By Shiyin Chen - Sep 26, 2011 11:02 AM GMT+0700
Enlarge image
The euro weakened against 12 of its 16 major peers. Photographer: Hannelore Foerster/Bloomberg
Sept. 26 (Bloomberg) -- Khiem Do, head of multi-asset strategy at Baring Asset Management in Hong Kong, talks about financial market volatility and the outlook for the global economy. Do speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Sept. 26 (Bloomberg) -- Mark Konyn, the Hong Kong-based chief executive officer of RCM Asia Pacific Ltd., talks about Europe's sovereign debt crisis. Konyn, speaking with Rishaad Salamat on Bloomberg Television's "On the Move Asia," also discusses China's economy. (Source: Bloomberg)
Sept. 26 (Bloomberg) -- Yudhistia Susanto, head of equities at PT Manulife Asset Management Indonesia in Jakarta, talks about investment strategy. Susanto speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Sept. 26 (Bloomberg) -- Markus Rosgen, a Hong Kong-based strategist at Citigroup Inc., talks about the outlook for Asian stocks and his investment strategy. Rosgen speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Sept. 26 (Bloomberg) -- Nicholas Smith, a Japan strategist at CLSA Asia-Pacific Markets Ltd., talks about the nation's financial markets and economy. Smith speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The euro weakened against most of its major peers, Asian stocks dropped to a 15-month low, while U.S. futures and oil pared gains amid concern European policy makers will struggle to contain the region’s debt crisis.
Europe’s shared currency fell 0.8 percent to 102.54 yen at 12:35 p.m. in Tokyo and slid 0.6 percent to $1.3422. The New Zealand dollar weakened for a sixth day and the won slumped 1.5 percent. The MSCI Asia Pacific Index lost 2.1 percent and the Nikkei 225 Stock Average sank 2.2 percent after Japan’s markets resumed after a holiday. Standard & Poor’s 500 Index futures rose 0.2 percent, paring gains of as much as 1.3 percent. Oil was little changed in New York and gold dropped a fourth day.
U.S. Treasury Secretary Timothy F. Geithner warned at the annual meeting of the International Monetary Fund that failure to combat the Greek-led turmoil threatened “cascading default, bank runs and catastrophic risk.” German Chancellor Angela Merkel said euro-region leaders must erect a firewall around Greece. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co. is forecasting that advanced economies will stall over the next year as Europe slides into a recession.
“Sentiment is still very poor out there and one has to accept the fact that economies are not going to do so well over the next six to 12 months,” Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management, which oversees about $10 billion, said in a Bloomberg Television interview. “What you need is confidence. European governments have to do something to reestablish confidence and trust.”
Euro Weakens
The euro weakened against 10 of its 16 major peers after Geithner, during weekend talks of the IMF and the World Bank in Washington, called on governments to unite with the ECB to beef up the capacity of their 440 billion-euro ($591 billion) bailout fund. At last week’s close of $1.35, the currency is 12 percent stronger than its average of $1.2024 since January 1999.
Data today may show the Ifo institute’s business climate index for Germany, based on a survey of 7,000 executives, will drop to 106.5 this month from 108.7 in August, according to the median forecast of economists in a Bloomberg News survey. That would be the lowest since June 2010.
“It’s certain that the debt crisis is causing an economic slowdown in Europe and that’s the main reason for selling the euro,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest bank by market value. “We can’t buy the euro because its economy is the weakest among the U.S., Europe and Japan.”
Greek Yields
Greek two-year note yields posted their biggest weekly gain since the country joined the euro region as credit-default swaps signaled a 94 percent probability the government will renege on its obligations within five years. Yields climbed to 69.69 percent, compared with 0.39 percent on similar-maturity German debt.
Germany’s Deputy Finance Minister Joerg Asmussen said yesterday that euro-region finance ministers won’t be in a position to decide on the disbursement of the next portion of aid to Greece when they meet on Oct. 3 because a report by the International Monetary Fund, European Central Bank and European Commission has been delayed.
The so-called kiwi slid 0.6 percent to 77.23 U.S. cents, set for its longest losing streak since September 2008. New Zealand’s imports exceeded exports by NZ$641 million ($496 million), from a revised NZ$111 million surplus in July, Statistics New Zealand said today in Wellington. The median estimate in a Bloomberg News survey of eight economists was for a NZ$321 million deficit.
South Korea’s won sank to near a one-week low after losing 4.7 percent last week. The currency gained 1.1 percent on Sept. 23 in the final minutes of trading as the finance ministry and central bank said they were ready to intervene.
Stocks Slump
About seven shares declined for every two that gained on MSCI’s Asia Pacific Index, which dropped 7.1 percent last week. The gauge has dropped 22 percent from its May 2 close that was the highest since 2008, matching some analysts’ definition of a bear market.
Japan’s Nikkei 225 (NKY) Stock Average slipped 2.1 percent. Australia’s S&P/ASX 200 Index decreased 0.4 percent, while South Korea’s Kospi Index dropped 1.4 percent. Hanjin Shipping Co. fell by the daily limit of 15 percent in Seoul after the shipping line said it will sell new shares.
Futures indicate the S&P 500 may extend the 0.6 percent gain on Sept. 23. The MSCI All-Country World Index was down 0.5 percent. The gauge of developed and emerging markets sank 7.6 percent last week and also 23 percent from the May 2 close that was the highest since 2008.
Pimco’s Prediction
Yields on 10-year Treasuries slipped two basis points to 1.81 percent and the rate on 30-year bonds dropped three basis points to 2.87 percent. The extra yield long bonds offer over two-year notes shrank to 2.67 percentage points from this year’s high of 4.04 percentage points in January. The spread was 2.55 percentage points on Sept. 23, the least since March 2009.
Pacific Investment Management, or Pimco, sees little-to-no economic growth in industrial nations in the coming 12 months as Europe’s economy shrinks by 1 percent to 2 percent and the U.S. stagnates, according to El-Erian. Pimco runs the world’s biggest bond fund.
The cost of insuring corporate and sovereign bonds against non-payment decreased, with the Markit iTraxx Australia index falling nine basis points to 207, Credit Agricole CIB prices show. That’s on track for the biggest drop since Aug. 15, according to data provider CMA. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan decreased six basis points to 225 basis points, Credit Agricole prices show. A decline of six basis points would be the largest since Sept. 7.
Oil for November delivery was little changed at $79.90 a barrel in New York. Futures dropped 9.2 percent last week to the lowest settlement since Aug. 9. Immediate-delivery gold slipped 1.6 percent to $1,630.55 an ounce, extending a three-day, 8.1 percent slump. Three-month copper declined 0.5 percent to $7,321.50 a metric ton in London, a seventh day of losses.
S&P’s GSCI Index of raw materials tumbled 8.3 percent last week, the most since May. Money managers cut the combined net- long position across 18 futures and options by 20 percent in the week ended Sept. 20, the most since February 2010, data from the U.S. Commodity Futures Trading Commission show.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
Posts
No comments:
Post a Comment