20120328 1001 Global Market Related News.

Asia Stocks Fall as U.S. Data Fail to Encourage Investors (Source: Bloomberg)
Asian stocks as better-than- expected U.S. consumer confidence failed to encourage buying after the region’s benchmark equities index yesterday gained the most in two months. Japanese shares led losses after the expiration of a deadline for getting dividend payments. Samsung Electronics Co. (005930), South Korea’s biggest exporter of consumer electronics, lost 0.6 percent in Seoul. Mizuho Financial Group Inc. (8411), Japan’s third-largest bank by market value, paced losses among financial firms. Sharp Corp. (6753) was poised to rise by its daily limit after saying Foxconn Technology Group will buy a stake in the maker of flat panel displays. The MSCI Asia Pacific Index dropped 0.4 percent to 127.46 as of 9:46 a.m. in Tokyo, having lost 1.2 percent this month. The measure advanced 12 percent this year through yesterday, headed for the biggest quarterly gain since the three months ended September, 2009. The MSCI Asia Pacific excluding Japan Index slid 0.1 percent.
“U.S. data overnight were mixed, and as a result we are in a consolidation phase after markets put on some pretty gains, particularly in Japan,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. Asia. “In terms of reassessing the outlook over the next quarter or so, people will probably sit on the sidelines.”

Nikkei 225 Falls After U.S. Data Fails to Extend Rally (Source: Bloomberg)
Japanese shares fell after U.S. data failed to encourage investors and the Nikkei 225 Stock Average gained the most in six months yesterday. Sharp Corp. was poised to jump after saying it will sell a stake in its display unit to Foxconn Technology Group. The Nikkei 225 dropped 1.1 percent to 10,141.96 as of 9:06 a.m. in Tokyo, after yesterday recovering to the closing level on March 11 last year, the day of the earthquake and tsunami. The broader Topix slid 1.3 percent to 860.74, with shares falling as 78 percent of its companies prepare to go ex-dividend today.

U.S. Stocks Fall After S&P 500 Rallies to Four-Year High (Source: Bloomberg)
U.S. stocks retreated as a report showing American consumer confidence near the strongest level in a year failed to encourage investors after the Standard & Poor’s 500 Index advanced to an almost four-year high. Losses accelerated in the final 15 minutes of trading as financial companies slumped. Bank of America Corp. lost 3.3 percent as Robert W. Baird & Co. cut its rating. Apollo Group Inc. (APOL) fell 8.5 percent on new enrollment concern. Homebuilder Lennar Corp. (LEN) surged 4.7 percent amid better-than-estimated earnings. Pfizer Inc. (PFE) added 1.5 percent as Goldman Sachs Group Inc. raised the possibility of a full breakup of the company. The S&P 500 lost 0.3 percent to 1,412.52 at 4 p.m. New York time, after rising 1.7 percent in two days. The Dow Jones Industrial Average slid 43.90 points, or 0.3 percent, to 13,197.73. About 6.1 billion shares changed hands on U.S. exchanged today, or 8.8 percent below the three-month average.
“There’s maybe some short-term vulnerability, but it doesn’t really dent my longer-term optimism,” said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp. Her firm has $1.81 trillion in client assets. “We had a huge day yesterday. So, it’s not a big surprise not to see an immediate follow-through.”

Japan Stocks Recoup Quake Losses on Yen Slide, Building (Source: Bloomberg)
Japan’s Nikkei 225 Stock Average (NKY) erased losses since the country’s record earthquake as the declining yen and $241 billion of reconstruction spending helped make it the best-performing benchmark index in the developed world this year. The Nikkei 225 surged 21 percent in 2012 as central bank intervention helped weaken the yen, boosting the outlook for Japan’s exporters as the country rebuilds. Taiheiyo Cement Corp. (5233) led the Nikkei’s gains, climbing 61 percent on efforts to repair damage from the temblor and tsunami. Fast Retailing Co. (9983), a discount clothier, jumped 51 percent as electricity shortages forced people to buy more seasonal clothing. Something Holdings Co. (1408), a provider of ground surveying and strengthening, increased eightfold, the most of any Japanese listed stock. The Nikkei 225 rose 2.4 percent to 10,255.15 at the 3 p.m. close in Tokyo yesterday.
The gauge fell 1.7 percent to finish at 10,254.43 on March 11, 2011, when the earthquake struck 14 minutes before the market closed. The measure fell 16 percent in the next two trading days, the biggest decline since the October 1987 Black Monday crash. “It is profound that the market has finally made back its losses, but we have a long way to go toward true reconstruction,” said Ayako Sera, a market strategist at Sumitomo Trust & Banking Co. (8403), which manages the equivalent of $302 billion. “It was shocking the yen surged that much after the quake. The stronger yen had held back a stock recovery.”

European Stocks Drop After U.S. Consumer Confidence Data (Source: Bloomberg)
European stocks declined for the first time in three days, erasing an earlier advance, as confidence among U.S. consumers dropped and shares of energy companies retreated. Total SA (FP) plunged the most since 2008 as a North Sea platform belonging to France’s largest oil producer leaked gas for a third day. Royal Bank of Scotland Group Plc (RBS) gained 3.3 percent as the U.K. government was said to have held talks to sell part of its stake to Middle Eastern sovereign-wealth funds. The Stoxx Europe 600 Index (SXXP) retreated 0.5 percent to 266.92 at the close, after earlier advancing as much as 0.7 percent. The benchmark measure has still increased 9.2 percent this quarter, its biggest rally in the first three months of a year since 1998. “Total is a heavyweight in the indexes, so it has a lot of impact,” said Lionel Heurtin, a fund manager at Ofi Asset Management in Paris, which oversees $67 billion. “The news reminds us of BP, so it’s normal to be cautious.”
BP Plc reached an estimated $7.8 billion settlement this month with businesses and individuals damaged in the 2010 Deepwater Horizon oil rig disaster that killed 11 people and led to the world’s largest accidental spill.

Yen Gains Versus Peers as Stock Drop Boosts Refuge Demand (Source: Bloomberg)
The yen gained versus all of its major counterparts as investors flocked to refuge assets amid a decline in Asian equities. The euro held near a one-month high against the greenback before a European finance ministers’ summit this week where they are expected to agree to bolster the region’s debt-crisis firewall. The U.S. currency rose against the Australian and New Zealand dollars before a report forecast to show orders for durable goods rose last month, reducing the case for further easing by the Federal Reserve. “U.S. stocks fell and Asian stocks are a bit lower,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “If the stock market were to come under further pressure, then you’ll likely see Aussie down against the yen, euro down against the yen.”
The yen added 0.3 percent to 82.97 per dollar as of 10:15 a.m. in Tokyo. It fetched 110.65 per euro from 110.75. The 17- nation currency gained 0.2 percent to $1.3337 after climbing to $1.3386 yesterday, the highest since Feb. 29. Australia’s dollar weakened 0.2 percent to $1.0443 and New Zealand’s dipped 0.2 percent to 81.94 U.S. cents.

Foxconn Counts on Apple’s Future Through Sharp Investment (Source: Bloomberg)
Foxconn Technology Group (FOXCGZ) and founder Terry Gou will invest 133 billion yen ($1.6 billion) in Sharp (6753) Corp. and its display unit as the maker of Apple Inc. (AAPL)’s iPad seeks a supply of flat panels to drive future growth. Foxconn, including Taipei-listed flagship Hon Hai Precision Industry Co. (2317) will buy 9.9 percent of Sharp Corp. for 66.9 billion yen in a new-share sale, the Osaka-based company said in a statement. Foxconn chairman Terry Gou and related investment companies will buy 46.5 percent of Sharp Display Products Corp., a venture with Sony Corp. (6758), for 66 billion yen. Yesterday’s deal, the largest Japanese acquisition by a Taiwanese buyer, includes an agreement to purchase as much as 50 percent of Sharp Display’s LCD panels. Sharp (6753), which last month forecast a record 290 billion-yen loss for the fiscal year as TV prices dropped, may begin supplying panels for Apple’s iPad next month, according to researcher IHS Inc.
“This is a risky and aggressive move by Foxconn, which is betting on current and future Apple products, including the iPad and an Apple television, a product which doesn’t even exist,” said Vincent Chen, a Taipei-based analyst at Financial Holding Co. who recommends investors buy Hon Hai. “Foxconn needs the acquisition to get advanced display technology, which it currently lacks.”

Treasuries Rise With Dollar as S&P 500 Index Retreats (Source: Bloomberg)
Treasuries rose, trimming the biggest monthly drop in more than a year, after an auction generated higher-than-average demand. The dollar strengthened against most major counterparts, and the Standard & Poor’s 500 Index fell from an almost four-year high. Ten-year Treasury yields lost seven basis points to 2.18 percent at 4 p.m. in New York, paring the monthly gain to 21 basis points. The dollar added 0.3 percent to $1.3323 per euro as it strengthened versus 14 of 16 major counterparts. The Standard & Poor’s 500 Index slipped 0.3 percent to 1,412.52 after closing at the highest level since May 2008 yesterday. The Nikkei 225 Stock Average erased losses from last year’s earthquake. Natural gas slumped to a 10-year low on speculation government data this week will show a growing surplus. Treasuries gained as the government sold $35 billion of two-year securities. Federal Reserve Chairman Ben S. Bernanke signaled yesterday he will continue to stimulate the economy.
The economic recovery is not yet assured and unemployment remains too high, Bernanke told ABC News anchor Diane Sawyer, according to transcripts of the interview released after the close of markets today. “The auction went very well, and should extend to the rest of the week’s auctions given the sentiment,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities SA, a primary dealer obliged to bid at Treasury offerings. “There is less risk appetite, which is beneficial for bonds. Going into quarter-end and month-end, there is more reluctance to take on risk position because people want to pay it safe.”

Consumer Confidence in U.S. Holds Close to One-Year High (Source: Bloomberg)
An improving job market helped keep consumer confidence close to the highest level in a year in March as a growing number of Americans said they planned to buy cars, homes and appliances. The Conference Board’s index was 70.2 this month, in line with the median forecast in a Bloomberg News survey, down from a revised 71.6 reading in February, according to the New York- based research group. Another report today showed home prices dropped at a slower pace in January, signaling stabilization in housing that may begin to brighten moods. The best six months of job growth since 2006, unemployment at a three-year low, and stock-market gains are giving Americans the means to withstand higher costs at the gas pump. A pickup in buying plans this month shows a sustained optimism may keep driving consumer spending, which accounts for about 70 percent of the economy.
“It’s a tug of war -- the labor market versus gasoline prices,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York. “We are close to that key psychological level of $4 a gallon. Assuming gas prices don’t shoot to the moon, consumers will keep spending.”

Bernanke Says Too Early to Declare Victory on U.S. Recovery (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said unemployment remains too high, the recovery in the U.S. economy isn’t assured and policy makers don’t rule out any further options to boost growth. “It’s far too early to declare victory,” Bernanke said, according to a transcript of an interview with ABC News anchor Diane Sawyer provided by the network. “The recent news has been good. But I think we need to be cautious and make sure this is sustainable. And -- we haven’t quite yet got to the point where we can be completely confident that we’re on a track to full recovery.” Asked if another round of quantitative easing, or large- scale bond purchases, remains “on the table,” the 58-year-old Fed chief said, “we don’t take any options off the table.” He added: “We have to be prepared to respond to however the economy evolves.”
The remarks, airing on “World News with Diane Sawyer” at 6:30 p.m. on the ABC Television Network, expand on a speech by Bernanke yesterday in Arlington, Virginia, in which he said the fall in the jobless rate to 8.3 percent may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009.” Significant further improvement in reducing unemployment will probably require faster growth, he said.

Bernanke Says Fed Crisis Response Prevented Global Meltdown (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said the central bank’s aggressive response to the 2007-2009 financial crisis and recession helped prevent a worldwide catastrophe. “We did stop the meltdown,” Bernanke said today in the third of four lectures to undergraduates at George Washington University. “We avoided what would have been, I think, a collapse of the global financial system.” The lectures are the latest effort by the Fed to explain its actions to the public as it comes under scrutiny by critics in Congress and on the campaign trail. Representative Ron Paul, a Texas Republican who is seeking his party’s presidential nomination, today criticized the Fed for its aid to the European Central Bank. Today’s talk in Washington focused on the Fed’s response to the crisis. In the previous one, Bernanke examined its roots, including the boom and bust in home prices and the Fed’s failure to recognize vulnerabilities in the financial system.
Following the bankruptcy of Lehman Brothers Holdings Inc. in 2008, the central bank flooded the financial system with liquidity, expanding its balance sheet to $2.3 trillion by December of that year from $900 billion in September.

Home Prices in U.S. Cities Fell at Slower Pace in January (Source: Bloomberg)
Home prices in 20 U.S. cities dropped at a slower pace in January, pointing to stabilization in the real estate market. The S&P/Case-Shiller index (SPX) of property values in 20 cities fell 3.8 percent from a year earlier, matching the median forecast of 32 economists surveyed by Bloomberg News, after decreasing 4.1 percent in December, a report from the group showed today in New York. Prices were little changed in January from the prior month, the best performance since July. Property values are steadying as a strengthening labor market underpins housing demand, which may allow the industry that precipitated the recession to contribute to growth this year. Nonetheless, the recovery in sales may be restrained by foreclosures that are putting more properties onto the market.
“We are starting to see a slightly less-negative picture,” said Sean Incremona, a senior economist at 4Cast Inc. in New York, who correctly projected the decline. “We have seen some slight progress from very depressed levels, but there’s still a long, long way to go.”

Japan Tax Battle Looms as DPJ Finishes Plan Doubling Sales Levy (Source: Bloomberg)
Japanese Prime Minister Yoshihiko Noda’s ruling party finalized details of its plan to double the nation’s consumption tax, clearing the way to submit legislation to parliament. The Democratic Party of Japan agreed early this morning on the final wording of the bill, which states the levy could be halted in the event of dire economic conditions. DPJ members approved a plan last year to raise the tax to 8 percent in April 2014 and 10 percent in October 2015. Submitting the legislation to parliament sets the stage for a battle with the opposition Liberal Democratic Party, which backed away from supporting a similar plan when it held power. While Noda said earlier this month he believes the parties can reach an agreement, LDP leader Sadakazu Tanigaki has suggested new elections should be called first.
“Given the development of political discussions, it’s getting increasingly unclear whether Noda’s government can conduct a vote for the sales tax bill during the current Diet session and pass it,” said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. “The LDP, the largest opposition group, won’t likely cooperate on the bill easily.”

South Korean Manufacturer Confidence Climbs to 6-Month High (Source: Bloomberg)
South Korean manufacturers’ confidence rose to the highest level in six months on signs that the outlook for global growth is improving. An index measuring expectations for April climbed to 85 from 84 for March, the Bank of Korea said in a statement in Seoul today. A measure of expectations at non-manufacturing companies advanced to 82 from 80. Progress in containing Europe’s debt crisis has buoyed confidence, along with improvements in the U.S. economy and Federal Reserve Chairman Ben S. Bernanke signaling that an accommodative monetary policy may continue. South Korea’s consumer sentiment index rose to a four-month high, a central bank report showed yesterday.
“Broad sentiment and economic conditions are apparently improving, which will likely reduce any odds of an interest rate cut and buoy the won,” said Lee Sang Jae, a senior economist at Hyundai Securities Co. in Seoul. “The first quarter of this year will be a bottom and the economy will likely gain pace from the second quarter, with the European crisis easing and major economies picking up.” The Bank of Korea left its benchmark rate unchanged at 3.25 percent on March 8 for a ninth straight month, saying that downside risks to growth persist while inflation expectations remain high. Consumer inflation moderated to a 14-month low of 3.1 percent in February, within the central bank’s target range.

Investors Hesitate as Frontier Market Myanmar Faces Elections (Source: Bloomberg)
Myanmar’s emergence as Asia’s next tiger economy is more potential than reality as a rush of investors finds little to spend money on besides a limited supply of hotel rooms after six decades of isolation. “Every day, another delegation, another delegation, another delegation, and no one’s putting money on the table,” says Tony Picon, associate director of property broker Colliers International Thailand. “The business community that’s visiting Myanmar must be honest and say ‘We’re just looking, we’re not going to buy,’ and not leading a false sense of anticipation from the local community.” Investors’ first hurdle is the sanctions maintained by the U.S. and Europe, which policy makers are preparing to review following by-elections next week that include dissident Aung San Suu Kyi. Even then, restrictions on capital flows, lack of a developed stock exchange, an untested legal environment and rudimentary infrastructure will offer plenty of reasons for holding off putting money in the former dictatorship.
A flow of corporate executives and tourists to Yangon, the former capital and largest city, has “astronomically” lifted hotel prices in the past few months to as high as $400 per night, according to Picon. At the same time, many businesses are balking at long-term deals, making local agents reluctant to deal with foreigners, he said.

Europe’s Austerity Push Breaks Mother’s Promise of Social Model (Source: Bloomberg)
Ester Artells’s mother told her that if she worked hard she would go a long way. Growing up in Reus in northern Spain (IBEX), Artells understood that a good education would give her the career and lifestyle her mother was denied by the military regime of General Francisco Franco. The economic slump has forced the 35-year-old biologist to move to France, putting a painful twist on the parental advice she received in what’s now the heartland of European unemployment. “It was clear to me, as soon as I finished my thesis, I’d be packing my bags,” said Artells, who found a research post at the University of Aix-Marseille after completing her doctorate last year. “For my mother, it’s very difficult. Everything we’ve fought for since the dictatorship is being wrecked.” Across Europe, parents who assumed the social model built by governments since World War II would make each generation better off than the last are watching the sovereign debt crisis sweep away the promises they made to their children.
Greek teachers and state workers are witnessing the end of the job for life and English students face U.S.-style tuition fees, while the French have been forced to join other Europeans in retiring later. In the background, politicians across the 27 European Union members are implementing austerity measures to the tune of about 450 billion euros ($600 billion), according to government announcements.

French Consumer Confidence Unexpectedly Jumped in March (Source: Bloomberg)
French consumer confidence unexpectedly jumped by the most in almost five years in March as the euro region’s second-largest economy prepares for a possible change of government. A measure of sentiment rose to 87 from 82 in February, national statistics office Insee said in Paris today. Economists forecast an unchanged reading, according to the median of 16 estimates in a Bloomberg News survey. The gain was the biggest since May 2007, when Nicolas Sarkozy won France’s presidency promising to bolster household purchasing power. “Every five years people think the next government will do better,” said Dominique Barbet, an economist at BNP Paribas in Paris. “This time they’re opening the champagne early.”
Opinion surveys point to a victory for Sarkozy’s socialist rival Francois Hollande in presidential elections that conclude on May 6. While Sarkozy and Hollande are seen as neck-and-neck in the first round of voting, scheduled for April 22, polls consistently show Hollande leading Sarkozy by an unprecedented margin for the May 6 run-off between the two leading candidates.