20120320 0948 Global Market Related News.

Asian Stocks Rise on U.S. Homebuilder Confidence, RBA Comments (Source: Bloomberg)
Asian stocks rose as confidence among U.S. homebuilders added to signs the world’s biggest economy is strengthening and as the Reserve Bank of Australia said it saw saw less downside risk when it kept its benchmark interest rate unchanged this month. Samsung Electronics Co. (005930), Asia’s biggest consumer- electronics maker, gained 1 percent in Seoul. LG Display Co., a manufacturer of liquid crystal displays that gets about 16 percent of its sales from the U.S., rose 2.4 percent. National Australia Bank Ltd., the nation’s fourth-largest lender, added 0.3 percent after a gauge of leading economic indicators improved in January. “This rally is not over yet,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Things are looking a lot better. Employment and housing in the U.S. are starting to show improvements. This pickup in momentum might have legs.”
The MSCI Asia Pacific Excluding Japan Index (MXAPJ) gained 0.1 percent to 445.50 as of 8:46 a.m. in Hong Kong. The gauge climbed 13 percent this year through yesterday as positive economic reports from the U.S. boosted the outlook for the region’s exporters.

Shares hold near highs on recovery hopes
LONDON, March 19 (Reuters) - World share markets stayed within touching distance of near eight-month highs while the euro and yen were steady against the dollar on Monday as markets took a breather after recent sharp gains.
"We expect risky assets to continue to hold their own, but given the lingering uncertainties, we prefer to remain close to the beneficiaries of a strong U.S. economy," Barclays Capital analysts said in a note.
 
S&P 500 Rises to Four-Year High as Apple Plans Dividend (Source: Bloomberg)
The Standard & Poor’s 500 Index (SPX) advanced to the highest level since May 2008 as Apple Inc. plans to pay a dividend and buy back $10 billion of its stock. Apple climbed 2.7 percent to a record $601.10. Citigroup (C) Inc. advanced 1.3 percent after selling its 2.71 percent stake in Shanghai Pudong Development Bank. U.S. Steel (X) Corp. rallied 6.4 percent to pace gains in commodity shares. United Parcel Service Inc. (UPS) increased 3.4 percent after agreeing to buy TNT Express NV. Bank of America Corp. retreated 2.8 percent, reversing an earlier advance that drove the stock above $10.
The S&P 500 rose 0.4 percent to 1,409.75 at 4 p.m. New York time, trading 9.9 percent below its October 2007 record of 1,565.15. The Dow Jones Industrial Average added 6.51 points, or 0.1 percent, to 13,239.13. The Nasdaq Composite Index (CCMP) gained 0.8 percent to 3,078.32, the highest level since November 2000. The S&P Smallcap 600 Index (SML) increased 0.9 percent to an all-time high of 465.97. About 6.6 billion shares changed hands on U.S. exchanges, almost in line with its three-month average.

European Stocks Are Little Changed Near Eight-Month High (Source: Bloomberg)
European (SXXP) stocks were little changed after last week’s biggest advance for the benchmark Stoxx Europe 600 Index since early February. Standard Life Plc and DSV (DSV) A/S paced declining shares after analysts downgraded the companies. Misys Plc (MSY) rallied 7.4 percent after Vista Equity Partners agreed to buy the company for 1.3 billion pounds ($2.1 billion). Greek banks climbed as corporate bond risk fell in Europe. The Stoxx 600 (SXXP) slid 0.1 percent to 272.07 at the close in London, following last week’s 2.6 percent advance. The gauge rose to its highest level since July last week as data from Germany to the U.S. indicated global growth is gaining momentum and the Federal Reserve raised its assessment of the world’s largest economy.
The market is “getting very high, possibly running out of oxygen as it were. Some of the tactical indicators are beginning to look quite weak,” Michael O’Sullivan, head of portfolio strategy at Credit Suisse Private Banking said on Bloomberg Television. “I wouldn’t be surprised to see some sort of correction over the next couple of weeks.”

Emerging Stocks Slip Third Day as China Homes Drop Curbs Outlook (Source: Bloomberg)
Emerging-market stocks slid for a third day, led by property developer Poly (Hong Kong) Investments Ltd., as the worst month for Chinese home prices since at least 2011 bolstered global slowdown concerns. The MSCI Emerging Markets Index (MXEF) slid 0.2 percent to 1,061.31 at the close in New York, as energy producers and telecommunications companies dropped. Moscow-based OAO Gazprom (GAZP), the world’s biggest gas producer, slumped to a one-month low as Russia’s Micex Index (INDEXCF) had the largest decline in almost two weeks. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, fell 1.5 percent, as lenders and developers led the Hang Seng China Enterprises Index (HSCEI) lower for the fourth day. Brazil’s Bovespa Index (IBOV) advanced for the first time in four days.
New home prices in China fell in 27 of 70 cities in February from a year earlier and prices were unchanged in six, government data showed yesterday, the worst performance since officials began releasing data for individual cities at the start of 2011. Christine Lagarde, the International Monetary Fund’s managing director, also warned of slowing growth in emerging markets in a March 18 speech in Beijing.

China’s Stocks Advance to One-Week High; Shale Gas Shares Climb (Source: Bloomberg)
China’s stocks rose, driving the benchmark index to a one-week high, after International Monetary Fund official Zhu Min said China will avoid an economic hard- landing as investment remains strong. Kingdream Public Ltd. (000825), whose businesses include gas distribution, jumped 10 percent after the government said it will boost development of the shale gas industry. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. advanced 4.3 percent, pacing a rally for producers of rare earth. China Vanke Co. (000002) and Poly Real Estate Group Co. led property developers to the biggest decline among industry groups in the Shanghai Composite Index after home prices posted the worst performance in a year. “The government has the tools to offset a decline in economic growth such as monetary policy or measures targeting specific industries,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The property market is still the biggest risk the economy is facing now.”

Japanese Stocks Gain as Trading Companies Climb in Tokyo (Source: Bloomberg)
Japanese stocks rose, with the Nikkei 225 Stock Average recording its highest close since last year’s earthquake, as trading companies gained on higher crude prices. Utilities fell after Citigroup Inc. reduced its recommendation on the companies. Mitsui & Co. (8031), a trading house that counts commodities as its major source of profit, increased 0.9 percent. Fanuc Corp., an industrial robot maker, rose 2 percent after Citigroup boosted its share-price estimate on the outlook for higher demand. It was the biggest contributor to the Nikkei’s advance. Kansai Electric Power Co. slumped 4.2 percent after Citigroup cut its rating on the stock and broadcaster NHK reported Osaka City may urge the utility to abolish nuclear reactors.
“What we’re seeing is a return to more buoyant growth taking away the impact of negative growth from the nuclear crisis around this time last year,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Very significant tailwinds are helping share prices move higher in the Japanese market.” The Nikkei 225 Stock Average (NKY) rose 0.1 percent to 10,141.99 as of the 3 p.m. Tokyo-market close. The Nikkei is about 1 percent away from its closing price on March 11 last year, when the magnitude-9 earthquake struck at 2:46 p.m., sparking a sell- off minutes before the end of trading.

Treasury 10-Year Futures Fall Before U.S. Housing Starts (Source: Bloomberg)
Treasury 10-year futures contracts fell to the least since October before a government report that economists said will show homebuilding in the U.S. climbed to a three-month high. Ten-year notes dropped for a ninth day yesterday, the longest stretch since June 2006, as investors bet a strengthening economy will diminish the refuge appeal of U.S. government securities. Financial markets were closed in Japan today for a national holiday. “The data have been getting better,” said Roger Bridges, who oversees the equivalent of $15.9 billion of debt as the Sydney-based head of fixed income at Tyndall Investment Management Ltd., a unit of Nikko Asset Management Co. in Japan. “U.S. 10-year notes still look expensive.” Ten-year Treasury futures contracts for June delivery declined 1/32, or 31 cents per $1,000 face amount, to 127 29/32 as of 8:58 a.m. in Singapore. They were as low as 127 25/32, a level not seen since Oct. 28.
Housing starts rose to a 700,000 annual rate last month from a 699,000 pace in January, according to the median estimate of 80 economists surveyed by Bloomberg News. It would be the strongest reading since November’s three-year high of 702,000.

FOREX-Yen on the back foot, hits five-mth lows vs euro
SYDNEY/SINGAPORE, March 19 (Reuters) - The yen stayed on the defensive with the euro reaching a fresh five-month high against the Japanese currency, while the dollar nursed losses following a setback late last week.      
"I don't think we will see any sudden move toward yen strength for a while, but we could see the market swing back a bit," the trader said, adding that March was typically a month that attracts some Japanese corporate demand for yen ahead of Japan's business year-end at the end of the month.  

Dollar Near One-Week Low Versus Euro Before Fed Bernanke (Source: Bloomberg)
The dollar traded within 0.2 percent of its lowest in a week against the euro on speculation Federal Reserve Chairman Ben Bernanke will reiterate today that a slow U.S. recovery warrants near-zero interest rates. The greenback remained lower after yesterday falling versus 15 of 16 major peers after gains in U.S. stocks boosted demand for higher-yielding assets. The euro neared a four-month high against the yen before reports this week forecast to show German services and factory output grew in March. Australia’s dollar approached a 10-month high against the yen after minutes showed the Reserve Bank left rates unchanged this month after seeing “somewhat less” downside risk to the economy. “The Fed is not going to change their recent rhetoric on the economy and they’re going to still characterize the recovery as somewhat tepid,” said Andrew Salter, a strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Sydney. “The long-term trend that’s in place is U.S. dollar weakness.”
The dollar was at $1.3242 per euro as of 9:16 a.m. in Singapore from $1.3238 in New York yesterday, when it fell as low as $1.3266, the least since March 9. It fetched 83.35 yen from 83.35. The euro bought 110.38 yen from 110.34 after rising as high as 110.57 yesterday, the most since Oct. 31.

Bernanke Seen Not Knowing Jobless Rate Below Fed Forecasts (Source: Bloomberg)
David Waldrop, 59, says he considers himself retired after searching unsuccessfully for work comparable to the job he lost in July 2007 at the U.S. Department of Energy in Atlanta. “There was certainly nothing in my area at my level,” he said. While the right opening might pull him back to employment, for now he sees his exit from the U.S. labor force as permanent. “I don’t see it happening,” he said. “I don’t see anything offering opportunities.” Waldrop is one of millions who have dropped out of the labor market in the aftermath of the deepest recession since the Great Depression, causing the employment-to-population ratio to fall to 58.6 percent from 62.7 percent at the end of 2007. Federal Reserve Chairman Ben S. Bernanke says the decline reflects weakness in the economy that’s causing discouraged Americans to leave the workforce, bolstering his decision to add to his record monetary stimulus in January.
Economists at Barclays Capital, UBS AG and Moody’s Corp. disagree. They say the percentage of people aged 16 and older with jobs is shrinking permanently because of a structural shift as baby boomers like Waldrop retire. This will contribute to the jobless rate falling to 7.8 percent by December, below the Fed’s prediction of 8.2 percent to 8.5 percent, according to Drew Matus, senior U.S. economist at UBS and Dean Maki, chief U.S. economist at Barclays.

Homebuilder Confidence in U.S. Holds at Highest Since 2007 (Source: Bloomberg)
Confidence among U.S. homebuilders held in March at the highest level since June 2007 as sales expectations climbed for a sixth month. The reading of 28 in the National Association of Home Builders/Wells Fargo index of builder confidence was less than projected and followed a February figure that was lower than initially reported, figures from the Washington-based group showed today. The median forecast of economists surveyed by Bloomberg News called for a rise to 30. Readings below 50 mean more respondents said conditions were poor. Cheaper homes and mortgage rates close to all-time lows are helping drive record housing affordability, benefiting builders such as Toll Brothers Inc. At the same time, the real estate market remains challenged by distressed properties and the threat of more foreclosures that could push down values further.
“While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving,” Barry Rutenberg, chairman of the National Association of Home Builders and a builder from Gainesville, Florida, said today in a statement.

Geithner’s Bid to Recoup TARP Gets Boost From Stress Tests (Source: Bloomberg)
Treasury Secretary Timothy F. Geithner is getting a boost from the Federal Reserve as he seeks to recoup taxpayer money used to bail out banks during the financial crisis. Regions Financial Corp. (RF) and Zions Bancorporation (ZION) last week said they plan to repay money they received through the Troubled Asset Relief Program after passing Fed stress tests. The tests, designed to ensure that the largest U.S. banks could withstand another severe recession, indicate that that the two lenders are strong enough to repay TARP. The Treasury is trying to unwind the biggest chunks of TARP as President Barack Obama gears up for his re-election campaign. The public outcry over bailouts in 2008 and 2009 remains part of the political debate. Republican presidential candidate Rick Santorum, who was against bailouts, has criticized rival Mitt Romney for supporting aid to banks while opposing help for automakers.
“The administration needs to clean this out,” said Clifford Rossi, a former managing director of Citigroup Inc. (C)’s consumer lending group and a University of Maryland professor of business. “Now with the stress test release, this is a good time to pull the trigger.”

Fed’s Dudley Says U.S. Isn’t ‘Out of the Woods’: Economy (Source: Bloomberg)
Federal Reserve Bank of New York President William C. Dudley said signs the economy is improving don’t dispel risks to growth that include higher gasoline prices, fiscal cutbacks and a weak housing market. “The incoming data on the U.S. economy has been a bit more upbeat of late, suggesting that the recovery may be getting better established,” Dudley said today in a speech in Melville, New York. “But, while these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods in terms of generating a strong, sustainable recovery.” Dudley’s comments elaborated on a March 13 statement by the Federal Open Market Committee, which noted that unemployment has declined while remaining “elevated.” Dudley, FOMC vice chairman, said the economy has shown signs of strength partly because of inventory building and unseasonably warm weather. Responding to an audience question, he said “nothing has been decided” about more bond-buying by the Fed to spur growth.
The New York Fed chief’s comments “reiterate a very dovish position among the leaders of the FOMC, those setting the policy agenda,” said Eric Green, chief economist at TD Securities Inc. in New York and a former economist at the New York Fed. The speech is “consistent with the FOMC statement last week, but must also be seen as being more dovish, couching progress on the economic front with uncertainty,” he said.

Thailand May Hold Rates as Asia Gauges Risks From China to Oil (Source: Bloomberg)
Thailand and Taiwan may keep interest rates unchanged this week as Asian policy makers gauge the extent of a growth slowdown in China that’s adding to challenges posed by the European crisis and rising oil prices. Thailand will hold its benchmark one-day bond repurchase rate at 3 percent tomorrow, according to 19 of 21 economists surveyed by Bloomberg News, with two predicting a third consecutive cut to 2.75 percent. Taiwan may leave the discount rate on 10-day loans to banks at 1.875 percent on March 22, all 10 economists in a separate survey said. Central banks from Australia to South Korea refrained from cutting rates this month as higher energy costs boosted inflation risks, reducing the scope for monetary stimulus to counter a Chinese slowdown and Europe’s slump. International Monetary Fund Deputy Managing Director Zhu Min said yesterday that China is “heading for a soft landing,” while a report last week showed an improving U.S. labor market.
“Regional central banks mostly are still in this wait-and- see mode,” said Sylvia Chiu, an economist at SinoPac Financial Holdings Co. in Taipei. “Although the economic outlook is getting better as the U.S. economy is slowly coming out of the woods, it’s still uncertain whether it’s strong enough to drive a rebound in exports in Asia.”

RBA Saw Less Downside Risk in March Rate Pause: Minutes (Source: Bloomberg)
Australia’s central bank kept its benchmark interest rate unchanged this month as the nation’s mining investment boom intensified and risks from Europe’s debt crisis eased, minutes of its March 6 meeting showed. “Members noted that while this downside risk could still materialize, this seemed somewhat less likely than a few months ago,” the minutes released today by the Sydney-based Reserve Bank of Australia showed. “So long as inflation remained well contained, there would be ample scope for the bank to ease policy in such a scenario.” The decision to hold the benchmark rate for a second month at 4.25 percent reflects optimism European leaders will contain the region’s fiscal crisis amid signs of improvement in the global economy. RBA Governor Glenn Stevens and his board reduced borrowing costs twice late last year as employment stagnated and asset prices declined even as resource investment surged and the currency strengthened.
Policy makers noted in the minutes that the local dollar rose during the month to about the highest level in trade- weighted terms since 1985 and that the appreciation is driving “significant structural adjustment” in the economy.

Spain Torments Draghi on Deficit as Banks Tap Loans: Euro Credit (Source: Bloomberg)
Spanish Prime Minister Mariano Rajoy may be enjoying the European Central Bank’s emergency funds too much for Mario Draghi’s comfort. Rajoy’s loosening of a pledge to cut Spain’s deficit within days of the central bank’s latest three-year loan offering to banks has confronted the ECB president with just the behavior it wants to avoid. ECB officials are concerned the respite they have won for the region’s most vulnerable nations has eased pressure on them to address the budget shortfalls that first provoked the turmoil. “There’s a moral hazard element to this,” Ken Wattret, chief European economist at BNP Paribas SA in London, said in a telephone interview. “The ECB is clearly worried that in some countries the lower the risk premium on sovereign debt, the less urgency there will be to make some changes.”
Spanish 10-year borrowing costs have fallen 63 basis points to 5.19 percent since the ECB’s measures were announced in December, providing what Rajoy described as a “great relief” as Spanish lenders’ central-bank borrowings surged to record levels. His defiance on the deficit presents the ECB with the same quandary it faced last year, when former Italian premier Silvio Berlusconi’s government backpedalled on austerity pledged in return for ECB purchases of the nation’s bonds.

Monti to Meet Labor Unions Amid Fresh Warning on Crisis (Source: Bloomberg)
Italy’s Prime Minister Mario Monti will press ahead with efforts to revise the country’s labor laws this week, amid fresh warnings that the three-year-old European debt crisis is far from over. Monti will lead talks with unions and employers in a final round of negotiations beginning tomorrow as the government seeks an agreement this week. Decision makers meanwhile warned against complacency after delivery of the final element of Greece’s 130 billion-euro ($171 billion) bailout package and the completion of the world’s largest sovereign-debt restructuring last week. “Optimism should not give us a sense of comfort or lull us into a false sense of security,” International Monetary Fund Managing Director Christine Lagarde said at the China Development Forum in Beijing yesterday. “We cannot go back to business as usual,” she said, urging vigilance on oil prices, debt and the risk of slowing growth in emerging markets.
An easing of the crisis offered breathing room for Monti to seek an Italian labor-market overhaul and for euro-area ministers aiming to bolster euro bailout funding before a meeting at the end of the month. Still, urgency was underscored by an IMF warning that the Greek bailout held “exceptional risks” that could prompt a “disorderly” exit from the monetary union unless additional help is prepared.