LONDON, Oct 17 (Reuters) - Norilsk Nickel said on Friday it will halt production at its Cawse laterite nickel operation in Western Australia because of higher costs and lower metal prices.
The facility, which has been put on indefinite care and maintenance, has been operating under increasing cost pressures for some time, the world's biggest nickel producer said in a statement.
"Significant increases in the cost of inputs coupled with a steep decline in nickel prices have lead to the decision to stop production indefinitely," it said.
The company will examine disposing of the operation as one of its options and said it is considering a range of alternatives for its workers.
A number of mining companies have been forced to reduce output and delay future projects as nickel prices fell close to or below marginal costs.
London Metal Exchange three-month nickel MNI3 has slumped almost 80 percent since reaching a record high of $51,800 a tonne in May 2007, amid falling demand from stainless steel producers, and prices have been below $20,000 since Sept. 2.
Production at Cawse was suspended in June because of a disruption in gas and sulphuric acid supplies.
Norilsk Nickel said the decision does not affect its other Australian nickel operations at Black Swan, Lake Johnston and Waterloo which continue to perform well, in line with expectations.
(Reporting by Julie Crust; editing by Peter Blackburn)
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Friday, October 17, 2008
EMERGING MARKETS-Central bank moves lift LatAm currencies
* Mexico peso gains after cenbank leaves rates unchanged
* LatAm stocks rise but investors show little conviction
* Emerging-market bond spreads flat
* Argentina bonds fall on swap of guaranteed loans
By Walter Brandimarte
NEW YORK, Oct 17 (Reuters) - Latin American currencies recovered part of their recent losses on Friday, supported by a series of central bank actions across the region, while stocks rose in a market still plagued by global recession fears.
Among the actions supporting regional currencies were Mexico's central bank decision to keep interest rates unchanged, Brazil's further selling of currency swaps, and direct sales of dollars on the spot foreign-exchange market by Peru and Argentina.
The Mexican peso strengthened 1.7 percent to 12.84 per dollar after the central bank held its key interest rate at 8.25 percent, supporting demand for its currency.
Some analysts expected policy-makers to cut rates to protect the Mexican economy from an expected U.S. recession. For details.
"This will help stabilize the peso and the interest- rate differential may take the exchange rate to 12.50 pesos per dollar until the end of the year," said Bartosz Pawlowski, an analyst with Toronto Dominion Bank.
The Brazilian real BRBY gained 1.1 percent to 2.135 per dollar as investors awaited an additional sale of dollar swaps, which are similar to a sale of dollars in futures markets, later in the day.
"The central bank is giving liquidity to the market, and providing hedging to investors," said Gerson da Nobrega, manager of the currency desk at Sao Paulo-based Alfa Investimento bank.
In Peru, the sol was little changed at 3.069 per dollar. It had closed at 3.065 per dollar on Wednesday after the central bank sold about $153.2 million in the foreign-exchange market. Since the beginning of the month, Peruvian policy-makers have spent $2.133 billion to support the currency.
Latin American stocks also rose, with the MSCI stock index for the region .MILA00000PUS gaining 6.05 percent, amid a very volatile session on Wall Street.
Confidence is still shaky among equity investors, who fear commodity prices might fall more and corporate profits may be severely hurt in Latin America during an expected global recession.
The Brazilian benchmark Bovespa index .BVSP rose 1.8 percent supported by gains of iron ore producer Vale and oil firm Petrobras , which had posted strong losses on Thursday on the back of falling commodity prices.
Mexico's IPC stock index .MXX rose 1.6 percent, Chile's blue-chip IPSA index .IPSA rose 1.59 percent, while Colombia's IGBC index .IGBC climbed 2.4 percent and Argentina's MerVal was up 1.48 percent.
In debt markets, yield spreads between emerging-market bonds and US Treasuries were flat at 623 basis points, according to the benchmark JP Morgan EMBI+ index 11EMJ. The indicator is seen as a key gauge of investors' aversion to risk.
Argentina's sovereign bonds were lower, with total returns declining 0.88 percent on the EMBI+, as investors feared they might be forced by the government to participate in a swap of guaranteed loans coming due between 2009 and 2012. (Additional reporting by Luis Rojas Mena and Lorena Segura in Mexico City, with Jenifer Correa in Sao Paulo; Editing by Jan Paschal)
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* LatAm stocks rise but investors show little conviction
* Emerging-market bond spreads flat
* Argentina bonds fall on swap of guaranteed loans
By Walter Brandimarte
NEW YORK, Oct 17 (Reuters) - Latin American currencies recovered part of their recent losses on Friday, supported by a series of central bank actions across the region, while stocks rose in a market still plagued by global recession fears.
Among the actions supporting regional currencies were Mexico's central bank decision to keep interest rates unchanged, Brazil's further selling of currency swaps, and direct sales of dollars on the spot foreign-exchange market by Peru and Argentina.
The Mexican peso
Some analysts expected policy-makers to cut rates to protect the Mexican economy from an expected U.S. recession. For details.
"This will help stabilize the peso and the interest- rate differential may take the exchange rate to 12.50 pesos per dollar until the end of the year," said Bartosz Pawlowski, an analyst with Toronto Dominion Bank.
The Brazilian real BRBY gained 1.1 percent to 2.135 per dollar as investors awaited an additional sale of dollar swaps, which are similar to a sale of dollars in futures markets, later in the day.
"The central bank is giving liquidity to the market, and providing hedging to investors," said Gerson da Nobrega, manager of the currency desk at Sao Paulo-based Alfa Investimento bank.
In Peru, the sol was little changed at 3.069 per dollar. It had closed at 3.065 per dollar on Wednesday after the central bank sold about $153.2 million in the foreign-exchange market. Since the beginning of the month, Peruvian policy-makers have spent $2.133 billion to support the currency.
Latin American stocks also rose, with the MSCI stock index for the region .MILA00000PUS gaining 6.05 percent, amid a very volatile session on Wall Street.
Confidence is still shaky among equity investors, who fear commodity prices might fall more and corporate profits may be severely hurt in Latin America during an expected global recession.
The Brazilian benchmark Bovespa index .BVSP rose 1.8 percent supported by gains of iron ore producer Vale and oil firm Petrobras , which had posted strong losses on Thursday on the back of falling commodity prices.
Mexico's IPC stock index .MXX rose 1.6 percent, Chile's blue-chip IPSA index .IPSA rose 1.59 percent, while Colombia's IGBC index .IGBC climbed 2.4 percent and Argentina's MerVal was up 1.48 percent.
In debt markets, yield spreads between emerging-market bonds and US Treasuries were flat at 623 basis points, according to the benchmark JP Morgan EMBI+ index 11EMJ. The indicator is seen as a key gauge of investors' aversion to risk.
Argentina's sovereign bonds were lower, with total returns declining 0.88 percent on the EMBI+, as investors feared they might be forced by the government to participate in a swap of guaranteed loans coming due between 2009 and 2012. (Additional reporting by Luis Rojas Mena and Lorena Segura in Mexico City, with Jenifer Correa in Sao Paulo; Editing by Jan Paschal)
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US STOCKS-Market edges up on bargain hunting, Google
NEW YORK, Oct 17 (Reuters) - U.S. stocks gained slightly in skittish trade on Friday, with the Nasdaq briefly rising 1 percent as investors scoured the market for beaten-down shares, offsetting mounting concerns about recession.
A report showing that construction starts on U.S. homes slid to a new 17-1/2-year low increased recession fears, but reassuring profits from such bellwethers as Google Inc , up more than 7 percent, encouraged investors seek bargains.
Sentiment got a lift from billionaire investor Warren Buffett, writing in the New York Times, who said he is buying U.S. stocks. That gave investors yet another reason to wade back into the market, albeit cautiously. For details.
The Dow Jones industrial average .DJI was up 1 point, or 0.01 percent at 8,980.26. The Standard & Poor's 500 Index .SPX was up 0.50 point, or 0.05 percent, at 946.93. The Nasdaq Composite Index .IXIC was up 7.01 points, or 0.41 percent, at 1,724.72, after gaining 1 percent to a session high at 1,734.88.. (Reporting by Ellis Mnyandu; Editing by Jan Paschal)
Read more...
A report showing that construction starts on U.S. homes slid to a new 17-1/2-year low increased recession fears, but reassuring profits from such bellwethers as Google Inc , up more than 7 percent, encouraged investors seek bargains.
Sentiment got a lift from billionaire investor Warren Buffett, writing in the New York Times, who said he is buying U.S. stocks. That gave investors yet another reason to wade back into the market, albeit cautiously. For details.
The Dow Jones industrial average .DJI was up 1 point, or 0.01 percent at 8,980.26. The Standard & Poor's 500 Index .SPX was up 0.50 point, or 0.05 percent, at 946.93. The Nasdaq Composite Index .IXIC was up 7.01 points, or 0.41 percent, at 1,724.72, after gaining 1 percent to a session high at 1,734.88.. (Reporting by Ellis Mnyandu; Editing by Jan Paschal)
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Daily Market Commentary - Fundamental Outlook
Daily Forex Fundamentals | Written by GCI Financial | Oct 17 08 15:42 GMT |
€
The euro appreciated vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.3515 level and was supported around the $1.3385 level. Interbank lending rates continued to normalize today as overnight euro Libor rates fell below the European Central Bank's target rate and overnight dollar rates were fixed near the Federal Reserve's target rate. Data released in the U.S. today saw September housing starts off 6.3% to an annualized 817,000 rate while building permits fell 8.3%. Additionally, the mid-October University of Michigan consumer sentiment indicator fell to 56.7, far below consensus estimates. In eurozone news, ECB member Nowotny said he expects further downward revisions to economic growth projections for the eurozone. ECB's Gonzalez-Paramo sees inflation below 2% in H2 2009. Data released in the eurozone today the EMU-15 August trade deficit print at -€9.3 billion. Euro bids are cited around the US$ 1.3320 level.
¥/ CNY
The yen appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the ¥100.60 level and was capped around the ¥101.80 level. Finance minister Nakagawa said the government is not ruling out a Group of Eight meeting about the global crisis but Prime Minister Aso is known to want some firm commitments about additional capital injections from countries. Bank of Japan Governor Shirakawa cautiously said "We must be mindful of how recent global financial market turmoil could, through worsening world economic conditions, affect Japan's economy." Data released in Japan overnight saw the August tertiary index decline 1.4% m/m while August wages were up +0.1% y/y. The Nikkei 225 stock index climbed 2.78% to close at ¥8,693.82. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-Ã -vis the yen as the single currency tested bids around the ¥134.80 level and was capped around the ¥137.40 level. The British pound and Swiss franc moved lower vis-Ã -vis the yen as the crosses tested bids around the ¥173.90 and ¥88.55 levels, respectively. The Chinese yuan weakened vis-Ã -vis the U.S. dollar as the greenback closed at CNY 6.8340 in the over-the-counter market, up from CNY 6.8297.
₤
The British pound depreciated vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.7220 level and was capped around the $1.7380 level. Overnight sterling LIBOR rates fell nearly 50bps as they continue to normalize. Bank of England will unveil a new liquidity provision scheme on Monday to help stabilize the financial system. Cable bids are seen around the $1.7115 level. The euro moved higher vis-Ã -vis the British pound as the single currency tested offers around the ₤0.7810 level and was supported around the ₤0.7745 level.
GCI Financial
http://www.gcitrading.com
DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
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€
The euro appreciated vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.3515 level and was supported around the $1.3385 level. Interbank lending rates continued to normalize today as overnight euro Libor rates fell below the European Central Bank's target rate and overnight dollar rates were fixed near the Federal Reserve's target rate. Data released in the U.S. today saw September housing starts off 6.3% to an annualized 817,000 rate while building permits fell 8.3%. Additionally, the mid-October University of Michigan consumer sentiment indicator fell to 56.7, far below consensus estimates. In eurozone news, ECB member Nowotny said he expects further downward revisions to economic growth projections for the eurozone. ECB's Gonzalez-Paramo sees inflation below 2% in H2 2009. Data released in the eurozone today the EMU-15 August trade deficit print at -€9.3 billion. Euro bids are cited around the US$ 1.3320 level.
¥/ CNY
The yen appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the ¥100.60 level and was capped around the ¥101.80 level. Finance minister Nakagawa said the government is not ruling out a Group of Eight meeting about the global crisis but Prime Minister Aso is known to want some firm commitments about additional capital injections from countries. Bank of Japan Governor Shirakawa cautiously said "We must be mindful of how recent global financial market turmoil could, through worsening world economic conditions, affect Japan's economy." Data released in Japan overnight saw the August tertiary index decline 1.4% m/m while August wages were up +0.1% y/y. The Nikkei 225 stock index climbed 2.78% to close at ¥8,693.82. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-Ã -vis the yen as the single currency tested bids around the ¥134.80 level and was capped around the ¥137.40 level. The British pound and Swiss franc moved lower vis-Ã -vis the yen as the crosses tested bids around the ¥173.90 and ¥88.55 levels, respectively. The Chinese yuan weakened vis-Ã -vis the U.S. dollar as the greenback closed at CNY 6.8340 in the over-the-counter market, up from CNY 6.8297.
₤
The British pound depreciated vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.7220 level and was capped around the $1.7380 level. Overnight sterling LIBOR rates fell nearly 50bps as they continue to normalize. Bank of England will unveil a new liquidity provision scheme on Monday to help stabilize the financial system. Cable bids are seen around the $1.7115 level. The euro moved higher vis-Ã -vis the British pound as the single currency tested offers around the ₤0.7810 level and was supported around the ₤0.7745 level.
GCI Financial
http://www.gcitrading.com
DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
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U.S. Market Update
Daily Forex Fundamentals | Written by Trade The News | Oct 17 08 15:44 GMT |
Dow -65 S&P -4 NASDAQ -5
Slumping housing data and the lower-than-expected University of Michigan confidence data held back equity markets in early trading, but optimism has retuned mid-morning as markets push back into positive territory. Libor has continued its incremental declines, and the US three-month TED spread has fallen back towards 380 basis points, well off the all time highs above 470. The oil majors are down as crude sustains its one-year lows around $70, although CVX and XOM are off their worst levels. SLB-8% is also off its lows this morning as declines in crude obscure the company's in-line earnings report. The oil services leader hedged its view of 2009, saying that while it anticipates slowing spending due to the economic downturn, the weakness of the existing supply base and historically falling reserve replacement could make up for any slowdown in business. In any case, it believes it will take 18 months for supply and demand to return to balance, given flat demand. The major financials are jumpy in early action, with the XLF swinging in and out of negative territory as traders consider the long-term implications of the "partial nationalization." None other than President Bush addressed the controversy himself this morning, insisting in a pre-market address that the Treasury's stakes did not amount to nationalization. As the majors grapple with the government, smaller financial companies are struggling with the realities of crisis. Regional banks First Horizon National and Zions Bancorp offered disappointing quarterly results, characterized by worse-than-expected earnings and revenue, sharply declining ROE, and climbing charge-offs and loan loss provisions. Both names were down 8-10% before the bell; FHN-2% has recovered nicely while multiple downgrades overnight are weighing on ZION-10%. Quarterly revenue was well below expectations at COF+6%, which reported troubling metrics yesterday after the close, including rising charge-offs and delinquencies in its credit cart and auto finance units. On the conference call, the CFO said he believes charge-offs will rise through the end of the year, but injected some optimism by insisting the firm can reach its sales growth targets for the year. CMA+2% is bucking the trend, blowing out earnings and revenue estimates and actually reporting lower loan-loss provisions. Recession fears are hitting industrial conglomerate HON-7% after the firm cut its full-year outlook before the open. On the conference call the CFO said he expects recession in 2009 and slowing growth in emerging markets. JCI-7% is down as well on the news. Tech heavyweights Google and AMD offered more-or-less positive earnings after the close yesterday. GOOG+6% reported strong growth metrics, with CEO Schmidt saying that search traffic is growing across the board. AMD+8% reported a loss that was one quarter the expected amount and trounced revenue estimates, showing gross margins 8% higher q/q.
Treasury yields have experienced a tight correlation to equity markets during the first half of the session. As US stock indices moved into positive territory the yield on the ten-year moved back towards 4% and the two-year has regained the 1.6% mark. Again there has been some thawing of credit markets visible, as the three-month LIBOR fixing improved another 9 basis points and the yield on the three-month T-bill has climbed back above 0.6%. In currencies some of the dollar safe haven buying was unwound when stocks went green, but both the euro and cable are struggling to hold onto positive territory.
Trade The News Staff
Trade The News, Inc.
Legal disclaimer and risk disclosure
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.
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Dow -65 S&P -4 NASDAQ -5
Slumping housing data and the lower-than-expected University of Michigan confidence data held back equity markets in early trading, but optimism has retuned mid-morning as markets push back into positive territory. Libor has continued its incremental declines, and the US three-month TED spread has fallen back towards 380 basis points, well off the all time highs above 470. The oil majors are down as crude sustains its one-year lows around $70, although CVX and XOM are off their worst levels. SLB-8% is also off its lows this morning as declines in crude obscure the company's in-line earnings report. The oil services leader hedged its view of 2009, saying that while it anticipates slowing spending due to the economic downturn, the weakness of the existing supply base and historically falling reserve replacement could make up for any slowdown in business. In any case, it believes it will take 18 months for supply and demand to return to balance, given flat demand. The major financials are jumpy in early action, with the XLF swinging in and out of negative territory as traders consider the long-term implications of the "partial nationalization." None other than President Bush addressed the controversy himself this morning, insisting in a pre-market address that the Treasury's stakes did not amount to nationalization. As the majors grapple with the government, smaller financial companies are struggling with the realities of crisis. Regional banks First Horizon National and Zions Bancorp offered disappointing quarterly results, characterized by worse-than-expected earnings and revenue, sharply declining ROE, and climbing charge-offs and loan loss provisions. Both names were down 8-10% before the bell; FHN-2% has recovered nicely while multiple downgrades overnight are weighing on ZION-10%. Quarterly revenue was well below expectations at COF+6%, which reported troubling metrics yesterday after the close, including rising charge-offs and delinquencies in its credit cart and auto finance units. On the conference call, the CFO said he believes charge-offs will rise through the end of the year, but injected some optimism by insisting the firm can reach its sales growth targets for the year. CMA+2% is bucking the trend, blowing out earnings and revenue estimates and actually reporting lower loan-loss provisions. Recession fears are hitting industrial conglomerate HON-7% after the firm cut its full-year outlook before the open. On the conference call the CFO said he expects recession in 2009 and slowing growth in emerging markets. JCI-7% is down as well on the news. Tech heavyweights Google and AMD offered more-or-less positive earnings after the close yesterday. GOOG+6% reported strong growth metrics, with CEO Schmidt saying that search traffic is growing across the board. AMD+8% reported a loss that was one quarter the expected amount and trounced revenue estimates, showing gross margins 8% higher q/q.
Treasury yields have experienced a tight correlation to equity markets during the first half of the session. As US stock indices moved into positive territory the yield on the ten-year moved back towards 4% and the two-year has regained the 1.6% mark. Again there has been some thawing of credit markets visible, as the three-month LIBOR fixing improved another 9 basis points and the yield on the three-month T-bill has climbed back above 0.6%. In currencies some of the dollar safe haven buying was unwound when stocks went green, but both the euro and cable are struggling to hold onto positive territory.
Trade The News Staff
Trade The News, Inc.
Legal disclaimer and risk disclosure
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.
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U.S.: Housing Starts and Permits Plummet in September
Daily Forex Fundamentals | Written by TD Bank Financial Group | Oct 17 08 15:17 GMT |
* U.S. housing starts declined to their lowest since 1991.
* Building permits were also very weak, falling 8.3% M/M.
* The retrenchment in building activity means that housing will remain a drag on economic activity.
U.S. housing starts declined by a whopping 6.3% M/M in September, following the upwardly revised 8.1% M/M drop in August (previously reported as -6.2% M/M). The drop brought new residential construction to 817K, which is the lowest level of new construction activity since 1991. Residential permit approvals were also weak, falling by 8.3% M/M, following the 8.5% M/M drop in the prior month. And at 786K, permits are at their lowest level since 1991. On a year ago basis, residential starts and permits are now down 34.8% Y/Y and 36.2% Y/Y, respectively.
The details of the report were downright sour. The important single-family units construction declined by its largest margin in two years, posting a whopping 12.0% M/M drop in September, bringing the number of new single-family homes built to 544K - its lowest level since late 1981. On the other hand, the construction of condos rose by 7.5% M/M, with the number of multi-units homes built rising to 273K.
This housing sector report was simply awful, as it suggests that the U.S. housing market correction may have quickened in recent months. And with the U.S. economy appearing to have softened considerably in recent months, and the labour market remaining in a very depressing state, there is little to suggest that a turnaround in activity will occur any time soon. Nevertheless, while the retrenchment in residential building activity will mean that the U.S. housing sector will remain a source of drag for economic activity, it is nonetheless one important step in facilitating a turnaround in the sector as it will slow the pace of inventory accumulation of unsold new homes.
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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* U.S. housing starts declined to their lowest since 1991.
* Building permits were also very weak, falling 8.3% M/M.
* The retrenchment in building activity means that housing will remain a drag on economic activity.
U.S. housing starts declined by a whopping 6.3% M/M in September, following the upwardly revised 8.1% M/M drop in August (previously reported as -6.2% M/M). The drop brought new residential construction to 817K, which is the lowest level of new construction activity since 1991. Residential permit approvals were also weak, falling by 8.3% M/M, following the 8.5% M/M drop in the prior month. And at 786K, permits are at their lowest level since 1991. On a year ago basis, residential starts and permits are now down 34.8% Y/Y and 36.2% Y/Y, respectively.
The details of the report were downright sour. The important single-family units construction declined by its largest margin in two years, posting a whopping 12.0% M/M drop in September, bringing the number of new single-family homes built to 544K - its lowest level since late 1981. On the other hand, the construction of condos rose by 7.5% M/M, with the number of multi-units homes built rising to 273K.
This housing sector report was simply awful, as it suggests that the U.S. housing market correction may have quickened in recent months. And with the U.S. economy appearing to have softened considerably in recent months, and the labour market remaining in a very depressing state, there is little to suggest that a turnaround in activity will occur any time soon. Nevertheless, while the retrenchment in residential building activity will mean that the U.S. housing sector will remain a source of drag for economic activity, it is nonetheless one important step in facilitating a turnaround in the sector as it will slow the pace of inventory accumulation of unsold new homes.
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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Mid-Day Report: Markets Stay in Tight Range after Poor US Data
Market Overview | Written by ActionForex.com | Oct 17 08 14:08 GMT |
Dollar continues to stay in tight range in early US session as poor economic data from US fails to trigger much price action in the financial markets. New residential construction data showed housing market is still in deep recession. Housing starts dropped by -6.3% to 26 years low of 0.82m annualized rate in Sep. Building permits dropped by -8.3% to 27 years low of 0.786m annualized rate. Preliminary reading of U of Michigan consumer sentiments tumbled sharply to 57.5 in Sep. But after all, dollar index remains in tight range above 82 level while most forex pairs are bounded in sideway consolidation. DOW opens lower of lack follow though selling. Crude continues to struggle around above 70 as consolidation continues too even though gold dropped below 800 level again and reached as low as 779.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 99.98; (P) 100.84; (R1) 102.43; More.
Intraday outlook in USD/JPY remains neutral for the moment as choppy sideway trading continues. Though, note that as long as 103.49/54 resistance holds, the fall from 110.66 should still be in progress. Below 99.27 will bring retest of 97.91 low and break confirm recent decline has resumed for retesting 95.77 low. However, sustained break of 103.54 will argue that fall from 110.66 has completed and focus will turn to 106.14 resistance for confirmation.
In the bigger picture, medium term rise from 95.77 has completed at 110.66 with bearish divergence condition in daily MACD. Also, the three wave structure of such rise argues that it's just correction, or part of the consolidation to the down trend from 124.13. Hence, deeper fall is now expected to retest 95.77 low. Break will confirm that whole down trend from 124.13 has resumed and should target 61.8% projection of 124.13 to 95.77 from 110.66 at 93.13 first. On the upside, above 106.14 resistance will indicate that fall from 110.66 has completed. This will suggest that medium term consolidation from 95.77 is still in progress. In such case, another test of 110.66 could be seen before resuming the down trend from 124.13.
Economic Indicators Update
Read more...
Dollar continues to stay in tight range in early US session as poor economic data from US fails to trigger much price action in the financial markets. New residential construction data showed housing market is still in deep recession. Housing starts dropped by -6.3% to 26 years low of 0.82m annualized rate in Sep. Building permits dropped by -8.3% to 27 years low of 0.786m annualized rate. Preliminary reading of U of Michigan consumer sentiments tumbled sharply to 57.5 in Sep. But after all, dollar index remains in tight range above 82 level while most forex pairs are bounded in sideway consolidation. DOW opens lower of lack follow though selling. Crude continues to struggle around above 70 as consolidation continues too even though gold dropped below 800 level again and reached as low as 779.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 99.98; (P) 100.84; (R1) 102.43; More.
Intraday outlook in USD/JPY remains neutral for the moment as choppy sideway trading continues. Though, note that as long as 103.49/54 resistance holds, the fall from 110.66 should still be in progress. Below 99.27 will bring retest of 97.91 low and break confirm recent decline has resumed for retesting 95.77 low. However, sustained break of 103.54 will argue that fall from 110.66 has completed and focus will turn to 106.14 resistance for confirmation.
In the bigger picture, medium term rise from 95.77 has completed at 110.66 with bearish divergence condition in daily MACD. Also, the three wave structure of such rise argues that it's just correction, or part of the consolidation to the down trend from 124.13. Hence, deeper fall is now expected to retest 95.77 low. Break will confirm that whole down trend from 124.13 has resumed and should target 61.8% projection of 124.13 to 95.77 from 110.66 at 93.13 first. On the upside, above 106.14 resistance will indicate that fall from 110.66 has completed. This will suggest that medium term consolidation from 95.77 is still in progress. In such case, another test of 110.66 could be seen before resuming the down trend from 124.13.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Tertiary industry index Aug -1.40% -0.80% 1.20%
00:30 AUD Australia Imports Prices Q3 5.00% 0.50% 1.40%
09:00 EUR Eurozone Trade balance (euro) Aug -9.03B -6.0B -2.3B -2.0B
12:30 USD U.S. Housing starts Sep 0.82M 0.88M 0.89M 0.87M
12:30 USD U.S. Housing starts M/M Sep -6.30% N/A -8.50%
12:30 USD U.S. Building permits Sep 0.79M 0.85M 0.85M 0.86M
12:30 USD U.S. Building permits M/M Sep -8.30% N/A -6.20%
13:55 USD U.S. U. Michigan survey Prel. Sep 57.5 65.5 70.3
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The Close of the Week and Trading Remains of Low Volume!
Daily Forex Fundamentals | Written by Crown Forex | Oct 17 08 15:14 GMT |
A fundamental free calendar with calm trading was witnessed today after the USD was able to gain against majors with the rebound seen in stock markets. Yet even with the fundamentals concerning the housing sector being released from the US today, the dollar is still able to find its way to the upside with the exception for the yen.
US President Bush also made a speech in front of the Chamber of Commerce today saying that the actions taken by the government should help ease the credit freeze as he tried to restore confidence in the markets.
The 15 nation currency after falling against the dollar was able to slightly rebound from the 1.3408 support level as it is currently being limited by the 14 day moving average on the four hour charts at 1.3475. A breach of the mentioned resistance will open the way for the pair to target the 1.35 levels and 1.3530 respectively. Direction indicators are supporting the upside direction yet momentum indicators show a neural trend could continue to dominate movements.
As for the Royal pound, it continued to trade within narrow ranges between the resistance level at 1.7344 after the 20 day moving average was able to halt further gains at 1.7380s, and the support level at 1.7221. Even with the ADX indicator on the weekly chart pointing to the upside, it has adjusted on an intraday basis to show that the pair will continue to trade with low volatility in a sideways channel.
Similar to the pound, the USD/JPY pair is consolidating within the 100.90 support level and the 101.46 resistance level as it lacks momentum to specify a clear trend. The upside direction on the indicators have weakened and as the pair is currently finding difficulties in breaching the minor resistance level at 101.20 which is also the 20 day moving average on the four hour chart we expect the pair to continue to move sideways with low volumes as pointed out by the relative strength indicator.
Crown Forex
disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.
Read more...
A fundamental free calendar with calm trading was witnessed today after the USD was able to gain against majors with the rebound seen in stock markets. Yet even with the fundamentals concerning the housing sector being released from the US today, the dollar is still able to find its way to the upside with the exception for the yen.
US President Bush also made a speech in front of the Chamber of Commerce today saying that the actions taken by the government should help ease the credit freeze as he tried to restore confidence in the markets.
The 15 nation currency after falling against the dollar was able to slightly rebound from the 1.3408 support level as it is currently being limited by the 14 day moving average on the four hour charts at 1.3475. A breach of the mentioned resistance will open the way for the pair to target the 1.35 levels and 1.3530 respectively. Direction indicators are supporting the upside direction yet momentum indicators show a neural trend could continue to dominate movements.
As for the Royal pound, it continued to trade within narrow ranges between the resistance level at 1.7344 after the 20 day moving average was able to halt further gains at 1.7380s, and the support level at 1.7221. Even with the ADX indicator on the weekly chart pointing to the upside, it has adjusted on an intraday basis to show that the pair will continue to trade with low volatility in a sideways channel.
Similar to the pound, the USD/JPY pair is consolidating within the 100.90 support level and the 101.46 resistance level as it lacks momentum to specify a clear trend. The upside direction on the indicators have weakened and as the pair is currently finding difficulties in breaching the minor resistance level at 101.20 which is also the 20 day moving average on the four hour chart we expect the pair to continue to move sideways with low volumes as pointed out by the relative strength indicator.
Crown Forex
disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.
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KeyCorp, Community Banks May Wait for Paulson Aid
By Rebecca Christie and Robert Schmidt
Oct. 17 (Bloomberg) -- Community banks that Federal Reserve Chairman Ben S. Bernanke calls a key link between financial markets and the U.S. economy face a longer wait for government aid than their bigger competitors.
The Treasury is urging small and regional banks to contact their primary regulator for details on how to access $125 billion in funds -- half of a $250 billion sum set aside to recapitalize the nation's lenders. Five federal regulators plus the states, meanwhile, are waiting for more guidance from the Treasury.
``I don't think that when they rolled this out they understood there would be all these problems,'' said former Treasury official Wayne Abernathy, now an executive vice president at the American Bankers Association in Washington. ``The sooner they can get the details out, the better.''
Treasury Secretary Henry Paulson's aides are working to standardize procedures for putting capital into thousands of banks of varying size, charter and health. The voluntary program will serve as triage for the banking system -- giving some institutions a lifeline of money, while rebuffing weaker ones.
Investors have responded optimistically to Paulson's bank rescue. Standard and Poor's Small-Cap Regional Banks Index of 37 small lenders rose 6.7 percent yesterday to 86.75 and is up 55 percent from a low this year reached on July 15.
Shares Rally
Shares of KeyCorp, the third-largest bank in Ohio, are up 36 percent since Paulson announced plans to buy equity stakes in banks big and small. Regions Financial Corp., Alabama's biggest bank, is up 30 percent. Zions Bancorporation, a Salt Lake City- based lender operating in 10 western states, is up 27 percent.
Spokespeople for KeyCorp and Zions weren't immediately available to comment.
Smaller banks must decide by Nov. 14 whether they want to participate in the Treasury program, said Camden Fine, chief executive of the Independent Community Bankers of America, a Washington-based group that represents lenders such as CountryBank USA in Cando, North Dakota, and Easton Bank and Trust Co. in Easton, Maryland.
``Many banks can't step through the corporate hoops,'' Fine said. The ``Treasury is willing to make some accommodation along that line, but we haven't heard definitively.''
Next Week
Fine said he anticipates the department will release more details next week, which may help with the decision.
Some information about the plan is starting to emerge. The Treasury is making accommodations to allow privately held banks to participate and trying to find a way to help lenders that don't issue the kind of preferred shares that the U.S. wants to buy, Abernathy said.
Treasury spokeswoman Jennifer Zuccarelli said the program is being assembled speedily. ``Regarding smaller banks, we are working with the regulators to quickly establish details for participation in this program,'' she said.
The next step is out of banks' control, as the Treasury has to decide which applicants deserve the money.
``There's going to be a sorting process as to the financial health of banks and thrifts,'' said University of Connecticut law professor Patricia McCoy, a former member of the Fed's consumer advisory council. ``The ones that are either on the ropes or look like they might be on the ropes will not get capital infusions.''
On the Fence
Some community bankers said they don't have enough information yet to decide whether to participate.
Central Virginia Bank, a state bank that's part of the Fed system with about $500 million in assets, is in search of new capital to replace an $18 million investment in Fannie Mae and Freddie Mac preferred shares, said Larry Lyons, the bank's president and chief executive officer.
``We're very interested,'' said Lyons, whose bank is based in Powhatan, Virginia. ``We just have not had an opportunity to look at this thing in detail and look at what our other options are.''
For banks that intend to sign up, board approval will likely be required. For banks that are undecided, or those that don't normally issue the type of preferred stock the Treasury is buying, the administrative challenges are even greater.
``It is complicated,'' Fine said.
Paulson earlier this week set aside $125 billion for ``healthy'' banks of all sizes, after persuading nine major U.S. lenders to accept another $125 billion in fresh capital. The Treasury says the big banks will get their cash in ``days'' to start lending again.
Share of Deposits
Half of U.S. bank deposits are in those nine large banks, with the remainder spread across the country in smaller firms. Any delays by the Treasury in getting money to the local level threaten to slow economic growth in areas where job losses are mounting and consumer spending weakening.
When Congress was considering the rescue program, the Treasury secretary said he opposed capital infusions into troubled banks because it amounted to a sign of failure.
With the credit crisis worsening and bank lending frozen, Paulson changed his approach.
``It's an absolutely horrendous time to go out to the market and raise capital,'' Lyons said. ``If things aren't too bad and too onerous in this Treasury proposal, we might consider doing that and then two or three years from now, we could go out and just raise capital in a normal fashion and pay that off.''
To contact the reporters on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net. Robert Schmidt in Washington at rschmidt5@bloomberg.net.
Read more...
Oct. 17 (Bloomberg) -- Community banks that Federal Reserve Chairman Ben S. Bernanke calls a key link between financial markets and the U.S. economy face a longer wait for government aid than their bigger competitors.
The Treasury is urging small and regional banks to contact their primary regulator for details on how to access $125 billion in funds -- half of a $250 billion sum set aside to recapitalize the nation's lenders. Five federal regulators plus the states, meanwhile, are waiting for more guidance from the Treasury.
``I don't think that when they rolled this out they understood there would be all these problems,'' said former Treasury official Wayne Abernathy, now an executive vice president at the American Bankers Association in Washington. ``The sooner they can get the details out, the better.''
Treasury Secretary Henry Paulson's aides are working to standardize procedures for putting capital into thousands of banks of varying size, charter and health. The voluntary program will serve as triage for the banking system -- giving some institutions a lifeline of money, while rebuffing weaker ones.
Investors have responded optimistically to Paulson's bank rescue. Standard and Poor's Small-Cap Regional Banks Index of 37 small lenders rose 6.7 percent yesterday to 86.75 and is up 55 percent from a low this year reached on July 15.
Shares Rally
Shares of KeyCorp, the third-largest bank in Ohio, are up 36 percent since Paulson announced plans to buy equity stakes in banks big and small. Regions Financial Corp., Alabama's biggest bank, is up 30 percent. Zions Bancorporation, a Salt Lake City- based lender operating in 10 western states, is up 27 percent.
Spokespeople for KeyCorp and Zions weren't immediately available to comment.
Smaller banks must decide by Nov. 14 whether they want to participate in the Treasury program, said Camden Fine, chief executive of the Independent Community Bankers of America, a Washington-based group that represents lenders such as CountryBank USA in Cando, North Dakota, and Easton Bank and Trust Co. in Easton, Maryland.
``Many banks can't step through the corporate hoops,'' Fine said. The ``Treasury is willing to make some accommodation along that line, but we haven't heard definitively.''
Next Week
Fine said he anticipates the department will release more details next week, which may help with the decision.
Some information about the plan is starting to emerge. The Treasury is making accommodations to allow privately held banks to participate and trying to find a way to help lenders that don't issue the kind of preferred shares that the U.S. wants to buy, Abernathy said.
Treasury spokeswoman Jennifer Zuccarelli said the program is being assembled speedily. ``Regarding smaller banks, we are working with the regulators to quickly establish details for participation in this program,'' she said.
The next step is out of banks' control, as the Treasury has to decide which applicants deserve the money.
``There's going to be a sorting process as to the financial health of banks and thrifts,'' said University of Connecticut law professor Patricia McCoy, a former member of the Fed's consumer advisory council. ``The ones that are either on the ropes or look like they might be on the ropes will not get capital infusions.''
On the Fence
Some community bankers said they don't have enough information yet to decide whether to participate.
Central Virginia Bank, a state bank that's part of the Fed system with about $500 million in assets, is in search of new capital to replace an $18 million investment in Fannie Mae and Freddie Mac preferred shares, said Larry Lyons, the bank's president and chief executive officer.
``We're very interested,'' said Lyons, whose bank is based in Powhatan, Virginia. ``We just have not had an opportunity to look at this thing in detail and look at what our other options are.''
For banks that intend to sign up, board approval will likely be required. For banks that are undecided, or those that don't normally issue the type of preferred stock the Treasury is buying, the administrative challenges are even greater.
``It is complicated,'' Fine said.
Paulson earlier this week set aside $125 billion for ``healthy'' banks of all sizes, after persuading nine major U.S. lenders to accept another $125 billion in fresh capital. The Treasury says the big banks will get their cash in ``days'' to start lending again.
Share of Deposits
Half of U.S. bank deposits are in those nine large banks, with the remainder spread across the country in smaller firms. Any delays by the Treasury in getting money to the local level threaten to slow economic growth in areas where job losses are mounting and consumer spending weakening.
When Congress was considering the rescue program, the Treasury secretary said he opposed capital infusions into troubled banks because it amounted to a sign of failure.
With the credit crisis worsening and bank lending frozen, Paulson changed his approach.
``It's an absolutely horrendous time to go out to the market and raise capital,'' Lyons said. ``If things aren't too bad and too onerous in this Treasury proposal, we might consider doing that and then two or three years from now, we could go out and just raise capital in a normal fashion and pay that off.''
To contact the reporters on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net. Robert Schmidt in Washington at rschmidt5@bloomberg.net.
Read more...
Single-Family Home Starts in U.S. Fall to 26-Year Low
By Bob Willis
Enlarge Image/Details
Oct. 17 (Bloomberg) -- Housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in 26 years, indicating the three-year real-estate slump is intensifying.
Construction of single-family homes dropped 12 percent to a 544,000 annual rate, the Commerce Department said in Washington. Starts on all residential properties, including condominiums, slid to 817,000, below all 74 forecasts in a Bloomberg News survey.
Builders will find it difficult to lure buyers into the market after stock prices plunged this month and banks made it harder to qualify for a mortgage. Declines in construction are likely to continue to hurt economic growth well into 2009, extending the housing slump into a fourth year.
``The full impact from the financial meltdown is yet to come,'' said David Sloan, a senior economist at 4Cast Inc. in New York, whose estimate matched the lowest in the Bloomberg survey. ``Housing will be a drag on growth into the middle of next year. The bottom is now looking further away than it did previously.''
Treasuries climbed, sending benchmark 10-year note yields down to 3.88 percent at 9:31 a.m. in New York, from 3.96 percent late yesterday. The Standard & Poor's 500 Stock Index fell 1.8 percent to 929.86.
Permits Decline
Building permits, a sign of future construction, dropped 8.3 percent to a 786,000 pace, matching the lowest level since November 1981.
Total starts were projected to fall to an 872,000 annual pace, according to the median forecast of the economists polled by Bloomberg News. The reading for August was revised down to 872,000 from a previous estimate of 895,000.
Compared with September 2007, work began on 31 percent fewer properties. Work on multifamily homes, such as townhouses and apartment buildings, climbed 7.5 percent from the prior month to an annual rate of 273,000.
Starts of single-family houses dropped to record lows in three of four regions in September, led by a 24 percent slump in the Midwest.
The biggest housing slump in a generation was showing signs of nearing a bottom when financial markets began to implode in September, leading to the government takeover of mortgage lenders Freddie Mac and Fannie Mae, the failure of banks and a $700 billion government rescue plan this month. Recent events are likely delaying any return to stability.
`New Nail'
``These things are putting a new nail'' in the housing market's coffin, David Seiders, chief economist at the National Association of Homebuilders, said in an interview on Bloomberg Television yesterday. ``this sort of vicious feedback loop is still in play.''
The National Association of Home Builders/Wells Fargo index of builder confidence decreased in October to its lowest since 1985, the Washington-based association said yesterday.
Combined sales of new and existing homes have fallen 36 percent from their peaks in mid-2005. Home construction has declined 64 percent from a peak in January 2006. The supply of unsold homes on the market remains above 10 months' worth of sales, signaling homebuilding is likely to continue falling.
Home prices in major cities are down an average of 20 percent from mid-2006, after nearly doubling in the prior six years, according to the S&P/Case Shiller index of 20 metropolitan areas.
Prices Drop
Falling prices are contributing to the jump in foreclosures as Americans, trying to refinance adjustable-rate loans, find out they owe more than their homes are worth. The drop in prices also means owners can't tap home equity for extra cash, one reason behind the slowdown in consumer spending.
Homebuilders are still reeling. Lennar Corp., the second- largest U.S. homebuilder, on Sept. 23 reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.
``The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,'' Chief Executive Officer Stuart Miller said in a statement.
To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net.
Read more...
Enlarge Image/Details
Oct. 17 (Bloomberg) -- Housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in 26 years, indicating the three-year real-estate slump is intensifying.
Construction of single-family homes dropped 12 percent to a 544,000 annual rate, the Commerce Department said in Washington. Starts on all residential properties, including condominiums, slid to 817,000, below all 74 forecasts in a Bloomberg News survey.
Builders will find it difficult to lure buyers into the market after stock prices plunged this month and banks made it harder to qualify for a mortgage. Declines in construction are likely to continue to hurt economic growth well into 2009, extending the housing slump into a fourth year.
``The full impact from the financial meltdown is yet to come,'' said David Sloan, a senior economist at 4Cast Inc. in New York, whose estimate matched the lowest in the Bloomberg survey. ``Housing will be a drag on growth into the middle of next year. The bottom is now looking further away than it did previously.''
Treasuries climbed, sending benchmark 10-year note yields down to 3.88 percent at 9:31 a.m. in New York, from 3.96 percent late yesterday. The Standard & Poor's 500 Stock Index fell 1.8 percent to 929.86.
Permits Decline
Building permits, a sign of future construction, dropped 8.3 percent to a 786,000 pace, matching the lowest level since November 1981.
Total starts were projected to fall to an 872,000 annual pace, according to the median forecast of the economists polled by Bloomberg News. The reading for August was revised down to 872,000 from a previous estimate of 895,000.
Compared with September 2007, work began on 31 percent fewer properties. Work on multifamily homes, such as townhouses and apartment buildings, climbed 7.5 percent from the prior month to an annual rate of 273,000.
Starts of single-family houses dropped to record lows in three of four regions in September, led by a 24 percent slump in the Midwest.
The biggest housing slump in a generation was showing signs of nearing a bottom when financial markets began to implode in September, leading to the government takeover of mortgage lenders Freddie Mac and Fannie Mae, the failure of banks and a $700 billion government rescue plan this month. Recent events are likely delaying any return to stability.
`New Nail'
``These things are putting a new nail'' in the housing market's coffin, David Seiders, chief economist at the National Association of Homebuilders, said in an interview on Bloomberg Television yesterday. ``this sort of vicious feedback loop is still in play.''
The National Association of Home Builders/Wells Fargo index of builder confidence decreased in October to its lowest since 1985, the Washington-based association said yesterday.
Combined sales of new and existing homes have fallen 36 percent from their peaks in mid-2005. Home construction has declined 64 percent from a peak in January 2006. The supply of unsold homes on the market remains above 10 months' worth of sales, signaling homebuilding is likely to continue falling.
Home prices in major cities are down an average of 20 percent from mid-2006, after nearly doubling in the prior six years, according to the S&P/Case Shiller index of 20 metropolitan areas.
Prices Drop
Falling prices are contributing to the jump in foreclosures as Americans, trying to refinance adjustable-rate loans, find out they owe more than their homes are worth. The drop in prices also means owners can't tap home equity for extra cash, one reason behind the slowdown in consumer spending.
Homebuilders are still reeling. Lennar Corp., the second- largest U.S. homebuilder, on Sept. 23 reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.
``The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,'' Chief Executive Officer Stuart Miller said in a statement.
To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net.
Read more...
U.S. October Consumer Sentiment Falls Most on Record
By Shobhana Chandra
Oct. 17 (Bloomberg) -- Confidence among U.S. consumers fell by the most on record in October, raising the risk that spending will slump as job losses mount and financial markets crash.
The Reuters/University of Michigan preliminary index of consumer sentiment fell to 57.5 from 70.3 in September, the biggest decline since monthly records began in 1978. The measure, which averaged 85.6 in 2007, was lower than forecast.
Americans felt less secure after the Standard & Poor's 500 Index fell every trading day but two so far this month, the credit crunch intensified and businesses cut more jobs. Further cutbacks in consumer spending, which accounts for more than two- thirds of the economy, will deepen a recession.
``Even gasoline-price decreases were overpowered by the massive destruction of wealth,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. ``Things are pretty awful in the economy and that should make itself felt through weaker consumer spending.''
The confidence index was forecast to fall to 65, according to the median of 61 economists surveyed by Bloomberg News. Estimates ranged from 55 to 74.1.
A government report earlier today showed housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in a quarter century. Work began on 817,000 houses last month, down 6.3 percent from August's level, the Commerce Department said in Washington. Construction of single-family homes dropped 12 percent to a 544,000 rate, the fewest since February 1982.
Breakdown
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 56.7 from 67.2.
A gauge of current conditions, which reflects Americans' perceptions of their financial situations and whether it is a good time to buy big-ticket items like cars, slumped to 58.9, the lowest level ever, from 75.
There was mixed news on price expectations. Consumers said they projected an inflation rate of 4.5 percent over the next 12 months, compared with 4.3 percent in the September survey. Over the next five years, the figures tracked by Federal Reserve policy makers, Americans expected a 2.8 percent rate of inflation, down from the prior month and the slowest pace in a year.
The preliminary Reuters/University of Michigan consumer confidence report reflects about 300 responses, compared with 500 households for the final survey.
Gasoline Prices
Regular unleaded gasoline prices slid to an average $3.08 a gallon at the pump on Oct. 15, from $3.63 on Sept. 30, according to AAA.
Shoppers are becoming more cautious. Sales at U.S. stores open at least a year rose 1 percent last week from a year earlier, slowing for the eighth time in nine weeks, the International Council of Shopping Centers and Goldman Sachs Group Inc. said in a statement on Oct. 14.
Wal-Mart Stores Inc., the world's largest retailer, reaffirmed its profit forecast for the third quarter after shoppers seeking discounted groceries and household goods helped to boost the Bentonville, Arkansas-based company's September sales.
Consumers ``continue to look for basics for their families,'' Eduardo Castro-Wright, Wal-Mart's U.S. stores chief, said in an Oct. 8 statement.
-- With reporting by Chris Burritt in Greensboro, North Carolina. Editors: Mark Rohner, Carlos Torres
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Read more...
Oct. 17 (Bloomberg) -- Confidence among U.S. consumers fell by the most on record in October, raising the risk that spending will slump as job losses mount and financial markets crash.
The Reuters/University of Michigan preliminary index of consumer sentiment fell to 57.5 from 70.3 in September, the biggest decline since monthly records began in 1978. The measure, which averaged 85.6 in 2007, was lower than forecast.
Americans felt less secure after the Standard & Poor's 500 Index fell every trading day but two so far this month, the credit crunch intensified and businesses cut more jobs. Further cutbacks in consumer spending, which accounts for more than two- thirds of the economy, will deepen a recession.
``Even gasoline-price decreases were overpowered by the massive destruction of wealth,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. ``Things are pretty awful in the economy and that should make itself felt through weaker consumer spending.''
The confidence index was forecast to fall to 65, according to the median of 61 economists surveyed by Bloomberg News. Estimates ranged from 55 to 74.1.
A government report earlier today showed housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in a quarter century. Work began on 817,000 houses last month, down 6.3 percent from August's level, the Commerce Department said in Washington. Construction of single-family homes dropped 12 percent to a 544,000 rate, the fewest since February 1982.
Breakdown
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 56.7 from 67.2.
A gauge of current conditions, which reflects Americans' perceptions of their financial situations and whether it is a good time to buy big-ticket items like cars, slumped to 58.9, the lowest level ever, from 75.
There was mixed news on price expectations. Consumers said they projected an inflation rate of 4.5 percent over the next 12 months, compared with 4.3 percent in the September survey. Over the next five years, the figures tracked by Federal Reserve policy makers, Americans expected a 2.8 percent rate of inflation, down from the prior month and the slowest pace in a year.
The preliminary Reuters/University of Michigan consumer confidence report reflects about 300 responses, compared with 500 households for the final survey.
Gasoline Prices
Regular unleaded gasoline prices slid to an average $3.08 a gallon at the pump on Oct. 15, from $3.63 on Sept. 30, according to AAA.
Shoppers are becoming more cautious. Sales at U.S. stores open at least a year rose 1 percent last week from a year earlier, slowing for the eighth time in nine weeks, the International Council of Shopping Centers and Goldman Sachs Group Inc. said in a statement on Oct. 14.
Wal-Mart Stores Inc., the world's largest retailer, reaffirmed its profit forecast for the third quarter after shoppers seeking discounted groceries and household goods helped to boost the Bentonville, Arkansas-based company's September sales.
Consumers ``continue to look for basics for their families,'' Eduardo Castro-Wright, Wal-Mart's U.S. stores chief, said in an Oct. 8 statement.
-- With reporting by Chris Burritt in Greensboro, North Carolina. Editors: Mark Rohner, Carlos Torres
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Read more...
Mexico Leaves Rate at 8.25% Amid Inflation Concerns
By Jens Erik Gould and Hugh Collins
Oct. 17 (Bloomberg) -- Mexico's central bank kept its benchmark interest rate unchanged today as policy makers balance concerns the economy will slow amid a worldwide credit crunch with predictions that inflation may accelerate again.
The bank's five-member board, led by Governor Guillermo Ortiz, left the key lending rate at 8.25 percent. The global credit crisis has ``intensified notably,'' in recent weeks, the central bank said in a statement posted on its Web site.
``Financial market volatility continues at extremely high levels,'' the statement said. ``The impact on emerging economies has been particularly intense.''
While lower borrowing costs may help soften the impact of the worldwide credit crisis on a sagging economy, policy makers kept rates steady because a cut would further weaken the currency and spur inflation, said Luis Flores, an economist at IXE Casa de Bolsa SA in Mexico City.
``Mexican inflation still hasn't peaked,'' Flores said. ``The central bank doesn't want to lower rates while inflation is accelerating; it would send mixed signals to the market.''
The decision matched forecasts by 18 of 20 economists surveyed by Bloomberg. Two analysts forecast policy makers would decrease rates by a quarter percentage point.
The central bank said that the world economic slump, and particularly the slowdown in the U.S., was hurting Mexico's economy. Still, it expects inflation this year to stay within previously announced guidelines. In July, the central bank forecast annual inflation may reach as high as 6 percent in the fourth quarter.
Inflation Battle
Banxico, as the central bank is known, has raised the benchmark rate by 0.75 percentage point this year to the highest in almost three years, in an effort to battle inflation hovering near a 5-year high. The bank left rates unchanged in September.
Inflation will quicken to 5.7 percent in October, according to a forecast by Sergio Luna Martinez, the director of economic research at Citigroup Inc.'s Banamex unit in Mexico City.
Consumer prices rose 5.47 percent in September from a year earlier, slower than the 5.57 percent pace in August, as prices for agricultural products fell.
``There will be a jump in inflation in October,'' said Luna Martinez, who predicts the bank will lower the interest rate in November. ``It's better not to change rates.''
The central bank has sold $11.2 billion since last week to stem a rout in the peso, reducing its near-record foreign reserves. The currency tumbled to a record low last week as investors pulled out of riskier assets amid the worst global credit crisis since the Great Depression.
Peso Rout
A rate cut would work against the bank's efforts to prop up the weakening peso, said Rafael Camarena, an economist at Banco Santander SA.
``An interest rate cut could generate more volatility in currency markets,'' he said.
Slowing economic expansion is a concern in Mexico. President Felipe Calderon revised his 2009 budget proposal last week because of the credit crisis, lowering forecasts for economic growth and oil prices. He also proposed a stimulus package equal to 1 percent of gross domestic product that includes spending on infrastructure, energy and education.
The central bank may keep rates unchanged this year until inflation starts to fall, then cut rates in 2009 to boost Mexico's sagging economy, said Bertrand Delgado, a Latin America economist with New York-based IDEAglobal Inc.
``The economy is deteriorating quite rapidly,'' Delgado said. ``I'm expecting 150 basis points of cuts in 2009, most of them in the first half.''
U.S. government reports yesterday showed that the slump in the world's largest economy, the buyer of 80 percent of Mexican exports, is deepening as the financial crisis squeezes companies and consumers out of credit markets. U.S. industrial production sank 2.8 percent in September, the most in 34 years.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net; Hugh Collins in Mexico City Hcollins8@bloomberg.net
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Oct. 17 (Bloomberg) -- Mexico's central bank kept its benchmark interest rate unchanged today as policy makers balance concerns the economy will slow amid a worldwide credit crunch with predictions that inflation may accelerate again.
The bank's five-member board, led by Governor Guillermo Ortiz, left the key lending rate at 8.25 percent. The global credit crisis has ``intensified notably,'' in recent weeks, the central bank said in a statement posted on its Web site.
``Financial market volatility continues at extremely high levels,'' the statement said. ``The impact on emerging economies has been particularly intense.''
While lower borrowing costs may help soften the impact of the worldwide credit crisis on a sagging economy, policy makers kept rates steady because a cut would further weaken the currency and spur inflation, said Luis Flores, an economist at IXE Casa de Bolsa SA in Mexico City.
``Mexican inflation still hasn't peaked,'' Flores said. ``The central bank doesn't want to lower rates while inflation is accelerating; it would send mixed signals to the market.''
The decision matched forecasts by 18 of 20 economists surveyed by Bloomberg. Two analysts forecast policy makers would decrease rates by a quarter percentage point.
The central bank said that the world economic slump, and particularly the slowdown in the U.S., was hurting Mexico's economy. Still, it expects inflation this year to stay within previously announced guidelines. In July, the central bank forecast annual inflation may reach as high as 6 percent in the fourth quarter.
Inflation Battle
Banxico, as the central bank is known, has raised the benchmark rate by 0.75 percentage point this year to the highest in almost three years, in an effort to battle inflation hovering near a 5-year high. The bank left rates unchanged in September.
Inflation will quicken to 5.7 percent in October, according to a forecast by Sergio Luna Martinez, the director of economic research at Citigroup Inc.'s Banamex unit in Mexico City.
Consumer prices rose 5.47 percent in September from a year earlier, slower than the 5.57 percent pace in August, as prices for agricultural products fell.
``There will be a jump in inflation in October,'' said Luna Martinez, who predicts the bank will lower the interest rate in November. ``It's better not to change rates.''
The central bank has sold $11.2 billion since last week to stem a rout in the peso, reducing its near-record foreign reserves. The currency tumbled to a record low last week as investors pulled out of riskier assets amid the worst global credit crisis since the Great Depression.
Peso Rout
A rate cut would work against the bank's efforts to prop up the weakening peso, said Rafael Camarena, an economist at Banco Santander SA.
``An interest rate cut could generate more volatility in currency markets,'' he said.
Slowing economic expansion is a concern in Mexico. President Felipe Calderon revised his 2009 budget proposal last week because of the credit crisis, lowering forecasts for economic growth and oil prices. He also proposed a stimulus package equal to 1 percent of gross domestic product that includes spending on infrastructure, energy and education.
The central bank may keep rates unchanged this year until inflation starts to fall, then cut rates in 2009 to boost Mexico's sagging economy, said Bertrand Delgado, a Latin America economist with New York-based IDEAglobal Inc.
``The economy is deteriorating quite rapidly,'' Delgado said. ``I'm expecting 150 basis points of cuts in 2009, most of them in the first half.''
U.S. government reports yesterday showed that the slump in the world's largest economy, the buyer of 80 percent of Mexican exports, is deepening as the financial crisis squeezes companies and consumers out of credit markets. U.S. industrial production sank 2.8 percent in September, the most in 34 years.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net; Hugh Collins in Mexico City Hcollins8@bloomberg.net
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U.S. September Housing Starts and Permits: Summary (Table)
By Alex Tanzi
Oct. 17 (Bloomberg) -- Following is a summary of the Sept. housing starts report from the Commerce Department.
SOURCE: U.S. Commerce Department.
To contact the reporter on this story: Alex Tanzi in Washington at atanzi@bloomberg.net
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Oct. 17 (Bloomberg) -- Following is a summary of the Sept. housing starts report from the Commerce Department.
===========================================================================
Sept. Aug. July June May April March Feb.
2008 2008 2008 2008 2008 2008 2008 2008
===========================================================================
Housing starts 0.817 0.872 0.949 1.089 0.982 1.004 0.988 1.107
3-mo. average 0.879 0.970 1.007 1.025 0.991 1.033 1.053 1.057
Single family 0.544 0.618 0.644 0.663 0.682 0.681 0.711 0.722
Multi-family 0.273 0.254 0.305 0.426 0.300 0.323 0.277 0.385
--------------------------------------------------------------------------
Housing permits 0.786 0.857 0.937 1.138 0.978 0.982 0.932 0.981
3-mo. average 0.860 0.977 1.018 1.033 0.964 0.965 0.988 1.048
Single family 0.532 0.553 0.584 0.616 0.635 0.649 0.621 0.646
Multi-family 0.254 0.304 0.353 0.522 0.343 0.333 0.311 0.335
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Under construction 0.918 0.943 0.955 0.977 0.989 1.006 1.013 1.024
3-mo. average 0.939 0.958 0.974 0.991 1.003 1.014 1.024 1.038
===========================================================================
Sept. Aug. July June May April March Feb.
2008 2008 2008 2008 2008 2008 2008 2008
===========================================================================
Single family 0.461 0.482 0.489 0.511 0.530 0.550 0.563 0.580
Multi-family 0.457 0.461 0.466 0.466 0.459 0.456 0.450 0.444
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Housing completed 1.097 0.982 1.086 1.131 1.144 1.033 1.192 1.251
3-mo. average 1.055 1.066 1.120 1.103 1.123 1.159 1.258 1.304
Single family 0.806 0.689 0.830 0.844 0.877 0.808 0.909 0.906
Multi-family 0.291 0.293 0.256 0.287 0.267 0.225 0.283 0.345
----------------------MOM%----------------- -YOY%-
Housing starts -6.3% -8.1% -12.9% 10.9% -2.2% 1.6% -10.7% -31.1%
Single family -12.0% -4.0% -2.9% -2.8% 0.1% -4.2% -1.5% -41.9%
Multi-family 7.5% -16.7% -28.4% 42.0% -7.1% 16.6% -28.1% 9.6%
--------------------------------------------------------------------------
Housing permits -8.3% -8.5% -17.7% 16.4% -0.4% 5.4% -5.0% -38.4%
Single family -3.8% -5.3% -5.2% -3.0% -2.2% 4.5% -3.9% -38.9%
Multi-family -16.4% -13.9% -32.4% 52.2% 3.0% 7.1% -7.2% -37.6%
--------------------------------------------------------------------------
Under construction -2.7% -1.3% -2.3% -1.2% -1.7% -0.7% -1.1% -17.3%
===========================================================================
Sept. Aug. July June May April March Sept.
2008 2008 2008 2008 2008 2008 2008 YOY%
===========================================================================
Single family -4.4% -1.4% -4.3% -3.6% -3.6% -2.3% -2.9% -30.9%
Multi-family -0.9% -1.1% 0.0% 1.5% 0.7% 1.3% 1.4% 3.2%
--------------------------------------------------------------------------
Housing completed 11.7% -9.6% -4.0% -1.1% 10.7% -13.3% -4.7% -20.4%
Single family 17.0% -17.0% -1.7% -3.8% 8.5% -11.1% 0.3% -26.8%
Multi-family -0.7% 14.5% -10.8% 7.5% 18.7% -20.5% -18.0% 5.1%
--------------------------------------------------------------------------
Ratio M/S Starts 50.2% 41.1% 47.4% 64.3% 44.0% 47.4% 39.0% 53.3%
Ratio M/S Permits 47.7% 55.0% 60.4% 84.7% 54.0% 51.3% 50.1% 51.9%
===========================================================================
NOTE: All figures in millions of units and seasonally
adjusted at an annual rate. Percent changes are seasonally
adjusted.
SOURCE: U.S. Commerce Department.
To contact the reporter on this story: Alex Tanzi in Washington at atanzi@bloomberg.net
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Natural Gas Futures Advance on Speculation of Colder Weather
By Reg Curren
Oct. 17 (Bloomberg) -- Natural gas futures in New York gained for the fourth day this week as U.S. commercial consumers sought supplies before demand picks up with colder weather.
Below-normal temperatures are forecast from Texas to Massachusetts late next week, according to a 14-day outlook from the Climate Prediction Center in Camp Springs, Maryland. Demand for the heating and industrial fuel peaks during the cold weather months in the Northern Hemisphere.
``Utilities and electricity generators are locking in their prices because these are realistic prices for them,'' said Ed Kennedy, a trader with Commercial Brokerage Corp. in Miami. ``You're not going to get fired for buying $6 gas.''
Natural gas for November delivery rose 16.3 cents, or 2.4 percent, to $6.866 per million British thermal units at 11:28 a.m. on the New York Mercantile Exchange. Gas has advanced 5.1 percent this week.
Prices are likely to continue trading in a narrow range until the arrival of the first significant blast of cold weather, Kennedy said.
``It has been chamber-of-commerce weather and we're getting to the end of that in the near term,'' he said. ``Forecasters are saying below-normal temperatures for November.''
Inventories of gas rose 79 billion cubic feet in the week ended Oct. 10, below analyst expectations, to 3.277 trillion cubic feet, a U.S. Energy Department report yesterday showed. Thirteen of 17 analysts in a Bloomberg survey expected an increase of at least 80 billion cubic feet.
``There's a lot of buying support under the $7 level and the possibility of marginal production possibly going down,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``It's come down so far it makes it more attractive from an end- user's perspective to be buying.''
Cold-Weather Demand
Gas has declined 49 percent from a 30-month closing high of $13.577 per million Btu on July 3.
Utilities and large industrial users have been boosting stockpiles of gas since the end of last winter to have enough for this cold-weather season, when demand exceeds production. The rebuilding period typically ends in early November.
``It's starting to get to the time of year for the seasonal low price and we're starting to prepare for winter,'' said Neill. ``At some point, this market is going to turn back up and I kind of think we're there.''
Prices in the 2007-2008 season from Nov. 1 to March 31 advanced 21 percent and averaged $8.327 per million Btu, according to data compiled by Bloomberg. Prices a year earlier averaged $7.346 per million Btu.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
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Oct. 17 (Bloomberg) -- Natural gas futures in New York gained for the fourth day this week as U.S. commercial consumers sought supplies before demand picks up with colder weather.
Below-normal temperatures are forecast from Texas to Massachusetts late next week, according to a 14-day outlook from the Climate Prediction Center in Camp Springs, Maryland. Demand for the heating and industrial fuel peaks during the cold weather months in the Northern Hemisphere.
``Utilities and electricity generators are locking in their prices because these are realistic prices for them,'' said Ed Kennedy, a trader with Commercial Brokerage Corp. in Miami. ``You're not going to get fired for buying $6 gas.''
Natural gas for November delivery rose 16.3 cents, or 2.4 percent, to $6.866 per million British thermal units at 11:28 a.m. on the New York Mercantile Exchange. Gas has advanced 5.1 percent this week.
Prices are likely to continue trading in a narrow range until the arrival of the first significant blast of cold weather, Kennedy said.
``It has been chamber-of-commerce weather and we're getting to the end of that in the near term,'' he said. ``Forecasters are saying below-normal temperatures for November.''
Inventories of gas rose 79 billion cubic feet in the week ended Oct. 10, below analyst expectations, to 3.277 trillion cubic feet, a U.S. Energy Department report yesterday showed. Thirteen of 17 analysts in a Bloomberg survey expected an increase of at least 80 billion cubic feet.
``There's a lot of buying support under the $7 level and the possibility of marginal production possibly going down,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``It's come down so far it makes it more attractive from an end- user's perspective to be buying.''
Cold-Weather Demand
Gas has declined 49 percent from a 30-month closing high of $13.577 per million Btu on July 3.
Utilities and large industrial users have been boosting stockpiles of gas since the end of last winter to have enough for this cold-weather season, when demand exceeds production. The rebuilding period typically ends in early November.
``It's starting to get to the time of year for the seasonal low price and we're starting to prepare for winter,'' said Neill. ``At some point, this market is going to turn back up and I kind of think we're there.''
Prices in the 2007-2008 season from Nov. 1 to March 31 advanced 21 percent and averaged $8.327 per million Btu, according to data compiled by Bloomberg. Prices a year earlier averaged $7.346 per million Btu.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
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Solarworld, Solon Start U.S. Factories to Tap `Massive' Demand
By Nicholas Comfort
Oct. 17 (Bloomberg) -- Solarworld AG, a German maker of equipment to generate power from sunlight, and smaller rival Solon AG fuer Solartechnik both opened factories in the U.S. today to benefit from ``massively'' increasing demand there.
Solarworld's plant in Hillsboro, Oregon, will make solar cells out of silicon discs, also known as wafers, the company said in a statement. Solon's Tucson, Arizona facility will make modules, the panels mounted on roofs or in fields to capture the sun's rays, according to a separate, e-mailed statement.
President George W. Bush signed into law $17 billion in alternative energy tax breaks as part of the $700 billion bank- rescue plan approved by Congress earlier this month. That will boost demand and allow the solar industry growth rates to outstrip those of the U.S. economy, Solarworld Chief Executive Officer Frank Asbeck has said.
U.S. ``demand for clean and non-imported energy is massively increasing,'' Solarworld said in its statement. Solar power will ``clearly win the day against the current trend in the U.S. economy,'' where the solar market will more than double to sales of about 1 gigawatt of final products in 2009, it said.
The Bonn-based company's Oregon plant will be the country's biggest. It will have an initial capacity of 100 megawatts, rising to 500 megawatts in the next three years, according to the statement. Investments will total $500 million by 2011.
The company, which also owns a module factory in California, said its Freiberg plant in the German state of Saxony will remain the biggest manufacturing location. Solarworld is spending 350 million euros ($469.4 million) expanding production there to 1 gigawatt, or 1,000 megawatts, according to the statement.
Berlin-based Solon will produce modules and other solar power plant equipment with a combined capacity of 60 megawatts per year in Tucson, the company said, without specifying future plans for output.
To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
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Oct. 17 (Bloomberg) -- Solarworld AG, a German maker of equipment to generate power from sunlight, and smaller rival Solon AG fuer Solartechnik both opened factories in the U.S. today to benefit from ``massively'' increasing demand there.
Solarworld's plant in Hillsboro, Oregon, will make solar cells out of silicon discs, also known as wafers, the company said in a statement. Solon's Tucson, Arizona facility will make modules, the panels mounted on roofs or in fields to capture the sun's rays, according to a separate, e-mailed statement.
President George W. Bush signed into law $17 billion in alternative energy tax breaks as part of the $700 billion bank- rescue plan approved by Congress earlier this month. That will boost demand and allow the solar industry growth rates to outstrip those of the U.S. economy, Solarworld Chief Executive Officer Frank Asbeck has said.
U.S. ``demand for clean and non-imported energy is massively increasing,'' Solarworld said in its statement. Solar power will ``clearly win the day against the current trend in the U.S. economy,'' where the solar market will more than double to sales of about 1 gigawatt of final products in 2009, it said.
The Bonn-based company's Oregon plant will be the country's biggest. It will have an initial capacity of 100 megawatts, rising to 500 megawatts in the next three years, according to the statement. Investments will total $500 million by 2011.
The company, which also owns a module factory in California, said its Freiberg plant in the German state of Saxony will remain the biggest manufacturing location. Solarworld is spending 350 million euros ($469.4 million) expanding production there to 1 gigawatt, or 1,000 megawatts, according to the statement.
Berlin-based Solon will produce modules and other solar power plant equipment with a combined capacity of 60 megawatts per year in Tucson, the company said, without specifying future plans for output.
To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
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Edison May Buy Assets of Rivals Amid Credit Crisis
By Anthony DiPaola and Michele Seghizzi
Oct. 17 (Bloomberg) -- Edison SpA, Italy's second-largest utility, may gain from the worldwide financial crisis if indebted rivals have difficulty getting credit and are forced to sell assets, Chief Executive Officer Umberto Quadrino said.
``We have the possibility to benefit from this situation if the opportunity presents itself,'' Quadrino said in an interview in London yesterday. The company's liquidity is ``enviable'' and debt is low at less than 3 billion euros ($4 billion), he said.
Edison is set to meet its profit targets this year after a ``good'' third quarter, Quadrino said. The Milan-based company will have earnings before interest, taxes, depreciation and amortization of about 1.55 billion euros this year, he said.
Edison increased as much as 7.4 percent and traded at 1.09 euros as of 10:44 a.m. in Milan. The shares are down 50 percent this year.
The utility is seeking to expand abroad to gain more power customers and is looking for natural-gas assets to create its own supply base for its generation plants and clients. The company is participating in two pipeline projects to Italy and completed a liquefied natural gas receiving terminal.
Next year
The facility, which turns the fuel back into gas for shipment to power plants and homes, will take its first cargoes next year and be operating at full capacity by the start of the 2009 winter, Quadrino said. The LNG terminal is moored about 15 kilometers (9.3 miles) from Rovigo, off Italy's Adriatic coast, and has a capacity of 8 billion cubic meters of gas.
Exxon Mobil Corp. and Qatar Petroleum both own 45 percent of the facility, with Edison owning the remainder and having rights to 80 percent of fuel imported.
Quadrino confirmed Edison's 6.2 billion-euro investment plan for the five years through 2013. The company has 1.5 billion euros in committed credit lines and can finance all the exploration and production projects it has under way, he said.
Edison expects to announce soon it was the winner of a bid to develop gas fields in Egypt, Quadrino said. The company is also exploring for gas in Iran.
To contact the reporter on this story: Anthony DiPaola in Rome at adipaola@bloomberg.net; Michele Seghizzi in London at mseghizzi@bloomberg.net.
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Oct. 17 (Bloomberg) -- Edison SpA, Italy's second-largest utility, may gain from the worldwide financial crisis if indebted rivals have difficulty getting credit and are forced to sell assets, Chief Executive Officer Umberto Quadrino said.
``We have the possibility to benefit from this situation if the opportunity presents itself,'' Quadrino said in an interview in London yesterday. The company's liquidity is ``enviable'' and debt is low at less than 3 billion euros ($4 billion), he said.
Edison is set to meet its profit targets this year after a ``good'' third quarter, Quadrino said. The Milan-based company will have earnings before interest, taxes, depreciation and amortization of about 1.55 billion euros this year, he said.
Edison increased as much as 7.4 percent and traded at 1.09 euros as of 10:44 a.m. in Milan. The shares are down 50 percent this year.
The utility is seeking to expand abroad to gain more power customers and is looking for natural-gas assets to create its own supply base for its generation plants and clients. The company is participating in two pipeline projects to Italy and completed a liquefied natural gas receiving terminal.
Next year
The facility, which turns the fuel back into gas for shipment to power plants and homes, will take its first cargoes next year and be operating at full capacity by the start of the 2009 winter, Quadrino said. The LNG terminal is moored about 15 kilometers (9.3 miles) from Rovigo, off Italy's Adriatic coast, and has a capacity of 8 billion cubic meters of gas.
Exxon Mobil Corp. and Qatar Petroleum both own 45 percent of the facility, with Edison owning the remainder and having rights to 80 percent of fuel imported.
Quadrino confirmed Edison's 6.2 billion-euro investment plan for the five years through 2013. The company has 1.5 billion euros in committed credit lines and can finance all the exploration and production projects it has under way, he said.
Edison expects to announce soon it was the winner of a bid to develop gas fields in Egypt, Quadrino said. The company is also exploring for gas in Iran.
To contact the reporter on this story: Anthony DiPaola in Rome at adipaola@bloomberg.net; Michele Seghizzi in London at mseghizzi@bloomberg.net.
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Goldman Advises Investors to Switch to Shell From BP
By Nicholas Larkin and Ben Farey
Oct. 17 (Bloomberg) -- Investors should switch to Royal Dutch Shell Plc from BP Plc as Europe's largest oil company has underperformed its rival the past month and will offer better cash-flow growth from 2010-13, Goldman Sachs Group Inc. said.
Goldman raised Shell, based in The Hague, to ``buy'' from ``neutral'' and lowered BP to ``neutral'' from ``buy,'' London- based analyst Michele Della Vigna said today in a note to investors.
London-based BP, Europe's second-largest oil company, has outperformed its competitor by 10 percent the past month and is close to the top of a two-year relative trading range with Shell, Vigna said. Crude oil has plunged more than 50 percent since reaching a record $147.27 a barrel in July.
Shell's Class A shares traded in London gained as much as 8 percent today and were up 72 pence at 1,366 pence as of 12:06 p.m. local time. BP added 4.6 percent to 415.75 pence.
``The five major new projects that Shell is developing will add $10 billion extra cash flow to Shell by 2012,'' Vigna said in the report. ``We believe that the high exposure to marketing will provide an edge versus the fall in crude prices, leaving the company better positioned than the rest of the industry in a falling crude price environment.''
New Projects
Shell's new projects scheduled to start from 2010 include the Pearl gas-to-liquids development in Qatar and the Canadian oil sands Athabasca expansion. It also plans to press ahead with the deepwater Perdido development in the Gulf of Mexico, the Sakhalin 2 project off Russia's eastern coast and the Qatargas 4 LNG project. These will add $10 billion of extra cash flow to Shell by about 2012, based on oil at $85 a barrel, Goldman said.
Goldman said the main risk for Shell is its high capital expenditure program at a time of falling oil prices, which could affect cash flow.
Still, Goldman said Shell has one of the ``most healthy'' balance sheets in the industry and could sustain two years of oil at $50 a barrel and still have a similar debt to capital ratio as BP at about 19 percent.
BP's third-quarter earnings are scheduled to be released on Oct. 28, followed by Shell on Oct. 30.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net or Ben Farey in London at 2369 or bfarey@bloomberg.net
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Oct. 17 (Bloomberg) -- Investors should switch to Royal Dutch Shell Plc from BP Plc as Europe's largest oil company has underperformed its rival the past month and will offer better cash-flow growth from 2010-13, Goldman Sachs Group Inc. said.
Goldman raised Shell, based in The Hague, to ``buy'' from ``neutral'' and lowered BP to ``neutral'' from ``buy,'' London- based analyst Michele Della Vigna said today in a note to investors.
London-based BP, Europe's second-largest oil company, has outperformed its competitor by 10 percent the past month and is close to the top of a two-year relative trading range with Shell, Vigna said. Crude oil has plunged more than 50 percent since reaching a record $147.27 a barrel in July.
Shell's Class A shares traded in London gained as much as 8 percent today and were up 72 pence at 1,366 pence as of 12:06 p.m. local time. BP added 4.6 percent to 415.75 pence.
``The five major new projects that Shell is developing will add $10 billion extra cash flow to Shell by 2012,'' Vigna said in the report. ``We believe that the high exposure to marketing will provide an edge versus the fall in crude prices, leaving the company better positioned than the rest of the industry in a falling crude price environment.''
New Projects
Shell's new projects scheduled to start from 2010 include the Pearl gas-to-liquids development in Qatar and the Canadian oil sands Athabasca expansion. It also plans to press ahead with the deepwater Perdido development in the Gulf of Mexico, the Sakhalin 2 project off Russia's eastern coast and the Qatargas 4 LNG project. These will add $10 billion of extra cash flow to Shell by about 2012, based on oil at $85 a barrel, Goldman said.
Goldman said the main risk for Shell is its high capital expenditure program at a time of falling oil prices, which could affect cash flow.
Still, Goldman said Shell has one of the ``most healthy'' balance sheets in the industry and could sustain two years of oil at $50 a barrel and still have a similar debt to capital ratio as BP at about 19 percent.
BP's third-quarter earnings are scheduled to be released on Oct. 28, followed by Shell on Oct. 30.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net or Ben Farey in London at 2369 or bfarey@bloomberg.net
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Mexico's Peso Falls as U.S. Housing Slumps More Than Forecast
By Michael J. Moore
Oct. 17 (Bloomberg) -- Mexico's peso fell after a housing report added to evidence that the U.S. economy, the biggest buyer of Mexican exports, is faltering under the strain of a global credit crisis.
The peso dropped 0.5 percent to 12.8925 per dollar at 9:10 a.m. New York time. Banco de Mexico bought $2.3 billion worth of pesos in the past two days, after purchases of $8.9 billion worth last week, in an effort to shore up the currency after it plunged to a record low of 14.2927 on Oct. 8.
Construction began on 817,000 houses in the U.S. last month, down 6.3 percent from August's 872,000 level, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.3 percent to 786,000 pace, the lowest level since November 1981.
Banco de Mexico policy makers will leave their benchmark overnight lending rate at 8.25 percent at a meeting today, according to 18 of 20 economists surveyed by Bloomberg. The bank is slated to announce the rate at 10 a.m. New York time. The other two analysts predict a cut.
To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net
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Oct. 17 (Bloomberg) -- Mexico's peso fell after a housing report added to evidence that the U.S. economy, the biggest buyer of Mexican exports, is faltering under the strain of a global credit crisis.
The peso dropped 0.5 percent to 12.8925 per dollar at 9:10 a.m. New York time. Banco de Mexico bought $2.3 billion worth of pesos in the past two days, after purchases of $8.9 billion worth last week, in an effort to shore up the currency after it plunged to a record low of 14.2927 on Oct. 8.
Construction began on 817,000 houses in the U.S. last month, down 6.3 percent from August's 872,000 level, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.3 percent to 786,000 pace, the lowest level since November 1981.
Banco de Mexico policy makers will leave their benchmark overnight lending rate at 8.25 percent at a meeting today, according to 18 of 20 economists surveyed by Bloomberg. The bank is slated to announce the rate at 10 a.m. New York time. The other two analysts predict a cut.
To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net
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Canada's Currency Poised for Third Weekly Drop on Oil's Decline
By Chris Fournier
Oct. 17 (Bloomberg) -- Canada's currency is poised for its third weekly decline, the longest losing streak since August, as the threat of a U.S. economic slowdown reduced commodity prices.
The Canadian currency has weakened 1.3 percent this week, as crude oil sank below $70 a barrel and the country's main stock index touched the lowest in four years. The U.S. is Canada's largest trading partner.
``We've seen pretty steady selling of the Canadian dollar,'' said Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Bank of New York Mellon, the world's largest custodial bank. ``The flow of economic data is pretty negative in the U.S. We have the usual correlation in energy prices and the Canadian dollar. The U.S. slowdown is expected to have an impact on Canada's exports.''
The Canadian dollar depreciated as much as 1.3 percent today to C$1.1932 per U.S. dollar, from C$1.1783 yesterday. It last traded at C$1.1864 at 10:25 a.m. in Toronto. The currency traded at C$1.1732 on Oct. 10. One Canadian dollar buys 84.29 U.S. cents.
Crude oil for November delivery lost more than $5 this week and yesterday touched $68.57. It has lost more than half its value since reaching a record $147.27 on July 11.
The Canadian dollar has depreciated 15 percent since then.
`Very Difficult'
``We're advising holding on to the U.S. dollar,'' Shankar said. ``We're expecting the greenback to build on its gains. Currencies like the Canadian dollar are going to find it very difficult to get support.''
The Standard & Poor's/TSX Composite Index yesterday reached the lowest since October 2004. The Dow Jones Industrial Average fell 1.2 percent today.
The yield on the two-year government bond rose 5 basis points, or 0.05 percentage point, to 2.26 percent this week, the first gain in a month. The price of the 2.75 percent security due in December 2010 fell 12 cents during the period to C$101.
The 10-year note's yield decreased 9 basis points to 3.70 percent during the week. The price of the 4.25 percent security maturing in June 2018 climbed 71 cents to C$104.38.
The 10-year bond yielded 144 basis points more than the two- year security, down from 158 basis points a week ago, when the so-called yield curve reached the steepest since September 2004.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Oct. 17 (Bloomberg) -- Canada's currency is poised for its third weekly decline, the longest losing streak since August, as the threat of a U.S. economic slowdown reduced commodity prices.
The Canadian currency has weakened 1.3 percent this week, as crude oil sank below $70 a barrel and the country's main stock index touched the lowest in four years. The U.S. is Canada's largest trading partner.
``We've seen pretty steady selling of the Canadian dollar,'' said Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Bank of New York Mellon, the world's largest custodial bank. ``The flow of economic data is pretty negative in the U.S. We have the usual correlation in energy prices and the Canadian dollar. The U.S. slowdown is expected to have an impact on Canada's exports.''
The Canadian dollar depreciated as much as 1.3 percent today to C$1.1932 per U.S. dollar, from C$1.1783 yesterday. It last traded at C$1.1864 at 10:25 a.m. in Toronto. The currency traded at C$1.1732 on Oct. 10. One Canadian dollar buys 84.29 U.S. cents.
Crude oil for November delivery lost more than $5 this week and yesterday touched $68.57. It has lost more than half its value since reaching a record $147.27 on July 11.
The Canadian dollar has depreciated 15 percent since then.
`Very Difficult'
``We're advising holding on to the U.S. dollar,'' Shankar said. ``We're expecting the greenback to build on its gains. Currencies like the Canadian dollar are going to find it very difficult to get support.''
The Standard & Poor's/TSX Composite Index yesterday reached the lowest since October 2004. The Dow Jones Industrial Average fell 1.2 percent today.
The yield on the two-year government bond rose 5 basis points, or 0.05 percentage point, to 2.26 percent this week, the first gain in a month. The price of the 2.75 percent security due in December 2010 fell 12 cents during the period to C$101.
The 10-year note's yield decreased 9 basis points to 3.70 percent during the week. The price of the 4.25 percent security maturing in June 2018 climbed 71 cents to C$104.38.
The 10-year bond yielded 144 basis points more than the two- year security, down from 158 basis points a week ago, when the so-called yield curve reached the steepest since September 2004.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Yen Heads for Weekly Drop Versus Euro as U.S. Stocks Rally
By Ye Xie and Kim-Mai Cutler
Oct. 17 (Bloomberg) -- The yen headed for its first weekly drop against the euro in a month as a rally in U.S. stocks encouraged investors to buy higher-yielding assets funded by low-cost loans in Japan's currency.
South Korea's won rebounded today, following the biggest drop in a decade, on speculation the government will prop up confidence in financial markets.
``Those people who kept their powder dry may find it's not a bad opportunity to get into the carry trade again,'' said Dave Floyd, global head of foreign-exchange research and trading in Bend, Oregon, at Aspen Trading Group, a research and trading firm. ``The lack of downward momentum in yen crosses suggests we are in a transitional phase from higher volatility to relatively low volatility.''
The yen fell 1.2 percent to 136.63 against the euro this week, from 134.96 on Oct. 10, and was up 0.1 percent at 11:23 a.m. in New York. The yen dropped 0.7 percent to 101.40 against the dollar this week from 100.67. The euro increased 0.4 percent to $1.3456, from $1.3408, and was little changed today.
South Korea's won rose 2.9 percent today to 1,333.90 per dollar, following a 9.8 percent decline. The Bank of Korea said it will trade directly with banks in the swaps market to help boost foreign-currency liquidity.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net
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Oct. 17 (Bloomberg) -- The yen headed for its first weekly drop against the euro in a month as a rally in U.S. stocks encouraged investors to buy higher-yielding assets funded by low-cost loans in Japan's currency.
South Korea's won rebounded today, following the biggest drop in a decade, on speculation the government will prop up confidence in financial markets.
``Those people who kept their powder dry may find it's not a bad opportunity to get into the carry trade again,'' said Dave Floyd, global head of foreign-exchange research and trading in Bend, Oregon, at Aspen Trading Group, a research and trading firm. ``The lack of downward momentum in yen crosses suggests we are in a transitional phase from higher volatility to relatively low volatility.''
The yen fell 1.2 percent to 136.63 against the euro this week, from 134.96 on Oct. 10, and was up 0.1 percent at 11:23 a.m. in New York. The yen dropped 0.7 percent to 101.40 against the dollar this week from 100.67. The euro increased 0.4 percent to $1.3456, from $1.3408, and was little changed today.
South Korea's won rose 2.9 percent today to 1,333.90 per dollar, following a 9.8 percent decline. The Bank of Korea said it will trade directly with banks in the swaps market to help boost foreign-currency liquidity.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net
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Schlumberger Profit Rises After Oil Climbs to Record
By David Wethe
Enlarge Image/Details
Oct. 17 (Bloomberg) -- Schlumberger Ltd., the world's largest oilfield-services provider, said third-quarter net income climbed 13 percent after record crude prices spurred exploration and production spending by customers. The company's shares fell after it said growth may slow.
Profit rose to $1.53 billion, or $1.25 a share, from $1.35 billion, or $1.09, a year earlier, Houston-based Schlumberger said today in a statement. Revenue advanced 22 percent to $7.26 billion as U.S. oil futures topped $147 a barrel in July and traded 57 percent higher than in last year's third quarter.
Sales jumped 32 percent in Latin America and 28 percent in Europe, Africa and former Soviet states after producers such as Petroleo Brasileiro SA boosted spending. Deteriorating credit markets ``will undoubtedly have an effect on our activity,'' Schlumberger Chief Executive Officer Andrew Gould said in the statement. Should slumping economies slow oil spending, he said, ``any significant drop in exploration and production investment would rapidly provoke an even stronger recovery.''
``The fact that they haven't said, `Oh my goodness, the sky is falling,' I think is significant,'' said Michael Henzi, an analyst at Sterne Agee & Leach Inc. in Boston. ``The company is not one to panic or get euphoric.''
Schlumberger fell $5.39, or 10 percent, to $47.81 at 9:53 a.m. in New York Stock Exchange composite trading. The shares, which have 21 buy and four hold ratings from analysts, have lost more than half their value since the end of June.
`Tail Winds' Blow
Chevron Corp. and other exploration and production companies, known as E&Ps, ramped up spending in the past year to bolster reserves and output as oil rallied. Projects are going forward even after oil tumbled more than $70 a barrel from July's all-time high.
``You still have the tail winds of the first half of the year coming through where you have record cash margins for the E&Ps, record spending and record commodity prices,'' said Benjamin Dell, an analyst at Sanford C. Bernstein & Co. in New York who rates Schlumberger shares ``market perform.'' ``Most of that is still working its way through the system.''
Producers may cut spending in the next 12 to 15 months because of lower prices, Gould told investors and analysts on a conference call.
Schlumberger didn't cite one-time costs or gains. Earnings per share matched the average of 25 analyst estimates for profit excluding any such items, according to a Bloomberg survey.
Segment Results
U.S. gas futures had an average price of almost $9 per million British thermal units, up 44 percent from last year's third quarter.
Revenue from Schlumberger's oilfield-contracting business jumped 24 percent from a year earlier to $6.36 billion, according to the statement. Revenue at WesternGeco, the company's seismic-mapping business, rose 12 percent to $892 million.
Dan Pickering, an analyst at Tudor, Pickering, Holt & Co. Securities in Houston, said the seismic unit's results exceeded his expectations, and Schlumberger's overall performance was in line with his projections. The company's ``slightly more cautious'' tone in its statement will lead investors to speculate about prospects for oil spending.
``This is really going to be how bullish do people want to be, how bearish do people want to be,'' Pickering said. ``That tug-of-war is going to play out for the next six months.''
Gustav and Ike
Atlantic hurricanes reduced third-quarter profit by 4 cents a share, Schlumberger said. Hurricanes Gustav and Ike slammed the Louisiana and Texas coasts last month after forcing production shutdowns and damaging equipment in the Gulf of Mexico. Almost all Gulf oil output was idled after Ike hit.
Schlumberger is capitalizing on increased exploration spending by expanding sales outside North America. The company, which derived almost three-fourths of its profit from outside North America last year, has said it's targeting Brazil and other Latin American markets for growth.
The number of oil and gas rigs active around the world rose in September to 3,557, the highest since 1985, according to a count by Baker Hughes Inc. Rig use is an indicator of demand for Schlumberger's drilling tools, subsea pumps, well testing and other products and services.
Technology is giving Schlumberger an edge against its competition and helping to boost profit margins, said James Wicklund, chief investment officer at Carlson Capital LP, a Dallas-based hedge fund.
``They have the best technology going,'' Wicklund said. ``It gives them an edge from both winning the business and being able to charge higher margins.''
Halliburton, the world's second-largest oilfield services provider, is scheduled to report earnings next week. Baker Hughes, the third-largest oilfield contractor, plans to report its third-quarter results on Oct. 22.
To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.
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Enlarge Image/Details
Oct. 17 (Bloomberg) -- Schlumberger Ltd., the world's largest oilfield-services provider, said third-quarter net income climbed 13 percent after record crude prices spurred exploration and production spending by customers. The company's shares fell after it said growth may slow.
Profit rose to $1.53 billion, or $1.25 a share, from $1.35 billion, or $1.09, a year earlier, Houston-based Schlumberger said today in a statement. Revenue advanced 22 percent to $7.26 billion as U.S. oil futures topped $147 a barrel in July and traded 57 percent higher than in last year's third quarter.
Sales jumped 32 percent in Latin America and 28 percent in Europe, Africa and former Soviet states after producers such as Petroleo Brasileiro SA boosted spending. Deteriorating credit markets ``will undoubtedly have an effect on our activity,'' Schlumberger Chief Executive Officer Andrew Gould said in the statement. Should slumping economies slow oil spending, he said, ``any significant drop in exploration and production investment would rapidly provoke an even stronger recovery.''
``The fact that they haven't said, `Oh my goodness, the sky is falling,' I think is significant,'' said Michael Henzi, an analyst at Sterne Agee & Leach Inc. in Boston. ``The company is not one to panic or get euphoric.''
Schlumberger fell $5.39, or 10 percent, to $47.81 at 9:53 a.m. in New York Stock Exchange composite trading. The shares, which have 21 buy and four hold ratings from analysts, have lost more than half their value since the end of June.
`Tail Winds' Blow
Chevron Corp. and other exploration and production companies, known as E&Ps, ramped up spending in the past year to bolster reserves and output as oil rallied. Projects are going forward even after oil tumbled more than $70 a barrel from July's all-time high.
``You still have the tail winds of the first half of the year coming through where you have record cash margins for the E&Ps, record spending and record commodity prices,'' said Benjamin Dell, an analyst at Sanford C. Bernstein & Co. in New York who rates Schlumberger shares ``market perform.'' ``Most of that is still working its way through the system.''
Producers may cut spending in the next 12 to 15 months because of lower prices, Gould told investors and analysts on a conference call.
Schlumberger didn't cite one-time costs or gains. Earnings per share matched the average of 25 analyst estimates for profit excluding any such items, according to a Bloomberg survey.
Segment Results
U.S. gas futures had an average price of almost $9 per million British thermal units, up 44 percent from last year's third quarter.
Revenue from Schlumberger's oilfield-contracting business jumped 24 percent from a year earlier to $6.36 billion, according to the statement. Revenue at WesternGeco, the company's seismic-mapping business, rose 12 percent to $892 million.
Dan Pickering, an analyst at Tudor, Pickering, Holt & Co. Securities in Houston, said the seismic unit's results exceeded his expectations, and Schlumberger's overall performance was in line with his projections. The company's ``slightly more cautious'' tone in its statement will lead investors to speculate about prospects for oil spending.
``This is really going to be how bullish do people want to be, how bearish do people want to be,'' Pickering said. ``That tug-of-war is going to play out for the next six months.''
Gustav and Ike
Atlantic hurricanes reduced third-quarter profit by 4 cents a share, Schlumberger said. Hurricanes Gustav and Ike slammed the Louisiana and Texas coasts last month after forcing production shutdowns and damaging equipment in the Gulf of Mexico. Almost all Gulf oil output was idled after Ike hit.
Schlumberger is capitalizing on increased exploration spending by expanding sales outside North America. The company, which derived almost three-fourths of its profit from outside North America last year, has said it's targeting Brazil and other Latin American markets for growth.
The number of oil and gas rigs active around the world rose in September to 3,557, the highest since 1985, according to a count by Baker Hughes Inc. Rig use is an indicator of demand for Schlumberger's drilling tools, subsea pumps, well testing and other products and services.
Technology is giving Schlumberger an edge against its competition and helping to boost profit margins, said James Wicklund, chief investment officer at Carlson Capital LP, a Dallas-based hedge fund.
``They have the best technology going,'' Wicklund said. ``It gives them an edge from both winning the business and being able to charge higher margins.''
Halliburton, the world's second-largest oilfield services provider, is scheduled to report earnings next week. Baker Hughes, the third-largest oilfield contractor, plans to report its third-quarter results on Oct. 22.
To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.
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Crude Oil Rises From 13-Month Low on Signs OPEC Will Cut Output
By Mark Shenk
Oct. 17 (Bloomberg) -- Crude oil advanced from a 13-month low on signs that OPEC will announce a production cut at a meeting next week.
The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world's oil, brought forward to next week a November meeting to discuss output levels. Oil has tumbled more than 50 percent since reaching a record $147.27 in July because the financial crisis threatens to push the world into a recession, curbing fuel demand.
``OPEC has to be very careful because we are on the verge of a major global recession,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``Consumers are going to make their case to the Saudis over the next week so the meeting's result isn't a forgone conclusion.''
Crude oil for November delivery rose $1.38, or 2 percent, to $71.23 a barrel at 10:17 a.m. on the New York Mercantile Exchange. Prices are down 19 percent from a year ago.
``We really overdid it on the down side,'' said Dan Flynn, an energy analyst at Alaron Trading Corp. in Chicago. ``We are also up on concern that OPEC will cut output next week.''
OPEC will likely reduce oil output by 1 million barrels a day at next week's meeting to check the drop in prices, Qatari Oil Minister Abdullah al-Attiyah said.
OPEC oil supplies fell 3.8 percent in September to 31.8 million barrels a day, according to data from Geneva-based consultants PetroLogistics Ltd. The amount declined from 33.05 million barrels in August because of lower sales by Saudi Arabia and Iran, Conrad Gerber, the company founder, said yesterday.
``Demand looks bad and until things improve the market is going to be under pressure,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``Every rally is a selling opportunity.''
Lower Demand
Fuel demand in the U.S., consumer of 24 percent of the world's oil, was at the lowest since July 1999 during the past four weeks, according to a weekly supply report from the Energy Department. Demand averaged about 18.6 million barrels a day, according to yesterday's report.
Brent crude oil for December settlement rose $1.33, or 2 percent, to $69.17 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Read more...
Oct. 17 (Bloomberg) -- Crude oil advanced from a 13-month low on signs that OPEC will announce a production cut at a meeting next week.
The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world's oil, brought forward to next week a November meeting to discuss output levels. Oil has tumbled more than 50 percent since reaching a record $147.27 in July because the financial crisis threatens to push the world into a recession, curbing fuel demand.
``OPEC has to be very careful because we are on the verge of a major global recession,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``Consumers are going to make their case to the Saudis over the next week so the meeting's result isn't a forgone conclusion.''
Crude oil for November delivery rose $1.38, or 2 percent, to $71.23 a barrel at 10:17 a.m. on the New York Mercantile Exchange. Prices are down 19 percent from a year ago.
``We really overdid it on the down side,'' said Dan Flynn, an energy analyst at Alaron Trading Corp. in Chicago. ``We are also up on concern that OPEC will cut output next week.''
OPEC will likely reduce oil output by 1 million barrels a day at next week's meeting to check the drop in prices, Qatari Oil Minister Abdullah al-Attiyah said.
OPEC oil supplies fell 3.8 percent in September to 31.8 million barrels a day, according to data from Geneva-based consultants PetroLogistics Ltd. The amount declined from 33.05 million barrels in August because of lower sales by Saudi Arabia and Iran, Conrad Gerber, the company founder, said yesterday.
``Demand looks bad and until things improve the market is going to be under pressure,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``Every rally is a selling opportunity.''
Lower Demand
Fuel demand in the U.S., consumer of 24 percent of the world's oil, was at the lowest since July 1999 during the past four weeks, according to a weekly supply report from the Energy Department. Demand averaged about 18.6 million barrels a day, according to yesterday's report.
Brent crude oil for December settlement rose $1.33, or 2 percent, to $69.17 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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China's Spot Iron Ore Prices Fall 12% This Week on Weak Demand
By Helen Yuan
Oct. 17 (Bloomberg) -- Cash prices of iron ore imported by China, the world's biggest buyer, fell 12 percent to a 19-month low because of weaker demand from steelmakers.
Prices at Qingdao, China's biggest port handling the steelmaking ingredient, tumbled 100 yuan to 720 yuan ($105) a metric ton, the lowest since the week of March 16, 2007, according to Beijing Antaike Information Development Co.
Chinese mills have cut production as the economic slowdown and a global credit crunch curbed demand from automakers and builders. Shougang Corp., Jiangsu Shagang Group Co. and other Chinese steelmakers have said they are slowing orders because of high stockpiles and lower demand.
The Chinese price of hot-rolled coil, a benchmark steel product, kept falling in the past month, dropping 39 percent to 3,645 yuan a ton from a record 5,957 yuan on June 5, according to Antaike.
Cash prices for iron ore arriving at Beilun port, where Baoshan Steel receives shipments, dropped 13 percent to 700 yuan a ton this week, Antaike said.
China buys most of its spot iron ore from Indian mining companies.
To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net
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Oct. 17 (Bloomberg) -- Cash prices of iron ore imported by China, the world's biggest buyer, fell 12 percent to a 19-month low because of weaker demand from steelmakers.
Prices at Qingdao, China's biggest port handling the steelmaking ingredient, tumbled 100 yuan to 720 yuan ($105) a metric ton, the lowest since the week of March 16, 2007, according to Beijing Antaike Information Development Co.
Chinese mills have cut production as the economic slowdown and a global credit crunch curbed demand from automakers and builders. Shougang Corp., Jiangsu Shagang Group Co. and other Chinese steelmakers have said they are slowing orders because of high stockpiles and lower demand.
The Chinese price of hot-rolled coil, a benchmark steel product, kept falling in the past month, dropping 39 percent to 3,645 yuan a ton from a record 5,957 yuan on June 5, according to Antaike.
Cash prices for iron ore arriving at Beilun port, where Baoshan Steel receives shipments, dropped 13 percent to 700 yuan a ton this week, Antaike said.
China buys most of its spot iron ore from Indian mining companies.
To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net
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East European Currencies: Hungarian Forint Drops for Third Week
By Ewa Krukowska
Oct. 17 (Bloomberg) -- Hungary's forint fell for a third week against the euro on concern government and central bank measures to revive credit markets will fail to shield the economy from a financial crisis. The Turkish lira also declined.
The forint slid to near a two-year low after Goldman Sachs Group Inc. reduced its currency and economic-growth forecasts for the country and Fitch cut the outlook on Hungary's foreign- debt rating. The MTI news agency also cited Finance Minister Janos Veres as saying the government cut its expansion and inflation predictions for 2009.
``Emergency measures enacted by the National Bank of Hungary over the past few days are likely to assuage foreign exchange-funding problems for the banks,'' Angus Halkett, a strategist in London at Deutsche Bank AG, the world's biggest currency trader, wrote in a research note. ``The medium-term outlook for the forint remains bleak.''
The forint was little changed at 267.79 per euro by 4:04 p.m. in Budapest, declining of 3.8 percent in the past week.
The Hungarian currency, once a favorite for the carry trade because of the country's 8.5 percent key interest rate is the third-worst performer against the euro among European and African currencies this month as rising risk aversion saps appetite for higher-yielding assets.
Hungary has a ``near zero'' chance of defaulting on its debt, central bank President Andras Simor said on state television station MTV yesterday. Fitch today lowered its outlook on the nation's BBB+ debt rating to ``negative'' from ``stable.''
`More Depreciation'
``While the package of measures announced by the Hungarian government and central bank has been commendably swift, there may be more to come in terms of the forint depreciation,'' Koon Chow, a strategist in London at Barclays Plc, wrote in a note today.
The Hungarian economy will grow 2.2 percent this year and 1.5 percent next year, down from 2.3 percent and 2.5 percent in a previous estimate, Goldman analysts including Rory MacFarquhar wrote in an e-mailed report today. The forint will trade at 245 per euro in six months, compared with a previous forecast of 230, they said.
``Shocks from global financial turbulence and the likelihood of recession in the euro area have heightened downside credit risk given Hungary's high external-debt stock, wide current-account deficit and large external-financing requirement,'' David Heslam, director of Fitch's sovereign team in London, wrote in a report.
Creating Liquidity
Hungary is focusing on creating liquidity in money markets with the backing of banks and investments funds, Prime Minister Ferenc Gyurcsany said today in an interview on state television.
The European Central Bank said yesterday it will support Hungary's money-market operations with a loan of as much as 5 billion euros ($6.7 billion). The government is also drawing up proposals to help ease foreign-exchange risk for borrowers, Gyurcsany said.
In other trading, the Turkish lira fell to 1.5170 against the dollar, from 1.5035 yesterday, declining 5.6 percent since Oct. 10, while the Romanian leu rose to 3.6578 per euro, from 3.7926 yesterday, advancing 4.1 percent from last week.
The Czech koruna fell to 25.155 per euro, from 24.987 yesterday, losing 1.1 percent in the past five days.
The Polish zloty fell to 3.5462 per euro, compared with 3.5651 yesterday, climbing 1 percent since Oct. 10.
Polish industrial output rose a more-than-expected 7 percent in September, after falling 3.7 percent in August, a report from the statistical office showed today.
Policy maker Marian Noga told TVN CNBC Biznes today he saw a ``small'' chance of the Warsaw-based central bank cutting the 6 percent main interest rate.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
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Oct. 17 (Bloomberg) -- Hungary's forint fell for a third week against the euro on concern government and central bank measures to revive credit markets will fail to shield the economy from a financial crisis. The Turkish lira also declined.
The forint slid to near a two-year low after Goldman Sachs Group Inc. reduced its currency and economic-growth forecasts for the country and Fitch cut the outlook on Hungary's foreign- debt rating. The MTI news agency also cited Finance Minister Janos Veres as saying the government cut its expansion and inflation predictions for 2009.
``Emergency measures enacted by the National Bank of Hungary over the past few days are likely to assuage foreign exchange-funding problems for the banks,'' Angus Halkett, a strategist in London at Deutsche Bank AG, the world's biggest currency trader, wrote in a research note. ``The medium-term outlook for the forint remains bleak.''
The forint was little changed at 267.79 per euro by 4:04 p.m. in Budapest, declining of 3.8 percent in the past week.
The Hungarian currency, once a favorite for the carry trade because of the country's 8.5 percent key interest rate is the third-worst performer against the euro among European and African currencies this month as rising risk aversion saps appetite for higher-yielding assets.
Hungary has a ``near zero'' chance of defaulting on its debt, central bank President Andras Simor said on state television station MTV yesterday. Fitch today lowered its outlook on the nation's BBB+ debt rating to ``negative'' from ``stable.''
`More Depreciation'
``While the package of measures announced by the Hungarian government and central bank has been commendably swift, there may be more to come in terms of the forint depreciation,'' Koon Chow, a strategist in London at Barclays Plc, wrote in a note today.
The Hungarian economy will grow 2.2 percent this year and 1.5 percent next year, down from 2.3 percent and 2.5 percent in a previous estimate, Goldman analysts including Rory MacFarquhar wrote in an e-mailed report today. The forint will trade at 245 per euro in six months, compared with a previous forecast of 230, they said.
``Shocks from global financial turbulence and the likelihood of recession in the euro area have heightened downside credit risk given Hungary's high external-debt stock, wide current-account deficit and large external-financing requirement,'' David Heslam, director of Fitch's sovereign team in London, wrote in a report.
Creating Liquidity
Hungary is focusing on creating liquidity in money markets with the backing of banks and investments funds, Prime Minister Ferenc Gyurcsany said today in an interview on state television.
The European Central Bank said yesterday it will support Hungary's money-market operations with a loan of as much as 5 billion euros ($6.7 billion). The government is also drawing up proposals to help ease foreign-exchange risk for borrowers, Gyurcsany said.
In other trading, the Turkish lira fell to 1.5170 against the dollar, from 1.5035 yesterday, declining 5.6 percent since Oct. 10, while the Romanian leu rose to 3.6578 per euro, from 3.7926 yesterday, advancing 4.1 percent from last week.
The Czech koruna fell to 25.155 per euro, from 24.987 yesterday, losing 1.1 percent in the past five days.
The Polish zloty fell to 3.5462 per euro, compared with 3.5651 yesterday, climbing 1 percent since Oct. 10.
Polish industrial output rose a more-than-expected 7 percent in September, after falling 3.7 percent in August, a report from the statistical office showed today.
Policy maker Marian Noga told TVN CNBC Biznes today he saw a ``small'' chance of the Warsaw-based central bank cutting the 6 percent main interest rate.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
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Gold Prices Fall as Homebuilding Drops, Easing Inflation Fears
By Halia Pavliva
Oct. 17 (Bloomberg) -- Gold fell, heading for the biggest weekly drop in two months, as a report showed single-family home construction sank to the slowest pace in 26 years, easing inflation concerns as the economy cools. Silver also slid.
Work started on the fewest single-family homes in the U.S. in September since February 1982, fueling concerns an economic slump will deepen. Some investors sell gold and other precious metals to raise cash when the cost of credit rises and slowing economic growth eases inflation concerns.
``Gold prices appeared set to record their largest weekly loss in over two months on the back of drastically trimmed inflation expectations and the nauseating volatility in the global equity markets,'' Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal, said today in a note to clients.
Gold futures for December delivery fell $11.50, or 1.4 percent, to $793 an ounce at 10:05 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mean a drop of 7.7 percent for the week, the biggest such decline for a most-active contract since Aug. 15. The price earlier dropped to $779 an ounce, the lowest since Sept. 17.
Silver futures for December delivery fell 27.5 cents, or 2.9 percent, to $9.36 an ounce on the Comex. The price earlier fell to $9.17, the lowest for a most-active contract since Feb. 16, 2006. The price dropped 35 percent this year before today, while gold was down 4 percent.
`Under Pressure'
``The lack of jewelry demand and ongoing deleveraging is likely to keep gold and other precious metals under pressure in the near term,'' John Reade, the head of metals strategy at UBS AG in London, said earlier today in a research report. ``Deleveraging may present some fantastic opportunities for long-term value investors that can live with negative short-term marks on their portfolio.''
UBS will review its short-term forecasts for gold and other precious metals on Oct. 20, Reade said.
Construction began on 6.3 percent fewer U.S. homes last month from August, falling to an annual rate of 817,000 units, the Commerce Department said today in Washington. Building permits, a sign of future construction, dropped 8.3 percent to the lowest annual pace since November 1981.
Construction of single-family homes slid 12 percent to a 544,000 annual rate last month, the slowest since February 1982.
U.S. stock indexes fell, indicating the Standard & Poor's 500 Index may trim its biggest weekly gain since 2003, as evidence increased that the economy is falling into a recession.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.
Read more...
Oct. 17 (Bloomberg) -- Gold fell, heading for the biggest weekly drop in two months, as a report showed single-family home construction sank to the slowest pace in 26 years, easing inflation concerns as the economy cools. Silver also slid.
Work started on the fewest single-family homes in the U.S. in September since February 1982, fueling concerns an economic slump will deepen. Some investors sell gold and other precious metals to raise cash when the cost of credit rises and slowing economic growth eases inflation concerns.
``Gold prices appeared set to record their largest weekly loss in over two months on the back of drastically trimmed inflation expectations and the nauseating volatility in the global equity markets,'' Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal, said today in a note to clients.
Gold futures for December delivery fell $11.50, or 1.4 percent, to $793 an ounce at 10:05 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mean a drop of 7.7 percent for the week, the biggest such decline for a most-active contract since Aug. 15. The price earlier dropped to $779 an ounce, the lowest since Sept. 17.
Silver futures for December delivery fell 27.5 cents, or 2.9 percent, to $9.36 an ounce on the Comex. The price earlier fell to $9.17, the lowest for a most-active contract since Feb. 16, 2006. The price dropped 35 percent this year before today, while gold was down 4 percent.
`Under Pressure'
``The lack of jewelry demand and ongoing deleveraging is likely to keep gold and other precious metals under pressure in the near term,'' John Reade, the head of metals strategy at UBS AG in London, said earlier today in a research report. ``Deleveraging may present some fantastic opportunities for long-term value investors that can live with negative short-term marks on their portfolio.''
UBS will review its short-term forecasts for gold and other precious metals on Oct. 20, Reade said.
Construction began on 6.3 percent fewer U.S. homes last month from August, falling to an annual rate of 817,000 units, the Commerce Department said today in Washington. Building permits, a sign of future construction, dropped 8.3 percent to the lowest annual pace since November 1981.
Construction of single-family homes slid 12 percent to a 544,000 annual rate last month, the slowest since February 1982.
U.S. stock indexes fell, indicating the Standard & Poor's 500 Index may trim its biggest weekly gain since 2003, as evidence increased that the economy is falling into a recession.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.
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Central European Stocks Tumble on Goldman Forecast, Fitch Cut
By Pawel Kozlowski
Oct. 17 (Bloomberg) -- Central European stocks dropped for a third day, led by financial companies, after Goldman Sachs Group Inc. lowered its economic forecasts for the region and Fitch Ratings reduced Hungary's foreign-debt rating.
Komercni Banka AS, the third-largest bank in the Czech Republic, fell 17 percent, the most since 1999. OTP Nyrt. slid to its lowest level in almost five years after HSBC Holdings Plc downgraded Hungary's largest bank on concern its loan expansion may slow and credit quality worsen. Bank Pekao SA, Poland's biggest bank, posted its steepest drop on record.
The NTX Index of 30 companies in the region retreated 4.9 percent to 945.71 at 4:42 p.m. in Vienna, the lowest in almost four years, even as stocks in western Europe rose after a two-day selloff. The Czech PX Index slumped 10 percent at the close in Prague, the biggest fluctuation among equity markets included in global benchmarks.
``We're facing a global recession and people have realized central Europe won't avoid its impact,'' said Martin Majdaniuk, who helps manage the equivalent of $3 billion at Baring Asset Management in London. ``Goldman's forecast revisions added fuel to the selloff.''
Hungary's BUX Index fell 2.4 percent, Poland's WIG20 Index lost 6.4 percent and Austria's ATX Index retreated 4.8 percent.
Goldman cited slowing growth in western European economies and turmoil on global markets as the reasons for lowering its projections. The Czech Republic's 2008 growth forecast was reduced to 4.3 percent this year from 4.4 percent, while the 2009 outlook was changed to 2.5 percent from 3.8 percent.
Komercni Plunges
The Hungarian economy will grow 2.2 percent this year and 1.5 percent next year, down from 2.3 percent and 2.5 percent in 2009, according to Goldman.
The Polish economy will expand 5.4 percent in 2008, compared with a previous forecast of 5.6 percent and 3.6 percent next year, down from 4.2 percent.
Komercni Banka lost 530 koruna, or 17 percent, to 2,510 in Prague trading. Erste Bank AG, Austria's biggest publicly traded bank, slid 2.77 euros, or 12 percent, to 21.22 euros in Vienna.
The Goldman report ``is the news that set it off,'' said Milan Lavicka, an analyst at Prague-based Atlantik Financial Markets AS. ``Investors got worried about growth in the region,'' and began selling Czech shares, he said.
OTP declined 150 forint, or 4.6 percent, to 3,150, extending this month's loss to 48 percent. HSBC cut its recommendation on the shares to ``underweight'' from ``overweight'' and slashed its price projection for the bank 62 percent to 3,500 forint.
`Negative'
Fitch lowered its credit-rating outlook for Hungary to ``negative'' from ``stable,'' citing the country's worsening growth outlook, external debt, current account gap and financing requirement. The Hungarian government today reduced its forecast for gross domestic product growth to 1.2 percent from 3 percent and is also working on an ``emergency scenario'' with no growth, said David Daroczi, a government spokesman.
Pekao, the Polish unit of UniCredit SpA, dropped 15.3 zloty, or 11 percent, to 127.4 while PKO Bank Polski SA, Poland's second-largest bank, slid 2.4 zloty, or 7.7 percent, to 28.6.
``Some people are speculating Poland may also be hit by the global banking turmoil as growth is slowing,'' said Artur Zareba, executive director of equity sales at Bank Zachodni WBK SA in Warsaw.
BRE Bank SA, majority-owned by Commerzbank AG, retreated 6.2 zloty, or 3.3 percent, to 184, while Getin Holding SA, the financial-services company controlled by Polish billionaire Leszek Czarnecki, declined 0.27 zloty, or 4.1 percent, to 6.3 after UniCredit downgraded the stocks to ``hold'' from ``buy.''
New World
Investor confidence in central and eastern Europe fell for the first month in three in October, led by Hungary and Croatia, on a worsening global economic outlook.
An index of investors' and analysts' expectations for the region over the next six months slid to minus 51.1 points in October from minus 30.6 in September according to the survey released today by the ZEW Center for European Economic Research and Erste Bank AG.
New World Resources NV, the Czech Republic's biggest maker of coking coal for steel producers, plunged 22 percent to 111 koruna, its lowest since debuting on the bourse in May, after U.K. Coal Plc, the nation's biggest miner of the fuel, fell the most ever in London trading after saying full-year output will ``significantly'' miss a previous target because wet weather curbed third-quarter production.
To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net
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Oct. 17 (Bloomberg) -- Central European stocks dropped for a third day, led by financial companies, after Goldman Sachs Group Inc. lowered its economic forecasts for the region and Fitch Ratings reduced Hungary's foreign-debt rating.
Komercni Banka AS, the third-largest bank in the Czech Republic, fell 17 percent, the most since 1999. OTP Nyrt. slid to its lowest level in almost five years after HSBC Holdings Plc downgraded Hungary's largest bank on concern its loan expansion may slow and credit quality worsen. Bank Pekao SA, Poland's biggest bank, posted its steepest drop on record.
The NTX Index of 30 companies in the region retreated 4.9 percent to 945.71 at 4:42 p.m. in Vienna, the lowest in almost four years, even as stocks in western Europe rose after a two-day selloff. The Czech PX Index slumped 10 percent at the close in Prague, the biggest fluctuation among equity markets included in global benchmarks.
``We're facing a global recession and people have realized central Europe won't avoid its impact,'' said Martin Majdaniuk, who helps manage the equivalent of $3 billion at Baring Asset Management in London. ``Goldman's forecast revisions added fuel to the selloff.''
Hungary's BUX Index fell 2.4 percent, Poland's WIG20 Index lost 6.4 percent and Austria's ATX Index retreated 4.8 percent.
Goldman cited slowing growth in western European economies and turmoil on global markets as the reasons for lowering its projections. The Czech Republic's 2008 growth forecast was reduced to 4.3 percent this year from 4.4 percent, while the 2009 outlook was changed to 2.5 percent from 3.8 percent.
Komercni Plunges
The Hungarian economy will grow 2.2 percent this year and 1.5 percent next year, down from 2.3 percent and 2.5 percent in 2009, according to Goldman.
The Polish economy will expand 5.4 percent in 2008, compared with a previous forecast of 5.6 percent and 3.6 percent next year, down from 4.2 percent.
Komercni Banka lost 530 koruna, or 17 percent, to 2,510 in Prague trading. Erste Bank AG, Austria's biggest publicly traded bank, slid 2.77 euros, or 12 percent, to 21.22 euros in Vienna.
The Goldman report ``is the news that set it off,'' said Milan Lavicka, an analyst at Prague-based Atlantik Financial Markets AS. ``Investors got worried about growth in the region,'' and began selling Czech shares, he said.
OTP declined 150 forint, or 4.6 percent, to 3,150, extending this month's loss to 48 percent. HSBC cut its recommendation on the shares to ``underweight'' from ``overweight'' and slashed its price projection for the bank 62 percent to 3,500 forint.
`Negative'
Fitch lowered its credit-rating outlook for Hungary to ``negative'' from ``stable,'' citing the country's worsening growth outlook, external debt, current account gap and financing requirement. The Hungarian government today reduced its forecast for gross domestic product growth to 1.2 percent from 3 percent and is also working on an ``emergency scenario'' with no growth, said David Daroczi, a government spokesman.
Pekao, the Polish unit of UniCredit SpA, dropped 15.3 zloty, or 11 percent, to 127.4 while PKO Bank Polski SA, Poland's second-largest bank, slid 2.4 zloty, or 7.7 percent, to 28.6.
``Some people are speculating Poland may also be hit by the global banking turmoil as growth is slowing,'' said Artur Zareba, executive director of equity sales at Bank Zachodni WBK SA in Warsaw.
BRE Bank SA, majority-owned by Commerzbank AG, retreated 6.2 zloty, or 3.3 percent, to 184, while Getin Holding SA, the financial-services company controlled by Polish billionaire Leszek Czarnecki, declined 0.27 zloty, or 4.1 percent, to 6.3 after UniCredit downgraded the stocks to ``hold'' from ``buy.''
New World
Investor confidence in central and eastern Europe fell for the first month in three in October, led by Hungary and Croatia, on a worsening global economic outlook.
An index of investors' and analysts' expectations for the region over the next six months slid to minus 51.1 points in October from minus 30.6 in September according to the survey released today by the ZEW Center for European Economic Research and Erste Bank AG.
New World Resources NV, the Czech Republic's biggest maker of coking coal for steel producers, plunged 22 percent to 111 koruna, its lowest since debuting on the bourse in May, after U.K. Coal Plc, the nation's biggest miner of the fuel, fell the most ever in London trading after saying full-year output will ``significantly'' miss a previous target because wet weather curbed third-quarter production.
To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net
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European Stocks Rise; Ericsson, Nokia, Shell, Total Advance
By Adam Haigh
Oct. 17 (Bloomberg) -- European stocks rose, with the Dow Jones Stoxx 600 Index rebounding from its steepest two-day retreat since 1987, on better-than-estimated earnings at Sony Ericsson Mobile Communications Ltd. and lower money-market rates. Ericsson AB added 5.9 percent. Nokia Oyj rose 10 percent as WestLB upgraded the world's biggest mobile-phone maker following declines. Royal Dutch Shell Plc and Total SA climbed more than 4 percent as crude rebounded from a 13-month low.
Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the global economy is on the brink of a recession. Europe's Stoxx 600 had its biggest two-day surge on record, before posting the steepest two-day slump since 1987. The cost of borrowing dollars in London is headed for its first weekly drop since July.
``There are some rays of hope out there,'' said Alan Beaney, head of investments at Principal Investment Management in Sevenoaks, England, which has $1.6 billion in assets under management. Declines in money-market rates are ``the start of a longer trend,'' Beaney said in a Bloomberg Television interview.
The Stoxx 600 added 3.8 percent to 214.15 at 4:02 p.m. in London as 15 of 19 industry groups increased. The index has gained 4.5 percent this week, its first advance in five weeks.
The Standard & Poor's 500 Index gained 0.4 percent, while the MSCI Asia Pacific Index increased 0.5 percent.
National Markets
Stocks pared gains after a report showed housing starts in the U.S. fell more than forecast last month and construction of single-family homes plunged to the lowest level in a quarter century.
National benchmark indexes increased in 14 of the 18 western European markets. The U.K.'s FTSE 100 added 4.4 percent, and France's CAC 40 rose 3.4 percent. Germany's DAX gained 3.1 percent.
The Stoxx 600 climbed 13 percent in the first two days this week. Reports showing declines in U.S. retail sales and an increase in U.K. unemployment to the highest since November 2006 drove shares lower, sending Europe's benchmark index to its steepest retreat since the market crash of 1987.
Options expiring in the U.S. today may add to this week's volatility.
The most widely owned S&P 500 options expiring this week are October 1,150 puts. The S&P 500's 18 percent retreat from that strike price profited buyers of those contracts, which increased almost sixfold in value this month. Even after yesterday's 4.3 percent surge, the index has slumped 22 percent in three weeks.
Hedging Risk, Libor
Market makers who are short the options may try to hedge that risk, said Scott Nations, president of Fortress Trading Inc., a Chicago-based firm that trades options and futures. Investors who are short puts as the market fall, they need to sell more of the underlying, he said, and if it goes up, they have to buy more back.
The London interbank offered rate, or Libor, for three- month loans in dollars dropped for a fifth day, sliding 8 basis points, or 0.08 percentage point, to 4.42 percent, the British Bankers' Association said. It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell.
Concern the seizure in credit markets will trigger a global recession erased $27 trillion in value from stocks worldwide, dragging the Stoxx 600 down 42 percent this year. Financial firms reported $660 billion in losses and writedowns from mortgage-related investments since the beginning of 2007.
Ericsson, Nokia
Ericsson rallied 5.9 percent to 50.60 kronor. The mobile- phone venture of Sony Corp. and Ericsson reported a smaller third-quarter loss than analysts had anticipated as its unit shipments and market share held up.
Nokia rose 10 percent to 12.46 euros. WestLB raised the stock to ``hold'' from ``reduce.''
``As the share price is already largely reflecting this negative scenario in our view we upgrade'' the stock, WestLB wrote in a note to clients. The shares have fallen 28 percent in two months.
Shell, Europe's largest oil company, rallied 4 percent to 1,346 pence as Goldman Sachs Group Inc. recommended buying the stock and crude oil gained as much as 4.5 percent to $73.02 a barrel. Total, the third largest oil producer in Europe, added 4.1 percent to 34.565 euros.
Carrefour SA, Europe's largest retailer, advanced 4 percent to 25.66 euros. Goldman Sachs added the shares to its ``conviction buy'' list citing recent price declines.
Valuations
The Stoxx 600 was valued at 8.6 times earnings of companies yesterday, near the cheapest on record. The MSCI World Index traded at 11.4 times the earnings of its 1,730 companies, and the S&P 500 was valued at 18.7 times profit, near the lowest in more than a year.
Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.
Writing in the New York Times, he said he's following the principle: be fearful when others are greedy, and greedy when others are fearful.
ING Groep NV, the biggest Dutch financial-services firm, tumbled 22 percent to 7.85 euros on speculation the bank may need to raise capital.
The Netherlands made 20 billion euros available to financial institutions on Oct. 10 to boost liquidity and strengthen capital amid a worsening global credit crunch. ING said at the time that it would assess the government package and the ``possible implications once more details are available.'' That statement still holds, spokeswoman Carolien van der Giessen said today.
Ongoing Speculation
``There seems to be ongoing speculation that ING doesn't have enough capital,'' said Joost de Graaf, a senior portfolio manager who helps oversee about $650 million at Kempen Capital Management in Amsterdam. Kempen doesn't hold ING stock.
Saab AB dropped 7.6 percent to 85 kronor after the Swedish maker of the Gripen fighter plane reported a third-quarter net loss as customers delayed military projects and orders, prompting the company to deepen its planned cost cuts and eliminate 500 jobs.
Safran SA added 2.1 percent to 9.34 euros. Europe's second- biggest aircraft-engine maker said nine-month sales rose 1.5 percent, driven by higher shipments of aircraft equipment such as carbon brakes.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Read more...
Oct. 17 (Bloomberg) -- European stocks rose, with the Dow Jones Stoxx 600 Index rebounding from its steepest two-day retreat since 1987, on better-than-estimated earnings at Sony Ericsson Mobile Communications Ltd. and lower money-market rates. Ericsson AB added 5.9 percent. Nokia Oyj rose 10 percent as WestLB upgraded the world's biggest mobile-phone maker following declines. Royal Dutch Shell Plc and Total SA climbed more than 4 percent as crude rebounded from a 13-month low.
Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the global economy is on the brink of a recession. Europe's Stoxx 600 had its biggest two-day surge on record, before posting the steepest two-day slump since 1987. The cost of borrowing dollars in London is headed for its first weekly drop since July.
``There are some rays of hope out there,'' said Alan Beaney, head of investments at Principal Investment Management in Sevenoaks, England, which has $1.6 billion in assets under management. Declines in money-market rates are ``the start of a longer trend,'' Beaney said in a Bloomberg Television interview.
The Stoxx 600 added 3.8 percent to 214.15 at 4:02 p.m. in London as 15 of 19 industry groups increased. The index has gained 4.5 percent this week, its first advance in five weeks.
The Standard & Poor's 500 Index gained 0.4 percent, while the MSCI Asia Pacific Index increased 0.5 percent.
National Markets
Stocks pared gains after a report showed housing starts in the U.S. fell more than forecast last month and construction of single-family homes plunged to the lowest level in a quarter century.
National benchmark indexes increased in 14 of the 18 western European markets. The U.K.'s FTSE 100 added 4.4 percent, and France's CAC 40 rose 3.4 percent. Germany's DAX gained 3.1 percent.
The Stoxx 600 climbed 13 percent in the first two days this week. Reports showing declines in U.S. retail sales and an increase in U.K. unemployment to the highest since November 2006 drove shares lower, sending Europe's benchmark index to its steepest retreat since the market crash of 1987.
Options expiring in the U.S. today may add to this week's volatility.
The most widely owned S&P 500 options expiring this week are October 1,150 puts. The S&P 500's 18 percent retreat from that strike price profited buyers of those contracts, which increased almost sixfold in value this month. Even after yesterday's 4.3 percent surge, the index has slumped 22 percent in three weeks.
Hedging Risk, Libor
Market makers who are short the options may try to hedge that risk, said Scott Nations, president of Fortress Trading Inc., a Chicago-based firm that trades options and futures. Investors who are short puts as the market fall, they need to sell more of the underlying, he said, and if it goes up, they have to buy more back.
The London interbank offered rate, or Libor, for three- month loans in dollars dropped for a fifth day, sliding 8 basis points, or 0.08 percentage point, to 4.42 percent, the British Bankers' Association said. It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell.
Concern the seizure in credit markets will trigger a global recession erased $27 trillion in value from stocks worldwide, dragging the Stoxx 600 down 42 percent this year. Financial firms reported $660 billion in losses and writedowns from mortgage-related investments since the beginning of 2007.
Ericsson, Nokia
Ericsson rallied 5.9 percent to 50.60 kronor. The mobile- phone venture of Sony Corp. and Ericsson reported a smaller third-quarter loss than analysts had anticipated as its unit shipments and market share held up.
Nokia rose 10 percent to 12.46 euros. WestLB raised the stock to ``hold'' from ``reduce.''
``As the share price is already largely reflecting this negative scenario in our view we upgrade'' the stock, WestLB wrote in a note to clients. The shares have fallen 28 percent in two months.
Shell, Europe's largest oil company, rallied 4 percent to 1,346 pence as Goldman Sachs Group Inc. recommended buying the stock and crude oil gained as much as 4.5 percent to $73.02 a barrel. Total, the third largest oil producer in Europe, added 4.1 percent to 34.565 euros.
Carrefour SA, Europe's largest retailer, advanced 4 percent to 25.66 euros. Goldman Sachs added the shares to its ``conviction buy'' list citing recent price declines.
Valuations
The Stoxx 600 was valued at 8.6 times earnings of companies yesterday, near the cheapest on record. The MSCI World Index traded at 11.4 times the earnings of its 1,730 companies, and the S&P 500 was valued at 18.7 times profit, near the lowest in more than a year.
Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.
Writing in the New York Times, he said he's following the principle: be fearful when others are greedy, and greedy when others are fearful.
ING Groep NV, the biggest Dutch financial-services firm, tumbled 22 percent to 7.85 euros on speculation the bank may need to raise capital.
The Netherlands made 20 billion euros available to financial institutions on Oct. 10 to boost liquidity and strengthen capital amid a worsening global credit crunch. ING said at the time that it would assess the government package and the ``possible implications once more details are available.'' That statement still holds, spokeswoman Carolien van der Giessen said today.
Ongoing Speculation
``There seems to be ongoing speculation that ING doesn't have enough capital,'' said Joost de Graaf, a senior portfolio manager who helps oversee about $650 million at Kempen Capital Management in Amsterdam. Kempen doesn't hold ING stock.
Saab AB dropped 7.6 percent to 85 kronor after the Swedish maker of the Gripen fighter plane reported a third-quarter net loss as customers delayed military projects and orders, prompting the company to deepen its planned cost cuts and eliminate 500 jobs.
Safran SA added 2.1 percent to 9.34 euros. Europe's second- biggest aircraft-engine maker said nine-month sales rose 1.5 percent, driven by higher shipments of aircraft equipment such as carbon brakes.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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Stock Gyrations May Roil Trading as Options Expire
By Jeff Kearns
Enlarge Image/Details
Oct. 17 (Bloomberg) -- The U.S. stock market's wildest swings since 1929 are getting a dose of more volatility as almost 80 million options expire today.
The Standard & Poor's 500 Index jumped 4 percent from its low to its high today, or almost twice the average gap in 2008. The measure added 0.9 percent to 954.74 at 11:09 a.m. in New York as billionaire investor Warren Buffett's advice to buy shares overshadowed reports showing the housing slump and consumer confidence worsened.
Owners of the contracts on stocks, indexes and exchange- traded funds have until today's close to take advantage of the rights granted by their calls and puts. Investors are preparing for the possibility that market makers will boost volatility by buying and selling stock to hedge the risk of the option trades they have facilitated.
``I'd expect some fireworks,'' said Herb Kurlan, president of Vtrader Pro LLC, a San Francisco-based options and futures brokerage. ``The unwinding of positions is going to be more pronounced because of the high volatility.''
About a quarter of the approximately 337 million existing options expire today, according to Chicago-based Options Clearing Corp., which settles all trading of U.S. exchange-listed contracts and is the world's largest derivatives clearinghouse.
Wildest Since 1929
The S&P 500 moved more than 1 percent in 10 of the 12 trading sessions in October, or 83 percent of the time, amid concern the global economy will enter a recession. That puts the benchmark index for U.S. stocks on track for the biggest swings since November 1929, when gains or losses of at least 1 percent occurred 88 percent of the time, according to S&P analyst Howard Silverblatt.
The most widely owned S&P 500 options expiring this week are October 1,150 puts. The S&P 500's 18 percent retreat from that strike price profited buyers of those contracts, which increased almost sixfold in value this month. Even after yesterday's 4.3 percent surge, the index has slumped 22 percent in three weeks.
``There could be significant volatility as market makers who are short the options try to hedge that risk,'' said Scott Nations, president of Fortress Trading Inc., a Chicago-based firm that trades options and futures. ``If you're short puts as the market goes down, you have to sell more of the underlying, and if it goes up, you have to buy more back.''
`All Hands on Deck'
The market also proved volatile yesterday. The S&P 500 jumped 9 percent from its low to its high, the ninth consecutive session that the trough and peak were more than 5 percent apart. The average difference this year is 2.2 percent, compared with 1.2 percent in 2007 and 0.8 percent in 2006.
The Chicago Board Options Exchange Volatility Index, a measure of expected share-price swings and option prices, surged to an intraday record 81.17 yesterday. It dropped 2.4 percent to 67.61 at the close. The VIX added 8.9 percent to 73.54 today.
``We're going to have all hands on deck,'' said Joseph Cusick, senior market analyst at OptionsXpress Holdings Inc., a Chicago-based online brokerage. ``There's a possibility it could be explosive, but it should be relatively orderly.''
Last week, the number of options traded in 2008 surpassed the full-year record of 2.86 billion contracts set in 2007, according to OCC. U.S. trading of exchange-listed options began in 1973 at the CBOE.
October options on the S&P 500 and other stock indexes finished trading yesterday. The settlement price for those contracts will be determined by today's first trade. For S&P 500 options, which are the most actively traded U.S. contracts, about 24 percent of the total open interest of 17.6 million expires today, according to the CBOE.
Contracts on stocks and ETFs continue trading through today's close.
``We're going to be in for a wild ride,'' said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages $6 billion in San Antonio. ``It's going to be like going to Coney Island.''
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
Read more...
Enlarge Image/Details
Oct. 17 (Bloomberg) -- The U.S. stock market's wildest swings since 1929 are getting a dose of more volatility as almost 80 million options expire today.
The Standard & Poor's 500 Index jumped 4 percent from its low to its high today, or almost twice the average gap in 2008. The measure added 0.9 percent to 954.74 at 11:09 a.m. in New York as billionaire investor Warren Buffett's advice to buy shares overshadowed reports showing the housing slump and consumer confidence worsened.
Owners of the contracts on stocks, indexes and exchange- traded funds have until today's close to take advantage of the rights granted by their calls and puts. Investors are preparing for the possibility that market makers will boost volatility by buying and selling stock to hedge the risk of the option trades they have facilitated.
``I'd expect some fireworks,'' said Herb Kurlan, president of Vtrader Pro LLC, a San Francisco-based options and futures brokerage. ``The unwinding of positions is going to be more pronounced because of the high volatility.''
About a quarter of the approximately 337 million existing options expire today, according to Chicago-based Options Clearing Corp., which settles all trading of U.S. exchange-listed contracts and is the world's largest derivatives clearinghouse.
Wildest Since 1929
The S&P 500 moved more than 1 percent in 10 of the 12 trading sessions in October, or 83 percent of the time, amid concern the global economy will enter a recession. That puts the benchmark index for U.S. stocks on track for the biggest swings since November 1929, when gains or losses of at least 1 percent occurred 88 percent of the time, according to S&P analyst Howard Silverblatt.
The most widely owned S&P 500 options expiring this week are October 1,150 puts. The S&P 500's 18 percent retreat from that strike price profited buyers of those contracts, which increased almost sixfold in value this month. Even after yesterday's 4.3 percent surge, the index has slumped 22 percent in three weeks.
``There could be significant volatility as market makers who are short the options try to hedge that risk,'' said Scott Nations, president of Fortress Trading Inc., a Chicago-based firm that trades options and futures. ``If you're short puts as the market goes down, you have to sell more of the underlying, and if it goes up, you have to buy more back.''
`All Hands on Deck'
The market also proved volatile yesterday. The S&P 500 jumped 9 percent from its low to its high, the ninth consecutive session that the trough and peak were more than 5 percent apart. The average difference this year is 2.2 percent, compared with 1.2 percent in 2007 and 0.8 percent in 2006.
The Chicago Board Options Exchange Volatility Index, a measure of expected share-price swings and option prices, surged to an intraday record 81.17 yesterday. It dropped 2.4 percent to 67.61 at the close. The VIX added 8.9 percent to 73.54 today.
``We're going to have all hands on deck,'' said Joseph Cusick, senior market analyst at OptionsXpress Holdings Inc., a Chicago-based online brokerage. ``There's a possibility it could be explosive, but it should be relatively orderly.''
Last week, the number of options traded in 2008 surpassed the full-year record of 2.86 billion contracts set in 2007, according to OCC. U.S. trading of exchange-listed options began in 1973 at the CBOE.
October options on the S&P 500 and other stock indexes finished trading yesterday. The settlement price for those contracts will be determined by today's first trade. For S&P 500 options, which are the most actively traded U.S. contracts, about 24 percent of the total open interest of 17.6 million expires today, according to the CBOE.
Contracts on stocks and ETFs continue trading through today's close.
``We're going to be in for a wild ride,'' said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages $6 billion in San Antonio. ``It's going to be like going to Coney Island.''
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
Read more...
U.K. Stocks Rally; BP, Royal Dutch Shell, HSBC Lead the Advance
By Sarah Thompson
Oct. 17 (Bloomberg) -- U.K. stocks rallied for the first time in three days as investors bought shares in energy producers and financial companies after the FTSE 100 Index traded at the cheapest relative to earnings this decade.
BP Plc and Royal Dutch Shell Plc climbed more than 8 percent after oil advanced for the first time in four days. HSBC Holdings Plc, Europe's biggest bank by value, advanced 2.7 percent as the cost of borrowing dollars in London headed for its first weekly drop since July.
The benchmark FTSE 100 advanced 192.15, or 5 percent, to 4,053.54 at 4:15 p.m., extending this week gain to 3.2 percent. The FTSE All-Share Index increased 4.2 percent today and Ireland's ISEQ Index lost 0.2 percent.
``Almost everyone thinks there are cheap stocks out there,'' said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London, which manages about $125 billion. ``Money markets are still some way from returning to normal, but if it's a mild recession, then buying now will be a good medium-term plan.''
Concern the seizure in credit markets will trigger a global recession has erased $27 trillion in value from stocks worldwide, dragging the FTSE 100 down 38 percent this year. Financial firms reported $660 billion in losses and writedowns from mortgage-related investments since the beginning of 2007.
Losses in the FTSE All-Share Oil & Gas Producers Index and the FTSE All-Share Banks Index in the past two days left both measures trading near the lowest prices relative to their members' estimated profits since at least 2005, when Bloomberg data on the estimates start.
The FTSE 100 yesterday was valued at 7.4 times earnings, the cheapest since at least 1999.
BP, Europe's second-largest oil company, climbed 8.6 percent to 431.5 pence. Shell, the region's largest, added 6.5 percent to 1,378 pence.
Crude Rebounds
Crude oil rebounded from a 13-month low in New York as stock markets rallied and on speculation OPEC may announce production cuts at a meeting next week.
HSBC gained 2.7 percent to 792 pence. The London interbank offered rate, or Libor, for three-month loans in dollars dropped for a fifth day, sliding 8 basis points, or 0.08 percentage point, to 4.42 percent, the British Bankers' Association said.
It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
U.K. companies:
Computacenter Plc (CCC LN) jumped 4 pence, or 4.5 percent, to 93. The U.K. seller of personal computers said sales in the third quarter advanced 6 percent, helped by the weaker pound against the euro.
Imperial Energy Plc (IEC LN) added 45 pence, or 5.1 percent, to 935. Oil & Natural Gas Corp., India's biggest exploration company, said the global credit freeze won't hamper plans for its 1.4 billion-pound ($2.4 billion) acquisition of Imperial Energy.
Inchcape Plc (INCH LN) decreased 50 pence, or 39 percent, to 76.75. The global operator of car dealerships said 2009 earnings will be ``significantly'' below its forecasts as waning consumer confidence restrains auto sales.
Premier Foods Plc (PFD LN), the second-largest U.K. bread baker, declined to comment on the biggest drop by its stock since trading began in July 2004. Premier plunged as much as 54 percent, wiping about 158 million pounds ($274 million) off its market value. Speculation is circulating about a breach of banking covenants, said Martin Deboo, an analyst at Investec Securities in London. The shares last traded 9.3 percent lower at 31.75 pence.
Rank Group Plc (RNK LN) jumped 3.5 pence, or 6.2 percent, to 59.75. The second-largest U.K. casino owner said a sales drop slowed in the last 3 1/2 months after it won permission to install more electronic gaming machines in bingo clubs.
U.K. Coal Plc (UKC LN) decreased 66.75 pence, or 33 percent, to 133.5. The nation's biggest miner of the fuel fell the most ever in London trading after saying full-year output will ``significantly'' miss a previous target because wet weather curbed third-quarter production.
Irish Companies:
Ryanair Holdings Plc (RYA ID) increased 30 cents, or 15 percent, to 2.35 euros. Europe's biggest discount airline ordered 10 Boeing 737 aircraft in an order valued at about $745 million at list prices.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
Read more...
Oct. 17 (Bloomberg) -- U.K. stocks rallied for the first time in three days as investors bought shares in energy producers and financial companies after the FTSE 100 Index traded at the cheapest relative to earnings this decade.
BP Plc and Royal Dutch Shell Plc climbed more than 8 percent after oil advanced for the first time in four days. HSBC Holdings Plc, Europe's biggest bank by value, advanced 2.7 percent as the cost of borrowing dollars in London headed for its first weekly drop since July.
The benchmark FTSE 100 advanced 192.15, or 5 percent, to 4,053.54 at 4:15 p.m., extending this week gain to 3.2 percent. The FTSE All-Share Index increased 4.2 percent today and Ireland's ISEQ Index lost 0.2 percent.
``Almost everyone thinks there are cheap stocks out there,'' said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London, which manages about $125 billion. ``Money markets are still some way from returning to normal, but if it's a mild recession, then buying now will be a good medium-term plan.''
Concern the seizure in credit markets will trigger a global recession has erased $27 trillion in value from stocks worldwide, dragging the FTSE 100 down 38 percent this year. Financial firms reported $660 billion in losses and writedowns from mortgage-related investments since the beginning of 2007.
Losses in the FTSE All-Share Oil & Gas Producers Index and the FTSE All-Share Banks Index in the past two days left both measures trading near the lowest prices relative to their members' estimated profits since at least 2005, when Bloomberg data on the estimates start.
The FTSE 100 yesterday was valued at 7.4 times earnings, the cheapest since at least 1999.
BP, Europe's second-largest oil company, climbed 8.6 percent to 431.5 pence. Shell, the region's largest, added 6.5 percent to 1,378 pence.
Crude Rebounds
Crude oil rebounded from a 13-month low in New York as stock markets rallied and on speculation OPEC may announce production cuts at a meeting next week.
HSBC gained 2.7 percent to 792 pence. The London interbank offered rate, or Libor, for three-month loans in dollars dropped for a fifth day, sliding 8 basis points, or 0.08 percentage point, to 4.42 percent, the British Bankers' Association said.
It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
U.K. companies:
Computacenter Plc (CCC LN) jumped 4 pence, or 4.5 percent, to 93. The U.K. seller of personal computers said sales in the third quarter advanced 6 percent, helped by the weaker pound against the euro.
Imperial Energy Plc (IEC LN) added 45 pence, or 5.1 percent, to 935. Oil & Natural Gas Corp., India's biggest exploration company, said the global credit freeze won't hamper plans for its 1.4 billion-pound ($2.4 billion) acquisition of Imperial Energy.
Inchcape Plc (INCH LN) decreased 50 pence, or 39 percent, to 76.75. The global operator of car dealerships said 2009 earnings will be ``significantly'' below its forecasts as waning consumer confidence restrains auto sales.
Premier Foods Plc (PFD LN), the second-largest U.K. bread baker, declined to comment on the biggest drop by its stock since trading began in July 2004. Premier plunged as much as 54 percent, wiping about 158 million pounds ($274 million) off its market value. Speculation is circulating about a breach of banking covenants, said Martin Deboo, an analyst at Investec Securities in London. The shares last traded 9.3 percent lower at 31.75 pence.
Rank Group Plc (RNK LN) jumped 3.5 pence, or 6.2 percent, to 59.75. The second-largest U.K. casino owner said a sales drop slowed in the last 3 1/2 months after it won permission to install more electronic gaming machines in bingo clubs.
U.K. Coal Plc (UKC LN) decreased 66.75 pence, or 33 percent, to 133.5. The nation's biggest miner of the fuel fell the most ever in London trading after saying full-year output will ``significantly'' miss a previous target because wet weather curbed third-quarter production.
Irish Companies:
Ryanair Holdings Plc (RYA ID) increased 30 cents, or 15 percent, to 2.35 euros. Europe's biggest discount airline ordered 10 Boeing 737 aircraft in an order valued at about $745 million at list prices.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
Read more...
Canadian Stocks Gain, Led by Royal Bank of Canada, Manulife
By Whitney Kisling
Oct. 17 (Bloomberg) -- Canadian stocks rose, as banks and insurers led the main index toward its first weekly gain in a month on speculation the government will loosen accounting rules.
Royal Bank of Canada, the country's biggest bank, advanced for a second day after the National Post reported that the Accounting Standards Board, Canada's accounting watchdog, will give banks more flexibility with mark-to-market reporting. Gold mining companies including Goldcorp Inc. declined with the price of the precious metal.
The Standard & Poor's/TSX Composite Index climbed 94.80, or 1 percent, to 9,364.77 at 10:18 a.m. in Toronto, as 170 stocks gained and 66 fell. The index has gained 3.4 percent this week.
Royal Bank added 1.4 percent to C$46.31. Manulife Financial Corp., Canada's biggest insurer by assets, gained 1.3 percent to C$28.17. Bank of Montreal climbed 3.2 to C$42.82.
Goldcorp, the second-largest bullion miner by market value, slid 4.9 percent to C$23.54, while Barrick Gold Corp., the largest gold miner, fell 2.3 percent to C$28.38.
Research in Motion Ltd., the maker of the BlackBerry smartphone, rose 0.8 percent to C$69.55.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net
Read more...
Oct. 17 (Bloomberg) -- Canadian stocks rose, as banks and insurers led the main index toward its first weekly gain in a month on speculation the government will loosen accounting rules.
Royal Bank of Canada, the country's biggest bank, advanced for a second day after the National Post reported that the Accounting Standards Board, Canada's accounting watchdog, will give banks more flexibility with mark-to-market reporting. Gold mining companies including Goldcorp Inc. declined with the price of the precious metal.
The Standard & Poor's/TSX Composite Index climbed 94.80, or 1 percent, to 9,364.77 at 10:18 a.m. in Toronto, as 170 stocks gained and 66 fell. The index has gained 3.4 percent this week.
Royal Bank added 1.4 percent to C$46.31. Manulife Financial Corp., Canada's biggest insurer by assets, gained 1.3 percent to C$28.17. Bank of Montreal climbed 3.2 to C$42.82.
Goldcorp, the second-largest bullion miner by market value, slid 4.9 percent to C$23.54, while Barrick Gold Corp., the largest gold miner, fell 2.3 percent to C$28.38.
Research in Motion Ltd., the maker of the BlackBerry smartphone, rose 0.8 percent to C$69.55.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net
Read more...
U.S. Stocks Rise as Buffett's Advice Offsets Housing Data
By Eric Martin
Oct. 17 (Bloomberg) -- U.S. stocks rose and the Standard & Poor's 500 Index extended its best weekly gain since 2003 as Warren Buffett's advice to buy shares and Google Inc.'s earnings offset a report showing the housing slump worsened.
Google, owner of the most popular search engine, jumped 6.6 percent after topping analysts' profit estimates. D.R. Horton Inc. and Meritage Homes Corp. led a gauge of builders lower on a Commerce Department report that construction of single-family homes plunged to the lowest level in a quarter century. The Dow Jones Industrial Average recovered from a decline of 261 points as the expiration of options also spurred volatility amid the wildest month for market swings since 1929.
``I've been buying American stocks,'' Buffett, the world's second-richest person, wrote in a New York Times column. ``A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.''
The S&P 500 climbed 6.09 points, or 0.6 percent, to 952.52 at 11:11 a.m. in New York. The Dow Jones Industrial Average added 44.44, or 0.5 percent, to 9,023.7. The Nasdaq Composite Index rose 13.95 to 1,731.66.
The S&P 500 has climbed 5.7 percent this week as money- market rates dropped and prospects of a government bailout of bond insurers lifted financial shares. The index is still down 35 percent in 2008 as losses and writedowns from mortgage- related investments at banks worldwide swelled to $660 billion. The Dow has added 6.7 percent this week.
Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the credit crisis will spur a contraction in the global economy. The S&P 500 posted its biggest gain since the 1930s on Oct. 13, before plunging the most since the crash of 1987 on Oct. 15 as retail sales had their steepest drop in three years.
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
Read more...
Oct. 17 (Bloomberg) -- U.S. stocks rose and the Standard & Poor's 500 Index extended its best weekly gain since 2003 as Warren Buffett's advice to buy shares and Google Inc.'s earnings offset a report showing the housing slump worsened.
Google, owner of the most popular search engine, jumped 6.6 percent after topping analysts' profit estimates. D.R. Horton Inc. and Meritage Homes Corp. led a gauge of builders lower on a Commerce Department report that construction of single-family homes plunged to the lowest level in a quarter century. The Dow Jones Industrial Average recovered from a decline of 261 points as the expiration of options also spurred volatility amid the wildest month for market swings since 1929.
``I've been buying American stocks,'' Buffett, the world's second-richest person, wrote in a New York Times column. ``A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.''
The S&P 500 climbed 6.09 points, or 0.6 percent, to 952.52 at 11:11 a.m. in New York. The Dow Jones Industrial Average added 44.44, or 0.5 percent, to 9,023.7. The Nasdaq Composite Index rose 13.95 to 1,731.66.
The S&P 500 has climbed 5.7 percent this week as money- market rates dropped and prospects of a government bailout of bond insurers lifted financial shares. The index is still down 35 percent in 2008 as losses and writedowns from mortgage- related investments at banks worldwide swelled to $660 billion. The Dow has added 6.7 percent this week.
Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the credit crisis will spur a contraction in the global economy. The S&P 500 posted its biggest gain since the 1930s on Oct. 13, before plunging the most since the crash of 1987 on Oct. 15 as retail sales had their steepest drop in three years.
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
Read more...
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