By Adam Haigh
Sept. 10 (Bloomberg) -- U.S. stock-index futures rose after FedEx Corp. said first-quarter profit will exceed a previous forecast on lower fuel spending and Texas Instruments Inc. maintained its sales outlook.
FedEx, the world's largest air-cargo carrier, climbed 4.1 percent in German trading as the new earnings projection topped analysts' estimates. Texas Instruments added 2.7 percent after the second-biggest U.S. semiconductor maker allayed concern that slower mobile-phone demand would drag down sales further. Lehman Brothers Holdings Inc. rallied 32 percent, indicating the stock may rebound from a slump that erased almost half of its value.
Futures on the Standard & Poor's 500 Index expiring in September added 10.4, or 0.9 percent, to 1,236.9 at 10:02 a.m. in London. Dow Jones Industrial Average futures climbed 79 to 11,326. Nasdaq-100 Index futures rose 21 to 1,749.75.
``What FedEx is trying to do is match any fluctuation that they can in the fuel prices,'' said David Hart, a senior equity analyst at London-based investment adviser Fat Prophets U.K. Ltd. ``Oil has come off a lot and that has been good for fuel prices for the company.''
Stocks tumbled yesterday as concern about Lehman's ability to raise capital rattled the banking industry and a drop in oil prices pushed energy companies down by the most in six years. The 3.4 percent decline in the S&P 500 threatened to erase the measure's rebound from a 2 1/2-year low on July 15, leaving it with a gain of 0.8 percent.
FedEx, Texas Instruments
FedEx climbed 4.1 percent to $88.20. Earnings will be $1.23 a share for the period ended Aug. 31, eclipsing the outlook of 80 cents to $1, FedEx said yesterday. Analysts expected 95 cents a share, according to the average of 12 estimates compiled by Bloomberg.
Texas Instruments rose 2.7 percent to $22.29 in Germany. Third-quarter revenue will be between $3.33 billion and $3.47 billion, the Dallas-based company said yesterday. The midpoint, $3.4 billion, matched a previous forecast and the average estimate of analysts in a Bloomberg survey.
Lehman rallied 32 percent to $10.33 in Germany. The fourth- largest U.S. securities firm said it will announce third-quarter results and ``key strategic initiatives'' today at 7:30 a.m. in New York, a week earlier than the date scheduled to report earnings. The stock slumped 45 percent yesterday.
The bank has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.
Lehman plans to announce it's in talks with BlackRock Inc. to sell a package of mostly British residential real-estate assets, the Wall Street Journal reported, citing people it didn't identify.
For Related News:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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Wednesday, September 10, 2008
Forex and Dow Jones Recommended Levels
Daily Forex Technicals | Written by FXtechtrade | Sep 10 08 03:06 GMT |
EUR/USD
Today's support: - 1.4060, 1.4040 and 1.4014 (main), where correction is possible. Break would give 1.3992, where correction also may be. Then follows 1.3972. Break of the latter would result in 1.3945. If a strong impulse, we would see 1.3923. Continuation will give 1.3896 and 1.3873
Today's resistance: - 1.4182 and 1.4232(main). Break would give 1.4270, where a correction is possible. Then goes 1.4312. Break of the latter would result in 1.4340. If a strong impulse, we'd see 1.4364. Continuation will give 1.4396.
USD/JPY
Today's support: - 106.87, 106.56and106.20 (main). Break would bring 107.36, where correction is possible. Then 107.10. If a strong impulse, we would see 106.88. Continuation would give 106.56 and 106.20.
Today's resistance: - 107.76 and 108.23(main), where a correction may happen. Break would bring 108.57, where also a correction may be. Then 108.78. If a strong impulse, we would see 108.90. Continuation will give 109.32 and 109.70.
DOW JONES INDEX
Today's support: - 11 176.86, 11 149.03 and 11 126.20(main), where a delay and correction may happen. Break of the latter will give 11 114.65, where correction also can be. Then follows 11 086.88. Be there a strong impulse, we would see 11 058.77. Continuation will bring 11 036.25 and 10 985.63.
Today's resistance: - 11 263.27, 11 295.00 and 11 351.31(main), where a delay and correction may happen. Break would bring 11 364.00, where a correction may happen. Then follows 11 396.26, where a delay and correction could also be. Be there a strong impulse, we'd see 11 418.73. Continuation would bring 11 430.00.
FXtechtrade
http://www.fxtechtrade.com
Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.
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EUR/USD
Today's support: - 1.4060, 1.4040 and 1.4014 (main), where correction is possible. Break would give 1.3992, where correction also may be. Then follows 1.3972. Break of the latter would result in 1.3945. If a strong impulse, we would see 1.3923. Continuation will give 1.3896 and 1.3873
Today's resistance: - 1.4182 and 1.4232(main). Break would give 1.4270, where a correction is possible. Then goes 1.4312. Break of the latter would result in 1.4340. If a strong impulse, we'd see 1.4364. Continuation will give 1.4396.
USD/JPY
Today's support: - 106.87, 106.56and106.20 (main). Break would bring 107.36, where correction is possible. Then 107.10. If a strong impulse, we would see 106.88. Continuation would give 106.56 and 106.20.
Today's resistance: - 107.76 and 108.23(main), where a correction may happen. Break would bring 108.57, where also a correction may be. Then 108.78. If a strong impulse, we would see 108.90. Continuation will give 109.32 and 109.70.
DOW JONES INDEX
Today's support: - 11 176.86, 11 149.03 and 11 126.20(main), where a delay and correction may happen. Break of the latter will give 11 114.65, where correction also can be. Then follows 11 086.88. Be there a strong impulse, we would see 11 058.77. Continuation will bring 11 036.25 and 10 985.63.
Today's resistance: - 11 263.27, 11 295.00 and 11 351.31(main), where a delay and correction may happen. Break would bring 11 364.00, where a correction may happen. Then follows 11 396.26, where a delay and correction could also be. Be there a strong impulse, we'd see 11 418.73. Continuation would bring 11 430.00.
FXtechtrade
http://www.fxtechtrade.com
Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.
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Daily Forex Market Commentary
| Daily Forex Technicals | Written by Global Forex Trading | Sep 10 08 03:18 GMT | | |
Despite the massive sell-off in the US equity indices, oil & co. and carry trades, the European currencies ended little changed on Tuesday, after giving up early gains. Only dollar/yen tumbled to close at the lowest level since July 21. Depending on the news on Lehman, the catalyst of the equity slide, the dollar should see the same pattern on Wednesday as well. The outlook remains positive on dollar/Europe and slightly bearish in dollar/yen. No US reports are due on Wednesday.Euro/dollarEuro/dollar consolidated and closed virtually unchanged after cutting a new low for the downtrend on Tuesday. My model remains short. The immediate outlook is only marginally positive, while the medium-term outlook is negative. Initial resistance remains at 1.4157. The next cap is between 1.4197 and 1.4207. If this strong area gives way, the pair is in for an aggressive recovery toward 1.4295. Distant resistance is at 1.4390 Immediate support is at 1.4047. Below 1.3835, distant support is at 1.3695. Oscillators are declining. NEAR-TERM: Mixed to slightly bullish Dollar/yenDollar/yen fell sharply amid a new wave of sales of yen crosses. Following a brief recovery, the sell-off should resume. My model remains short. Above 107.22, resistance is at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Above 108.70, resistance remains at 109.15 from another 50-point pivot, which targets 109.65 and 108.65. Distant resistance is at 110.35 from a 50-point pivot, which targets 109.85 and 110.85. Initial support is at 106.75 from a 50-point pivot, which targets 106.25 and 107.25. A pivot low is at 105.53. Oscillators are declining. NEAR-TERM: Mixed Sterling/dollarSterling/dollar consolidated in an inside range on Tuesday after failing to mount a recovery in New York. My model remains short. The medium term is bearish, but the short-term outlook remains mixed. Initial resistance is at 1.7706. This is followed by 1.7737 from a Fibonacci retracement level. Above the strong pivot at 1.7975, distant resistance remains at 1.8100. Immediate support is at 1.7505. Below the pivot low at 1.7471, distant support remains at 1.7315. Oscillators are falling. NEAR-TERM: Mixed Dollar/Swiss francDollar/Swiss slipped in an inside range on Tuesday after reaching the highest level since the end of last year a day before. My model remains long. Following some corrective decline, the uptrend should resume. Immediate support is at 1.1214. This is followed by 1.1140. Distant support is at 1.1100. Initial resistance remains at 1.1371. Above 1.1466, a pivot high remains at 1.1605. Oscillators are rising. NEAR-TERM: Mixed Cornelius Luca DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought. | |
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Asia Session Recap
| Daily Forex Fundamentals | Written by Forex.com | Sep 10 08 03:12 GMT | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
If there is a word to describe today's Asia session it would be: choppy. The main driver in the market has moved from Fannie Mae and Freddie Mac to the fate of Lehman Brothers, a major US investment bank. EUR/USD was stuck between the 1.4100 and 1.4150 levels while USD/JPY remained between 107.35 and 106.65. The whippy price action is just another testament of the high degree of emotion that is dominating the financial markets in these unprecedented times.Interestingly, commodities are experiencing another wave of selling. Gold just broke to levels not seen since 2007 and crude oil is approaching the $100 mark. Typically we have seen a negative correlation between commodities and the USD but this last move has not seen fresh highs in the USD. Are we seeing a divergence and which market is leading? It is still too early to tell but just something to watch. Looking forward the focus is clearly Lehman's announcement tomorrow and we expect some positioning in front of the release. Will traders reduce risk or make their bets now? In either case, look for volatility to explode especially if the outcome is significantly different from expectations. Upcoming Economic Data Releases (London Session):
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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Japan's Current-Account Surplus Narrowed in July on Import Bill
By Keiko Ujikane 
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Sept. 10 (Bloomberg) -- Japan's current-account surplus narrowed for a fifth month in July as record oil prices pushed up the import bill, blunting a rebound in exports.
The surplus shrank 17.3 percent to 1.53 trillion yen ($14.3 billion) from a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg News was for the gap to narrow to 1.31 trillion yen.
Crude oil has fallen 29 percent since reaching a record $147 a barrel on July 11, providing some relief to companies facing weakening sales at home and abroad. While demand from Asia helped export growth pick up in July, that may not last as slowdowns in the U.S. and Europe infect the rest of the world.
``The economic stagnation in the U.S. is spreading to Europe as well as emerging nations such as China,'' said Kyohei Morita, chief economist at Barclays Capital in Tokyo. ``Should a slowdown in those emerging markets become more notable, that would have a bigger adverse impact on Japanese exporters.''
Falling sales and earnings prompted companies to reduce spending on factories and equipment for a fifth straight quarter in the three months ended June 30, the Finance Ministry said last week. Profits, eroded by costlier energy and raw materials, fell 5.2 percent, the fourth consecutive decline.
The world's second-largest economy probably shrank last quarter at a faster pace than the government initially reported, economists predict revised figures will show on Sept. 12.
Shrinking Economy
Gross domestic product fell at an annual 3 percent pace in the three months ended June, according to the median estimate of 25 economists surveyed by Bloomberg News, more than the 2.4 percent reported last month. That would be the sharpest contraction since 2001, when Japan suffered its last recession.
Imports climbed 18.9 percent in July from a year earlier, today's report showed. Japan gets virtually all of its oil from abroad. Exports rose 8.7 percent, after falling 1.5 percent the previous month, the first decline since November 2003.
China replaced the U.S. as Japan's biggest customer in July, a separate ministry report showed last month. Exports to China climbed 16.5 percent and shipments to the U.S. declined 11.4 percent. Today's trade figures don't include regional breakdowns.
The current account tracks the flow of goods, services and investment income between Japan and its trading partners. It includes trade not shown in the customs-cleared balance.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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Australia's S&P/ASX 200 Index Slumps on Lehman Funding Concerns
By Shani Raja
Sept. 10 (Bloomberg) -- Australia's stocks fell as Lehman Brothers Holdings Inc. failed to sell a stake to Korea Development Bank, reviving concern about banks worldwide, and commodity stocks dropped after metals and oil prices slumped.
Macquarie Group Ltd., Australia's biggest securities firm, declined 3.8 percent, after the collapse of the Korea Bank deal raised questions about banks' ability to raise capital. BHP Billiton Ltd., the world's biggest mining company, plunged 5.4 percent to its lowest since March 20 after a measure of six metals traded on the London Metal Exchange slipped 2 percent.
Australia's benchmark S&P/ASX 200 Index slipped 117.80 points, or 2.4 percent, to 4,862.30, at 10:25 a.m. Sydney time.
The Australian index has tumbled 23 percent in 2008, compared with the 17 percent fall in the Standard & Poor's 500 Index. Global financial companies have posted losses in excess of $500 billion on a credit contraction, while slowing growth has damped demand for resources.
``Investors in Asia have gone into panic and pray mode,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``It's the uncertainty of not knowing when and how it will all end.''
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Sept. 10 (Bloomberg) -- Australia's stocks fell as Lehman Brothers Holdings Inc. failed to sell a stake to Korea Development Bank, reviving concern about banks worldwide, and commodity stocks dropped after metals and oil prices slumped.
Macquarie Group Ltd., Australia's biggest securities firm, declined 3.8 percent, after the collapse of the Korea Bank deal raised questions about banks' ability to raise capital. BHP Billiton Ltd., the world's biggest mining company, plunged 5.4 percent to its lowest since March 20 after a measure of six metals traded on the London Metal Exchange slipped 2 percent.
Australia's benchmark S&P/ASX 200 Index slipped 117.80 points, or 2.4 percent, to 4,862.30, at 10:25 a.m. Sydney time.
The Australian index has tumbled 23 percent in 2008, compared with the 17 percent fall in the Standard & Poor's 500 Index. Global financial companies have posted losses in excess of $500 billion on a credit contraction, while slowing growth has damped demand for resources.
``Investors in Asia have gone into panic and pray mode,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``It's the uncertainty of not knowing when and how it will all end.''
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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New Zealand May Cut Benchmark Rate a Second Time Amid Recession
By Tracy Withers 
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Sept. 10 (Bloomberg) -- New Zealand central bank Governor Alan Bollard will cut interest rates for the second time in seven weeks tomorrow as spending slows amid a recession, easing pressure on inflation.
The Reserve Bank will cut the official cash rate a quarter point to 7.75 percent, according to 13 of 14 economists surveyed by Bloomberg. One expects Bollard will lower the rate a half point when he announces his decision at 9 a.m. in Wellington.
Bollard cut borrowing costs in July for the first time in five years, and said further reductions are likely as the economy slows. The Treasury Department said this week the economy was in a recession in the first half of 2008 and may also contract in the third quarter amid a slump in housing investment and rising unemployment.
``The slowdown in the economy is well and truly entrenched and the inflation outlook has improved,'' said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. ``We continue to expect a cautious easing cycle.''
Bollard, 57, will cut the rate twice more this year, according to the economists surveyed by Bloomberg. The rate will be 6.75 percent by March, the lowest level since September 2005, they forecast.
The central bank will probably revise its forecast for the economy to show gross domestic product contracted in the second quarter, putting New Zealand in its first recession since 1998, said Tuffley. The economy shrank 0.3 percent in the first three months of the year.
Construction Slows
Construction fell 5.8 percent in the second quarter, according to a Sept. 8 government report. Retail spending dropped 1.4 percent, the most in 13 years. The government publishes second-quarter GDP figures on Sept. 26.
The Treasury Department this week reiterated it expects the economy shrank in the three months ended June, and said it couldn't rule out a further contraction in the three months through September.
The decline in domestic demand was led by record-high credit costs and soaring food and fuel prices, which curbed consumer spending and stalled the housing market.
The jobless rate rose to a two-year high in the second quarter and hiring intentions have declined.
``The New Zealand economy stalled in the first half, reducing company profits, so employers became more hesitant in their hiring plans,'' Catherine Lo-Giacco, general manager of Manpower New Zealand, said in a report yesterday.
House Sales
House prices fell 4.5 percent in August from a year earlier, according to the government valuation agency. That followed a 2.2 percent drop in July, the first decline since the series began in February 2005.
House sales fell to a 16-year low in June, before gaining in July as sellers lowered prices to complete deals, according to the Real Estate Institute.
While the economy stalls, high fuel and food prices have driven faster inflation. Consumer prices rose at the fastest pace in 18 years in the second quarter and the central bank forecasts the inflation rate will be close to 5 percent in the year to September.
``The Reserve Bank has no headroom and needs to limit the scope for flow-on into inflation expectations,'' said Robin Clements, chief New Zealand economist at UBS AG. ``There doesn't look to be a sense of urgency that would demand aggressive easing at this time.''
Bollard expects the inflation rate will slow to 3 percent by mid-2010. The central bank is required to keep average inflation between 1 percent and 3 percent.
Gasoline Prices
Gasoline prices have slumped 8 percent since Bollard's July 24 rate cut, adding to signs inflation may have peaked.
Central bankers around the world are grappling with slowing economic growth while surging fuel and food prices fan inflation.
The Reserve Bank of Australia this month lowered its benchmark for the first time in seven years as economic growth weakens. Governor Glenn Stevens said this week it may be six months before inflation eases.
The European Central Bank last week kept interest rates unchanged at a seven-year high, citing inflation concerns even as the euro-region economy contracted in the second quarter. The Bank of England kept its rate steady after economic growth stalled in the three months ended June 30.
Following is a table of forecasts for New Zealand's cash rate at the next three reviews, and the target at the end of the first and second quarters next year.
2008 2009 Sept. Oct. Dec. March June Median 7.75% 7.5% 7.25% 6.75% 6.75% ------------------------------------------------------ 4Cast 7.75% 7.75% 7.5% 7.25% 6.75% ANZ National 7.75% 7.5% 7.25% 7.25% 7.0% ASB Bank 7.75% 7.5% 7.25% 6.75% 6.75% BNZ 7.75% 7.5% 7.25% 6.75% 6.25% Barclays 7.75% 7.75% 7.5% 7.25% 7.0% Citigroup 7.75% 7.5% 7.25% 6.75% 6.5% Deutsche 7.75% 7.5% 7.25% 6.75% 6.25% First NZ 7.75% 7.5% 7.25% 7.25% 7.0% Goldman Sachs 7.75% 7.5% 7.25% 6.75% 6.0% JPMorgan 7.75% 7.5% 7.25% 6.75% 6.25% Macquarie 7.75% 7.5% 7.25% 6.75% 6.5% RBC 7.5% 7.25% 7.0% 6.5% 6.25% UBS 7.75% 7.5% 7.25% 6.75% 6.75% Westpac 7.75% 7.5% 7.25% 7.0% 7.0% ======================================================
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.
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New Zealand Exports Decline, Adding to Signs of a Recession
By Tracy Withers
Sept. 10 (Bloomberg) -- New Zealand's exports fell for a second straight quarter as a drought crimped milk production, adding to signs the economy has fallen into recession for the first time in 10 years.
Export volumes decreased 3.7 percent from the first quarter, when they dropped 3.9 percent, Statistics New Zealand said in Wellington today. Overseas shipments make up one-third of the $105 billion economy. Imports increased 5.4 percent.
Drought, record-high interest rates and a housing slump have pushed the economy into its first recession since 1998, the Treasury Department said this week. Reserve Bank Governor Alan Bollard will probably cut interest rates for a second time in seven weeks tomorrow as weak demand eases inflation pressure, according to all 15 economists surveyed by Bloomberg News.
``Net exports will be a drag on economic growth,'' said Shamubeel Eaqub, an economist at Goldman Sachs JBWere Ltd. in Auckland. ``GDP data are very likely to confirm a recession. In our view, current monetary policy is too tight.''
New Zealand's dollar bought 66.62 U.S. cents at 11:45 a.m. in Wellington from 66.78 cents immediately before the report. The currency has slumped 16 percent in the past six months, the worst performer of 16 major currencies tracked by Bloomberg.
Gross domestic product contracted 0.3 percent in the first quarter. Second-quarter GDP figures will be published on Sept. 26. Economists will complete their estimates following a Sept. 15 report on New Zealand manufacturing.
Retail, Construction
Retail spending fell 1.5 percent in the second quarter, the biggest decline in 13 years. Construction slumped 5.6 percent in the same period, according to a government report this week.
Dry weather began in October and extended until March with some parts of the country getting the least rain in a century in January, according to the National Climate Center. Farmers produced less milk, prompting Fonterra Cooperative Group Ltd., the world's largest dairy exporter, to announce in February it may restrict new export orders.
Dairy exports declined 17 percent last quarter, led by milk powder and cheese, today's report showed. Dairy shipments make up about one-fifth of New Zealand exports.
Purchases of aircraft, cars and gasoline buoyed imports in the quarter. Imports of consumption goods rose 1.4 percent led by food. Purchases of intermediate goods used by industry advanced 1 percent, led by diesel.
Import prices rose 4.8 percent, the most in two years, bolstered by fuel and food. Exports prices rose by 4.4 percent amid a decline in milk powder prices that offset meat, aluminum and crude oil.
The terms of trade index, which measures the amount of imports New Zealand can buy from a fixed quantity of exports, fell 0.5 percent from a record-high in the first quarter.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.
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Sept. 10 (Bloomberg) -- New Zealand's exports fell for a second straight quarter as a drought crimped milk production, adding to signs the economy has fallen into recession for the first time in 10 years.
Export volumes decreased 3.7 percent from the first quarter, when they dropped 3.9 percent, Statistics New Zealand said in Wellington today. Overseas shipments make up one-third of the $105 billion economy. Imports increased 5.4 percent.
Drought, record-high interest rates and a housing slump have pushed the economy into its first recession since 1998, the Treasury Department said this week. Reserve Bank Governor Alan Bollard will probably cut interest rates for a second time in seven weeks tomorrow as weak demand eases inflation pressure, according to all 15 economists surveyed by Bloomberg News.
``Net exports will be a drag on economic growth,'' said Shamubeel Eaqub, an economist at Goldman Sachs JBWere Ltd. in Auckland. ``GDP data are very likely to confirm a recession. In our view, current monetary policy is too tight.''
New Zealand's dollar bought 66.62 U.S. cents at 11:45 a.m. in Wellington from 66.78 cents immediately before the report. The currency has slumped 16 percent in the past six months, the worst performer of 16 major currencies tracked by Bloomberg.
Gross domestic product contracted 0.3 percent in the first quarter. Second-quarter GDP figures will be published on Sept. 26. Economists will complete their estimates following a Sept. 15 report on New Zealand manufacturing.
Retail, Construction
Retail spending fell 1.5 percent in the second quarter, the biggest decline in 13 years. Construction slumped 5.6 percent in the same period, according to a government report this week.
Dry weather began in October and extended until March with some parts of the country getting the least rain in a century in January, according to the National Climate Center. Farmers produced less milk, prompting Fonterra Cooperative Group Ltd., the world's largest dairy exporter, to announce in February it may restrict new export orders.
Dairy exports declined 17 percent last quarter, led by milk powder and cheese, today's report showed. Dairy shipments make up about one-fifth of New Zealand exports.
Purchases of aircraft, cars and gasoline buoyed imports in the quarter. Imports of consumption goods rose 1.4 percent led by food. Purchases of intermediate goods used by industry advanced 1 percent, led by diesel.
Import prices rose 4.8 percent, the most in two years, bolstered by fuel and food. Exports prices rose by 4.4 percent amid a decline in milk powder prices that offset meat, aluminum and crude oil.
The terms of trade index, which measures the amount of imports New Zealand can buy from a fixed quantity of exports, fell 0.5 percent from a record-high in the first quarter.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.
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Japan Wholesale Prices Rise at Fastest Pace in 27 Years on Oil
By Mayumi Otsuma 
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Sept. 10 (Bloomberg) -- Japan's wholesale inflation rate stayed close to a 27-year high in August, squeezing corporate profits and hurting an economy that may already be in a recession.
Producer prices, the costs companies pay for energy and raw materials, climbed 7.2 percent from a year earlier from a revised 7.3 percent increase in July, the Bank of Japan said in Tokyo today. The median estimate of 33 economists surveyed by Bloomberg News was for 7.2 percent.
Wholesale inflation in Japan may slow to reflect lower crude oil prices, which have tumbled by more than a fifth since reaching a record in July. Bank of Japan Governor Masaaki Shirakawa last week said there are few signs that higher commodity prices are spreading through the economy because wages aren't rising as fast as prices.
``Japan's producer price increases are close to their peak, though they will remain at high levels for a while,'' said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. ``With wage growth stagnating and economic growth slowing, there is little risk that inflation will become a rooted problem.''
Producer prices fell 0.1 percent in August from July, when they rose 2.2 percent, the central bank said.
Crude oil has fallen 28 percent since exceeding $147 a barrel for the first time on July 11, prompting gasoline retailers to cut prices at pump for a fourth week while soybeans, corn and wheat have slumped after climbing to records this year.
Profit Margins
Higher costs have eaten into profit margins, leaving companies with less to spend on wages and equipment. Weaker exports and capital spending caused the economy to contract last quarter, prompting some economists to predict the world's second-largest economy is already in a recession.
Nippon Oil Corp. and Japan Energy Corp. cut wholesale gasoline prices this month to reflect the recent decline in oil. Prices at the pump fell to 176.2 yen a liter ($6.12 a gallon) in the week ended Sept. 1, 4.8 percent lower than the record marked in August.
``Accelerating cost gains will gradually fade, and the focus is shifting to when and how much price gains will moderate,'' said Kyohei Morita, chief economist at Barclays Capital in Tokyo. Prices may cool should oil prices continue to drop and the yen extend its gains against the dollar, he said.
A 5 yen per liter drop in gasoline, kerosene and other oil products in a month would lower wholesale prices by 0.31 percentage point and a 10 percent advance in the yen against the dollar would push prices down by 0.5 percentage point, Morita estimates. The yen has gained 1.8 percent in the past month against the dollar.
The Bank of Japan's overseas commodity index, which shows changes in commodity costs including oil, steel, copper and wheat, rose 42 percent in August from a year before, slower than a 52 percent increase in July.
Foist Costs
Companies continue to foist costs onto customers to protect profits even as commodity prices decline. Durable goods makers, which have managed to absorb costs by increasing productivity so far, are starting to charge more.
Toyota Motor Corp. raised prices of hybrid Prius cars and some commercial vehicles on Sept. 1, its first increase in the domestic market in 16 years. Mitsubishi Electric Co. last month announced a plan to raise prices of air-conditioners and refrigerators.
Profits of Japanese manufacturers contracted 11.7 percent in the second quarter while their sales rose 1.4 percent, a Finance Ministry survey showed last week.
``Sales are going up, but costs are going up faster because of commodity prices, and profits are going down at an accelerating pace,'' said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo.
To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
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U.K. Economy Contracted in the Past Three Months, Niesr Says
By Brian Swint
Sept. 10 (Bloomberg) -- The U.K. economy is contracting for the first time in at least a decade, the National Institute for Economic and Social Research said.
Gross domestic product dropped 0.2 percent in the June to August period and fell 0.1 percent in the three months through July, the group, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement today. The May to July estimate, revised today, was the first decline since Niesr started its calculation in April 1996.
``These figures are appreciably lower than we had anticipated last month on account of the downward revision to second-quarter GDP growth published last month,'' Niesr said in a statement. ``Output was weak in June and base period effects therefore suggest that the rate of output fall may not be greater than the August figure.''
Britain may be entering its first recession since 1991 as house prices plummet and financial services reel from the global credit squeeze that has already cost more than $500 billion in writedowns and losses. The Bank of England still hasn't cut interest rates since April on concerns about inflation, which reached more than double the 2 percent target in July.
U.K. growth stalled in the second quarter, ending the country's longest stretch of growth in more than a century, the statistics office said Aug. 22.
More than half of the 51 economists in a Bloomberg News survey from Aug. 29 said the benchmark interest rate will fall by a quarter-point to 4.75 percent from the current 5 percent by the end of the year.
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.
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Sept. 10 (Bloomberg) -- The U.K. economy is contracting for the first time in at least a decade, the National Institute for Economic and Social Research said.
Gross domestic product dropped 0.2 percent in the June to August period and fell 0.1 percent in the three months through July, the group, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement today. The May to July estimate, revised today, was the first decline since Niesr started its calculation in April 1996.
``These figures are appreciably lower than we had anticipated last month on account of the downward revision to second-quarter GDP growth published last month,'' Niesr said in a statement. ``Output was weak in June and base period effects therefore suggest that the rate of output fall may not be greater than the August figure.''
Britain may be entering its first recession since 1991 as house prices plummet and financial services reel from the global credit squeeze that has already cost more than $500 billion in writedowns and losses. The Bank of England still hasn't cut interest rates since April on concerns about inflation, which reached more than double the 2 percent target in July.
U.K. growth stalled in the second quarter, ending the country's longest stretch of growth in more than a century, the statistics office said Aug. 22.
More than half of the 51 economists in a Bloomberg News survey from Aug. 29 said the benchmark interest rate will fall by a quarter-point to 4.75 percent from the current 5 percent by the end of the year.
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.
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Hey Scorsese, Japan's Yakuza Has a Story for You: William Pesek
Commentary by William Pesek
Sept. 10 (Bloomberg) -- Far from the neon lights and glitz of Tokyo, the western Japanese prefecture of Fukuoka doesn't seem an obvious sight for a backlash against mobsters.
About 600 residents of Kurume last month asked a local court to block an organized-crime group from using office buildings in the city. It's the first such action by the public and how things turn out could say much about the international standing of the second-biggest economy.
What does the yakuza have to do with Japan's economy? Quite a bit, according to an Aug. 20 report by the National Police Agency.
First reported by the London-based newspaper the Times, the report found that the yakuza's switch from old-fashioned crime such as drugs and prostitution to financial markets is accelerating. It called the phenomenon a ``disease that will shake the foundations of the economy.''
The yakuza has been switching gears for years. Even after the bubble years of the 1980s ended badly, mobsters prospered from the untold billions of dollars worth of construction projects funded by the government to create jobs.
In recent years, there have been fewer crackdowns on bid- rigging and less public-works spending. Even for legitimate companies there have been fewer building projects to go around. The dynamic squeezed the mobsters much the way it did Japanese households. Globalization also forced gangsters to adapt.
Evolving Yakuza
Slowly but surely, anti-gang laws that Japan passed in 1992 have made it harder for the yakuza to operate in broad daylight. The changes created unprecedented competition. Gangland violence increased. The biggest crime groups survived, many smaller ones didn't. Thriving nowadays means being more creative.
That's just what yakuza crime syndicates have done. The biggest concern is that the yakuza is in the midst of a widespread assault on Japan's financial markets, becoming aggressive traders and manipulators of Japanese shares.
The theory is that the yakuza employs as many as 1,000 supposedly legitimate front companies and takes big positions in undervalued stocks of other enterprises, which have no idea they have acquired de facto mob connections. The yakuza is acting more like private-equity firms than small-time loan sharks of old.
Hey, Scorsese
All this may sound more like a Martin Scorsese script than serious economic analysis. In fact, Scorsese is known to have more than a passing interest in the yakuza, which would seem an ideal next challenge for the director of ``Goodfellas'' and ``The Departed.''
A few years back, movie enthusiasts in Japan buzzed about press reports that Scorsese might direct a big-screen version of Robert Whiting's 2000 gangster book ``Tokyo Underworld.''
If Scorsese is still interested, Japan has a tale for him.
As Japan risks sliding into a recession, overseas investors are wondering what happened to its long-awaited recovery. Bulls rushed into Japanese stocks in the early 2000s expecting great things as deflation was replaced by stable growth. These days, optimism is in short supply.
There are many explanations for Japan's malaise: too great a reliance on exports, households lacking enough confidence to save less and spend more, weak productivity and relentless competition from China, India and the rest of developing Asia.
Does the yakuza deserve a mention here? Anyone who dismisses this out of hand forgets the mobsters' role in prolonging Japan's bad-loan crisis of the 1990s. Loans linked even tangentially to the criminal underworld were virtually impossible to collect.
Out of Control
There's now little doubt about the yakuza's infiltration of other parts of Japan's financial system. When the government is putting out reports on crime syndicates broadening their fund- raising methods to stock trading, real estate, consumer finance and other areas, it's a sign the problem is out of control.
Robert Feldman, head of economic research at Morgan Stanley in Tokyo, put it well in a report last year: ``The influence of organized crime in both political and corporate/financial circles remains a barrier to an efficient economy and efficient financial markets. The loser has been Japan's competitiveness. It seems unreasonable to expect foreign companies and investors to expand activity in Japan while the issues with organized crime remain so troubling.''
The government needs to clamp down more aggressively on the workings of the 80,000 or so known yakuza, says Jake Adelstein, a former police reporter at the Yomiuri Shimbun newspaper. In the absence of stronger action, it's falling to stock-exchange officials in cities such as Osaka to investigate which companies might be infiltrated by mobsters.
Economic Setback
Adelstein says there might be 600 ``yakuza-connected companies.'' Any move to delist a company -- or companies -- may spook foreign investors and hurt the broader market. That would be another setback for Japan's economy at a time when it's trying to attract more overseas capital.
``Not to mince words, but the Japanese laws for dealing with organized crime suck -- they're just terrible,'' Adelstein, author of the new book ``Tokyo Vice: An American Reporter on the Police Beat in Japan'' told Bloomberg Television on Sept. 3. As the mobsters evolve and the public gets wiser to the dangers they pose, the police aren't keeping up.
The only consolation is that with Japan's broadest stock barometer down 19 percent this year, yakuza investments may not be doing very well.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Read more...
Sept. 10 (Bloomberg) -- Far from the neon lights and glitz of Tokyo, the western Japanese prefecture of Fukuoka doesn't seem an obvious sight for a backlash against mobsters.
About 600 residents of Kurume last month asked a local court to block an organized-crime group from using office buildings in the city. It's the first such action by the public and how things turn out could say much about the international standing of the second-biggest economy.
What does the yakuza have to do with Japan's economy? Quite a bit, according to an Aug. 20 report by the National Police Agency.
First reported by the London-based newspaper the Times, the report found that the yakuza's switch from old-fashioned crime such as drugs and prostitution to financial markets is accelerating. It called the phenomenon a ``disease that will shake the foundations of the economy.''
The yakuza has been switching gears for years. Even after the bubble years of the 1980s ended badly, mobsters prospered from the untold billions of dollars worth of construction projects funded by the government to create jobs.
In recent years, there have been fewer crackdowns on bid- rigging and less public-works spending. Even for legitimate companies there have been fewer building projects to go around. The dynamic squeezed the mobsters much the way it did Japanese households. Globalization also forced gangsters to adapt.
Evolving Yakuza
Slowly but surely, anti-gang laws that Japan passed in 1992 have made it harder for the yakuza to operate in broad daylight. The changes created unprecedented competition. Gangland violence increased. The biggest crime groups survived, many smaller ones didn't. Thriving nowadays means being more creative.
That's just what yakuza crime syndicates have done. The biggest concern is that the yakuza is in the midst of a widespread assault on Japan's financial markets, becoming aggressive traders and manipulators of Japanese shares.
The theory is that the yakuza employs as many as 1,000 supposedly legitimate front companies and takes big positions in undervalued stocks of other enterprises, which have no idea they have acquired de facto mob connections. The yakuza is acting more like private-equity firms than small-time loan sharks of old.
Hey, Scorsese
All this may sound more like a Martin Scorsese script than serious economic analysis. In fact, Scorsese is known to have more than a passing interest in the yakuza, which would seem an ideal next challenge for the director of ``Goodfellas'' and ``The Departed.''
A few years back, movie enthusiasts in Japan buzzed about press reports that Scorsese might direct a big-screen version of Robert Whiting's 2000 gangster book ``Tokyo Underworld.''
If Scorsese is still interested, Japan has a tale for him.
As Japan risks sliding into a recession, overseas investors are wondering what happened to its long-awaited recovery. Bulls rushed into Japanese stocks in the early 2000s expecting great things as deflation was replaced by stable growth. These days, optimism is in short supply.
There are many explanations for Japan's malaise: too great a reliance on exports, households lacking enough confidence to save less and spend more, weak productivity and relentless competition from China, India and the rest of developing Asia.
Does the yakuza deserve a mention here? Anyone who dismisses this out of hand forgets the mobsters' role in prolonging Japan's bad-loan crisis of the 1990s. Loans linked even tangentially to the criminal underworld were virtually impossible to collect.
Out of Control
There's now little doubt about the yakuza's infiltration of other parts of Japan's financial system. When the government is putting out reports on crime syndicates broadening their fund- raising methods to stock trading, real estate, consumer finance and other areas, it's a sign the problem is out of control.
Robert Feldman, head of economic research at Morgan Stanley in Tokyo, put it well in a report last year: ``The influence of organized crime in both political and corporate/financial circles remains a barrier to an efficient economy and efficient financial markets. The loser has been Japan's competitiveness. It seems unreasonable to expect foreign companies and investors to expand activity in Japan while the issues with organized crime remain so troubling.''
The government needs to clamp down more aggressively on the workings of the 80,000 or so known yakuza, says Jake Adelstein, a former police reporter at the Yomiuri Shimbun newspaper. In the absence of stronger action, it's falling to stock-exchange officials in cities such as Osaka to investigate which companies might be infiltrated by mobsters.
Economic Setback
Adelstein says there might be 600 ``yakuza-connected companies.'' Any move to delist a company -- or companies -- may spook foreign investors and hurt the broader market. That would be another setback for Japan's economy at a time when it's trying to attract more overseas capital.
``Not to mince words, but the Japanese laws for dealing with organized crime suck -- they're just terrible,'' Adelstein, author of the new book ``Tokyo Vice: An American Reporter on the Police Beat in Japan'' told Bloomberg Television on Sept. 3. As the mobsters evolve and the public gets wiser to the dangers they pose, the police aren't keeping up.
The only consolation is that with Japan's broadest stock barometer down 19 percent this year, yakuza investments may not be doing very well.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Read more...
Australia's Consumer Sentiment Gains for Second Month
By Jacob Greber
Sept. 10 (Bloomberg) -- Australian consumer confidence rose for a second month in September after the central bank cut borrowing costs for the first time in seven years.
The sentiment index climbed 7 percent from August to 92.2 points, according to a Westpac Banking Corp. and Melbourne Institute survey released today in Sydney. It is the eighth straight reading of less than 100, showing pessimists outnumber optimists.
Central bank Governor Glenn Stevens cut the overnight cash rate target from a 12-year high by a quarter point to 7 percent on Sept. 2 and signaled this week he may reduce it again when the slowing economy starts to cool inflation. Consumer sentiment was also boosted by an 8 percent drop in the cost of gasoline in August, Westpac said.
The increase ``is a direct response to the decision by the Reserve Bank to cut their overnight cash rate and the swift response by the banks to reduce their variable mortgage rates by a similar amount,'' said Bill Evans, chief economist at Westpac in Sydney.
The Australian dollar bought 80.02 U.S. cents at 10:32 a.m. in Sydney from 80.05 cents just before the report was released. The two-year government bond yield was unchanged at 5.51 percent.
Westpac's survey of 1,200 consumers was conducted between Sept. 1 and Sept. 7.
Inflation Outlook
Stevens said on Sept. 8 the Reserve Bank of Australia is seeking a ``gradual fall'' in the inflation rate, which rose to 4.5 percent in the second quarter. He aims to keep inflation between 2 percent and 3 percent on average.
``In the near term, the question will be do we hold here or go down a bit more'' on interest rates,'' Stevens said.
Westpac's Evans said that while consumer sentiment has recovered sharply in the past two months, it ``is still at very poor levels. Rates will need to come down further after October to provide some meaningful relief to financial conditions.''
Still, ``any more evidence of a resurgent consumer will soon see the Reserve Bank backing off any further rate cuts until there is convincing evidence of easing inflation pressures,'' Evans added.
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
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Sept. 10 (Bloomberg) -- Australian consumer confidence rose for a second month in September after the central bank cut borrowing costs for the first time in seven years.
The sentiment index climbed 7 percent from August to 92.2 points, according to a Westpac Banking Corp. and Melbourne Institute survey released today in Sydney. It is the eighth straight reading of less than 100, showing pessimists outnumber optimists.
Central bank Governor Glenn Stevens cut the overnight cash rate target from a 12-year high by a quarter point to 7 percent on Sept. 2 and signaled this week he may reduce it again when the slowing economy starts to cool inflation. Consumer sentiment was also boosted by an 8 percent drop in the cost of gasoline in August, Westpac said.
The increase ``is a direct response to the decision by the Reserve Bank to cut their overnight cash rate and the swift response by the banks to reduce their variable mortgage rates by a similar amount,'' said Bill Evans, chief economist at Westpac in Sydney.
The Australian dollar bought 80.02 U.S. cents at 10:32 a.m. in Sydney from 80.05 cents just before the report was released. The two-year government bond yield was unchanged at 5.51 percent.
Westpac's survey of 1,200 consumers was conducted between Sept. 1 and Sept. 7.
Inflation Outlook
Stevens said on Sept. 8 the Reserve Bank of Australia is seeking a ``gradual fall'' in the inflation rate, which rose to 4.5 percent in the second quarter. He aims to keep inflation between 2 percent and 3 percent on average.
``In the near term, the question will be do we hold here or go down a bit more'' on interest rates,'' Stevens said.
Westpac's Evans said that while consumer sentiment has recovered sharply in the past two months, it ``is still at very poor levels. Rates will need to come down further after October to provide some meaningful relief to financial conditions.''
Still, ``any more evidence of a resurgent consumer will soon see the Reserve Bank backing off any further rate cuts until there is convincing evidence of easing inflation pressures,'' Evans added.
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
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OPEC Ministers Agree to Hold Production Steady, Official Says
By Ayesha Daya
Sept. 10 (Bloomberg) -- OPEC, whose members supply more than 40 percent of the world's oil, agreed to maintain current production levels, an OPEC official said.
Ministers from the Organization of Petroleum Exporting Countries are still meeting at the group's headquarters in Vienna, the official said, speaking on condition of anonymity.
``OPEC has kept output unchanged because politically there's so much concern over high oil prices and OPEC has been blamed for much of this,'' John Hall, managing director of John Hall Associates Ltd. said before the decision was announced.
The quota for 12 of OPEC's 13 members is 29.673 million barrels a day.
Brent crude oil fell below $100 a barrel for the first time in five months yesterday and prices have fallen more than 30 percent from July's records.
``The market is in a very healthy position,'' Saudi Arabian Oil Minister Ali al-Naimi, who sets policy for the world's largest oil producer, told reporters before ministers started closed-door talks at the Vienna headquarters of the Organization of Petroleum Exporting Countries.
To contact the reporter on this story: Ayesha Daya in Vienna at adaya1@bloomberg.net.
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Sept. 10 (Bloomberg) -- OPEC, whose members supply more than 40 percent of the world's oil, agreed to maintain current production levels, an OPEC official said.
Ministers from the Organization of Petroleum Exporting Countries are still meeting at the group's headquarters in Vienna, the official said, speaking on condition of anonymity.
``OPEC has kept output unchanged because politically there's so much concern over high oil prices and OPEC has been blamed for much of this,'' John Hall, managing director of John Hall Associates Ltd. said before the decision was announced.
The quota for 12 of OPEC's 13 members is 29.673 million barrels a day.
Brent crude oil fell below $100 a barrel for the first time in five months yesterday and prices have fallen more than 30 percent from July's records.
``The market is in a very healthy position,'' Saudi Arabian Oil Minister Ali al-Naimi, who sets policy for the world's largest oil producer, told reporters before ministers started closed-door talks at the Vienna headquarters of the Organization of Petroleum Exporting Countries.
To contact the reporter on this story: Ayesha Daya in Vienna at adaya1@bloomberg.net.
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Yen Trades Near One-Year High on Signs Credit Losses May Spread
By Stanley White and Ye Xie
Sept. 10 (Bloomberg) -- The yen traded near a one-year high against the euro on speculation credit-market losses will spread, prompting investors to reduce holdings of higher-yielding assets funded with Japan's currency.
Japan's currency also traded near two-year highs against the Australian and New Zealand dollars, favorites of so-called carry trades, as global stocks tumbled after talks between Lehman Brothers Holdings Inc. and potential investor Korea Development Bank broke down. Australia's currency fell to a one- year low versus the greenback as a drop in prices of gold and oil reduced the economic prospects of the commodity exporter.
``The yen is likely to get a boost,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``If a name as big as Lehman is having trouble getting funding, other banks may face a similar situation. In this environment, you can't take on the risk of carry trades.''
The yen was at 151.09 per euro at 8:40 a.m. in Tokyo from 150.94 late yesterday in New York. It earlier rose to 150.52, the strongest since Aug. 17, 2007. Against the dollar, the yen traded at 107.12 from 106.81 yesterday when it gained 1.4 percent. The euro was at $1.4106 compared with $1.4135. The yen may rise to 150.70 per euro today, Soma forecast.
Australia's currency dropped to 79.83 U.S. cents to trade below 80 U.S. cents for the first time since August 2007. It was last at 80.39 cents from 81.39 cents late yesterday in Asia as the price of gold, the nation's fourth most-valuable export commodity, slid to the lowest since November, Raw materials make up 60 percent of Australia's sales overseas.
Crude Oil Falls
The dollar was supported against the euro as crude oil for October delivery decreased 0.5 percent to $102.70 a barrel. Saudi and Venezuelan oil ministers signaled the Organization of Petroleum Exporting Countries will maintain production levels when it meets today in Vienna. Gold futures for December delivery fell 0.4 percent to $774.30 an ounce.
Japan's currency rose to 85.86 per Australian dollar from 87.97. It also advanced 2.4 percent to 71.30 versus the New Zealand dollar.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates. The risk is that currency market moves erase those profits. Japan's 0.5 percent target lending rate compares with 7 percent in Australia and 8 percent in New Zealand.
`Probably go Under'
Lehman's shares dropped to the lowest level in a decade as a person familiar with the firm said it was continuing to negotiate with other potential investors after talks with the South Korean firm broke down. Lehman will announce third-quarter earnings and ``key strategic initiatives'' tomorrow, the fourth- largest U.S. securities firm said in a statement. The Standard & Poor's 500 Index dropped 3.4 percent. Stocks also declined in Europe.
``The equity market is thinking if Lehman is not going to get bought, it'll probably go under,'' said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. ``The sharp fall in equities is weighing on risk appetite, and yen crosses are taking a hit.''
Standard & Poor's may lower its A1 long-term rating on Lehman because the ``precipitous decline'' in the share price creates uncertainty about the firm's ability to raise additional capital. S&P said Lehman's liquidity is ``sound,'' noting the firm can borrow from the Federal Reserve.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net;
Read more...
Sept. 10 (Bloomberg) -- The yen traded near a one-year high against the euro on speculation credit-market losses will spread, prompting investors to reduce holdings of higher-yielding assets funded with Japan's currency.
Japan's currency also traded near two-year highs against the Australian and New Zealand dollars, favorites of so-called carry trades, as global stocks tumbled after talks between Lehman Brothers Holdings Inc. and potential investor Korea Development Bank broke down. Australia's currency fell to a one- year low versus the greenback as a drop in prices of gold and oil reduced the economic prospects of the commodity exporter.
``The yen is likely to get a boost,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``If a name as big as Lehman is having trouble getting funding, other banks may face a similar situation. In this environment, you can't take on the risk of carry trades.''
The yen was at 151.09 per euro at 8:40 a.m. in Tokyo from 150.94 late yesterday in New York. It earlier rose to 150.52, the strongest since Aug. 17, 2007. Against the dollar, the yen traded at 107.12 from 106.81 yesterday when it gained 1.4 percent. The euro was at $1.4106 compared with $1.4135. The yen may rise to 150.70 per euro today, Soma forecast.
Australia's currency dropped to 79.83 U.S. cents to trade below 80 U.S. cents for the first time since August 2007. It was last at 80.39 cents from 81.39 cents late yesterday in Asia as the price of gold, the nation's fourth most-valuable export commodity, slid to the lowest since November, Raw materials make up 60 percent of Australia's sales overseas.
Crude Oil Falls
The dollar was supported against the euro as crude oil for October delivery decreased 0.5 percent to $102.70 a barrel. Saudi and Venezuelan oil ministers signaled the Organization of Petroleum Exporting Countries will maintain production levels when it meets today in Vienna. Gold futures for December delivery fell 0.4 percent to $774.30 an ounce.
Japan's currency rose to 85.86 per Australian dollar from 87.97. It also advanced 2.4 percent to 71.30 versus the New Zealand dollar.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates. The risk is that currency market moves erase those profits. Japan's 0.5 percent target lending rate compares with 7 percent in Australia and 8 percent in New Zealand.
`Probably go Under'
Lehman's shares dropped to the lowest level in a decade as a person familiar with the firm said it was continuing to negotiate with other potential investors after talks with the South Korean firm broke down. Lehman will announce third-quarter earnings and ``key strategic initiatives'' tomorrow, the fourth- largest U.S. securities firm said in a statement. The Standard & Poor's 500 Index dropped 3.4 percent. Stocks also declined in Europe.
``The equity market is thinking if Lehman is not going to get bought, it'll probably go under,'' said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. ``The sharp fall in equities is weighing on risk appetite, and yen crosses are taking a hit.''
Standard & Poor's may lower its A1 long-term rating on Lehman because the ``precipitous decline'' in the share price creates uncertainty about the firm's ability to raise additional capital. S&P said Lehman's liquidity is ``sound,'' noting the firm can borrow from the Federal Reserve.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net;
Read more...
New Zealand Dollar Declines on Commodity Prices, U.S. Stocks
By Tracy Withers
Sept. 10 (Bloomberg) -- The New Zealand dollar declined as commodity prices fell and weaker U.S. stock prices prompted investors to spurn higher-yielding currencies.
Crude oil fell to a five-month low and gold, copper and other commodity prices dropped amid expectations global growth will slow. Talks to sell a stake in Lehman Brothers Holdings Inc. broke down, sending U.S. stocks lower and curbing investor demand for currencies such as New Zealand's, where the benchmark interest rate is 8 percent.
``Worries about global growth and a sharp pull back in commodity prices have taken a toll on the New Zealand dollar,'' said Danica Hampton, strategist at Bank of New Zealand Ltd. in Wellington. ``Sharp losses in U.S. equities also sparked risk aversion-inspired selling.''
New Zealand's currency fell to 66.72 U.S. cents at 9:10 a.m. in Wellington from 67.54 cents in late Asian trading yesterday. It fell to 71.36 yen from 73.00 yen.
Crude oil fell to a five-month low in New York and Brent oil in London dropped below $100 a barrel as the Saudi Arabian and Venezuelan oil ministers signaled that OPEC will maintain production levels when it meets in Vienna.
Copper fell to the lowest price in more than seven months on concern that slowing global growth may curb demand for raw materials.
Commodity Exporter
About 30 percent of the New Zealand economy comes from exports, of which more than half are commodities, including meat, dairy products and oil.
The Standard & Poor's 500 index fell 3.4 percent, its biggest drop since February 2007. Lehman led financial shares to their steepest drop since July after talks to sell a stake to Korea Development Bank broke down.
New Zealand's dollar is popular with investors who borrow cheaply in Japan, where the benchmark rate is 0.5 percent, and seek higher yields elsewhere. The trades are risky because profits are determined by movements in two currencies, and traders exit the trades when risk aversion increases.
The currency will become relatively less attractive to those seeking higher yields because Reserve Bank Governor Alan Bollard will probably cut the benchmark interest rate tomorrow, according to all 14 economists surveyed by Bloomberg News. Traders expect the rate will fall to 6.5 percent within a year, according to swaps trading.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net
Read more...
Sept. 10 (Bloomberg) -- The New Zealand dollar declined as commodity prices fell and weaker U.S. stock prices prompted investors to spurn higher-yielding currencies.
Crude oil fell to a five-month low and gold, copper and other commodity prices dropped amid expectations global growth will slow. Talks to sell a stake in Lehman Brothers Holdings Inc. broke down, sending U.S. stocks lower and curbing investor demand for currencies such as New Zealand's, where the benchmark interest rate is 8 percent.
``Worries about global growth and a sharp pull back in commodity prices have taken a toll on the New Zealand dollar,'' said Danica Hampton, strategist at Bank of New Zealand Ltd. in Wellington. ``Sharp losses in U.S. equities also sparked risk aversion-inspired selling.''
New Zealand's currency fell to 66.72 U.S. cents at 9:10 a.m. in Wellington from 67.54 cents in late Asian trading yesterday. It fell to 71.36 yen from 73.00 yen.
Crude oil fell to a five-month low in New York and Brent oil in London dropped below $100 a barrel as the Saudi Arabian and Venezuelan oil ministers signaled that OPEC will maintain production levels when it meets in Vienna.
Copper fell to the lowest price in more than seven months on concern that slowing global growth may curb demand for raw materials.
Commodity Exporter
About 30 percent of the New Zealand economy comes from exports, of which more than half are commodities, including meat, dairy products and oil.
The Standard & Poor's 500 index fell 3.4 percent, its biggest drop since February 2007. Lehman led financial shares to their steepest drop since July after talks to sell a stake to Korea Development Bank broke down.
New Zealand's dollar is popular with investors who borrow cheaply in Japan, where the benchmark rate is 0.5 percent, and seek higher yields elsewhere. The trades are risky because profits are determined by movements in two currencies, and traders exit the trades when risk aversion increases.
The currency will become relatively less attractive to those seeking higher yields because Reserve Bank Governor Alan Bollard will probably cut the benchmark interest rate tomorrow, according to all 14 economists surveyed by Bloomberg News. Traders expect the rate will fall to 6.5 percent within a year, according to swaps trading.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net
Read more...
Gold Falls to Lowest Since October on Oil Decline, Outlook
By Gavin Evans
Sept. 10 (Bloomberg) -- Gold dropped to the lowest in more than 10 months in Asia as a declining oil price reduced demand for the metal as a hedge against inflation.
Bullion for immediate delivery fell as much as $9.60, or 1.2 percent, to $767.65 an ounce, its lowest intraday price since Oct. 25. It last traded at $768.21 at 9:50 a.m. Sydney time.
Gold futures for December delivery lost as much as 2.7 percent to $770.70 an ounce on the Comex division of the New York Mercantile Exchange, also the lowest since October. The contract last traded at $772 an ounce.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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Sept. 10 (Bloomberg) -- Gold dropped to the lowest in more than 10 months in Asia as a declining oil price reduced demand for the metal as a hedge against inflation.
Bullion for immediate delivery fell as much as $9.60, or 1.2 percent, to $767.65 an ounce, its lowest intraday price since Oct. 25. It last traded at $768.21 at 9:50 a.m. Sydney time.
Gold futures for December delivery lost as much as 2.7 percent to $770.70 an ounce on the Comex division of the New York Mercantile Exchange, also the lowest since October. The contract last traded at $772 an ounce.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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N.Y. Oil Falls as OPEC Signals No Cuts, Ike May Pass Oil Region
By Mark Shenk and Samantha Zee
Sept. 10 (Bloomberg) -- Crude oil fell to a five-month low in New York as the Saudi Arabian and Venezuelan oil ministers signaled OPEC will maintain production levels at a meeting in Vienna, and as Hurricane Ike may bypass U.S. oil regions.
Ministers of the Organization of Petroleum Exporting Countries agreed to keep output steady, Platts reported, citing an unidentified delegate. The market is ``well-balanced'' Saudi Oil Minister Ali al-Naimi said yesterday. Rafael Ramirez, Venezuela's energy and oil minister, said the group should leave production unchanged. Hurricane Ike weakened and veered away from platforms in the Gulf of Mexico.
``If Venezuela is comfortable with a rollover, we aren't going to see a cut from OPEC,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York. ``There will probably be a lot of talk about compliance, and little else.''
Crude oil for October delivery fell 56 cents, or 0.5 percent, to $102.70 a barrel at 8:56 a.m. Sydney time on the New York Mercantile Exchange. Prices have dropped to their lowest since the start of April after reaching a record $147.27 on July 11.
Yesterday, October crude futures fell $3.08, or 2.9 percent, to $103.26 a barrel in New York.
Brent crude oil for October settlement declined $3.10, or 3 percent, to settle at $100.34 a barrel on London's ICE Futures Europe, the lowest settlement price since April 1. Futures touched $99.04, the lowest intraday price since March 25. The contract has dropped nine straight days, the longest stretch since 1988.
`Psychological Impact'
``There's a psychological impact with the return to double- digit prices,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``OPEC members have gotten used to prices with a one in front. They probably won't wait long to act, because 1998 is always in the back of their mind.''
OPEC raised quotas at a meeting in Jakarta in November 1997, just before Asian economies faltered. A combination of increased supply and falling demand sent prices tumbling to $10 a barrel the following year.
``We have worked very hard since June's meeting to bring prices to where they are now,'' al-Naimi said upon arrival in Vienna. ``We have been very successful.''
Saudi Arabia, the world's largest oil producer, pledged to raise output by 500,000 barrels a day through June and July to calm prices. It hosted an emergency meeting of oil producers and consumers in June to discuss how to stabilize markets. Saudi King Abdullah said oil prices above $100 a barrel were too high, in an interview with Italian newspaper La Repubblica on July 16.
Stricter Compliance
``Venezuela will support leaving production unchanged'' at the meeting that began yesterday, Ramirez said. ``Stocks are at a comfortable level and we're seeing an overproduction of 1 million to 1.5 million barrels a day.''
Ramirez called for stricter compliance with production quotas to counter a potential gain in stockpiles in the first quarter next year. ``History has shown that if inventories rise above normal levels, we will have a price collapse,'' he said.
The market is nearing ``equilibrium'' at about $100 a barrel, Ramirez said. He declined to comment on whether an output cut is on the table at today's gathering and said an additional meeting before OPEC's Dec. 17 summit in Algeria is possible. ``We will carefully have to monitor the market until then,'' he added.
``The last thing OPEC wants is to see economies crater around the world,'' said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $4.5 billion energy-company bond portfolio. ``They want to see strong demand growth.''
OPEC members with quotas produced about 592,000 barrels a day more than their official limit of 29.673 million last month, according to Bloomberg News estimates. Iraq has no quota.
Political Impact
``Politically, they don't want to rock the boat at this time,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York. ``The economic situation is another reason for keeping production unchanged.''
Ike weakened to Category 1 on the 5-step Saffir-Simpson scale of intensity as it entered the southeastern Gulf of Mexico yesterday, with sustained winds of 75 miles (120 kilometers) per hour, the U.S. National Hurricane Center said on its Web site at 5 p.m. Miami time.
Now that Ike has emerged in the Gulf, it could strengthen and become a ``major'' hurricane, the hurricane center report said. The center's 5-day forecast shows the storm making landfall near Corpus Christi, Texas, which means it could bypass most of the oil installations in the Gulf, lessening the chance of causing major damage in the region.
``The main thing moving the market is that Ike has veered to the southwest,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``It's now expected to make landfall on the south Texas coast, which will spare most of the platforms and refining areas.''
Gasoline for October delivery fell 9.77 cents, or 3.6 percent, to settle at $2.6526 a gallon in New York, the lowest settlement since April 1. Heating oil dropped 8.84 cents, or 2.9 percent, to $2.9247 a gallon, the lowest settlement price since April 3.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Samantha Zee in Los Angeles in szee@bloomberg.net.
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Sept. 10 (Bloomberg) -- Crude oil fell to a five-month low in New York as the Saudi Arabian and Venezuelan oil ministers signaled OPEC will maintain production levels at a meeting in Vienna, and as Hurricane Ike may bypass U.S. oil regions.
Ministers of the Organization of Petroleum Exporting Countries agreed to keep output steady, Platts reported, citing an unidentified delegate. The market is ``well-balanced'' Saudi Oil Minister Ali al-Naimi said yesterday. Rafael Ramirez, Venezuela's energy and oil minister, said the group should leave production unchanged. Hurricane Ike weakened and veered away from platforms in the Gulf of Mexico.
``If Venezuela is comfortable with a rollover, we aren't going to see a cut from OPEC,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York. ``There will probably be a lot of talk about compliance, and little else.''
Crude oil for October delivery fell 56 cents, or 0.5 percent, to $102.70 a barrel at 8:56 a.m. Sydney time on the New York Mercantile Exchange. Prices have dropped to their lowest since the start of April after reaching a record $147.27 on July 11.
Yesterday, October crude futures fell $3.08, or 2.9 percent, to $103.26 a barrel in New York.
Brent crude oil for October settlement declined $3.10, or 3 percent, to settle at $100.34 a barrel on London's ICE Futures Europe, the lowest settlement price since April 1. Futures touched $99.04, the lowest intraday price since March 25. The contract has dropped nine straight days, the longest stretch since 1988.
`Psychological Impact'
``There's a psychological impact with the return to double- digit prices,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``OPEC members have gotten used to prices with a one in front. They probably won't wait long to act, because 1998 is always in the back of their mind.''
OPEC raised quotas at a meeting in Jakarta in November 1997, just before Asian economies faltered. A combination of increased supply and falling demand sent prices tumbling to $10 a barrel the following year.
``We have worked very hard since June's meeting to bring prices to where they are now,'' al-Naimi said upon arrival in Vienna. ``We have been very successful.''
Saudi Arabia, the world's largest oil producer, pledged to raise output by 500,000 barrels a day through June and July to calm prices. It hosted an emergency meeting of oil producers and consumers in June to discuss how to stabilize markets. Saudi King Abdullah said oil prices above $100 a barrel were too high, in an interview with Italian newspaper La Repubblica on July 16.
Stricter Compliance
``Venezuela will support leaving production unchanged'' at the meeting that began yesterday, Ramirez said. ``Stocks are at a comfortable level and we're seeing an overproduction of 1 million to 1.5 million barrels a day.''
Ramirez called for stricter compliance with production quotas to counter a potential gain in stockpiles in the first quarter next year. ``History has shown that if inventories rise above normal levels, we will have a price collapse,'' he said.
The market is nearing ``equilibrium'' at about $100 a barrel, Ramirez said. He declined to comment on whether an output cut is on the table at today's gathering and said an additional meeting before OPEC's Dec. 17 summit in Algeria is possible. ``We will carefully have to monitor the market until then,'' he added.
``The last thing OPEC wants is to see economies crater around the world,'' said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $4.5 billion energy-company bond portfolio. ``They want to see strong demand growth.''
OPEC members with quotas produced about 592,000 barrels a day more than their official limit of 29.673 million last month, according to Bloomberg News estimates. Iraq has no quota.
Political Impact
``Politically, they don't want to rock the boat at this time,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York. ``The economic situation is another reason for keeping production unchanged.''
Ike weakened to Category 1 on the 5-step Saffir-Simpson scale of intensity as it entered the southeastern Gulf of Mexico yesterday, with sustained winds of 75 miles (120 kilometers) per hour, the U.S. National Hurricane Center said on its Web site at 5 p.m. Miami time.
Now that Ike has emerged in the Gulf, it could strengthen and become a ``major'' hurricane, the hurricane center report said. The center's 5-day forecast shows the storm making landfall near Corpus Christi, Texas, which means it could bypass most of the oil installations in the Gulf, lessening the chance of causing major damage in the region.
``The main thing moving the market is that Ike has veered to the southwest,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``It's now expected to make landfall on the south Texas coast, which will spare most of the platforms and refining areas.''
Gasoline for October delivery fell 9.77 cents, or 3.6 percent, to settle at $2.6526 a gallon in New York, the lowest settlement since April 1. Heating oil dropped 8.84 cents, or 2.9 percent, to $2.9247 a gallon, the lowest settlement price since April 3.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Samantha Zee in Los Angeles in szee@bloomberg.net.
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Australia Stocks Update: S&P/ASX 200 Falls 80.20 to 4,899.90
By Darren Boey
Sep. 10 (Bloomberg) -- Australia's benchmark stock index, the S&P/ASX 200 Index, fell 1.61 percent at 10:05 a.m.
The index of 200 companies traded on the Australian Stock Exchange fell 80.20 to 4,899.90. Among the stocks in the index, 15 rose, 103 fell and 82 were unchanged.
Declines in the S&P/ASX 200 Index were led by Bhp Billiton Ltd, Commonwealth Bank Of Australia and Australia & New Zealand Banking Group Ltd. About 78.14 million shares changed hands on the Australian Stock Exchange.
Bhp Billiton Ltd, which fell A$2.01 to A$34.04, was the most active stock by value in Australia.
The next most-active issues were Fortescue Metals Group Ltd, which fell 50 cents to A$6.00, and Bhp Billiton Plc, which fell A$5.21 to A$31.77.
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Sep. 10 (Bloomberg) -- Australia's benchmark stock index, the S&P/ASX 200 Index, fell 1.61 percent at 10:05 a.m.
The index of 200 companies traded on the Australian Stock Exchange fell 80.20 to 4,899.90. Among the stocks in the index, 15 rose, 103 fell and 82 were unchanged.
Declines in the S&P/ASX 200 Index were led by Bhp Billiton Ltd, Commonwealth Bank Of Australia and Australia & New Zealand Banking Group Ltd. About 78.14 million shares changed hands on the Australian Stock Exchange.
Bhp Billiton Ltd, which fell A$2.01 to A$34.04, was the most active stock by value in Australia.
The next most-active issues were Fortescue Metals Group Ltd, which fell 50 cents to A$6.00, and Bhp Billiton Plc, which fell A$5.21 to A$31.77.
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Australian Dollar Falls Below 80 U.S. Cents as Commodities Slip
By Candice Zachariahs 
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Sept. 10 (Bloomberg) -- The Australian dollar dropped below 80 U.S. cents for the first time since August 2007 as prices tumbled for commodities the nation exports, including gold.
The currency, a favorite of so-called carry trades, also declined to its weakest in more than two years against the yen after U.S. equity markets slid amid growing concern about Lehman Brothers Holdings Inc.'s ability to raise capital.
``The atmosphere is extremely negative for anything leveraged to global growth, which is Australia and particularly the Australian dollar,'' said Peter Jolly, head of research at National Australia Bank Ltd. in Sydney. ``We've seen sizable falls in equities and commodities overnight and that's dragged the Australian dollar lower.''
The currency fell 1.2 percent to 80.39 U.S. cents at 8:39 a.m. in Sydney from 81.39 cents in late Asian trading yesterday. It earlier touched 79.83, the lowest since August 2007. The Australian dollar bought 86.07 yen from 87.97 yen yesterday.
Jolly forecast that the Aussie, as the currency is also called, will trade between 70 and 80 cents for the next six months.
The Australian dollar was the worst performer among the 16 most-active currencies traded against the greenback after the price of gold, the country's third-most valuable raw material export, fell for a seventh straight session. Crude oil, the nation's fourth-most valuable commodity export, slipped to a five-month low.
The Aussie also fell as the Standard & Poor's 500 Index of U.S. stocks slumped 3.4 percent, its biggest drop since February 2007. Lehman, the fourth-largest U.S. securities firm, led financial shares lower and the drop in oil prices pushed energy companies down by the most in six years.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates. The risk is that currency market moves erase those profits. Borrowing costs stand at 7 percent in Australia, compared with 0.5 percent in Japan and 2 percent in U.S.
To contact the reporter on this story: Candice Zachariahs in Sydney at Czachariahs2@bloomberg.net
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Japan Stocks Slump as Lehman Sparks Credit Concerns; Sony Falls
By Patrick Rial
Sept. 10 (Bloomberg) -- Japanese stocks slumped after Lehman Brothers Holdings Inc.'s inability to raise capital stoked concern financial market turmoil will linger.
Sumitomo Mitsui Financial Group Inc., Japan's third-largest listed bank, lost 2.9 percent. Sony Corp. sank 2.5 percent after the yen rallied against the dollar and euro, reducing the value of overseas sales. Trading house Mitsubishi Corp. was poised to fall after Brent crude oil dropped below $100 a barrel.
``The mood in the market is getting worse and we could be pushing toward some new lows today,'' Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. ``Financial and energy related-shares led the drop in the U.S. with oil taking a dive, and that pattern looks to be repeated here today.''
The Nikkei 225 Stock Average fell 189,92, or 1.5 percent, to 12,210.73 as of 9:08 a.m. in Tokyo. The broader Topix index slid 17.25, or 1.5 percent, to 1,174.34.
Lehman dropped a record 45 percent yesterday to near a 10- year low after talks to sell a stake to Korea Development Bank broke down. The company said after the close of trading it will announce third-quarter results and ``key strategic initiatives'' later today. The Standard & Poor's 500 Index declined 3.4 percent.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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Economic Calendar Eco Data 9/10/08
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:01 | GBP | U.K. NIESR GDP Estimates Aug | 0.10% | |||
| 23:30 | OPEC Press Conference | |||||
| 23:50 | JPY | Japan Domestic CGPI M/M Aug | 0.10% | 2.00% | ||
| 23:50 | JPY | Japan Domestic CGPI Y/Y Aug | 7.20% | 7.10% | ||
| 23:50 | JPY | Japan Trade balance (jpy) Jul | 221.0B | 252.1B | ||
| 23:50 | JPY | Japan Current account Jul | 1317.2B | 493.9B | ||
| 00:30 | AUD | Australia W'pac consumer confi. Sep | N/A | 9.10% | ||
| 05:00 | JPY | Japan Leading indicators Jul | 91.9 | 91.3 | ||
| 08:30 | GBP | U.K. Trade balance (gbp) Jul | -4.55B | -4.74B | ||
| 14:35 | USD | Crude Oil Inventories | -4.8M | -1.9M |
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Asian Stocks Drop For Second Day on Lehman Concern, Lower Oil
By Kyung Bok Cho and Shani Raja
Sept. 10 (Bloomberg) -- Asian stocks fell for a second day, led by financial and commodity companies, on concern Lehman Brothers Holdings Inc. will fail to raise capital and after oil traded below $100 a barrel in London.
Commonwealth Bank of Australia and Kookmin Bank both fell by more than 2 percent after Lehman's talks to sell a stake to Korea Development Bank broke down. BHP Billiton Ltd., the world's largest mining company, tumbled 5.6 percent, leading commodity stocks lower after crude oil and metal prices declined.
``All the worries about the banking sector have resurfaced and are shaking sentiment once again,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``You had oil prices falling quite sharply. While that's positive in the medium term, in the short-term it puts a lot of pressure on energy stocks.''
The MSCI Asia Pacific Index slipped 1.1 percent to 117.44 as of 9:11 a.m. in Tokyo, extending yesterday's 2.2 percent loss. Commodity and financial stocks accounted for about two-thirds of today's decline.
The Asian benchmark has tumbled 25 percent in 2008, compared with the 17 percent fall in the Standard & Poor's 500 Index. Global financial companies have posted losses in excess of $500 billion on a credit contraction, while slowing growth has damped demand for resources produced in the region.
Japan's Nikkei 225 Stock Average lost 1.3 percent to 12,241.17. Shares in Australia and South Korea also declined.
U.S. stocks slumped yesterday, with the S&P 500 falling 3.4 percent, the most since February 2007. In the previous session, the measure had gained the most in a month after the government's takeover of Fannie Mae and Freddie Mac.
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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Sept. 10 (Bloomberg) -- Asian stocks fell for a second day, led by financial and commodity companies, on concern Lehman Brothers Holdings Inc. will fail to raise capital and after oil traded below $100 a barrel in London.
Commonwealth Bank of Australia and Kookmin Bank both fell by more than 2 percent after Lehman's talks to sell a stake to Korea Development Bank broke down. BHP Billiton Ltd., the world's largest mining company, tumbled 5.6 percent, leading commodity stocks lower after crude oil and metal prices declined.
``All the worries about the banking sector have resurfaced and are shaking sentiment once again,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``You had oil prices falling quite sharply. While that's positive in the medium term, in the short-term it puts a lot of pressure on energy stocks.''
The MSCI Asia Pacific Index slipped 1.1 percent to 117.44 as of 9:11 a.m. in Tokyo, extending yesterday's 2.2 percent loss. Commodity and financial stocks accounted for about two-thirds of today's decline.
The Asian benchmark has tumbled 25 percent in 2008, compared with the 17 percent fall in the Standard & Poor's 500 Index. Global financial companies have posted losses in excess of $500 billion on a credit contraction, while slowing growth has damped demand for resources produced in the region.
Japan's Nikkei 225 Stock Average lost 1.3 percent to 12,241.17. Shares in Australia and South Korea also declined.
U.S. stocks slumped yesterday, with the S&P 500 falling 3.4 percent, the most since February 2007. In the previous session, the measure had gained the most in a month after the government's takeover of Fannie Mae and Freddie Mac.
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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Tuesday, September 9, 2008
EU to Cut Economic Growth Forecasts, Almunia Says
By Fergal O'Brien and Christian Vits
Sept. 9 (Bloomberg) -- The European Union will cut its economic-growth forecast this week as confidence wanes and inflation expectations increase, EU Commissioner Joaquin Almunia said, calling the outlook ``unusually uncertain.''
``The prospects for the second half of 2008 and the beginning of 2009 are not very good,'' Almunia, who is in charge of economic and monetary affairs, said in a speech in Frankfurt today, citing forecasts by the European Central Bank and the Organization for Economic Cooperation and Development. ``Tomorrow I will present our updated forecasts for this year and unfortunately I don't expect to convey a different message.''
Europeans' confidence fell to the lowest in more than five years in August after the euro-area economy contracted in the second quarter for the first time in almost a decade. The ECB last week lowered its 2008 euro-region growth forecast to 1.4 percent from 1.8 percent and its 2009 prediction to 1.2 percent from 1.5 percent. The OECD also cut its forecast for the region.
Exports from Germany, Europe's largest economy, declined more than economists forecast in July as cooling global growth curbed demand, according to figures published today. Spanish Finance Minister Pedro Solbes said his nation's economy, the fourth-largest in the euro region, is at risk of entering a recession because of a construction slump and tight credit conditions.
Euro Region
Luxembourg Finance Minister Jean-Claude Juncker, who leads a group of counterparts from the euro region, last week said the EU may cut its 2008 growth forecast to as low as 1 percent. It forecast growth of 1.7 percent in April.
Speaking to reporters after his speech in Frankfurt today, Almunia said he expects the slowdown in growth to be temporary.
``I hope the recovery will start in 2009,'' he said. ``In 2010, growth figures will return in line with potential.''
In the meantime, the ECB, which raised its key interest rate to a seven-year high of 4.25 percent in July to combat inflation, is showing little inclination to cut borrowing costs even as expansion cools. At the same time it cut its growth forecasts, the central bank raised its inflation prediction for 2008 and 2009.
While inflation eased in August to 3.8 percent from 4 percent, the highest in 16 years, ``this does not mean we should underestimate the risks of second-round effects,'' Almunia said today. Inflation expectations are ``moving to the upside.''
Almunia also said he expects losses related to the collapse of the U.S. subprime-mortgage market, which have already reached $500 billion, to increase.
``Hopes that we had come through the worst of the turbulence before the summer have proved unfounded,'' he said. ``Few predicted the scale of losses and writedowns we are seeing in the banking sector'' and ``there is undoubtedly more to come.''
To contact the reporters on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net; Christian Vits in Frankfurt at cvits@bloomberg.net.
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Sept. 9 (Bloomberg) -- The European Union will cut its economic-growth forecast this week as confidence wanes and inflation expectations increase, EU Commissioner Joaquin Almunia said, calling the outlook ``unusually uncertain.''
``The prospects for the second half of 2008 and the beginning of 2009 are not very good,'' Almunia, who is in charge of economic and monetary affairs, said in a speech in Frankfurt today, citing forecasts by the European Central Bank and the Organization for Economic Cooperation and Development. ``Tomorrow I will present our updated forecasts for this year and unfortunately I don't expect to convey a different message.''
Europeans' confidence fell to the lowest in more than five years in August after the euro-area economy contracted in the second quarter for the first time in almost a decade. The ECB last week lowered its 2008 euro-region growth forecast to 1.4 percent from 1.8 percent and its 2009 prediction to 1.2 percent from 1.5 percent. The OECD also cut its forecast for the region.
Exports from Germany, Europe's largest economy, declined more than economists forecast in July as cooling global growth curbed demand, according to figures published today. Spanish Finance Minister Pedro Solbes said his nation's economy, the fourth-largest in the euro region, is at risk of entering a recession because of a construction slump and tight credit conditions.
Euro Region
Luxembourg Finance Minister Jean-Claude Juncker, who leads a group of counterparts from the euro region, last week said the EU may cut its 2008 growth forecast to as low as 1 percent. It forecast growth of 1.7 percent in April.
Speaking to reporters after his speech in Frankfurt today, Almunia said he expects the slowdown in growth to be temporary.
``I hope the recovery will start in 2009,'' he said. ``In 2010, growth figures will return in line with potential.''
In the meantime, the ECB, which raised its key interest rate to a seven-year high of 4.25 percent in July to combat inflation, is showing little inclination to cut borrowing costs even as expansion cools. At the same time it cut its growth forecasts, the central bank raised its inflation prediction for 2008 and 2009.
While inflation eased in August to 3.8 percent from 4 percent, the highest in 16 years, ``this does not mean we should underestimate the risks of second-round effects,'' Almunia said today. Inflation expectations are ``moving to the upside.''
Almunia also said he expects losses related to the collapse of the U.S. subprime-mortgage market, which have already reached $500 billion, to increase.
``Hopes that we had come through the worst of the turbulence before the summer have proved unfounded,'' he said. ``Few predicted the scale of losses and writedowns we are seeing in the banking sector'' and ``there is undoubtedly more to come.''
To contact the reporters on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net; Christian Vits in Frankfurt at cvits@bloomberg.net.
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