20120313 0929 Global Market Related News.

Asia Stocks Advance on Greek Aid, Central Bank Decisions (Source: Bloomberg)
Asian stocks rose, with the benchmark index set to gain for a third day in four, amid optimism euro-area finance chiefs will complete a second Greek bailout, and before policy announcements by the Bank of Japan and U.S. Federal Reserve today. Nintendo Co. (7974), a manufacturer of game consoles that gets a third of its sales in Europe, rose 1.7 percent in Osaka. Qantas Airways Ltd., an Australian carrier, gained 3.8 percent after Macquarie Group Ltd. raised its rating to “outperform,” citing the nation’s strengthening currency to offset fuel costs. Daewoo Shipbuilding & Marine Engineering Co., a crude oil tankers maker, increased 2.8 percent in Seoul after HI Investment raised its target price, citing possible orders for oil rigs.
“It seems like the Greek bond deal is going through; that issue is off the table, at least for the time being,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “I wouldn’t expect much out of the BOJ, and obviously people will wait and see what the Fed says.” The MSCI Asia Pacific Index rose 0.4 percent to 126.67 as of 9:49 a.m. in Tokyo, with more than three stocks climbing fpor each that declined. All 10 industry groups in the measure advanced.

Japan’s Nikkei 225 Reaches Seven-Month High on Optimism for Greek Rescue (Source: Bloomberg)
March 13 (Bloomberg) --　Japanese shares rose, with the Nikkei 225 Stock Average (NKY) headed for its highest close since August, amid optimism euro-area finance chiefs will complete a second Greek bailout this week and before policy announcements by the Bank of Japan and the Federal Reserve today. Nintendo Co. (7974), a manufacturer of game consoles that gets a third of its sales in Europe, rose 1 percent. Mizuho Financial Group Inc. (8411) led gains among banks. Chemical maker Asahi Kasei Corp. (3407) fell 3.1 percent after agreeing to buy U.S.-based Zoll Medical Corp. for $2.2 billion. The Nikkei 225 Stock Average rose 0.5 percent to 9,934.93, its highest since Aug. 1, as of 9:18 a.m. in Tokyo. The broader Topix Index gained 0.2 percent to 847.14 after falling 0.4 percent yesterday.
“It seems like the Greek bond deal is going through. That issue is off the table, at least for the time being,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “I wouldn’t expect much out of the BOJ, and obviously people will wait and see what the Fed says.”

U.S. Stock Volume Lowest of Year as S&P 500 Gain Fails to Awaken Investors (Source: Bloomberg)
Trading (MVOLUSE) on American equity exchanges fell to the lowest level of the year today as enthusiasm waned among investors even after the Standard & Poor’s 500 Index rallied 25 percent in five months. Shares changing hands on all exchanges fell 16 percent to 5.23 billion today from March 9, while S&P 500 composite volume slipped 17 percent to 2.17 billion shares, data compiled by Bloomberg show. Those are the lowest daily levels excluding holiday weeks since Bloomberg began tracking the data in 2008. A rally that has restored more than $3.2 trillion into U.S. equities has failed to lure investors following one of the most volatile years on record. While the S&P 500 reached its highest level since June 2008 on March 1 and has had its best annual start since 1998, individuals are shunning equities after they were burned in 2011 by Europe’s debt crisis, according to Mark Turner, head of U.S. sales trading at Instinet Inc. in New York.
“I don’t think investors are completely convinced,” Turner said in a telephone interview. “Today was extremely light volume because it was quiet in Europe over the weekend and there was no major headlines coming out of Europe. Money has been shifting to bonds out of equities for some time now. There’s a host of different reasons. Take your pick.”

Dow Theory Signals Sluggish Economic Recovery (Source: Bloomberg)
Transportation and industrial shares are diverging in the U.S., a signal that equity investors are starting to agree with what the bond market already knows: this economic recovery will remain sluggish for months to come. The Dow Jones Transportation Average fell 4.2 percent from its six-month high on Feb. 3 through today, while the Dow Jones Industrial Average (INDU) added 0.8 percent. The gauge of 20 shipping companies from FedEx Corp. to United Continental Holdings Inc. (UAL) peaked before the rest of the market when the technology bubble popped in 2000 and began slipping into a bear market three months before broader benchmark indexes in 2007.
While Laszlo Birinyi, the founder of Birinyi Associates Inc., says falling transport stocks don’t signal an end to the three-year bull market that doubled the Standard & Poor’s 500 Index (SPX), money managers at Robert W. Baird & Co. and Legg Mason Inc. say the 27 percent rise in the index since October may have gone too fast. Transport stocks are falling as 10-year Treasury yields (USGG10YR) stay near 2 percent, with economists forecasting the slowest post-recession recovery since World War II. “In a healthy market, everything is going in the same direction,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $85 billion, said in a March 6 phone interview. “When that starts to diverge, that raises a flag that potential trouble may be brewing.”

Most U.S. Stocks Fall in Thinnest Trading Day of 2012 on China Slowdown (Source: Bloomberg)
Most U.S. stocks retreated, capping the thinnest trading day in 2012, as investors weighed whether a Chinese slowdown will lead to an easing of monetary policy. Newmont Mining Corp. (NEM) and Schlumberger Ltd. (SLB) lost more than 1.9 percent as commodities fell. Financial companies slid on concern about how banks will perform in Federal Reserve stress tests and as the cost of insuring against default on European sovereign bonds rose to the highest in eight weeks. Gauges of utility and telephone providers in the S&P 500, which are least- tied to economic growth, gained. Apple Inc. (AAPL) rose 1.3 percent. Seven stocks declined for every five rising on U.S. exchanges at 4 p.m. New York time, with about 5.2 billion shares changing hands. The S&P 500 advanced less than 0.1 percent to 1,371.09 today. The Dow Jones Industrial Average increased 37.69 points, or 0.3 percent, to 12,959.71. The Russell 2000 Index of smaller companies retreated 0.3 percent to 814.29.
“The U.S. is in good shape, yet China is a big question mark,” said Erick Maronak, chief investment officer of Victory Capital Management Inc. in New York. His firm oversees $28 billion. “How much will they have to ease to get things back on track? Europe is still going to be a huge work in progress. Now that there’s some greater visibility on the Greece situation, everyone starts looking at dominoes two and three.”

European Stocks Fall on China Exports Data; Temenos Slips (Source: Bloomberg)
European (SXXP) stocks retreated, halting a three-day rally for the Stoxx Europe 600 Index, as a report showed export in China, the world’s second-largest economy, grew at a slower pace than forecast. Mining companies fell with metal prices. Temenos Group AG (TEMN) dropped 4.9 percent after the company terminated merger talks with Misys Plc. (MSY) Banca Monte dei Paschi di Siena SpA (BMPS) sank 5 percent after its biggest investor reached an agreement with banks that hold part of its stake as collateral on a loan. The Stoxx 600 fell 0.2 percent to 264.87 at the close. The benchmark measure has still rallied 8.3 percent so far this year as the European (SXXP) Central Bank disbursed 1 trillion euros ($1.3 trillion) of loans to the euro area’s banks and U.S. economic reports beat estimates. The gauge rallied at the end of last week, trimming its weekly drop to 0.7 percent, as a release showed that the U.S. economy added more jobs than predicted and Greece’s private creditors agreed to a debt swap.
“China really is the only potential negative out there,” said Steve Goldman, managing director at Kapstream Capital in Sydney which manages about $3.2 billion in assets on Bloomberg Television. “We’ve seen a good start to the year and there is a lot less risk to the global economy than there was three, four, five months ago.”

Emerging-Market Stocks Decline as Chinese Data Signals Economic Slowdown (Source: Bloomberg)
Emerging-market stocks posted their biggest decline in almost a week as Chinese trade and retail sales data signaled a deepening slowdown in the global economy. The MSCI Emerging Markets Index (MXEF) declined for the first time in three days, losing 0.9 percent to 1,050.50 at the close in New York. Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s biggest retailer, led declines on Brazil’s Bovespa (IBOV) index among companies that depend on consumer demand. LG Chem Ltd. (051910), the chemical maker that counts China as its biggest export market, retreated 3.5 percent in Seoul. China had the largest trade deficit in at least 22 years last month, the weakest gain in factory production between January and February since 2009, and year-to-date retail sales missed analysts’ estimates, government data released March 9 and 10 showed. European finance ministers are moving toward signing off on the 130 billion-euro ($170 billion) aid package for Greece.
“Global demand is abating and China is one of the major export countries, so of course it’s very much affected by this weakening general global demand,” Daniel Lenz, chief emerging market strategist at DZ Bank AG, said by phone from Frankfurt. “China is still growing strongly in comparison to other countries, and there is of course more risk to the downside on exports than on imports.”

Dollar Trades Near 10-Month High Against Yen Before Fed’s Policy Meeting (Source: Bloomberg)
The dollar traded 0.3 percent from a 10-month high against the yen as evidence of a U.S. economic recovery tempered speculation that the Federal Reserve will signal additional easing at a policy meeting today. Demand for the yen was limited amid expectations the Bank of Japan (8301) will keep interest rates and the size of its asset- purchase fund unchanged at a two-day meeting that ends today. The euro remained higher against the dollar after European Union Economic and Monetary Affairs Commissioner Olli Rehn said he was confident that European Union leaders would reach an agreement on increasing the size of its crisis fighting funds this month. “Recent U.S. data may be strong enough to persuade policy makers to be less cautious about the pace of the recovery,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides currency margin-trading services. “The market is reducing bets for another round of quantitative easing, pushing the dollar higher.”
The dollar rose 0.2 percent to 82.37 yen at 8:48 a.m. in Tokyo from the close yesterday, after touching 82.65 on March 9, the highest since April 27. The currency was little changed at $1.3170. The yen slid 0.3 percent to 108.48 per euro.

Euro Finance Chiefs Give Political Backing to $170 Billion Greek Aid Plan (Source: Bloomberg)
Euro-area finance ministers signed off on a second Greek bailout, clearing the way for the first payment from the 130 billion-euro package ($170 billion) to be made this month. “The new Greek program is not only in its starting blocks, but has been politically adopted tonight by the euro group,” Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of 17 finance ministers, said in Brussels late yesterday. Euro finance officials will give a formal approval on March 14, a day before the International Monetary Fund board votes on its contribution. Greece is now in line to receive more than 100 billion euros in the next three years from the European Financial Stability Facility, the euro region’s temporary rescue fund, starting with payments of 5.9 billion euros in March, 3.3 billion euros in April and 5.3 billion euros in May, EFSF Chief Executive Officer Klaus Regling said.
The agreement caps months of grueling negotiations between Greece, the IMF and euro-area authorities over the successor to an initial 2010 bailout that failed to halt the debt crisis. To win new the aid package, Greece had to sign on to deep budget cuts and complete the world’s largest-ever sovereign debt restructuring.

Outlook for U.S. Consumer Spending Brightens on Employment Gains: Economy (Source: Bloomberg)
Household spending may be about to pick up after stagnating for three straight months as employment and incomes climb and the weather turns more seasonable, giving the U.S. economy a lift. “The situation for consumers has improved significantly over the last several months,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “Spending is bound to accelerate, the most important driver being improvement in the labor market.” Employers boosted payrolls in February, capping the best six-month streak of job growth since 2006, Labor Department data showed last week. Consumer spending on utilities will probably return to normal after dropping from November through January because of unseasonably warm weather.
“Given the labor market and some of these weather factors, there is reason to be optimistic,” said Troy Davig, a senior economist at Barclays Capital Inc. in New York. “The warm weather has held down consumer spending, basically because of the direct impact of households purchasing less energy to heat their homes. That’s generally positive for the consumer, but the immediate impact has depressed consumption.”

Fed to Test 19 Banks’ Capital Against Recession Scenario (Source: Bloomberg)
The Federal Reserve will show how the capital of 19 U.S. banks might fare through a deep recession and a second housing crisis when they unveil stress-test results in three days. The tests will show results for revenues, capital ratios and profits or losses at each firm over a nine-quarter period, the Fed said in a paper released today in Washington. The results will be released at 4:30 p.m. on March 15. Templates included in the Fed release today showed an array of categories it plans to disclose, from trading and counterparty losses to credit cards and first-lien mortgages.
“Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty,” the Fed said in a statement. “The supervisory stress scenario is not the Federal Reserve’s forecast for the economy, but was designed to represent an outcome that, while unlikely, may occur if the U.S economy were to experience a deep recession at the same time that economic activity in other major economies contracted significantly.” The KBW Bank Index of 24 U.S. lenders has advanced 15 percent this year as investors bet a strengthening economy will help firms boost earnings. Concern that the nation’s banks may be damaged by Europe’s debt crisis helped drive down the index 25 percent in 2011, its worst annual performance since the 2008 credit crisis.

China Slowdown Bolsters Case for Monetary Easing as Yuan Slides: Economy (Source: Bloomberg)
China’s economic growth slowed in the first two months of the year, with both exports and domestic demand moderating faster than analysts had forecast, building the case for Premier Wen Jiabao to accelerate stimulus measures. The world’s second-largest economy had the biggest trade deficit last month in at least 22 years, the weakest January- February factory-production gain since 2009 and retail sales below the median economist estimate, government data showed March 9 and 10. Central bank Governor Zhou Xiaochuan said today that the nation has large scope in theory for lowering banks’ reserve requirements, and the yuan tumbled after officials weakened the reference rate. Moderating inflation and Europe’s faltering export demand may encourage the government to loosen credit and pause on currency gains, with the yuan down 0.5 percent this year against the dollar after climbing 4.5 percent in 2011.
“We are likely to see another cut sometime soon” in the required-reserves ratio, Brian Jackson, a Hong Kong-based economist with Royal Bank of Canada, said in a Bloomberg Television interview. “If you look at the January and February numbers combined, whether it’s trade, whether it’s industrial production, it all shows a pretty clear picture of things continuing to slow down since the start of the year.”

India’s Industrial Output Growth Beats Estimates, Spurring Sensex Advance (Source: Bloomberg)
India’s industrial production unexpectedly rose at the fastest pace in seven months in January, weathering the highest interest rates since 2008 and weaker global growth. Output (INPIINDY) at factories, utilities and mines advanced 6.8 percent from a year earlier, after a revised 2.5 percent climb in December, the Central Statistical Office said in a statement in New Delhi today. The figure exceeded all 26 estimates in a Bloomberg News survey. A history of swings in the data may prevent the report from easing concern that the cost of credit and the impact of Europe’s debt crisis are dimming India’s economic outlook. The central bank, which lowered lenders’ reserve requirements last week and reviews rates on March 15, has signaled readiness to join nations from Brazil to the Philippines in cutting borrowing costs as expansion slows and inflation eases.
“The production figures are very volatile and I wouldn’t give too much weight to this number,” said Madan Sabnavis, chief economist at Credit Analysis & Research Ltd. in Mumbai. “The overall growth trend still remains weak. The Reserve Bank of India will wait until April to take any action on rates, and by then it will have more information on the budget deficit and inflation.”

BRICs Fastest Inflation Accelerating Puts Subbarao on Hold: India Credit (Source: Bloomberg)
Indian inflation, the fastest among the biggest emerging markets, is poised to accelerate as oil costs rise for a nation that depends on imports for 80 percent of its energy requirements, interest-rate swaps show. The cost of locking in rates for five years rose to 7.49 percent in Mumbai on March 9, the highest in almost five months, according to data compiled by Bloomberg. Wholesale prices rose 6.7 percent last month after increasing 6.55 percent in January, according to the median forecast of economists in a Bloomberg survey before data due on March 14. That would compare with levels of 6.2 percent in Brazil, 3.2 percent in China and 3.7 percent in Russia. Reserve Bank of India Governor Duvvuri Subbarao on March 9 unexpectedly slashed the amount of deposits lenders need to set aside as reserves to ease a cash squeeze in the banking system.
He will refrain from lowering borrowing costs at this week’s policy meeting, a separate survey showed, as this year’s 16.8 percent rise in Brent threatens to fuel inflation in a nation where 80 percent of the population lives on less than $2 a day. “Oil prices are becoming a big concern and will aggravate inflation,” Killol Pandya, the Mumbai-based head of fixed- income investment at the local unit of Daiwa Asset Management Co. that oversees $225 million, said in an interview on March 9. “A rate cut is unlikely to happen this month.”

Vietnam Cuts Benchmark Rates to Support Growth Amid Slowdown (Source: Bloomberg)
Vietnam cut its interest rates to support a slowing economy even as the nation faces Asia’s fastest inflation. The State Bank of Vietnam reduced the refinancing rate for the first time since 2009 to 14 percent from 15 percent, effective tomorrow, it said in a statement on its website today. It also cut the discount rate to 12 percent from 13 percent and the dong deposit cap for terms of one-month and above to 13 percent from 14 percent. Vietnam joins emerging markets from Thailand to Brazil in lowering borrowing costs as Europe’s sovereign-debt crisis and rising oil prices threaten expansion. The move contrasts with the nation’s so-called Resolution 11 policy passed a year ago, which aimed to rein in an inflation rate that remains above 16 percent even after easing for a sixth straight month in February.
“The rate cut aims to support growth, as inflation pressures have eased and liquidity in the banking system has improved,” Hai Pham, a Singapore-based analyst at Australia & New Zealand Banking Group Ltd., said before the decision. “The central bank is confident about the inflation trajectory.”

Euro Weakness Waning as Draghi Cash Prompts Forecasters to Drop Bear Views (Source: Bloomberg)
The world’s biggest banks are less pessimistic about the euro as the European Central Bank provides unlimited cash to the region’s financial system, Germany may avoid recession and Greece looks to complete the biggest sovereign debt restructuring in history. Strategists at Bank of America Corp. and Morgan Stanley raised their estimates for the euro this month, as the median estimates of more than 50 strategists surveyed by Bloomberg increased for the second and third quarters. The 17-nation currency is up about 1.3 percent from an almost 10-year low on Jan. 16 against nine developed-market peers. While the crisis that led to bailouts of Greece, Portugal and Ireland and the restructuring of Greek debt caused the euro to weaken 8.7 percent versus the dollar since August, traders who predicted a breakup of the single currency are being silenced.
ECB President Mario Draghi gave banks more than 1 trillion euros ($1.31 trillion) of three-year loans in December and February, and German business confidence rose to a  seven- month high. “We’ve been gradually feeling better about Europe,” David Woo, the global head of rates and currencies at Bank of America Merrill Lynch in New York, said in a telephone interview on March 2. Draghi’s loans have supported the euro, he said. “That combined with the fact that the global economic outlook has improved, including U.S. growth gaining momentum, has made us less bearish on the euro.”

Euro Ministers Head Toward Final Approval of Second Greek Rescue (Source: Bloomberg)
Euro-area finance ministers will move toward completing the next Greek bailout this week as they meet in Brussels tonight. Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-region finance ministers, said he had “no doubt” that a second bailout program for Greece would be approved and he expected a final decision on March 14. “As far as principles are concerned, there is no doubt that the second Greek program will be approved,” Juncker said today in Brussels before a meeting of the group. Ministers from the 17 nations that share the euro are gathering to review the 130 billion-euro ($170 billion) second package for Greece after bondholders agreed last week to take a loss on the country’s debt. They’re also looking at Spain’s budget-cutting efforts and Portugal’s aid program, underscoring their desire to prevent contagion.