20121004 1220 Global Market Related News.

Asia FX By Cornelius Luca - Wed 03 Oct 2012 15:29:46 CT (Source:CME/www.lucafxta.com)
The appetite for risk was mixed on Wednesday amid mixed US data. Yet, most of the foreign currencies ended lower. The US stock markets made little progress, while oil plunged 4%. The short-term outlook for most of the major foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is short on all foreign currencies. Good luck!

Overnight
US: The ADP employment survey showed a drop to 162,000 in September from 201,000 in August.
US: The ISM service sector rose to 55.1 in September from 53.7 in August.

Today's economic calendar
Australia: AiG Performance of Services Index for September
Australia: Building permits for August

GLOBAL MARKETS-Asian shares steady, investors wait for more US data
TOKYO, Oct 4 (Reuters) - Asian shares steadied and the safe-haven dollar eased after positive U.S. data, leaving investors waiting for more economic indicators from the world's largest economy later in the day and a European Central Bank policy meeting.
"The FOMC minutes may shed some light on any possible dimensions surrounding the improvement in the labour market the committee is looking for and scale of purchases they are willing to undertake," ANZ Bank said in a research.

Asia Stocks Swing Between Gains, Losses on U.S. Data, Oil (Bloomberg)
Asian stocks swung between gains and losses as exporters rose on reports on U.S. jobs and service industries beat economist estimates. Energy companies dropped as oil traded near a two-month low. Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, rose 2 percent. Fisher & Paykel Appliances Holdings Ltd. gained 1.7 percent in Wellington after directors of the refrigerator maker rejected a bid from China’s Haier Corp., saying it is too low. Woodside Petroleum Ltd., Australia’s second-largest oil producer, slid 1.9 percent in Sydney. The MSCI Asia Pacific Index (MXAP) lost 0.1 percent to 121.43 as of 10:45 a.m. in Tokyo, reversing gains of as much as 0.3 percent. The regional index gained 4 percent in September amid speculation China will add to stimulus measures, following moves by central banks in the U.S. and Japan. Australia cut its benchmark interest rate this week.
U.S. jobs data “was a little bit better than expectations and that’s positive,” said George Boubouras, Melbourne-based head of investment strategy at the Australian wealth-management unit of UBS AG. The Swiss bank has about $1.5 trillion in assets under management. “Stimulus is there for a reason.” The Nikkei 225 Stock Average (NKY) rose 0.1 percent and Australia’s S&P/ASX 200 Index was little changed. Hong Kong’s Hang Seng Index dropped 0.1 percent. South Korea’s Kospi Index declined 0.6 percent. Markets in China remain closed today for holidays. Futures on the Standard & Poor’s 500 Index added 0.1 percent today. The index gained 0.4 percent in New York yesterday, when ADP Employer Services said companies added 162,000 jobs last month, exceeding the median forecast of economists surveyed by Bloomberg for a 140,000 advance. Service industries in the U.S. expanded more than forecast in September.
The MSCI Asia Pacific Index gained 6.7 percent this year through yesterday as policy makers boosted stimulus measures to counter a global economic slowdown and tame Europe’s debt crisis. The Asian benchmark index traded at 12.8 times estimated earnings, compared with 13.8 times for the Standard & Poor’s 500 Index and 12 times for the Stoxx Europe 600 Index.

Japanese Stocks Advance on U.S. Employment, Services Data (Bloomberg)
Japanese stocks rose, with the Nikkei 225 (NKY) Stock Average headed for its first gain in five days, as reports on U.S. jobs and service industries beat expectations. Shares extended gains after the yen weakened. Honda Motor Co. (7267), a carmaker that depends on North America for 44 percent of its sales, climbed 3 percent. Izumi Co., a shopping-center operator, jumped 23 percent after announcing a share buyback and raising its net-income forecast. Computer- printer maker Canon Inc. (7751) fell 2.7 percent after Hewlett-Packard Co., the world’s largest manufacturer of personal computers, projected 2013 profit that missed estimates. The Nikkei 225 gained 0.6 percent to 8,800.76 as of the midday break in Tokyo, with volume was 13 percent above 30-day average. The broader Topix Index advanced 0.9 percent to 733.79, with about two stocks rising for each that fell.
U.S. jobs data “was a little bit better than expectations and that’s positive, but stimulus is there for a reason,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank oversees about $1.5 trillion in assets. “They need to really address true labor-market accelerations in North America.” The Topix has fallen 0.2 percent this year as of yesterday on a strengthening yen as investors sought refuge amid a slowing global economy, weighing on export-heavy Japan. Shares on the Topix trade for about 0.87 times book value, compared with 2.25 for the Standard & Poor’s 500 Index and 1.51 times for the Stoxx Europe 600 Index. A number lower than one means a company can be bought for less than the value of its assets.

U.S. Stocks Rise as Service, Jobs Data Offset China (Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third day, as better- than-forecast growth in American employment and service industries offset concern about China’s economy. PulteGroup Inc. (PHM) led homebuilders to the biggest rally since July as mortgage applications climbed to the highest level in more than three years. Best Buy Co. jumped 4.7 percent on a report the retailer’s founder and buyout firms are scrutinizing the company’s finances. Hewlett-Packard (HPQ) Co. tumbled 13 percent after the computer maker forecast fiscal 2013 profit that missed estimates as Chief Executive Officer Meg Whitman said a turnaround effort won’t happen any time soon.
The S&P 500 rose 0.4 percent to 1,450.99 at 4 p.m. in New York. The benchmark index for American equities has climbed 0.7 percent in three days. The Dow Jones Industrial Average added 12.25 points, or 0.1 percent, to 13,494.61 today. Volume for exchange-listed stocks in the U.S. was 6.2 billion shares, or 4.4 percent above the three-month average. “Today’s data is saying very clearly that we’re not heading to a recession,” Thomas Sowanick, chief investment officer of Omnivest Group LLC, which oversees $3 billion in Princeton, New Jersey, said in a phone interview. “Investors are getting a little bit more optimistic about the future,” he said. Weak data from China “increased the likelihood that the Chinese central bank or some other mechanism is focusing on providing liquidity to the economy.”

European Stocks Little Changed as Data Offsets Spain (Bloomberg)
European stocks closed little changed as U.S. reports on private hiring and services-industry growth beat estimates, offsetting Spain’s stance that it won’t ask for a sovereign bailout soon. EasyJet Plc (EZJ), Europe’s second-biggest discount airline, rose 3.5 percent as full-year earnings beat its forecasts. BTG Plc (BTG) gained the most in almost a year after increasing its financial- year revenue forecast. FirstGroup (FGP) Plc plunged 21 percent after Britain’s biggest train operator was stripped of the country’s premier express route. The Stoxx Europe 600 Index (SXXP) slipped 0.1 percent to 271.37 at the close in London, after swinging between gains and losses at least 12 times today. The gauge has rallied 16 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited asset-purchase program and the Federal Reserve announced a third round of quantitative easing.
“It’s a good sign when the market starts reacting to macro data again,” said Anja Hochberg, head of investment strategy at Credit Suisse Group AG in Zurich. “The latest economic numbers show that the economy is bottoming out. However -- and this speaks for an even bigger upside potential of the markets -- the economic hopes still need to show in real terms. The sentiment is not yet exhausted. One more reason to invest in equities.” National benchmark indexes fell in half of the 18 western European markets today. France’s CAC 40 retreated 0.2 percent, the U.K.’s FTSE 100 gained 0.3 percent while Germany’s DAX rose 0.2 percent.

Emerging Stocks Fall for First Time in Five Days on Oil (Bloomberg)
Emerging-market stocks declined for the first time in five days as falling crude-oil prices dragged producers lower and China’s service industries expanded at the weakest pace in more than a year. The MSCI Emerging Markets Index (MXEF) slid 0.4 percent to 1,002.50. Brazil’s Bovespa stock index (VXEEM) dropped 1 percent, with power company Cia. Energetica de Sao Paulo and state-controlled oil producer Petroleo Brasileiro SA falling. Russian oil company OAO Tatneft (TATN) declined 2.2 percent, after profit sank 17 percent in the first half. PetroChina Co., China’s biggest oil producer, slid 1 percent. Indexes in Russia, Turkey and Mexico retreated.
Oil fell below $90 a barrel in New York after U.S. crude stockpiles climbed for a fourth week and concern rose that demand will decline as the Chinese economy weakens. China’s non- manufacturing purchasing managers’ index slid to 53.7 from 56.3 in August, according to official reports today, underscoring a slowdown that spurred the Asian Development Bank to lower its 2012 regional growth estimate. “The Chinese PMI figure was not fantastic, and even though services is not a main sector in China, it has some negative impact,” Guillaume Tresca, a senior emerging market strategist at Credit Agricole Corporate & Investment Bank, said in a phone interview from Paris. “Falling oil prices may lead the market lower in the short term, but it provides emerging market central banks with some leeway to carry out rate cuts.”

Yen Holds Losses Versus Major Peers Before BOJ Decision (Bloomberg)
The yen remained lower against all 16 major counterparts before the Bank of Japan (8301) begins a two-day policy meeting today after expanding stimulus last month. The euro was 0.9 percent from a three-week low versus the dollar before Spain sells bonds as investors weigh whether the debt-saddled nation will ask for an international bailout. European Central Bank policy makers convene today to discuss ways to contain fiscal turmoil in the region. The Australian dollar slid to a four-week low after data showed the nation’s retail sales rose by less than economists had expected. “In a situation where stock prices fall and dollar-yen declines, I expect the BOJ to bolster aggressive monetary easing,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities, a unit of Japan’s third-largest bank by market value. “Such a move would keep the yen in check.”
The Japanese currency slid 0.2 percent to 78.65 per dollar as of 11:41 a.m. in Tokyo after touching 78.66, the weakest since Sept. 19. It dropped 0.3 percent to 101.60 per euro, set for a sixth-straight decline. The 17-nation euro fetched $1.2922 from $1.2905. The currency reached $1.2804 on Oct. 1, the lowest since Sept. 11. The BOJ increased its asset-purchase program by 10 trillion yen ($127 billion) to 55 trillion yen at the previous meeting on Sept. 19, saying the economy’s pick-up was slowing while prices were flat. Data over the past week have added to the case that the BOJ will need to expand stimulus to boost growth and achieve its 1 percent inflation goal. Consumer prices in August matched the steepest decline in 16 months and the nation’s biggest manufacturers grew more pessimistic last quarter.

FOREX-Euro waits for Spain's move; Aussie slips on trade data
SYDNEY/TOKYO, Oct 3 (Reuters) - The euro steadied on Wednesday as traders tried to gauge how close Spain is to asking for European financial aid, while the Australian dollar slid to a four-week low after Australia posted its biggest trade deficit in 3-1/2 years.
"Rajoy has taken reform steps so he can apply for aid anytime he needs. That should discourage speculators from selling the euro too aggressively," said Seiya Nakajima, chief economist at Itochu Corp, referring to Spanish Prime Minister Mariano Rajoy.

Treasury Yields Near Month-Low Before German Factory Data (Bloomberg)
Treasury 10-year yields were near the lowest in almost a month before data tomorrow that may show factory orders in Germany dropped, adding to evidence the euro bloc’s debt crisis is hurting the economy, the region’s biggest. U.S. government bonds remained higher following a four-day advance ahead of an auction of Spanish debt today as investors weigh whether the nation will ask for an international bailout. The Federal Reserve is scheduled to buy today as much as $2.25 billion of Treasuries maturing from February 2036 to August 2042 as part of its program to replace shorter-term notes in its holdings with longer-maturity debt. “The euro area’s core countries, such as Germany, have supported the region’s growth, but their economies are getting worse now,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest lender by market value. “Demand for Treasuries as a safe asset remains strong.”
The yield on 10-year notes was little changed at 1.62 percent as of 10:53 a.m. in Tokyo. It fell to 1.60 percent yesterday, the lowest since Sept. 7. The 1.625 percent security due August 2022 traded at 100 1/32 today, according to Bloomberg Bond Trader data. Japan’s bonds were little changed, with 10-year yields at 0.765 percent in Tokyo, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The rates fell to 0.755 percent on Oct. 2 and 3, the lowest since Aug. 7. German factory orders, adjusted for seasonal swings and inflation, probably slid 0.5 percent in August from the previous month, according to the median estimate of economists in a Bloomberg News survey.

Global Services Weaken as Europe Slides Into Recession: Economy (Bloomberg)
Services industries from Asia to Europe cooled last month after the euro-area debt crisis pulled economies including Spain and Italy into recession and damped global growth prospects. The purchasing managers’ index fell to 53.7 in September from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing in Beijing said today. That’s the lowest since at least March 2011. In the euro-area, a gauge slipped to 46.1 last month from 47.2 and a U.K. measure also fell. Readings below 50 indicate contraction. China’s weaker services number underscores a slowdown that spurred the Asian Development Bank to lower its 2012 regional growth estimate. As Europe’s economic slump deepens amid a fiscal squeeze and weakening confidence, the ADB said the threat of a “shock emanating from the unresolved euro-area sovereign debt crisis” is among the biggest downside risks to Asia.
“The global environment will remain challenging,” said Silvio Peruzzo, an economist at Nomura International Plc in London. “In the euro area, there’s a lack of demand because of austerity; some countries have suffered more than others. We expect the economy to shrink again in the third quarter with a significant chance for another contraction in the fourth.”

U.S., Europe Nowhere Close to Ending Crisis, Krugman Says (Bloomberg)
The U.S. and the European Union are “nowhere close to ending” the financial crisis and German-led austerity efforts may lead to a 1930s-style economic depression, Nobel laureate Paul Krugman said. Five years into the crisis, the U.S. needs “another round of stimulus” and Federal Reserve officials “should be doing whatever they can” to aid the recovery, while Europe needs a fiscal union to save its single currency, Krugman said in a speech in Belgrade today. “Europe must accept there are limits to austerity and that additional austerity won’t do anything but bring societies on the verge of collapse,” said Krugman, an economics professor at Princeton University. “No country will have prosperity until Germany and the ECB have decided that too much pain has been inflicted.”
The European Central Bank and the Fed have unveiled plans to fight the crisis and reduce borrowing costs. ECB President Mario Draghi last month announced an unlimited bond-buying program for distressed euro-area nations, while Fed Chairman Ben S. Bernanke has committed to another round of so-called quantitative easing.

Services in U.S. Expanded More Than Forecast in August (Bloomberg)
Service industries in the U.S. expanded in September by the most in six months, underpinning an economy that lost momentum in the first half of the year. The Institute for Supply Management’s non-manufacturing index climbed to 55.1, exceeding the most optimistic projection in a Bloomberg survey, from 53.7 in August, figures from the Tempe, Arizona-based group showed today. Readings above 50 signal expansion. ADP Employer Services said in a separate report that private payrolls increased 162,000 last month. “The economy seems to be leveling off,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts, who projected the services index would rise. “Domestic factors are starting to improve. Jobs are being created and people are feeling a little more confident so they are going to spend more.”
A sustained pickup in industries from construction to retailing that account for almost 90 percent of the economy will help make up for recent weakness in manufacturing. At the same time, a cooling global economy has prompted some service providers such as FedEx Corp. (FDX) to trim growth forecasts. Stocks advanced after the U.S. figures, with the Standard & Poor’s 500 Index climbing 0.3 percent to 1,450.34 at 2:37 p.m. in New York. The U.S. figures stand in contrast to other data today showing services industries from Asia to Europe slowed after the euro-area debt crisis pulled economies including Spain and Italy into recession.

ADP Says U.S. Companies Added 162,000 Workers to Payrolls (Bloomberg)
Companies added more workers than projected in September, evidence the labor market may be perking up, a private report based on payrolls showed. The 162,000 increase in employment followed a revised 189,000 jump in August, figures from Roseland, New Jersey-based ADP Employer Services showed today. The median forecast of 38 economists surveyed by Bloomberg projected a 140,000 advance. The hiring gains, which were led by companies with fewer than 500 workers, will help shore up consumer confidence and spending, which in turn will bolster economic growth. A Labor Department report on Oct. 5 may show private payrolls increased by 128,000 in September and unemployment rose to 8.2 percent from 8.1 percent the prior month, according to the Bloomberg survey median.
“Small and medium-size firms continue to be the driving force behind job growth,” Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, said in a research note. “Hiring at startup and small firms will continue to be the key to the sustainability of the labor market recovery going forward.” Stock-index futures rose after the report. The contract on the Standard & Poor’s 500 Index maturing in December climbed 0.1 percent to 1,442.6 at 9:09 a.m. in New York. Estimates for the ADP employment figures ranged from 90,000 to 190,000 in the Bloomberg survey.

U.S. States Teetering on Brink of Fiscal Cliff, Ganeriwala Says (Bloomberg)
The possibility of automatic federal budget cuts threatens U.S. states’ well-being, even as their revenue recovers, said Manju Ganeriwala, the incoming president of the National Association of State Treasurers. “We’re approaching the cliff, and hopefully it’s a climbing down and not just jumping from the cliff,” Ganeriwala, Virginia’s treasurer, said today at the State & Municipal Finance Conference hosted by Bloomberg Link in New York. If Congress doesn’t agree on how to reduce the federal deficit, states may lose funding and jobs when $600 billion in automatic tax increases and spending cuts take effect in January, said Ganeriwala, 56, who will head the association next year. That may further hinder progress for governments that cut jobs as tax revenue fell. The number of public positions in 2011 shrank by 1.3 percent, about 280,000 positions, according to data from the U.S. Department of Commerce. More than half those positions were from state and city administrations.
States already are confronting the “stupidity factor” of Congress’s waiting until the last minute to act, said Chipman Flowers Jr., the Delaware treasurer. “They’re going to solve the problem,” Flowers said. “They’re just going to wait until the 11th hour.”

China’s Slowdown Reverberates as ADB Cuts Forecasts (Bloomberg)
China’s services industry expanded the least in more than a year, underscoring a slowdown that spurred the Asian Development Bank to lower its 2012 regional growth estimate and caused a slide in Australian coal exports. The purchasing managers’ index from the Chinese government and logistics federation fell to 53.7 in September from 56.3 the previous month, a report showed today, while Australia recorded its widest trade deficit since March 2008 in August. The ADB today forecast Asia excluding Japan will expand 6.1 percent this year, the slowest pace since 2009. Asian stocks fell and commodities declined for a second day, while Australia’s dollar slipped to its lowest level in a month on concern global demand is faltering, putting pressure on authorities to support growth. Central banks in Japan, South Korea, Indonesia, Thailand, India and the Philippines are scheduled to meet this month to determine monetary policy as the region gauges the need for more stimulus measures.
“Deceleration in the region’s two giants -- the People’s Republic of China and India -- and in other major exporting economies is tempering earlier optimism,” the ADB said. “The ongoing sovereign debt crisis in the euro area and the looming fiscal cliff in the U.S. pose major risks to the outlook.” Asia’s exports have faltered as slower global growth crimps demand for the region’s goods. Malaysia’s shipments abroad unexpectedly slipped for the first time in three months in July, while Thailand and South Korea have recorded three straight months of declines in overseas sales.

China services PMI falls to lowest in nearly two years(Reuters)
China's normally robust services sector weakened sharply in September to its lowest point since November 2010, as slow growth in manufacturing finally began to feed through to the rest of the economy, an official survey showed on Wednesday.

India Pushes Economy Opening With FDI Insurance, Pension Plans (Bloomberg)
Indian Prime Minister Manmohan Singh is seeking to build on the biggest opening of the country’s economy in a decade with the cabinet today scheduled to consider proposals to lift caps on foreign investment in insurance and pension industries. Ministers will consider allowing overseas companies to own as much as 49 percent of local insurance ventures, from the current 26 percent, and for the first time permit foreign direct investment of as much as 26 percent in pension funds, according to two government officials with direct knowledge of the matter, who asked not to be identified, citing rules. The plans would need parliamentary approval to become law, which may prove difficult for a minority government.
After two years of policy paralysis, the Congress party-led government burst into life last month with decisions to throw open retail and aviation sectors, and its energy markets, to foreign investment and cut fuel subsidies. While the moves, which didn’t need the support of lawmakers, splintered Singh’s biggest ally from the ruling coalition, the prime minister defended his actions saying only strong economic growth would pay for programs to aid millions of poor people. “It’s amazing how quickly expectations of the government have changed,” said Alex Mathews, research head at Geojit BNP Paribas Financial Services Ltd. (GBNP) in the southern city of Kochi. “The government looks set to continue with bold reforms.”
Singh’s administration has rejected a recommendation by a parliamentary panel, which in December said a further increase in foreign direct investment may not be in the interest of the country’s insurance industry, according to the people, who spoke yesterday.

Euro-Region August Retail Sales Unexpectedly Increase on Germany (Bloomberg)
Euro-area retail sales unexpectedly increased for a fourth month in August as demand rebounded in Germany, Europe’s largest economy. Sales in the 17-member euro area rose 0.1 percent from July, when they also gained a revised 0.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a decline of 0.1 percent, according to the median of 17 estimates in a Bloomberg News survey. From a year earlier, sales dropped 1.3 percent. European households are tightening their belts as the region’s economy shows signs of a deepening slump. Euro-area unemployment held at a record 11.4 percent in August and economic confidence fell last month after the fiscal crisis and budget cuts forced at least five euro nations into recessions. In Germany, retail sales rose 0.3 percent from July, when they fell 1 percent, today’s report showed. France reported a drop of 0.8 percent, while sales rose 2.1 percent in Spain.

Poland Signals November Cut After Holding Borrowing Costs (Bloomberg)
Poland’s central bank signaled it may cut borrowing costs next month if the economy slows further after unexpectedly leaving them at the highest level since 2009 for a fourth meeting. The Narodowy Bank Polski kept the benchmark seven-day interest rate at 4.75 percent yesterday. Eight economists in a Bloomberg survey predicted no change, while 27 expected a 25 basis-point reduction that would have reversed a rate increase in May, the only one by a central bank in the European Union this year. The NBP last lowered the benchmark in June, 2009. While central banks around the world have eased monetary policy to avert a recession, Poland has kept rates at the highest in three years to tame inflation, even after Governor Marek Belka signaled the need to reduce them amid Europe’s debt crisis. Poland’s expansion eased in the second quarter to 2.4 percent from a year earlier, the slowest since 2009.
“Inflation is still high and we wanted to make sure the trend of weakening economic growth will persist,” Belka said at a news conference yesterday. The central bank “will ease monetary policy” next month should data show the economy slowing further and limited inflation risks, according to an e- mailed statement after today’s meeting. The zloty strengthened 0.4 percent to trade at 4.0931 per euro at 5:01 p.m. in Warsaw yesterday, compared with 4.1171 before the release. The five-year government bond yield jumped as many as 9 basis points after the decision and was at 4.210 percent, up 5 basis points on the day.

Eurozone Sept PMI slide suggests no growth return (Reuters)
Dwindling new orders and faster layoffs marked a worsening decline for euro zone companies last month, according to business surveys that dent hopes the economy will return to growth before 2013.