Asian Stocks Drop on Growth as Australian Dollar Falls (Source: Bloomberg)
Asian stocks fell, with the regional benchmark index heading for its biggest weekly decline this year after European and Chinese manufacturing contracted. The MSCI Asia Pacific Index (MXAP) slipped 0.6 percent as of 9:25 a.m. in Tokyo, heading for a 1.4 percent drop this week, the most since the period ended Dec. 16. The Nikkei 225 Stock Average declined 1 percent today, while Standard & Poor’s 500 Index futures added 0.1 percent. The Australian dollar was poised for its biggest weekly drop in three months before a report on business sentiment in China. The yen has advanced 0.9 percent this week. “You have a more cautious attitude toward risk and, at the same time, the Japanese trade figures question the idea that Japan’s external accounts are in terrible shape,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “Risk-sensitive trades are being pared back, which favors the yen.”
A gauge of European manufacturing fell to 47.7 as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics yesterday. A preliminary measure of Chinese manufacturing slipped to 48.1 in March, the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics.
Asian Stocks Head for Weekly Loss on Europe Economic Data (Source: Bloomberg)
Asian stocks dropped after manufacturing contracted more than economists forecast in the euro-area, dimming the outlook for global economic growth and Asian exports. Nintendo Co. (7974), a manufacturer of game consoles that gets a third of its sales in Europe, slid 2.5 percent in Osaka. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer and the world’s largest mining company, lost 1.4 percent in Sydney after metal and oil prices fell yesterday. QR National, an Australian rail freight company, sank 3.5 percent after revising its full-year earnings guidance. The MSCI Asia Pacific Index (MXAP) declined 0.6 percent to 126.12 as of 9:27 a.m. in Tokyo, headed for a 1.4 percent drop for the week. Japan’s Nikkei 225 Stock Average (NKY) slid 1 percent. Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index slipped 0.4 percent.
S&P 500 Trims Longest Monthly Rally Since 2009 on China (Source: Bloomberg)
U.S. stocks retreated, trimming the longest monthly rally since September 2009 for the Standard & Poor’s 500 Index, as manufacturing contracted in China and Europe and FedEx Corp. (FDX) tumbled amid a disappointing forecast. FedEx sank 3.5 percent after the world’s largest cargo airline predicted slower growth in coming quarters. The Dow Jones Transportation Average, which is considered a proxy for economic growth, slumped 2.1 percent. Commodity shares had the biggest losses in the S&P 500 among 10 groups as Alcoa Inc. (AA) and Chevron Corp. (CVX) dropped at least 2.3 percent. Bank of America Corp. (BAC) fell 2.2 percent to pace declines in financial shares. The S&P 500 declined 0.7 percent to 1,392.78 at 4 p.m. New York time, slumping 1.2 percent in three days. The gauge has risen 2 percent in March, on pace for a fourth monthly rally. The Dow Jones Industrial Average fell 78.48 points, or 0.6 percent, to 13,046.14. The Russell 2000 Index (RTY) slid 1 percent to 821.44.
About 6.5 billion shares changed hands on U.S. exchanges, almost in line with the three-month average. “We are watching China closely,” said Scott Armiger, a portfolio manager at Christiana Trust in Greenville, Delaware, which has $11 billion in client assets. “There are still a lot of questions about the pace of economic growth,” he said. “It’s not unusual to have a pullback in the market after a strong run. We’ve made a lot of money in less than six months.”
Europe Stocks Drop for Fourth Day as Manufacturing Falls (Source: Bloomberg)
European stocks fell for a fourth day, the longest losing streak since November, as manufacturing contracted in China and the euro area. Randgold Resources Ltd. (RRS), which operates three mines in Mali, plunged the most since 2008 after a military coup in the West African nation. Baloise (BALN) Holding AG, Switzerland’s third- largest insurer, and Meyer Burger Technology AG (MBTN), a maker of solar-panel equipment, slid more than 4 percent in Zurich trading after profit declined. The Stoxx Europe 600 Index (SXXP) retreated 1.2 percent to 265.49 at the close of trading, the lowest since March 12. The gauge has still gained 8.6 percent this year as the European Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders and U.S. economic data surpassed estimates.
“People have been too optimistic regarding global economic recovery,” said Stephane Ekolo, chief European strategist at Market Securities in London. “We will hear more and more people saying China is heading for a hard landing and that the euro zone isn’t finished with its problems.” National benchmark indexes fell in all of the 18 western European markets. The U.K.’s FTSE 100 slipped 0.8 percent, France’s CAC 40 retreated 1.6 percent and Germany’s DAX declined 1.3 percent.
GLOBAL MARKETS-Stocks slip in Europe on China concerns
LONDON, March 22 (Reuters) - European stocks slipped on Thursday, keeping the benchmark world equity index below recent 8-month highs, while the dollar was weaker against the yen as data showing China's factory activity shrank renewed concerns about global growth.
"There is a concern, which I share, that we have a rather uneven recovery with the euro zone periphery in particular rather weak and former growth engines like China also not seeing a pronounced recovery," Gerhard Schwarz, head of equity strategy at Baader Bank, said.
Emerging Stocks Drop as China Manufacturing May Contract (Source: Bloomberg)
Emerging-market stocks extended their longest losing streak this year after data showed China’s manufacturing may contract for a fifth month while euro-area services and factory output shrank more than economists forecast. The MSCI Emerging Markets Index (MXEF) fell 0.7 percent to 1,040.39 by 10:39 a.m. in New York, slipping for a sixth day. Energy and materials companies retreated the most, with OAO Gazprom, the world’s largest natural gas exporter, tumbling 2 percent. JBS SA (JBSS3), the world’s largest beef producer, headed for its biggest loss in two months after reporting lower-than- expected profit for the fourth quarter.
A preliminary measure of Chinese manufacturing fell to 48.1 in March, the lowest level since November, according to data from HSBC Holdings Plc and Markit Economics. A euro-area gauge of services and manufacturing output dropped to 48.7 from 49.3 in February, London-based Markit said in an initial estimate today, below all but one forecast in a Bloomberg News survey of 21 economists. Readings below 50 indicate contraction. “This reinforces a sense that growth is slowing down, but for China at least we think we come out on the other side of this with easing,” John Lomax, an emerging-markets strategist at HSBC, said by phone from London. “For Europe, it’s a bit more problematic in that Europe doesn’t have the ability to change policy in the same way, and it suggests a recession this year.”
Yen Set for Weekly Gains as Stocks Fall on China Concern (Source: Bloomberg)
The yen was set for weekly gains against all 16 of its major peers amid concern Chinese growth is slowing and on speculation Asian equities will extend a global stocks rout. The Australian dollar was poised for its biggest weekly drop this year before a report on business sentiment in China, which follows data yesterday that indicated manufacturing is shrinking in the world’s second-largest economy. Demand for the U.S. dollar was limited after Federal Reserve Chairman Ben S. Bernanke said low inflation allows “more leeway” on policy. The yen was 0.3 percent from a one-week high against the greenback after Japan posted an unexpected trade surplus. “You have a more cautious attitude toward risk and, at the same time, the Japanese trade figures question the idea that Japan’s external accounts are in terrible shape,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “Risk-sensitive trades are being pared back, which favors the yen.”
The yen traded at 82.54 per dollar as of 9:10 a.m. in Tokyo, unchanged from yesterday in New York. The Japanese currency has advanced 1.1 percent this week and yesterday touched 82.33, the strongest since March 13. The 17-nation euro fetched 109.01 yen from 108.95 and bought $1.3206 from $1.3201. The so-called Aussie dollar has dropped 1.8 percent this week to $1.0405, its largest decline since the five-day period ended Dec. 16.
FOREX-Aussie hits 2-mth low on China flash PMI; Europe data eyed
TOKYO, March 22 (Reuters) - The Australian dollar dropped to a two-month low after data showed China's manufacturing activity shrank in March for a fifth straight month, underscoring concerns about growth slowing in the world's second largest economy.
"Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand. This calls for further easing steps from the Beijing authorities," HSBC chief China economist Qu Hongbin said.
U.S. Outlook Optimism at Eight-Year High: Economy (Source: Bloomberg)
The number of Americans saying the U.S. economy is getting better rose in March to the highest level since 2004 as a decline in claims for unemployment benefits offered more evidence of a labor-market recovery. Thirty-four percent of respondents to Bloomberg’s monthly consumer expectations survey said the economy was improving, the largest share since January 2004. The pickup boosted the monthly expectations index to the highest in a year. Figures from the Labor Department today showed jobless claims decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008. The best six months of job growth since 2006 are boosting the optimism of consumers whose spending accounts for 70 percent of the economy. Another report today showed the index of leading indicators rose in February by the most in 11 months, signaling the U.S. expansion will strengthen, helping to sustain global growth as China slows and Europe threatens to sink into a recession.
“The economy will be gradually building up momentum going forward,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “We will be shouldering a little bit more of the burden given the slowdown in Europe and some degree of slowing in emerging markets.”
Deep Recessions in U.S. May Be the Norm, Say NBER Economists (Source: Bloomberg)
Deeper recessions and more gradual recoveries will be the norm rather than the exception as the U.S. workforce grows at a slower pace, according to economists on the panel that determines when slumps begin and end. The typical contraction “will have steeper declines and slower recoveries in output and employment,” according to a paper by Harvard University’s James Stock and Princeton University’s Mark Watson presented today at the Brookings Panel on Economic Activity in Washington. “We can expect recoveries from future recessions to be ‘jobless’ as well,” they said, similar to the two most recent rebounds. The economists, who are members of the National Bureau of Economic Research’s business cycle dating committee, found the severity, length and aftermath of the 18-month slump that ended in June 2009 were predictable based on comparisons with past downturns.
The conclusion stands in contrast to a 2009 study by Carmen M. Reinhart and Kenneth Rogoff that showed recoveries from recessions caused by financial meltdowns are different. Stock and Watson’s research shows the “recession was the result of one or more large shocks, that these shocks were simply larger versions of ones that had been seen before, and that the response of macro variables to these shocks was almost entirely in line with historical experience,” they wrote. Stock and Watson joined the NBER’s committee in September 2009.
Most Americans Since 2004 See Economy Improving as Jobs Pick Up (Source: Bloomberg)
More Americans this month said the economy was improving than at any time in eight years as the job market picked up. The share of households viewing the economy as heading in the right direction rose to 34 percent in March, the most since January 2004, pushing the Bloomberg monthly expectations gauge to a one-year high of 1. The weekly Bloomberg Comfort Index (COMFCOMF) was minus 34.9 in the period ended March 18, down from a four-year high of minus 33.7 over the previous seven days. “The sense that things have finally stabilized has clearly boosted confidence,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Downside risk to both the overall level of comfort and Americans perceptions of the direction of the economy remains” as fuel prices increase, he said.
The best six months of job growth since 2006 is probably behind the increase in optimism, raising the odds that the spending that accounts for about 70 percent of the economy will strengthen. Gains in incomes and employment may be among reasons households have so far been able to weather the jump in gasoline prices.
China Manufacturing Contraction May Worsen, Data Show (Source: Bloomberg)
A Chinese manufacturing index indicated a worse contraction this month, bolstering the case for Premier Wen Jiabao to add measures to sustain growth even as he prolongs a campaign to cool property prices. The preliminary 48.1 reading in a purchasing managers’ index from HSBC Holdings Plc and Markit Economics today is the lowest since November and compares with a final 49.6 in February. A result below 50 indicates a contraction. Asian stocks pared gains and oil and copper fell as the report added to concerns about a deeper slowdown in the world’s second-biggest economy. Wen this month pledged pre-emptive fine- tuning of fiscal and monetary policies to support growth after increases in gross domestic product slowed in 2011. “Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand, and this calls for further easing steps,” saidQu Hongbin, Hong Kong-based chief economist for China at HSBC.
Hong Kong Middle Class Backlash Fed by Tycoons Chosing Leaders (Source: Bloomberg)
Stephen Chung gave up on buying an apartment in Hong Kong after realizing it would take him 10 years to save the $115,000 deposit for a two-bedroom box in the northern part of the former British colony. He isn’t expecting any help from the city’s next leader. “In this place there are only two kinds of people -- those who can afford to buy a home and all the good stuff, and those who can’t,” said Chung, 25, who quit his advertising job last year to start a tourism firm. “There’s no more middle class.”
Chung’s bitterness reflects a broader disillusionment with the city’s leadership ahead of a March 25 election, which will see a 1,193-member committee of billionaires, businessmen, lawmakers and academics choose a new chief executive for the next five years. While China’s tacit approval is seen as necessary to win, the campaign -- with two candidates dogged by personal scandal and conflict of interest allegations -- has exacerbated public discontent over collusion between business and politics and fueled accusations that leaders are out of touch with regular people.
The new chief executive will inherit a city with the biggest wealth gap in Asia, which has been spawned by an influx of money from mainland China and eight years of rising property prices that have made Hong Kong the world’s most expensive place to buy a home. At stake is the city’s ability to maintain its status as the best place to do business and as a gateway to the world’s fastest-growing region, as the new leader tries to balance China’s demands for stability with the aspirations of Hong Kong’s 7.1 million residents.
Japan’s Unexpected Trade Surplus Adds to Rebound Signs (Source: Bloomberg)
Japan reported an unexpected trade surplus for February and higher-than-forecast exports, adding to evidence of a rebound in the world’s third-biggest economy. Overseas shipments dropped 2.7 percent from a year earlier, the finance ministry said today in Tokyo. The median forecast of 28 economists surveyed by Bloomberg News was for a 6.5 percent decrease. Imports rose a more-than-estimated 9.2 percent, leaving a surplus of 32.9 billion yen ($395 million). The yen’s decline of about 7 percent against the dollar since the Bank of Japan expanded monetary stimulus on Feb. 14 is making exports more competitive for companies such as Sony Corp. (6758) The Cabinet Office said yesterday that the economy is picking up “slowly” after the earthquake and tsunami that devastated northeastern regions in March last year.
Today’s figures indicate that “a recovery in exports will likely be sustainable,” said Kohei Okazaki, an economist at Nomura Securities Co. (NCLZ) in Tokyo. “Japan’s economy will likely return to growth this quarter and maintain a good pace of growth in the following quarters.”
U.K. Retail Sales Decline More Than Economists Forecast (Source: Bloomberg)
U.K. retail sales fell more than economists forecast in February as households curtailed spending after a weaker-than-estimated increase the previous month. Sales including fuel fell 0.8 percent from January, the most in nine months, the Office for National Statistics said today in London. Economists forecast a 0.5 percent decline, according to the median of 23 estimates in a Bloomberg News survey. The increase in January was revised to 0.3 percent from 0.9 percent. Chancellor of the Exchequer George Osborne said yesterday that Britain will avoid another recession as he announced an increase in the threshold before workers begin paying income tax. Still, inflation that is outpacing wage growth and rising unemployment may curtail any increase in consumer demand and weigh on the economy’s recovery from a 0.2 percent drop in gross domestic product in the fourth quarter.
“The data puts a real dent in hopes that the consumer may be perking up appreciably and tempers hopes that GDP will see a relatively decent return to growth in the first quarter,” Howard Archer, an economist at IHS Global Insight in London, said in a research note. “The concern is that consumers will be cautious in their spending for some time to come.”
Osborne’s U.K. Budget Revenue Forecasts Called Into Doubt by IFS (Source: Bloomberg)
U.K. Chancellor of the Exchequer George Osborne used revenue assumptions in his budget yesterday that may turn out to be overoptimistic, the Institute for Fiscal Studies said. “One worry for the chancellor as the dust settles on his third budget is that in an attempt to achieve a fiscally neutral package he has created some risks,” IFS Director Paul Johnson told reporters in London today. “This budget may turn out to be less fiscally neutral than intended.” The research group questioned whether Osborne’s decision to lower the top rate of income tax to 45 percent from 50 percent next year will only cost 100 million pounds ($158 million) a year, as the chancellor said yesterday. It said there are also concerns about whether caps on relief for higher-rate taxpayers will bring in 300 million pounds and an increase in stamp duty on purchases of the most expensive houses and apartments will produce 300 million pounds as Osborne expects.
Osborne pledged there would be no “unfunded giveaways” in his budget, citing threats of a downgrade of Britain’s AAA status from Fitch Ratings and Moody’s Investors Service as a reason to redouble efforts to stick to his austerity program, the most severe since at least World War II, and narrow a budget deficit that’s more than 8 percent of gross domestic product.
Euro-Area Services, Manufacturing Contracted in March: Economy (Source: Bloomberg)
Euro-area services and manufacturing output contracted more than economists forecast in March, adding to signs the economy has slipped into recession. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 48.7 from 49.3 in February, London-based Markit Economics said in an initial estimate today. Economists forecast a gain to 49.6, according to the median of 21 estimates in a Bloomberg News survey. A reading below 50 indicates contraction. Europe’s economy may struggle to regain strength after shrinking 0.3 percent in the fourth quarter as governments toughen budget cuts, rising oil prices erode consumers’ purchasing power and global demand weakens. In the U.K., retail sales fell more than economists forecast in February. Ireland’s economy slipped back into a recession in the fourth quarter, and Chinese manufacturing contracted this month.
“Today’s figures clearly show that the recession in the euro zone is far from over,” said Peter Vanden Houte, an economist at ING Group in Brussels. “This increases the danger that the debt crisis could come back with vengeance” by making it more difficult for governments to cut budget deficits.
Ireland Said to Ready Bank-Debt Proposal for ECB Review (Source: Bloomberg)
Irish Central Bank Governor Patrick Honohan will probably ask the European Central Bank Governing Council today for permission to effectively delay a cash payment on its banking debt, as the country tries to ease the burden of saving its financial system, said two people with direct knowledge of the matter. The state is due to make a 3.1 billion-euro ($4.1 billion) payment to the former Anglo Irish Bank Corp., which is then supposed to use the funds to reduce its emergency borrowings from the country’s central bank. Instead, the lender may use the funds to buy a new Irish government bond, meaning no net cash outflow from the state. The bond can be used to tap funding from the ECB, the people said.
Irish Finance Minister Michael Noonan confirmed to lawmakers late yesterday the state was considering using a bond for the March payment, without giving more detail. The concession may facilitate a longer-term effort to cut the cost of Ireland’s banking rescue, which helped tip the nation into an international bailout in 2010. The Irish government is seeking European help to restructure about 30 billion euros of so-called promissory notes used to rescue the former Anglo Irish. “It makes sense for European officials to facilitate a restructuring, thus improving the chances of a return to the market for Ireland,” said Juliet Tennent and Dermot O’Leary, economists at Goodbody Stockbrokers in Dublin, in a note. Neil Whoriskey, a spokesman for the Irish Central Bank, and Wiktor Krzyzanowski, a spokesman for the ECB, declined to comment.
Thailand’s Kittiratt Gives Baht Target While Urging Lower Rates (Source: Bloomberg)
Thailand’s Finance Minister Kittiratt Na-Ranong gave a target for where the baht should trade at and urged the central bank to cut the benchmark interest rate by half a percentage point to help exporters, pushing the currency to a one-month low. Thai-based companies faced difficulties shipping goods when the baht approached a level of 30 per dollar, he said in an interview with Bloomberg Television yesterday in Hong Kong. Exports fell more than expected in January as factories struggled to resume production after the worst flooding in almost 70 years and as global demand weakened. “Those companies have been adjusting themselves and improved their efficiency in order to barely survive,” Kittiratt said at the Credit Suisse Asian Investor Conference. “So the range of 32 to 34 would be very good.”
The minister is renewing his push for policy easing after the Bank of Thailand this week joined central banks from Australia to South Korea in keeping interest rates unchanged, refraining from adding to two previous reductions as higher energy costs boosted inflation risks. Kittiratt had urged the Bank of Thailand to lower borrowing costs and help businesses cope with the country’s worst flooding since 1942 before the monetary authority started cutting in November.
IMF Seeks Broad Support in Egypt for Potential Loan Program (Source: Bloomberg)
The International Monetary Fund wants measures attached to a potential loan to Egypt to have “broad political support,” a spokesman for the fund said. A team just visited the country “to lay groundwork for the return of the technical team that can continue work on Egypt’s economic program,” spokesman David Hawley told reporters in Washington today. The IMF consulted with different stakeholders “to make sure that if and when a program is agreed, there is a clear understanding on both sides about the support needed for implementing policies.” Egypt officially requested the loan from the fund in January, as the government seeks to boost an economy struggling to recover from a year of unrest in the wake of the uprising that ousted former President Hosni Mubarak. The economy grew 1.8 percent in the fiscal year through June, the slowest pace in at least a decade.
Hawley also said that upcoming elections in Greece are “not an obstacle” to the implementation of a new 130 billion- euro ($171 billion) program that the IMF helps finance. He said it is “premature to speculate about” the success of the aid program for Portugal.
No comments:
Post a Comment