japan posted a record trade deficit in January as the yen’s strength and weaker global demand eroded manufacturers’ profits and slowed the nation’s recovery from last year’s earthquake and tsunami. The gap widened to 1.48 trillion yen ($19 billion) and shipments dropped 9.3 percent from a year earlier as energy imports surged, a Ministry of Finance reported in Tokyo today. The median estimate of 28 economists surveyed by Bloomberg News was for a shortfall of 1.46 trillion yen. The drag from trade risks countering the boost from reconstruction work that JPMorgan Securities forecasts will drive a return to growth this quarter after the economy shrank in the final three months of last year. The government is seeing progress in its campaign to rein in the yen, with the currency trading at the weakest in seven months against the dollar after the Bank of Japan last week announced extra monetary stimulus.
“The recovery pace may be slow,” said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. “That’s because a recovery in exports may be dull and reconstruction demand may not come out as strongly as some people expect.”
Japan Agrees With China to Aid Europe Through IMF After Further Euro Steps (Source: Bloomberg)
Japanese Finance Minister Jun Azumi said that his nation and China are committed to help resolve the European debt crisis through the International Monetary Fund once euro region members take further steps themselves. “We shared the view that Europe needs to make more efforts to create a bigger firewall,” Azumi told reporters in Beijing yesterday after meeting Chinese Vice Premier Wang Qishan. “We also agreed to act together as the IMF will probably ask the U.S., Japan and China” to help boost its lending capacity. The meetings deepened dialogue between Asia’s two largest economies after a visit by Prime Minister Yoshihiko Noda to Beijing in December, and contrast with periodic tensions between the two over maritime boundaries. The continued readiness of Japan and China to help offers Europeans an inducement as they close in on a 130 billion-euro ($170 billion) Greek bailout.
Japan’s AA- Credit Rating May be Cut if Economic Outlook Weakens, S&P Says (Source: Bloomberg)
Standard and Poor’s affirmed Japan’s sovereign-debt rating at AA- while maintaining a negative outlook and warning that a downgrade is likely if medium-term growth prospects weaken. The ranking is supported by an “ample net external asset position, relatively strong financial system, and diversified economy,” S&P said in a statement today, also citing the yen’s role as a “key international reserve currency.” S&P has cut the ratings of European nations including France and Italy this year, along with reducing both the U.S. and Japan last year. Prime Minister Yoshihiko Noda is struggling to tame the world’s biggest public debt burden while supporting an economy that was hurt by last year’s earthquake and tsunami and shrank an annualized 2.3 percent in the fourth quarter. He’s yet to secure lawmakers’ support for a sales-tax increase intended to put the nation on a stronger financial footing.
Thai GDP Shrinks 9% Amid Floods in Fourth Quarter, Almost Twice Estimates (Source: Bloomberg)
Thailand’s economy shrank more than economists estimated as the worst floods in almost 70 years disrupted output by manufacturers from Western Digital Corp. to Honda Motor Co., putting pressure on policy makers to aid growth. Gross domestic product declined 9 percent in the three months through December from a year earlier, after climbing a revised 3.7 percent the previous quarter, the National Economic and Social Development Board said in Bangkok today. The median of 14 estimates in a Bloomberg News survey was for a 5 percent drop. The economy grew 0.1 percent in 2011. Southeast Asia’s second-largest economy contracted for the first time since 2009 after floods that killed more than 700 people and inundated two-thirds of the country dented exports already hurt by weaker European demand. Prime Minister Yingluck Shinawatra has pledged to spend 350 billion baht ($11 billion) on infrastructure and the Bank of Thailand cut the benchmark interest rate for a second straight meeting in January.
Greek Rescue in Prospect as Ministers Meet (Source: Bloomberg)
European governments moved toward a second rescue of Greece, calculating that the 130 billion-euro ($172 billion) cost of a fresh bailout is a price worth paying to prevent a default that could shatter the euro area. Finance ministers haggled into the night in Brussels over the terms of new loans to Greece and a possible contribution by central banks, and leaned on investors to accept bigger write- offs in a bond exchange that is vital to staving off a Greek bankruptcy next month. Bondholders’ response to the swap, Greece’s ability to prolong two years of austerity, and a series of parliamentary approvals in northern European countries gripped by an anti- bailout mindset loom as risks to the latest salvage operation. “We still have a bit of work to do,” German Finance Minister Wolfgang Schaeuble told reporters yesterday as he arrived for the meeting of euro-area finance chiefs. “We’ve set out to wrap up the decision on a new aid program for Greece. I’m confident.”
Iron Lady Merkel Bucks German Street (Source: Bloomberg)
Angela Merkel is having a Margaret Thatcher moment. Having spent six years in office defying comparison with Britain’s first woman prime minister, Merkel is being likened to Thatcher as she steers Europe’s response to the financial crisis with demands for debt reduction and tighter economic controls. Media including the Frankfurter Allgemeine Zeitung, the newspaper of record in Germany’s financial hub, dub her “Europe’s Iron Lady.” Strengthened by record-low joblessness at home, Merkel has rejected calls to either cut Greece loose from the euro area or ease her conditions for aid. By bucking the German street and steering the middle course, she is gambling that policy makers will continue to prevent a euro meltdown, helping her win re- election next year and match Thatcher’s third term.
“If Merkel were to go into elections with a collapsed euro zone she’d have a lot of difficulty winning,” Giles Merritt, head of Friends of Europe, a Brussels-based research group that promotes debate on the European Union, said in an interview. “Finally her statesman side is kicking in.”
Spain Sinks Deeper Into Periphery on Debt Rise (Source: Bloomberg)
Spain’s debt load is set to double from where it was when Europe’s sovereign debt crisis began, eroding the economic advantages that distinguished it from the region’s periphery and helped shield it from Greek (1004Z) contagion. Finance chiefs meet in Brussels today in the latest effort to save Greece from default. Spain went into the crisis with public debt of 40 percent of its gross domestic product, compared with an average ratio of 70 percent in the euro region. The European Union forecasts its debt will have almost doubled by next year, as Moody’s Investors Service says Spain is losing one of its “key relative credit strengths.” Investors give Spain a discount of just 30 basis points on borrowing for a decade compared with what they charge Italy, down from 200 basis points at the end of last year. Spain’s 10- year yield is 5.18 percent, up 33 basis points since Feb. 1.
No comments:
Post a Comment