By Stephen Kirkland and Shiyin Chen - Oct 3, 2011 8:49 PM GMT+0700
Enlarge image
Traders work at the New York Stock Exchangeon Sept. 30, 2011. Photographer: Scott Eells/Bloomberg
Oct. 3 (Bloomberg) -- John Vail, chief global strategist and head of asset allocation at Nikko Asset Management in Tokyo, talks about Japan's economy, stocks and investment strategy. Vail also discusses European stocks. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Oct. 3 (Bloomberg) -- Philip Tulk, head of Asian conglomerates and gaming research at Royal Bank of Scotland Group Plc, talks about the outlook for Macau casino stocks. Tulk speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Stocks fell, following the biggest quarterly losses since 2008, and commodities dropped to a 10- month low as Europe’s finance chiefs prepared to weigh the risk of a Greek default. The cost of insuring German government debt rose to a record.
The MSCI All-Country World Index sank 1.6 percent at 9:30 a.m. in New York after plunging 18 percent in the third quarter. The Standard & Poor’s 500 Index lost 0.4 percent. The Stoxx Europe 600 Index slipped 1.9 percent as BNP Paribas SA, France’s biggest bank, tumbled 5.6 percent. The S&P GSCI index of commodities fell 1.5 percent as copper dropped 2.4 percent. Ten- year German bund yields lost seven basis points, while 30-year Treasury yields declined eight points. Credit-default swaps on German debt climbed six basis points to 118.
European officials prepared to meet in Luxembourg today to consider how to shield banks from the debt crisis and boost the region’s rescue fund after Greece missed a deficit target for 2012. Factory output in the U.S. probably grew at the slowest pace in more than two years in September, economists said before a report from the Institute for Supply Management.
“The big issue in the euro zone remains avoiding contagion from the all-but-inevitable Greek sovereign default,” Larry Hatheway, the head of macro strategy at UBS AG in London, wrote in a report today. We are “unlikely to get much relief from euro zone uncertainties in the coming months.”
The S&P 500 extended last quarter’s 14 percent loss. Yahoo! Inc. jumped as Alibaba Group Holding Ltd. Chairman Jack Ma said he’s “very interested” in buying the U.S. Web portal.
ISM Data
The U.S. ISM factory index probably fell to 50.3 from 50.6 in August, according to the median forecast of 67 economists in a Bloomberg survey. A reading of 50 is the dividing line between contraction and expansion.
Bill Gross, the manager of the world’s biggest bond fund, said the global economy risks lapsing into a recession with the pace of growth falling below the “new normal” level the firm has predicted since 2009.
“Sovereign balance sheets resemble an overweight diabetic on the verge of a heart attack,” Gross wrote in a monthly investment outlook posted on Newport Beach, California-based Pacific Investment Management Co.’s website today. “If global policy makers could focus on structural as opposed to cyclical financial solutions, new normal growth as opposed to recession might be possible.”
European Stocks
All 19 industry groups declined in the Stoxx 600 as Commerzbank AG, Germany’s second-largest lender, and Societe Generale SA of France dropped at least 5 percent. BHP Billiton Ltd. and Rio Tinto Group, the world’s largest mining companies, retreated at least 3 percent.
Dexia SA slumped 9.5 percent as Moody’s Investors Service placed the credit ratings of the lender’s three main operating entities on review for possible downgrade. Les Echos said finance ministers from Belgium and France are meeting today to discuss financing options for Dexia.
The Federal Reserve Bank of New York may ask foreign lenders for more detailed daily reports on liquidity as the U.S. steps up monitoring of risks from Europe’s sovereign debt crisis, according to two people with knowledge of the matter.
Liquidity Concern
Regulators held informal talks with some of the largest European lenders about producing a “fourth-generation daily liquidity” or 4G report, according to the people, who asked for anonymity because communications with central ban kers are confidential. The reports may cover potential liabilities such as foreign-exchange swaps and credit-default swaps, said one person. The U.S. has already increased the number of examiners embedded in these banks, the person said.
The yield on the Greek 10-year bond rose six basis points to 22.75 percent, driving the difference in yield with benchmark bunds 12 basis points higher. The yield on Italy’s two-year security fell 12 basis points and Spain’s declined three points as the European Central Bank bought the nations’ bonds, according to four people with knowledge of the transactions. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments rose 1.9 basis points to 342.2, approaching the record high of 358.5 set Sept. 23, according to CMA.
Greece Austerity
The Greek government passed 6.6 billion euros ($8.8 billion) of austerity measures last night to cut the 2012 deficit to 6.8 percent of gross domestic product, missing the 6.5 percent goal previously set with the European Union, International Monetary Fund and ECB, known as the troika. Finance Minister Evangelos Venizelos had earlier said Greece would miss the targets and the troika accepted the new budget. Euro region finance ministers meet again Oct. 13 to decide on a sixth bailout payment.
The 10-year U.S. Treasury note yield slipped four basis points, while the two-year yield rose almost one basis point. The Fed plans to buy $2.25 billion to $2.75 billion of Treasuries maturing from February 2036 to August 2041, according to the Fed Bank of New York’s website. Today’s purchases will be the first under a program announced Sept. 21 to buy $400 billion of bonds with maturities of six to 30 years through June, while selling an equal amount of debt maturing in three years or less.
The euro depreciated 0.6 percent to $1.3307, and fell as much as 0.6 percent to the lowest level since Jan. 18. The Dollar Index, which tracks the U.S. currency against those of six trading partners, climbed 0.7 percent. The yen strengthened against all of its 16 major peers.
The pound weakened against the dollar for a second day and gilts rose as traders judged a surprise increase in U.K. manufacturing as insufficient to keep the Bank of England from providing further stimulus for the economy.
Commodities Slump
The GSCI index of 24 commodities fell as much as 1.8 percent to the lowest since Dec. 1. Oil in New York slipped 2.5 percent to $77.20 a barrel. Gold for December delivery jumped 2 percent to $1,655.40 an ounce and silver climbed 1.6 percent after jumping as much as 4.5 percent.
The MSCI Emerging Markets Index sank 2.9 percent, following its 23 percent plunge in the three months ended Sept. 30. The Hang Seng China Enterprises Index slumped 4.4 percent, the Jakarta Composite Index (JCI) slid 5.6 percent and the SET Index retreated 5.1 percent in Bangkok.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
Posts
No comments:
Post a Comment