Most Asian Stocks Gain as Japanese Exporters Gain on Yen (Source: Bloomberg)
Most Asian stocks rose as trading resumed in many markets across the region. Japanese exporters gained on a weaker yen and automakers including Toyota (7203) Motor Corp. advanced after Nomura Holdings Inc. raised target prices. Toyota advanced for the first time in nine trading sessions after Nomura said a weaker yen and higher sales in the U.S. will boost profit. Hitachi Construction Machinery Co., a Japanese machinery maker that gets a quarter of its sales in China, gained 4 percent before mainland trade data is released today. BHP Billiton Ltd., the world’s biggest miner, dropped 0.6 percent in Sydney as crude prices fell and Australia’s markets reopened after a four-day weekend. The MSCI Asia Pacific Index was little changed at 124.16 as of 10:34 a.m. on the first day this month that all Asia markets will be open. About five stocks gained for every four that fell. The MSCI Asia Pacific Index that excludes Japanese stocks edged down 0.1 percent.
Asia’s benchmark gauge has retreated 3.7 percent since the st art of March as China cut its growth target and on speculation stocks had risen too fast after the index advanced 15 percent in the first two months of the year. “People are already more or less defensively positioned and they’re taking advantage of lower valuations,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Investment Trust, which oversees the equivalent of $72.1 billion in assets. “But the basic dynamic hasn’t changed -- Asia will do relatively better than other markets.”
Japan Stocks Snap Five-Day Loss as Yen Retreats (Source: Bloomberg)
April 10 (Bloomberg) -- Japanese shares rose, with the Nikkei 225 (NKY) Stock Average snapping a five-day losing streak, as the yen retreated from a one-month high against the dollar, boosting the earnings outlook for the nation’s exporters. Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, rose 1.8 percent after Nomura Holdings Inc. raised the stock’s target price. Mitsui Fudosan Co. paced gains among real estate companies after it forecast profit will more than double. Kansai Electric Power Co. advanced 3.4 percent after Prime Minister Yoshiko Noda “basically” approved safety measures for its nuclear reactors, paving the way for them to be restarted. The Nikkei 225 rose 0.6 percent to 9,605.98 as of 9:49 a.m. in Tokyo, with volume 28 percent below the 30-day average before the Bank of Japan concludes an interest-rate policy meeting today. The broader Topix Index gained 0.8 percent to 819.91.
“We are seeing a technical rebound after stocks fell five days,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $61 billion. “The market’s focus is on today’s BOJ meeting. They will probably take no action today, and that could weigh on stocks and boost the yen.”
U.S. Stocks Decline as Employment Report Misses Estimates (Source: Bloomberg)
U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower following its worst week of 2012, after employers added fewer jobs than forecast in March. Caterpillar Inc. (CAT) and General Electric Co. (GE) sank more than 1.5 percent, pacing declines among industrial shares. Financial shares lost 1.6 percent among 10 groups in the S&P 500. Bank of America Corp. (BAC) and Citigroup Inc. erased at least 2.4 percent. Alcoa Inc. (AA), scheduled to report earnings tomorrow, slipped 0.3 percent. AOL Inc. (AOL) soared 43 percent after agreeing to sell and license patents to Microsoft Corp. The S&P 500 slumped 1.1 percent to 1,382.20 at 4 p.m. New York time, after losing 0.7 percent last week. The Dow Jones Industrial Average dropped 130.55 points, or 1 percent, to 12,929.59. About 5.5 billion shares changed hands on U.S. exchanges today, 19 percent below the three-month average. Equity markets were shut for Good Friday on April 6, when the employment report was released.
“At the moment, the one big news story that people have to focus on is the jobs number so there’s a focus on the disappointment there,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “The economy does continue to grow, but slowly, and I think that’s been the source of frustration for a lot of investors, that we haven’t had the big forward movement in the economy like we have in the past.”
U.K. Stocks Climb as Mining Rally Reverses FTSE 100 Drop (Source: Bloomberg)
U.K. stocks rose, with the FTSE 100 Index rebounding from its largest decline since November, as a rally in basic-resource shares reversed earlier losses. BHP Billiton Ltd. (BHP) and Rio Tinto Group, the biggest London- listed mining companies, advanced more than 1 percent as copper climbed. British Sky Broadcasting Group Plc (BSY) sank to a seven- month low as the pay-TV broadcaster in which Rupert Murdoch’s News Corp. owns a 39 percent stake said its Sky News channel approved the hacking of e-mails on two occasions. The FTSE 100 gained 19.9 points, or 0.4 percent, to 5,723.67 at the close in London. The gauge declined as much as 0.7 percent earlier as British manufacturing output unexpectedly contracted and concern about the euro-area debt crisis resurfaced. The FTSE All-Share Index rose 0.3 percent today, while Ireland’s ISEQ slipped less than 0.1 percent. Western European markets are closed tomorrow and April 9 for Easter.
“Investors will be pleased to see that we’re going into the Easter break without adding to yesterday’s big declines,” said Angus Campbell, the head of market analysis at Capital Spreads in London. “Negative sentiment turned positive as Spanish bond yields retreated following an earlier spike, allowing investors to dip back into beaten-up equities.”
Korean Won Near 2-Week Low on Global Economy Concern; Bonds Fall (Source: Bloomberg)
South Korea’s won traded near a two-week low as concern that the global economic recovery is losing steam damped demand for emerging-market assets. Government bonds declined. China’s overseas shipments probably rose 7 percent in March from a year earlier, compared with 18.4 percent growth the previous month, according to the median estimate in a Bloomberg News survey before official data today. Figures last week showed hiring by American employers in March trailed the most- pessimistic forecast. North Korea may test a nuclear weapon after a planned missile launch between April 12 and 16, a South Korean intelligence report showed yesterday. “China’s trade data will be important as it may offset growth concerns coming out from the U.S. or it may add oil to the fire,” said Kim Doo Hyun, a Seoul-based currency dealer at Korea Exchange Bank. (004940) “Concerns over North Korea will prevent the won from strengthening, but with the holiday tomorrow, not many traders will be betting aggressively on a weaker won.”
Yen Falls Before BOJ Decision as Japanese Stocks Rally (Source: Bloomberg)
The yen weakened against all of its 16 major counterparts amid speculation the Bank of Japan (8301) will add to monetary easing this month. The 17-nation euro was within 0.2 percent of a three-month low against the pound before France and Italy auction debt this week after yields rose at Spain’s sales last week. The New Zealand dollar declined against most peers before China releases trade data today. “There are some expectations for an easing by the BOJ,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow. “This seems to be causing yen selling.” The yen dropped 0.5 percent to 107.33 per euro as of 10:34 a.m. in Tokyo from the close in New York yesterday. It slid 0.3 percent to 81.76 per dollar. The euro was little changed at $1.3123 and traded at 82.47 U.K. pence after touching 82.30 yesterday, the lowest since Jan. 9.
FOREX-Dollar hits 1-mth low vs yen after US jobs data
SINGAPORE, April 9 (Reuters) - The dollar hit a one-month low versus the yen, extending losses after last week's lower-than-expected U.S. jobs figures bolstered views the Federal Reserve could yet adopt more monetary easing to support the economy.
"When you look at short positions in the yen, they haven't really decreased, and their size is still comparable to levels seen back in the summer of 2007," Karakama said.
Bernanke Sees Need for More Curbs on Shadow Banking (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke called on regulators to stem risks from “shadow banking” operating beyond traditional oversight and favored steps to promote the “resiliency” of money market funds. “An important lesson learned from the financial crisis is that the growth of what has been termed ‘shadow banking’ creates additional potential channels for the propagation of shocks through the financial system and the economy,” Bernanke said today in a speech in Stone Mountain, Georgia. Bernanke also called for close tracking of financial innovation and backed curbs on intraday credit in tri-party repo markets. While not specifying what steps he supports to increase stability among money market funds, he referred to Securities and Exchange Commission proposals to require firms to maintain capital buffers or to redeem shares at the market value of underlying assets rather than at a fixed price of $1.
Congress under a 2010 regulatory overhaul known as Dodd- Frank mandated the Fed to safeguard stability partly by monitoring firms whose collapse may provoke turmoil across financial markets. The law is aimed at averting a repeat of the credit crisis that was triggered by the collapse of U.S. mortgage finance and deepened by the failure of Lehman Brothers Holdings Inc. in 2008.
Profit Growth Stalls as European Slump Hampers Recovery (Source: Bloomberg)
U.S. corporate profit growth stalled in the U.S. last quarter as companies from McDonald’s Corp. (MCD) to 3M Co. (MMM) saw gains in the world’s largest economy eroded by a slump in Europe. Earnings at Standard & Poor’s 500 Index companies, excluding financials, are seen gaining 0.6 percent in the first and the second quarter from a year earlier, according to analysts’ estimates compiled by Bloomberg, the slowest growth rate since 2009. The European debt crisis and a slowdown in China are hurting S&P 500 companies, which derive about 40 percent of profits from abroad. At home, where the S&P 500 Index had its biggest first-quarter rally since 1998, consumer confidence is improving along with the job market -- boosting demand for construction companies and retailers.
“While the U.S. economy is the cleanest shirt in the hamper at the moment, we’re only talking about an economy that’s motoring along at a subpar pace,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “The only way you’re going to see higher profitability is through faster growth.”
U.S. Employment Growth Seen Rebounding From Slump (Source: Bloomberg)
The March setback in hiring will prove temporary as the U.S. economy, in its third year of expansion, now is better equipped to overcome a slowdown in Europe and rising fuel costs, economists said. Growing sales and profits may give business leaders the confidence to take on staff at a faster clip than last month’s 120,000 gain in payrolls, according to analysts at JPMorgan Chase & Co. and Deutsche Bank Securities Inc. They say the data don’t signal a repeat of 2010 and 2011 -- when hiring was derailed after promising starts by concern about government debt, energy costs and natural disasters -- even though the total was weaker than all the estimates from 80 economists surveyed by Bloomberg News. That sentiment isn’t universal, with economists at Bank of America Corp. among those projecting employment will slump in the second half of the year as the government prepares to put the brakes on spending to tame the budget deficit.
Joseph LaVorgna and Carl Riccadonna at Deutsche Bank counter that income gains will unleash increases in household spending and hiring that will boost job creation by an average of at least 200,000 a month for all of 2012. “While the economy is going to do OK, we think jobs are going to be doing better than OK,” Bruce Kasman, chief economist at JPMorgan in New York, said in an April 6 conference call following the Labor Department’s employment report. “We don’t think today’s number represents the trend,” he said, affirming a forecast that payrolls will rise by 200,000 workers on average for the rest of the year.
Jobs Pose Challenge S&P 500 Has Overcome Nine Times (Source: Bloomberg)
U.S. employment growth that trailed economists’ forecasts in March presents a challenge that stocks have overcome nine times during the bull market that’s driven the Standard & Poor’s 500 Index up 107 percent in three years. The Labor Department’s monthly tally of U.S. hiring missed the median projection by 85,000, according to data compiled by Bloomberg. While the S&P 500 (SPX) averaged losses of 0.8 percent in the day after shortfalls of this magnitude since March 2009, the benchmark gauge cut its decline in half a week later and was up 0.9 percent after two weeks, the data show. The S&P 500 lost 1.1 percent today after the April 6 report renewed concern about the pace of the U.S. recovery. Federal Reserve Chairman Ben S. Bernanke’s March 26 pledge to keep “accommodative” monetary policy to stimulate jobs may cushion the blow, said U.S. Trust Co.’s Chris Hyzy and National Securities Corp.’s Donald Selkin. So will corporate earnings, said Wells Fargo & Co.’s Ann Miletti.
“With a bad number, the thought is, well, the Fed has ammunition,” Hyzy, who helps oversee about $325 billion as chief investment officer of U.S. Trust in New York, said in an April 6 telephone interview. “The market comes back after a drop. The only way they add liquidity is if it looks like the economic recovery is receding.”
Record Treasury Demand Keeps Yields Low as Supply Shrinks (Source: Bloomberg)
Investors are plowing into Treasuries (USB2YBC) at a record pace as the supply of the world’s safest securities dwindles, ensuring yields will stay low regardless of whether the Federal Reserve undertakes more stimulus to fight unemployment. Buyers bid $3.19 for each dollar of the $538 billion in notes and bonds sold this year, the most since the government began releasing the data in 1992 and on pace to beat the high of $3.04 in 2011. The net amount of Treasuries available will decline by 30 percent once proceeds from maturing securities are reinvested, according to data from CRT Capital Group LLC. Skepticism about the U.S. recovery, as well as signs Europe’s debt turmoil isn’t over, is enhancing demand for Treasuries. This may keep yields from surging even if Fed policy makers refrain from a third round of quantitative easing, and allow the Obama administration to finance a fourth deficit exceeding $1 trillion at near-record low costs.
“Investors are holding an overwhelming amount of cash in the system and chasing fewer securities, which has supported Treasuries,” said Dominic Konstam, global head of interest- rates research in New York at Deutsche Bank AG, one of 21 primary dealers that trade with the central bank, in an April 5 telephone interview.
Treasuries Decline Before 3-, 10-, 30-Year Auctions (Source: Bloomberg)
Treasuries snapped a gain on concern yields that fell to a four-week low will curb demand as investors bid for $66 billion of notes and bonds starting today. Ten-year notes yield negative 85 basis points after accounting for consumer prices, the biggest deficit in almost a month. The U.S. is scheduled to sell $32 billion of 3-year notes today, $21 billion of 10-year debt tomorrow and $13 billion of 30-year bonds on April 12. Ten-year notes yielded 2.05 percent as of 9:47 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent note due in February 2022 changed hands at 99 17/32. The yield was as low as 2.02 percent yesterday, the least since March 12. “Below 2 percent is an uncomfortable place to buy,” said Kei Katayama, who invests in U.S. bonds at Tokyo-based Daiwa SB Investments Ltd., which oversees the equivalent of $60.7 billion, including Asia’s second-largest mutual fund. “The U.S. economy is on a slow, steady pace of recovery,”
Russia Holds Interest Rates as Inflation Pressures Increase (Source: Bloomberg)
Russia’s central bank refrained from cutting interest rates for a fourth month after signaling that “medium-term” inflation risks are increasing. Bank Rossii left the refinancing rate at 8 percent, as predicted by 21 of 22 economists in a Bloomberg News survey. The overnight auction-based repurchase rate was kept at 5.25 percent and the overnight deposit rate will remain at 4 percent. The world’s largest energy exporter is keeping borrowing costs unchanged even after the inflation rate fell to the lowest in two decades. Current market interest rates are “acceptable for the coming months,” Bank Rossii said. China may ease policy to boost faltering growth and Brazil has cut its benchmark rate five times since August. “Medium-term inflation risks are rising because of uncertainty over the impact on consumer prices of the planned increase in most of the regulated prices and tariffs in July,” the central bank said in the statement.
Consumer prices rose 3.7 percent from year earlier in March and core inflation, which excludes volatile costs such as energy, decelerated to 5.5 percent, the regulator said today. Russia’s benchmark 30-stock Micex Index reversed gains, dropping 0.4 percent to 1,491.45 in Moscow after the announcement. The gauge had risen as much as 0.6 percent before the decision. The ruble remained little changed at 29.63 against the dollar and was steady at 38.7080 versus the euro.
China Consumer Prices Rise Faster-Than-Estimated 3.6% (Source: Bloomberg)
China’s inflation accelerated more than forecast in March on a pickup in food prices, signaling that policy makers may exercise caution in adding stimulus to boost growth. Consumer prices rose 3.6 percent from a year earlier, the National Bureau of Statistics said today. That was more than the median 3.4 percent estimate in a Bloomberg News survey of 33 economists. Food-related costs gained 7.5 percent. Premier Wen Jiabao’s officials may need to remain alert to the risk of inflation bouncing back even after price increases stayed below the government’s 4 percent target for a second month. China’s economy may have expanded last quarter at the slowest pace in almost three years, showing the limits of the nation’s contribution to global growth as U.S. job growth weakens and concern mounts about Europe’s sovereign-debt crisis.
“The upside surprise in today’s CPI reading is likely to raise concerns about a possible rebound in inflationary pressures among policy makers,” said Song Yu, a Beijing-based economist with Goldman Sachs Group Inc. “The data could limit the magnitude of the policy loosening that likely started in March,” Song said, citing Goldman’s observations on the increasing supply of loans and news reports on the government easing restrictions on banks’ lending capacity.
China Consumer Prices Rise Faster-Than-Estimated 3.6% (Source: Bloomberg)
China’s inflation accelerated more than forecast in March on a pickup in food prices, signaling that policy makers may exercise caution in adding stimulus to boost growth. Consumer prices rose 3.6 percent from a year earlier, the National Bureau of Statistics said today. That was more than the median 3.4 percent estimate in a Bloomberg News survey of 33 economists. Food-related costs gained 7.5 percent. Premier Wen Jiabao’s officials may need to remain alert to the risk of inflation bouncing back even after price increases stayed below the government’s 4 percent target for a second month. China’s economy may have expanded last quarter at the slowest pace in almost three years, showing the limits of the nation’s contribution to global growth as U.S. job growth weakens and concern mounts about Europe’s sovereign-debt crisis.
“The upside surprise in today’s CPI reading is likely to raise concerns about a possible rebound in inflationary pressures among policy makers,” said Song Yu, a Beijing-based economist with Goldman Sachs Group Inc. “The data could limit the magnitude of the policy loosening that likely started in March,” Song said, citing Goldman’s observations on the increasing supply of loans and news reports on the government easing restrictions on banks’ lending capacity.
Japan’s Noda Announces Anti-Deflation Talks as BOJ Sets Policy (Source: Bloomberg)
Prime Minister Yoshihiko Noda said the government will hold ministerial meetings on overcoming deflation as policy makers explore ways to end more than a decade of price declines. Economic and Fiscal Policy Minister Motohisa Furukawa will lead the discussions, Noda said yesterday according to remarks posted on the website of the prime minister’s office. Bank of Japan (8301) Governor Masaaki Shirakawa will attend the gatherings as an observer and the meetings could begin as soon as this month, the Nikkei newspaper reported, without citing where it obtained the information. Lawmakers last week blocked the appointment of BNP Paribas SA economist Ryutaro Kono to the central bank’s board, highlighting political pressure for Shirakawa’s officials to ramp up efforts to spur growth and end deflation. Noda’s announcement came with the BOJ partway through a two-day monetary policy meeting that ends today. The government wants to “escape deflation and improve the economy,” Noda said.
Singapore’s MAS to Hold Currency-Gain Pace, Survey Shows (Source: Bloomberg)
The Monetary Authority of Singapore will maintain the current pace of appreciation of the city state’s currency on speculation consumer-price gains will limit the authority’s scope to ease policy, analysts said. Officials will hold the current rate of the local dollar’s advance and refrain from altering its trading band, according to 20 of 21 financial companies surveyed by Bloomberg News. One said there is a 50 percent chance the central bank will either keep its stance unchanged or increase the band’s slope to levels prior to its last review in October. The government will announce the currency decision on April 13, the same day it releases preliminary gross domestic product data. Core inflation is “proving to be more persistent,” Khoon Goh, a Singapore-based senior currency strategist at ANZ National Bank, wrote in an e-mailed response to questions. “We see the MAS maintaining the current appreciation slope to keep inflation within target.”
The MAS is forecast to join central banks from Australia to Thailand, which refrained from raising benchmark rates this month and last as they weigh inflation risks. Economists predict policy makers in Indonesia and South Korea will also hold borrowing costs when they gather this week.
Spain Seeks 10 Billion Euros in Health, Education Savings (Source: Bloomberg)
Spain plans to save more than 10 billion euros ($13 billion) from health and education programs and will accelerate the sale of banking stakes to reduce the budget deficit amid the European debt crisis. Prime Minister Mariano Rajoy met today with ministers to discuss measures to eliminate overlaps and boost efficiencies in health and education, the government said today in a statement. Spain will also speed up the sale of its majority stakes in lenders while studying ways to increase access to credit, the administration said. Rajoy, who took office in December, is trying to narrow the deficit to 5.3 percent of gross domestic product this year from last year’s 8.5 percent. Investors, concerned he won’t be able to manage Spain’s biggest deficit reduction in at least three decades, last week pushed yields on Spanish debt to the highest since December. Rajoy twice last week referred to the possibility of Spain seeking a bailout.
Spain today reiterated its goal of cutting the deficit to 3 percent of GDP in 2013 as it expects new financial-stability measures and “structural reforms” will reverse the recession and stop job-destruction, it said.
U.K. House-Price Gauge Rises to Highest in 21 Months, RICS Says (Source: Bloomberg)
A U.K. house-price index rose to a 21-month high in March as first-time buyers sought to take advantage of an expiring property-tax exemption, the Royal Institution of Chartered Surveyors said. The gauge rose 3 points from February to minus 10, the highest reading since June 2010, according to a report today e- mailed by London-based RICS, which conducts a monthly survey of property surveyors nationwide. Still, a reading below zero shows more surveyors saw price drops than gains last month. The figures reflect Britons taking advantage of a two-year stamp-duty exemption for first-time buyers purchasing a home costing less than 250,000 pounds ($400,000) before it ended on March 24. A continuation of this year’s upward trend in the gauge is uncertain given economic difficulties faced by the U.K., RICS Chief Economist Simon Rubinsohn said in a statement.
“Demand saw a slight boost in March as many first time buyers looked to beat the stamp duty holiday deadline,” Rubinsohn said. “There has been a gentle increase in activity across the market in the early part of the year but it remains to be seen whether this can continue, given the changes in the budget and ongoing problems affecting the economy.”
ECB Financing for Portuguese Banks Rose to Record in March (Source: Bloomberg)
The European Central Bank’s financing for Portuguese lenders rose to a record in March, the Bank of Portugal said. ECB financing climbed to 56.3 billion euros ($74 billion) from 47.6 billion euros in February, the Bank of Portugal said today on the BPStat portion of its website. ECB financing previously peaked at 49.1 billion euros in August 2010. In April last year, Portugal became the third euro-area country after Greece and Ireland to require aid and will receive 78 billion euros under its agreement with the International Monetary Fund and the European Union. The aid plan earmarks 12 billion euros for Portugal’s lenders, if needed. As part of the plan, those lenders were required to raise core Tier 1 capital ratios to 9 percent by the end of 2011 and 10 percent by the end of 2012.
The Frankfurt-based ECB awarded 529.5 billion euros to 800 financial institutions, it said on Feb. 29. The central bank’s second round of three-year loans was designed to avert credit paralysis and ease concern that Europe’s banks would run out of cash or curb lending as the region’s sovereign-debt crisis drove up borrowing costs.
