By Ben Livesey
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Aug. 6 (Bloomberg) -- Royal Bank of Scotland Group Plc probably will report the first loss in its 40 years as a publicly traded company and Barclays Plc may post its biggest profit drop in a decade because of credit writedowns and rising bad loans.
RBS, Britain's second-biggest bank, may report a first-half loss of 1.16 billion pounds ($2.3 billion) on Aug. 8, according to the average estimate of 10 analysts surveyed by Bloomberg. Barclays, the U.K.'s third-biggest bank, probably will say tomorrow that net income dropped 42 percent to 1.52 billion pounds in the six months ended June 30, analysts estimate.
RBS was battered by about 5.7 billion pounds of credit losses in the first half, about a third of which were tied to the acquisition of Amsterdam-based ABN Amro Holding NV's investment banking unit, analysts said. Edinburgh-based RBS and its partners Banco Santander SA of Spain and Fortis of Belgium outbid Barclays last year for ABN Amro, in what was the biggest banking acquisition in history.
``Barclays has successfully avoided, either by good luck or good judgment, the worst deals that have driven higher markdowns elsewhere,'' said Ian Gordon, a London-based analyst at Exane BNP Paribas, who has ``outperform'' ratings on Barclays and RBS.
RBS, led by Chief Executive Officer Fred Goodwin, and London-based Barclays relied on securities trading for about 33 percent of earnings last year. In the first half, RBS probably will post a 2 billion-pound loss at its investment banking unit, while the competing Barclays Capital unit may say pretax profit plunged 76 percent to 392 million pounds, according to the analysts' survey.
Fewer Writedowns
Barclays CEO John Varley, 52, probably avoided a loss as the company has reported fewer writedowns for securities linked to the collapse of the U.S. subprime mortgage market. Barclays and RBS may post additional losses on assets tied to bond insurers, according to analysts at Panmure Gordon & Co.
``Barclays may show resilient underlying numbers in investment banking, while RBS is different,'' said Neil Smith, a Dusseldorf-based analyst at WestLB AG, who has a ``hold'' rating on Barclays and recommends clients ``add'' to their RBS holdings. ``The key concerns will be about further writedowns and capital raising.''
RBS has dropped 40 percent this year, compared with Barclays's 25 percent decline.
First-half results at RBS were hurt by rising bad loans in the U.S. and U.K. The Citizens consumer banking unit, based in Providence, Rhode Island, said in April that loan-losses rose ``markedly'' in a mortgage-brokerage division. RBS, which had about 27 billion pounds of U.S. home loans at the end of last year, said in June that its credit quality was ``robust.''
Bad Loans
In the U.K., RBS has about 734 million pounds of bad loans, said Simon Pilkington, a London-based analyst at JPMorgan Cazenove Ltd., who has an ``underperform'' rating on the bank's shares.
Goodwin, 49, has tried to sell assets, including RBS's insurance arm. RBS raised 12.3 billion pounds in a share sale during June to replenish capital.
Barclays may post about 3.7 billion pounds of writedowns this year, according to analysts at Oriel Securities Ltd. in London.
The company said in May that it had 4 billion pounds of collateralized debt obligations backed primarily by residential mortgages, 4.2 billion pounds of U.S. subprime loans, 4.5 billion pounds of so-called Alt-A loans, and 12.6 billion pounds of commercial mortgages. Unlike RBS, Barclays hasn't marked down the value of its 7.3 billion pounds in buyout loans. The bank said in May that the loans were ``performing.''
Marked Down
Analysts at Citigroup Inc. have estimated Barclays may need another 9 billion pounds of capital.
Barclays raised 4.5 billion pounds in a share sale last month to shore up capital, hire bankers in the U.S. and open branches in Asia. Barclays has not added significantly to the 1.7 billion pounds of writedowns it took in the first quarter and will ``outperform'' rivals in terms of credit losses, President Robert Diamond, 57, said in June.
``Many regard Barclays's management as being in denial in terms of writedowns on toxic assets,'' said Gordon of Exane BNP Paribas. ``I think the market may be in for a positive surprise as they have been selling down assets and avoided the higher risk leveraged loan deals.''
Barclays may say first-half bad loans rose 87 percent to 1.8 billion pounds, according to analysts' estimates.
To contact the reporter on this story: Ben Livesey in London at blivesey@bloomberg.net
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Wednesday, August 6, 2008
Yen Volatility Falls to 7-Month Low as Fed Keeps Rates on Hold
By Kosuke Goto
Aug. 6 (Bloomberg) -- Volatility for dollar-yen options fell to the lowest in seven months after the Federal Reserve left borrowing costs unchanged at 2 percent for a second meeting.
Volatility, a gauge of expected exchange-rate fluctuations, slid 2 percent, the most in a week, as U.S. and Asian stocks rose on the Fed's statement that inflation will moderate. Demand waned for options that protect against further gains in the yen.
``The Fed meeting, a major risk event, was gone,'' said Ryousei Ishida, senior vice president of foreign-exchange options at Mizuho Corporate Bank Ltd. in Tokyo. ``With markets calming down, options traders are letting down their guard against any panic yen-buying, pushing down the volatility.''
Implied volatility on one-month dollar-yen options fell to 9.6550 percent as of 6:26 a.m. in London, the lowest since Dec. 27, from 9.8525 percent yesterday.
So-called risk-reversal rates on dollar-yen options show traders paid the smallest premium since July 11 for yen calls, which grant the right to buy the currency, versus puts, which give the right to sell.
The risk-reversal rate on one-month options was at minus 2.8250 percent compared with minus 3.9925 percent on July 16, the lowest level since April. A negative value indicates greater demand for yen calls.
Declining Risk
The risk reversal rate reached minus 6.85 on March 17, as traders dumped investments funded by loans in Japan. The yen reached an almost 13-year high of 95.76 per dollar on that day, after the Fed's emergency weekend cut in its discount rate and the sale of Bear Stearns Cos. to JPMorgan Chase & Co.
Japan's currency traded at 108.32 yen a dollar from 108.35 in New York late yesterday.
Falling volatility may weaken the yen by giving investors confidence to borrow in Japan, which has the lowest interest rates among major economies, and buy assets in higher-yielding markets in so-called carry trades.
In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency moves erase those profits.
To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net
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Aug. 6 (Bloomberg) -- Volatility for dollar-yen options fell to the lowest in seven months after the Federal Reserve left borrowing costs unchanged at 2 percent for a second meeting.
Volatility, a gauge of expected exchange-rate fluctuations, slid 2 percent, the most in a week, as U.S. and Asian stocks rose on the Fed's statement that inflation will moderate. Demand waned for options that protect against further gains in the yen.
``The Fed meeting, a major risk event, was gone,'' said Ryousei Ishida, senior vice president of foreign-exchange options at Mizuho Corporate Bank Ltd. in Tokyo. ``With markets calming down, options traders are letting down their guard against any panic yen-buying, pushing down the volatility.''
Implied volatility on one-month dollar-yen options fell to 9.6550 percent as of 6:26 a.m. in London, the lowest since Dec. 27, from 9.8525 percent yesterday.
So-called risk-reversal rates on dollar-yen options show traders paid the smallest premium since July 11 for yen calls, which grant the right to buy the currency, versus puts, which give the right to sell.
The risk-reversal rate on one-month options was at minus 2.8250 percent compared with minus 3.9925 percent on July 16, the lowest level since April. A negative value indicates greater demand for yen calls.
Declining Risk
The risk reversal rate reached minus 6.85 on March 17, as traders dumped investments funded by loans in Japan. The yen reached an almost 13-year high of 95.76 per dollar on that day, after the Fed's emergency weekend cut in its discount rate and the sale of Bear Stearns Cos. to JPMorgan Chase & Co.
Japan's currency traded at 108.32 yen a dollar from 108.35 in New York late yesterday.
Falling volatility may weaken the yen by giving investors confidence to borrow in Japan, which has the lowest interest rates among major economies, and buy assets in higher-yielding markets in so-called carry trades.
In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency moves erase those profits.
To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net
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Brazil, Chile: Latin America Bond and Currency Preview
By Jamie McGee
Aug. 6 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
Brazil: Inflation, as measured by the Getulio Vargas Foundation's IGP-DI index, slowed to 1.3 percent in July from 1.89 percent in June, according to the median estimate of 22 economists in a Bloomberg survey.
The foundation is scheduled to release the data at 7 a.m. New York time.
The real fell 0.8 percent to 1.5746 per dollar.
The yield on the country's zero-coupon bonds due January 2010 fell 8 basis points, 0.08 percentage point, to 14.76 percent, according to Banco Votorantim SA.
Chile: Economic growth will accelerate in the second half of the year, Finance Minister Andres Velasco said.
``The economy is taking off and we are going to have a second half that will be better than the first,'' Velasco told reporters today in Melipilla, Chile.
The peso weakened 0.4 percent to 512.75 per dollar.
The yield for a basket of five-year peso bonds in inflation- linked currency units fell 3 basis points to 2.86 percent, according to Bloomberg composite prices.
To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net
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Aug. 6 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
Brazil: Inflation, as measured by the Getulio Vargas Foundation's IGP-DI index, slowed to 1.3 percent in July from 1.89 percent in June, according to the median estimate of 22 economists in a Bloomberg survey.
The foundation is scheduled to release the data at 7 a.m. New York time.
The real fell 0.8 percent to 1.5746 per dollar.
The yield on the country's zero-coupon bonds due January 2010 fell 8 basis points, 0.08 percentage point, to 14.76 percent, according to Banco Votorantim SA.
Chile: Economic growth will accelerate in the second half of the year, Finance Minister Andres Velasco said.
``The economy is taking off and we are going to have a second half that will be better than the first,'' Velasco told reporters today in Melipilla, Chile.
The peso weakened 0.4 percent to 512.75 per dollar.
The yield for a basket of five-year peso bonds in inflation- linked currency units fell 3 basis points to 2.86 percent, according to Bloomberg composite prices.
To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net
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Yuan Forwards Underestimate China's Currency Gain, Goldman Says
By Kim Kyoungwha and Judy Chen
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Aug. 6 (Bloomberg) -- China's yuan is likely to appreciate against the dollar ``almost three times as fast'' as traders predict because money flowing into the country is still increasing, according to Goldman Sachs Group Inc.
The rate of yuan gains has slowed over the past month and non-deliverable forwards show traders have pared expectations for the speed of the advance on speculation China is reducing the pace to protect exporters as economic growth cools. China last month set up an electronic network to monitor export income to stop currency speculators using bogus contracts to bypass investment rules.
China's record trade surplus and so-called `hot money' inflows betting on yuan appreciation have pushed the nation's foreign-currency reserves to $1.8 trillion, driving inflation to a 12-year high in February.
``We remain confident that it would be the wrong decision to close long yuan exposure at these levels,'' Thomas Stolper, a London-based strategist at the world's biggest securities firm by market value, wrote in a research note yesterday. ``The pace of reserve accumulation remains a serious issue.''
Cash inflows from the trade surplus and foreign direct investment suggests reserve accumulation runs at about $30 billion per month before additional speculative capital, according to the report. This year's monthly increase in reserves amounted to $46.8 billion on average, hindering the People's Bank of China from conducting ``effective'' monetary policy and added ever more dollars to the ``staggering'' reserves, Goldman said.
Forward Bets
The yuan traded at 6.8506 per dollar as of 12 p.m. in Shanghai, from 6.8556 yesterday, according to China Foreign Exchange Trade System. The currency is more than 20 percent higher than the 8.3 level it was pegged at until July 2005.
Non-deliverable forwards show an implied rate for the yuan of 6.6115 in the next 12 months, a gain of 3.2 percent from today's spot rate and compared with bets for a level of 6.4650 at the start of July. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Yuan forwards are non-deliverable because they are settled in dollars.
China's Politburo, the Communist Party's top decision-making body, dropped mention of ``tight'' monetary policy in a report on July 25 and said growth and inflation were both top priorities.
China's crackdown on ``hot money'' seems to be curbing inflows of speculative capital, enabling policy makers to slow the pace of yuan appreciation, Yu Yongding, a former adviser to the central bank, said in an interview last week.
More rigorous checks by the State Administration of Foreign Exchange, China's currency regulator, have started to control ``unwanted money'' flows, reducing the need for rapid yuan gains to quell inflation, Yu said.
`Unfortunate Development'
Any slowdown in the yuan would be ``a rather unfortunate development as it would create incentives to worsen the imbalances'' in the economy, sacrificing domestic demand to further boost exports when the exact opposite is needed,'' Stolper said.
The market's perception that growth without exports is difficult to achieve in China is unfounded, Stolper said.
The People's Bank of China guides the exchange rate against a basket of five currencies that includes the Japanese yen and euro. The yuan is allowed to trade 0.5 percent against the dollar either side of a reference rate set each day by the central bank. China set the reference rate weaker for a sixth day today at 6.8525.
On Goldman Sach's trade-weighted index the yuan ``is clearly still appreciating,'' Stolper said, strengthening 1 percent of a two-week period.
China's decision to raise tax rebates for textile exporters last week is seen as a measure to ``offset the worst side effects of an otherwise unchanged foreign-exchange stance,'' he said.
``By giving in to some pressures from the industries hardest hit, the overall currency policy of gradual yuan appreciation may actually be maintained more easily,'' Stolper wrote.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net;
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Enlarge Image/Details
Aug. 6 (Bloomberg) -- China's yuan is likely to appreciate against the dollar ``almost three times as fast'' as traders predict because money flowing into the country is still increasing, according to Goldman Sachs Group Inc.
The rate of yuan gains has slowed over the past month and non-deliverable forwards show traders have pared expectations for the speed of the advance on speculation China is reducing the pace to protect exporters as economic growth cools. China last month set up an electronic network to monitor export income to stop currency speculators using bogus contracts to bypass investment rules.
China's record trade surplus and so-called `hot money' inflows betting on yuan appreciation have pushed the nation's foreign-currency reserves to $1.8 trillion, driving inflation to a 12-year high in February.
``We remain confident that it would be the wrong decision to close long yuan exposure at these levels,'' Thomas Stolper, a London-based strategist at the world's biggest securities firm by market value, wrote in a research note yesterday. ``The pace of reserve accumulation remains a serious issue.''
Cash inflows from the trade surplus and foreign direct investment suggests reserve accumulation runs at about $30 billion per month before additional speculative capital, according to the report. This year's monthly increase in reserves amounted to $46.8 billion on average, hindering the People's Bank of China from conducting ``effective'' monetary policy and added ever more dollars to the ``staggering'' reserves, Goldman said.
Forward Bets
The yuan traded at 6.8506 per dollar as of 12 p.m. in Shanghai, from 6.8556 yesterday, according to China Foreign Exchange Trade System. The currency is more than 20 percent higher than the 8.3 level it was pegged at until July 2005.
Non-deliverable forwards show an implied rate for the yuan of 6.6115 in the next 12 months, a gain of 3.2 percent from today's spot rate and compared with bets for a level of 6.4650 at the start of July. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Yuan forwards are non-deliverable because they are settled in dollars.
China's Politburo, the Communist Party's top decision-making body, dropped mention of ``tight'' monetary policy in a report on July 25 and said growth and inflation were both top priorities.
China's crackdown on ``hot money'' seems to be curbing inflows of speculative capital, enabling policy makers to slow the pace of yuan appreciation, Yu Yongding, a former adviser to the central bank, said in an interview last week.
More rigorous checks by the State Administration of Foreign Exchange, China's currency regulator, have started to control ``unwanted money'' flows, reducing the need for rapid yuan gains to quell inflation, Yu said.
`Unfortunate Development'
Any slowdown in the yuan would be ``a rather unfortunate development as it would create incentives to worsen the imbalances'' in the economy, sacrificing domestic demand to further boost exports when the exact opposite is needed,'' Stolper said.
The market's perception that growth without exports is difficult to achieve in China is unfounded, Stolper said.
The People's Bank of China guides the exchange rate against a basket of five currencies that includes the Japanese yen and euro. The yuan is allowed to trade 0.5 percent against the dollar either side of a reference rate set each day by the central bank. China set the reference rate weaker for a sixth day today at 6.8525.
On Goldman Sach's trade-weighted index the yuan ``is clearly still appreciating,'' Stolper said, strengthening 1 percent of a two-week period.
China's decision to raise tax rebates for textile exporters last week is seen as a measure to ``offset the worst side effects of an otherwise unchanged foreign-exchange stance,'' he said.
``By giving in to some pressures from the industries hardest hit, the overall currency policy of gradual yuan appreciation may actually be maintained more easily,'' Stolper wrote.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net;
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Asian Currencies: Philippine Peso Advances, Ringgit Declines
By Aaron Pan and Karl Lester M. Yap
Aug. 6 (Bloomberg) -- The Philippine peso led gains in Asian currencies on speculation the central bank will raise borrowing costs and widen the interest-rate advantage over the U.S., making local assets more attractive.
The peso climbed to the highest in two months against the U.S. dollar after the Federal Reserve yesterday kept its benchmark interest rate unchanged and signaled it may delay any increase in borrowing costs. Five of the 10 most-active Asian currencies outside of Japan rose today, three fell and two were little changed.
``Higher Philippine rates will lure funds looking for high- yield assets,'' said Catherine Tan, head of regional foreign exchange at IFR Markets. ``The inflows will help boost the peso.''
The local currency rose 0.7 percent to 43.835 per dollar as of 12:49 p.m. in Manila, according to Tullett Prebon Plc. That's the highest since June 3.
The Fed maintained its rate at 2 percent and said weak labor markets and tight credit conditions will likely weigh on economic growth.
Bangko Sentral ng Pilipinas raised the overnight borrowing rate by a half-percentage point to 5.75 percent on July 17, increasing the difference between the two nation's rates to 3.75 percent. Bangko Sentral next meets on Aug. 28 to decide on monetary policy after two increases this year.
Singapore's dollar was little changed at S$1.3784 against the U.S. currency, Indonesia's rupiah strengthened 0.1 percent to 9,065 and the Thai baht was little changed at 33.64. Taiwan's dollar lost 0.4 percent to NT$30.838 and Vietnam's dong advanced 0.5 percent to 16,600.
`Favorable Mood'
South Korea's won rose, snapping a three-day decline, on investor expectations overseas demand for the nation's assets will increase as stocks gain.
The won also climbed from a two-week low on speculation authorities will buy the currency to cool inflation stoked by rising import prices. Fund managers outside Korea bought more local shares than they sold for the first time in four days, according to data from the stock exchange.
``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank based in Seoul.
The currency rose 0.1 percent to 1,016.80 against the dollar, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performance of the 10 most-active regional currencies outside of Japan.
Crude Oil
The Kospi stock index gained as much as 2.5 percent as crude oil declined for a third day.
Crude oil for September delivery fell 0.7 percent $118.38 a barrel a barrel on the New York Mercantile Exchange. The contract touched $118 yesterday, the lowest since May 5.
Malaysia's ringgit declined for a fourth day on speculation falling crude oil prices and the Federal Reserve's decision to maintain borrowing costs will spur demand for the U.S. currency.
The ringgit headed for its longest losing run in more than seven weeks on concern a slump in the price of palm oil, of which Malaysia is the second-biggest exporter, will also restrain export growth in the months ahead.
`Conspiring Support'
``The signs are conspiring to support demand for the dollar in the short term,'' said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. ``Asian currencies will also have to give up some of their gains with exports likely to come off in the second half.''
The ringgit fell 0.2 percent to 3.2762 against the dollar, according to data compiled by Bloomberg. The currency may weaken to 3.30 before ending the year at about 3.10, Yeo said.
Standard Chartered Plc cut the end-September forecast for the Malaysian currency to 3.26 from an earlier estimate of 3.23, citing accelerating inflation, slowing growth and the central bank's failure to increase interest rates.
Traders see a 95 percent chance Fed policy makers will hold borrowing costs again at their Sept. 16 meeting, according to futures trading. The odds of no-change at the Oct. 29 meeting rose to 73 percent from 20 percent a week ago.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
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Aug. 6 (Bloomberg) -- The Philippine peso led gains in Asian currencies on speculation the central bank will raise borrowing costs and widen the interest-rate advantage over the U.S., making local assets more attractive.
The peso climbed to the highest in two months against the U.S. dollar after the Federal Reserve yesterday kept its benchmark interest rate unchanged and signaled it may delay any increase in borrowing costs. Five of the 10 most-active Asian currencies outside of Japan rose today, three fell and two were little changed.
``Higher Philippine rates will lure funds looking for high- yield assets,'' said Catherine Tan, head of regional foreign exchange at IFR Markets. ``The inflows will help boost the peso.''
The local currency rose 0.7 percent to 43.835 per dollar as of 12:49 p.m. in Manila, according to Tullett Prebon Plc. That's the highest since June 3.
The Fed maintained its rate at 2 percent and said weak labor markets and tight credit conditions will likely weigh on economic growth.
Bangko Sentral ng Pilipinas raised the overnight borrowing rate by a half-percentage point to 5.75 percent on July 17, increasing the difference between the two nation's rates to 3.75 percent. Bangko Sentral next meets on Aug. 28 to decide on monetary policy after two increases this year.
Singapore's dollar was little changed at S$1.3784 against the U.S. currency, Indonesia's rupiah strengthened 0.1 percent to 9,065 and the Thai baht was little changed at 33.64. Taiwan's dollar lost 0.4 percent to NT$30.838 and Vietnam's dong advanced 0.5 percent to 16,600.
`Favorable Mood'
South Korea's won rose, snapping a three-day decline, on investor expectations overseas demand for the nation's assets will increase as stocks gain.
The won also climbed from a two-week low on speculation authorities will buy the currency to cool inflation stoked by rising import prices. Fund managers outside Korea bought more local shares than they sold for the first time in four days, according to data from the stock exchange.
``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank based in Seoul.
The currency rose 0.1 percent to 1,016.80 against the dollar, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performance of the 10 most-active regional currencies outside of Japan.
Crude Oil
The Kospi stock index gained as much as 2.5 percent as crude oil declined for a third day.
Crude oil for September delivery fell 0.7 percent $118.38 a barrel a barrel on the New York Mercantile Exchange. The contract touched $118 yesterday, the lowest since May 5.
Malaysia's ringgit declined for a fourth day on speculation falling crude oil prices and the Federal Reserve's decision to maintain borrowing costs will spur demand for the U.S. currency.
The ringgit headed for its longest losing run in more than seven weeks on concern a slump in the price of palm oil, of which Malaysia is the second-biggest exporter, will also restrain export growth in the months ahead.
`Conspiring Support'
``The signs are conspiring to support demand for the dollar in the short term,'' said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. ``Asian currencies will also have to give up some of their gains with exports likely to come off in the second half.''
The ringgit fell 0.2 percent to 3.2762 against the dollar, according to data compiled by Bloomberg. The currency may weaken to 3.30 before ending the year at about 3.10, Yeo said.
Standard Chartered Plc cut the end-September forecast for the Malaysian currency to 3.26 from an earlier estimate of 3.23, citing accelerating inflation, slowing growth and the central bank's failure to increase interest rates.
Traders see a 95 percent chance Fed policy makers will hold borrowing costs again at their Sept. 16 meeting, according to futures trading. The odds of no-change at the Oct. 29 meeting rose to 73 percent from 20 percent a week ago.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
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Dollar's Advance May Stall at 108.76 Yen on Charts, Daiwa Says
By Kosuke Goto
Aug. 6 (Bloomberg) -- The dollar's advance against Japan's currency may stall at 108.76 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.
The U.S. currency's 25-day moving average versus the yen has risen since late last month, a bullish signal for the next few weeks, Tokyo-based Kinouchi said. The dollar may keep climbing until it reaches 108.76, its 260-day moving average and a level where sell orders are likely to be placed, he said.
``Technically, there is a sign of dollar buying,'' said Kinouchi at the unit of Japan's second-largest brokerage. ``The dollar may be well supported for the next half a month, but the currency's advance should be limited.''
The dollar traded at 108.38 yen as of 11:27 a.m. in Tokyo from 108.35 yen late yesterday in New York. It has gained 1.5 percent versus the yen in the past month.
The U.S. currency's 260-day moving average has been declining since August, which signals it may keep falling in the longer term, according to Bloomberg data.
Traders often look for signs of a currency's short-term outlook by viewing the five-day moving average and aim to forecast longer trends by looking at the 25- and 260-day moving averages. Analysts use these averages to identify levels of support, where buying is expected, or resistance, where selling is predicted.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
Read more...
Aug. 6 (Bloomberg) -- The dollar's advance against Japan's currency may stall at 108.76 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.
The U.S. currency's 25-day moving average versus the yen has risen since late last month, a bullish signal for the next few weeks, Tokyo-based Kinouchi said. The dollar may keep climbing until it reaches 108.76, its 260-day moving average and a level where sell orders are likely to be placed, he said.
``Technically, there is a sign of dollar buying,'' said Kinouchi at the unit of Japan's second-largest brokerage. ``The dollar may be well supported for the next half a month, but the currency's advance should be limited.''
The dollar traded at 108.38 yen as of 11:27 a.m. in Tokyo from 108.35 yen late yesterday in New York. It has gained 1.5 percent versus the yen in the past month.
The U.S. currency's 260-day moving average has been declining since August, which signals it may keep falling in the longer term, according to Bloomberg data.
Traders often look for signs of a currency's short-term outlook by viewing the five-day moving average and aim to forecast longer trends by looking at the 25- and 260-day moving averages. Analysts use these averages to identify levels of support, where buying is expected, or resistance, where selling is predicted.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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Australian Dollar May Fall on Rate Outlook, TD Securities Says
By Ron Harui
Aug. 6 (Bloomberg) -- The Australian dollar may fall as much as 15 percent against the U.S. dollar as the nation's central bank is set to cut its benchmark interest rate 2.25 percentage points by the end of 2009, according to TD Securities Ltd.
The local dollar, known as the Aussie, dropped 4.7 percent in the past month, the worst performance among the 16 most-active currencies, as slowing consumer demand fuels speculation the Reserve Bank of Australia will trim borrowing costs. The Aussie dropped a seventh day, its longest stretch since Sept. 13, 2006, as prices slid for commodities the nation exports such as gold.
``The slow-motion Aussie train-wreck is likely to intensify with a further 10 percent to 15 percent decline on the cards over the next 12 to 18 months as interest rates and commodity prices fall,'' wrote Stephen Koukoulas, London-based head of global foreign exchange and fixed income strategy at the unit of Canada's Toronto-Dominion Bank, in a research note today.
The Australian dollar traded at 91.84 U.S. cents as of 4:10 p.m. in Sydney from 91.85 cents late in Asia yesterday. The currency earlier reached 91.33 cents, the lowest since April 4.
Reserve Bank of Australia Governor Glenn Stevens yesterday said that inflation may slow, allowing for a ``less restrictive stance of monetary policy in the period ahead,'' after a meeting where the RBA kept the overnight cash rate target at 7.25 percent.
Since the central bank's previous meeting on July 1, reports have shown consumer confidence slumped in July to the lowest level in 16 years, retail sales fell 1 percent in June, and lending to consumers and businesses rose at the slowest annual pace since 2002.
Australian Dollar `Vulnerable'
Traders are betting the RBA will lower its benchmark rate by 0.91 percentage point in the next 12 months, up from 0.65 percentage point on Aug. 4, according to a Credit Suisse Group index based on interest-rate swaps.
``Rates are forecast to fall to 5 percent by the end of 2009,'' Koukoulas wrote. ``The Australian dollar is vulnerable to further falls.''
Australia's dollar will probably weaken to 79 cents by the end of next year, TD Securities forecasts. That's more bearish than the median estimate for that date of 87 cents from a Bloomberg survey of 30 analysts. The currency last traded at 79 cents on Aug. 20, 2007, according to data compiled by Bloomberg.
The Aussie also may decline as falling commodity prices hurt the nation's terms of trade, a measure of export earnings, Koukoulas wrote.
The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials has dropped 15 percent since reaching a record high on July 3. Crude oil has lost more than $28 since touching a record of $147.27 a barrel on July 11. Commodity exports such as oil contribute 17 percent to Australia's S1 trillion economy.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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Aug. 6 (Bloomberg) -- The Australian dollar may fall as much as 15 percent against the U.S. dollar as the nation's central bank is set to cut its benchmark interest rate 2.25 percentage points by the end of 2009, according to TD Securities Ltd.
The local dollar, known as the Aussie, dropped 4.7 percent in the past month, the worst performance among the 16 most-active currencies, as slowing consumer demand fuels speculation the Reserve Bank of Australia will trim borrowing costs. The Aussie dropped a seventh day, its longest stretch since Sept. 13, 2006, as prices slid for commodities the nation exports such as gold.
``The slow-motion Aussie train-wreck is likely to intensify with a further 10 percent to 15 percent decline on the cards over the next 12 to 18 months as interest rates and commodity prices fall,'' wrote Stephen Koukoulas, London-based head of global foreign exchange and fixed income strategy at the unit of Canada's Toronto-Dominion Bank, in a research note today.
The Australian dollar traded at 91.84 U.S. cents as of 4:10 p.m. in Sydney from 91.85 cents late in Asia yesterday. The currency earlier reached 91.33 cents, the lowest since April 4.
Reserve Bank of Australia Governor Glenn Stevens yesterday said that inflation may slow, allowing for a ``less restrictive stance of monetary policy in the period ahead,'' after a meeting where the RBA kept the overnight cash rate target at 7.25 percent.
Since the central bank's previous meeting on July 1, reports have shown consumer confidence slumped in July to the lowest level in 16 years, retail sales fell 1 percent in June, and lending to consumers and businesses rose at the slowest annual pace since 2002.
Australian Dollar `Vulnerable'
Traders are betting the RBA will lower its benchmark rate by 0.91 percentage point in the next 12 months, up from 0.65 percentage point on Aug. 4, according to a Credit Suisse Group index based on interest-rate swaps.
``Rates are forecast to fall to 5 percent by the end of 2009,'' Koukoulas wrote. ``The Australian dollar is vulnerable to further falls.''
Australia's dollar will probably weaken to 79 cents by the end of next year, TD Securities forecasts. That's more bearish than the median estimate for that date of 87 cents from a Bloomberg survey of 30 analysts. The currency last traded at 79 cents on Aug. 20, 2007, according to data compiled by Bloomberg.
The Aussie also may decline as falling commodity prices hurt the nation's terms of trade, a measure of export earnings, Koukoulas wrote.
The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials has dropped 15 percent since reaching a record high on July 3. Crude oil has lost more than $28 since touching a record of $147.27 a barrel on July 11. Commodity exports such as oil contribute 17 percent to Australia's S1 trillion economy.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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Euro Rises on Speculation ECB's Trichet to Flag Inflation Risk
By Stanley White and Kosuke Goto
Aug. 6 (Bloomberg) -- The euro rose, rebounding from a seven-week low against the dollar, on speculation European Central Bank President Jean-Claude Trichet will signal higher interest rates may be needed to combat inflation.
The 15-nation currency also advanced against the yen before the ECB's meeting tomorrow, at which it will keep its key interest rate at 4.25 percent, according to a Bloomberg News survey of economists. Australia's dollar declined to a four- month low and Canada's currency traded near its weakest in almost a year as prices of commodities the nations export fell.
``With the ECB being a strong inflation fighter, Trichet may want to leave some room for further rate increases this year,'' said Masaki Fukui, a senior economist and currency analyst in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-largest publicly traded lender by assets. ``The euro may be supported as long as there remains speculation over higher rates.''
The euro rose to $1.5508 at 7:50 a.m. in London from $1.5454 yesterday, when it touched $1.5447, the weakest since June 16. The euro advanced to 168.15 yen from 167.42. The U.S. currency was at 108.42 yen, little changed from yesterday. It earlier rose to a seven-week high of 108.48.
Taiwan's dollar dropped the most in more than two months before a report tomorrow that will probably show export growth slowed in July, according to the median estimate of economists surveyed by Bloomberg News.
The currency fell for a seventh day, sliding 0.3 percent to NT$30.809 against the U.S. currency, on speculation slowing growth will deter the central bank from raising rates.
Commodity Currencies
The Australian dollar dropped to 91.33 U.S. cents, the lowest since April 4, before trading at 91.87 from 91.85 cents late yesterday in Asia. Oil, Australia's fourth most-valuable commodity export, fell 24 cents to $118.91 a barrel. Gold, the country's third-biggest overseas shipment, weakened to below $900 an ounce for the first time since June.
The Canadian dollar traded at C$1.0420, near yesterday's low of C$1.0453, the weakest since Sept. 11. Raw materials account for more than half of Canadian and Australian exports.
Trichet will hold a press conference after the ECB announces its decision tomorrow at 1:45 p.m. in Frankfurt.
The inflation rate for the euro region rose to 4.1 percent in July, the fastest pace in more than 16 years, more than double the pace ECB targets.
Oil Price Boon
The U.S. dollar held near seven-week highs against the yen as oil tumbled to the lowest level in three months, supporting economic growth prospects in the world's largest consumer of the fuel.
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending.
``The U.S. dollar should continue to be buoyed,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co. ``The fall in oil is a plus for the U.S. At the same time, it encourages the withdrawal of funds from the commodity currencies.''
The dollar may rise to $1.5435 versus the euro and 108.50 yen today, he forecast.
`Off Their Peak'
Investors should buy the U.S. currency against the Canadian dollar as prices of commodities Canada exports such as oil are falling, according to Goldman Sachs Group Inc., the world's largest securities firm.
``Oil and other commodity prices are now clearly off their peak,'' wrote Kevin Edgeley and other Goldman strategists in a research note to clients yesterday. ``The dollar has responded with a break above the congestion range'' between C$1.03 and C$1.04, they said.
The U.S. dollar may extend gains to C$1.0865, the analysts said.
The Federal Reserve left borrowing costs unchanged yesterday at 2 percent, saying ``downside risks'' to growth remain, while inflation is a ``significant concern.''
Traders yesterday pared bets the Fed will raise interest rates on Sept. 16. Futures on the Chicago Board of Trade showed a 27 percent chance the Fed would increase its target lending rate at least a quarter-percentage point, down from 32 percent on Aug. 4.
``They are clearly not signaling tightening,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar has already gained some ground. While commodities continue tanking, the rally can last a little bit longer here.''
British Pound
The pound was at $1.9559, trading near a seven-week low of $1.9521 touched yesterday, after a U.K. consumer confidence index fell the most in at least four years due to a housing market slump.
The dollar's advance against Japan's currency may stall at 108.76 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.
The U.S. currency's 25-day moving average versus the yen has risen since late last month, a bullish signal for the next few weeks, Tokyo-based Kinouchi said. The dollar may keep climbing until it reaches 108.76, its 260-day moving average and a level where sell orders are likely to be placed, he said.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netKosuke Goto in Tokyo at kgoto2@bloomberg.net
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Aug. 6 (Bloomberg) -- The euro rose, rebounding from a seven-week low against the dollar, on speculation European Central Bank President Jean-Claude Trichet will signal higher interest rates may be needed to combat inflation.
The 15-nation currency also advanced against the yen before the ECB's meeting tomorrow, at which it will keep its key interest rate at 4.25 percent, according to a Bloomberg News survey of economists. Australia's dollar declined to a four- month low and Canada's currency traded near its weakest in almost a year as prices of commodities the nations export fell.
``With the ECB being a strong inflation fighter, Trichet may want to leave some room for further rate increases this year,'' said Masaki Fukui, a senior economist and currency analyst in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-largest publicly traded lender by assets. ``The euro may be supported as long as there remains speculation over higher rates.''
The euro rose to $1.5508 at 7:50 a.m. in London from $1.5454 yesterday, when it touched $1.5447, the weakest since June 16. The euro advanced to 168.15 yen from 167.42. The U.S. currency was at 108.42 yen, little changed from yesterday. It earlier rose to a seven-week high of 108.48.
Taiwan's dollar dropped the most in more than two months before a report tomorrow that will probably show export growth slowed in July, according to the median estimate of economists surveyed by Bloomberg News.
The currency fell for a seventh day, sliding 0.3 percent to NT$30.809 against the U.S. currency, on speculation slowing growth will deter the central bank from raising rates.
Commodity Currencies
The Australian dollar dropped to 91.33 U.S. cents, the lowest since April 4, before trading at 91.87 from 91.85 cents late yesterday in Asia. Oil, Australia's fourth most-valuable commodity export, fell 24 cents to $118.91 a barrel. Gold, the country's third-biggest overseas shipment, weakened to below $900 an ounce for the first time since June.
The Canadian dollar traded at C$1.0420, near yesterday's low of C$1.0453, the weakest since Sept. 11. Raw materials account for more than half of Canadian and Australian exports.
Trichet will hold a press conference after the ECB announces its decision tomorrow at 1:45 p.m. in Frankfurt.
The inflation rate for the euro region rose to 4.1 percent in July, the fastest pace in more than 16 years, more than double the pace ECB targets.
Oil Price Boon
The U.S. dollar held near seven-week highs against the yen as oil tumbled to the lowest level in three months, supporting economic growth prospects in the world's largest consumer of the fuel.
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending.
``The U.S. dollar should continue to be buoyed,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co. ``The fall in oil is a plus for the U.S. At the same time, it encourages the withdrawal of funds from the commodity currencies.''
The dollar may rise to $1.5435 versus the euro and 108.50 yen today, he forecast.
`Off Their Peak'
Investors should buy the U.S. currency against the Canadian dollar as prices of commodities Canada exports such as oil are falling, according to Goldman Sachs Group Inc., the world's largest securities firm.
``Oil and other commodity prices are now clearly off their peak,'' wrote Kevin Edgeley and other Goldman strategists in a research note to clients yesterday. ``The dollar has responded with a break above the congestion range'' between C$1.03 and C$1.04, they said.
The U.S. dollar may extend gains to C$1.0865, the analysts said.
The Federal Reserve left borrowing costs unchanged yesterday at 2 percent, saying ``downside risks'' to growth remain, while inflation is a ``significant concern.''
Traders yesterday pared bets the Fed will raise interest rates on Sept. 16. Futures on the Chicago Board of Trade showed a 27 percent chance the Fed would increase its target lending rate at least a quarter-percentage point, down from 32 percent on Aug. 4.
``They are clearly not signaling tightening,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar has already gained some ground. While commodities continue tanking, the rally can last a little bit longer here.''
British Pound
The pound was at $1.9559, trading near a seven-week low of $1.9521 touched yesterday, after a U.K. consumer confidence index fell the most in at least four years due to a housing market slump.
The dollar's advance against Japan's currency may stall at 108.76 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.
The U.S. currency's 25-day moving average versus the yen has risen since late last month, a bullish signal for the next few weeks, Tokyo-based Kinouchi said. The dollar may keep climbing until it reaches 108.76, its 260-day moving average and a level where sell orders are likely to be placed, he said.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netKosuke Goto in Tokyo at kgoto2@bloomberg.net
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Commodity Slump `Moves the Needle' on BHP Offer: Chart of Day
By Brett Foley
Aug. 6 (Bloomberg) -- Slumping commodity prices may be a boon for BHP Billiton's $134 billion hostile offer for Rio Tinto Group, the biggest mining takeover bid.
The S&P 500 Materials Index is within 1.7 percent of a bear market today. That may strengthen BHP's argument that its bid isn't too low, as Rio has claimed. Melbourne-based BHP, the world's biggest mining company by market value, says it can cut costs by combining the companies' headquarters and adjacent iron ore operations Western Australian.
The CHART OF THE DAY shows that Rio's stock trades in London at a discount of almost 10 percent to BHP's offer of 3.4 shares for each Rio share, plotted against the decline in the Materials Index. Rio last traded at a premium on April 6.
``You could argue that as commodity prices fall and margins come under pressure, the kicker you get from those synergies will become more attractive,'' says Simon Toyne, an analyst at Numis Securities in London. ``That could help move the needle a little bit more on the BHP offer.''
BHP Chief Executive Officer Marius Kloppers said he will deliver $3.7 billion in cost savings. Chairman Don Argus wrote last week to Rio shareholders for the first time, saying the offer would generate ``substantial, additional'' value for investors.
European Union antitrust regulators widened a probe of the BHP plan last month saying they have ``serious doubts'' about a combination that would control more than a third of the world's iron ore, the main ingredient in steel.
To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net
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Aug. 6 (Bloomberg) -- Slumping commodity prices may be a boon for BHP Billiton's $134 billion hostile offer for Rio Tinto Group, the biggest mining takeover bid.
The S&P 500 Materials Index is within 1.7 percent of a bear market today. That may strengthen BHP's argument that its bid isn't too low, as Rio has claimed. Melbourne-based BHP, the world's biggest mining company by market value, says it can cut costs by combining the companies' headquarters and adjacent iron ore operations Western Australian.
The CHART OF THE DAY shows that Rio's stock trades in London at a discount of almost 10 percent to BHP's offer of 3.4 shares for each Rio share, plotted against the decline in the Materials Index. Rio last traded at a premium on April 6.
``You could argue that as commodity prices fall and margins come under pressure, the kicker you get from those synergies will become more attractive,'' says Simon Toyne, an analyst at Numis Securities in London. ``That could help move the needle a little bit more on the BHP offer.''
BHP Chief Executive Officer Marius Kloppers said he will deliver $3.7 billion in cost savings. Chairman Don Argus wrote last week to Rio shareholders for the first time, saying the offer would generate ``substantial, additional'' value for investors.
European Union antitrust regulators widened a probe of the BHP plan last month saying they have ``serious doubts'' about a combination that would control more than a third of the world's iron ore, the main ingredient in steel.
To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net
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Australian Dollar Trades Near Four-Month Low; N.Z. Dollar Gains
By Ron Harui and Candice Zachariahs
Aug. 6 (Bloomberg) -- The Australian dollar traded near the lowest in four months as the yield advantage of the nation's two- year government bonds over U.S. Treasuries shrank to the least this year. The New Zealand dollar gained.
Australia's currency may weaken for a seventh day, its longest losing stretch in almost two years, as the prices of commodities the country exports such as gold and oil declined. New Zealand's currency rose to the highest in almost a month versus Australia's as the Reserve Bank of Australia signaled yesterday it may begin cutting interest rates.
``The Australian dollar is in a massive, massive negative channel at the moment, it's got no friends,'' said Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney. ``We've seen commodity prices go against it, interest-rate differentials go against it, the U.S. dollar is strengthening and oil prices are coming down.''
The Australian dollar traded at 91.89 U.S. cents as of 4:55 p.m. in Sydney from 91.85 cents late in Asia yesterday. It earlier reached 91.33 cents, the lowest since April 4. The currency, known as the Aussie, climbed to 99.63 yen from 99.07 yen yesterday when it slid 1.8 percent, the most since March.
The New Zealand dollar rose to NZ$1.2645 per Australian dollar from NZ$1.2685 late in Asia yesterday. It earlier touched NZ$1.2599, the strongest since July 10. The currency, also known as the kiwi, advanced to 72.62 U.S. cents from 72.40 cents. It strengthened to 78.74 yen from 78.09 yen.
Worst Performer
Australia's currency extended its decline in the past week to 2.5 percent, the worst performance among the 16 most-active currencies versus the U.S. dollar, as the difference in yield between local two-year bonds and similar-dated U.S. debt shrank to 3.44 percentage points, the narrowest since Dec. 7.
Traders are betting that the RBA will lower its benchmark rate by 0.87 percentage point in the next 12 months, up from 0.65 percentage point on Aug. 4, according to a Credit Suisse Group index based on swaps trading. Australian home-loan approvals fell to a four-year low in June, the statistics bureau said today, adding to signs the economy is cooling.
RBA Governor Glenn Stevens said yesterday that inflation may slow, allowing for a ``less restrictive stance'' on interest rates. The central bank left its benchmark interest rate unchanged at 7.25 percent, which compares with 8 percent in New Zealand, 2 percent in the U.S. and 0.5 percent in Japan.
The Australian dollar also weakened as prices slid for gold and crude oil, the nation's third and fourth most-valuable raw material exports. Gold dropped below $900 an ounce and crude oil fell below $119 a barrel to its lowest in three months. Commodity exports contribute 17 percent to the nation's $1 trillion economy.
Technical Charts
Losses in the Australian dollar may be limited as technical charts signaled the currency's 6.7 percent slide from a 25-year high on July 16 was excessive.
``Short term, it looks a bit overdone,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``The Aussie in three weeks has gone from 98.50 cents down to 91.30 cents, so we're starting to see some'' investors buying the currency to cover their wrong-way bets.
The Australian dollar's 14-day relative strength index versus the U.S. dollar was 24.21 according to data compiled by Bloomberg. A level below 30 signals losses may be excessive and can indicate the currency is about to change direction.
The New Zealand dollar gained for a sixth day against Australia's, the longest winning run since June 2007, on speculation the RBA will cut rates as soon as next month.
`Underpinned'
New Zealand's ``currency has been underpinned by solid interest to buy the kiwi against the Aussie,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``Over the past couple of days, we've seen an about- turn in Australian-dollar sentiment.''
The New Zealand dollar also gained after the nation's commodity export price index rose in July, led by beef, aluminum and lamb, ANZ National Bank Ltd. said yesterday. Sales of commodities make up 70 percent of the nation's overseas sales.
The New Zealand dollar has fallen 2.3 percent since the Reserve Bank of New Zealand cut its benchmark rate a quarter- percentage point to 8 percent on July 24 and signaled further reductions were likely.
Traders are betting the RBNZ will lower borrowing costs by 1.51 percentage points in the next 12 months, according to a Credit Suisse index.
Australian two-year government bonds rose for an 11th day, pushing the yield down 2 basis points to 5.98 percent. The price of the 5.25 percent security due August 2010 gained 0.040, or A$0.40 per A$1,000 face amount, to 98.633. A basis point is 0.01 percentage point.
New Zealand government debt declined. The yield on the benchmark 10-year note rose 3 basis points to 6.17 percent. The price of the 6 percent security maturing December 2019 fell 0.227 to 98.793.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Candice Zachariahs in New York at czachariahs1@bloomberg.net.
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Aug. 6 (Bloomberg) -- The Australian dollar traded near the lowest in four months as the yield advantage of the nation's two- year government bonds over U.S. Treasuries shrank to the least this year. The New Zealand dollar gained.
Australia's currency may weaken for a seventh day, its longest losing stretch in almost two years, as the prices of commodities the country exports such as gold and oil declined. New Zealand's currency rose to the highest in almost a month versus Australia's as the Reserve Bank of Australia signaled yesterday it may begin cutting interest rates.
``The Australian dollar is in a massive, massive negative channel at the moment, it's got no friends,'' said Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney. ``We've seen commodity prices go against it, interest-rate differentials go against it, the U.S. dollar is strengthening and oil prices are coming down.''
The Australian dollar traded at 91.89 U.S. cents as of 4:55 p.m. in Sydney from 91.85 cents late in Asia yesterday. It earlier reached 91.33 cents, the lowest since April 4. The currency, known as the Aussie, climbed to 99.63 yen from 99.07 yen yesterday when it slid 1.8 percent, the most since March.
The New Zealand dollar rose to NZ$1.2645 per Australian dollar from NZ$1.2685 late in Asia yesterday. It earlier touched NZ$1.2599, the strongest since July 10. The currency, also known as the kiwi, advanced to 72.62 U.S. cents from 72.40 cents. It strengthened to 78.74 yen from 78.09 yen.
Worst Performer
Australia's currency extended its decline in the past week to 2.5 percent, the worst performance among the 16 most-active currencies versus the U.S. dollar, as the difference in yield between local two-year bonds and similar-dated U.S. debt shrank to 3.44 percentage points, the narrowest since Dec. 7.
Traders are betting that the RBA will lower its benchmark rate by 0.87 percentage point in the next 12 months, up from 0.65 percentage point on Aug. 4, according to a Credit Suisse Group index based on swaps trading. Australian home-loan approvals fell to a four-year low in June, the statistics bureau said today, adding to signs the economy is cooling.
RBA Governor Glenn Stevens said yesterday that inflation may slow, allowing for a ``less restrictive stance'' on interest rates. The central bank left its benchmark interest rate unchanged at 7.25 percent, which compares with 8 percent in New Zealand, 2 percent in the U.S. and 0.5 percent in Japan.
The Australian dollar also weakened as prices slid for gold and crude oil, the nation's third and fourth most-valuable raw material exports. Gold dropped below $900 an ounce and crude oil fell below $119 a barrel to its lowest in three months. Commodity exports contribute 17 percent to the nation's $1 trillion economy.
Technical Charts
Losses in the Australian dollar may be limited as technical charts signaled the currency's 6.7 percent slide from a 25-year high on July 16 was excessive.
``Short term, it looks a bit overdone,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``The Aussie in three weeks has gone from 98.50 cents down to 91.30 cents, so we're starting to see some'' investors buying the currency to cover their wrong-way bets.
The Australian dollar's 14-day relative strength index versus the U.S. dollar was 24.21 according to data compiled by Bloomberg. A level below 30 signals losses may be excessive and can indicate the currency is about to change direction.
The New Zealand dollar gained for a sixth day against Australia's, the longest winning run since June 2007, on speculation the RBA will cut rates as soon as next month.
`Underpinned'
New Zealand's ``currency has been underpinned by solid interest to buy the kiwi against the Aussie,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``Over the past couple of days, we've seen an about- turn in Australian-dollar sentiment.''
The New Zealand dollar also gained after the nation's commodity export price index rose in July, led by beef, aluminum and lamb, ANZ National Bank Ltd. said yesterday. Sales of commodities make up 70 percent of the nation's overseas sales.
The New Zealand dollar has fallen 2.3 percent since the Reserve Bank of New Zealand cut its benchmark rate a quarter- percentage point to 8 percent on July 24 and signaled further reductions were likely.
Traders are betting the RBNZ will lower borrowing costs by 1.51 percentage points in the next 12 months, according to a Credit Suisse index.
Australian two-year government bonds rose for an 11th day, pushing the yield down 2 basis points to 5.98 percent. The price of the 5.25 percent security due August 2010 gained 0.040, or A$0.40 per A$1,000 face amount, to 98.633. A basis point is 0.01 percentage point.
New Zealand government debt declined. The yield on the benchmark 10-year note rose 3 basis points to 6.17 percent. The price of the 6 percent security maturing December 2019 fell 0.227 to 98.793.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Candice Zachariahs in New York at czachariahs1@bloomberg.net.
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China Grain Center Lifts Soybean Output Forecast 6%
By William Bi
Aug. 6 (Bloomberg) -- China, the world's biggest soybean consumer, may harvest 6 percent more of the oilseed than previously expected as farmers boosted planting and favorable weather aided crop growth, a state-owned forecaster said.
Output may rise 37 percent from a year ago to 17.5 million metric tons, the China National Grain and Oils Information Center said today in an e-mailed report. That is 1 million tons more than the center's projection last month.
China's higher output may slow its growth in soybean imports, which are set to reach a record 34.4 million tons in the year through Sept. 30. A slow-down in China's buying may add to pressure on the commodity traded in Chicago, which is near a three-month low on the prospect of improved U.S. crops.
``The tone of a bumper soybean crop this year was set'' after extensive rains in China's main grain-growing region this month, Li Jianlei, analyst at Cofco Co., said in an e-mailed report today. ``Soybean prices may be poised to fall further.''
China's northeast, the nation's largest growing area for corn and soybeans, may have above-average temperatures in the first 10 days of August, aiding soybean pod-forming and corn silking, the National Meteorological Center said last week.
Farmers planted 9.65 million hectares (23.8 million acres) of soybeans in the spring, a gain of 11 percent or 950,000 hectares from 2007, turning some corn-growing land to the more profitable soybeans, the center said. That switch helped cut corn plantings by 0.7 percent to 27.9 million hectares, it said.
Yields Rise
Still, corn output may gain by 4.2 million tons from a year ago to 156 million tons because average yields in the coming harvest is expected to jump significantly from last year's drought-hampered crops, the center said. This year's total output was revised up by 2 million tons from 154 million tons in the center's forecast on July 8.
Rice production may gain 0.5 percent to 186.5 million tons, up from the center's projection of 185.7 million tons last month, it said. The center left output of wheat and rapeseed unchanged at 112.5 million tons and 11.5 million tons respectively.
The following table details crop forecast by the center.
===============================================================
2007* 2008(July) 2008 (Aug) %Change
(YoY) =============================================================== Production (in million tons)
Corn 151.8 154.0 156.0 2.7
Wheat 109.9 112.5 112.5 2.4
Rough rice 185.5 185.7 186.5 0.5
Soybeans 12.8 16.5 17.5 36.7
Rapeseed 10.6 11.5 11.5 8.5
Planted area (in million hectares)
Corn 28.05 27.70 27.85 -0.7
Wheat 22.98 23.00 23.00 0.1
Rice 29.23 29.20 29.20 -0.1
Soybeans 8.02 9.50 9.65 10.9
Rapeseed 5.60 6.40 6.40 13.3 ===============================================================
*The center cited revised 2007 figures by the National Bureau of Statistics
To contact the reporter for this story: William Bi in Beijing at wbi@bloomberg.net
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Aug. 6 (Bloomberg) -- China, the world's biggest soybean consumer, may harvest 6 percent more of the oilseed than previously expected as farmers boosted planting and favorable weather aided crop growth, a state-owned forecaster said.
Output may rise 37 percent from a year ago to 17.5 million metric tons, the China National Grain and Oils Information Center said today in an e-mailed report. That is 1 million tons more than the center's projection last month.
China's higher output may slow its growth in soybean imports, which are set to reach a record 34.4 million tons in the year through Sept. 30. A slow-down in China's buying may add to pressure on the commodity traded in Chicago, which is near a three-month low on the prospect of improved U.S. crops.
``The tone of a bumper soybean crop this year was set'' after extensive rains in China's main grain-growing region this month, Li Jianlei, analyst at Cofco Co., said in an e-mailed report today. ``Soybean prices may be poised to fall further.''
China's northeast, the nation's largest growing area for corn and soybeans, may have above-average temperatures in the first 10 days of August, aiding soybean pod-forming and corn silking, the National Meteorological Center said last week.
Farmers planted 9.65 million hectares (23.8 million acres) of soybeans in the spring, a gain of 11 percent or 950,000 hectares from 2007, turning some corn-growing land to the more profitable soybeans, the center said. That switch helped cut corn plantings by 0.7 percent to 27.9 million hectares, it said.
Yields Rise
Still, corn output may gain by 4.2 million tons from a year ago to 156 million tons because average yields in the coming harvest is expected to jump significantly from last year's drought-hampered crops, the center said. This year's total output was revised up by 2 million tons from 154 million tons in the center's forecast on July 8.
Rice production may gain 0.5 percent to 186.5 million tons, up from the center's projection of 185.7 million tons last month, it said. The center left output of wheat and rapeseed unchanged at 112.5 million tons and 11.5 million tons respectively.
The following table details crop forecast by the center.
===============================================================
2007* 2008(July) 2008 (Aug) %Change
(YoY) =============================================================== Production (in million tons)
Corn 151.8 154.0 156.0 2.7
Wheat 109.9 112.5 112.5 2.4
Rough rice 185.5 185.7 186.5 0.5
Soybeans 12.8 16.5 17.5 36.7
Rapeseed 10.6 11.5 11.5 8.5
Planted area (in million hectares)
Corn 28.05 27.70 27.85 -0.7
Wheat 22.98 23.00 23.00 0.1
Rice 29.23 29.20 29.20 -0.1
Soybeans 8.02 9.50 9.65 10.9
Rapeseed 5.60 6.40 6.40 13.3 ===============================================================
*The center cited revised 2007 figures by the National Bureau of Statistics
To contact the reporter for this story: William Bi in Beijing at wbi@bloomberg.net
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Crude Oil Is Little Changed After Falling as Demand May Decline
By Nesa Subrahmaniyan
Aug. 6 (Bloomberg) -- Crude oil was little changed after falling yesterday in New York on concern slowing economic growth in the U.S. and Europe will curb fuel consumption.
Oil dropped to its lowest level since early May as the services industries in the U.S. and Europe shrank for a second straight month in July. Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.
``There's concern about fading demand because of economic slowdowns in the U.S., Europe and now, even China,'' said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore. ``It's a correction, not a collapse, and we are halfway there,'' said Merath, who forecast oil will fall to $110 a barrel by the end of September.
Crude oil for September delivery traded at $119.08 a barrel, down 9 cents at 3:03 p.m. Singapore time in electronic trading on the New York Mercantile Exchange after earlier falling as much as $1.07, or 0.9 percent, to $118.10 a barrel. Yesterday, the contract settled at $119.17 a barrel in New York after dropping to $118, the lowest since May 5.
Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.
The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.
Inflation Hedge
Oil has also fallen as its appeal as an inflation hedge has been curbed by gains in the dollar against the euro and yen. The dollar traded near a seven-week high against the euro, and was near its highest versus the yen in more than a month. U.S. Federal Reserve policy makers left interest rates unchanged yesterday amid weak economic growth.
``Monetary conditions are also fading away,'' reducing oil's appeal to investors, Credit Suisse's Merath said.
U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report.
Nymex gasoline for September delivery fell as much as 1.89 cents, or 0.6 percent, to $2.9375 a gallon and traded at $2.9575 at 2:55 p.m. Singapore time. Yesterday it lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the fuel.
Gasoline Prices
Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
``Blame the deteriorating U.S. economy and its weak demand,'' said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. ``Supply concerns are being ignored now.''
Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, according to the National Hurricane Center.
The U.S. Energy department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.
Brent crude for September settlement traded at $117.84 a barrel, up 14 cents at 3:06 p.m. Singapore time. Earlier today it dropped as much as 80 cents, or 0.7 percent, to $116.90 a barrel on London's ICE Futures Europe exchange.
OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
``The Saudis are delivering what they promised after they said in June they would increase production,'' Credit Suisse's Merath said.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
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Aug. 6 (Bloomberg) -- Crude oil was little changed after falling yesterday in New York on concern slowing economic growth in the U.S. and Europe will curb fuel consumption.
Oil dropped to its lowest level since early May as the services industries in the U.S. and Europe shrank for a second straight month in July. Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.
``There's concern about fading demand because of economic slowdowns in the U.S., Europe and now, even China,'' said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore. ``It's a correction, not a collapse, and we are halfway there,'' said Merath, who forecast oil will fall to $110 a barrel by the end of September.
Crude oil for September delivery traded at $119.08 a barrel, down 9 cents at 3:03 p.m. Singapore time in electronic trading on the New York Mercantile Exchange after earlier falling as much as $1.07, or 0.9 percent, to $118.10 a barrel. Yesterday, the contract settled at $119.17 a barrel in New York after dropping to $118, the lowest since May 5.
Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.
The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.
Inflation Hedge
Oil has also fallen as its appeal as an inflation hedge has been curbed by gains in the dollar against the euro and yen. The dollar traded near a seven-week high against the euro, and was near its highest versus the yen in more than a month. U.S. Federal Reserve policy makers left interest rates unchanged yesterday amid weak economic growth.
``Monetary conditions are also fading away,'' reducing oil's appeal to investors, Credit Suisse's Merath said.
U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report.
Nymex gasoline for September delivery fell as much as 1.89 cents, or 0.6 percent, to $2.9375 a gallon and traded at $2.9575 at 2:55 p.m. Singapore time. Yesterday it lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the fuel.
Gasoline Prices
Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
``Blame the deteriorating U.S. economy and its weak demand,'' said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. ``Supply concerns are being ignored now.''
Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, according to the National Hurricane Center.
The U.S. Energy department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.
Brent crude for September settlement traded at $117.84 a barrel, up 14 cents at 3:06 p.m. Singapore time. Earlier today it dropped as much as 80 cents, or 0.7 percent, to $116.90 a barrel on London's ICE Futures Europe exchange.
OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
``The Saudis are delivering what they promised after they said in June they would increase production,'' Credit Suisse's Merath said.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
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Copper Trades Little Changed in Asia on Slowdown, Stockpiles
By Glenys Sim
Aug. 6 (Bloomberg) -- Copper traded little changed in Asia after declining to the lowest in almost six months on concern global demand may be weakening as stockpiles rise amid a global economic slowdown.
Manufacturing shrank last month in China and Europe, and stagnated in the U.S., the biggest markets for metals. Chinese home-appliance makers, the world's largest exporters of the products, are cutting copper buying as air conditioner and fridge sales slow, said Jiangxi Copper Co.
``Market participants are mainly concerned with fading demand because of economic downturn materializing everywhere from the U.S. to Europe and now a slowdown in China,'' Tobias Merath, an analyst at Credit Suisse Group in Singapore, said today in a Bloomberg Television interview. ``So there's certainly a psychological component there.''
Copper for delivery in three months stood at $7,630 a metric ton on the London Metal Exchange at 1:12 p.m. Singapore time. The contract fell to $7,530 a ton yesterday, the lowest since Feb. 7.
Copper for October delivery rose as much as 660 yuan, or 1.1 percent, to 59,620 yuan ($8,702) a ton on the Shanghai Futures Exchange before trading at 59,480 yuan by the 11:30 a.m. local time break.
Copper inventories monitored by the London Metal Exchange climbed for a 17th day to 148,750 metric tons yesterday, the highest since Feb. 26.
``Inflationary pressures should come off rather quickly now with the oil price down so much,'' Merath said. ``This gives emerging markets some leeway to stabilize their growth rate, so we don't think this is really a start of a collapse of the commodities sector.''
Crude oil fell for a third day in New York, trading near $118 a barrel as demand may be further eroded by economic slowdowns in the U.S., Europe and China.
Among other LME-traded metals, aluminum rose 0.2 percent to $2,905 a ton, zinc was up 0.8 percent at $1,760 and nickel was down 0.4 percent at $17,530. Lead and tin had not traded as of 1:16 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Aug. 6 (Bloomberg) -- Copper traded little changed in Asia after declining to the lowest in almost six months on concern global demand may be weakening as stockpiles rise amid a global economic slowdown.
Manufacturing shrank last month in China and Europe, and stagnated in the U.S., the biggest markets for metals. Chinese home-appliance makers, the world's largest exporters of the products, are cutting copper buying as air conditioner and fridge sales slow, said Jiangxi Copper Co.
``Market participants are mainly concerned with fading demand because of economic downturn materializing everywhere from the U.S. to Europe and now a slowdown in China,'' Tobias Merath, an analyst at Credit Suisse Group in Singapore, said today in a Bloomberg Television interview. ``So there's certainly a psychological component there.''
Copper for delivery in three months stood at $7,630 a metric ton on the London Metal Exchange at 1:12 p.m. Singapore time. The contract fell to $7,530 a ton yesterday, the lowest since Feb. 7.
Copper for October delivery rose as much as 660 yuan, or 1.1 percent, to 59,620 yuan ($8,702) a ton on the Shanghai Futures Exchange before trading at 59,480 yuan by the 11:30 a.m. local time break.
Copper inventories monitored by the London Metal Exchange climbed for a 17th day to 148,750 metric tons yesterday, the highest since Feb. 26.
``Inflationary pressures should come off rather quickly now with the oil price down so much,'' Merath said. ``This gives emerging markets some leeway to stabilize their growth rate, so we don't think this is really a start of a collapse of the commodities sector.''
Crude oil fell for a third day in New York, trading near $118 a barrel as demand may be further eroded by economic slowdowns in the U.S., Europe and China.
Among other LME-traded metals, aluminum rose 0.2 percent to $2,905 a ton, zinc was up 0.8 percent at $1,760 and nickel was down 0.4 percent at $17,530. Lead and tin had not traded as of 1:16 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Cisco Advances as Revenue Holds Up Even Amid Economic Slowdown
By Vivek Shankar
Aug. 6 (Bloomberg) -- Cisco Systems Inc., the largest maker of networking equipment, jumped 7.3 percent after Chief Executive Officer John Chambers's forecast for the next six months eased investor concern that business is deteriorating.
Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections, San Jose, California-based Cisco said yesterday.
Financial-services customers and other large corporate clients are investing in new equipment to manage computer networks after paring orders a year ago, Chambers, 58, said in an interview. That helped boost sales of switches, Cisco's biggest product line, by 5 percent in the fourth quarter, up from growth of 3 percent in the previous three months.
``Many people were mentally prepared for a slightly lower outlook,'' said Simon Leopold, an analyst at Morgan Keegan & Co. in New York. He expects the shares to perform in line with the industry and doesn't own any. ``It's a bit of relief rally, sort of `We're happy it's not worse.'''
Cisco rose $1.66 to $24.31 in extended trading yesterday. If the gain holds today in regular Nasdaq Stock Market trading, it would be the biggest jump in two years. The shares had fallen 16 percent this year before today.
Sales will increase about 8 percent this quarter, Chambers said yesterday, indicating revenue of about $10.3 billion. Analysts predicted $10.4 billion, according to a Bloomberg survey. In the second period, revenue will rise 8.5 percent, in line with the average prediction by analysts.
``It's too early to call this a trend,'' Chambers said. The company may continue to see economic challenges for the next few quarters, he said.
Trimming Expenses
To weather the slowdown, Chambers said he will expand Cisco's product lines and trim expenditures. Operating expenses will drop to about 37 percent of sales this quarter, down from about 40 percent in the period just ended. Demand is also rising for the TelePresence videoconferencing system, Chambers said.
The company departed from its usual practice of issuing an annual forecast, saying it won't make that prediction until revenue growth starts to reaccelerate.
Fourth-quarter net income advanced 4.4 percent to $2.01 billion, or 33 cents a share, from $1.93 billion, or 31 cents, a year earlier, Cisco said. Excluding costs such as stock-based compensation, profit was 40 cents a share, compared with the 39 cents estimated by analysts.
Revenue climbed 9.9 percent to $10.36 billion. Analysts in a Bloomberg survey predicted $10.3 billion.
Positive Sign
Orders in the enterprise unit, which caters to Cisco's biggest customers, rose 13 percent in the fourth quarter, which ended July 26.
``People are still putting their money where their mouth is,'' said Barry Jaruzelski, a technology analyst at consulting firm Booz Allen Hamilton Inc. in New York. ``It's a very positive sign.''
Cisco's sales to phone and cable-television companies, known as service providers, slowed as some clients delayed purchases. Orders grew 5 percent in the fourth quarter, down from 6 percent in the third quarter, and 20 percent in the period before that.
The business was ``mixed, both by companies and geographies,'' Chambers said on the call. It accounts for about 24 percent of sales, according to Credit Suisse Group AG.
Investors consider Cisco to be a barometer for the technology industry because it dominates the market for routers and switches. The report followed earnings from Google Inc. and Microsoft Corp. last month that disappointed investors.
Chambers reiterated that Cisco's business may not rebound until 2009. Still, ``no one really knows,'' he said.
To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- Cisco Systems Inc., the largest maker of networking equipment, jumped 7.3 percent after Chief Executive Officer John Chambers's forecast for the next six months eased investor concern that business is deteriorating.
Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections, San Jose, California-based Cisco said yesterday.
Financial-services customers and other large corporate clients are investing in new equipment to manage computer networks after paring orders a year ago, Chambers, 58, said in an interview. That helped boost sales of switches, Cisco's biggest product line, by 5 percent in the fourth quarter, up from growth of 3 percent in the previous three months.
``Many people were mentally prepared for a slightly lower outlook,'' said Simon Leopold, an analyst at Morgan Keegan & Co. in New York. He expects the shares to perform in line with the industry and doesn't own any. ``It's a bit of relief rally, sort of `We're happy it's not worse.'''
Cisco rose $1.66 to $24.31 in extended trading yesterday. If the gain holds today in regular Nasdaq Stock Market trading, it would be the biggest jump in two years. The shares had fallen 16 percent this year before today.
Sales will increase about 8 percent this quarter, Chambers said yesterday, indicating revenue of about $10.3 billion. Analysts predicted $10.4 billion, according to a Bloomberg survey. In the second period, revenue will rise 8.5 percent, in line with the average prediction by analysts.
``It's too early to call this a trend,'' Chambers said. The company may continue to see economic challenges for the next few quarters, he said.
Trimming Expenses
To weather the slowdown, Chambers said he will expand Cisco's product lines and trim expenditures. Operating expenses will drop to about 37 percent of sales this quarter, down from about 40 percent in the period just ended. Demand is also rising for the TelePresence videoconferencing system, Chambers said.
The company departed from its usual practice of issuing an annual forecast, saying it won't make that prediction until revenue growth starts to reaccelerate.
Fourth-quarter net income advanced 4.4 percent to $2.01 billion, or 33 cents a share, from $1.93 billion, or 31 cents, a year earlier, Cisco said. Excluding costs such as stock-based compensation, profit was 40 cents a share, compared with the 39 cents estimated by analysts.
Revenue climbed 9.9 percent to $10.36 billion. Analysts in a Bloomberg survey predicted $10.3 billion.
Positive Sign
Orders in the enterprise unit, which caters to Cisco's biggest customers, rose 13 percent in the fourth quarter, which ended July 26.
``People are still putting their money where their mouth is,'' said Barry Jaruzelski, a technology analyst at consulting firm Booz Allen Hamilton Inc. in New York. ``It's a very positive sign.''
Cisco's sales to phone and cable-television companies, known as service providers, slowed as some clients delayed purchases. Orders grew 5 percent in the fourth quarter, down from 6 percent in the third quarter, and 20 percent in the period before that.
The business was ``mixed, both by companies and geographies,'' Chambers said on the call. It accounts for about 24 percent of sales, according to Credit Suisse Group AG.
Investors consider Cisco to be a barometer for the technology industry because it dominates the market for routers and switches. The report followed earnings from Google Inc. and Microsoft Corp. last month that disappointed investors.
Chambers reiterated that Cisco's business may not rebound until 2009. Still, ``no one really knows,'' he said.
To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net
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Atlantia, BNP Paribas, Commerzbank: European Equity Preview
By Eric Martin
Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in Europe trading. Stock symbols are in parentheses, and share prices are from the previous close.
Europe's Dow Jones Stoxx 600 gained 2.7 percent to 285.01. The Dow Jones Stoxx 50 Index rose 2.7 percent to 2,898.86. The Euro Stoxx 50 Index, a benchmark for nations using the euro, added 2.8 percent to 3,380.09.
A2A SpA (A2A IM): Italy's largest municipal utility is scheduled to publish first-half results. The shares declined 0.3 percent to 2.30 euros.
Atlantia SpA (ATL IM): Italy's biggest toll-road operator reported first-half profit of 366.6 million euros ($567 million), beating the average analyst estimate by 2.3 percent, as acquisitions and higher tolls offset sluggish traffic growth. The shares gained 11 cents, or 0.6 percent, to 17.11 euros.
BNP Paribas SA (BNP FP): France's biggest bank by market value reports second-quarter earnings before the market opens in Paris. Net income probably fell 33 percent to 1.52 billion euros, according to the median of 13 analyst estimates. The shares added 2.38 euros, or 4 percent, to 61.88.
Commerzbank AG (CBK GY): Germany's second-largest bank will release second-quarter results. Net income probably fell on debt- related writedowns and after last year's earnings were boosted by the sale of its Jupiter fund unit, according to analysts in a Bloomberg survey. The shares rose 1.025 cents, or 4.9 percent, to 21.945 euros.
Continental AG (CON GY): Europe's second-largest tiremaker is in talks with U.S. private-equity firms Apollo Management LP and KKR & Co. to help fend off a hostile takeover by Schaeffler Group, Handelsblatt reported, citing unidentified people in the banking industry. The shares added 26 cents, or 0.4 percent, to 72.21 euros.
Galp Energia SGPS SA (GALP PL): Portugal's biggest oil company may say first-half adjusted net income declined 37 percent to 178.8 million euros on lower refining margins, according to the median estimate of five analysts surveyed by Bloomberg. Galp slipped 31 cents, or 2.7 percent, to 11 euros.
Givaudan SA (GIVN VX): The world's biggest maker of scents and flavors may make further acquisitions, Gilles Andrier, the company's chief executive officer, told Handelszeitung in an interview. Givaudan rose 5.50 Swiss francs, or 0.6 percent, to 883 francs.
Henkel AG & Co. KGaA (HEN3 GY): The maker of Loctite glue and Persil detergent may report second-quarter profit rose on higher glue prices and new hair-care products, according to analysts surveyed by Bloomberg News. Henkel added 1.32 euros, or 5.3 percent, to 26.19.
Iberia Lineas Aereas de Espana SA (IBLA SM): British Airways Plc (BAY LN), which last week said it started talks to merge with Iberia, said it filled less available seating in July as slowing economic growth damped demand for leisure and business travel. Iberia gained 17 cents, or 8.9 percent, to 2.09 euros.
Munich Re (MUV2 GY): The world's largest reinsurer will hold a press conference on second-quarter results. Net income fell to about 600 million euros from 1.16 million euros a year earlier, Munich Re said on July 25, warning of ``substantial'' writedowns on stock investments. The shares gained 3.81 euros, or 3.6 percent, to 110.37.
Nokian Renkaat Oyj (NRE1V FH): The biggest Nordic tiremaker will probably say it had second-quarter net income of 56.7 million euros on revenue of 288.5 million euros, the mean analyst predictions. The stock climbed 2.1 euros, or 7.9 percent, to 28.6.
OMV AG (OMV AV): The Austrian oil company aiming to merge with Hungary's Mol Nyrt. may say second-quarter profit gained 31 percent because of higher earnings from producing oil and natural gas. OMV fell 1.18 euros, or 2.7 percent, to 42.32 euros.
ProSiebenSat.1 Media AG (PSM GY): Germany's biggest private broadcaster is scheduled to report second-quarter results. The shares rallied 66 cents, or 12 percent, to 6.19 euros.
Swiss Re (RUKN VX): The world's second-largest reinsurer said profit dropped 53 percent, more than analysts estimated, after 362 million Swiss francs ($345 million) of writedowns related to credit-default swaps. Swiss Re rose 1.25 Swiss francs, or 1.9 percent, to 66.65.
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
Read more...
Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in Europe trading. Stock symbols are in parentheses, and share prices are from the previous close.
Europe's Dow Jones Stoxx 600 gained 2.7 percent to 285.01. The Dow Jones Stoxx 50 Index rose 2.7 percent to 2,898.86. The Euro Stoxx 50 Index, a benchmark for nations using the euro, added 2.8 percent to 3,380.09.
A2A SpA (A2A IM): Italy's largest municipal utility is scheduled to publish first-half results. The shares declined 0.3 percent to 2.30 euros.
Atlantia SpA (ATL IM): Italy's biggest toll-road operator reported first-half profit of 366.6 million euros ($567 million), beating the average analyst estimate by 2.3 percent, as acquisitions and higher tolls offset sluggish traffic growth. The shares gained 11 cents, or 0.6 percent, to 17.11 euros.
BNP Paribas SA (BNP FP): France's biggest bank by market value reports second-quarter earnings before the market opens in Paris. Net income probably fell 33 percent to 1.52 billion euros, according to the median of 13 analyst estimates. The shares added 2.38 euros, or 4 percent, to 61.88.
Commerzbank AG (CBK GY): Germany's second-largest bank will release second-quarter results. Net income probably fell on debt- related writedowns and after last year's earnings were boosted by the sale of its Jupiter fund unit, according to analysts in a Bloomberg survey. The shares rose 1.025 cents, or 4.9 percent, to 21.945 euros.
Continental AG (CON GY): Europe's second-largest tiremaker is in talks with U.S. private-equity firms Apollo Management LP and KKR & Co. to help fend off a hostile takeover by Schaeffler Group, Handelsblatt reported, citing unidentified people in the banking industry. The shares added 26 cents, or 0.4 percent, to 72.21 euros.
Galp Energia SGPS SA (GALP PL): Portugal's biggest oil company may say first-half adjusted net income declined 37 percent to 178.8 million euros on lower refining margins, according to the median estimate of five analysts surveyed by Bloomberg. Galp slipped 31 cents, or 2.7 percent, to 11 euros.
Givaudan SA (GIVN VX): The world's biggest maker of scents and flavors may make further acquisitions, Gilles Andrier, the company's chief executive officer, told Handelszeitung in an interview. Givaudan rose 5.50 Swiss francs, or 0.6 percent, to 883 francs.
Henkel AG & Co. KGaA (HEN3 GY): The maker of Loctite glue and Persil detergent may report second-quarter profit rose on higher glue prices and new hair-care products, according to analysts surveyed by Bloomberg News. Henkel added 1.32 euros, or 5.3 percent, to 26.19.
Iberia Lineas Aereas de Espana SA (IBLA SM): British Airways Plc (BAY LN), which last week said it started talks to merge with Iberia, said it filled less available seating in July as slowing economic growth damped demand for leisure and business travel. Iberia gained 17 cents, or 8.9 percent, to 2.09 euros.
Munich Re (MUV2 GY): The world's largest reinsurer will hold a press conference on second-quarter results. Net income fell to about 600 million euros from 1.16 million euros a year earlier, Munich Re said on July 25, warning of ``substantial'' writedowns on stock investments. The shares gained 3.81 euros, or 3.6 percent, to 110.37.
Nokian Renkaat Oyj (NRE1V FH): The biggest Nordic tiremaker will probably say it had second-quarter net income of 56.7 million euros on revenue of 288.5 million euros, the mean analyst predictions. The stock climbed 2.1 euros, or 7.9 percent, to 28.6.
OMV AG (OMV AV): The Austrian oil company aiming to merge with Hungary's Mol Nyrt. may say second-quarter profit gained 31 percent because of higher earnings from producing oil and natural gas. OMV fell 1.18 euros, or 2.7 percent, to 42.32 euros.
ProSiebenSat.1 Media AG (PSM GY): Germany's biggest private broadcaster is scheduled to report second-quarter results. The shares rallied 66 cents, or 12 percent, to 6.19 euros.
Swiss Re (RUKN VX): The world's second-largest reinsurer said profit dropped 53 percent, more than analysts estimated, after 362 million Swiss francs ($345 million) of writedowns related to credit-default swaps. Swiss Re rose 1.25 Swiss francs, or 1.9 percent, to 66.65.
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
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Crude Oil Falls a Third Day as Slowing Economies May Cut Demand
By Nesa Subrahmaniyan
Aug. 6 (Bloomberg) -- Crude oil fell for a third day in New York, trading near $118 a barrel, on concern slowing economic growth in the U.S. and Europe will curb fuel consumption.
Oil dropped to its lowest level since early May as the services industries in the U.S. and Europe shrank for a second straight month in July. Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.
``There's concern about fading demand because of economic slowdowns in the U.S., Europe and now, even China,'' said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore. ``It's a correction, not a collapse, and we are halfway there,'' said Merath, who forecast oil will fall to $110 a barrel by the end of September.
Crude oil for September delivery fell as much as $1.07, or 0.9 percent, to $118.10 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $118.50 at 1:34 p.m. Singapore time. Yesterday, oil fell $2.24, or 1.8 percent, to settle at $119.17 a barrel in New York. Earlier, it touched $118, the lowest since May 5.
Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.
The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.
Inflation Hedge
Oil has also fallen as its appeal as an inflation hedge has been curbed by gains in the dollar against the euro and yen. The dollar traded near a seven-week high against the euro, and was near its highest versus the yen in more than a month. U.S. Federal Reserve policy makers left interest rates unchanged yesterday amid weak economic growth.
``Monetary conditions are also fading away,'' reducing oil's appeal to investors, Credit Suisse's Merath said.
U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report.
Nymex gasoline for September delivery fell as much as 1.89 cents, or 0.6 percent, to $2.9375 a gallon. Yesterday it lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the fuel.
Gasoline Prices
Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
``Blame the deteriorating U.S. economy and its weak demand,'' said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. ``Supply concerns are being ignored now.''
Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, according to the National Hurricane Center.
The U.S. Energy department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.
Brent crude for September settlement dropped as much as 80 cents, or 0.7 percent, to $116.90 a barrel on London's ICE Futures Europe exchange today, and traded at $116.93 a barrel at 12:11 a.m. Singapore time.
OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
``The Saudis are delivering what they promised after they said in June they would increase production,'' Credit Suisse's Merath said.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
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Aug. 6 (Bloomberg) -- Crude oil fell for a third day in New York, trading near $118 a barrel, on concern slowing economic growth in the U.S. and Europe will curb fuel consumption.
Oil dropped to its lowest level since early May as the services industries in the U.S. and Europe shrank for a second straight month in July. Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.
``There's concern about fading demand because of economic slowdowns in the U.S., Europe and now, even China,'' said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore. ``It's a correction, not a collapse, and we are halfway there,'' said Merath, who forecast oil will fall to $110 a barrel by the end of September.
Crude oil for September delivery fell as much as $1.07, or 0.9 percent, to $118.10 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $118.50 at 1:34 p.m. Singapore time. Yesterday, oil fell $2.24, or 1.8 percent, to settle at $119.17 a barrel in New York. Earlier, it touched $118, the lowest since May 5.
Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. On Aug. 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 percent, its biggest loss since March.
The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.
Inflation Hedge
Oil has also fallen as its appeal as an inflation hedge has been curbed by gains in the dollar against the euro and yen. The dollar traded near a seven-week high against the euro, and was near its highest versus the yen in more than a month. U.S. Federal Reserve policy makers left interest rates unchanged yesterday amid weak economic growth.
``Monetary conditions are also fading away,'' reducing oil's appeal to investors, Credit Suisse's Merath said.
U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday. Demand last week dropped 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report.
Nymex gasoline for September delivery fell as much as 1.89 cents, or 0.6 percent, to $2.9375 a gallon. Yesterday it lost 4.38 cents, or 1.5 percent, to $2.9564 a gallon, the lowest close since May 1. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the fuel.
Gasoline Prices
Regular gasoline at the pump, averaged nationwide, fell 1 cent to $3.871 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
``Blame the deteriorating U.S. economy and its weak demand,'' said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. ``Supply concerns are being ignored now.''
Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, according to the National Hurricane Center.
The U.S. Energy department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.
Brent crude for September settlement dropped as much as 80 cents, or 0.7 percent, to $116.90 a barrel on London's ICE Futures Europe exchange today, and traded at $116.93 a barrel at 12:11 a.m. Singapore time.
OPEC boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
``The Saudis are delivering what they promised after they said in June they would increase production,'' Credit Suisse's Merath said.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
Read more...
Standard Life, ITV, Xstrata, Aricom: U.K., Irish Equity Preview
By Andrew Shepherd
Aug. 6 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.
The benchmark FTSE 100 Index rose 134.3, or 2.5 percent, to 5,454.50. The FTSE All-Share Index rose 2.6 percent and Ireland's ISEQ Index increased 326.47 cents.
U.K. companies:
Anglo American Plc (AAL LN): The world's fourth-biggest diversified mining company completed its transaction for control of Minas-Rio iron ore project and Amapa iron ore system in Brazil. The shares advanced 72 pence, or 2.8 percent, to 2694 pence.
Aricom Plc (ORE LN): The developer of iron-ore mines in eastern Russia is scheduled to report earnings results. The shares declined 1.25 pence, or 2.7 percent, to 45.75 pence.
British Energy Group Plc (BGY LN): British Energy Group Plc's Chief Executive Officer Bill Coley told staff on Aug. 5 that the U.K.'s biggest nuclear power producer is focused on agreeing to a deal to be bought by Electricite de France SA, two people with knowledge of the message said. The shares fell 8 pence, or 1.1 percent, to 710 pence.
Eurasian Natural Resources Corp. (ENRC LN): The Kazakh producer of steel making raw materials is scheduled to release earnings. The shares fell 48 pence, or 4.8 percent, to 950 pence.
F&C Asset Management Plc (FCAM LN): F&C oversees the U.K.'s oldest investment fund and is scheduled to report earnings. The shares rose 3.75 pence, or 3.7 percent, to 104 pence.
Inmarsat Plc (ISAT LN): The U.K. satellite company that provides communications services is scheduled to report earnings results. The shares rose 1.25 pence, or 0.3 percent, to 477.25 pence.
ITV Plc (ITV LN): The U.K.'s biggest commercial broadcaster is scheduled to report earnings. The shares rose 2.8 pence, or 6.4 percent, to 46.3 pence.
Land of Leather Holdings Plc (LAN LN): Land of Leather is being sued for 250,000 pounds ($488,360) plus interest and costs by Agilo Ltd., a fund that buys shares in companies facing problems, the London-based Times reported, citing a claim filed at the High Court. The shares rose 0.25 pence, or 0.6 percent, to 39.5 pence.
Liberty International Plc (LII LN): The U.K.'s largest shopping-center owner is scheduled to report earnings. The shares rose 40.5 pence, or 4.4 percent, to 970 pence.
Morgan Crucible Co. (MGCR LN): Morgan Crucible, whose medical components are used by General Electric Co., is scheduled to report earnings. The shares advanced 4.25 pence, or 2.2 percent, to 199.5 pence.
Old Mutual Plc (OML LN): The U.K. insurer that makes most of its money in South Africa is scheduled to report earnings. The shares advanced 8.2 pence, or 8.5 percent, to 106.4 pence.
Standard Life Plc (SL/ LN): Scotland's largest insurer is scheduled to report earnings. The shares rose 21 pence, or 9.4 percent, to 244.25 pence.
Taylor Nelson Sofres Plc (TNS LN): Apax Partners Worldwide LLP has held discussions with GFK AG about funding a cash offer for Taylor Nelson, the London-based Times reported. The shares rose 5 pence, or 1.9 percent, to 275 pence.
WS Atkins Plc (ATK LN): The U.K.'s biggest engineering- design company is scheduled to release its first quarter trading statement. The shares rose 23 pence, or 2.6 percent, to 918 pence.
Xstrata Plc (XTA LN): The largest exporter of power station coal is scheduled to report earnings. The shares fell 43 pence, or 1.3 percent, to 3,200 pence.
To contact the reporter on this story: Andrew Shepherd in London at ashepherd5@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.
The benchmark FTSE 100 Index rose 134.3, or 2.5 percent, to 5,454.50. The FTSE All-Share Index rose 2.6 percent and Ireland's ISEQ Index increased 326.47 cents.
U.K. companies:
Anglo American Plc (AAL LN): The world's fourth-biggest diversified mining company completed its transaction for control of Minas-Rio iron ore project and Amapa iron ore system in Brazil. The shares advanced 72 pence, or 2.8 percent, to 2694 pence.
Aricom Plc (ORE LN): The developer of iron-ore mines in eastern Russia is scheduled to report earnings results. The shares declined 1.25 pence, or 2.7 percent, to 45.75 pence.
British Energy Group Plc (BGY LN): British Energy Group Plc's Chief Executive Officer Bill Coley told staff on Aug. 5 that the U.K.'s biggest nuclear power producer is focused on agreeing to a deal to be bought by Electricite de France SA, two people with knowledge of the message said. The shares fell 8 pence, or 1.1 percent, to 710 pence.
Eurasian Natural Resources Corp. (ENRC LN): The Kazakh producer of steel making raw materials is scheduled to release earnings. The shares fell 48 pence, or 4.8 percent, to 950 pence.
F&C Asset Management Plc (FCAM LN): F&C oversees the U.K.'s oldest investment fund and is scheduled to report earnings. The shares rose 3.75 pence, or 3.7 percent, to 104 pence.
Inmarsat Plc (ISAT LN): The U.K. satellite company that provides communications services is scheduled to report earnings results. The shares rose 1.25 pence, or 0.3 percent, to 477.25 pence.
ITV Plc (ITV LN): The U.K.'s biggest commercial broadcaster is scheduled to report earnings. The shares rose 2.8 pence, or 6.4 percent, to 46.3 pence.
Land of Leather Holdings Plc (LAN LN): Land of Leather is being sued for 250,000 pounds ($488,360) plus interest and costs by Agilo Ltd., a fund that buys shares in companies facing problems, the London-based Times reported, citing a claim filed at the High Court. The shares rose 0.25 pence, or 0.6 percent, to 39.5 pence.
Liberty International Plc (LII LN): The U.K.'s largest shopping-center owner is scheduled to report earnings. The shares rose 40.5 pence, or 4.4 percent, to 970 pence.
Morgan Crucible Co. (MGCR LN): Morgan Crucible, whose medical components are used by General Electric Co., is scheduled to report earnings. The shares advanced 4.25 pence, or 2.2 percent, to 199.5 pence.
Old Mutual Plc (OML LN): The U.K. insurer that makes most of its money in South Africa is scheduled to report earnings. The shares advanced 8.2 pence, or 8.5 percent, to 106.4 pence.
Standard Life Plc (SL/ LN): Scotland's largest insurer is scheduled to report earnings. The shares rose 21 pence, or 9.4 percent, to 244.25 pence.
Taylor Nelson Sofres Plc (TNS LN): Apax Partners Worldwide LLP has held discussions with GFK AG about funding a cash offer for Taylor Nelson, the London-based Times reported. The shares rose 5 pence, or 1.9 percent, to 275 pence.
WS Atkins Plc (ATK LN): The U.K.'s biggest engineering- design company is scheduled to release its first quarter trading statement. The shares rose 23 pence, or 2.6 percent, to 918 pence.
Xstrata Plc (XTA LN): The largest exporter of power station coal is scheduled to report earnings. The shares fell 43 pence, or 1.3 percent, to 3,200 pence.
To contact the reporter on this story: Andrew Shepherd in London at ashepherd5@bloomberg.net
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Commerzbank, Fuchs, Henkel, Munich Re: German Equity Preview
By Stefanie Haxel
Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in German trading. Stock symbols are in parentheses, and share prices are from the previous close.
The X-DAX Index rose 0.5 percent to 6556.62. The measure, derived from trading in DAX Index futures, provides an estimate of Germany's benchmark index. The DAX rose 2.7 percent to 6,518.7.
Air Berlin Plc (AB1 GY): Europe's third-biggest discount airline is scheduled to report second-quarter results. The shares climbed 23 cents, or 6.7 percent, to 3.72 euros.
Commerzbank AG (CBK GY): Germany's second-largest bank will release second-quarter results. Net income probably fell on debt-related writedowns and after last year's earnings were boosted by the sale of its Jupiter fund unit, according to analysts in a Bloomberg survey. The shares rose 1.025 cents, or 4.9 percent, to 21.945 euros.
Continental AG (CON GY): Europe's second-largest tiremaker is in talks with U.S. private-equity firms Apollo Management LP and KKR & Co. to help fend off a hostile takeover by Schaeffler Group, Handelsblatt reported, citing unidentified people in the banking industry. The shares added 26 cents, or 0.4 percent, to 72.21 euros.
Freenet AG (FNT GY): Vodafone Group Plc is considered the favorite to buy the digital-subscriber-line business of the mobile-phone and Internet company, Platow Brief reported, without citing anyone. Freenet shares lost 59 cents, or 5.1 percent, to 10.97 euros.
Fuchs Petrolub AG (FPE GY): Germany's largest maker of lubricants is scheduled to release quarterly results. Net income probably gained 6.1 percent to 33 million euros ($51.4 million), according to the median of seven estimates in a Bloomberg News survey. The shares fell 2.20 euros, or 3.7 percent, to 57.46.
Henkel AG & Co. KGaA (HEN3 GY): The maker of Loctite glue and Persil detergent may report tomorrow second-quarter profit rose on higher glue prices and new hair-care products, according to analysts surveyed by Bloomberg News. Henkel shares added 1.32 euros, or 5.3 percent, to 26.19.
Munich Re (MUV2 GY): The world's largest reinsurer will hold a press conference on second-quarter results. Net income fell to about 600 million euros ($929 million) from 1.16 million euros a year earlier, Munich Re said on July 25, warning of ``substantial'' writedowns on stock investments. The shares gained 3.81 euros, or 3.6 percent, to 110.37.
ProSiebenSat.1 Media AG (PSM GY): Germany's biggest private broadcaster is scheduled to report second-quarter results. The shares rallied 66 cents, or 12 percent, to 6.19 euros.
To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.
Read more...
Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in German trading. Stock symbols are in parentheses, and share prices are from the previous close.
The X-DAX Index rose 0.5 percent to 6556.62. The measure, derived from trading in DAX Index futures, provides an estimate of Germany's benchmark index. The DAX rose 2.7 percent to 6,518.7.
Air Berlin Plc (AB1 GY): Europe's third-biggest discount airline is scheduled to report second-quarter results. The shares climbed 23 cents, or 6.7 percent, to 3.72 euros.
Commerzbank AG (CBK GY): Germany's second-largest bank will release second-quarter results. Net income probably fell on debt-related writedowns and after last year's earnings were boosted by the sale of its Jupiter fund unit, according to analysts in a Bloomberg survey. The shares rose 1.025 cents, or 4.9 percent, to 21.945 euros.
Continental AG (CON GY): Europe's second-largest tiremaker is in talks with U.S. private-equity firms Apollo Management LP and KKR & Co. to help fend off a hostile takeover by Schaeffler Group, Handelsblatt reported, citing unidentified people in the banking industry. The shares added 26 cents, or 0.4 percent, to 72.21 euros.
Freenet AG (FNT GY): Vodafone Group Plc is considered the favorite to buy the digital-subscriber-line business of the mobile-phone and Internet company, Platow Brief reported, without citing anyone. Freenet shares lost 59 cents, or 5.1 percent, to 10.97 euros.
Fuchs Petrolub AG (FPE GY): Germany's largest maker of lubricants is scheduled to release quarterly results. Net income probably gained 6.1 percent to 33 million euros ($51.4 million), according to the median of seven estimates in a Bloomberg News survey. The shares fell 2.20 euros, or 3.7 percent, to 57.46.
Henkel AG & Co. KGaA (HEN3 GY): The maker of Loctite glue and Persil detergent may report tomorrow second-quarter profit rose on higher glue prices and new hair-care products, according to analysts surveyed by Bloomberg News. Henkel shares added 1.32 euros, or 5.3 percent, to 26.19.
Munich Re (MUV2 GY): The world's largest reinsurer will hold a press conference on second-quarter results. Net income fell to about 600 million euros ($929 million) from 1.16 million euros a year earlier, Munich Re said on July 25, warning of ``substantial'' writedowns on stock investments. The shares gained 3.81 euros, or 3.6 percent, to 110.37.
ProSiebenSat.1 Media AG (PSM GY): Germany's biggest private broadcaster is scheduled to report second-quarter results. The shares rallied 66 cents, or 12 percent, to 6.19 euros.
To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.
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Bic, BNP Paribas, Pizzorno, Vilmorin: French Stocks Preview
By Helene Fouquet
Aug. 6 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index surged 105.72, or 2.5 percent, to 4,386.35 in Paris after three days of losses. The SBF 120 Index increased 2.4 percent.
Bastide Le Confort Medical SA (BLC FP): The home health- care operator said fourth-quarter revenue rose to 24.9 million euros from 21.5 million euros a year earlier. The company also forecast fiscal 2009 sales will rise at least 10 percent. The shares rose 6 cents, or 0.4 percent, to 14.61 euros.
Bic SA (BB FP): The world's biggest maker of disposable pens reports first-half profit before the market opens in Paris. The shares advanced 2.19 euros, or 6.5 percent, to 35.75 euros.
BNP Paribas SA (BNP FP): France's biggest bank by market value reports second-quarter earnings before the market opens in Paris. Net income probably fell 33 percent to 1.52 billion euros, according to the median of 13 analyst estimates. The shares added 2.38 euros, or 4 percent, to 61.88 euros.
Groupe Pizzorno Environnement (GPE FP): The waste- management company reported a 20 percent rise in first-half revenue and forecast full-year sales will rise at least 10 percent. The shares gained 90 cents, or 4.7 percent, to 19.90 euros.
Vilmorin & Cie. (RIN FP): The carrot and bean seed producer said fiscal year revenue rose 13 percent to 897 million euros and forecast a ``significant rise'' in operating margins. The shares dropped 41 cents, or 0.3 percent, to 119.79 euros.
To contact the reporter on this story: Helene Fouquet in Paris at Hfouquet1@bloomberg.net.
Read more...
Aug. 6 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index surged 105.72, or 2.5 percent, to 4,386.35 in Paris after three days of losses. The SBF 120 Index increased 2.4 percent.
Bastide Le Confort Medical SA (BLC FP): The home health- care operator said fourth-quarter revenue rose to 24.9 million euros from 21.5 million euros a year earlier. The company also forecast fiscal 2009 sales will rise at least 10 percent. The shares rose 6 cents, or 0.4 percent, to 14.61 euros.
Bic SA (BB FP): The world's biggest maker of disposable pens reports first-half profit before the market opens in Paris. The shares advanced 2.19 euros, or 6.5 percent, to 35.75 euros.
BNP Paribas SA (BNP FP): France's biggest bank by market value reports second-quarter earnings before the market opens in Paris. Net income probably fell 33 percent to 1.52 billion euros, according to the median of 13 analyst estimates. The shares added 2.38 euros, or 4 percent, to 61.88 euros.
Groupe Pizzorno Environnement (GPE FP): The waste- management company reported a 20 percent rise in first-half revenue and forecast full-year sales will rise at least 10 percent. The shares gained 90 cents, or 4.7 percent, to 19.90 euros.
Vilmorin & Cie. (RIN FP): The carrot and bean seed producer said fiscal year revenue rose 13 percent to 897 million euros and forecast a ``significant rise'' in operating margins. The shares dropped 41 cents, or 0.3 percent, to 119.79 euros.
To contact the reporter on this story: Helene Fouquet in Paris at Hfouquet1@bloomberg.net.
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Asian Stocks Rise First Day in Four on Oil; Toyota, Sony Gain
By Chua Kong Ho and Shani Raja
Aug. 6 (Bloomberg) -- Asian stocks rose for the first time in four days, led by automakers and electronics manufacturers, on speculation lower oil costs will slow inflation and spur consumer spending.
Toyota Motor Corp., Japan's largest automaker, and Samsung Electronics Co. gained after crude fell for a third day and the Federal Reserve left U.S. interest rates unchanged, saying price gains will ease. Sony Corp. advanced the most in two weeks after saying it will buy Bertelsmann AG's share of their music venture. Commonwealth Bank of Australia led financial companies higher.
``Stocks should react favorably to the increasingly dovish monetary policy stances by central bankers around the world,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``Oil prices are in retreat and the risk of inflation is dissipating.''
The MSCI Asia-Pacific Index increased 1.7 percent to 129.36 as of 1:10 p.m. in Tokyo, snapping a three-day decline. About six stocks rose for each that fell, and all of the index's 10 industry groups advanced. The Philippine Stock Exchange Index climbed 3.5 percent, the biggest gain in the region.
Japan's Nikkei 225 Stock Average added 2.5 percent to 13,230.99. Sanyo Electric Co., Japan's third-largest solar-cell maker, surged the most in four months after forecasting it will double its global market share by 2020.
Toyota, Harvey Norman
All markets in Asia open for trading rallied, apart from Pakistan. Hong Kong is shut today as Severe Tropical Storm Kammuri buffeted the city.
U.S. stocks rallied the most since April, sending the Standard & Poor's 500 Index to a 2.9 percent gain, as oil fell and the central bank forecast that inflation will ease through next year. S&P 500 index futures rose 0.2 percent today.
Toyota, which counts North America as its largest market, added 2.9 percent to 4,630 yen, while rival Honda Motor Co. gained 4.2 percent to 3,450 yen. Samsung Electronics, the world's biggest computer-memory maker, climbed 2.7 percent to 582,000 won.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, jumped the most since March 2006 after the Reserve Bank of Australia yesterday signaled it may begin to cut borrowing costs. The stock gained 7.8 percent to A$3.46.
Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on interest rates.
`Big Relief'
Commonwealth Bank, Australia's biggest mortgage lender, advanced 5 percent to A$43.33, the most since April 21. Westpac Banking Corp., the nation's third-largest bank by market value, added 4.6 percent to A$22.85.
Oil dropped for a third day, by 0.8 percent, to $118.25 at 1:28 p.m. Tokyo time. Yesterday, futures fell $2.81 a barrel on speculation demand will be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11.
Korean Air Lines Co., South Korea's largest carrier, climbed 6.1 percent to 45,350 won, on speculation fuel costs will drop. Air China Ltd., Beijing's biggest airline, rose 2.4 percent to 9.99 yuan.
``A halt in crude price gains is a big relief for investors,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
Philippine Stocks Rise
Sony rose 5.4 percent to 4,280 yen, the most since May 15, after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.
Sanyo Electric jumped 8.7 percent to 225 yen, the most since April 2, after forecasting its share of the solar-battery market will climb to 10 percent by 2020, from 4 percent in the year ended March 31.
Tomy Co. added 4.9 percent to 707 yen, the biggest advance since Feb. 14, after the Japanese toymaker yesterday almost tripled its net income outlook for the six months ending Sept. 30. The popularity of Transformers, made into a movie by Steven Spielberg's DreamWorks SKG last year, boosted sales of character goods and royalty income, according to a company spokeswoman.
Globe Telecom
Globe Telecom Inc., the second-largest mobile-phone operator in the Philippines, jumped 8.4 percent to 1,230 pesos, the most since Oct. 5, 2006, after the company said it will increase dividend payments. Philippine Long Distance Telephone Co., the nation's biggest stock by market value, gained 1.8 percent to 2,570 pesos, the highest since June 3.
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, fell 2.6 percent to 891 yen, heading for the lowest since April 1. First-quarter profit dropped 66 percent to 51.2 billion yen ($473 million), the company said. That trailed the average estimate of 127.8 billion yen in a Bloomberg News survey of analysts.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- Asian stocks rose for the first time in four days, led by automakers and electronics manufacturers, on speculation lower oil costs will slow inflation and spur consumer spending.
Toyota Motor Corp., Japan's largest automaker, and Samsung Electronics Co. gained after crude fell for a third day and the Federal Reserve left U.S. interest rates unchanged, saying price gains will ease. Sony Corp. advanced the most in two weeks after saying it will buy Bertelsmann AG's share of their music venture. Commonwealth Bank of Australia led financial companies higher.
``Stocks should react favorably to the increasingly dovish monetary policy stances by central bankers around the world,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``Oil prices are in retreat and the risk of inflation is dissipating.''
The MSCI Asia-Pacific Index increased 1.7 percent to 129.36 as of 1:10 p.m. in Tokyo, snapping a three-day decline. About six stocks rose for each that fell, and all of the index's 10 industry groups advanced. The Philippine Stock Exchange Index climbed 3.5 percent, the biggest gain in the region.
Japan's Nikkei 225 Stock Average added 2.5 percent to 13,230.99. Sanyo Electric Co., Japan's third-largest solar-cell maker, surged the most in four months after forecasting it will double its global market share by 2020.
Toyota, Harvey Norman
All markets in Asia open for trading rallied, apart from Pakistan. Hong Kong is shut today as Severe Tropical Storm Kammuri buffeted the city.
U.S. stocks rallied the most since April, sending the Standard & Poor's 500 Index to a 2.9 percent gain, as oil fell and the central bank forecast that inflation will ease through next year. S&P 500 index futures rose 0.2 percent today.
Toyota, which counts North America as its largest market, added 2.9 percent to 4,630 yen, while rival Honda Motor Co. gained 4.2 percent to 3,450 yen. Samsung Electronics, the world's biggest computer-memory maker, climbed 2.7 percent to 582,000 won.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, jumped the most since March 2006 after the Reserve Bank of Australia yesterday signaled it may begin to cut borrowing costs. The stock gained 7.8 percent to A$3.46.
Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on interest rates.
`Big Relief'
Commonwealth Bank, Australia's biggest mortgage lender, advanced 5 percent to A$43.33, the most since April 21. Westpac Banking Corp., the nation's third-largest bank by market value, added 4.6 percent to A$22.85.
Oil dropped for a third day, by 0.8 percent, to $118.25 at 1:28 p.m. Tokyo time. Yesterday, futures fell $2.81 a barrel on speculation demand will be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11.
Korean Air Lines Co., South Korea's largest carrier, climbed 6.1 percent to 45,350 won, on speculation fuel costs will drop. Air China Ltd., Beijing's biggest airline, rose 2.4 percent to 9.99 yuan.
``A halt in crude price gains is a big relief for investors,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
Philippine Stocks Rise
Sony rose 5.4 percent to 4,280 yen, the most since May 15, after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.
Sanyo Electric jumped 8.7 percent to 225 yen, the most since April 2, after forecasting its share of the solar-battery market will climb to 10 percent by 2020, from 4 percent in the year ended March 31.
Tomy Co. added 4.9 percent to 707 yen, the biggest advance since Feb. 14, after the Japanese toymaker yesterday almost tripled its net income outlook for the six months ending Sept. 30. The popularity of Transformers, made into a movie by Steven Spielberg's DreamWorks SKG last year, boosted sales of character goods and royalty income, according to a company spokeswoman.
Globe Telecom
Globe Telecom Inc., the second-largest mobile-phone operator in the Philippines, jumped 8.4 percent to 1,230 pesos, the most since Oct. 5, 2006, after the company said it will increase dividend payments. Philippine Long Distance Telephone Co., the nation's biggest stock by market value, gained 1.8 percent to 2,570 pesos, the highest since June 3.
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, fell 2.6 percent to 891 yen, heading for the lowest since April 1. First-quarter profit dropped 66 percent to 51.2 billion yen ($473 million), the company said. That trailed the average estimate of 127.8 billion yen in a Bloomberg News survey of analysts.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
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Australia Stocks: Macquarie DDR, ResMed, Sino Gold, Stockland
By Shani Raja
Aug. 6 (Bloomberg) -- The S&P/ASX 200 Index jumped 140.40 points, or 2.9 percent, to 4,960.80 at 2:05 p.m. in Sydney, the most since July 21. The broader All Ordinaries Index added 127.90, or 2.6 percent, to 5,009.90, while the futures index expiring in September gained 2.3 percent to 4,940.
Banks and retailers: Financial and retail stocks rallied after Australia's central bank signaled yesterday it may begin to cut borrowing costs as slowing economic growth cools inflation.
Harvey Norman Holdings Ltd. (HVN AU), Australia's largest furniture and electronics retailer, gained 25 cents, or 7.8 percent to A$3.46, the most in more than two years. David Jones Ltd. (DJS AU), the nation's No. 2 department store chain, rose 27 cents, or 7.7 percent, to A$3.76, the highest since May 16.
Commonwealth Bank of Australia (CBA AU), the nation's largest mortgage lender, advanced A$2.14, or 5.2 percent, to A$43.39, the most since April 21. National Australia Bank Ltd. (NAB AU), the largest by assets, climbed 91 cents, or 3.7 percent, to A$25.66.
Gold producers: Newcrest Mining Ltd. (NCM AU) slumped 83 cents, or 3.2 percent, to A$25.48, the lowest since September 2007. Sino Gold Mining Ltd. (SGX AU), owner of China's second- largest bullion mine, fell 5 cents, or 1.1 percent, to A$4.50, the lowest since June 11. St. Barbara Ltd. (SBM AU), aiming to become Australia's third-largest gold producer, lost 1 cent, or 4.8 percent, to 20 cents, the lowest since September 2005.
Gold fell below $900 an ounce for the first time since June in New York, as the dollar's rebound and plunging energy costs reduced the appeal of the precious metal as a hedge against inflation.
Asciano Ltd. (AIO AU), the Australian port and railroad operator fighting a bid from David Bonderman's TPG Capital, added 6 cents, or 1.2 percent, to A$5.10, the highest since Feb. 26. The company plans to sell shares and stakes in units to help fund expansions in Queensland state coal haulage and Saudi Arabia.
Just Group Ltd. (JST AU) rallied 7 cents, or 2.1 percent, to A$3.39, partly reversing yesterday's 7.8 percent decline. Premier Investments Ltd., controlled by Australian billionaire Solomon Lew, increased its stake in Just Group to exceed 50 percent, ensuring support from the target's board for a takeover bid.
Kagara Ltd. (KZL AU) added 16 cents, or 5.7 percent, to A$2.98, the most since July 21. The Australian supplier to Korea Zinc Co. may increase copper production from its Australian mines by 34 percent in the year to June 30, 2009, and more than double zinc output within two years, Executive Chairman Kim Robinson said.
Macquarie DDR Trust (MDT AU), an Australian real estate investment trust, soared 4 cents, or 14 percent, to 34 cents, the index's second-biggest gainer, after Developers Diversified Realty Corp. of the U.S. raised its stake in the company to 8.9 percent from 7.8 percent.
News Corp. (NWS AU), the media company controlled by Rupert Murdoch, rose 47 cents, or 2.9 percent, to A$16.57, the highest since June 27. News Corp. reported fourth-quarter profit that beat analysts' estimates on gains from DVDs and newspapers and the sale of its stake in Gemstar-TV Guide International Inc.
ResMed Inc. (RMD AU), the world's second-biggest maker of machines for breathing-related sleep disorders, soared 62 cents, or 15 percent, to A$4.64, the most in more than eight years and the benchmark's biggest gainer, after its fastest sales growth in seven quarters boosted net income 7.1 percent in the three months ended June 30.
Riversdale Mining Ltd. (RIV AU), an Australian coal-mining company, slumped for the third day this week, losing 65 cents, or 7.3 percent, to A$8.20, the index's biggest loser. The company announced plans Aug. 4 to issue an additional 100,000 ordinary shares at A$1 each.
Santos Ltd. (STO AU) dropped 69 cents, or 4.1 percent, to A$16.26, the lowest since April 30. Crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies.
Stockland (SGP AU) leapt 55 cents, or 13 percent, to A$4.95, the most since 1987, after its rating was raised to ``neutral'' from ``underperform'' by analyst David Burgess at Credit Suisse Group. The 12-month price target is A$5.23 per share.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Aug. 6 (Bloomberg) -- The S&P/ASX 200 Index jumped 140.40 points, or 2.9 percent, to 4,960.80 at 2:05 p.m. in Sydney, the most since July 21. The broader All Ordinaries Index added 127.90, or 2.6 percent, to 5,009.90, while the futures index expiring in September gained 2.3 percent to 4,940.
Banks and retailers: Financial and retail stocks rallied after Australia's central bank signaled yesterday it may begin to cut borrowing costs as slowing economic growth cools inflation.
Harvey Norman Holdings Ltd. (HVN AU), Australia's largest furniture and electronics retailer, gained 25 cents, or 7.8 percent to A$3.46, the most in more than two years. David Jones Ltd. (DJS AU), the nation's No. 2 department store chain, rose 27 cents, or 7.7 percent, to A$3.76, the highest since May 16.
Commonwealth Bank of Australia (CBA AU), the nation's largest mortgage lender, advanced A$2.14, or 5.2 percent, to A$43.39, the most since April 21. National Australia Bank Ltd. (NAB AU), the largest by assets, climbed 91 cents, or 3.7 percent, to A$25.66.
Gold producers: Newcrest Mining Ltd. (NCM AU) slumped 83 cents, or 3.2 percent, to A$25.48, the lowest since September 2007. Sino Gold Mining Ltd. (SGX AU), owner of China's second- largest bullion mine, fell 5 cents, or 1.1 percent, to A$4.50, the lowest since June 11. St. Barbara Ltd. (SBM AU), aiming to become Australia's third-largest gold producer, lost 1 cent, or 4.8 percent, to 20 cents, the lowest since September 2005.
Gold fell below $900 an ounce for the first time since June in New York, as the dollar's rebound and plunging energy costs reduced the appeal of the precious metal as a hedge against inflation.
Asciano Ltd. (AIO AU), the Australian port and railroad operator fighting a bid from David Bonderman's TPG Capital, added 6 cents, or 1.2 percent, to A$5.10, the highest since Feb. 26. The company plans to sell shares and stakes in units to help fund expansions in Queensland state coal haulage and Saudi Arabia.
Just Group Ltd. (JST AU) rallied 7 cents, or 2.1 percent, to A$3.39, partly reversing yesterday's 7.8 percent decline. Premier Investments Ltd., controlled by Australian billionaire Solomon Lew, increased its stake in Just Group to exceed 50 percent, ensuring support from the target's board for a takeover bid.
Kagara Ltd. (KZL AU) added 16 cents, or 5.7 percent, to A$2.98, the most since July 21. The Australian supplier to Korea Zinc Co. may increase copper production from its Australian mines by 34 percent in the year to June 30, 2009, and more than double zinc output within two years, Executive Chairman Kim Robinson said.
Macquarie DDR Trust (MDT AU), an Australian real estate investment trust, soared 4 cents, or 14 percent, to 34 cents, the index's second-biggest gainer, after Developers Diversified Realty Corp. of the U.S. raised its stake in the company to 8.9 percent from 7.8 percent.
News Corp. (NWS AU), the media company controlled by Rupert Murdoch, rose 47 cents, or 2.9 percent, to A$16.57, the highest since June 27. News Corp. reported fourth-quarter profit that beat analysts' estimates on gains from DVDs and newspapers and the sale of its stake in Gemstar-TV Guide International Inc.
ResMed Inc. (RMD AU), the world's second-biggest maker of machines for breathing-related sleep disorders, soared 62 cents, or 15 percent, to A$4.64, the most in more than eight years and the benchmark's biggest gainer, after its fastest sales growth in seven quarters boosted net income 7.1 percent in the three months ended June 30.
Riversdale Mining Ltd. (RIV AU), an Australian coal-mining company, slumped for the third day this week, losing 65 cents, or 7.3 percent, to A$8.20, the index's biggest loser. The company announced plans Aug. 4 to issue an additional 100,000 ordinary shares at A$1 each.
Santos Ltd. (STO AU) dropped 69 cents, or 4.1 percent, to A$16.26, the lowest since April 30. Crude oil fell, closing below $120 a barrel for the first time in three months, amid signs demand may be curtailed by slowdowns in the U.S. and European economies.
Stockland (SGP AU) leapt 55 cents, or 13 percent, to A$4.95, the most since 1987, after its rating was raised to ``neutral'' from ``underperform'' by analyst David Burgess at Credit Suisse Group. The 12-month price target is A$5.23 per share.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Japan Stocks Rise as Inflation Concerns Ease; Fuji Heavy Gains
By Masaki Kondo
Aug. 6 (Bloomberg) -- Japan's stocks rose the most in two weeks as falling oil prices lifted expectations production costs will ease and consumer spending will rebound.
Fuji Heavy Industries Ltd., the maker of Subaru cars, led automakers to their biggest jump in two weeks, while tiremaker Bridgestone Corp. rose the most in six months after crude oil fell a third day. Game maker Konami Corp. surged after posting its biggest quarterly profit gain in two years.
``Investors were caught by fear crude would keep rising endlessly,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which manages about $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
The Nikkei 225 Stock Average climbed 342.38, or 2.7 percent, to 13,257.04 as of 1:50 p.m. in Tokyo, breaking a three-day slide. The broader Topix index added 28.97, or 2.3 percent, to 1,276.68. Both gauges rose the most since July 22.
Crude prices, which have risen 64 percent in the past 12 months and spurred the fastest inflation in a decade in Japan, lost 1.8 percent to $119.17 a barrel yesterday, the lowest since May 5. Rising costs and weakening demand have dented corporate profits, prompting Japanese companies to cut output, investment and hiring.
Yesterday, the Federal Reserve said it ``expects inflation to moderate'' from later this year and left the benchmark interest rate unchanged. The Fed's comments sent U.S. stocks to their biggest rally since April.
Fuji Heavy surged 7.1 percent to 573 yen, the biggest jump since June 11, while Isuzu Motors Ltd., Japan's largest maker of light-duty trucks, soared 6.9 percent to 421 yen, breaking a four-day losing streak. Automakers as a group were set for the biggest gain since July 24.
Tires, Games
Bridgestone surged a second day, rising 7.5 percent to 1,843 yen, set for the sharpest gain since Jan. 25. Rival Sumitomo Rubber Industries Inc. jumped 5.2 percent to 864 yen.
The drop in oil sent a gauge of tiremakers to the biggest gain among groups on the Topix. About seven gallons of oil are needed to make a standard car tire, according to the Rubber Manufacturers Association.
Canon Inc., the world's biggest digital-camera maker, rose 5.2 percent to 5,100 yen. Sony Corp., which gets a quarter of its sales in the Americas, added 5.4 percent to 4,280 yen, the biggest gain since May 15. Sony also gained after saying it will buy out Bertelsmann AG's stake in Sony BMG Music Entertainment to get full control of the recording company. Electronics makers contributed the most to the Topix's jump.
`Solid' Earnings
Konami climbed 5.5 percent to 3,630 yen, headed for the biggest advance since May 16. The company reported a 66 percent jump in first-quarter operating profit yesterday on sales of the latest installment in its ``Metal Gear Solid'' video game series. That's the biggest advance in quarterly operating profit since June 2006, according to data compiled by Bloomberg.
Sanyo Electric Co., Japan's third-biggest solar-cell maker, jumped 9.7 percent to 227 yen, the biggest gain since April 2. Sanyo yesterday forecast its global market share in solar batteries will more than double by 2020 as it increases output.
Other battery-related stocks surged. NGK Insulators Ltd. which makes parts used in wind power, soared 8.9 percent to 1,548 yen, while GS Yuasa Corp., a maker of batteries for electric cars, climbed 9.5 percent to 519 yen.
Mitsubishi UFJ Financial Group Inc., Japan's biggest listed bank, lost 2.7 percent to 890 yen and was the most actively traded stock by volume on the Tokyo exchange. Net income tumbled 66 percent to 51.2 billion yen ($473 million) in the first quarter on increased bad-loan costs and a decline in fee income, the bank said yesterday. That's less than half of what analysts had estimated.
Nikkei futures expiring in September added 2.6 percent to 13,250 in Osaka and gained 2.5 percent to 13,250 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Aug. 6 (Bloomberg) -- Japan's stocks rose the most in two weeks as falling oil prices lifted expectations production costs will ease and consumer spending will rebound.
Fuji Heavy Industries Ltd., the maker of Subaru cars, led automakers to their biggest jump in two weeks, while tiremaker Bridgestone Corp. rose the most in six months after crude oil fell a third day. Game maker Konami Corp. surged after posting its biggest quarterly profit gain in two years.
``Investors were caught by fear crude would keep rising endlessly,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which manages about $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
The Nikkei 225 Stock Average climbed 342.38, or 2.7 percent, to 13,257.04 as of 1:50 p.m. in Tokyo, breaking a three-day slide. The broader Topix index added 28.97, or 2.3 percent, to 1,276.68. Both gauges rose the most since July 22.
Crude prices, which have risen 64 percent in the past 12 months and spurred the fastest inflation in a decade in Japan, lost 1.8 percent to $119.17 a barrel yesterday, the lowest since May 5. Rising costs and weakening demand have dented corporate profits, prompting Japanese companies to cut output, investment and hiring.
Yesterday, the Federal Reserve said it ``expects inflation to moderate'' from later this year and left the benchmark interest rate unchanged. The Fed's comments sent U.S. stocks to their biggest rally since April.
Fuji Heavy surged 7.1 percent to 573 yen, the biggest jump since June 11, while Isuzu Motors Ltd., Japan's largest maker of light-duty trucks, soared 6.9 percent to 421 yen, breaking a four-day losing streak. Automakers as a group were set for the biggest gain since July 24.
Tires, Games
Bridgestone surged a second day, rising 7.5 percent to 1,843 yen, set for the sharpest gain since Jan. 25. Rival Sumitomo Rubber Industries Inc. jumped 5.2 percent to 864 yen.
The drop in oil sent a gauge of tiremakers to the biggest gain among groups on the Topix. About seven gallons of oil are needed to make a standard car tire, according to the Rubber Manufacturers Association.
Canon Inc., the world's biggest digital-camera maker, rose 5.2 percent to 5,100 yen. Sony Corp., which gets a quarter of its sales in the Americas, added 5.4 percent to 4,280 yen, the biggest gain since May 15. Sony also gained after saying it will buy out Bertelsmann AG's stake in Sony BMG Music Entertainment to get full control of the recording company. Electronics makers contributed the most to the Topix's jump.
`Solid' Earnings
Konami climbed 5.5 percent to 3,630 yen, headed for the biggest advance since May 16. The company reported a 66 percent jump in first-quarter operating profit yesterday on sales of the latest installment in its ``Metal Gear Solid'' video game series. That's the biggest advance in quarterly operating profit since June 2006, according to data compiled by Bloomberg.
Sanyo Electric Co., Japan's third-biggest solar-cell maker, jumped 9.7 percent to 227 yen, the biggest gain since April 2. Sanyo yesterday forecast its global market share in solar batteries will more than double by 2020 as it increases output.
Other battery-related stocks surged. NGK Insulators Ltd. which makes parts used in wind power, soared 8.9 percent to 1,548 yen, while GS Yuasa Corp., a maker of batteries for electric cars, climbed 9.5 percent to 519 yen.
Mitsubishi UFJ Financial Group Inc., Japan's biggest listed bank, lost 2.7 percent to 890 yen and was the most actively traded stock by volume on the Tokyo exchange. Net income tumbled 66 percent to 51.2 billion yen ($473 million) in the first quarter on increased bad-loan costs and a decline in fee income, the bank said yesterday. That's less than half of what analysts had estimated.
Nikkei futures expiring in September added 2.6 percent to 13,250 in Osaka and gained 2.5 percent to 13,250 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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China Stocks Rise for First Time in Three Days; Air China Gains
By Zhang Shidong
Aug. 6 (Bloomberg) -- China's stocks rose for the first time in three days, led by banks and transport companies, after oil prices dropped and an official with the nation's pricing regulator said inflation may drop in the fourth quarter.
China Merchants Bank Co., the nation's biggest dual-currency credit-card issuer, and Air China Ltd. advanced as crude traded near $118 a barrel. Lower inflation eases pressure on the central bank to raise borrowing costs to curb rising prices.
``Investors have seen some reason to move into equities with oil dropping and inflation expectations easing,'' said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose 42.38, or 1.6 percent, to 2,745.46 at the 11:30 a.m. local-time break, snapping a two-day, 4.9 percent loss. The gauge earlier fell as much as 0.9 percent.
The measure has lost 49 percent this year, the worst performer among the world's top 20 benchmark indexes, on concern rising fuel prices and accelerating inflation will hurt earnings. The central bank this year ordered lenders to set aside a record amount in reserves to tame rising consumer prices after increasing interest rates six times in 2007.
Zijin Mining Group Co., China's largest gold producer, declined after prices of the bullion retreated.
Merchants Bank, the nation's biggest dual-currency credit- card issuer, gained 3 percent to 24.42 yuan. Citic Securities Co., China's biggest publicly traded brokerage, advanced 3.6 percent to 23.06 yuan.
Airlines Advance
Inflation may ease to 4.5 percent in the fourth quarter as pork price gains slow and a stronger yuan cuts import costs, Xu Lianzhong, head of the price analysis and forecast division at the National Development and Reform Commission's Price Monitoring Center, wrote in the China Securities Journal today. The consumer price index rose 7.1 percent in June.
Air China, the nation's largest international carrier, added 2.4 percent to 9.99 yuan. China Southern Airlines Co., the nation's biggest carrier by fleet size, rose 1.6 percent to 7.76 yuan. Jet fuel accounted for about 40 percent of Chinese airlines' costs in 2007, according to their annual reports.
Oil dropped $2.81 to $118.60 a barrel yesterday on speculation demand may be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11.
Zijin Mining, China's largest gold producer, lost 1.8 percent to 6.58 yuan. Zhongjin Gold Corp., the second-largest, retreated 3.9 percent to 41.98 yuan.
Gold futures fell 2.4 percent to $886.10 an ounce in New York. Earlier, the price touched $883.90, the lowest since June 25, the last time the metal settled below $900.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, gained 1.9 percent to 2,740.41. The Shenzhen Composite Index added 1 percent to 798.47.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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Aug. 6 (Bloomberg) -- China's stocks rose for the first time in three days, led by banks and transport companies, after oil prices dropped and an official with the nation's pricing regulator said inflation may drop in the fourth quarter.
China Merchants Bank Co., the nation's biggest dual-currency credit-card issuer, and Air China Ltd. advanced as crude traded near $118 a barrel. Lower inflation eases pressure on the central bank to raise borrowing costs to curb rising prices.
``Investors have seen some reason to move into equities with oil dropping and inflation expectations easing,'' said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose 42.38, or 1.6 percent, to 2,745.46 at the 11:30 a.m. local-time break, snapping a two-day, 4.9 percent loss. The gauge earlier fell as much as 0.9 percent.
The measure has lost 49 percent this year, the worst performer among the world's top 20 benchmark indexes, on concern rising fuel prices and accelerating inflation will hurt earnings. The central bank this year ordered lenders to set aside a record amount in reserves to tame rising consumer prices after increasing interest rates six times in 2007.
Zijin Mining Group Co., China's largest gold producer, declined after prices of the bullion retreated.
Merchants Bank, the nation's biggest dual-currency credit- card issuer, gained 3 percent to 24.42 yuan. Citic Securities Co., China's biggest publicly traded brokerage, advanced 3.6 percent to 23.06 yuan.
Airlines Advance
Inflation may ease to 4.5 percent in the fourth quarter as pork price gains slow and a stronger yuan cuts import costs, Xu Lianzhong, head of the price analysis and forecast division at the National Development and Reform Commission's Price Monitoring Center, wrote in the China Securities Journal today. The consumer price index rose 7.1 percent in June.
Air China, the nation's largest international carrier, added 2.4 percent to 9.99 yuan. China Southern Airlines Co., the nation's biggest carrier by fleet size, rose 1.6 percent to 7.76 yuan. Jet fuel accounted for about 40 percent of Chinese airlines' costs in 2007, according to their annual reports.
Oil dropped $2.81 to $118.60 a barrel yesterday on speculation demand may be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11.
Zijin Mining, China's largest gold producer, lost 1.8 percent to 6.58 yuan. Zhongjin Gold Corp., the second-largest, retreated 3.9 percent to 41.98 yuan.
Gold futures fell 2.4 percent to $886.10 an ounce in New York. Earlier, the price touched $883.90, the lowest since June 25, the last time the metal settled below $900.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, gained 1.9 percent to 2,740.41. The Shenzhen Composite Index added 1 percent to 798.47.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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Asian Market Update
Daily Forex Fundamentals | Written by Trade The News | Aug 06 08 04:16 GMT |
Asian stocks rally after FOMC; Oil's downward spiral continues
Forex: The USD was mixed in Asia, failing to add on to the buying momentum seen during Tuesday's session. Dealers reported very large, very steady USD demand from U.S. real money accounts during the U.S. session, with institutional funds withdrawing from the commodity currencies. Expectations of higher U.S. interest rates diminished slightly after the Fed meeting, but several analysts argue that the USD will hold on as long as equities remain steady. USD/JPY could see some big moves over the coming sessions, with traders expecting the pair to test the large number of stops above 108.70. But it won't be easy to break above 108.70, and USD/JPY faces some near-term resistance. Some traders talked about a rumored option barrier at 108.50, while others saw USD/JPY selling by Japanese exporters ahead of Japan's "obon" summer holiday. It still looks like one-way traffic lower for the AUD/USD, with little buying interest seen until 0.9000, and stop-loss orders are also scarce. Dealers heard rumors of more real money funds planning to sell AUD/USD this week, but other commentators feel recent AUD selling has been overdone. For EUR/USD, traders heard talk of decent sized bids from sovereign names at 154.50.
Australian home loans drop to a four year low during June: (AU JUNE HOME LOANS: -3.7% V -2.0% expected, -6.9% prior; INVESMENT LENDING: -0.3% V -6.1% prior) Analysts said the fifth straight drop in mortgage lending adds to evidence that the Australian economy is slowing down faster than the Reserve Bank of Australia has expected, reinforcing the idea that the central bank will cut interest rates as soon as next month.
Equities: At 0:05 EDT Japan's Nikkei is +2.41%, the S&P/ASX200 is +2.90%, South Korea's KOSPI is +2.16%, and the Shanghai composite index is +1.85%. The S&P500 futures contract gained +0.13% since the U.S. close, last trading at 1,284.60. Asian stocks continue to track Wall Street's rebound, and a chorus of analysts argues that the rally off the July 15 lows is the real deal. "If the Fed can avoid raising interest rates now, and if oil prices can keep falling, any recession may be shallow," writes the Wall Street Journal's E.S. Browning. "Since investors tend to buy stocks six months ahead of a recovery, some conclude now is the time to buy." Bargain hunters bought Japanese exporters, airlines, steel makers and technology companies, lifting the Nikkei above 13,200. Shares of Mitsubishi UFJ are sharply lower after reporting a disappointing set of Q1 results, with the bank taking a ¥141.7B loan loss provision (about $1.3B). The bank maintained its forecast for nearly flat growth this fiscal year through March 2009. In Sydney, banks, retailers and certain resource stocks recovered, but the S&P/ASX200 index remains stuck below the 5,000 mark. Tech companies boosted South Korea's KOSPI index, while banks and airlines provided most of the upside in Shanghai. Hong Kong markets were closed due to a typhoon warning.
Commodities: Crude oil prices continued the downward spiral, with the Nymex contract losing -0.70% between 18:00 EDT and 0:14 EDT, last trading at $118.34/bbl. The next catalyst for oil markets will probably be the release of the weekly U.S. inventories data, which is expected to show that gasoline stocks fell by 1.5M barrels last week. Spot gold is marginally higher by 0.21%, last trading at 888.10/oz.
Trade The News Staff
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Asian stocks rally after FOMC; Oil's downward spiral continues
Forex: The USD was mixed in Asia, failing to add on to the buying momentum seen during Tuesday's session. Dealers reported very large, very steady USD demand from U.S. real money accounts during the U.S. session, with institutional funds withdrawing from the commodity currencies. Expectations of higher U.S. interest rates diminished slightly after the Fed meeting, but several analysts argue that the USD will hold on as long as equities remain steady. USD/JPY could see some big moves over the coming sessions, with traders expecting the pair to test the large number of stops above 108.70. But it won't be easy to break above 108.70, and USD/JPY faces some near-term resistance. Some traders talked about a rumored option barrier at 108.50, while others saw USD/JPY selling by Japanese exporters ahead of Japan's "obon" summer holiday. It still looks like one-way traffic lower for the AUD/USD, with little buying interest seen until 0.9000, and stop-loss orders are also scarce. Dealers heard rumors of more real money funds planning to sell AUD/USD this week, but other commentators feel recent AUD selling has been overdone. For EUR/USD, traders heard talk of decent sized bids from sovereign names at 154.50.
Australian home loans drop to a four year low during June: (AU JUNE HOME LOANS: -3.7% V -2.0% expected, -6.9% prior; INVESMENT LENDING: -0.3% V -6.1% prior) Analysts said the fifth straight drop in mortgage lending adds to evidence that the Australian economy is slowing down faster than the Reserve Bank of Australia has expected, reinforcing the idea that the central bank will cut interest rates as soon as next month.
Equities: At 0:05 EDT Japan's Nikkei is +2.41%, the S&P/ASX200 is +2.90%, South Korea's KOSPI is +2.16%, and the Shanghai composite index is +1.85%. The S&P500 futures contract gained +0.13% since the U.S. close, last trading at 1,284.60. Asian stocks continue to track Wall Street's rebound, and a chorus of analysts argues that the rally off the July 15 lows is the real deal. "If the Fed can avoid raising interest rates now, and if oil prices can keep falling, any recession may be shallow," writes the Wall Street Journal's E.S. Browning. "Since investors tend to buy stocks six months ahead of a recovery, some conclude now is the time to buy." Bargain hunters bought Japanese exporters, airlines, steel makers and technology companies, lifting the Nikkei above 13,200. Shares of Mitsubishi UFJ are sharply lower after reporting a disappointing set of Q1 results, with the bank taking a ¥141.7B loan loss provision (about $1.3B). The bank maintained its forecast for nearly flat growth this fiscal year through March 2009. In Sydney, banks, retailers and certain resource stocks recovered, but the S&P/ASX200 index remains stuck below the 5,000 mark. Tech companies boosted South Korea's KOSPI index, while banks and airlines provided most of the upside in Shanghai. Hong Kong markets were closed due to a typhoon warning.
Commodities: Crude oil prices continued the downward spiral, with the Nymex contract losing -0.70% between 18:00 EDT and 0:14 EDT, last trading at $118.34/bbl. The next catalyst for oil markets will probably be the release of the weekly U.S. inventories data, which is expected to show that gasoline stocks fell by 1.5M barrels last week. Spot gold is marginally higher by 0.21%, last trading at 888.10/oz.
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Asia Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 06 08 05:39 GMT |
The Euro was resuscitated is the Asia Session, after hitting a multi-week low of 1.5444 less than 24 hours ago. Opening the session, the pair bottomed out near 1.5450 and then took the escalator up. EUR/USD eventually hit a high just a pip or two under 1.5500 and looked strong as the session wound down. It would seem that the overall enthusiasm from yesterday's big moves in NY have all but died down. Asian stock markets followed the Wall Street lead and thus led to heavy buying in the Yen crosses, as EUR/JPY spent the session going up….After a start near 167.30 the pair never looked back as it reached highs just under the 168.00 level. GBP/JPY shadowed the move although it seemed to fizzle near the end. A low of 211.45 early on gave way to a 212.15 high toward mid session, and following a slight retracement was clawing its way back to those levels by the London open.
USD/JPY hit a 7 week high just near 108.45, as the US Dollar continued to enjoy the benefits of lower crude oil. The resistance just above at 108.60 is just waiting to defend its ground. With much of Europe vacationing this month, the Japanese will follow suite soon as the Obon Festival begins next week, and although not a national holiday, many folks go on vacation during this particular time. The point of the preceding culture lesson is that you can expect some significant position squaring ahead of what may be a thin trading week during Obon.
With the fall of commodities, so went the Aussie, but after touching a four month low of 0.9132 just yesterday, the pair found some traction and clawed its way higher this session to a high just above 0.9185. Although this may look encouraging at first glance, don't be fooled, it is widely expected that the RBA will begin an easing cycle sooner than later, and with the fall of oil and commodities, expect the overbought pair to remain under some severe pressure.
Continue to look at the link between lower oil, higher US stocks and Dollar strength…
Upcoming Economic Data Releases (London Session):
8/6/2008 9:30GMT UK BRC July Shop Price Index 6-Aug
8/6/2008 10:00GMT GE Factory Orders MoM (sa) JUN -0.90% 0.40%
8/6/2008 10:00GMT GE Factory Orders YoY (nsa) JUN -2.00% -4.70%
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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The Euro was resuscitated is the Asia Session, after hitting a multi-week low of 1.5444 less than 24 hours ago. Opening the session, the pair bottomed out near 1.5450 and then took the escalator up. EUR/USD eventually hit a high just a pip or two under 1.5500 and looked strong as the session wound down. It would seem that the overall enthusiasm from yesterday's big moves in NY have all but died down. Asian stock markets followed the Wall Street lead and thus led to heavy buying in the Yen crosses, as EUR/JPY spent the session going up….After a start near 167.30 the pair never looked back as it reached highs just under the 168.00 level. GBP/JPY shadowed the move although it seemed to fizzle near the end. A low of 211.45 early on gave way to a 212.15 high toward mid session, and following a slight retracement was clawing its way back to those levels by the London open.
USD/JPY hit a 7 week high just near 108.45, as the US Dollar continued to enjoy the benefits of lower crude oil. The resistance just above at 108.60 is just waiting to defend its ground. With much of Europe vacationing this month, the Japanese will follow suite soon as the Obon Festival begins next week, and although not a national holiday, many folks go on vacation during this particular time. The point of the preceding culture lesson is that you can expect some significant position squaring ahead of what may be a thin trading week during Obon.
With the fall of commodities, so went the Aussie, but after touching a four month low of 0.9132 just yesterday, the pair found some traction and clawed its way higher this session to a high just above 0.9185. Although this may look encouraging at first glance, don't be fooled, it is widely expected that the RBA will begin an easing cycle sooner than later, and with the fall of oil and commodities, expect the overbought pair to remain under some severe pressure.
Continue to look at the link between lower oil, higher US stocks and Dollar strength…
Upcoming Economic Data Releases (London Session):
8/6/2008 9:30GMT UK BRC July Shop Price Index 6-Aug
8/6/2008 10:00GMT GE Factory Orders MoM (sa) JUN -0.90% 0.40%
8/6/2008 10:00GMT GE Factory Orders YoY (nsa) JUN -2.00% -4.70%
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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