Traders Eye 45-Minute Window After Good Friday Report (Source: Bloomberg)
Wedbush Securities Inc.’s Michael James will be up at 5:30 a.m. in Los Angeles tomorrow, even though equity markets are closed for a holiday and he doesn’t have to work. The reason for the early wake-up: jobs. While stock markets around the world are shut for Good Friday, the Labor Department will publish its monthly employment report at 8:30 a.m. New York time. Equity traders will have 45 minutes to react, as trading of futures linked to the Standard & Poor’s 500 Index and Dow Jones Industrial Average will continue until 9:15 a.m. on CME Group Inc. (CME)’s Chicago Mercantile Exchange. “It’s too important,” James, managing director of equity trading at Wedbush, said in a telephone interview on April 2. “People, whether they’re working or not, whether they’re on the buy-side or sell-side, are going to be paying attention to the number and the reaction in the futures.”
The U.S. economy added 205,000 jobs in March, according to the median estimate of 80 economists surveyed by Bloomberg before the report. That would be the fourth straight month employers added more than 200,000 workers, according to data compiled by Bloomberg.
Asian Stocks Drop as German Factory Slump Clouds Outlook (Source: Bloomberg)
Asian stocks fell for a second day, with the regional benchmark index headed for its biggest weekly drop this year, after German industrial output fell more than expected, fueling concern Europe’s economy is contracting and damping the outlook for export earnings. Sony Corp. (6758), which generates one fifth of its sales in Europe, lost 1.7 percent in Tokyo. Kobe Steel Ltd. led declines among makers of the material after posting a loss twice as big as forecast. Astellas Pharma Inc. rose 2.6 percent after the drug maker’s new treatment for overactive bladders won the backing of advisers to U.S. regulators.
The MSCI Asia Pacific Index fell 0.4 percent to 124.81 as of 9:21 a.m. in Tokyo, with about four stocks falling for each that rose. For the week, the measure is down 1.4 percent, the biggest weekly decline since the period ended Dec. 16. Markets in Hong Kong, Australia and Singapore are closed today for a public holiday. Volume on Japan’s main stock indexes was about 25 percent below the 30-day intraday average ahead of a jobs report in the U.S. today. “Europe’s economy faces a downside risk, and it remains to be seen whether it will spread across the world,” said Kazuyuki Terao, chief investment officer of RCM Japan Co. “It’s hard to buy today. The U.S. jobs data may be relatively strong, but we don’t know how the market will react to it.”
Japanese Stock Drop as Europe Debt Crisis Concern Flares (Source: Bloomberg)
Japanese stock futures declined as rising bond yields in Europe fueled concern the debt crisis has yet to be contained, overshadowing signs of improvement in the U.S. jobs market. American depositary receipts of Sony Corp. (6758) sank 1.2 percent from the closing share price in Tokyo as the euro weakened against the yen, crimping the earnings outlook for Japan’s exporters. Shares of Kobe Steel Ltd. (5406) may be active after the steelmaker posting a wider-than-expected loss. Inpex Corp. (1605) and other energy companies may advance after crude prices yesterday gained for the first time in three days. “In Europe, investors are starting to be conscious of the unsustainability of Spain’s debt and that’s weakening the euro against the yen,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.
Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 9,715 in Chicago yesterday, compared with 9,790 in Osaka, Japan. They were bid in the pre-market at 9,720 in Osaka, at 8:05 a.m. local time. Markets in Australia, New Zealand and Hong Kong are closed today for a holiday.
Japanese Stock Futures Gain on U.S. Confidence, Spending (Source: Bloomberg)
Japanese stocks declined, with the Nikkei 225 Stock Average heading for its biggest weekly loss since August, as rising bond yields in Europe fueled concern the debt crisis has yet to be contained, outweighing improvement in the U.S. jobs market. Sony Corp. (6758), which depends on Europe for more than a fifth of its sales, lost 1.7 percent from after the euro weakened against the yen, crimping the earnings outlook for Japan’s exporters. Kobe Steel Ltd. (5406) sank 3.1 percent after posting a loss that was twice as big as forecast. NSK Ltd. (6471) fell 2.4 percent after the bearing maker’s equity rating was cut to “neutral” by Mito Securities Co. “Europe’s economy faces a downside risk, and it remains to be seen whether it will spread across the world,” said Kazuyuki Terao, chief investment officer of RCM Japan Co. “The U.S. jobs data may be relatively strong, but we don’t know how the market will react to it.”
The Nikkei 225 (NKY) fell 0.8 percent to 9,687.72 as of 9:16 a.m. in Tokyo, heading for a weekly drop of 3.9 percent. Volume on the gauge was more than 20 percent below the 30-day average. The broader Topix Index lost 0.9 percent to 825.03, with more than four times as many shares declining as advancing.
U.S. Stocks Fall as S&P 500 Has Worst Weekly Drop in 2012 (Source: Bloomberg)
U.S. stocks slid this week, giving the Standard & Poor’s 500 Index its biggest decline of the year, after the Federal Reserve signaled it will refrain from further monetary stimulus and concern about Europe intensified. Nine out of 10 S&P 500 industries retreated during the holiday-shortened week. Energy companies fell the most as Alpha Natural Resources Inc. (ANR) slumped 6.6 percent, leading the group to a 1.8 percent drop. SanDisk Corp. (SNDK) and Constellation Brands Inc. (STZ) tumbled at least 8.4 percent after providing disappointing forecasts. Apple Inc. jumped 5.7 percent, helping drive technology companies in the benchmark index to the longest string of weekly gains since at least 1989.
The S&P 500 fell 0.7 percent for the week to 1,398.08, after reaching the highest level since May 2008 on April 2. The Dow Jones Industrial Average lost 151.90 points, or 1.2 percent, to 13,060.14. While U.S. stocks markets are closed tomorrow for Good Friday, futures on the two indexes will trade for 45 minutes after the Labor Department’s monthly jobs report comes out at 8:30 a.m. New York time. “The Fed is taking QE3 a little bit off the table,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in a telephone interview, referring to a third round of stimulus measures known as quantitative easing. “The market knows how the movie ends. It has seen it twice before and is worried we’re on the cusp of a 15 to 20 percent pullback.”
European Stocks Fall for Third Week as Spain Bonds Drop (Source: Bloomberg)
European stocks fell for a third week, the longest losing streak since August, as Spain’s rising borrowing costs boosted concern the euro-area has yet to contain its debt crisis, and the U.S. Federal Reserve damped expectations for further monetary stimulus. Banking shares led declines. Banca Popolare di Milano Scarl (PMI) and UniCredit SpA slid at least 12 percent each this week. Peugeot SA (UG) dropped 10 percent after a report showed U.S. sales of light vehicles rose less than forecast. Cairn Energy Plc (CNE) gained 3.7 percent after agreeing to buy Agora Oil & Gas AS to expand in the North Sea. The Stoxx Europe 600 Index (SXXP) declined 1.6 percent to 259.07 this week. The benchmark measure climbed 7.7 percent in the first quarter, its best performance during the first three months of the year since 2006, as the ECB disbursed 1 trillion euros ($1.3 trillion) in three-year loans to the region’s financial institutions and U.S. economic reports beat estimates.
“The fact that Spain is back in the news makes equity investors nervous about where we go from here,” said Peter Dixon, global equities economist at Commerzbank AG (CBK) in London. “So long as we have some kind of concern to worry about, there are going to be limits to which equities will be able to take off.”
FOREX-Euro wobbles on renewed periphery and econ worry
LONDON, April 5 (Reuters) - The euro hovered near a three-week trough against the dollar and could be in line for further losses prompted by a deteriorating economic outlook in the euro zone and a weak Spanish bond auction.
"If we continue to see Spanish yields pushing out, the euro should broadly come lower and I'm happy to stick with a short position for now, looking to take profit near $1.3000" said Jeremy Stretch, head of currency strategy at CIBC.
Euro Set for Biggest Weekly Drop in 7 Months on Debt Woes (Source: Bloomberg)
The euro headed for the biggest weekly drop against the yen in seven months as Spain’s rising borrowing costs fueled concern that the region has yet to contain its debt crisis. The 17-nation currency traded 0.2 percent from a three-week low versus the dollar before data next week that may show German exports fell and growth in French industrial production slowed, adding to evidence that the fiscal woes are hampering the region’s economies. Demand for the greenback was supported before a report today forecast to show U.S. payrolls increased by more than 200,000 workers in March for a fourth month, damping speculation the Federal Reserve will add new stimulus.
“We haven’t seen any major improvements in the European debt situation,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “After Greece, investors may be beginning to shift their focus onto countries like Spain, Portugal and Italy. I expect the euro will gradually sink as the region’s economy deteriorates.” The euro fetched 107.50 yen at 8:39 a.m. in Tokyo from 107.61 in New York yesterday, extending its decline this week to 2.8 percent, set for the steepest five-day slide since the week ended Sept. 9. The common currency was little changed at $1.3064, after sliding to $1.3035 yesterday, the weakest level since March 15. The dollar bought 82.29 yen from 82.37 yen.
Payrolls in U.S. Probably Expanded by 205,000 Last Month (Source: Bloomberg)
Claims (INJCJC) for U.S. unemployment benefits dropped last week to the lowest level in four years, adding to recent reports showing signs of health in the economy. Jobless claims fell 6,000 to 357,000 in the week ended March 31, the fewest since April 2008, the Labor Department reported today in Washington. The median forecast of 43 economists in a Bloomberg News survey estimated a decrease to 355,000. The number of people on unemployment benefit rolls also dropped, while those getting extended payments increased. The improved labor market, rising stock prices and easier credit are lifting U.S. consumer confidence and spending, which accounts for 70 percent of the economy. A report tomorrow may show the world’s largest economy added more than 200,000 jobs in March for a third consecutive month, the longest streak of similar increases since late 1999 to early 2000.
“The labor market is going to continue to gradually heal, though we have a long ways to go,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The economy is pulling up pretty well given the headwinds we’re seeing from Europe.”
Facebook Said to Pick Nasdaq Over NYSE for Stock Listing (Source: Bloomberg)
Facebook Inc. (FB) plans to list its shares on the Nasdaq Stock Market, further cementing the exchange operator’s position as the favored venue for the biggest U.S. technology companies, according to a person with knowledge of the matter. The person declined to be named because the discussions are private. Facebook filed for a $5 billion initial public offering on Feb. 1. While the market capitalization of New York Stock Exchange shares is about triple the value of Nasdaq companies, the latter market operator has about twice as many technology corporations trading for more than $1 billion, according to data compiled by Bloomberg. Exchange operators NYSE Euronext and Nasdaq OMX (NDAQ) Group Inc., rivals for virtually every IPO in America, competed for what may be the biggest listing by a technology company. Winning the IPO means more fees, a boost in trading revenue and the chance to link an exchange’s brand with the largest social-networking website in the world.
New York Fed Markets Group Chief Brian Sack to Resign (Source: Bloomberg)
Brian Sack, markets group chief at the Federal Reserve Bank of New York, is resigning this year after leading operations implementing the central bank’s monetary policy since June 2009. Sack, 41, will remain at his current post until June 29, the district bank said today in a statement on its website. He will then be placed on leave until his resignation from the New York Fed effective Sept. 14, according to the statement. As head of the markets group, Sack oversaw the record expansion of the Fed’s balance sheet while policy makers turned to unconventional tools such as two quantitative-easing programs in the aftermath of the credit crisis. Using bond purchases as a stimulus tool, the central bank expanded its assets to a record $2.94 trillion on Feb. 15. The Fed cut its benchmark interest rate to near zero in December 2008.
“Brian’s service to the bank over the past three years has been critical to our response to the financial crisis and the country’s economic recovery,” William C. Dudley, president of the New York Fed said in the statement. “I accepted his resignation with great regret and wish him well.”
Consumer Confidence Climbs as U.S. Job Market Improves: Economy (Source: Bloomberg)
Consumer confidence climbed last week to the highest level in four years and unemployment claims fell, pointing to a brighter job market that may invigorate the U.S. economy. The Bloomberg Consumer Comfort Index (COMFCOMF) rose to minus 31.4 in the period ended April 1, the best reading since March 2008, from minus 34.7 the prior week. Filings for jobless benefits dropped by 6,000 to 357,000 in the week ended March 31, the fewest since April 2008, the Labor Department said. Employers probably took on more than 700,000 workers in the first three months of this year, the best quarter for job growth since 2006, a report tomorrow may show, while equities rallied the most since 1998. The improvements may support consumer spending in the face of rising gasoline prices.
“There’s a gradual acceleration underway in the economy,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, and the second-most accurate forecaster of unemployment applications. “Today’s claims data and confidence reading put a positive spin going into tomorrow’s payroll report,” he said, projecting 210,000 jobs were created in March.
End Double Mandate to Save Fed’s Independence (Source: Bloomberg)
There’s one prediction that can safely be made about the decision that the Supreme Court will render on the Affordable Care Act: The final vote will almost certainly be along party lines. The court’s progressive politicization in recent years is a natural reaction to the increasingly activist role it has adopted. As justices have weighed in on questions that were traditionally the province of elected officials -- such as abortion rights -- political institutions have fought back by making ideological orthodoxy a requirement for a Supreme Court appointment. What’s worse is that a similar dynamic is now occurring at another important U.S. institution: the Federal Reserve Board. In June 2011, Peter Diamond, a Nobel laureate in economics, was forced to withdraw his nomination because of Republican opposition in the Senate. True, his expertise isn’t monetary policy, but was he really so unqualified?
This politicization of the Fed reached a new peak in recent days, with at least one senator saying he would seek to block the confirmation of two new board nominees (one Republican and the other Democrat). I don’t know Jerome Powell (the Republican nominee), but I do know Jeremy Stein (the Democratic one) very well. Even if I don’t agree with him on everything, I couldn’t imagine a wiser, more competent and independent choice to serve at the Fed. So why does his nomination risk being thwarted?
Canada Adds Most Jobs Since 2008 as Full-Time Work Soars (Source: Bloomberg)
Canada added the most jobs since September 2008 last month, a gain dominated by full-time positions that revived what had been a stalling labor market in the world’s 10th largest economy. Employment rose by 82,300 following a decline of 2,800 in February, Statistics Canada said today in Ottawa, lowering the jobless rate to 7.2 percent from 7.4 percent. Economists surveyed by Bloomberg News projected a 10,500 gain in jobs and 7.4 percent unemployment, according to the median forecasts. Employment growth should add to household spending that the Bank of Canada said last month has been rising faster than expected. Governor Mark Carney said in an April 2 speech that high household debt loads and sluggish exports remain major risks to the expansion, and he has kept his key lending rate at 1 percent since September 2010 to boost demand.
“This was a blockbuster report,” said Mazen Issa, Canada macro strategist at TD Securities in Toronto. “There could be a slight tinge of hawkishness” in the central bank’s next interest-rate announcement on April 17, he said. Canada’s dollar strengthened 0.3 percent to 99.36 cents per U.S. dollar at 4:28 p.m in Toronto. One Canadian dollar buys $1.0066. Canada’s benchmark 2-year bond fell, with the yield rising 4 basis points to 1.26 percent.
China Hedge Fund Credence to Boost Stocks on QFII Quota (Source: Bloomberg)
Credence Oriental Trade Enterprise Ltd. (CRDOTPL), a China hedge fund that has beaten 98 percent of its rivals, will boost its Chinese stock holdings on the prospect of economic expansion and increased equity purchases by foreigners. Credence is increasing the percentage of yuan-denominated A shares and Hong Kong-listed H shares it holds in its portfolio to 70 percent from 50 percent, while reducing bets on commodities, Tom Tang, co-manager of the China-domiciled fund, said in a phone interview from Hong Kong on April 4. Credence, which has 211 million yuan ($33.6 million) in assets, has returned 29 percent in the past three years, outperforming 1,203 China-focused funds, according to data compiled by Bloomberg. “Equities will be our major investment in the future,” said Tang, 39, who is based in Shenzhen. “There’s less variety in commodities and we want a more diversified portfolio.”
The Shanghai Composite Index (SHCOMP) has risen 4.7 percent this year on speculation the government will ease monetary policies and take measures to prevent stocks from slumping for a third year. The China Securities Regulatory Commission announced on April 3 that it increased quotas for qualified foreign institutional investors to $80 billion from $30 billion, spurring the biggest gains for the benchmark stocks measure in three weeks. “This is good news for the stock market,” said Tang. “It will increase trading of blue-chip stocks and improve valuations.”
Chinese Export Machine Upgraded as Cranes Replace Toys (Source: Bloomberg)
From a sprawling manufacturing base deep in China’s southwestern Hunan province, some 100 kilometers from where Mao Zedong was born, construction-machinery maker Sany Group (SANYIZ) plans to take on the world. While workers in blue overalls and yellow hard hats crawl over cranes and cement mixer trucks in a gleaming factory, Sany President Tang Xiuguo sits nearby, discussing the opening of factories in Brazil, India, and Alabama and the $475 million acquisition of a German maker of cement pumps, Putzmeister Holding GmbH. Tang, a founder of the 22-year-old company, aims to lift overseas sales, now some 5 percent of its $16 billion revenue, to up to one-fifth of revenues within five years.
China’s export business, which increased 17 percent a year over the last three decades on plastic toys, cheap shoes, and electronics assembled by companies such as Foxconn Technology Group, is changing fast, Bloomberg Businessweek reports in its April 9 edition. Rising labor costs, up 15 percent annually since 2005, plus the yuan’s 30 percent gain since a peg to the dollar was scrapped that year, are putting new pressures on the nation’s cheap manufacturing model and driving textile, shoe, and apparel factories to close or relocate to Vietnam, Cambodia, or Bangladesh. “China’s share of the world’s low-end exports has started to fall. This reflects a shift by Chinese producers into sectors where margins are higher rather than a failure to compete,” U.K.-based Capital Economics said in a March 28 note.
Morgan Stanley Sees Japan Stimulus Ahead as BOJ Nominee Blocked (Source: Bloomberg)
The Bank of Japan may expand stimulus this month after lawmakers escalated pressure for extra action by blocking a candidate for the bank’s board and renewing calls for a more “proactive” monetary policy. Morgan Stanley MUFG Securities Co., Mizuho Securities Co. and SMBC Nikko Securities Inc. predict that the BOJ will expand asset purchases at a meeting on April 27. Parliament’s upper house yesterday rejected BNP Paribas SA economist Ryutaro Kono, described by Goldman Sachs Group Inc. (GS) as holding similar views to Governor Masaaki Shirakawa, who says that monetary policy alone cannot solve deflation. The central bank may stand pat at a two-day meeting ending April 10, preserving ammunition for later in the month, when price projections will show a goal of 1 percent inflation is not in sight, according to Morgan Stanley.
“The BOJ must be struggling to balance between responding to political requests and operating effective monetary policies,” said Akio Makabe, an economics professor at Shinshu University in central Japan.
U.K. Manufacturing Unexpectedly Drops for Second Month: Economy (Source: Bloomberg)
U.K. manufacturing output unexpectedly declined for a second month in February, indicating the economy’s return to growth may be uneven. Factory output fell 1 percent from January, the most since April last year, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg News survey was for an increase of 0.1 percent. Manufacturing, which accounts for 10 percent of the economy, was revised to a 0.3 percent decline in January from a 0.1 percent increase. Reports this week showed expansion in services, manufacturing and construction accelerated in March, suggesting the economy probably returned to growth in the first quarter. Still, the British Chambers of Commerce said the recovery remains “weak.” The Bank of England maintained emergency stimulus for the economy at a meeting today.
“The U.K. recovery is not to be taken for granted,” said Blerina Uruci, an economist at Barclays in London. “We maintain our view that the economy will remain fragile during the first half of the year before gaining strength during the second half.”
King’s Stimulus Affirmed as BOE Readies QE Debate in May (Source: Bloomberg)
Bank of England Governor Mervyn King and his committee voted today to complete their current round of stimulus as they get ready to debate next month whether to bring the program to a halt. With some on the nine-member Monetary Policy Committee toughening their stance about the threat of inflation and King insisting the U.K.’s predicament still feels “like a crisis,” the panel backed finishing their 325 billion pounds ($516 billion) of quantitative easing. That sets the stage for a showdown in May, when officials will have new forecasts and data on first-quarter gross domestic product. Policy makers are trying to nurture a recovery under pressure from Europe’s debt crisis and Chancellor of the Exchequer George Osborne’s fiscal squeeze. While surveys this week indicated the economy is gaining momentum, Adam Posen and David Miles still called for another expansion of stimulus last month at a meeting when the majority of their colleagues favored waiting to gauge risks to inflation.
“Attention now turns to the May meeting, which is certainly a live one,” said David Tinsley, chief U.K. economist at BNP Paribas SA in London and a former Bank of England official. “The committee may not feel particularly moved to change its view that the risks around the inflation target are ‘broadly balanced.’ Still, it remains a close call.”
Draghi Scotches ECB Exit Talk as Spain Keeps Crisis Alive (Source: Bloomberg)
European Central Bank President Mario Draghi quashed talk of an early exit from emergency stimulus measures as Spain struggled to borrow in financial markets, a reminder of the risk that the region’s debt crisis could flare again. Speaking just hours after Spanish Prime Minister Mariano Rajoy warned his country faces “extreme difficulty,” Draghi said yesterday that talk of the ECB starting to withdraw its support for euro-area banks is “premature.” At the same time, in a nod to growing inflation concerns in Germany, he said the ECB won’t hesitate to counter price risks if needed. Policy makers left their benchmark rate at a record low of 1 percent.
The ECB has expanded its balance sheet by about 30 percent since Draghi took office in November, pumping more than 1 trillion euros ($1.3 trillion) into the banking system in a bid to stem the debt crisis. Pressure to unwind the emergency measures is rising in Germany, where workers are winning some of the biggest pay increases in two decades, threatening to stoke inflation. “Premature Bundesbank calls for an ECB exit strategy have now triggered a new round of market wobbles, with a focus on Spain,” said Holger Schmieding, chief economist at Berenberg Bank in London. “The risk of a new irrational market panic remains serious.”
U.S. to Ease Myanmar Restrictions, Ending Isolation (Source: Bloomberg)
Myanmar, once the world’s largest rice exporter, is set to re-engage with the global economy in a boost to Southeast Asian growth as the U.S. prepares to ease some sanctions. Secretary of State Hillary Clinton said yesterday the U.S. will selectively lift restrictions on investment in Myanmar, after this month’s elections allowed democracy advocate Aung San Suu Kyi to win a seat in parliament. This week, leaders from the Association of Southeast Asian Nations, or Asean, called for the U.S. and Europe to end sanctions. The opening of Myanmar’s economy, one of Asia’s last untapped frontier markets, may give investors and neighboring countries access to its mineral wealth and a market of 64 million people after decades of military rule. The nation bordering China and India has won support for its efforts to attract investment by holding elections and overhauling its financial system, including a managed float of its currency.
“Myanmar’s opening is the creation of a whole new consumer market and that cannot be but good for the rest of the region,” Rodolfo Severino, former secretary general of Asean, said in Singapore today. “There are opportunities for investment, but we have to see if the measures are sustained. The U.S.’s lifting of sanctions may be followed by other countries and that is important.”
No comments:
Post a Comment