Asian Stocks Advance, Headed for Bull Market, on U.S. Consumer Confidence (Source: Bloomberg)
Japanese stock futures and Australian equities advanced after U.S. consumer confidence jumped to a one-year high, boosting the outlook for Asian exporters to the world’s biggest economy. American depositary receipts of Toyota Motor Corp. (7203), Japan’s biggest carmaker that gets almost 30 percent of its revenue in North America, rose 0.6 percent from the closing share price in Tokyo. Those of Sony Corp. (6758) climbed 1 percent after a group led by the electronics maker sought European Union approval for its purchase of EMI Group’s publishing unit. Rio Tinto Group, the world’s No. 3 mining company by sales, gained 0.8 percent percent in Sydney after metals prices increased. Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in March closed at 9,785 in Chicago yesterday, compared with 9,760 in Osaka, Japan. They were bid in the pre-market at 9,780 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index rose 0.2 percent today. New Zealand’s NZX 50 Index increased 0.5 percent in Wellington.
Japanese Stocks Advance as U.S., Europe Consumer Confidence Beat Estimates (Source: Bloomberg)
Japanese stocks advanced after consumer confidence in the U.S. and Europe beat expectations, boosting the earnings outlook for exporters. Nissan Motor Co. (7201), a carmaker that gets about 80 percent of its revenue abroad, climbed 0.9 percent. Sony Corp. (6758) rose 1 percent the electronics maker sought European Union approval to purchase EMI Group’s music publishing unit. Advantest Corp. (6857), a maker of memory-chip testers, jumped 3 percent after the Philadelphia Semiconductor Index (SOX) gained the most since Feb. 16. The Nikkei 225 Stock Average (NKY) rose 0.5 percent to 9,770.11 at 9:03 a.m. in Tokyo, extending a six-month high. The broader Topix gained 0.5 percent to 842.82, with more than three times as many shares advancing as falling. “The U.S. economy is recovering momentum, reducing uncertainty about the future of the global economy,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.
Dow Closes Above 13,000 for First Time Since ’08 (Source: Bloomberg)
U.S. stocks rose, sending the Dow Jones Industrial Average (INDU) to its first close above 13,000 since 2008, as better-than-estimated consumer confidence data and a drop in oil bolstered optimism in the world’s largest economy. Apple Inc. (AAPL) added 1.8 percent and its market capitalization approached $500 billion as it is said to unveil a new iPad next month. Micron Technology Inc. (MU) jumped 3.7 percent after buying Intel (INTC) Corp.’s stake in two wafer factories as the companies expand their venture. Intel advanced 1.3 percent. Priceline.com Inc. surged 7 percent to the highest level since 1999 (PCLN) as profit beat estimates. The Bloomberg U.S. Airlines Index rallied 1.7 percent as oil fell the most in more than five weeks.
The Standard & Poor’s 500 Index increased 0.3 percent to 1,372.18 at 4 p.m. New York time, gaining for a fourth day, the longest streak since Jan. 23. The Dow advanced 23.61 points, or 0.2 percent, to 13,005.12. The 30-stock gauge closed above 13,000 after three unsuccessful attempts over the past week. “13,000 is just a number,” Malcolm Polley, who oversees about $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania, said in a telephone interview. “The U.S. economy is in decent shape. The market is not expensive.”
European Stocks Rise on U.S. Consumer Confidence Report (Source: Bloomberg)
European (SXXP) stocks climbed as a report showed that U.S. consumer confidence beat economists’ forecasts, even after durable-goods orders in the world’s largest economy unexpectedly slumped. KBC Groep NV (KBC) rallied 4.7 percent after Banco Santander SA agreed to buy the Belgian lender’s Polish unit, Kredyt Bank SA. National Bank of Greece SA (ETE) dropped 6.7 percent as the shares of lenders retreated. TomTom NV (TOM2) plummeted 15 percent after forecasting lower revenue. The Stoxx Europe 600 Index increased 0.2 percent to 264.33 at the close, after earlier gaining as much as 0.4 percent and losing as much as 0.5 percent. The gauge has rallied 8.1 percent so far this year as the European (SXXP) Central Bank lent unlimited cash to the region’s banks. “The worse-than-expected durables goods data remind us that even though the situation is the U.S. is better than in Europe, the recovery is still fragile,” said Stephane Ekolo, chief European strategist at Market Securities in London.
Yen helped by Japan exporters month-end trades
TOKYO, Feb 28 (Reuters) - The yen pulled away from a 9-month low plumbed the day before on month-end buying by Tokyo exporters, although short-covering by hedge funds forced it to relinquish some early gains, traders said.
"A pretty natural dip after the February spike is setting in and is amplified by Japanese exporters," said Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
Euro Approaches Three-Month High Before ECB Bank-Refinancing Operation (Source: Bloomberg)
The euro rose towards its strongest in almost three months on speculation the European Central Bank’s allotment of three-year loans to banks today will spur demand for the region’s assets. The yen slid against 15 of its 16 major peers on prospects the ECB action will boost buying of higher-yielding assets. The dollar held a two-day drop against Japan’s currency before Federal Reserve Chairman Ben S. Bernanke testifies to the House Financial Services Committee after saying Jan. 25 the bank is keeping open the option to increase bond purchases to support growth. Australia’s dollar reached a one-week high before a report forecast to show consumer spending climbed.
“This market is underweight risk, the market has not been committed to putting on the yield trade, and I think if you get a good number, the euro will do well,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., referring to the ECB’s loan operation. “It would provide a stimulus to risk currencies and risk itself.”
U.S. Consumer Sentiment Climbs Toward ’08 Levels (Source: Bloomberg)
Consumer-confidence measures are climbing out of the depths reached during the last recession as employers step up hiring and stocks rally, signaling Americans may be poised to increase spending. The Conference Board’s gauge in February increased to the highest level in a year, figures from the New York-based research group showed today. The Bloomberg Consumer Comfort Index rose to an almost four-year high in the week through Feb. 19, and the Thomson Reuters/University of Michigan measure of consumer sentiment increased to 75.3 in February, the sixth straight monthly gain and the longest advance since 1997. The last time the University of Michigan index stayed above 75 for more than two months was in the period through January 2008, a month after the end of the previous expansion. Consumers are likely to grow more optimistic as the two-year recovery boosts employment and incomes further, said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York.
“The major driver of the improvement in confidence has been the labor market,” Maki said. “We would expect consumer confidence to continue trending higher if the labor market continues to improve as we expect.”
Home Prices in 20 U.S. Cities Decline 4% (Source: Bloomberg)
Home prices in 20 U.S. cities dropped more than forecast in December to the lowest level since the housing crisis began in mid-2006, indicating foreclosures are hampering the industry’s recovery. The S&P/Case-Shiller index of property values in 20 cities fell 4 percent from a year earlier, after decreasing 3.9 percent in November, a report from the group showed today in New York. The median forecast of 31 economists surveyed by Bloomberg News called for a 3.7 percent decline. Distressed properties returning to the market mean prices will stay depressed, prompting buyers to wait for cheaper bargains and impeding construction. While sales have begun to stabilize, a rebound in home values may take time, underscoring Federal Reserve policy makers’ concern that weakness in housing is blunting their efforts to spur the economic expansion.
“We’re still dealing with a lot of distressed properties and very low absolute levels of demand,” said Sean Incremona, a senior economist at 4Cast Inc. in New York, who accurately projected the 4 percent drop. “We’re not seeing any of the stabilization in housing activity filter through to prices.”
Consumer Confidence Rises to One-Year High (Source: Bloomberg)
Confidence among U.S. consumers climbed to a 12-month high in February, signaling household spending will help sustain the expansion. The Conference Board’s index increased more than forecast, to 70.8 from 61.5 in January, figures from the New York-based private research group showed today. Economists projected the gauge would climb to 63, according to the median estimate in a Bloomberg News survey. Americans are growing more upbeat after unemployment fell to a three year low and stock-market rally boosted household wealth, helping them withstand lower home prices and higher gasoline costs. Another report showed durable goods orders declined in January by the most since 2009 after the expiration of a tax break allowing full expensing of business equipment purchases.
“We’re seeing further evidence the labor market is better,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. With more improvement, “a self-sustaining feedback loop will become present whereby rising income engenders a further lift in confidence, which in turn lifts spending.”
Durable Goods Orders in U.S. Drop 4%, Marking Worst Decline in Three Years (Source: Bloomberg)
Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment. Bookings (DGNOCHNG) for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey. The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year. At the same time, a strengthening auto industry may help keep factories at the forefront of the expansion that began in June 2009. “The expected weakness may not last, as the weak start to the quarter has tended to give way to a stronger end over the last 2 1/2 years since the recession ended,” Jonathan Basile, a senior economist at Credit Suisse in New York, said in an e-mail.
California Sells 38% of $2 Billion Debt as Market Rallies (Source: Bloomberg)
California (STOCA1), the most indebted U.S. state, took orders from individuals for $765 million of $2 billion in tax-exempt bonds with a preliminary yield of 2.7 percent for 10-year debt, according to the state treasurer. The first day of the sale saw robust demand even as the state lowered the yield by 1 percentage point from October, Treasurer Bill Lockyer said. Today’s orders accounted for 38 percent of the offering, according to an e-mailed statement from Lockyer’s office. “The retail demand has been pretty hefty, so we’re pleased with the results so far,” Lockyer said in the statement. “We look forward to doing some more retail business tomorrow and completing a deal on Wednesday that provides taxpayers some much-needed savings on our debt payments.”
The general-obligation sale comes as yields on top-rated municipal securities due in 10 years fell to a one-week low, according to a Bloomberg Valuation index. Yields (BVMB30Y) on AAA 30-year bonds approached the lowest level since at least January 2009. Treasury 10-year note yields traded at almost the lowest level in three weeks as the Federal Reserve bought U.S. notes.
China Showdown Over Property Curbs Simmers (Source: Bloomberg)
China’s local municipalities will press on with efforts to ease property curbs that have slowed the land sales they rely on for revenue, even after two cities retreated in the face of opposition from the central government. Wuhu and Foshan, smaller cities that get at least 30 percent of their revenue from selling sites, abandoned attempts to lift some restrictions that have hurt prices and sales. Premier Wen Jiabao has reiterated the government won’t waver from its measures to keep housing affordable. “The local governments are testing the water, but the central government is saying we are not ready yet,” said Andy Rothman, CLSA Asia-Pacific Markets’ Shanghai-based China macroeconomic strategist, who expects officials in Beijing to start allowing their local counterparts to relax housing enforcements in the second quarter.
That is already happening. The southern city of Zhongshan, the hometown of Sun Yat-sen, the founder of modern China, increased a price cap on residential home sales in January, and the western city of Chongqing last month raised the minimum threshold where a property holding tax kicks in.
Japan’s Factory Production Rises More Than Anticipated as Demand Rebounds (Source: Bloomberg)
Japan’s industrial production increased more than forecast, adding to signs that the world’s third-largest economy may return to growth this quarter. Factory output rose 2 percent in January from the previous month, the Trade Ministry said in Tokyo today. The median estimate of 31 economists surveyed by Bloomberg News was for a 1.5 percent gain. Toyota Motor Corp. (7203) and Nissan Motor Co. are recovering from disruptions caused by Thailand’s floods and the earthquake and tsunami that devastated Japan’s northeast last March. Reconstruction work and incentives for purchases of environmentally friendly cars may help to revive an economy that shrank an annualized 2.3 percent in the fourth quarter. “The transport industry has already started making up for a decline in production from the November flooding in Thailand,” Kyohei Morita, chief economist at Barclays Capital in Tokyo, said before the report. “The revival of the eco-car subsidies will likely help domestic production maintain a firm footing.”
Confidence in Europe Rises More Than Forecast on Stability Signs: Economy (Source: Bloomberg)
Economic confidence in the euro area improved more than forecast in February, adding to signs the economy is stabilizing after a fourth-quarter contraction. An index of executive and consumer sentiment in the 17- nation euro area rose for a second month, increasing to 94.4 from 93.4 in January, the European Commission in Brussels said today. Economists had forecast a gain to 94, the median of 31 estimates in a Bloomberg News survey showed. Germany’s economy, Europe’s largest, has helped soften the impact of tougher austerity measures across the region as companies boost output and hiring to meet export demand. German business confidence rose more than economists forecast to a seven-month high in February and investors became more optimistic. European Central Bank President Mario Draghi has said that while some euro-area nations may see a “mild” recession, the overall situation “seems to be stabilizing.”
Today’s report suggests that “the euro zone is past the worst,” said Howard Archer, chief European economist at IHS Global Insight in London. “Even so, sentiment is still at a pretty low level and the euro zone is far from out of the economic woods.”
Papademos Gets Backing for $4.3B of Cuts (Source: Bloomberg)
Greece’s Parliament ratified a 3.2 billion-euro ($4.3 billion) package of spending cuts to the 2012 budget, taking Prime Minister Lucas Papademos one step closer to the country securing a rescue package to avert financial collapse. A total of 202 lawmakers voted in favor of the law and 80 against, Acting Parliament Speaker Grigoris Niotis said in remarks carried live on state-run Vouli TV yesterday after a roll-call vote. The vote is to be followed today by another that legislates permanent changes to pension funds and health-care spending, measures demanded by the European Union and International Monetary Fund in return for the 130 billion-euro lifeline. European governments moved toward a second rescue of Greece on Feb. 21, calculating that the cost of a fresh bailout, which includes a writedown of about 100 billion euros of Greek debt, is a price worth paying to prevent a financial collapse that could shatter the euro area.
Krugman Says Greece Running Out of Alternatives to Quitting Euro Currrency (Source: Bloomberg)
Nobel-prize winning economist Paul Krugman said Greece is “close” to having to leave the 17- member currency region as austerity measures imposed on the nation hamper its economic recovery. “If I were running a peripheral country I would say that you cannot leave” the euro region, Krugman, a professor at Princeton University, said in Lisbon late yesterday. While it would be “extremely disruptive,” Greece is “very close to running out of alternatives,” he said. Germany’s parliament approved a second Greek aid package in Berlin yesterday, part of a plan agreed earlier this month to stem the debt crisis. Still, finance officials from the Group of 20 nations meeting in Mexico over the weekend rebuffed pleas for additional funding through the International Monetary Fund, saying the region first needs to boost its own resources. European leaders are scheduled to meet in Brussels March 1-2.
Greece’s credit ratings were cut to “Selective Default” by Standard & Poor’s yesterday. S&P dropped Greece’s rating from CC, two levels above default, after the government added clauses to its debt designed to mop up investors unwilling to take part in a bond exchange, according to the statement.
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