FCPO last looked : 3084, changed : -38 points, volume : lower.
Bollinger band reading : side way range bound little upside biased.
MACD Histogram : turned downward, buyer seller battling
Support : 3100, 3070, 3050, 3020, 2970 level.
Resistance : 3100, 3150, 3200, 3250, 3270 level.
Comment :
FCPO trading lower with lesser volume distributed. Soy oil currently retreating lower after overnight closed recorded more than 1.5% gains while crude oil price currently trading firmer after last night surge.
Another weaker export data released today by SGS cargo surveyor pressured price downward however losses capped due to U.S. dry weather factor that supporting soy oil price.
Daily technical chart reading revised to suggesting a side way range bound little upside biased market development (base on last looked).
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
Tuesday, July 17, 2012
20120717 1721 FKLI EOD Daily Chart Study.
Bollinger band reading : upside biased with possible pullback correction.
MACD Histogram : turned upward, buyer in control.
Support : 1640, 1630, 1620, 1610 level.
Resistance : 1650, 1660, 1670, 1680 level.
Comment :
FKLI closed higher with little improved volume traded doing 3 points premium compare to cash market that closed recorded small gain. Overnight U.S. markets declined lower and today Asia markets ended in positive territory while European markets currently trading little higher.
Speculation on further U.S. stimulus measure sent Global market traded higher ahead of Federal Reserve semi-annual report on the economy and monetary policy today and tomorrow.
Daily chart reading revised to suggesting an upside biased market development with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.
20120717 1711 Regional Markets EOD Daily Chart Study.
DJIA chart reading : side way range bound.
Hang Seng chart reading : side way range bound.
KLCI chart reading : upside biased with possible pullback.
20120717 1604 Global Markets & Commodities Related News.
GLOBAL MARKETS: Asian shares surged as investors covered short positions and hunted for bargains while awaiting U.S. Federal Reserve Chairman Ben Bernanke's view on the U.S. economy expected later in the day. European shares were expected to open a touch higher, helped by simmering speculation that the U.S. Federal Reserve could open the door to new monetary stimulus after more weak economic data in the previous session. A surprise decline in June retail sales was the latest worrying sign from the economy, pushing U.S. stocks slightly lower on Monday, but Citigroup's earnings limited losses.
FOREX: The euro rose versus the dollar as purchases from hedge funds triggered a flurry of stop-loss buying, pulling the greenback to a seven-week low against a basket of currencies, exacerbating its losses after poor U.S. retail sales figures.
FOREX-Euro off lows as hedge fund buying triggers stop losses
TOKYO, July 17 (Reuters) - The euro rose versus the dollar on Tuesday as purchases from hedge funds triggered a flurry of stop-loss buying, pulling the greenback to a seven-week low against a basket of currencies, exacerbating its losses after poor U.S. retail sales figures.
In line with a mild increase in risk appetite across Asia on hopes for more monetary stimulus from the world's largest economy, the euro and the Australian dollar bounced off recent lows and also pushed higher versus the yen.
U.S. retail sales fall for 3rd straight month in June
U.S. retail sales fell in June for the third straight month, the longest run of consecutive drops since 2008 when the country was mired in recession.
IMF cuts global growth forecast as emerging economies slow
The International Monetary Fund on Monday cut its forecast for global economic growth and warned that the outlook could dim further if policymakers in the euro zone do not act with enough force and speed to quell their region's debt crisis.
Argentina to approve 15 mln tonnes corn exports-president
Argentina's government will approve the exportation of 15 million tonnes of 2012/13 corn, with an announcement scheduled for Wednesday, President Cristina Fernandez said on Monday.
GRAINS: Chicago corn surged to a contract high, extending a drought-fed rally of more than 40 percent over the last four weeks, as searing heat in the U.S. grain belt dealt yet another a heavy blow to crop yields last week.
Asia crude demand to fall in Sept on refinery disruptions
Asia's sweet crude market could come under pressure for a second month in September as demand is expected to fall with the shutdown of an Australian refinery and a slower pace of operations at a Thai refiner, trade sources said on Tuesday.
OIL: Brent crude stayed just above $103 per barrel on hopes of more policy steps by central banks to stimulate global economic growth ahead of U.S. Federal Reserve Chairman Ben Bernanke's testimony.
Standard Bank cuts aluminium, copper, nickel outlook
July 16 (Reuters) - Standard Bank lowered its outlook for average prices for aluminium, copper and nickel in 2012, while raising the estimate for zinc.
The bank cut its 2012 aluminium forecast to $2,110/tonne on average from $2,140/tonne and its 2013 forecast by $55 to an average of $2,225/tonne, saying production cuts were yet to emerge in spite of weak prices, as higher premiums continue to encourage production capacity to remain on-line.
POLL-Weak economy, sluggish Chinese demand weigh on copper
LONDON, July 16 (Reuters) - A slowdown in global growth and sluggish demand from top consumer China are set to dampen copper prices this year, with a sharp fall in the second quarter prompting a downward revision to forecasts for the year, a Reuters poll showed.
The 31 analysts polled called for cash prices for copper to average $8,003 a tonne in 2012, rising to $8,106 in 2013.
China's nickel ore importers turn to the Philippines -trade
HONG KONG/JAKARTA, July 16 (Reuters) - China's importers of laterite ores used to make nickel have switched to the Philippines as industry curbs reduced shipments from Indonesia, cutting June imports by as much as a quarter from a May record, traders and sources at smelters said.
China's imports of nickel ore and concentrate probably fell about 24 percent to below 5 million tonnes in June from a record 6.55 million in May, said a source at a major producer of nickel pig iron, who declined to be identified in the absence of authorisation to speak to the media.
China refined copper production up 7 pct in June m/m
China's refined copper production rose 7 percent in June, recovering from a three-month low in May and matching a record high set last August, as smelters bet on improving demand in the second half as the government takes steps to boost the economy.
BASE METALS: Copper rose, supported by hopes of more monetary stimulus from the U.S. Federal Reserve, after weak retail sales data added to evidence the world's largest economy was slowing.
PRECIOUS METALS: Gold traded flat ahead of the Federal Reserve Chairman Ben Bernanke's Congressional testimony, which is expected to provide clues on whether the U.S. central bank will launch further monetary stimulus.
METALS-Copper up on stimulus hopes ahead of Bernanke testimony
SHANGHAI, July 17 (Reuters) - Copper rose on Tuesday, supported by hopes of more monetary stimulus from the U.S. Federal Reserve, after weak retail sales data added to evidence the world's largest economy was slowing.
Investors are awaiting Fed Chairman Ben Bernanke's Congressional testimony for clues on whether the central bank will launch further easing measures to shore up the economy.
PRECIOUS-Gold inches up as investors await Bernanke testimony
SINGAPORE, July 17 (Reuters) - Gold edged higher on Tuesday ahead of Federal Reserve Chairman Ben Bernanke's Congressional testimony, which is expected to provide clues on whether the the U.S. central bank will launch further monetary stimulus.
Bernanke's appearance follows lacklustre data in the previous session that showed retail sales fell in June for a third consecutive month, adding to a string of recent soft data suggesting that U.S. economic growth might be faltering.
FOREX: The euro rose versus the dollar as purchases from hedge funds triggered a flurry of stop-loss buying, pulling the greenback to a seven-week low against a basket of currencies, exacerbating its losses after poor U.S. retail sales figures.
FOREX-Euro off lows as hedge fund buying triggers stop losses
TOKYO, July 17 (Reuters) - The euro rose versus the dollar on Tuesday as purchases from hedge funds triggered a flurry of stop-loss buying, pulling the greenback to a seven-week low against a basket of currencies, exacerbating its losses after poor U.S. retail sales figures.
In line with a mild increase in risk appetite across Asia on hopes for more monetary stimulus from the world's largest economy, the euro and the Australian dollar bounced off recent lows and also pushed higher versus the yen.
U.S. retail sales fall for 3rd straight month in June
U.S. retail sales fell in June for the third straight month, the longest run of consecutive drops since 2008 when the country was mired in recession.
IMF cuts global growth forecast as emerging economies slow
The International Monetary Fund on Monday cut its forecast for global economic growth and warned that the outlook could dim further if policymakers in the euro zone do not act with enough force and speed to quell their region's debt crisis.
Argentina to approve 15 mln tonnes corn exports-president
Argentina's government will approve the exportation of 15 million tonnes of 2012/13 corn, with an announcement scheduled for Wednesday, President Cristina Fernandez said on Monday.
GRAINS: Chicago corn surged to a contract high, extending a drought-fed rally of more than 40 percent over the last four weeks, as searing heat in the U.S. grain belt dealt yet another a heavy blow to crop yields last week.
Asia crude demand to fall in Sept on refinery disruptions
Asia's sweet crude market could come under pressure for a second month in September as demand is expected to fall with the shutdown of an Australian refinery and a slower pace of operations at a Thai refiner, trade sources said on Tuesday.
OIL: Brent crude stayed just above $103 per barrel on hopes of more policy steps by central banks to stimulate global economic growth ahead of U.S. Federal Reserve Chairman Ben Bernanke's testimony.
Standard Bank cuts aluminium, copper, nickel outlook
July 16 (Reuters) - Standard Bank lowered its outlook for average prices for aluminium, copper and nickel in 2012, while raising the estimate for zinc.
The bank cut its 2012 aluminium forecast to $2,110/tonne on average from $2,140/tonne and its 2013 forecast by $55 to an average of $2,225/tonne, saying production cuts were yet to emerge in spite of weak prices, as higher premiums continue to encourage production capacity to remain on-line.
POLL-Weak economy, sluggish Chinese demand weigh on copper
LONDON, July 16 (Reuters) - A slowdown in global growth and sluggish demand from top consumer China are set to dampen copper prices this year, with a sharp fall in the second quarter prompting a downward revision to forecasts for the year, a Reuters poll showed.
The 31 analysts polled called for cash prices for copper to average $8,003 a tonne in 2012, rising to $8,106 in 2013.
China's nickel ore importers turn to the Philippines -trade
HONG KONG/JAKARTA, July 16 (Reuters) - China's importers of laterite ores used to make nickel have switched to the Philippines as industry curbs reduced shipments from Indonesia, cutting June imports by as much as a quarter from a May record, traders and sources at smelters said.
China's imports of nickel ore and concentrate probably fell about 24 percent to below 5 million tonnes in June from a record 6.55 million in May, said a source at a major producer of nickel pig iron, who declined to be identified in the absence of authorisation to speak to the media.
China refined copper production up 7 pct in June m/m
China's refined copper production rose 7 percent in June, recovering from a three-month low in May and matching a record high set last August, as smelters bet on improving demand in the second half as the government takes steps to boost the economy.
BASE METALS: Copper rose, supported by hopes of more monetary stimulus from the U.S. Federal Reserve, after weak retail sales data added to evidence the world's largest economy was slowing.
PRECIOUS METALS: Gold traded flat ahead of the Federal Reserve Chairman Ben Bernanke's Congressional testimony, which is expected to provide clues on whether the U.S. central bank will launch further monetary stimulus.
METALS-Copper up on stimulus hopes ahead of Bernanke testimony
SHANGHAI, July 17 (Reuters) - Copper rose on Tuesday, supported by hopes of more monetary stimulus from the U.S. Federal Reserve, after weak retail sales data added to evidence the world's largest economy was slowing.
Investors are awaiting Fed Chairman Ben Bernanke's Congressional testimony for clues on whether the central bank will launch further easing measures to shore up the economy.
PRECIOUS-Gold inches up as investors await Bernanke testimony
SINGAPORE, July 17 (Reuters) - Gold edged higher on Tuesday ahead of Federal Reserve Chairman Ben Bernanke's Congressional testimony, which is expected to provide clues on whether the the U.S. central bank will launch further monetary stimulus.
Bernanke's appearance follows lacklustre data in the previous session that showed retail sales fell in June for a third consecutive month, adding to a string of recent soft data suggesting that U.S. economic growth might be faltering.
20120717 1100 Global Markets & Commodities Related News.
GLOBAL MARKETS-Shares pause as investors await Bernanke's testimony
TOKYO, July 17 (Reuters) - Asian shares paused as investors awaited Federal Reserve Chairman Ben Bernanke's view on the U.S. economy later in the day, after weak U.S. retail sales and a lower International Monetary Fund global growth forecast raised hopes of more stimulus from the Fed.
"I still don't see why the U.S. economy should slide back into recession. Slow growth is much more likely than no growth from here. But bears will growl," said Kit Juckes, currency strategist at Societe Generale.
COMMODITIES-Stimulus hopes lift oil; weather woes rally grains
NEW YORK/CHICAGO, July 16 (Reuters) - Commodities rose on Monday, adding to last week's gains as investors grew more hopeful about more monetary easing in China and the United States, boosting prices of oil and other raw materials.
"Prospects of more monetary easing are growing, supporting risk appetite," analysts at BNP Paribas said in a note.
Brent prices mask plentiful supply in wider market
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 16 (Reuters) - The big jump in headline oil prices since the end of June highlights the growing disconnect between Brent and the rest of the oil market.
It owes more to North Sea production problems and the broken nature of the benchmark Brent contract than rising tensions with Iran or hopes for more stimulative policies from the major central banks.
US crude stocks seen down, products up
July 16 (Reuters) - U.S. commercial crude oil stockpiles were projected down for last week due to higher refinery utilization, and increases in petroleum products were expected, a preliminary Reuters poll showed on Monday.
The poll of five analysts of oil and products data due this week forecast a 500,000-barrel drop in domestic crude inventories for the week to July 13. Two analysts called for a decline, one analyst expected an increase, and the other two forecast an unchanged reading.
OPEC 2011 exports jump, Angola's reserves slide
LONDON, July 16 (Reuters) - OPEC's petroleum exports jumped in value by 40 percent in 2011 year-on-year and the producers' GDP climbed 18 percent, according to their latest report, before a further increase in supplies this year that could bolster income further.
The gains, announced in OPEC's Annual Statistical Bulletin 2012 on Monday, reflect higher prices and steadily climbing output last year from many members of the Organization of the Petroleum Exporting Countries.
OIL-Oil higher on stimulus hopes, Iran tensions
NEW YORK, July 16 (Reuters) - Oil prices rose for a fourth straight session o n M onday, lifted by hopes that signs of economic slowing will prompt stimulus measures, especially in China, and by news a U.S. Navy vessel off the United Arab Emirates fired on a fishing boat that failed to heed warnings.
"Prospects of more monetary easing are growing, supporting risk appetite - in China first, as the government takes policy measures to protect economic growth, but also in the U.S.," said analysts at BNP Paribas.
NATURAL GAS-US natgas futures end lower despite early week heat
NEW YORK, July 16 (Reuters) - U.S. natural gas futures ended lower on Monday, pressured by milder Northeast and Midwest weather forecasts for later this week despite heat early in the week that should force more homeowners and businesses to crank up air conditioners.
"The weather is moving toward another round of (heat) over major portions of the U.S. but (it) will not last as long as the last bout nor will (it) cover as much of the U.S. as the last round," Energy Management Institute's Dominick Chirichella said in a report.
EURO COAL-Prices stable, few fresh trades seen
LONDON, July 16 (Reuters) - Physical prompt coal prices were little changed on Monday, but saw some support from firmer coal swaps values.
"We believe prices will remain relatively range-bound in the next 6-9 months and establish an average second half 2012 target of $91/T for (FOB Newcastle) coal," BoAML said.
TOKYO, July 17 (Reuters) - Asian shares paused as investors awaited Federal Reserve Chairman Ben Bernanke's view on the U.S. economy later in the day, after weak U.S. retail sales and a lower International Monetary Fund global growth forecast raised hopes of more stimulus from the Fed.
"I still don't see why the U.S. economy should slide back into recession. Slow growth is much more likely than no growth from here. But bears will growl," said Kit Juckes, currency strategist at Societe Generale.
COMMODITIES-Stimulus hopes lift oil; weather woes rally grains
NEW YORK/CHICAGO, July 16 (Reuters) - Commodities rose on Monday, adding to last week's gains as investors grew more hopeful about more monetary easing in China and the United States, boosting prices of oil and other raw materials.
"Prospects of more monetary easing are growing, supporting risk appetite," analysts at BNP Paribas said in a note.
Brent prices mask plentiful supply in wider market
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 16 (Reuters) - The big jump in headline oil prices since the end of June highlights the growing disconnect between Brent and the rest of the oil market.
It owes more to North Sea production problems and the broken nature of the benchmark Brent contract than rising tensions with Iran or hopes for more stimulative policies from the major central banks.
US crude stocks seen down, products up
July 16 (Reuters) - U.S. commercial crude oil stockpiles were projected down for last week due to higher refinery utilization, and increases in petroleum products were expected, a preliminary Reuters poll showed on Monday.
The poll of five analysts of oil and products data due this week forecast a 500,000-barrel drop in domestic crude inventories for the week to July 13. Two analysts called for a decline, one analyst expected an increase, and the other two forecast an unchanged reading.
OPEC 2011 exports jump, Angola's reserves slide
LONDON, July 16 (Reuters) - OPEC's petroleum exports jumped in value by 40 percent in 2011 year-on-year and the producers' GDP climbed 18 percent, according to their latest report, before a further increase in supplies this year that could bolster income further.
The gains, announced in OPEC's Annual Statistical Bulletin 2012 on Monday, reflect higher prices and steadily climbing output last year from many members of the Organization of the Petroleum Exporting Countries.
OIL-Oil higher on stimulus hopes, Iran tensions
NEW YORK, July 16 (Reuters) - Oil prices rose for a fourth straight session o n M onday, lifted by hopes that signs of economic slowing will prompt stimulus measures, especially in China, and by news a U.S. Navy vessel off the United Arab Emirates fired on a fishing boat that failed to heed warnings.
"Prospects of more monetary easing are growing, supporting risk appetite - in China first, as the government takes policy measures to protect economic growth, but also in the U.S.," said analysts at BNP Paribas.
NATURAL GAS-US natgas futures end lower despite early week heat
NEW YORK, July 16 (Reuters) - U.S. natural gas futures ended lower on Monday, pressured by milder Northeast and Midwest weather forecasts for later this week despite heat early in the week that should force more homeowners and businesses to crank up air conditioners.
"The weather is moving toward another round of (heat) over major portions of the U.S. but (it) will not last as long as the last bout nor will (it) cover as much of the U.S. as the last round," Energy Management Institute's Dominick Chirichella said in a report.
EURO COAL-Prices stable, few fresh trades seen
LONDON, July 16 (Reuters) - Physical prompt coal prices were little changed on Monday, but saw some support from firmer coal swaps values.
"We believe prices will remain relatively range-bound in the next 6-9 months and establish an average second half 2012 target of $91/T for (FOB Newcastle) coal," BoAML said.
20120717 1006 Malaysia Corporate Related News.
Former Sime Darby CEO Datuk Seri Ahmad Zubir Murshid was arrested yesterday and will be charged tomorrow for alleged criminal breach of trust (CBT) over a RM80m land deal in a case that may open a can of worms for the government conglomerate’s operations. Ahmad Zubir surrendered himself to the Malaysian Anti-Corruption Commission (MACC) at its headquarters in Putrajaya earlier this afternoon and had his statement recorded. MACC’s director of investigations, Datuk Mustafa Ali, confirmed the arrest but declined to elaborate, English-language daily The Star reported. Ahmad Zubir was subsequently released on bail, the paper reported. He had been expected to be charged at the Kuala Lumpur Sessions Court earlier yesterday but an MACC official who declined to be named told The Malaysian Insider the prosecution would be delayed until today as the case had not been registered yet. (Malaysianinsider)
Golden Plateau Sdn Bhd has signed a service agreement with Telekom Malaysia Bhd for the latter to supply, deliver, install, test and commission internal cabling equipment at StarzValley in Bandar Baru Nilai. The equipment is to satisfy High Speed Broadband services requirement at Starz Valley’s Small Office and Home Office (SOHO) block and residential blocks. Golden Plateau’s MD, Choo Yoke Cheong commented that the agreement is the first partnership between both parties and will enhance the adoption of ICT in Bandar Baru Nilai in line with the government’s efforts to increase broadband usage, establish an ICT-literate nation, and narrow the digital gap among Malaysians. Starz Valley is a four hectare mixed commercial and residential development area at Nilai educational township. It is slated for completion in three years and comprises 38 units of shop lots, eight units of retail, 104 units of SOHO, and 1,270 units of service apartment. (Bernama)
DRB-Hicom Bhd has appointed Datuk Seri Che Khalib Mohamad Noh as the Chief Operating Officer-Finance, Strategy & Planning, effective immediately. The former chief of Tenaga Nasional Bhd, a Fellow of the Association of Chartered Certified Accountants (United Kingdom), is also a member of the Malaysian Institute of Accountants. (Bernama)
Edaran Tan Chong Motor (ETCM), a wholly-owned unit of Tan Chong Motors, is optimistic the market share for Nissan cars will recover to 5.6% from 5.3% in the first five months of the year. Executive director, Datuk Dr Ang Bon Beng, said ETCM was on track to outpace the total industry volume (TIV) 2012's estimated growth of 2.5% for Nissan sales. "In the first five months, we dropped 0.3% compared with 5.6% last year. So, we are going to recover this market share in the next two quarters. There's a surge in the whole market after June and July, so we are maintaining our challenge to grow more than the estimated 2.5% for Nissan sales," he said. (Bernama, BT)
Ahmad Zaki Resources Bhd (AZRB) has awarded a RM600m contract to Advance Pact Sdn Bhd to provide hospital facilities management services. The contract, awarded through Ahmad Zaki's wholly-owned Peninsular Medical Sdn Bhd (PenMedic), is for more than 20 years. Advance Pact is a company under Unit Peneraju Agenda Bumiputera's (Teraju) Teras initiative. Under the agreement, Advance Pact will provide hospital facilities management services to the International Islamic University Malaysia (IIUM) teaching hospital in Kuantan, Pahang, for 21.5 years from 2015. In Sep-2011, the Higher Education Ministry and IIUM signed a 25-year concession agreement with PenMedic to build IIUM's teaching hospital under the design, build, lease, maintain and transfer basis. The hospital is expected to be completed by mid-2015. (BT)
Virgin Group's divestment of its 10% stake in AirAsia X is the result of a portfolio realignment, said an executive with Virgin Group. "We now prioritise resources where we can have the most impact and also use the Virgin brand," he said in an email reply. "While AirAsia X had been a very successful investment for us, it did not use the Virgin brand and we felt it was the right time to exit and focus on our branded portfolio," he added. (Financial Daily)
Malaysia Airlines (MAS) chairman Tan Sri Md Nor Yusof has quashed market talks that Ahmad Jauhari Yahya would quit the national carrier. Md Nor added that Ahmad Jauhari had been given a tremendous lift following the arrival and entry of the A380 aircraft. The aircraft has been deployed on the KL-London-KL route and has been experiencing high load factor since. (Star Biz)
Digistar Corporation Bhd will acquire the remaining 40% equity interest in Seni Pujaan Sdn Bhd, a property developer, for RM13m. Upon completion of the proposed acquisition, Seni Pujaan will become its wholly-owned subsidiary, Digistar said in a statement to Bursa Malaysia yesterday. (BT)
Karex Industries Sdn Bhd, the world's biggest condom maker, is looking to float its shares on Bursa Malaysia and tighten its grip on the global market, one of its top executives said. "We want to further expand our factories, including the one in Thailand," said Karex executive director Goh Miah Kiat. All in, we are producing three billion pieces now. We want to double our capacity to 6bn pieces by 2015," he said. With factories in Pontian, Klang and Thailand, Karex Group churns out about 3bn pieces of condoms a year. This works out to a 15% share of the world's condom market of 20bn pieces a year. (BT)
Sports shoe maker, Maxwell International Holdings Bhd hopes to negotiate with top labels like Nike and Adidas to manufacture shoes for them directly. Maxwell, which has OEM (original equipment manufacturer) and ODM (original design maker) capabilities, is investing RM150m in a new 150,000 sqm factory in Henan province, China. The new factory, about 8x bigger than its current factory in the Fujian province, would have more than 20 production lines producing more than 30m pairs of shoes a year, said Maxwell's CFO, Tan Swee Song. The factory in Henan province will be built over 3 phases. Phase one, with 60,000 sqm of space, is targeted to be completed by the end of next year at a cost of RM70m. Maxwell is using its internal funds to build the factory on a 17.5ha plot of land it acquired for RM17.2m. Tan said the new plant would start contributing to its earnings in 2014. (BT)
Lion Group’s founder and executive chairman Tan Sri William Cheng has lashed out at his critics claiming the group’s loss making steel operations would have been profitable had it not been for the influx of imports. He said the government’s plans to restructure the steel industry would not work if the surveillance on the import of flat steel is not addressed. Megasteel is operating at 30-40% of capacity as the local market was flooded with imported flat steel. (Financial Daily)
Axis-REIT Managers has issued RM110m in sukuk via its unit, Axis-REIT Sukuk to facilitate the establishment of up to RM300m under its sukuk programme. The proceeds from the sukuk will mainly be used to refinance the fund's existing financing facilities. (Malaysian Reserve)
BTM Resources' major shareholder and managing director Datuk Seri Yong Tu Sang has reduced his shareholding by over 10% in the past two months, shoring up the possibility of a new substantial shareholder at the loss-making timber company. (Financial Daily)
IPP: Fate to be known in September. Energy Commission chief executive officer Datuk Ahmad Fauzi Hasan said the government is in talks with the IPPs to come up with a more competitive power purchase agreements (PPAs). The extension of the licence to operate will be allowed based on the IPPs' willingness to reduce the PPAs under a new PPA agreement with new rates and new terms. However, the reduction will differ from one IPP to another. The restricted tender offer for the first-generation IPPs will close at end of the month. (Source: Business Times)
Golden Plateau Sdn Bhd has signed a service agreement with Telekom Malaysia Bhd for the latter to supply, deliver, install, test and commission internal cabling equipment at StarzValley in Bandar Baru Nilai. The equipment is to satisfy High Speed Broadband services requirement at Starz Valley’s Small Office and Home Office (SOHO) block and residential blocks. Golden Plateau’s MD, Choo Yoke Cheong commented that the agreement is the first partnership between both parties and will enhance the adoption of ICT in Bandar Baru Nilai in line with the government’s efforts to increase broadband usage, establish an ICT-literate nation, and narrow the digital gap among Malaysians. Starz Valley is a four hectare mixed commercial and residential development area at Nilai educational township. It is slated for completion in three years and comprises 38 units of shop lots, eight units of retail, 104 units of SOHO, and 1,270 units of service apartment. (Bernama)
DRB-Hicom Bhd has appointed Datuk Seri Che Khalib Mohamad Noh as the Chief Operating Officer-Finance, Strategy & Planning, effective immediately. The former chief of Tenaga Nasional Bhd, a Fellow of the Association of Chartered Certified Accountants (United Kingdom), is also a member of the Malaysian Institute of Accountants. (Bernama)
Edaran Tan Chong Motor (ETCM), a wholly-owned unit of Tan Chong Motors, is optimistic the market share for Nissan cars will recover to 5.6% from 5.3% in the first five months of the year. Executive director, Datuk Dr Ang Bon Beng, said ETCM was on track to outpace the total industry volume (TIV) 2012's estimated growth of 2.5% for Nissan sales. "In the first five months, we dropped 0.3% compared with 5.6% last year. So, we are going to recover this market share in the next two quarters. There's a surge in the whole market after June and July, so we are maintaining our challenge to grow more than the estimated 2.5% for Nissan sales," he said. (Bernama, BT)
Ahmad Zaki Resources Bhd (AZRB) has awarded a RM600m contract to Advance Pact Sdn Bhd to provide hospital facilities management services. The contract, awarded through Ahmad Zaki's wholly-owned Peninsular Medical Sdn Bhd (PenMedic), is for more than 20 years. Advance Pact is a company under Unit Peneraju Agenda Bumiputera's (Teraju) Teras initiative. Under the agreement, Advance Pact will provide hospital facilities management services to the International Islamic University Malaysia (IIUM) teaching hospital in Kuantan, Pahang, for 21.5 years from 2015. In Sep-2011, the Higher Education Ministry and IIUM signed a 25-year concession agreement with PenMedic to build IIUM's teaching hospital under the design, build, lease, maintain and transfer basis. The hospital is expected to be completed by mid-2015. (BT)
Virgin Group's divestment of its 10% stake in AirAsia X is the result of a portfolio realignment, said an executive with Virgin Group. "We now prioritise resources where we can have the most impact and also use the Virgin brand," he said in an email reply. "While AirAsia X had been a very successful investment for us, it did not use the Virgin brand and we felt it was the right time to exit and focus on our branded portfolio," he added. (Financial Daily)
Malaysia Airlines (MAS) chairman Tan Sri Md Nor Yusof has quashed market talks that Ahmad Jauhari Yahya would quit the national carrier. Md Nor added that Ahmad Jauhari had been given a tremendous lift following the arrival and entry of the A380 aircraft. The aircraft has been deployed on the KL-London-KL route and has been experiencing high load factor since. (Star Biz)
Digistar Corporation Bhd will acquire the remaining 40% equity interest in Seni Pujaan Sdn Bhd, a property developer, for RM13m. Upon completion of the proposed acquisition, Seni Pujaan will become its wholly-owned subsidiary, Digistar said in a statement to Bursa Malaysia yesterday. (BT)
Karex Industries Sdn Bhd, the world's biggest condom maker, is looking to float its shares on Bursa Malaysia and tighten its grip on the global market, one of its top executives said. "We want to further expand our factories, including the one in Thailand," said Karex executive director Goh Miah Kiat. All in, we are producing three billion pieces now. We want to double our capacity to 6bn pieces by 2015," he said. With factories in Pontian, Klang and Thailand, Karex Group churns out about 3bn pieces of condoms a year. This works out to a 15% share of the world's condom market of 20bn pieces a year. (BT)
Sports shoe maker, Maxwell International Holdings Bhd hopes to negotiate with top labels like Nike and Adidas to manufacture shoes for them directly. Maxwell, which has OEM (original equipment manufacturer) and ODM (original design maker) capabilities, is investing RM150m in a new 150,000 sqm factory in Henan province, China. The new factory, about 8x bigger than its current factory in the Fujian province, would have more than 20 production lines producing more than 30m pairs of shoes a year, said Maxwell's CFO, Tan Swee Song. The factory in Henan province will be built over 3 phases. Phase one, with 60,000 sqm of space, is targeted to be completed by the end of next year at a cost of RM70m. Maxwell is using its internal funds to build the factory on a 17.5ha plot of land it acquired for RM17.2m. Tan said the new plant would start contributing to its earnings in 2014. (BT)
Lion Group’s founder and executive chairman Tan Sri William Cheng has lashed out at his critics claiming the group’s loss making steel operations would have been profitable had it not been for the influx of imports. He said the government’s plans to restructure the steel industry would not work if the surveillance on the import of flat steel is not addressed. Megasteel is operating at 30-40% of capacity as the local market was flooded with imported flat steel. (Financial Daily)
Axis-REIT Managers has issued RM110m in sukuk via its unit, Axis-REIT Sukuk to facilitate the establishment of up to RM300m under its sukuk programme. The proceeds from the sukuk will mainly be used to refinance the fund's existing financing facilities. (Malaysian Reserve)
BTM Resources' major shareholder and managing director Datuk Seri Yong Tu Sang has reduced his shareholding by over 10% in the past two months, shoring up the possibility of a new substantial shareholder at the loss-making timber company. (Financial Daily)
IPP: Fate to be known in September. Energy Commission chief executive officer Datuk Ahmad Fauzi Hasan said the government is in talks with the IPPs to come up with a more competitive power purchase agreements (PPAs). The extension of the licence to operate will be allowed based on the IPPs' willingness to reduce the PPAs under a new PPA agreement with new rates and new terms. However, the reduction will differ from one IPP to another. The restricted tender offer for the first-generation IPPs will close at end of the month. (Source: Business Times)
20120717 1006 Global Economy Related News.
US retail sales fell 0.5% mom in Jun (a revised -0.2% in May), worse than consensus of a 0.2% gain. Retail sales less autos and gas fell 0.2% mom (a revised -0.1% in May), also undershooting consensus of +0.3%. (Bloomberg)
US business inventories gained 0.3% mom in May (a revised 0.3% in Apr), matching consensus. (Bloomberg)
The Eurozone consumer price index rose 2.4% yoy in Jun, unchanged from the rate posted in May and matching consensus. On a mom basis, the measure fell 0.1% (-0.1% in May), worse than consensus of no change. Core CPI came in at 1.6% yoy, matching consensus and May’s reading. (Bloomberg)
The Eurozone trade surplus rose to €6.9bn in May (€3.7bn in Apr; -€1.2bn in May 2011), boosted by a 6% increase in exports, but imports were unchanged from a year earlier. Consensus called for a reading of €4.0bn. (WSJ)
Moody's cut its rating for 13 Italian banks citing the weakened credit profile of the Italian government after its credit grade fell last week. (AFP)
The IMF stepped up its warnings on risks to the global economy, mainly from the crisis-mired eurozone, as it trimmed its growth forecast for the rest of 2012 by 0.1% from the Apr forecast to 3.5%. For 2013, the forecast is 3.9%, down from 4.1%. (AFP)
The IMF released €1.48bn in new funds to troubled Portugal after Lisbon passed a performance review under its bailout loan program. (AFP)
Foreign direct investment in China totaled US$59.1bn in the Jan-to-Jun period, a drop of 3% yoy. FDI in Jun totaled US$12bn, down from the US$12.86bn in the same a month a year earlier, but up from May's US$9.23bn. (Dow Jones)
China’s railway infrastructure investment may double in 2H12 from 1H12 for full-year spending to hit Rmb448.3bn, according to the National Development and Reform Commission. (Bloomberg)
China will cut taxes on the profits that foreign companies take out of the country by up to 50% after rules on withholding taxes were relaxed to encourage more overseas investment. Rmb45bn (US$8.6bn) of withholding taxes were collected last year, which accounted for more than half of total corporate taxes paid in China by foreign companies. (FT)
India’s wholesale-price index rose by 7.25% yoy in Jun, after climbing 7.55% in May. The median estimate was 7.61%. (Bloomberg)
Noting that India prohibited foreign investment in too many sectors such as retail, US President Barack Obama cited concerns over deteriorating investment climate there to endorse another "wave" of economic reforms. (AFP)
India should cut subsidies to spur investments, the IMF said, echoing widespread calls for fiscal consolidation to revive economic growth in Asia's third-largest economy. (WSJ)
Singapore’s private residential property sales posted their biggest drop in 2.5 years, declining 17% qoq to 5,572 units in the three months ended 30 Jun. (Bloomberg)
The floating of LPG prices remains the Thai government’s policy to be proceeded with in accordance with the market mechanism ahead of full liberalisation under the Asean Economic Community in 2015, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said. (The Nation)
The floatation of LPG price for transport and household use would raise the price by 20-30% from now and this would increase inflation in the last four months of this year by 0.037%, said Thai Commerce Permanent Secretary Yanyong Phuangrach. (The Nation)
The Thai government will consider the inflation rate before deciding whether to raise the price of liquified petroleum gas (LPG) for the household and transport sectors on 16 Aug as planned, which could increase prices by 20-30%. (Bangkok Post)
Indonesia's domestic car sales rose by 45% yoy in Jun (56.5% in May) to a monthly record of 101,743 cars. (Reuters)
Indonesia's domestic cement sales grew 9.5% yoy in Jun (15.6% in May). (Reuters)
The World Bank estimates the realization of Indonesia’s state expenditure this year is only Rp1.512tr (US$160.27m) or 97.67% of the target set of Rp1.548tr and lower than the government's prognosis for 100.3% forecast of Rp1.553tr. (IFT)
Indonesia’s Investment Coordinating Board (BKPM) projects investments in 2Q12 to reach Rp77.5tr (US$8.21bn) or an increase of 25% yoy. (IFT)
Moody's said the outlook for Indonesia's Baa3 sovereign rating remained stable, citing the country's strong growth, low government debt and recent track record of prudent fiscal management. (Reuters)
The Nielsen Global Consumer Confidence Index dipped 3 pts in the second quarter to 91. A reading below 100 signals consumers are pessimistic about the outlook. Indonesia's shift to top spot in the survey was a further sign that the country, with its big domestic economy and an expanding middle class, is weathering the global slowdown better than some other emerging markets. (Reuters)
Vietnam’s purchased apartment index declined 0.6% mom in Jul (-0.2% in Jun). (Bloomberg)
Overseas remittances to the Philippines increased 5.1% yoy in May (5.3% in Apr), to US$1.774bn (US$1.701bn in Apr). (Bloomberg)
Filipino business leaders turned more upbeat in 2Q12 and ranked second highest globally in having the proportion of optimists among their peers, based on the latest quarterly survey of Grant Thornton International Business Report, with a balance of 90%. (Philippine Daily Inquirer)
Myanmar's reform efforts have begun to bear fruit as foreign investments hit a record US$20bn last year. (Channel News Asia)
US business inventories gained 0.3% mom in May (a revised 0.3% in Apr), matching consensus. (Bloomberg)
The Eurozone consumer price index rose 2.4% yoy in Jun, unchanged from the rate posted in May and matching consensus. On a mom basis, the measure fell 0.1% (-0.1% in May), worse than consensus of no change. Core CPI came in at 1.6% yoy, matching consensus and May’s reading. (Bloomberg)
The Eurozone trade surplus rose to €6.9bn in May (€3.7bn in Apr; -€1.2bn in May 2011), boosted by a 6% increase in exports, but imports were unchanged from a year earlier. Consensus called for a reading of €4.0bn. (WSJ)
Moody's cut its rating for 13 Italian banks citing the weakened credit profile of the Italian government after its credit grade fell last week. (AFP)
The IMF stepped up its warnings on risks to the global economy, mainly from the crisis-mired eurozone, as it trimmed its growth forecast for the rest of 2012 by 0.1% from the Apr forecast to 3.5%. For 2013, the forecast is 3.9%, down from 4.1%. (AFP)
The IMF released €1.48bn in new funds to troubled Portugal after Lisbon passed a performance review under its bailout loan program. (AFP)
Foreign direct investment in China totaled US$59.1bn in the Jan-to-Jun period, a drop of 3% yoy. FDI in Jun totaled US$12bn, down from the US$12.86bn in the same a month a year earlier, but up from May's US$9.23bn. (Dow Jones)
China’s railway infrastructure investment may double in 2H12 from 1H12 for full-year spending to hit Rmb448.3bn, according to the National Development and Reform Commission. (Bloomberg)
China will cut taxes on the profits that foreign companies take out of the country by up to 50% after rules on withholding taxes were relaxed to encourage more overseas investment. Rmb45bn (US$8.6bn) of withholding taxes were collected last year, which accounted for more than half of total corporate taxes paid in China by foreign companies. (FT)
India’s wholesale-price index rose by 7.25% yoy in Jun, after climbing 7.55% in May. The median estimate was 7.61%. (Bloomberg)
Noting that India prohibited foreign investment in too many sectors such as retail, US President Barack Obama cited concerns over deteriorating investment climate there to endorse another "wave" of economic reforms. (AFP)
India should cut subsidies to spur investments, the IMF said, echoing widespread calls for fiscal consolidation to revive economic growth in Asia's third-largest economy. (WSJ)
Singapore’s private residential property sales posted their biggest drop in 2.5 years, declining 17% qoq to 5,572 units in the three months ended 30 Jun. (Bloomberg)
The floating of LPG prices remains the Thai government’s policy to be proceeded with in accordance with the market mechanism ahead of full liberalisation under the Asean Economic Community in 2015, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said. (The Nation)
The floatation of LPG price for transport and household use would raise the price by 20-30% from now and this would increase inflation in the last four months of this year by 0.037%, said Thai Commerce Permanent Secretary Yanyong Phuangrach. (The Nation)
The Thai government will consider the inflation rate before deciding whether to raise the price of liquified petroleum gas (LPG) for the household and transport sectors on 16 Aug as planned, which could increase prices by 20-30%. (Bangkok Post)
Indonesia's domestic car sales rose by 45% yoy in Jun (56.5% in May) to a monthly record of 101,743 cars. (Reuters)
Indonesia's domestic cement sales grew 9.5% yoy in Jun (15.6% in May). (Reuters)
The World Bank estimates the realization of Indonesia’s state expenditure this year is only Rp1.512tr (US$160.27m) or 97.67% of the target set of Rp1.548tr and lower than the government's prognosis for 100.3% forecast of Rp1.553tr. (IFT)
Indonesia’s Investment Coordinating Board (BKPM) projects investments in 2Q12 to reach Rp77.5tr (US$8.21bn) or an increase of 25% yoy. (IFT)
Moody's said the outlook for Indonesia's Baa3 sovereign rating remained stable, citing the country's strong growth, low government debt and recent track record of prudent fiscal management. (Reuters)
The Nielsen Global Consumer Confidence Index dipped 3 pts in the second quarter to 91. A reading below 100 signals consumers are pessimistic about the outlook. Indonesia's shift to top spot in the survey was a further sign that the country, with its big domestic economy and an expanding middle class, is weathering the global slowdown better than some other emerging markets. (Reuters)
Vietnam’s purchased apartment index declined 0.6% mom in Jul (-0.2% in Jun). (Bloomberg)
Overseas remittances to the Philippines increased 5.1% yoy in May (5.3% in Apr), to US$1.774bn (US$1.701bn in Apr). (Bloomberg)
Filipino business leaders turned more upbeat in 2Q12 and ranked second highest globally in having the proportion of optimists among their peers, based on the latest quarterly survey of Grant Thornton International Business Report, with a balance of 90%. (Philippine Daily Inquirer)
Myanmar's reform efforts have begun to bear fruit as foreign investments hit a record US$20bn last year. (Channel News Asia)
20120717 0957 Global Market Related News.
Asia FX By Cornelius Luca - Mon 16 Jul 2012 17:03:09 CT (Source: CME/www.lucafxta.com)
The appetite for risk was mixed on Monday amid economic stagnation and concern over the Eurozone crisis. Most of the foreign currencies fell reversed early losses and ended up, extending their recovery from Friday. The US stock markets fell, but oil rallied. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen. Good luck!
Overnight
US: Retail sales fell unexpectedly by 0.5% in June after shrinking 0.2% in May.
US: The NY Empire State Manufacturing index expanded to 7.4 in July from 2.3 in June.US: Business inventories rose 0.3% in May, while the April figure was revised to 0.4% from 0.3%. Total business sales fell 0.1% in May, matching the April decline.
Canada: Foreigners have purchased $26.1 billion of Canadian securities during May, while domestic investors have acquired $1.3 billion of domestic securities during the same period.
Traxis Partners Founder Barton Biggs Dies at Age 79 (Source: Bloomberg)
Barton Biggs, the money manager whose attention to emerging markets during a 30-year career at Morgan Stanley made him one of the first global investment strategists, has died. He was 79. Biggs died on July 14, Morgan Stanley Chairman and Chief Executive Officer James Gorman said yesterday in a memo to employees obtained by Bloomberg News. The cause was complications from a bacterial infection, according to a person with direct knowledge of the situation who asked not to be named because the matter is private. The New York native predicted the bull market in U.S. stocks that began in 1982 and warned investors away from Japanese shares in 1989 before they collapsed. He sealed his fame telling investors to sell technology companies as they soared in the late 1990s, a judgment dismissed by the press and other investors until the dot-com bubble burst.
“Barton was an exceptional financial strategist and a great friend,” Julian Robertson, founder of hedge fund Tiger Management LLC, said in a statement. “He had an immense impact on the financial industry for five decades. I shall miss him greatly.” After retiring from Morgan Stanley in 2003 at age 70, Biggs started Traxis Partners, a hedge fund, with two other Morgan Stanley (MS) alumni. While he was blindsided by the credit crisis that sent the Standard & Poor’s 500 Index in 2008 to its biggest annual decline since 1937, he correctly called the bottom in U.S. stocks in March 2009, and Traxis’s flagship fund returned three times the industry average in 2009.
Asian Stocks Little Changed on IMF Outlook, U.S. Data (Source: Bloomberg)
Asian stocks were little changed after U.S. retail sales dropped and the International Monetary Fund cut its 2013 global economic growth forecast. JX Holdings Inc. (5020), a petroleum refiner, sank 6 percent in Tokyo after saying it will shut all processing units at one of its plants after finding falsified safety reports over more than a decade. Hyundai Motor Co. fell 3.1 percent in Seoul after a report Hyundai Heavy Industries Co. will sell shares of the South Korean automaker at a discount. Fortescue Metals Group Ltd. (FMG), an iron-ore producer, rose 0.7 percent in Sydney after its shipments beat analyst estimates. The MSCI Asia Pacific Index (MXAP) was little changed at 115.74 as of 9:31 a.m. in Tokyo, with about five stocks declining for every four that gained. Markets are yet to open in Hong Kong and China. Japan’s Nikkei 225 Stock Average swung between gains and losses after reopening from a holiday yesterday. Australia’s S&P/ASX 200 Index (AS51) rose 0.2 percent.
South Korea’s Kospi Index retreated 0.7 percent after the nation’s Finance Minister Bahk Jae Wan ruled out additional fiscal stimulus for now, saying it could do more harm than good because the global economy is too weak to make it meaningful.
Japan Stocks Swing Between Gains, Losses on Yen, China (Source: Bloomberg)
Japanese stocks swung between gains and losses, after trading resumed in Tokyo following a three-day weekend, as gains in the yen offset speculation China may take more steps to boost its economy amid a global slowdown. Sony Corp. dropped 1.3 percent after the yen rose to a one- month high against the dollar, cutting the earnings outlook for Japan’s biggest consumer-electronics exporter. JX Holdings Inc. lead declines on the Nikkei 225 (NKY) Stock Average after the oil refiner said it will shut processing at one its plants after finding falsified safety reports. Create Restaurants Holdings Inc. advanced 6.6 percent after the operator of fast-food chains said it will buy back almost half its shares. The Nikkei 225 fell less than 0.1 percent to 8,720.07 as of 9:17 a.m. The broader Topix Index (TPX) dropped 0.2 percent, the longest losing streak since 2010, with about four stocks declining for every three that rose.
“As tightening measures have slowed China’s growth, the market’s focus is shifting to stimulus measures such as an interest-rate cut,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees about 15 trillion yen ($190 billion) in assets. “One thing to remember is that the yen is on the rise. Japan’s equities are sensitive to the yen’s level, which is likely to put a lid on the market.” Premier Wen Jiabao said momentum for a recovery in Chinese economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported on July 15. The government will step up policy fine-tuning in the second half to support growth. The comments drove a 0.4 percent increase yesterday in the MSCI Asia Pacific Index.
U.S. Stocks Fall as Economy Concern Offsets Energy Gains (Source: Bloomberg)
U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower for the seventh time in eight days, after the International Monetary Fund cut its global economic forecast and retail sales unexpectedly dropped. JPMorgan Chase & Co. (JPM) lost 2.7 percent while Home Depot Inc. and Caterpillar Inc. (CAT) dropped more than 1 percent to lead the Dow Jones Industrial Average lower. Equities pared losses as energy companies rose with the price of oil while Visa (V) Inc. and MasterCard (MA) Inc., the world’s biggest payment networks, gained at least 1.7 percent after agreeing to a settlement of at least $6.05 billion in a price-fixing case. The S&P 500 declined 0.2 percent to 1,353.64 at 4 p.m. New York time after earlier retreating as much as 0.6 percent. The Dow slipped 49.88 points, or 0.4 percent, to 12,727.21 today.
“The retail sales gives you another indicator that uncertainty has showed up in the consumer side,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “We’re in a bit of the summer doldrums.” The S&P 500 is down 4.6 percent from a four-year high in April as economic data trails forecasts and investors brace for what is projected to be the first decrease in quarterly earnings since 2009. The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, is at minus 64, near the almost 11-month low of minus 64.9 reached last week.
Recap Stock Index Market Report (Source:CME)
The September S&P 500 was mostly lower during the Monday morning trade, largely in response to slowing economic growth concerns. US economic data this morning on June retail sales showed their third monthly decline and were weaker than expected, and that pressured stocks lower. Meanwhile, better than expected earnings earlier from Citigroup lent a measure of support to the market. There was also news that Visa and Master Card were close to a settlement with US retailers, and that offered an added level of support to financial shares. A late morning rebound in financial and tech-related shares helped lift the S&P 500 briefly into positive territory.
European Stocks Rise, Extending Rally Into Seventh Week (Source: Bloomberg)
European stocks rose for a second day, extending the Stoxx Europe 600 Index’s longest stretch of weekly gains in more than two years, as manufacturing in the New York region expanded more than forecast. SEB (SEBA) AB, the Swedish bank that’s the second-largest lender in the Baltic countries, soared 8.2 percent after earnings topped analysts’ estimates. G4S Plc (GFS) sank 8.7 percent as the world’s biggest security company said it may incur a 50 million- pound ($78 million) loss after failing to provide enough guards for the Olympic Games. The Stoxx 600 (SXXP) advanced 0.2 percent to 256.73 at the close of trading. The gauge has climbed for six straight weeks, rallying 9.8 percent from this year’s low on June 4, as the European Central Bank and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and conditions for possible Italian aid.
“As we go into August-September, there’s a good possibility that we’ll see a slight uptick in macroeconomic data, particularly in northern Europe and probably in the United States,” Robert Parker, senior adviser at Credit Suisse Asset Management, said in a Bloomberg Television interview. “Investors have remained very underweight. The earnings season will run another month and expectations are so negative that the downside risk is low.”
Emerging Stocks Advance for Second Day on Stimulus Speculation (Source: Bloomberg)
Emerging-market stocks gained as the prospect that central banks in the U.S. and developing nations will take measures to stimulate their economies offset a lower global growth forecast from the International Monetary Fund. The MSCI Emerging Markets Index (MXEF) added 0.1 percent to 926.73 at 5:30 p.m. in New York, with 375 companies advancing and 364 declining. Mexico’s IPC (MEXBOL) index gained 1 percent, led by Grupo Elektra SA (ELEKTRA*), the retail and banking company controlled by billionaire Ricardo Salinas. Russia’s benchmark Micex gauge rose 0.4 percent and Hungary’s BUX Index (BUX) climbed 1.2 percent. Brazil’s Bovespa stock index fell from a one-week high and mining companies Vale SA (VALE3) and MMX Mineracao & Metalicos SA slumped on concern China’s slowdown may hurt exports. Investors speculated that Federal Reserve Chairman Ben S. Bernanke may highlight the need for low borrowing costs to spur the world’s largest economy when he speaks tomorrow before the Senate Banking committee.
Chinese authorities may announce measures to boost their economy following a cabinet meeting this week after the IMF cut its 2013 global growth forecast to 3.9 percent from 4.1 percent in April, and reduced projections for China’s growth this year to 8 percent from 8.2 percent. “There remains the hope, and to some degree the probability, that central banks in emerging markets, principally China, and the U.S. Federal Reserve, will continue to ease monetary policy in an effort to fuel forward growth,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said in a phone interview. “Perhaps then, investors will be able to focus on fundamentals and valuations rather than trying to handicap the next policy-maker moves.”
Recap Interest Rate Market Report (Source:CME)
Treasury prices forged another impressive trading range today with the bull camp clearly garnering the upper hand with the highest trade in September bonds since the June 4th, 2012 high. In addition to softer than expected US retail sales data, ongoing weakness in global equities, weakness in precious metals and a downward revision in Chinese growth by the IMF the Treasury market had very little competition for the flow of flight to quality funds today. Many traders think that volatility will remain very high into the US Fed Chairman testimony on Tuesday and for the time being the bull camp thinks volatility will simply push prices in their direction.
FOREX-Euro falls vs dollar, focus turns to Bernanke
LONDON, July 16 (Reuters) - The euro eased against the dollar on concerns about euro zone debt and high peripheral bond yields though its falls were tempered before testimony this week by U.S. Federal Reserve Chairman Ben Bernanke, who may hint at more monetary stimulus.
"The euro is likely to remain on the defensive ... If this report gains credibility that would be another reason to play the euro from the short side," said Jeremy Stretch, currency strategist at CIBC.
Dollar Remains Lower Before Bernanke Senate Testimony (Source: Bloomberg)
The dollar remained lower following a decline yesterday against the most of its major peers amid speculation Federal Reserve Chairman Ben S. Bernanke will hint at further monetary easing at testimony before Congress today. The greenback maintained a three-day decline versus the yen after an unexpected drop in U.S. retail sales rekindled speculation the Fed will introduce additional steps to support the world’s largest economy. The euro was 0.2 percent from the lowest in more than three years against the pound before German data that may signal deteriorating confidence among investors. “There is market positioning for Bernanke to deliver something today,” said Joseph Capurso, a strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “There is a high risk of more policy easing before the end of this year.”
The dollar was at 78.86 yen as of 9:28 a.m. in Tokyo after losing 1.1 percent in the past three sessions to 78.87. It was little changed at $1.2278 per euro. The 17-nation currency fetched 96.82 yen from 96.80. The euro was at 78.51 pence after touching 78.32 yesterday, the lowest since October 2008. Bernanke will deliver his semiannual report on the economy and monetary policy. He will testify to the House Financial Services Committee tomorrow.
IMF Cuts Global Outlook as EU Ensnares Emerging Economies (Source: Bloomberg)
The International Monetary Fund cut its 2013 global growth forecast as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India. Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook. Spain’s economy will contract 0.6 percent instead of a prior forecast for 0.1 percent growth, and India’s projection for next year was reduced 0.7 percentage point to a 6.5 percent expansion, it said. Central bankers from London to Seoul have lowered borrowing costs or increased bond buying in recent weeks in a round of international stimulus echoing the response to the 2007-08 global financial crisis. The fund said a U.S. rebound is moderating, the outlook is deteriorating for developing economies and global growth could suffer further if European policy makers put off measures agreed at a June summit to arrest the region’s instability.
“In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness,” the Washington-based IMF said in the report. “Downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action.”
Fed Shifts Focus to Jobs as Unemployment Stalls Above 8% (Source: Bloomberg)
Joblessness is the blemish on Ben S. Bernanke’s report card. Since the recession ended in June 2009, the Federal Reserve chairman has achieved inflation near his target of 2 percent, bolstered capital across the banking system and helped underpin confidence in the U.S. economy that’s contributed to record-low borrowing costs for the nation. Meanwhile, the unemployment rate has stalled above 8 percent for 41 consecutive months. The failure to bring joblessness closer to Fed officials’ longer-run goal of 5.2 percent to 6 percent has prompted Bernanke and his lieutenants to emphasize the need for economic growth over price stability, said John Silvia, chief economist at Wells Fargo Securities LLC. Bernanke added to his record monetary stimulus last month and said more action will be needed without “sustained improvement” in the jobs outlook.
“The employment number just isn’t improving; it’s the thing that’s out of whack,” Silvia said in a telephone interview from his Charlotte, North Carolina, office. “Yes, you’ve got a dual mandate, but like everything else in life sometimes you’ve got to focus on one more than the other.” Bernanke, who is scheduled to deliver his semi-annual monetary-policy report to Congress today and tomorrow, said June 20 that policy makers are focusing “primarily” on the outlook for jobs in deciding whether to ease further. The Federal Open Market Committee last month prolonged its maturity-extension program, known as Operation Twist, through the end of the year by $267 billion.
Retail Purchases in U.S. Unexpectedly Decrease 0.5% (Source: Bloomberg)
Retail sales in the U.S. unexpectedly fell for a third month in June as limited employment gains took a toll on consumers. The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales. Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May. The retail figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70 percent of the economy, curbing sales at retailers such as Target Corp. (TGT) and Macy’s Inc. (M)
“Weak spending growth and weak employment are reinforcing one another in a disconcerting negative feedback loop,” said Jay Feldman, a director of U.S. economics at Credit Suisse in New York, who cut his tracking estimate for second-quarter economic growth to 1.6 percent from 2 percent.
Manufacturing in New York Region Grew at a Faster Pace (Source: Bloomberg)
Manufacturing in the New York region expanded in July at a faster pace than anticipated, signaling factories will keep contributing to growth. The Federal Reserve Bank of New York’s general economic index rose to 7.4 from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg News called for an increase to 4.0. Readings greater than zero signal expansion in the so- called Empire State Index that covers New York, northern New Jersey and southern Connecticut. The last negative reading was in October. The figures may ease concern that factory production, which was bolstering the world’s largest economy, is faltering. At the same time, softening demand from Europe to China will likely weigh on exports of American-made goods and decelerating U.S. consumer spending may curb orders.
“The fact that manufacturing is still growing is good news,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, who projected a rise in the Empire index. “Any improvement, especially right now, should be welcomed. The sector is still contributing to economic growth.” In a separate report, the Commerce Department said retail sales in the U.S. declined for a third straight month in June. The 0.5 percent drop followed a 0.2 percent decrease in May.
Business Inventories in U.S. Increased More Than Forecast (Source: Bloomberg)
Inventories in the U.S. rose more than forecast in May as sales declined for a second month, indicating companies may limit factory orders. The 0.3 percent increase in stockpiles followed a revised 0.3 percent gain in April that was smaller than initially estimated, Commerce Department data showed today in Washington. The median forecast in a Bloomberg News survey projected a 0.2 percent gain. Sales fell 0.1 percent in May for a second month. Companies may reduce orders placed with manufacturers as they attempt to keep stockpiles in line with sales and gauge whether spending and the economy will keep slowing. Another report today showed retail sales fell in June for a third month.
“Business inventories are generally in pretty good shape, but businesses have been proactive and when seeing moderation in demand, keeping their inventories relatively tight as well,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. Smaller job gains have meant “slower income growth, and that translates directly to slower spending growth.” Businesses had enough goods on hand to last 1.27 months at the current sales pace in May, up from 1.26 months in April and the highest in a year.
Downgrade Anniversary Shows Investors Gained Buying U.S. (Source: Bloomberg)
When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened.
Short Sales on NYSE Top 2011 Peak as September Bets Lost 21% (Source: Bloomberg)
Short sales on the New York Stock Exchange have climbed above last September’s peak, a level that preceded a five-month rally and heralded losses for bears. Shares borrowed and sold reached 5.35 percent of stock available for trading last month, according to data compiled by NYSE Euronext. (NYX) That eclipses 5.28 percent on Sept. 15, when bearish bets peaked last year and the 25 most-shorted companies in the Standard & Poor’s 500 Index (SPX) began a 21 percent advance, data compiled by Bloomberg show. Investors speculating on declines have pushed up short sales each of the last two years only to see the trades fizzle as actions by central banks helped stoke rallies. Bulls say the same thing will happen in 2012 as European leaders work to contain the debt crisis and companies beat earnings projections for a 14th straight quarter. For bears, slowing economies from China to Germany mean the bets will finally pay off.
“To the extent people have gone short U.S. domestic equities, I think they’re kind of wasting their time,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $2 billion, said July 11. “As I said last year when Europe was falling apart and the U.S. was going down, once this panic is over we’ll go straight back up again.”
China Echoes 2009 Stimulus Planned Railway Spending Boost (Source: Bloomberg)
China’s railway infrastructure investment may double in the second half of this year from the first six months, aiding efforts to reverse a slowdown in the world’s second-biggest economy. Full-year spending will be 448.3 billion yuan ($70.3 billion), according to a statement dated July 6 on the website of the National Development and Reform Commission’s Anhui branch. That indicates about 300 billion yuan of investment in the second half, up from about 148.7 billion yuan in the first. China’s fixed-asset investment has already started to pick up and a jump in spending on railway construction would echo the stimulus rolled out during the global financial crisis. A decline in foreign direct investment reported by Vice Commerce Minister Wang Chao in Hong Kong yesterday underscored the toll that Europe’s debt woes and austerity measures are taking on Asia’s largest economy.
“China’s stimulus may be stronger than the market has expected,” said Zhang Zhiwei, a Hong Kong-based economist for Nomura Holdings Inc. who formerly worked for the International Monetary Fund. “There will be more positive signs in the coming months to confirm that China’s pro-growth policies are taking effect.”
China Slowdown Stymies Plan to Curb Shadow-Banking Risks (Source: Bloomberg)
China’s economic slowdown threatens to derail efforts to curb underground lending -- measures championed by Premier Wen Jiabao as crucial to future growth. The country grew in the second quarter at the slowest pace since the depths of the global financial crisis in 2009, 7.6 percent, putting pressure on China’s leaders to boost stimulus spending. Wen’s proposals to rein in the shadow-banking system, estimated to be about one-third the size of official lending, may be sidelined as a result, according to half a dozen economists interviewed by Bloomberg News.
“With an economy slowing more aggressively than the authorities perhaps want, the imperative to crack down on shadow financing becomes increasingly conflicted,” said Alistair Thornton, a Beijing-based economist with research firm IHS Global Insight Ltd. (IHS) “With the government increasingly in firefighting mode, the desire to push through tough reform in the financial sector inevitably takes a back seat to staving off a hard landing and managing global economic volatility.” Wen, whose term ends next year, has led calls to control what IHS estimates is $1.3 trillion of private financing, an amount equal to last year’s U.S. budget deficit. He has proposed channeling that money through government-regulated institutions to break what he called a “monopoly” on lending by state-owned banks and open a cascade of capital to China’s 42 million small and medium-sized businesses.
Tudou Drops as Growth Concerns Trigger Tumble: China Overnight (Source: Bloomberg)
Chinese equities fell in New York, sending the benchmark index to to the lowest level in nine months, on concern stimulus measures will take time to spur growth in the world’s second-largest economy. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York lost 1.4 percent to 86.55 yesterday, the lowest level since Oct 5. Tudou Holdings Ltd. (TUDO) led declines in Internet companies after the South China Morning Post said the resignation of the video website’s chief operating officer may prompt more people to leave. Aluminum Corp. of China Ltd. slid the most among government-owned companies after their combined first-half net income fell 12 percent.
The International Monetary Fund cut its 2013 global growth forecast yesterday, reducing projections for China’s growth this year to 8 percent from 8.2 percent three months ago. China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, according to a Xinhua News Agency report July 15, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week. “People are pessimistic about Chinese stocks because they haven’t seen obvious and quick effects of the stimulus measures,” Elena Ogram, who manages $50 million in emerging market assets, including Chinese stocks, at Bank am Bellevue AG said by phone yesterday from Zurich. “People will remain skeptical until there’s some confirmation that the stimulus which is being gradually introduced this year would feed through into the economy.”
Wen Says China’s Economic Recovery Yet to Show Momentum (Source: Bloomberg)
China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week. “It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established,” Wen said during an inspection tour in southwest Sichuan province, according to a Chinese-language report from the official Xinhua News Agency yesterday. At the same time, expansion is within the targeted range and measures to stabilize growth are “bearing fruit,” he said. China’s State Council may this week give details of easing measures to support growth after provincial visits by Wen and Vice Premier Li Keqiang to check on the economy, Nomura Holdings Inc. said in a note today. The China Securities Journal reported that a meeting as early as July 18 may be followed by policy steps, citing unidentified analysts.
“The State Council meeting may help shed some light on specific policy easing measures,” said Zhang Zhiwei, a Hong Kong-based economist for Nomura.
Tokyo Anti-Nuclear Rally Attracts Thousands as Protests Grow (Source: Bloomberg)
Tens of thousands of people packed Tokyo’s Yoyogi Park yesterday for Japan’s biggest anti-nuclear rally since the Fukushima disaster last year in growing protests against government moves to restart atomic reactors. Speakers at the demonstration, which broke up at 1:30 p.m. into three separate marches through Japan’s capital, included Nobel laureate Kenzaburo Oe and musician Ryuichi Sakamoto, who wrote the score for the movie “Merry Christmas, Mr. Lawrence.” Japan’s Prime Minister Yoshihiko Noda angered nuclear opponents last month when he approved the restart of two reactors at Kansai Electric Power Co. (9503)’s Ohi plant, which were shutdown along with other units for safety checks after the meltdown and radiation release from the wrecked Fukushima station. A Mainichi newspaper poll on June 4 showed as many as 71 percent of Japanese opposed the restart.
“The government allowed the Ohi nuclear reactors to restart and it’s going to allow more reactors to restart. We feel we are insulted by the government,” said Oe in his speech to the rally. “We have to stop the government’s plan,” said Oe, 77, who received the Nobel Prize for Literature in 1994.
South Korea’s Bahk Rules Out Additional Fiscal Stimulus (Source: Bloomberg)
South Korean Finance Minister Bahk Jae Wan ruled out additional fiscal stimulus for now, saying it could do more harm than good because the global economy is too weak to make it meaningful. “You don’t plant a tree in winter,” Bahk said yesterday in an interview with Bloomberg News in Seoul. While Asia’s fourth-largest economy retains room to boost growth both through monetary and fiscal measures, 3 percent growth “is not bad, given the global economy,” he said. Gross domestic product rose 2.8 percent in the first quarter from a year before. South Korea’s government and central bank have stepped up efforts to ease the impact from Europe’s debt crisis, a Chinese slowdown and muted U.S. job creation. The Bank of Korea unexpectedly cut its benchmark rate on July 12 and the Finance Ministry announced economic support measures on June 28.
Bahk, 57, said there was no way to say if the impact on South Korea’s economy from the European debt crisis has peaked, though the situation may improve later this year with ”occasional hiccups.” Policy makers in Seoul “still have ammunition” and would favor joining other nations in a coordinated approach if the global economy worsens significantly, he said.
India Inflation Unexpectedly Eases; Still BRIC’s Fastest (Source: Bloomberg)
India’s inflation unexpectedly eased in June while exceeding 7 percent for a fifth straight month, indicating price pressures may limit room to join a monetary stimulus drive stretching from China to Europe. The benchmark wholesale-price index rose 7.25 percent from a year earlier, after climbing 7.55 percent in May, the Commerce Ministry said in a statement in New Delhi today. The median of 36 estimates in a Bloomberg News survey was 7.61 percent. Jumps in the cost of living in a nation where most people get by on less than $2 per day prevented the Reserve Bank of India from cutting interest rates last month even with economic growth at a nine-year low. Governor Duvvuri Subbarao said June’s inflation reading is “way above the threshold level,” adding the bank’s policy aims at “restraining demand.”
“The fall is not the start of any trend and inflationary pressures are still predominant,” said Mumbai-based Prasanna Ananthasubramanian, chief economist at ICICI Securities Primary Dealership Ltd. “The Reserve Bank will not take this as a big move and they will not cut rates now.” The rupee, which has tumbled about 19.5 percent against the dollar in the past 12 months, weakened 0.3 percent to 55.3262 per dollar at the close in Mumbai. The BSE India Sensitive Index fell 0.6 percent, while the yield on the 8.15 percent government bond due June 2022 declined to 8.05 percent from 8.1 percent on July 13.
Singapore’s Home Sales Drop May Curb Price Gains: Southeast Asia (Source: Bloomberg)
Singapore’s biggest decline in home sales in 2 1/2 years may slow gains that pushed property prices to a record, easing concerns of further government curbs. The island state’s private residential property sales dropped 17 percent to 5,572 units in the three months ended June 30 from the previous quarter, according to data released by the Urban Redevelopment Authority yesterday. That’s the biggest quarterly decrease since the three months ended December 2009. “It’s an indication that things are slowing down,” Carolyn Goh, a spokeswoman at PropNex Realty, a Singapore-based real estate brokerage with 4,000 agents, said in an interview yesterday. “It looks like further cooling measures are unwarranted but it also depends on how the market responds in the second half.”
Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. The government said last week it’s prepared to enhance measures aimed at ensuring a “stable and sustainable” housing market, even as gains in home prices slowed this year. Home sales have climbed to 12,254 units this year through June 30, according to data from the authority. About 9,000 homes were sold in the first half of last year, according to PropNex. Suburban projects will be the “driving force” for developers in the second half of 2012, PropNex said.
German Court Won’t Rule on Bailout Fund for 8 Weeks (Source: Bloomberg)
Germany’s top court will take more than eight weeks to decide whether to suspend the euro-area’s permanent bailout fund, leaving Europe’s anti-crisis coffer less than half full to respond to the debt crisis. The Federal Constitutional Court in Karlsruhe will issue a ruling on bids to halt Germany’s participation in the European Stability Mechanism and the fiscal pact on Sept. 12, it said today in an e-mailed statement. That’s more than two months after it held a hearing on the measures. “The court has held a comprehensive hearing on the issue and will now take the time it needs to reach a decision,” German government spokesman Steffen Seibert told reporters in Berlin today. Finance Minister Wolfgang Schaeuble warned the hearing last week that a delay in activating the ESM “could lead to a significant worsening” of the crisis.
The delay could complicate efforts to resolve the 2 1/2- year-old crisis as European leaders squabble over the details of bailout conditions, bank rescues and burden sharing. In an interview yesterday, Chancellor Angela Merkel gave no ground on German demands for more centralized control over euro member states in return for joint liabilities.
Hollande Pressure on Peugeot Seen Limited by Mounting Losses (Source: Bloomberg)
French President Francois Hollande says PSA Peugeot Citroen (UG)’s plan to close a factory and slash 14,000 jobs won’t be tolerated. History suggests otherwise. In the last major clash between a sitting French president and a company over corporate downsizing, Hollande’s predecessor Nicolas Sarkozy vowed in 2008 that an ArcelorMittal (MT) plant in northeastern France would never close and jobs would be saved. A year later, the world’s biggest steel company shut the factory. Hollande, elected in May after pledging to block a “parade of firings,” said July 14 he would lean on Peugeot to rework a plan intended to stem losses and trim production capacity. The government will report the findings of a review later this month, as well as measures to prop up the French auto sector. “The state has no means to put pressure on Peugeot,” Florent Couvreur, an analyst at CM-CIC Securities in Paris. “We’ll see the plan they will present on July 25.”
The appetite for risk was mixed on Monday amid economic stagnation and concern over the Eurozone crisis. Most of the foreign currencies fell reversed early losses and ended up, extending their recovery from Friday. The US stock markets fell, but oil rallied. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen. Good luck!
Overnight
US: Retail sales fell unexpectedly by 0.5% in June after shrinking 0.2% in May.
US: The NY Empire State Manufacturing index expanded to 7.4 in July from 2.3 in June.US: Business inventories rose 0.3% in May, while the April figure was revised to 0.4% from 0.3%. Total business sales fell 0.1% in May, matching the April decline.
Canada: Foreigners have purchased $26.1 billion of Canadian securities during May, while domestic investors have acquired $1.3 billion of domestic securities during the same period.
Traxis Partners Founder Barton Biggs Dies at Age 79 (Source: Bloomberg)
Barton Biggs, the money manager whose attention to emerging markets during a 30-year career at Morgan Stanley made him one of the first global investment strategists, has died. He was 79. Biggs died on July 14, Morgan Stanley Chairman and Chief Executive Officer James Gorman said yesterday in a memo to employees obtained by Bloomberg News. The cause was complications from a bacterial infection, according to a person with direct knowledge of the situation who asked not to be named because the matter is private. The New York native predicted the bull market in U.S. stocks that began in 1982 and warned investors away from Japanese shares in 1989 before they collapsed. He sealed his fame telling investors to sell technology companies as they soared in the late 1990s, a judgment dismissed by the press and other investors until the dot-com bubble burst.
“Barton was an exceptional financial strategist and a great friend,” Julian Robertson, founder of hedge fund Tiger Management LLC, said in a statement. “He had an immense impact on the financial industry for five decades. I shall miss him greatly.” After retiring from Morgan Stanley in 2003 at age 70, Biggs started Traxis Partners, a hedge fund, with two other Morgan Stanley (MS) alumni. While he was blindsided by the credit crisis that sent the Standard & Poor’s 500 Index in 2008 to its biggest annual decline since 1937, he correctly called the bottom in U.S. stocks in March 2009, and Traxis’s flagship fund returned three times the industry average in 2009.
Asian Stocks Little Changed on IMF Outlook, U.S. Data (Source: Bloomberg)
Asian stocks were little changed after U.S. retail sales dropped and the International Monetary Fund cut its 2013 global economic growth forecast. JX Holdings Inc. (5020), a petroleum refiner, sank 6 percent in Tokyo after saying it will shut all processing units at one of its plants after finding falsified safety reports over more than a decade. Hyundai Motor Co. fell 3.1 percent in Seoul after a report Hyundai Heavy Industries Co. will sell shares of the South Korean automaker at a discount. Fortescue Metals Group Ltd. (FMG), an iron-ore producer, rose 0.7 percent in Sydney after its shipments beat analyst estimates. The MSCI Asia Pacific Index (MXAP) was little changed at 115.74 as of 9:31 a.m. in Tokyo, with about five stocks declining for every four that gained. Markets are yet to open in Hong Kong and China. Japan’s Nikkei 225 Stock Average swung between gains and losses after reopening from a holiday yesterday. Australia’s S&P/ASX 200 Index (AS51) rose 0.2 percent.
South Korea’s Kospi Index retreated 0.7 percent after the nation’s Finance Minister Bahk Jae Wan ruled out additional fiscal stimulus for now, saying it could do more harm than good because the global economy is too weak to make it meaningful.
Japan Stocks Swing Between Gains, Losses on Yen, China (Source: Bloomberg)
Japanese stocks swung between gains and losses, after trading resumed in Tokyo following a three-day weekend, as gains in the yen offset speculation China may take more steps to boost its economy amid a global slowdown. Sony Corp. dropped 1.3 percent after the yen rose to a one- month high against the dollar, cutting the earnings outlook for Japan’s biggest consumer-electronics exporter. JX Holdings Inc. lead declines on the Nikkei 225 (NKY) Stock Average after the oil refiner said it will shut processing at one its plants after finding falsified safety reports. Create Restaurants Holdings Inc. advanced 6.6 percent after the operator of fast-food chains said it will buy back almost half its shares. The Nikkei 225 fell less than 0.1 percent to 8,720.07 as of 9:17 a.m. The broader Topix Index (TPX) dropped 0.2 percent, the longest losing streak since 2010, with about four stocks declining for every three that rose.
“As tightening measures have slowed China’s growth, the market’s focus is shifting to stimulus measures such as an interest-rate cut,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees about 15 trillion yen ($190 billion) in assets. “One thing to remember is that the yen is on the rise. Japan’s equities are sensitive to the yen’s level, which is likely to put a lid on the market.” Premier Wen Jiabao said momentum for a recovery in Chinese economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported on July 15. The government will step up policy fine-tuning in the second half to support growth. The comments drove a 0.4 percent increase yesterday in the MSCI Asia Pacific Index.
U.S. Stocks Fall as Economy Concern Offsets Energy Gains (Source: Bloomberg)
U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower for the seventh time in eight days, after the International Monetary Fund cut its global economic forecast and retail sales unexpectedly dropped. JPMorgan Chase & Co. (JPM) lost 2.7 percent while Home Depot Inc. and Caterpillar Inc. (CAT) dropped more than 1 percent to lead the Dow Jones Industrial Average lower. Equities pared losses as energy companies rose with the price of oil while Visa (V) Inc. and MasterCard (MA) Inc., the world’s biggest payment networks, gained at least 1.7 percent after agreeing to a settlement of at least $6.05 billion in a price-fixing case. The S&P 500 declined 0.2 percent to 1,353.64 at 4 p.m. New York time after earlier retreating as much as 0.6 percent. The Dow slipped 49.88 points, or 0.4 percent, to 12,727.21 today.
“The retail sales gives you another indicator that uncertainty has showed up in the consumer side,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “We’re in a bit of the summer doldrums.” The S&P 500 is down 4.6 percent from a four-year high in April as economic data trails forecasts and investors brace for what is projected to be the first decrease in quarterly earnings since 2009. The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, is at minus 64, near the almost 11-month low of minus 64.9 reached last week.
Recap Stock Index Market Report (Source:CME)
The September S&P 500 was mostly lower during the Monday morning trade, largely in response to slowing economic growth concerns. US economic data this morning on June retail sales showed their third monthly decline and were weaker than expected, and that pressured stocks lower. Meanwhile, better than expected earnings earlier from Citigroup lent a measure of support to the market. There was also news that Visa and Master Card were close to a settlement with US retailers, and that offered an added level of support to financial shares. A late morning rebound in financial and tech-related shares helped lift the S&P 500 briefly into positive territory.
European Stocks Rise, Extending Rally Into Seventh Week (Source: Bloomberg)
European stocks rose for a second day, extending the Stoxx Europe 600 Index’s longest stretch of weekly gains in more than two years, as manufacturing in the New York region expanded more than forecast. SEB (SEBA) AB, the Swedish bank that’s the second-largest lender in the Baltic countries, soared 8.2 percent after earnings topped analysts’ estimates. G4S Plc (GFS) sank 8.7 percent as the world’s biggest security company said it may incur a 50 million- pound ($78 million) loss after failing to provide enough guards for the Olympic Games. The Stoxx 600 (SXXP) advanced 0.2 percent to 256.73 at the close of trading. The gauge has climbed for six straight weeks, rallying 9.8 percent from this year’s low on June 4, as the European Central Bank and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and conditions for possible Italian aid.
“As we go into August-September, there’s a good possibility that we’ll see a slight uptick in macroeconomic data, particularly in northern Europe and probably in the United States,” Robert Parker, senior adviser at Credit Suisse Asset Management, said in a Bloomberg Television interview. “Investors have remained very underweight. The earnings season will run another month and expectations are so negative that the downside risk is low.”
Emerging Stocks Advance for Second Day on Stimulus Speculation (Source: Bloomberg)
Emerging-market stocks gained as the prospect that central banks in the U.S. and developing nations will take measures to stimulate their economies offset a lower global growth forecast from the International Monetary Fund. The MSCI Emerging Markets Index (MXEF) added 0.1 percent to 926.73 at 5:30 p.m. in New York, with 375 companies advancing and 364 declining. Mexico’s IPC (MEXBOL) index gained 1 percent, led by Grupo Elektra SA (ELEKTRA*), the retail and banking company controlled by billionaire Ricardo Salinas. Russia’s benchmark Micex gauge rose 0.4 percent and Hungary’s BUX Index (BUX) climbed 1.2 percent. Brazil’s Bovespa stock index fell from a one-week high and mining companies Vale SA (VALE3) and MMX Mineracao & Metalicos SA slumped on concern China’s slowdown may hurt exports. Investors speculated that Federal Reserve Chairman Ben S. Bernanke may highlight the need for low borrowing costs to spur the world’s largest economy when he speaks tomorrow before the Senate Banking committee.
Chinese authorities may announce measures to boost their economy following a cabinet meeting this week after the IMF cut its 2013 global growth forecast to 3.9 percent from 4.1 percent in April, and reduced projections for China’s growth this year to 8 percent from 8.2 percent. “There remains the hope, and to some degree the probability, that central banks in emerging markets, principally China, and the U.S. Federal Reserve, will continue to ease monetary policy in an effort to fuel forward growth,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said in a phone interview. “Perhaps then, investors will be able to focus on fundamentals and valuations rather than trying to handicap the next policy-maker moves.”
Recap Interest Rate Market Report (Source:CME)
Treasury prices forged another impressive trading range today with the bull camp clearly garnering the upper hand with the highest trade in September bonds since the June 4th, 2012 high. In addition to softer than expected US retail sales data, ongoing weakness in global equities, weakness in precious metals and a downward revision in Chinese growth by the IMF the Treasury market had very little competition for the flow of flight to quality funds today. Many traders think that volatility will remain very high into the US Fed Chairman testimony on Tuesday and for the time being the bull camp thinks volatility will simply push prices in their direction.
FOREX-Euro falls vs dollar, focus turns to Bernanke
LONDON, July 16 (Reuters) - The euro eased against the dollar on concerns about euro zone debt and high peripheral bond yields though its falls were tempered before testimony this week by U.S. Federal Reserve Chairman Ben Bernanke, who may hint at more monetary stimulus.
"The euro is likely to remain on the defensive ... If this report gains credibility that would be another reason to play the euro from the short side," said Jeremy Stretch, currency strategist at CIBC.
Dollar Remains Lower Before Bernanke Senate Testimony (Source: Bloomberg)
The dollar remained lower following a decline yesterday against the most of its major peers amid speculation Federal Reserve Chairman Ben S. Bernanke will hint at further monetary easing at testimony before Congress today. The greenback maintained a three-day decline versus the yen after an unexpected drop in U.S. retail sales rekindled speculation the Fed will introduce additional steps to support the world’s largest economy. The euro was 0.2 percent from the lowest in more than three years against the pound before German data that may signal deteriorating confidence among investors. “There is market positioning for Bernanke to deliver something today,” said Joseph Capurso, a strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “There is a high risk of more policy easing before the end of this year.”
The dollar was at 78.86 yen as of 9:28 a.m. in Tokyo after losing 1.1 percent in the past three sessions to 78.87. It was little changed at $1.2278 per euro. The 17-nation currency fetched 96.82 yen from 96.80. The euro was at 78.51 pence after touching 78.32 yesterday, the lowest since October 2008. Bernanke will deliver his semiannual report on the economy and monetary policy. He will testify to the House Financial Services Committee tomorrow.
IMF Cuts Global Outlook as EU Ensnares Emerging Economies (Source: Bloomberg)
The International Monetary Fund cut its 2013 global growth forecast as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India. Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook. Spain’s economy will contract 0.6 percent instead of a prior forecast for 0.1 percent growth, and India’s projection for next year was reduced 0.7 percentage point to a 6.5 percent expansion, it said. Central bankers from London to Seoul have lowered borrowing costs or increased bond buying in recent weeks in a round of international stimulus echoing the response to the 2007-08 global financial crisis. The fund said a U.S. rebound is moderating, the outlook is deteriorating for developing economies and global growth could suffer further if European policy makers put off measures agreed at a June summit to arrest the region’s instability.
“In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness,” the Washington-based IMF said in the report. “Downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action.”
Fed Shifts Focus to Jobs as Unemployment Stalls Above 8% (Source: Bloomberg)
Joblessness is the blemish on Ben S. Bernanke’s report card. Since the recession ended in June 2009, the Federal Reserve chairman has achieved inflation near his target of 2 percent, bolstered capital across the banking system and helped underpin confidence in the U.S. economy that’s contributed to record-low borrowing costs for the nation. Meanwhile, the unemployment rate has stalled above 8 percent for 41 consecutive months. The failure to bring joblessness closer to Fed officials’ longer-run goal of 5.2 percent to 6 percent has prompted Bernanke and his lieutenants to emphasize the need for economic growth over price stability, said John Silvia, chief economist at Wells Fargo Securities LLC. Bernanke added to his record monetary stimulus last month and said more action will be needed without “sustained improvement” in the jobs outlook.
“The employment number just isn’t improving; it’s the thing that’s out of whack,” Silvia said in a telephone interview from his Charlotte, North Carolina, office. “Yes, you’ve got a dual mandate, but like everything else in life sometimes you’ve got to focus on one more than the other.” Bernanke, who is scheduled to deliver his semi-annual monetary-policy report to Congress today and tomorrow, said June 20 that policy makers are focusing “primarily” on the outlook for jobs in deciding whether to ease further. The Federal Open Market Committee last month prolonged its maturity-extension program, known as Operation Twist, through the end of the year by $267 billion.
Retail Purchases in U.S. Unexpectedly Decrease 0.5% (Source: Bloomberg)
Retail sales in the U.S. unexpectedly fell for a third month in June as limited employment gains took a toll on consumers. The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales. Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May. The retail figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70 percent of the economy, curbing sales at retailers such as Target Corp. (TGT) and Macy’s Inc. (M)
“Weak spending growth and weak employment are reinforcing one another in a disconcerting negative feedback loop,” said Jay Feldman, a director of U.S. economics at Credit Suisse in New York, who cut his tracking estimate for second-quarter economic growth to 1.6 percent from 2 percent.
Manufacturing in New York Region Grew at a Faster Pace (Source: Bloomberg)
Manufacturing in the New York region expanded in July at a faster pace than anticipated, signaling factories will keep contributing to growth. The Federal Reserve Bank of New York’s general economic index rose to 7.4 from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg News called for an increase to 4.0. Readings greater than zero signal expansion in the so- called Empire State Index that covers New York, northern New Jersey and southern Connecticut. The last negative reading was in October. The figures may ease concern that factory production, which was bolstering the world’s largest economy, is faltering. At the same time, softening demand from Europe to China will likely weigh on exports of American-made goods and decelerating U.S. consumer spending may curb orders.
“The fact that manufacturing is still growing is good news,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, who projected a rise in the Empire index. “Any improvement, especially right now, should be welcomed. The sector is still contributing to economic growth.” In a separate report, the Commerce Department said retail sales in the U.S. declined for a third straight month in June. The 0.5 percent drop followed a 0.2 percent decrease in May.
Business Inventories in U.S. Increased More Than Forecast (Source: Bloomberg)
Inventories in the U.S. rose more than forecast in May as sales declined for a second month, indicating companies may limit factory orders. The 0.3 percent increase in stockpiles followed a revised 0.3 percent gain in April that was smaller than initially estimated, Commerce Department data showed today in Washington. The median forecast in a Bloomberg News survey projected a 0.2 percent gain. Sales fell 0.1 percent in May for a second month. Companies may reduce orders placed with manufacturers as they attempt to keep stockpiles in line with sales and gauge whether spending and the economy will keep slowing. Another report today showed retail sales fell in June for a third month.
“Business inventories are generally in pretty good shape, but businesses have been proactive and when seeing moderation in demand, keeping their inventories relatively tight as well,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. Smaller job gains have meant “slower income growth, and that translates directly to slower spending growth.” Businesses had enough goods on hand to last 1.27 months at the current sales pace in May, up from 1.26 months in April and the highest in a year.
Downgrade Anniversary Shows Investors Gained Buying U.S. (Source: Bloomberg)
When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened.
Short Sales on NYSE Top 2011 Peak as September Bets Lost 21% (Source: Bloomberg)
Short sales on the New York Stock Exchange have climbed above last September’s peak, a level that preceded a five-month rally and heralded losses for bears. Shares borrowed and sold reached 5.35 percent of stock available for trading last month, according to data compiled by NYSE Euronext. (NYX) That eclipses 5.28 percent on Sept. 15, when bearish bets peaked last year and the 25 most-shorted companies in the Standard & Poor’s 500 Index (SPX) began a 21 percent advance, data compiled by Bloomberg show. Investors speculating on declines have pushed up short sales each of the last two years only to see the trades fizzle as actions by central banks helped stoke rallies. Bulls say the same thing will happen in 2012 as European leaders work to contain the debt crisis and companies beat earnings projections for a 14th straight quarter. For bears, slowing economies from China to Germany mean the bets will finally pay off.
“To the extent people have gone short U.S. domestic equities, I think they’re kind of wasting their time,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $2 billion, said July 11. “As I said last year when Europe was falling apart and the U.S. was going down, once this panic is over we’ll go straight back up again.”
China Echoes 2009 Stimulus Planned Railway Spending Boost (Source: Bloomberg)
China’s railway infrastructure investment may double in the second half of this year from the first six months, aiding efforts to reverse a slowdown in the world’s second-biggest economy. Full-year spending will be 448.3 billion yuan ($70.3 billion), according to a statement dated July 6 on the website of the National Development and Reform Commission’s Anhui branch. That indicates about 300 billion yuan of investment in the second half, up from about 148.7 billion yuan in the first. China’s fixed-asset investment has already started to pick up and a jump in spending on railway construction would echo the stimulus rolled out during the global financial crisis. A decline in foreign direct investment reported by Vice Commerce Minister Wang Chao in Hong Kong yesterday underscored the toll that Europe’s debt woes and austerity measures are taking on Asia’s largest economy.
“China’s stimulus may be stronger than the market has expected,” said Zhang Zhiwei, a Hong Kong-based economist for Nomura Holdings Inc. who formerly worked for the International Monetary Fund. “There will be more positive signs in the coming months to confirm that China’s pro-growth policies are taking effect.”
China Slowdown Stymies Plan to Curb Shadow-Banking Risks (Source: Bloomberg)
China’s economic slowdown threatens to derail efforts to curb underground lending -- measures championed by Premier Wen Jiabao as crucial to future growth. The country grew in the second quarter at the slowest pace since the depths of the global financial crisis in 2009, 7.6 percent, putting pressure on China’s leaders to boost stimulus spending. Wen’s proposals to rein in the shadow-banking system, estimated to be about one-third the size of official lending, may be sidelined as a result, according to half a dozen economists interviewed by Bloomberg News.
“With an economy slowing more aggressively than the authorities perhaps want, the imperative to crack down on shadow financing becomes increasingly conflicted,” said Alistair Thornton, a Beijing-based economist with research firm IHS Global Insight Ltd. (IHS) “With the government increasingly in firefighting mode, the desire to push through tough reform in the financial sector inevitably takes a back seat to staving off a hard landing and managing global economic volatility.” Wen, whose term ends next year, has led calls to control what IHS estimates is $1.3 trillion of private financing, an amount equal to last year’s U.S. budget deficit. He has proposed channeling that money through government-regulated institutions to break what he called a “monopoly” on lending by state-owned banks and open a cascade of capital to China’s 42 million small and medium-sized businesses.
Tudou Drops as Growth Concerns Trigger Tumble: China Overnight (Source: Bloomberg)
Chinese equities fell in New York, sending the benchmark index to to the lowest level in nine months, on concern stimulus measures will take time to spur growth in the world’s second-largest economy. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York lost 1.4 percent to 86.55 yesterday, the lowest level since Oct 5. Tudou Holdings Ltd. (TUDO) led declines in Internet companies after the South China Morning Post said the resignation of the video website’s chief operating officer may prompt more people to leave. Aluminum Corp. of China Ltd. slid the most among government-owned companies after their combined first-half net income fell 12 percent.
The International Monetary Fund cut its 2013 global growth forecast yesterday, reducing projections for China’s growth this year to 8 percent from 8.2 percent three months ago. China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, according to a Xinhua News Agency report July 15, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week. “People are pessimistic about Chinese stocks because they haven’t seen obvious and quick effects of the stimulus measures,” Elena Ogram, who manages $50 million in emerging market assets, including Chinese stocks, at Bank am Bellevue AG said by phone yesterday from Zurich. “People will remain skeptical until there’s some confirmation that the stimulus which is being gradually introduced this year would feed through into the economy.”
Wen Says China’s Economic Recovery Yet to Show Momentum (Source: Bloomberg)
China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week. “It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established,” Wen said during an inspection tour in southwest Sichuan province, according to a Chinese-language report from the official Xinhua News Agency yesterday. At the same time, expansion is within the targeted range and measures to stabilize growth are “bearing fruit,” he said. China’s State Council may this week give details of easing measures to support growth after provincial visits by Wen and Vice Premier Li Keqiang to check on the economy, Nomura Holdings Inc. said in a note today. The China Securities Journal reported that a meeting as early as July 18 may be followed by policy steps, citing unidentified analysts.
“The State Council meeting may help shed some light on specific policy easing measures,” said Zhang Zhiwei, a Hong Kong-based economist for Nomura.
Tokyo Anti-Nuclear Rally Attracts Thousands as Protests Grow (Source: Bloomberg)
Tens of thousands of people packed Tokyo’s Yoyogi Park yesterday for Japan’s biggest anti-nuclear rally since the Fukushima disaster last year in growing protests against government moves to restart atomic reactors. Speakers at the demonstration, which broke up at 1:30 p.m. into three separate marches through Japan’s capital, included Nobel laureate Kenzaburo Oe and musician Ryuichi Sakamoto, who wrote the score for the movie “Merry Christmas, Mr. Lawrence.” Japan’s Prime Minister Yoshihiko Noda angered nuclear opponents last month when he approved the restart of two reactors at Kansai Electric Power Co. (9503)’s Ohi plant, which were shutdown along with other units for safety checks after the meltdown and radiation release from the wrecked Fukushima station. A Mainichi newspaper poll on June 4 showed as many as 71 percent of Japanese opposed the restart.
“The government allowed the Ohi nuclear reactors to restart and it’s going to allow more reactors to restart. We feel we are insulted by the government,” said Oe in his speech to the rally. “We have to stop the government’s plan,” said Oe, 77, who received the Nobel Prize for Literature in 1994.
South Korea’s Bahk Rules Out Additional Fiscal Stimulus (Source: Bloomberg)
South Korean Finance Minister Bahk Jae Wan ruled out additional fiscal stimulus for now, saying it could do more harm than good because the global economy is too weak to make it meaningful. “You don’t plant a tree in winter,” Bahk said yesterday in an interview with Bloomberg News in Seoul. While Asia’s fourth-largest economy retains room to boost growth both through monetary and fiscal measures, 3 percent growth “is not bad, given the global economy,” he said. Gross domestic product rose 2.8 percent in the first quarter from a year before. South Korea’s government and central bank have stepped up efforts to ease the impact from Europe’s debt crisis, a Chinese slowdown and muted U.S. job creation. The Bank of Korea unexpectedly cut its benchmark rate on July 12 and the Finance Ministry announced economic support measures on June 28.
Bahk, 57, said there was no way to say if the impact on South Korea’s economy from the European debt crisis has peaked, though the situation may improve later this year with ”occasional hiccups.” Policy makers in Seoul “still have ammunition” and would favor joining other nations in a coordinated approach if the global economy worsens significantly, he said.
India Inflation Unexpectedly Eases; Still BRIC’s Fastest (Source: Bloomberg)
India’s inflation unexpectedly eased in June while exceeding 7 percent for a fifth straight month, indicating price pressures may limit room to join a monetary stimulus drive stretching from China to Europe. The benchmark wholesale-price index rose 7.25 percent from a year earlier, after climbing 7.55 percent in May, the Commerce Ministry said in a statement in New Delhi today. The median of 36 estimates in a Bloomberg News survey was 7.61 percent. Jumps in the cost of living in a nation where most people get by on less than $2 per day prevented the Reserve Bank of India from cutting interest rates last month even with economic growth at a nine-year low. Governor Duvvuri Subbarao said June’s inflation reading is “way above the threshold level,” adding the bank’s policy aims at “restraining demand.”
“The fall is not the start of any trend and inflationary pressures are still predominant,” said Mumbai-based Prasanna Ananthasubramanian, chief economist at ICICI Securities Primary Dealership Ltd. “The Reserve Bank will not take this as a big move and they will not cut rates now.” The rupee, which has tumbled about 19.5 percent against the dollar in the past 12 months, weakened 0.3 percent to 55.3262 per dollar at the close in Mumbai. The BSE India Sensitive Index fell 0.6 percent, while the yield on the 8.15 percent government bond due June 2022 declined to 8.05 percent from 8.1 percent on July 13.
Singapore’s Home Sales Drop May Curb Price Gains: Southeast Asia (Source: Bloomberg)
Singapore’s biggest decline in home sales in 2 1/2 years may slow gains that pushed property prices to a record, easing concerns of further government curbs. The island state’s private residential property sales dropped 17 percent to 5,572 units in the three months ended June 30 from the previous quarter, according to data released by the Urban Redevelopment Authority yesterday. That’s the biggest quarterly decrease since the three months ended December 2009. “It’s an indication that things are slowing down,” Carolyn Goh, a spokeswoman at PropNex Realty, a Singapore-based real estate brokerage with 4,000 agents, said in an interview yesterday. “It looks like further cooling measures are unwarranted but it also depends on how the market responds in the second half.”
Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. The government said last week it’s prepared to enhance measures aimed at ensuring a “stable and sustainable” housing market, even as gains in home prices slowed this year. Home sales have climbed to 12,254 units this year through June 30, according to data from the authority. About 9,000 homes were sold in the first half of last year, according to PropNex. Suburban projects will be the “driving force” for developers in the second half of 2012, PropNex said.
German Court Won’t Rule on Bailout Fund for 8 Weeks (Source: Bloomberg)
Germany’s top court will take more than eight weeks to decide whether to suspend the euro-area’s permanent bailout fund, leaving Europe’s anti-crisis coffer less than half full to respond to the debt crisis. The Federal Constitutional Court in Karlsruhe will issue a ruling on bids to halt Germany’s participation in the European Stability Mechanism and the fiscal pact on Sept. 12, it said today in an e-mailed statement. That’s more than two months after it held a hearing on the measures. “The court has held a comprehensive hearing on the issue and will now take the time it needs to reach a decision,” German government spokesman Steffen Seibert told reporters in Berlin today. Finance Minister Wolfgang Schaeuble warned the hearing last week that a delay in activating the ESM “could lead to a significant worsening” of the crisis.
The delay could complicate efforts to resolve the 2 1/2- year-old crisis as European leaders squabble over the details of bailout conditions, bank rescues and burden sharing. In an interview yesterday, Chancellor Angela Merkel gave no ground on German demands for more centralized control over euro member states in return for joint liabilities.
Hollande Pressure on Peugeot Seen Limited by Mounting Losses (Source: Bloomberg)
French President Francois Hollande says PSA Peugeot Citroen (UG)’s plan to close a factory and slash 14,000 jobs won’t be tolerated. History suggests otherwise. In the last major clash between a sitting French president and a company over corporate downsizing, Hollande’s predecessor Nicolas Sarkozy vowed in 2008 that an ArcelorMittal (MT) plant in northeastern France would never close and jobs would be saved. A year later, the world’s biggest steel company shut the factory. Hollande, elected in May after pledging to block a “parade of firings,” said July 14 he would lean on Peugeot to rework a plan intended to stem losses and trim production capacity. The government will report the findings of a review later this month, as well as measures to prop up the French auto sector. “The state has no means to put pressure on Peugeot,” Florent Couvreur, an analyst at CM-CIC Securities in Paris. “We’ll see the plan they will present on July 25.”
20120717 0957 Global Commodities Related News.
Worst-in-Generation Drought Dims U.S. Farm Economy Hopes (Source: Bloomberg)
Cloudless skies seldom look so ominous. A worst-in-a-generation drought from Indiana to Arkansas to California is damaging crops and rural economies and threatening to drive food prices to record levels. Agriculture, though a small part of the $15.5 trillion U.S. economy, had been one of the most resilient industries in the past three years as the country struggled to recover from the recession. “It might be a $50 billion event for the economy as it blends into everything over the next four quarters,” said Michael Swanson, agricultural economist at Wells Fargo & Co. (WFC) in Minneapolis, the largest commercial agriculture lender. “Instead of retreating from record highs, food prices will advance.”
The U.S. Department of Agriculture declared July 11 that more than 1,000 counties in 26 states are natural-disaster areas, the biggest such declaration ever. The designation makes farmers and ranchers in affected counties -- about a third of those in the entire country -- eligible for low-interest loans to help manage the drought, wildfires or other disasters. Corn rose today to the highest in 10 months while soybeans increased to the costliest since 2008.
Good Dirt Gone Dry Wilting Corn Crop as Food Costs Rally (Source: Bloomberg)
Tom Flora walked into one of his corn fields in Delphi, Indiana, last week to survey land that until last month he expected would yield a bigger-than-average harvest. Eight rows in, he declared the crop a total loss. “I’ve never seen this,” 63-year-old Flora said as he fingered the wilted brown leaves on a four-foot corn stalk that was half the normal height for this time of year and had cobs almost devoid of kernels. “This is good dirt here, but not this year. It’s too dry. I doubt this will produce anything.” The worst Midwest drought since 1988 is baking farms from Arkansas to Ohio and threatening corn output that the U.S. said last week will be the second-largest ever. The price of the grain used in food for people and livestock is surging at a time when retail-meat costs already are near record highs. Global food prices are poised to rebound from a 21-month low in June because of weaker-than-expected supply in the U.S., the world’s largest corn exporter, the United Nations said July 5.
With forecasters including AccuWeather Inc. predicting worsening conditions in the next month, corn traded in Chicago surged by $2.665 a bushel since mid-June, or 53 percent. The rally is adding to pressure on the livestock industry because cattle feedlots are already losing as much as $200 an animal. Sanderson Farms Inc. (SAFM), the third-largest U.S. poultry producer, said every 10-cent corn increase boosts costs by $2.21 million.
Crops Rally as Drought Parches Fields; U.S. Stocks Drop (Source: Bloomberg)
Crops led a rally in commodities, with corn reaching a 10-month high and soybeans reaching the priciest since 2008, as the worst drought in a generation parches American farms. U.S stocks fell and Treasuries gained amid concern the global economic recovery is weakening. Corn futures for December delivery jumped 4.4 percent to $7.725 a bushel in Chicago while November soybeans climbed 2.4 percent and soybean-meal futures touched an all-time high. Wheat jumped 4.3 percent to a 17-month high. Oil surged 1.5 percent to $88.43 a barrel and shares of energy producers rose, helping limit the drop in the Standard & Poor’s 500 Index to 0.2 percent. Government debt yields slid to records from the U.S. and Canada to Germany, France and the U.K. amid demand for assets considered most safe. Crops surged amid forecasts that most of the U.S. Midwest will be unusually dry and hot in the next 10 days, threatening to drive food prices to record highs.
T-Storm Weather LLC in Chicago said July is on pace to rank as the third driest and warmest in 118 years of data. Gains in Treasuries and losses in stocks followed a reduction in the International Monetary Fund’s forecast for global growth in 2013 and an unexpected decrease in U.S. retail sales. “The crops are shrinking daily, and the market is pricing in the risk for less available supply for export and domestic usage,” Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana, said in a telephone interview. “The path of least resistance is for higher prices until the crops get enough rain to stabilize yields.”
Corn, oil divergence is bad news for US ethanol
NEW YORK, July 12 (Reuters) - Soaring corn futures and stagnating oil prices spell disaster for the U.S. ethanol sector this summer. A repeat of the industry's financial troubles from a few years ago cannot be ruled out.
US corn futures have soared as evidence has mounted that drought conditions will devastate this year's crop. Front-month corn futures have jumped 15 percent since the end of June.
Wheat Market Recap Report (Source:CME)
September Wheat finished up 36 3/4 at 884 1/2, 4 1/2 off the high and 28 1/4 up from the low. December Wheat closed up 35 1/4 at 897 3/4. This was 26 3/4 up from the low and 4 off the high. September Chicago wheat traded sharply higher into the closing bell after new contract highs were made earlier in the session. Kansas City and Minneapolis wheat made new highs on the day. Wheat saw support from a threatening weather forecast in the US Midwest and on production concerns in the Black Sea and Australia. Russia's Farm Ministry sees Russia's wheat crop at 45 million tonnes vs. the current USDA estimate of 49 million tonnes. Private exporters in the US also sold Japan 107,214 tonnes of wheat for export in 2012/13 crop year. Export inspections for the week ending July 12th were pegged at 14.913 million bushels. Inspections are now 9.6% of the current USDA estimate for 2012/13 and need to average 23.4 million bushels per week to meet the USDA estimate. Chicago wheat spreads firmed today as the market believes demand will shift to the US market in the second half of the crop year. Spillover support from corn pushed wheat to new highs and outside markets provided a positive tilt with the US Dollar trading slightly lower on the day. September Oats closed up 7 3/4 at 380 1/4. This was 5 1/4 up from the low and 5 3/4 off the high.
Pro Farmer: After the Bell Wheat Recap (Source:CME)
Wheat futures closed 30-plus cents higher at all three exchanges in the nearby contracts, which was good for a high-range close. Early support came on spillover from the corn market, as traders recognize wheat has become a competitive feed alternative to corn. September Chicago wheat widened its premium to September corn futures today.
Corn Market Recap for 7/16/2012 (Source:CME)
September Corn finished up 36 1/4 at 776 3/4, 3 1/2 off the high and 27 1/2 up from the low. December Corn closed up 32 1/4 at 772 1/2. This was 23 1/4 up from the low and 5 1/2 off the high. December corn traded sharply higher into the closing bell and settled near the high end of it's daily trading range. The western Corn Belt weather forecast looks very threatening through next week with 95-102 temperatures and mostly dry weather. The two week forecast calls for warm temperatures and below normal rainfall, which will likely continue to stress the Midwest corn crop. Traders see another 3-5% decline in crops rated good to excellent for this afternoon's weekly update. Traders see decent coverage of near 1/4 to 1/2 inch of rain this week and about the same for next week favoring areas to the north and east of the central Corn Belt. Ethanol margins for the average Iowa producer for the week ending July 13th were reported at.016 cents/bushel. This is up from a loss of over.50 cents/bushel the week prior. The sharp increase in ethanol margins were due to sharply higher ethanol futures and stronger DDG prices. Export inspections for the week ending July 12th were reported at 21.732 million bushels as compared with 32 million average needed each week to reach the USDA forecast for the season. Threatening weather and declining yields continue to support corn prices in the short-term as the long-term demand outlook remains weak. Further losses were reported for Ukraine grain crops due to weather and Nebraska officials told producers on Friday to end irrigation due to drought conditions. Corn dipped midday on profit taking but rallied into the close after one analyst cut their average corn yield from 153.50 bushels/acre to 142.50. Many traders see average yield dropping well below 140 if the two-week forecast of hot and mostly dry weather verifies. Outside markets provided a slightly supportive tilt with the US Dollar trading lower and crude oil positive on the day. September Rice finished up 0.355 at 15.64, 0.07 off the high and equal to the low.
Pro Farmer: After the Bell Corn Recap (Source:CME)
Corn futures closed 30-plus cents higher in the September through March 2013 contracts, with the May and July 2013 contracts not far behind. Far-deferred months posted gains mostly in the 10- to 12-cent range. Funds bought an estimated 20,000 contracts (100 million bu.) of corn today. Traders continue to actively build premium into the market amid deteriorating crop conditions and declining yield potential.
US new-crop corn, soy hit contract highs on weather woes
SINGAPORE, July 16 (Reuters) - Chicago new-crop corn jumped 4 percent while soybeans gained about 2.5 percent with both markets climbing to contract highs on forecasts of more stressful hot weather in the U.S. grain belt this week.
"Strong gains reflect the ongoing supply issues in the U.S. as forecasts of high temperatures over the week will lead to further deterioration in corn and soybeans yield potential," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.
Russia sticks to crop f'cast, grain exports may be cut
MOSCOW, July 16 (Reuters) - There is no reason for major revisions to Russia's new-season grain crop forecast but grain export numbers may be revised lower if bad weather continues, Agriculture Minister Nikolai Fyodorov said on Monday.
The latest forecast envisages wheat crop harvest at 46-49 million tonnes in the new season, revised recently from an earlier 57 million tonnes.
India faces challenges in sustaining grains output-farm minister
NEW DELHI, July 16 (Reuters) - India is facing challenges in sustaining grains output due to poor monsoon rains, Farm Minister Sharad Pawar said on Monday.
India's crucial monsoon rains have been below average since the start of the season in June though they were one percent above average in the past week due to an improvement in central India.
U.S. crops wilting despite scattered Midwest rains
CHICAGO, July 14 (Reuters) - Scattered rains over the last 24 hours provided little relief for U.S. Midwest corn and soybean crops that are rapidly deteriorating in the worst drought since 1988, and the forecast is for scant rain for the next two weeks, meteorologists said on Saturday.
"Overall the rain yesterday won't put a dent in the drought because they were spotty hit or miss kind of rains. Certainly some isolated areas will benefit, but it was not a significant drought buster," said AccuWeather meteorologist Dan Pydynowski.
Argentine wheat sowing slowed by cold, dry weather
BUENOS AIRES, July 13 (Reuters) - Dry, cold weather slowed Argentine wheat planting last week as farmers struggled to penetrate their frost-covered fields, the government said on Friday, further complicating a season marked by low output expectations.
Argentina is the world's No. 6 wheat exporter and principal supplier to neighboring Brazil. But plantings are set to fall 17 percent versus the previous crop year to 3.82 million hectares.
Coffee edges higher, eyes on Brazil, cocoa steady
LONDON, July 16 (Reuters) - Coffee futures were slightly higher supported by concerns over the impact of wet weather in Brazil both on the quality of the crop currently being harvested and the development of next season's crop, while cocoa and sugar markets were steady. Coffee futures edged higher in early trade as quality concerns remained in top producer Brazil following unseasonably wet weather over recent months.
Brazil cane crop delays may boost yields -Czarnikow
LONDON, July 16 (Reuters) - Delays in harvesting of the sugarcane crop in the centre-south of top producer Brazil are likely to boost yields, commodities house Czarnikow said on Monday.
Brazil's cane crush this year is around 50 million tonnes of cane behind last year's following wet weather and planned delays to the crushing season.
India coffee up on good export demand
MUMBAI, July 16 (Reuters) - Coffee prices in India rose in the auction held on Thursday, helped by firm export demand, auctioneer J. Thomas & Co said in a statement.
"Exporters were active on arabica plantation, arabica cherry and robusta parchment premium grades on offer," the statement said.
Mexico sugar output drops 2.5 pct in 2011/12
MEXICO CITY, July 13 (Reuters) - Mexico produced 5.05 million tonnes of sugar during the 2011/12 harvesting season, down 2.5 percent from the previous harvest, according to figures published on Friday by Mexico's National Cane Workers' Union.
Output for the 2011/12 season was in line with forecasts by Mexico's national sugar committee Conadesuca.
Mexico June coffee exports rise 9.1 pct vs year ago
MEXICO CITY, July 13 (Reuters) - Coffee exports from Mexico rose 9.1 percent in June compared with the same month a year earlier, totaling 321,131 60-kg bags in the month, Mexico's coffee association AMECAFE said on Friday.
Mexican coffee exports through the first nine months of the 2011-12 harvesting season totaled 2.4 million bags, up 18 percent from the same nine-month period during the 2010-11 harvest, AMECAFE said.
Recap Energy Market Report (Source:CME)
September crude oil showed positive reversal action on the session, mounting a come back from early morning lows to register its highest close since May 29th. While a weaker than expected report on US retail sales pressured risk appetites, the crude and product markets were able to stabilize and turn higher. A turn lower in the US dollar and reports of a US Navy ship opening fire on a boat in the UAE supported the turn higher in crude oil prices. Chatter that Chinese officials could be closer to extending another round of monetary stimulus provided an added jolt to the crude oil market throughout the session. Gains in the expiring August Brent crude oil contract also offered the WTI market a modest lift.
Oil Declines From Seven-Week High Amid Global Economic Concern (Source: Bloomberg)
Oil dropped from the highest close in seven weeks in New York amid concern a slowdown in the global economy will curb fuel demand. Futures fell as much as 0.4 percent, declining for the first time in five days. The International Monetary Fund cut its 2013 global economic forecast while a U.S. Commerce Department report showed retail sales unexpectedly slipped in June. A gauge of investor confidence in Germany, the euro area’s biggest economy, probably slid to the lowest level since January, according to a Bloomberg News survey before data today. Oil for August delivery dropped as much as 37 cents to $88.06 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.13 at 9:40 a.m. Sydney time. The contract gained 1.5 percent to $88.43 yesterday, the highest close since May 29. Prices are 11 percent lower this year.
Brent crude for August settlement, which expired yesterday, climbed 1.1 percent to $103.55 on the London-based ICE Futures Europe exchange. The more-active September future rose $1.95 to $103.37. The European benchmark’s premium to West Texas Intermediate closed at $15.12. The IMF cut its 2013 global growth forecast as Europe’s debt crisis slows expansions in emerging markets. Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook.
China oil storage likely to slow from breakneck pace
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 16 (Reuters) - The big question for oil markets in the second half of 2012 is whether China will continue building its stockpiles at the same unprecedented rate of the past six months.
China, the world's second-largest crude user, imported over 600,000 barrels per day (bpd) more than what it refined in the first half, a surplus that's equivalent to about Turkey's daily consumption.
OIL-Brent stays above $102 on China stimulus hopes
SINGAPORE, July 16 (Reuters) - Brent crude held steady above $102 per barrel on optimism over the outlook for demand growth as China's Premier Wen Jiabao said the government would step up efforts to boost the economy of the world's second-largest oil consumer.
"Short-term sentiment should be good for oil as well as other risk assets. It is a combination of two factors -- China's growth coming in in line with expectations and hopes for more measures to boost the economy," said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.
Yemen says oil exports may resume this week
SANAA, July 15 (Reuters) - Yemen may be able to resume oil exports as planned this week after tribesmen agreed to allow repairs to the country's main crude pipeline, the oil minister said on Sunday.
"Resumption of pumping oil is expected tomorrow if the teams complete fixing the pipeline," Minister Hisham Sharaf told Reuters, adding talks with tribes to allow the repairs to go ahead had been successful.
Cloudless skies seldom look so ominous. A worst-in-a-generation drought from Indiana to Arkansas to California is damaging crops and rural economies and threatening to drive food prices to record levels. Agriculture, though a small part of the $15.5 trillion U.S. economy, had been one of the most resilient industries in the past three years as the country struggled to recover from the recession. “It might be a $50 billion event for the economy as it blends into everything over the next four quarters,” said Michael Swanson, agricultural economist at Wells Fargo & Co. (WFC) in Minneapolis, the largest commercial agriculture lender. “Instead of retreating from record highs, food prices will advance.”
The U.S. Department of Agriculture declared July 11 that more than 1,000 counties in 26 states are natural-disaster areas, the biggest such declaration ever. The designation makes farmers and ranchers in affected counties -- about a third of those in the entire country -- eligible for low-interest loans to help manage the drought, wildfires or other disasters. Corn rose today to the highest in 10 months while soybeans increased to the costliest since 2008.
Good Dirt Gone Dry Wilting Corn Crop as Food Costs Rally (Source: Bloomberg)
Tom Flora walked into one of his corn fields in Delphi, Indiana, last week to survey land that until last month he expected would yield a bigger-than-average harvest. Eight rows in, he declared the crop a total loss. “I’ve never seen this,” 63-year-old Flora said as he fingered the wilted brown leaves on a four-foot corn stalk that was half the normal height for this time of year and had cobs almost devoid of kernels. “This is good dirt here, but not this year. It’s too dry. I doubt this will produce anything.” The worst Midwest drought since 1988 is baking farms from Arkansas to Ohio and threatening corn output that the U.S. said last week will be the second-largest ever. The price of the grain used in food for people and livestock is surging at a time when retail-meat costs already are near record highs. Global food prices are poised to rebound from a 21-month low in June because of weaker-than-expected supply in the U.S., the world’s largest corn exporter, the United Nations said July 5.
With forecasters including AccuWeather Inc. predicting worsening conditions in the next month, corn traded in Chicago surged by $2.665 a bushel since mid-June, or 53 percent. The rally is adding to pressure on the livestock industry because cattle feedlots are already losing as much as $200 an animal. Sanderson Farms Inc. (SAFM), the third-largest U.S. poultry producer, said every 10-cent corn increase boosts costs by $2.21 million.
Crops Rally as Drought Parches Fields; U.S. Stocks Drop (Source: Bloomberg)
Crops led a rally in commodities, with corn reaching a 10-month high and soybeans reaching the priciest since 2008, as the worst drought in a generation parches American farms. U.S stocks fell and Treasuries gained amid concern the global economic recovery is weakening. Corn futures for December delivery jumped 4.4 percent to $7.725 a bushel in Chicago while November soybeans climbed 2.4 percent and soybean-meal futures touched an all-time high. Wheat jumped 4.3 percent to a 17-month high. Oil surged 1.5 percent to $88.43 a barrel and shares of energy producers rose, helping limit the drop in the Standard & Poor’s 500 Index to 0.2 percent. Government debt yields slid to records from the U.S. and Canada to Germany, France and the U.K. amid demand for assets considered most safe. Crops surged amid forecasts that most of the U.S. Midwest will be unusually dry and hot in the next 10 days, threatening to drive food prices to record highs.
T-Storm Weather LLC in Chicago said July is on pace to rank as the third driest and warmest in 118 years of data. Gains in Treasuries and losses in stocks followed a reduction in the International Monetary Fund’s forecast for global growth in 2013 and an unexpected decrease in U.S. retail sales. “The crops are shrinking daily, and the market is pricing in the risk for less available supply for export and domestic usage,” Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana, said in a telephone interview. “The path of least resistance is for higher prices until the crops get enough rain to stabilize yields.”
Corn, oil divergence is bad news for US ethanol
NEW YORK, July 12 (Reuters) - Soaring corn futures and stagnating oil prices spell disaster for the U.S. ethanol sector this summer. A repeat of the industry's financial troubles from a few years ago cannot be ruled out.
US corn futures have soared as evidence has mounted that drought conditions will devastate this year's crop. Front-month corn futures have jumped 15 percent since the end of June.
Wheat Market Recap Report (Source:CME)
September Wheat finished up 36 3/4 at 884 1/2, 4 1/2 off the high and 28 1/4 up from the low. December Wheat closed up 35 1/4 at 897 3/4. This was 26 3/4 up from the low and 4 off the high. September Chicago wheat traded sharply higher into the closing bell after new contract highs were made earlier in the session. Kansas City and Minneapolis wheat made new highs on the day. Wheat saw support from a threatening weather forecast in the US Midwest and on production concerns in the Black Sea and Australia. Russia's Farm Ministry sees Russia's wheat crop at 45 million tonnes vs. the current USDA estimate of 49 million tonnes. Private exporters in the US also sold Japan 107,214 tonnes of wheat for export in 2012/13 crop year. Export inspections for the week ending July 12th were pegged at 14.913 million bushels. Inspections are now 9.6% of the current USDA estimate for 2012/13 and need to average 23.4 million bushels per week to meet the USDA estimate. Chicago wheat spreads firmed today as the market believes demand will shift to the US market in the second half of the crop year. Spillover support from corn pushed wheat to new highs and outside markets provided a positive tilt with the US Dollar trading slightly lower on the day. September Oats closed up 7 3/4 at 380 1/4. This was 5 1/4 up from the low and 5 3/4 off the high.
Pro Farmer: After the Bell Wheat Recap (Source:CME)
Wheat futures closed 30-plus cents higher at all three exchanges in the nearby contracts, which was good for a high-range close. Early support came on spillover from the corn market, as traders recognize wheat has become a competitive feed alternative to corn. September Chicago wheat widened its premium to September corn futures today.
Corn Market Recap for 7/16/2012 (Source:CME)
September Corn finished up 36 1/4 at 776 3/4, 3 1/2 off the high and 27 1/2 up from the low. December Corn closed up 32 1/4 at 772 1/2. This was 23 1/4 up from the low and 5 1/2 off the high. December corn traded sharply higher into the closing bell and settled near the high end of it's daily trading range. The western Corn Belt weather forecast looks very threatening through next week with 95-102 temperatures and mostly dry weather. The two week forecast calls for warm temperatures and below normal rainfall, which will likely continue to stress the Midwest corn crop. Traders see another 3-5% decline in crops rated good to excellent for this afternoon's weekly update. Traders see decent coverage of near 1/4 to 1/2 inch of rain this week and about the same for next week favoring areas to the north and east of the central Corn Belt. Ethanol margins for the average Iowa producer for the week ending July 13th were reported at.016 cents/bushel. This is up from a loss of over.50 cents/bushel the week prior. The sharp increase in ethanol margins were due to sharply higher ethanol futures and stronger DDG prices. Export inspections for the week ending July 12th were reported at 21.732 million bushels as compared with 32 million average needed each week to reach the USDA forecast for the season. Threatening weather and declining yields continue to support corn prices in the short-term as the long-term demand outlook remains weak. Further losses were reported for Ukraine grain crops due to weather and Nebraska officials told producers on Friday to end irrigation due to drought conditions. Corn dipped midday on profit taking but rallied into the close after one analyst cut their average corn yield from 153.50 bushels/acre to 142.50. Many traders see average yield dropping well below 140 if the two-week forecast of hot and mostly dry weather verifies. Outside markets provided a slightly supportive tilt with the US Dollar trading lower and crude oil positive on the day. September Rice finished up 0.355 at 15.64, 0.07 off the high and equal to the low.
Pro Farmer: After the Bell Corn Recap (Source:CME)
Corn futures closed 30-plus cents higher in the September through March 2013 contracts, with the May and July 2013 contracts not far behind. Far-deferred months posted gains mostly in the 10- to 12-cent range. Funds bought an estimated 20,000 contracts (100 million bu.) of corn today. Traders continue to actively build premium into the market amid deteriorating crop conditions and declining yield potential.
US new-crop corn, soy hit contract highs on weather woes
SINGAPORE, July 16 (Reuters) - Chicago new-crop corn jumped 4 percent while soybeans gained about 2.5 percent with both markets climbing to contract highs on forecasts of more stressful hot weather in the U.S. grain belt this week.
"Strong gains reflect the ongoing supply issues in the U.S. as forecasts of high temperatures over the week will lead to further deterioration in corn and soybeans yield potential," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.
Russia sticks to crop f'cast, grain exports may be cut
MOSCOW, July 16 (Reuters) - There is no reason for major revisions to Russia's new-season grain crop forecast but grain export numbers may be revised lower if bad weather continues, Agriculture Minister Nikolai Fyodorov said on Monday.
The latest forecast envisages wheat crop harvest at 46-49 million tonnes in the new season, revised recently from an earlier 57 million tonnes.
India faces challenges in sustaining grains output-farm minister
NEW DELHI, July 16 (Reuters) - India is facing challenges in sustaining grains output due to poor monsoon rains, Farm Minister Sharad Pawar said on Monday.
India's crucial monsoon rains have been below average since the start of the season in June though they were one percent above average in the past week due to an improvement in central India.
U.S. crops wilting despite scattered Midwest rains
CHICAGO, July 14 (Reuters) - Scattered rains over the last 24 hours provided little relief for U.S. Midwest corn and soybean crops that are rapidly deteriorating in the worst drought since 1988, and the forecast is for scant rain for the next two weeks, meteorologists said on Saturday.
"Overall the rain yesterday won't put a dent in the drought because they were spotty hit or miss kind of rains. Certainly some isolated areas will benefit, but it was not a significant drought buster," said AccuWeather meteorologist Dan Pydynowski.
Argentine wheat sowing slowed by cold, dry weather
BUENOS AIRES, July 13 (Reuters) - Dry, cold weather slowed Argentine wheat planting last week as farmers struggled to penetrate their frost-covered fields, the government said on Friday, further complicating a season marked by low output expectations.
Argentina is the world's No. 6 wheat exporter and principal supplier to neighboring Brazil. But plantings are set to fall 17 percent versus the previous crop year to 3.82 million hectares.
Coffee edges higher, eyes on Brazil, cocoa steady
LONDON, July 16 (Reuters) - Coffee futures were slightly higher supported by concerns over the impact of wet weather in Brazil both on the quality of the crop currently being harvested and the development of next season's crop, while cocoa and sugar markets were steady. Coffee futures edged higher in early trade as quality concerns remained in top producer Brazil following unseasonably wet weather over recent months.
Brazil cane crop delays may boost yields -Czarnikow
LONDON, July 16 (Reuters) - Delays in harvesting of the sugarcane crop in the centre-south of top producer Brazil are likely to boost yields, commodities house Czarnikow said on Monday.
Brazil's cane crush this year is around 50 million tonnes of cane behind last year's following wet weather and planned delays to the crushing season.
India coffee up on good export demand
MUMBAI, July 16 (Reuters) - Coffee prices in India rose in the auction held on Thursday, helped by firm export demand, auctioneer J. Thomas & Co said in a statement.
"Exporters were active on arabica plantation, arabica cherry and robusta parchment premium grades on offer," the statement said.
Mexico sugar output drops 2.5 pct in 2011/12
MEXICO CITY, July 13 (Reuters) - Mexico produced 5.05 million tonnes of sugar during the 2011/12 harvesting season, down 2.5 percent from the previous harvest, according to figures published on Friday by Mexico's National Cane Workers' Union.
Output for the 2011/12 season was in line with forecasts by Mexico's national sugar committee Conadesuca.
Mexico June coffee exports rise 9.1 pct vs year ago
MEXICO CITY, July 13 (Reuters) - Coffee exports from Mexico rose 9.1 percent in June compared with the same month a year earlier, totaling 321,131 60-kg bags in the month, Mexico's coffee association AMECAFE said on Friday.
Mexican coffee exports through the first nine months of the 2011-12 harvesting season totaled 2.4 million bags, up 18 percent from the same nine-month period during the 2010-11 harvest, AMECAFE said.
Recap Energy Market Report (Source:CME)
September crude oil showed positive reversal action on the session, mounting a come back from early morning lows to register its highest close since May 29th. While a weaker than expected report on US retail sales pressured risk appetites, the crude and product markets were able to stabilize and turn higher. A turn lower in the US dollar and reports of a US Navy ship opening fire on a boat in the UAE supported the turn higher in crude oil prices. Chatter that Chinese officials could be closer to extending another round of monetary stimulus provided an added jolt to the crude oil market throughout the session. Gains in the expiring August Brent crude oil contract also offered the WTI market a modest lift.
Oil Declines From Seven-Week High Amid Global Economic Concern (Source: Bloomberg)
Oil dropped from the highest close in seven weeks in New York amid concern a slowdown in the global economy will curb fuel demand. Futures fell as much as 0.4 percent, declining for the first time in five days. The International Monetary Fund cut its 2013 global economic forecast while a U.S. Commerce Department report showed retail sales unexpectedly slipped in June. A gauge of investor confidence in Germany, the euro area’s biggest economy, probably slid to the lowest level since January, according to a Bloomberg News survey before data today. Oil for August delivery dropped as much as 37 cents to $88.06 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.13 at 9:40 a.m. Sydney time. The contract gained 1.5 percent to $88.43 yesterday, the highest close since May 29. Prices are 11 percent lower this year.
Brent crude for August settlement, which expired yesterday, climbed 1.1 percent to $103.55 on the London-based ICE Futures Europe exchange. The more-active September future rose $1.95 to $103.37. The European benchmark’s premium to West Texas Intermediate closed at $15.12. The IMF cut its 2013 global growth forecast as Europe’s debt crisis slows expansions in emerging markets. Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook.
China oil storage likely to slow from breakneck pace
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 16 (Reuters) - The big question for oil markets in the second half of 2012 is whether China will continue building its stockpiles at the same unprecedented rate of the past six months.
China, the world's second-largest crude user, imported over 600,000 barrels per day (bpd) more than what it refined in the first half, a surplus that's equivalent to about Turkey's daily consumption.
OIL-Brent stays above $102 on China stimulus hopes
SINGAPORE, July 16 (Reuters) - Brent crude held steady above $102 per barrel on optimism over the outlook for demand growth as China's Premier Wen Jiabao said the government would step up efforts to boost the economy of the world's second-largest oil consumer.
"Short-term sentiment should be good for oil as well as other risk assets. It is a combination of two factors -- China's growth coming in in line with expectations and hopes for more measures to boost the economy," said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.
Yemen says oil exports may resume this week
SANAA, July 15 (Reuters) - Yemen may be able to resume oil exports as planned this week after tribesmen agreed to allow repairs to the country's main crude pipeline, the oil minister said on Sunday.
"Resumption of pumping oil is expected tomorrow if the teams complete fixing the pipeline," Minister Hisham Sharaf told Reuters, adding talks with tribes to allow the repairs to go ahead had been successful.
20120717 0956 Soy Oil & Palm Oil Related News.
SGS CPO export down 26.1% to 533,556 tonnes for the period of 1~15 Jul 2012.
Pro Farmer: After the Bell Soybean Recap (Source:CME)
Bulls' maintained a solid grip on the soybean market today and pulled futures to a high-range close. Futures ended 30-plus cents higher through the July 2013 contract, with nearby contracts leading the advance. Soyoil and soymeal also posted strong gains. Traders worked to build additional weather premium into prices today after weekend rains weren't widespread or heavy enough to reduce the drought's grip and the forecast calls for building heat with limited precip chances.
Soybean Complex Market Recap (Source:CME)
August Soybeans finished up 39 at 1633 3/4, 2 1/4 off the high and 23 3/4 up from the low. November Soybeans closed up 38 at 1590 1/2. This was 22 1/2 up from the low and 8 off the high. August Soymeal closed up 13.2 at 487.3. This was 9.3 up from the low and 3.3 off the high. August Soybean Oil finished up 0.95 at 54.65, 0.02 off the high and 0.67 up from the low. November soybeans extended their overnight gains and settled sharply higher (up 38 cents) on the day. Soybean meal and oil traded higher with soybean meal posting a new high for the move. Showers last week provided beneficial rainfall for the southeast and delta but the two week forecast calls for warm temperatures and below normal rainfall, which will likely continue to stress the Midwest soybean crop. Reports that soybean growth has slowed and plants are stunted in the central Midwest have traders wondering if the most recent USDA yield estimate of 40.5 bushels/acre is too high. One market analyst lowered their average soybean yield to 40 bushels/acre from 42. The trade expects good/excellent ratings to be cut 5 points from last week in the afternoon Crop Condition reports. NOPA monthly crush data showed June crush at 134.156 million bushels vs. 117.178 million bushels in June 2011. This was more than 1 million bushels above expectations and suggests that the record high prices for soybeans have done little in the way of destroying demand. Export inspections for the week ending July 12, 2012 were reported at 14.271 million bushels. Export shipments need to average 12.3 million bushels each week to reach the USDA projection. The outside markets provided support as the US Dollar traded slightly lower and crude oil was higher on the day.
VEGOILS-Palm oil futures gain on U.S. weather woes
SINGAPORE, July 16 (Reuters) - Malaysian crude palm oil futures edged higher as demand prospects brightened after forecasts of more stressful weather in the U.S. threatened to tighten global oilseed supply further.
"One reason for the market rally today is the U.S. weather. Another reason is the big spread between soybean oil and palm oil that is more than $200 per tonne," said a trader with a foreign commodities brokerage in Malaysia.
Brazil '12/'13 soy harvest may top US crop-Agroconsult
SAO PAULO, July 13 (Reuters) - Brazil's 2012/13 soybean output could surpass U.S. production of the oilseed for the first time in history due to the drought in U.S. Midwest growing areas, local analyst Agroconsult said on Friday.
Under normal weather conditions, Brazilian farmers are expected to harvest a record 83.1 million tonnes of soybeans next season, which would be up 25 percent from the 66.4 million tonnes harvested from the drought-parched crop that ended in May, the analysts said.
High soyoil prices to spur demand for palm oil 16-Jul-2012 23:23 (Source: Reuters)
Soyoil rose 15 pct, palm oil 5 pct in past month Dealers are reluctant to buy due to uncertainty
AMSTERDAM, July 16 (Reuters) - A sharp increase in soyoil prices will spur demand for cheaper palm oil in Europe, lifting prices, but any deepening of the euro zone debt crisis could cap gains, traders said.
Soyoil prices on the European vegetable oil market rose 15 percent over the past month to 1,055 euros a tonne on Monday from 916 euros a tonne on June 16.
In the same period crude palm oil prices rose 7 percent to $1,037 a tonne from $967.
"The spread with soybean oil is getting bigger and that could be the demand driver (for palm oil), but the economic downturn in Europe could pressure down prices," one trader said.
"If the crisis deepens, people could panic and pull out of the market, going to safe havens such as gold."
"It is a very difficult market these days," another trader said.
The Dutch Board for Margarine Fats and Oils said in February it saw p alm oil d emand i n the European Union f lat this year as the main consumers - the food-processing industry and biodiesel producers - faced difficulties including higher raw material costs and a fall in demand due to economic crisis.(Full Story)
Soybean futures on the Chicago Board of Trade reached new highs on Monday as the worst drought since 1988 hit key growing areas in the United States, the world's top exporter. GRA/
Unfavourable weather in the Black Sea region, one of the world's top exporters, supported prices of all grains and oilseeds as well.
Higher prices of oilseeds, including soybean and rapeseed, lifted prices of palm oil, but at a slower pace as production is forecast to rise this year.
"We expect this will encourage increased end-user demand (for palm oil) as the prospect for oilseed production in the U.S. and India has declined due to adverse weather," Rabobank said in a research note.
"We maintain our view that vegetable oil prices will maintain their historically low valuation relative to meal in the short term, but will remain bullish across the entire oilseed complex on the deteriorating supply outlook."
Pro Farmer: After the Bell Soybean Recap (Source:CME)
Bulls' maintained a solid grip on the soybean market today and pulled futures to a high-range close. Futures ended 30-plus cents higher through the July 2013 contract, with nearby contracts leading the advance. Soyoil and soymeal also posted strong gains. Traders worked to build additional weather premium into prices today after weekend rains weren't widespread or heavy enough to reduce the drought's grip and the forecast calls for building heat with limited precip chances.
Soybean Complex Market Recap (Source:CME)
August Soybeans finished up 39 at 1633 3/4, 2 1/4 off the high and 23 3/4 up from the low. November Soybeans closed up 38 at 1590 1/2. This was 22 1/2 up from the low and 8 off the high. August Soymeal closed up 13.2 at 487.3. This was 9.3 up from the low and 3.3 off the high. August Soybean Oil finished up 0.95 at 54.65, 0.02 off the high and 0.67 up from the low. November soybeans extended their overnight gains and settled sharply higher (up 38 cents) on the day. Soybean meal and oil traded higher with soybean meal posting a new high for the move. Showers last week provided beneficial rainfall for the southeast and delta but the two week forecast calls for warm temperatures and below normal rainfall, which will likely continue to stress the Midwest soybean crop. Reports that soybean growth has slowed and plants are stunted in the central Midwest have traders wondering if the most recent USDA yield estimate of 40.5 bushels/acre is too high. One market analyst lowered their average soybean yield to 40 bushels/acre from 42. The trade expects good/excellent ratings to be cut 5 points from last week in the afternoon Crop Condition reports. NOPA monthly crush data showed June crush at 134.156 million bushels vs. 117.178 million bushels in June 2011. This was more than 1 million bushels above expectations and suggests that the record high prices for soybeans have done little in the way of destroying demand. Export inspections for the week ending July 12, 2012 were reported at 14.271 million bushels. Export shipments need to average 12.3 million bushels each week to reach the USDA projection. The outside markets provided support as the US Dollar traded slightly lower and crude oil was higher on the day.
VEGOILS-Palm oil futures gain on U.S. weather woes
SINGAPORE, July 16 (Reuters) - Malaysian crude palm oil futures edged higher as demand prospects brightened after forecasts of more stressful weather in the U.S. threatened to tighten global oilseed supply further.
"One reason for the market rally today is the U.S. weather. Another reason is the big spread between soybean oil and palm oil that is more than $200 per tonne," said a trader with a foreign commodities brokerage in Malaysia.
Brazil '12/'13 soy harvest may top US crop-Agroconsult
SAO PAULO, July 13 (Reuters) - Brazil's 2012/13 soybean output could surpass U.S. production of the oilseed for the first time in history due to the drought in U.S. Midwest growing areas, local analyst Agroconsult said on Friday.
Under normal weather conditions, Brazilian farmers are expected to harvest a record 83.1 million tonnes of soybeans next season, which would be up 25 percent from the 66.4 million tonnes harvested from the drought-parched crop that ended in May, the analysts said.
High soyoil prices to spur demand for palm oil 16-Jul-2012 23:23 (Source: Reuters)
Soyoil rose 15 pct, palm oil 5 pct in past month Dealers are reluctant to buy due to uncertainty
AMSTERDAM, July 16 (Reuters) - A sharp increase in soyoil prices will spur demand for cheaper palm oil in Europe, lifting prices, but any deepening of the euro zone debt crisis could cap gains, traders said.
Soyoil prices on the European vegetable oil market rose 15 percent over the past month to 1,055 euros a tonne on Monday from 916 euros a tonne on June 16.
In the same period crude palm oil prices rose 7 percent to $1,037 a tonne from $967.
"The spread with soybean oil is getting bigger and that could be the demand driver (for palm oil), but the economic downturn in Europe could pressure down prices," one trader said.
"If the crisis deepens, people could panic and pull out of the market, going to safe havens such as gold."
"It is a very difficult market these days," another trader said.
The Dutch Board for Margarine Fats and Oils said in February it saw p alm oil d emand i n the European Union f lat this year as the main consumers - the food-processing industry and biodiesel producers - faced difficulties including higher raw material costs and a fall in demand due to economic crisis.(Full Story)
Soybean futures on the Chicago Board of Trade reached new highs on Monday as the worst drought since 1988 hit key growing areas in the United States, the world's top exporter. GRA/
Unfavourable weather in the Black Sea region, one of the world's top exporters, supported prices of all grains and oilseeds as well.
Higher prices of oilseeds, including soybean and rapeseed, lifted prices of palm oil, but at a slower pace as production is forecast to rise this year.
"We expect this will encourage increased end-user demand (for palm oil) as the prospect for oilseed production in the U.S. and India has declined due to adverse weather," Rabobank said in a research note.
"We maintain our view that vegetable oil prices will maintain their historically low valuation relative to meal in the short term, but will remain bullish across the entire oilseed complex on the deteriorating supply outlook."
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