By Glenys Sim
July 17 (Bloomberg) -- Aluminum in Shanghai fell for a fourth day to a two-week low after global inventories jumped, signaling an oversupply of the metal.
Stockpiles of aluminum in warehouses monitored by the London Metal Exchange increased yesterday by 24,825 metric tons, the most since August 2006, to more than 1.1 million tons.
``There is no immediate supply tightness, LME stocks have doubled since late 2005 and now are well above 1 million tons,'' London-based VM Group analyst Matthew Turner said yesterday in a report. ``Chinese production capacity is still growing strongly and could reach 15 million tons in 2008.''
Aluminum on the Shanghai Futures Exchange fell as much as 1 percent to 19,170 yuan ($2,811) a ton, the lowest since July 1. The most-active contract traded at 19,195 yuan at 10:39 a.m. local time.
Aluminum for delivery in three months on the London Metal Exchange was little changed at $3,124 a ton at the same time, after dropping to the lowest in nearly three weeks yesterday. Prices rose to a record last week after smaller smelters in China, the world's largest producer, agreed to cut output as much as 10 percent.
``The news from China was extremely bullish, but it's not yet clear how long the voluntary production cut will last,'' Turner said. ``Probably not long if prices climb much higher. If the cutback lasts a year that could remove some 750,000 tons of aluminum from the world market, enough to wipe out twice this year's expected surplus.''
Among other LME-traded metals, copper rose 0.2 percent to $8,095 a ton, zinc gained 2.2 percent to $1,835, and nickel added 5.4 percent to $21,500. Lead slipped 0.8 percent to $1,950, and tin gained 0.7 percent to $23,400 as of 10:23 a.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Thursday, July 17, 2008
Gold Rises on Speculation Dollar May Fall, Inflation Rising
By Feiwen Rong and Iris Leung
July 17 (Bloomberg) -- Gold gained in Asia, after tumbling the most in more than three weeks yesterday, as investors sought a haven on concern the dollar may decline and inflation increase.
Bullion has gained 9.2 percent in the past month as the dollar fell and financial market instability sent the S&P 500 Index 8 percent lower during the same period. The dollar was little changed against the euro before a report later today that may show U.S. housing starts declined to a 17-year low.
``It seems that gold is well-supported at $960 an ounce,'' said William Kwan, bullion director at Gold Capital Management Pte in Singapore by phone. ``But as it is July already, hedge funds have started selling August futures and buying December ones, making the market more volatile in the short term.''
Bullion for immediate delivery rose 0.4 percent to $963.42 an ounce at 2:50 p.m. in Hong Kong after yesterday falling 1.8 percent, the biggest decline since June 23. Silver advanced 0.5 percent to $18.8650 an ounce.
Gold has dropped 2.5 percent from a four-month high of $988.02 an ounce on July 15 as crude oil retreated from a record $146.73 a barrel. It traded at $134.38 at 2:52 p.m. in Singapore.
The dollar was at $1.5856 against the euro at 2:53 p.m. in Hong Kong, having touched an all-time low of $1.6038 July 15.
Holdings Jump
Bullion holdings in exchange-traded funds jumped a record 1.48 million ounces on July 11, the largest one-day increase since November, 2004, when the first listing of such funds started, according to John Reade, analyst at UBS Ltd.
``Gold has seen an increase in buying from investors looking to protect themselves from systemic financial risk,'' Reade said in a report yesterday.
Gold for August delivery gained 0.1 percent to $964 an ounce in after-hours electronic trading on Comex at 2:57 p.m. in Hong Kong. Gold for December delivery traded in Shanghai fell 0.5 percent to 211.05 yuan a gram ($961 an ounce) at the same time.
Gold for June 2009 delivery was little changed at 3,288 yen a yen a gram ($972 an ounce) on the Tokyo Commodity Exchange at 4 p.m. local time.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.netIris Leung in Hong Kong at Ileung7@bloomberg.net
Read more...
July 17 (Bloomberg) -- Gold gained in Asia, after tumbling the most in more than three weeks yesterday, as investors sought a haven on concern the dollar may decline and inflation increase.
Bullion has gained 9.2 percent in the past month as the dollar fell and financial market instability sent the S&P 500 Index 8 percent lower during the same period. The dollar was little changed against the euro before a report later today that may show U.S. housing starts declined to a 17-year low.
``It seems that gold is well-supported at $960 an ounce,'' said William Kwan, bullion director at Gold Capital Management Pte in Singapore by phone. ``But as it is July already, hedge funds have started selling August futures and buying December ones, making the market more volatile in the short term.''
Bullion for immediate delivery rose 0.4 percent to $963.42 an ounce at 2:50 p.m. in Hong Kong after yesterday falling 1.8 percent, the biggest decline since June 23. Silver advanced 0.5 percent to $18.8650 an ounce.
Gold has dropped 2.5 percent from a four-month high of $988.02 an ounce on July 15 as crude oil retreated from a record $146.73 a barrel. It traded at $134.38 at 2:52 p.m. in Singapore.
The dollar was at $1.5856 against the euro at 2:53 p.m. in Hong Kong, having touched an all-time low of $1.6038 July 15.
Holdings Jump
Bullion holdings in exchange-traded funds jumped a record 1.48 million ounces on July 11, the largest one-day increase since November, 2004, when the first listing of such funds started, according to John Reade, analyst at UBS Ltd.
``Gold has seen an increase in buying from investors looking to protect themselves from systemic financial risk,'' Reade said in a report yesterday.
Gold for August delivery gained 0.1 percent to $964 an ounce in after-hours electronic trading on Comex at 2:57 p.m. in Hong Kong. Gold for December delivery traded in Shanghai fell 0.5 percent to 211.05 yuan a gram ($961 an ounce) at the same time.
Gold for June 2009 delivery was little changed at 3,288 yen a yen a gram ($972 an ounce) on the Tokyo Commodity Exchange at 4 p.m. local time.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.netIris Leung in Hong Kong at Ileung7@bloomberg.net
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Comercial Mexicana, CCU, Unibanco, Vale: Latin Equity Preview
By William Freebairn and Paulo Winterstein
July 17 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 1.1 percent to 4,407.88 yesterday. Chile's markets were closed yesterday for a holiday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
Cia. Vale do Rio Doce (VALE5 BS): The world's biggest iron- ore producer said yesterday that it is raising about 19.43 billion reais ($12.2 billion) by selling 256.9 million common shares for 46.28 reais each and 189.1 million preferred shares for 39.9 reais each. Vale preferred shares fell 2 percent to 42.60 reais, while voting shares fell 1.4 percent to 49.20 reais.
Uniao de Bancos Brasileiros SA (UBBR11 BS): Brazil's fourth- largest non-government bank, known as Unibanco, said its stockholders approved an 11-for-10 stock split. Holders of the bank's units, which represent one preferred share of Unibanco and one preferred share of Unibanco Holding, will get one additional unit for every 10 held. Unibanco gained 7.7 percent to 20.35 reais.
Chile
Cia. Cervecerias Unidas SA (CCU CC): Chile's largest brewer is trading for less than other beverage companies, creating ``an attractive buying opportunity,'' Banco Santander SA analysts Diego Celedon and Alexander Robarts wrote in a research report e- mailed July 15. Its profit margin will remain stable this year, and the company will benefit from an acquisition in Argentina, the analysts wrote, citing a meeting with company executives. CCU, as the company is known, fell 1.1 percent to 2,820 pesos.
Mexico
Controladora Comercial Mexicana SAB (COMERUBC MM): Mexico's third-largest supermarket chain is ``a compelling investment in turbulent times'' after announcing plans to create a publicly traded real estate investment trust, Credit Suisse Group analysts including Tufic Salem wrote in a research report e-mailed yesterday. Recent declines in the share price are an ``opportunity to pick up a deep-value stock,'' the analysts wrote. Comercial Mexicana rose 0.9 percent to 28.30 pesos.
Peru
Cia. de Minas Buenaventura (BVN PE): The world's seventh- largest gold producer said it reopened its Orcopampa mine after protesters ended the blockade of an access road. The five-day roadblock reduced output by 4,000 ounces, Buenaventura said in a statement e-mailed yesterday. Buenaventura fell 0.9 percent to $64.80.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
July 17 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 1.1 percent to 4,407.88 yesterday. Chile's markets were closed yesterday for a holiday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
Cia. Vale do Rio Doce (VALE5 BS): The world's biggest iron- ore producer said yesterday that it is raising about 19.43 billion reais ($12.2 billion) by selling 256.9 million common shares for 46.28 reais each and 189.1 million preferred shares for 39.9 reais each. Vale preferred shares fell 2 percent to 42.60 reais, while voting shares fell 1.4 percent to 49.20 reais.
Uniao de Bancos Brasileiros SA (UBBR11 BS): Brazil's fourth- largest non-government bank, known as Unibanco, said its stockholders approved an 11-for-10 stock split. Holders of the bank's units, which represent one preferred share of Unibanco and one preferred share of Unibanco Holding, will get one additional unit for every 10 held. Unibanco gained 7.7 percent to 20.35 reais.
Chile
Cia. Cervecerias Unidas SA (CCU CC): Chile's largest brewer is trading for less than other beverage companies, creating ``an attractive buying opportunity,'' Banco Santander SA analysts Diego Celedon and Alexander Robarts wrote in a research report e- mailed July 15. Its profit margin will remain stable this year, and the company will benefit from an acquisition in Argentina, the analysts wrote, citing a meeting with company executives. CCU, as the company is known, fell 1.1 percent to 2,820 pesos.
Mexico
Controladora Comercial Mexicana SAB (COMERUBC MM): Mexico's third-largest supermarket chain is ``a compelling investment in turbulent times'' after announcing plans to create a publicly traded real estate investment trust, Credit Suisse Group analysts including Tufic Salem wrote in a research report e-mailed yesterday. Recent declines in the share price are an ``opportunity to pick up a deep-value stock,'' the analysts wrote. Comercial Mexicana rose 0.9 percent to 28.30 pesos.
Peru
Cia. de Minas Buenaventura (BVN PE): The world's seventh- largest gold producer said it reopened its Orcopampa mine after protesters ended the blockade of an access road. The five-day roadblock reduced output by 4,000 ounces, Buenaventura said in a statement e-mailed yesterday. Buenaventura fell 0.9 percent to $64.80.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
Stocks in Europe, Asia Advance; U.S. Futures Are Little Changed
By Sarah Thompson
July 17 (Bloomberg) -- Stocks in Europe and Asia rose, lifting the MSCI World Index to its biggest two-day gain since April, as concern eased credit losses will stifle profit growth and lower oil prices buoyed airlines and carmakers. U.S. index futures were little changed.
UBS AG, the European bank hit hardest by the subprime contagion and Royal Bank of Scotland Group Plc jumped the most in three months, while Kookmin Bank gained in Seoul. Ryanair Holdings AG and Air China Ltd. advanced after oil had the sharpest two-day drop since January 2007. Novartis AG climbed after the drugmaker's profit beat analysts' estimates.
``We're seeing more optimistic elements,'' said Virginie Robert, a managing director at Raymond James Asset Management International in Paris. ``We've had a drop in oil. Earnings have been more favorable. The weakening in the second quarter is less than expected.'' Raymond James oversees $35 billion worldwide.
The MSCI World added 0.7 percent to 1,346.76 at 9:26 a.m. in London, advancing 1.7 percent in two days. The gains have cut this year's decline to 15 percent after better-than-expected profit from Wells Fargo & Co. yesterday helped restore confidence in financial stocks, the world's worst performers this year. The MSCI World Financials Index is valued at 9.7 times the earnings of its companies, the cheapest in at least 13 years, according to weekly data compiled by Bloomberg.
``In the short term, banks look oversold,'' said Lawrence Peterman, investment director at Eden Financial Ltd. in London. ``They are still not out of the woods in terms of earnings outlook and credit-market issues.''
JPMorgan, Merrill
Futures on the Standard & Poor's 500 Index slipping less than 0.1 percent before JPMorgan Chase & Co., Merrill Lynch & Co., Coca-Cola Co., International Business Machines Corp. and Microsoft Inc. report earnings today. U.S. stocks rallied yesterday after Wells Fargo's earnings sparked the biggest-ever gain in financial shares.
Europe's Dow Jones Stoxx 600 Index advanced 1.6 percent today, while the MSCI Asia Pacific Index climbed 1.4 percent.
More than $14 trillion has been wiped off the value of global equities since October as $423 billion in credit-related losses prolong the global economy's slump and rising commodity prices stoke inflation.
The MSCI World entered a bear market last week as oil rose to a record and the U.S. Treasury moved to shore up Fannie Mae and Freddie Mac. If history is a guide, the benchmark index may fall another 13 percent, based on the average decline of seven bear markets since 1969, according to data compiled by Birinyi Associates Inc. and Bloomberg.
Earnings Outlook
Analysts estimate profit for companies in the Stoxx 600 will decline 2.3 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.
Companies in the Standard & Poor's 500 Index, the benchmark for U.S. equities, will report a 14 percent fall in second- quarter profits, according to estimates of analysts compiled by Bloomberg. The quarter is expected to cap a full year of declining earnings, the longest profit slump since 2002.
UBS jumped 6.6 percent to 20.18 francs. Royal Bank, the U.K.'s second-biggest bank, climbed 8.5 percent to 179 pence. BNP Paribas SA, France's largest, rose 3.7 percent to 57 euros.
Kookmin, South Korea's largest bank, gained 1.9 percent to 52,800 won. Mitsubishi UFJ Financial Group Inc., the No. 1 Japanese bank by value, gained 3 percent to 955 yen.
Ryanair, Europe's largest discount airline, climbed 3.1 percent to 3.02 euros. Daimler AG, the world's second-biggest luxury carmaker, jumped 3.4 percent to 38.77 euros.
Air China, the nation's largest international carrier, rallied 5.8 percent to HK$4.18 in Hong Kong.
Oil fell $4.14, or 3 percent, to settle at $134.60 a barrel yesterday. Prices dropped 7.3 percent in the past two days. It traded down 99 cents today.
Novartis, Danone
Novartis rallied 2.4 percent to 58.8 francs. The maker of the Diovan heart pill said second-quarter profit rose 17 percent to $2.27 billion as the Swiss company sold more of the cardiovascular drug and the Gleevec cancer medicine. That beat the $2.14 billion median estimate of nine analysts surveyed by Bloomberg. Sales jumped 14 percent to $10.72 billion.
The shares may climb as much as 2.4 percent, according to pre-market trading at Clariden Leu.
Groupe Danone SA increased 2.8 percent to 43.46 euros. Sanford C. Bernstein & Co. analysts, including Andrew Wood, raised the shares to ``outperform'' from ``underperform,'' saying Danone has ``outstanding prospects for attractive growth and, for the first time in a very long while, in our view, an attractive valuation.'' The stock has fallen 29 percent this year.
Nokia Oyj, the biggest maker of mobile phones, rose 1.3 percent to 15.96 euros before reporting earnings today. Second-quarter revenue probably rose 1.8 percent to 12.8 billion euros ($20.5 billion) from a year earlier, according to the average estimate of 33 analysts in a Bloomberg survey. Net income may drop 56 percent from a year earlier, when profit was helped by a gain from the creation of Nokia Siemens Networks.
The company is scheduled to release results at 11 a.m. London time.
Cable & Wireless
Cable & Wireless Plc rose 3.9 percent 161.7 pence. Lehman Brothers Holdings Inc. upgraded the stock to ``overweight'' from ``equal weight'' after the U.K.'s second-biggest phone company said it might buy Scottish phone company Thus Group Plc.
``Shares have performed only in line with the telecom sector since the potential acquisition of Thus was first announced at the end of May,'' London-based analysts Graeme Pearson and Andy Parnis wrote in a report dated today. ``Thus would be additive to Cable & Wireless's existing plans for value realization in the second half.''
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
Read more...
July 17 (Bloomberg) -- Stocks in Europe and Asia rose, lifting the MSCI World Index to its biggest two-day gain since April, as concern eased credit losses will stifle profit growth and lower oil prices buoyed airlines and carmakers. U.S. index futures were little changed.
UBS AG, the European bank hit hardest by the subprime contagion and Royal Bank of Scotland Group Plc jumped the most in three months, while Kookmin Bank gained in Seoul. Ryanair Holdings AG and Air China Ltd. advanced after oil had the sharpest two-day drop since January 2007. Novartis AG climbed after the drugmaker's profit beat analysts' estimates.
``We're seeing more optimistic elements,'' said Virginie Robert, a managing director at Raymond James Asset Management International in Paris. ``We've had a drop in oil. Earnings have been more favorable. The weakening in the second quarter is less than expected.'' Raymond James oversees $35 billion worldwide.
The MSCI World added 0.7 percent to 1,346.76 at 9:26 a.m. in London, advancing 1.7 percent in two days. The gains have cut this year's decline to 15 percent after better-than-expected profit from Wells Fargo & Co. yesterday helped restore confidence in financial stocks, the world's worst performers this year. The MSCI World Financials Index is valued at 9.7 times the earnings of its companies, the cheapest in at least 13 years, according to weekly data compiled by Bloomberg.
``In the short term, banks look oversold,'' said Lawrence Peterman, investment director at Eden Financial Ltd. in London. ``They are still not out of the woods in terms of earnings outlook and credit-market issues.''
JPMorgan, Merrill
Futures on the Standard & Poor's 500 Index slipping less than 0.1 percent before JPMorgan Chase & Co., Merrill Lynch & Co., Coca-Cola Co., International Business Machines Corp. and Microsoft Inc. report earnings today. U.S. stocks rallied yesterday after Wells Fargo's earnings sparked the biggest-ever gain in financial shares.
Europe's Dow Jones Stoxx 600 Index advanced 1.6 percent today, while the MSCI Asia Pacific Index climbed 1.4 percent.
More than $14 trillion has been wiped off the value of global equities since October as $423 billion in credit-related losses prolong the global economy's slump and rising commodity prices stoke inflation.
The MSCI World entered a bear market last week as oil rose to a record and the U.S. Treasury moved to shore up Fannie Mae and Freddie Mac. If history is a guide, the benchmark index may fall another 13 percent, based on the average decline of seven bear markets since 1969, according to data compiled by Birinyi Associates Inc. and Bloomberg.
Earnings Outlook
Analysts estimate profit for companies in the Stoxx 600 will decline 2.3 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.
Companies in the Standard & Poor's 500 Index, the benchmark for U.S. equities, will report a 14 percent fall in second- quarter profits, according to estimates of analysts compiled by Bloomberg. The quarter is expected to cap a full year of declining earnings, the longest profit slump since 2002.
UBS jumped 6.6 percent to 20.18 francs. Royal Bank, the U.K.'s second-biggest bank, climbed 8.5 percent to 179 pence. BNP Paribas SA, France's largest, rose 3.7 percent to 57 euros.
Kookmin, South Korea's largest bank, gained 1.9 percent to 52,800 won. Mitsubishi UFJ Financial Group Inc., the No. 1 Japanese bank by value, gained 3 percent to 955 yen.
Ryanair, Europe's largest discount airline, climbed 3.1 percent to 3.02 euros. Daimler AG, the world's second-biggest luxury carmaker, jumped 3.4 percent to 38.77 euros.
Air China, the nation's largest international carrier, rallied 5.8 percent to HK$4.18 in Hong Kong.
Oil fell $4.14, or 3 percent, to settle at $134.60 a barrel yesterday. Prices dropped 7.3 percent in the past two days. It traded down 99 cents today.
Novartis, Danone
Novartis rallied 2.4 percent to 58.8 francs. The maker of the Diovan heart pill said second-quarter profit rose 17 percent to $2.27 billion as the Swiss company sold more of the cardiovascular drug and the Gleevec cancer medicine. That beat the $2.14 billion median estimate of nine analysts surveyed by Bloomberg. Sales jumped 14 percent to $10.72 billion.
The shares may climb as much as 2.4 percent, according to pre-market trading at Clariden Leu.
Groupe Danone SA increased 2.8 percent to 43.46 euros. Sanford C. Bernstein & Co. analysts, including Andrew Wood, raised the shares to ``outperform'' from ``underperform,'' saying Danone has ``outstanding prospects for attractive growth and, for the first time in a very long while, in our view, an attractive valuation.'' The stock has fallen 29 percent this year.
Nokia Oyj, the biggest maker of mobile phones, rose 1.3 percent to 15.96 euros before reporting earnings today. Second-quarter revenue probably rose 1.8 percent to 12.8 billion euros ($20.5 billion) from a year earlier, according to the average estimate of 33 analysts in a Bloomberg survey. Net income may drop 56 percent from a year earlier, when profit was helped by a gain from the creation of Nokia Siemens Networks.
The company is scheduled to release results at 11 a.m. London time.
Cable & Wireless
Cable & Wireless Plc rose 3.9 percent 161.7 pence. Lehman Brothers Holdings Inc. upgraded the stock to ``overweight'' from ``equal weight'' after the U.K.'s second-biggest phone company said it might buy Scottish phone company Thus Group Plc.
``Shares have performed only in line with the telecom sector since the potential acquisition of Thus was first announced at the end of May,'' London-based analysts Graeme Pearson and Andy Parnis wrote in a report dated today. ``Thus would be additive to Cable & Wireless's existing plans for value realization in the second half.''
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
Read more...
U.K. Stocks Advance, Led by RBS, Banks; BA Gains on Oil Price
By Sarah Jones
July 17 (Bloomberg) -- U.K. stocks climbed the most in more than a week as easing credit concerns sparked a rally in financial shares. Royal Bank of Scotland Group Plc, Britain's second-biggest bank, and Barclays Plc gained.
British Airways Plc and Kingfisher Plc led travel companies and retailers higher as oil had its biggest two-day drop since January 2007.
The FTSE 100 Index increased 87.2, or 1.7 percent, to 5,237.8 at 9:07 a.m. in London. The FTSE All-Share Index added 1.9 percent and Ireland's ISEQ Index jumped 3.9 percent, the biggest advance since March.
U.S. stocks rallied yesterday after higher-than-estimated profit at Wells Fargo & Co. sparked the biggest-ever gain in financial shares.
``We are a good way through finding out the depth of the credit crunch,'' said Gary Dugan, chief investment officer at Merrill Lynch Global Wealth Management for Europe. ``There are some things happening which are goods news'' such as the fall in the oil price.
RBS jumped 7.8 percent to 177.9 pence. Barclays, Britain's fourth-largest bank, climbed 5.5 percent to 281.5 pence. Lloyds TSB Group Plc, Britain's largest provider of checking accounts, added 4.9 percent to 298 pence.
British Airways, Europe's third-biggest airline, increased 4.7 percent to 235.75 pence. Carnival Plc, the world's largest cruise-line company, jumped 3.4 percent to 1,578 pence.
Crude oil for August Delivery fell for a third day in New York to less than $134 a barrel after tumbling almost 3 percent yesterday as U.S. inventories increased unexpectedly.
Kingfisher, the U.K.'s largest home-improvement retailer, increased 5.8 percent to 101.7 pence. Marks & Spencer Group Plc, Britain's biggest clothing retailer, added 3.8 percent to 248.75 pence.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Read more...
July 17 (Bloomberg) -- U.K. stocks climbed the most in more than a week as easing credit concerns sparked a rally in financial shares. Royal Bank of Scotland Group Plc, Britain's second-biggest bank, and Barclays Plc gained.
British Airways Plc and Kingfisher Plc led travel companies and retailers higher as oil had its biggest two-day drop since January 2007.
The FTSE 100 Index increased 87.2, or 1.7 percent, to 5,237.8 at 9:07 a.m. in London. The FTSE All-Share Index added 1.9 percent and Ireland's ISEQ Index jumped 3.9 percent, the biggest advance since March.
U.S. stocks rallied yesterday after higher-than-estimated profit at Wells Fargo & Co. sparked the biggest-ever gain in financial shares.
``We are a good way through finding out the depth of the credit crunch,'' said Gary Dugan, chief investment officer at Merrill Lynch Global Wealth Management for Europe. ``There are some things happening which are goods news'' such as the fall in the oil price.
RBS jumped 7.8 percent to 177.9 pence. Barclays, Britain's fourth-largest bank, climbed 5.5 percent to 281.5 pence. Lloyds TSB Group Plc, Britain's largest provider of checking accounts, added 4.9 percent to 298 pence.
British Airways, Europe's third-biggest airline, increased 4.7 percent to 235.75 pence. Carnival Plc, the world's largest cruise-line company, jumped 3.4 percent to 1,578 pence.
Crude oil for August Delivery fell for a third day in New York to less than $134 a barrel after tumbling almost 3 percent yesterday as U.S. inventories increased unexpectedly.
Kingfisher, the U.K.'s largest home-improvement retailer, increased 5.8 percent to 101.7 pence. Marks & Spencer Group Plc, Britain's biggest clothing retailer, added 3.8 percent to 248.75 pence.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Read more...
French Stocks: BNP Paribas, Essilor, Natixis, Pernod Ricard
By Daniela Silberstein
July 17 (Bloomberg) -- France's CAC 40 Index rose 75.43, or 1.8 percent, to 4,187.88 at 9:55 a.m. in Paris. The SBF 120 Index increased 2 percent to 3,026.29.
The following shares climbed or fell in the local market. Stock symbols are in parentheses.
BNP Paribas SA (BNP FP), France's largest bank, rose 2.1 euros, or 3.8 percent, to 57.09. Banking shares rallied across Europe following U.S. financial stocks higher after higher-than- expected profit at Wells Fargo & Co. eased concern credit losses will stifle profit growth.
Societe Generale SA (GLE FP), the second-biggest French bank, climbed 2.5 euros, or 4.9 percent, to 53.5. Credit Agricole SA (ACA FP), the third-largest, surged 63 cents, or 5.2 percent, to 12.63 euros.
Bourse Direct (BSD FP) tumbled 19 cents, or 14 percent, to 1.17 euros, the steepest decline since January. The company, which offers discount securities brokerage services, said first- half sales fell 7.1 percent to 15.7 million euros ($24.9 million).
Groupe Danone SA (BN FP) increased 1.19 euros, or 2.8 percent, to 43.45. Sanford C. Bernstein & Co. raised its recommendation on shares of the world's biggest yogurt maker to ``outperform'' from ``underperform.''
Essilor International SA (EF FP) slumped 3.88 euros, or 11 percent, to 32, the sharpest retreat since September 11 2001. The world's largest maker of eyeglass lenses said second-quarter revenue rose 2.3 percent to 758.1 million euros on higher sales in emerging markets. That fell short of analysts' estimates.
Etam Developpement SA (TAM FP) declined 21 cents, or 1.2 percent, to 17.39 euros. France's largest publicly traded maker of women's lingerie said second-quarter sales dropped 4.9 percent to 223 million euros.
Gaz de France SA (GAZ FP) gained 38 cents, or 1 percent, to 40.23 euros. The group's shareholders, along with those of Suez SA (SZE FP), approved merging the two companies, paving the way for the creation of the world's second-largest utility. The French government issued a decree allowing Gaz de France's privatization, which will enable the utility to merge with Suez. Suez shares rose 49 cents, or 1.2 percent, to 41.85 euros.
Geci International SA (GECP FP) slipped 7 cents, or 2.5 percent, to 2.79 euros. The aerospace services company reported a full-year loss of 4.1 million euros compared with 3.61 million euros a year earlier.
MGI Digital Graphic Technology (ALMDG FP) advanced 27 centimes, or 3.9 percent, to 7.22 euros, the steepest advance in more than a month. The printer manufacturer reported a 20 percent rise in second-quarter revenue to 4.31 million euros and forecast full-year sales will be more than 20 percent higher than year-earlier levels.
Natixis SA (KN FP) surged 46 cents, or 9.6 percent, to 5.25 euros, the biggest gain in two months. France's fourth-largest bank said it plans to raise 3.7 billion euros in a rights offer to shore up capital after writedowns related to the U.S. subprime crisis.
Pernod Ricard SA (RI FP) increased 1.5 euros, or 2.8 percent, to 55.27. Dresdner Kleinwort raised its recommendation for shares of the world's second-largest liquor maker to ``buy'' from ``add.''
To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
Read more...
July 17 (Bloomberg) -- France's CAC 40 Index rose 75.43, or 1.8 percent, to 4,187.88 at 9:55 a.m. in Paris. The SBF 120 Index increased 2 percent to 3,026.29.
The following shares climbed or fell in the local market. Stock symbols are in parentheses.
BNP Paribas SA (BNP FP), France's largest bank, rose 2.1 euros, or 3.8 percent, to 57.09. Banking shares rallied across Europe following U.S. financial stocks higher after higher-than- expected profit at Wells Fargo & Co. eased concern credit losses will stifle profit growth.
Societe Generale SA (GLE FP), the second-biggest French bank, climbed 2.5 euros, or 4.9 percent, to 53.5. Credit Agricole SA (ACA FP), the third-largest, surged 63 cents, or 5.2 percent, to 12.63 euros.
Bourse Direct (BSD FP) tumbled 19 cents, or 14 percent, to 1.17 euros, the steepest decline since January. The company, which offers discount securities brokerage services, said first- half sales fell 7.1 percent to 15.7 million euros ($24.9 million).
Groupe Danone SA (BN FP) increased 1.19 euros, or 2.8 percent, to 43.45. Sanford C. Bernstein & Co. raised its recommendation on shares of the world's biggest yogurt maker to ``outperform'' from ``underperform.''
Essilor International SA (EF FP) slumped 3.88 euros, or 11 percent, to 32, the sharpest retreat since September 11 2001. The world's largest maker of eyeglass lenses said second-quarter revenue rose 2.3 percent to 758.1 million euros on higher sales in emerging markets. That fell short of analysts' estimates.
Etam Developpement SA (TAM FP) declined 21 cents, or 1.2 percent, to 17.39 euros. France's largest publicly traded maker of women's lingerie said second-quarter sales dropped 4.9 percent to 223 million euros.
Gaz de France SA (GAZ FP) gained 38 cents, or 1 percent, to 40.23 euros. The group's shareholders, along with those of Suez SA (SZE FP), approved merging the two companies, paving the way for the creation of the world's second-largest utility. The French government issued a decree allowing Gaz de France's privatization, which will enable the utility to merge with Suez. Suez shares rose 49 cents, or 1.2 percent, to 41.85 euros.
Geci International SA (GECP FP) slipped 7 cents, or 2.5 percent, to 2.79 euros. The aerospace services company reported a full-year loss of 4.1 million euros compared with 3.61 million euros a year earlier.
MGI Digital Graphic Technology (ALMDG FP) advanced 27 centimes, or 3.9 percent, to 7.22 euros, the steepest advance in more than a month. The printer manufacturer reported a 20 percent rise in second-quarter revenue to 4.31 million euros and forecast full-year sales will be more than 20 percent higher than year-earlier levels.
Natixis SA (KN FP) surged 46 cents, or 9.6 percent, to 5.25 euros, the biggest gain in two months. France's fourth-largest bank said it plans to raise 3.7 billion euros in a rights offer to shore up capital after writedowns related to the U.S. subprime crisis.
Pernod Ricard SA (RI FP) increased 1.5 euros, or 2.8 percent, to 55.27. Dresdner Kleinwort raised its recommendation for shares of the world's second-largest liquor maker to ``buy'' from ``add.''
To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
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Japan Stocks End Losing Streak on Receding Credit-Loss Concern
By Patrick Rial
July 17 (Bloomberg) -- Japanese stocks rose, snapping a four-day drop by the Topix index, as concerns eased that credit losses will continue to plague banks and cause capital shortages.
Mizuho Financial Group Inc., Japan's third-biggest bank by market value, rose to the highest in a month while Orix Corp., the nation's biggest leasing company, surged. Brokerage Nomura Holdings Inc. climbed the most in almost three months.
Wells Fargo & Co. soared by a third in New York trading after reporting earnings that exceeded analyst estimates and raising its dividend. A measure of U.S. banks rallied the most on record after slumping a quarter in the previous week.
``The huge swings in U.S. financial stocks indicate that investors have been bracing themselves for the worst possible outcome,'' said Akio Yoshino, chief economist at Societe Generale Asset Management (Japan), which oversees about $16 billion. ``It now looks like we're ready for a bear market rally.''
The Nikkei 225 Stock Average climbed 127.15, or 1 percent, to 12,887.95 at the close of trading in Tokyo, the sharpest gain since June 16. The broader Topix index jumped 14.37, or 1.2 percent, to 1,263.65. More than three stocks climbed for each that retreated on the benchmark. Volume on the main board of the exchange was the 10th-lowest for a full trading day this year.
Japanese stocks were raised to ``neutral'' from ``underweight'' by Credit Suisse Group analyst Andrew Garthwaite, who said the market provides a hedge against inflation, oil prices and turmoil in credit markets. The Topix has lost 14 percent in 2008, less than all but Brazil among the world's 10- largest equity markets, and it's the top performer among major Asian benchmarks.
Wells Fargo, Oil
Wells Fargo, the second-biggest U.S. mortgage lender, led a rally in U.S. financial shares after the company said net income last quarter was 53 cents per share, beating the 50-cent average estimate of analysts. The company lifted its dividend by 10 percent, alleviating concern it lacks capital.
Global stocks have lost more than $13 trillion in value since October as banks and financial companies posted $416 billion in credit losses related to U.S. mortgage assets.
Mizuho rose 4.6 percent to 544,000 yen, the highest level since June 20, while Mitsubishi UFJ Financial Group Inc., the country's biggest lender by market value, gained 3 percent to 955 yen. Orix jumped 5 percent to 15,250 yen.
Nomura, Japan's biggest securities company, climbed 5 percent to 1,531 yen, the most since April 28. Daiwa Securities Group Inc., the No. 2 brokerage, surged 5 percent to 922 yen after the Nikkei newspaper said it will form an alliance with Brazil's Banco Itau.
Worst to First
Brokerages and non-bank financial companies had the biggest gains among Topix industry groups, rising 5 percent and 3.8 percent respectively. They were the two worst-performing groups since the Topix began a decline from its year-high on June 4.
``This doesn't look like much more than a one-day rebound,'' said Hideyuki Ookoshi, who helps oversee the equivalent of $365 million at Chiba-Gin Asset Management Co. ``Investors want to confirm where earnings are headed before taking a strong stance.''
Elsewhere, oil continued to slide after U.S. inventories unexpectedly increased, adding to evidence record prices are reducing demand. Crude futures dropped 3 percent to $134.60 in New York, extending the previous day's 4.4 percent slump.
Inpex Holdings Inc., Japan's biggest oil explorer, lost 0.9 percent to 1.17 million yen. Japan Petroleum Exploration Co., the second largest, declined 2.2 percent to 6,820 yen.
Denso Corp., the nation's largest auto-parts maker, lost 2.5 percent to 3,110 yen, making it the second-biggest loser on the Nikkei. Its shares were cut to ``hold'' at Nikko Citigroup Ltd. due to a forecast for slower production growth by its main customer, Toyota Motor Corp.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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Asian Stocks Rise the Most in a Month; Financials Lead Advance
By Chen Shiyin and Patrick Rial
July 17 (Bloomberg) -- Asian stocks rose, giving the region's benchmark index its biggest gain in a month, on speculation credit losses will ease and after oil prices tumbled.
HSBC Holdings Plc, Europe's largest bank by value, rebounded from a five-month low in Hong Kong after Wells Fargo & Co., the No. 2 U.S. mortgage lender, reported earnings that topped analyst estimates. Sony Corp. gained the most in three weeks in Tokyo after Credit Suisse Group said Japanese equities provide a hedge against credit-market turmoil. Air China Ltd. rallied following the biggest two-day drop in crude-oil prices since January 2007.
``There's a feeling now that the market has already taken account of any bad news on financials,'' Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which manages about $94 billion, said in an interview with Bloomberg Television. ``Wells Fargo's profit came as a positive surprise.''
The MSCI Asia-Pacific Index added 1.4 percent to 131.24 at 4:11 p.m. Tokyo time, ending a three-day slump that dragged the benchmark to a 21-month low. Almost three stocks rose for each one that fell. The index, set for its biggest gain since June 16, has lost 17 percent this year after the world's top banks and securities firms reported writedowns and credit losses exceeding $422 billion, and commodity prices jumped.
Japan's Nikkei 225 Stock Average increased 1 percent to 12,887.95, and equity indexes advanced in most markets open for trading. Pakistan's benchmark index slumped 4.2 percent, set for its 15th day of declines as investors stoned the stock exchange in protest at collapsing share values. Thailand is closed today.
U.S. stocks rallied yesterday, helping the Standard & Poor's 500 Index rebound from its lowest since 2005, after Wells Fargo's earnings and the slump in crude overshadowed a government report showing the fastest increase in consumer prices since 2005. S&P 500 Index futures slipped 0.2 percent today.
Banks Gain
HSBC, which got 26 percent of its 2007 revenue in North America, rose 2.8 percent to HK$116 in Hong Kong. It closed yesterday at the lowest since Feb. 20. Mitsubishi UFJ Financial Group Inc., the No. 1 Japanese bank by value, gained 3 percent to 955 yen.
``The market is looking for any indication the crisis is ending,'' said Scott Rundell, head of credit research at ING Investment Management in Sydney. ``Wells Fargo is one result and shows the equity market is crying out for something positive.''
The MSCI Asia-Pacific Index's measure of financial companies gained 2.9 percent today, accounting for more than half the broader gauge's advance. The finance measure has tumbled 21 percent this year, the most among 10 industry groups.
The gauge slumped 4.6 percent in the previous three days, to its lowest since December 2005 on concern losses will swell at Fannie Mae and Freddie Mac, the struggling U.S. mortgage- financing companies that the Treasury has pledged to support.
Japan Stocks
Sony, the world's second-largest maker of consumer electronics, added 2.3 percent to 4,390 yen, its largest increase since June 26. Toyota Motor Corp., Japan's biggest automaker, gained 0.9 percent to 4,680 yen. Nomura Holdings Inc., the nation's biggest brokerage, jumped 5 percent to 1,531 yen.
Japanese stocks were raised to ``neutral'' from ``underweight'' by Andrew Garthwaite, chief strategist at Credit Suisse Group. Japan's market provides a hedge against inflation, higher oil prices, and turmoil in credit markets, Garthwaite said in a note to clients. The Topix index has lost 14 percent in 2008, making Japan the best-performing market in Asia after Sri Lanka.
Air China, the nation's largest international carrier, rallied 5.1 percent to HK$4.15 in Hong Kong. Korean Air Lines Co., South Korea's No. 1 carrier, surged 4.8 percent to 43,500 won, while Qantas Airways Ltd., Australia's biggest, gained 4.1 percent to A$3.30.
Lower Oil, Metals
Crude oil for August delivery fell 3 percent yesterday in New York. Futures completed a two-day, 7.3 percent slump, the most since January 2007, and were at $134.95 today. Separately, copper futures fell to a one-month low, while gold tumbled the most in three weeks.
A report today showing that China's economy grew 10.1 percent last quarter, the slowest pace since 2005, added to speculation metal and oil prices will retreat as demand wanes. China is the world's largest user of copper and the second- biggest consumer of crude oil.
BHP Billiton Ltd., the world's largest mining company and Australia's No. 1 oil producer, fell 4.4 percent to A$37.55. Paladin Energy Ltd., a producer of uranium in Namibia, slumped 8.5 percent to A$5.81, the largest drop on MSCI's Asian index.
Pakistan's Karachi Stock Exchange 100 Index fell today as hundreds of investors gathered at the bourse to protest against a slump that has dragged the benchmark measure down by 29 percent this year.
Regulators on July 14 eased curbs on trading, including a restriction on price declines to 1 percent that had been in effect since June 24. Financial stocks paced today's drop, with MCB Bank Ltd., the country's No. 2 lender, falling 5 percent to 245.34 rupees.
To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
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Pakistani Investors Stone Karachi Exchange as Stocks Plunge
By Farhan Sharif
July 17 (Bloomberg) -- Pakistan's main stock exchange received police and paramilitary protection after investors stoned the building in protest at collapsing share values.
The Karachi Stock Exchange 100 Index fell for a 15th day, the longest losing streak in at least 18 years, prompting hundreds of investors to walk out of the trading hall, throw stones at the building and shout slogans against regulators.
``I have lost my life savings in the last 15 days and no one in the government or regulators came to help us,'' said Imran Inayat, an investor who was part of the protest.
Regulators this week eased curbs on trading, removing a 1 percent limit on price declines that led trading volumes to fall to the lowest in a decade. Shares have slumped 29 percent this year, ending a rally that had pushed the key index more than 14- fold higher since 2001.
``There has been some level of mismanagement by the authorities,'' said Habib-ur-Rehman, who manages the equivalent of 6.5 billion rupees ($90 million) in Pakistani stocks and bonds at Atlas Asset Management Ltd. in Karachi. ``This may be due to their misperception that they can prevent the market from falling. Investors have to learn to bear losses as they do gains.''
The Karachi Stock Exchange won't suspend trading, Chief Executive Adnan Afridi said by telephone. Investors were also protesting outside the Lahore Stock Exchange, Dawn News television reported.
In Karachi investors broke windows, threw plant holders in the parking lot of the building and at least one protester was injured.
The benchmark Karachi Stock Exchange 100 Index dropped 436.63 points, or 4.2 percent, to 10,055.25 at 12:36 p.m. local time.
To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan at fsharif2@bloomberg.net
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July 17 (Bloomberg) -- Pakistan's main stock exchange received police and paramilitary protection after investors stoned the building in protest at collapsing share values.
The Karachi Stock Exchange 100 Index fell for a 15th day, the longest losing streak in at least 18 years, prompting hundreds of investors to walk out of the trading hall, throw stones at the building and shout slogans against regulators.
``I have lost my life savings in the last 15 days and no one in the government or regulators came to help us,'' said Imran Inayat, an investor who was part of the protest.
Regulators this week eased curbs on trading, removing a 1 percent limit on price declines that led trading volumes to fall to the lowest in a decade. Shares have slumped 29 percent this year, ending a rally that had pushed the key index more than 14- fold higher since 2001.
``There has been some level of mismanagement by the authorities,'' said Habib-ur-Rehman, who manages the equivalent of 6.5 billion rupees ($90 million) in Pakistani stocks and bonds at Atlas Asset Management Ltd. in Karachi. ``This may be due to their misperception that they can prevent the market from falling. Investors have to learn to bear losses as they do gains.''
The Karachi Stock Exchange won't suspend trading, Chief Executive Adnan Afridi said by telephone. Investors were also protesting outside the Lahore Stock Exchange, Dawn News television reported.
In Karachi investors broke windows, threw plant holders in the parking lot of the building and at least one protester was injured.
The benchmark Karachi Stock Exchange 100 Index dropped 436.63 points, or 4.2 percent, to 10,055.25 at 12:36 p.m. local time.
To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan at fsharif2@bloomberg.net
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Daily Report: Dollar's Mild Rebound Continues
| Market Overview | Written by ActionForex.com | Jul 17 08 06:52 GMT | | |
| Dollar fought back yesterday on the back of strong rally in the stock markets, pullback in oil prices, and a stronger than expected CPI reading but the momentum is so far mild. Fed minutes might sound a bit more hawkish than Bernanke's testimony, noting that some committee members said that “some firming in policy would be appropriate very soon” to fight inflation. Nevertheless, markets are not that convinced yet with interest rates futures showing 41% chance of a hike by Dec, down from 44% a week ago. Another critical factor to the possibility of Fed's move is the situation in the housing markets. The National Association of Home Builders (NAHB) housing market index showed homebuilders confidence dropped to a new record low of 16 in Jul. New residential construction data will be released today and is expected to show further deterioration in building permits and housing starts in Jun. It will be hard for the Fed to remove policy accommodations if markets can't see an end to the housing recession. Philly Fed survey and jobless claims will also be released today. Other event to be focused today include Swiss ZEW and Bank of Canada Monetary Policy Report. AUD/USD Daily OutlookDaily Pivots: (S1) 0.9712; (P) 0.9764; (R1) 0.9799; More AUD/USD's retreat from 0.9849 is still in progress and with an intraday top in place at 0.9849, further pull back could still be seen to 4 hours 55 EMA (now at 0.9674). But downside should be contained well above 0.9475 support and bring rally resumption. As discussed before, prior break of near term trendline resistance reaffirms underlying strength in AUD/USD. Above 0.9849 will indicate recent rally has resumed for 1.0000 psychological resistance. In the bigger picture, the whole rally from 0.8512 is still in progress. Also, note that the break of near term trend line resistance and break out of bearish divergence conditions in daily MACD and RSI are both reaffirming the underlying strength in AUD/USD. Regardless of the structure, such rally is treated as part of the long term up trend from 0.4773 (01 low) and is still expected to extend further to next medium term target of 100% projection of 0.4773 to 0.8008 from 0.6773 at 1.0008 which overlaps with parity. On the downside, break of 0.9475 support is needed to be the first signal that a short term top is formed. Otherwise, recent uptrend is still expected to extend further.
| |
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 09:00 | CHF | Swiss ZEW index Jul | -67 | -63.8 | ||
| 12:30 | USD | U.S. Building permits Jun | 0.960M | 0.978M | ||
| 12:30 | USD | U.S. Building permits M/M Jun | N/A | -0.40% | ||
| 12:30 | USD | U.S. Housing starts Jun | 0.96M | 0.975 | ||
| 12:30 | USD | U.S. Housing starts M/M Jun | N/A | -3.30% | ||
| 12:30 | USD | U.S. Jobless claims Jun | 378K | 346K | ||
| 14:00 | USD | U.S. Philadelphia Fed survey Jul | -14.8 | -17.1 | ||
| 14:30 | CAD | BOC Monetary Policy Report |
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Fed Looking At Growth Over Inflation
Daily Forex Fundamentals | Written by AC-Markets | Jul 17 08 08:29 GMT |
Market Brief
Usd has been able to hold gain in the Asian session as risk appetite slowly crept back into the markets. EurUsd was range bound between 1.5801 - 1.5868 while UsdJpy bounced around the 104.70 - 105.30 levels. Jpy fueled carry trades saw renewed buying with AudJpy and EurJpy trending upward to 102.76 and 166.73. EM currencies also got a boost with UsdMxn and EurPln sliding to 10.2200 and 3.2083. The Usd was help as oil prices dropped sharply as EIA data showed an unexpected rise in inventories.
The Fed minutes released yesterday were perhaps slightly more hawkish then the market had anticipated. While member were clear apprehensive with placing inflation worries over growth concerns the minutes stated 'the next change in the stance of policy could well be an increase in the funds rate'. Notes that given the rapid evolution of event these minutes are old news and therefore the weight we attached should be limited. Especially considering at the time there was a general feeling that the US was stabilizing (which we know no is not the cases). With yesterday sharp increase in Junes headline inflation (5.0% vs. 4.5% exp) the Fed will have to stay diligent but given the downside risk to growth it would be irresponsible for the Fed to tighten. We expected the pause in Usd volatility will be short lived as uncertainty around domestic economic conditions, inflation and unsettled GSEs position are still very much outstanding.
With no major data to be released in the UK, Eurozone today movement will be purely based on sentiment and positioning. A good way to guage what the market is thing. In addition keep an eye on other assets classes such as equity market and energy prices for FX directional support.
ACM FOREX
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Market Brief
Usd has been able to hold gain in the Asian session as risk appetite slowly crept back into the markets. EurUsd was range bound between 1.5801 - 1.5868 while UsdJpy bounced around the 104.70 - 105.30 levels. Jpy fueled carry trades saw renewed buying with AudJpy and EurJpy trending upward to 102.76 and 166.73. EM currencies also got a boost with UsdMxn and EurPln sliding to 10.2200 and 3.2083. The Usd was help as oil prices dropped sharply as EIA data showed an unexpected rise in inventories.
The Fed minutes released yesterday were perhaps slightly more hawkish then the market had anticipated. While member were clear apprehensive with placing inflation worries over growth concerns the minutes stated 'the next change in the stance of policy could well be an increase in the funds rate'. Notes that given the rapid evolution of event these minutes are old news and therefore the weight we attached should be limited. Especially considering at the time there was a general feeling that the US was stabilizing (which we know no is not the cases). With yesterday sharp increase in Junes headline inflation (5.0% vs. 4.5% exp) the Fed will have to stay diligent but given the downside risk to growth it would be irresponsible for the Fed to tighten. We expected the pause in Usd volatility will be short lived as uncertainty around domestic economic conditions, inflation and unsettled GSEs position are still very much outstanding.
With no major data to be released in the UK, Eurozone today movement will be purely based on sentiment and positioning. A good way to guage what the market is thing. In addition keep an eye on other assets classes such as equity market and energy prices for FX directional support.
ACM FOREX
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China's Stocks Gain as Inflation Slows; Banks, Refiners Climb
By Chua Kong Ho
July 17 (Bloomberg) -- China's stocks rose for the first time in three days, led by banks and refiners, as inflation slowed last month and crude-oil prices declined.
Industrial & Commercial Bank of China Ltd., the nation's biggest bank by assets, led financial companies higher on speculation tightening measures will be eased. China Petroleum & Chemical Corp. and PetroChina Co., the nation's biggest oil refiners, gained after the biggest two-day drop in crude prices since January 2007. Coal producers declined after Shanxi Coking Co.'s parent said prices may fall from mid-2009 due to rising supplies.
``The slowdown in consumer price gains, coupled with falling oil prices, is positive as it gives the government more room to maneuver,'' said Michelle Qi, a portfolio manager at Bank of Communications Schroder Fund Management in Shanghai, which oversees $790 million.
The CSI 300 Index, which tracks yuan-denominated stocks traded in Shanghai and Shenzhen, added 0.1 percent to 2,749.43 as of 1:19 p.m. local time, after gaining as much as 2.5 percent and dropping 0.4 percent. Five of its 10 industry groups rose, with about five stocks gaining for every four that declined.
Gross domestic product grew 10.1 percent in the second quarter from a year earlier, the statistics bureau said today in Beijing. Growth was 10.6 percent in the first quarter. Consumer prices rose 7.1 percent in June, slowing from 7.7 percent in May.
Industrial & Commercial Bank gained 0.6 percent to 4.79 yuan. Bank of Communications Co., whose shareholders include HSBC Holdings Plc, rose 2 percent to 7.70 yuan.
China Inflation
Inflation has eased from February's 12-year high of 8.7 percent on smaller gains in food prices. China has imposed lending quotas and ordered banks to set aside a record 17.5 percent of deposits as reserves to tackle inflation, after increasing interest rates six times last year.
China's banking regulator told policy makers that forcing banks to increase reserves has hurt the industry's ability to repay debt, according to a person with knowledge of the matter.
``Overall policy would likely be more supportive of growth later in the year,'' said Frank Gong, head of China research and strategy at JPMorgan Chase & Co., in an e-mail. ``The central bank may start to ease its tight grip on commercial banks' credit expansion.''
China Petroleum, or Sinopec, gained 0.5 percent to 10.45 yuan, while PetroChina added 0.8 percent to 14.96 yuan. China controls domestic fuel prices to limit their impact on inflation, hampering refiners' ability to pass on higher raw-material expenses.
Crude oil for August delivery fell 3 percent yesterday in New York after the U.S. Energy Department showed an unexpected gain in supplies, completing a two-day, 7.3 percent slump.
China Shenhua Energy Co., the nation's largest coal producer, slid 0.6 percent to 32.63 yuan. Pingdingshan Tianan Coal Mining Co., based in Henan province, dropped 1.6 percent to 31.94 yuan.
``For the medium and long term, demand may decline gradually and prices will fluctuate and show a declining trend,'' said Liu Jianzhong, deputy general manager of Shanxi Coking Coal Group Co., at a conference today.
The Shanghai Composite Index, which tracks stocks on the larger of the nation's two exchanges, gained 0.4 percent to 2,717.49. The Shenzhen Composite Index advanced 0.3 percent.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net
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July 17 (Bloomberg) -- China's stocks rose for the first time in three days, led by banks and refiners, as inflation slowed last month and crude-oil prices declined.
Industrial & Commercial Bank of China Ltd., the nation's biggest bank by assets, led financial companies higher on speculation tightening measures will be eased. China Petroleum & Chemical Corp. and PetroChina Co., the nation's biggest oil refiners, gained after the biggest two-day drop in crude prices since January 2007. Coal producers declined after Shanxi Coking Co.'s parent said prices may fall from mid-2009 due to rising supplies.
``The slowdown in consumer price gains, coupled with falling oil prices, is positive as it gives the government more room to maneuver,'' said Michelle Qi, a portfolio manager at Bank of Communications Schroder Fund Management in Shanghai, which oversees $790 million.
The CSI 300 Index, which tracks yuan-denominated stocks traded in Shanghai and Shenzhen, added 0.1 percent to 2,749.43 as of 1:19 p.m. local time, after gaining as much as 2.5 percent and dropping 0.4 percent. Five of its 10 industry groups rose, with about five stocks gaining for every four that declined.
Gross domestic product grew 10.1 percent in the second quarter from a year earlier, the statistics bureau said today in Beijing. Growth was 10.6 percent in the first quarter. Consumer prices rose 7.1 percent in June, slowing from 7.7 percent in May.
Industrial & Commercial Bank gained 0.6 percent to 4.79 yuan. Bank of Communications Co., whose shareholders include HSBC Holdings Plc, rose 2 percent to 7.70 yuan.
China Inflation
Inflation has eased from February's 12-year high of 8.7 percent on smaller gains in food prices. China has imposed lending quotas and ordered banks to set aside a record 17.5 percent of deposits as reserves to tackle inflation, after increasing interest rates six times last year.
China's banking regulator told policy makers that forcing banks to increase reserves has hurt the industry's ability to repay debt, according to a person with knowledge of the matter.
``Overall policy would likely be more supportive of growth later in the year,'' said Frank Gong, head of China research and strategy at JPMorgan Chase & Co., in an e-mail. ``The central bank may start to ease its tight grip on commercial banks' credit expansion.''
China Petroleum, or Sinopec, gained 0.5 percent to 10.45 yuan, while PetroChina added 0.8 percent to 14.96 yuan. China controls domestic fuel prices to limit their impact on inflation, hampering refiners' ability to pass on higher raw-material expenses.
Crude oil for August delivery fell 3 percent yesterday in New York after the U.S. Energy Department showed an unexpected gain in supplies, completing a two-day, 7.3 percent slump.
China Shenhua Energy Co., the nation's largest coal producer, slid 0.6 percent to 32.63 yuan. Pingdingshan Tianan Coal Mining Co., based in Henan province, dropped 1.6 percent to 31.94 yuan.
``For the medium and long term, demand may decline gradually and prices will fluctuate and show a declining trend,'' said Liu Jianzhong, deputy general manager of Shanxi Coking Coal Group Co., at a conference today.
The Shanghai Composite Index, which tracks stocks on the larger of the nation's two exchanges, gained 0.4 percent to 2,717.49. The Shenzhen Composite Index advanced 0.3 percent.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net
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Housing In Focus
Daily Forex Fundamentals | Written by Crown Forex | Jul 17 08 07:45 GMT |
Major Market Mover: Housing In Focus
After a very busy week for the U.S. markets, from all the testimonies and min-utes, to inflation and sales to growth data, today comes carrying along with it some data on the housing sector, which once was the cause of all the troubles in the economy on all levels.
Housing starts will probably come at their lowest in 17 years, after 975K houses got started in May, it is expected that this number will drop to 960K annual pace in June, highlighting the ongoing contraction in the housing sector, while building permits are expected to decline to 965K in June, down from 969K annual pace.
The housing market is still one of the most sectors that we need to keep an eye on, as it was the first to start all of the slowing growth and the financial turmoil, and the way we see it, if the feds could not manage to make sure that this es-sence is properly soled, it does not matter how hard they try to do for other sec-tors, they are still going down.
The housing sector is correlated with every other angle in the economy, and that's why when the housing slump deepened, the leak has reached to the econ-omy and ruined every good was in it, and that's why we need to see an im-provement, and we need to see that soon, if the FOMC to ever hike rates again, they need to be sure that the housing market will not deteriorate any further.
In another report, weekly jobless claims are expected to reach 380K last week, up from 346K a week earlier, highlighting risky jobs market in July, and increas-ing fears about the health of the jobs market up to the end of the year, and you know how significant that can be for an economy which is striving to get out of a recession.
From the manufacturing sector, the Philly fed index is expected to drop by 15 in July, following a drop of 17.1 in June, showing some stabilization in the manufac-turing sector, and waiting for the better to come.
Another day that will be vital for the U.S. economy is upon us, and again, we need to be fully ready and open to anything might happen with that.
Crown Forex
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Major Market Mover: Housing In Focus
After a very busy week for the U.S. markets, from all the testimonies and min-utes, to inflation and sales to growth data, today comes carrying along with it some data on the housing sector, which once was the cause of all the troubles in the economy on all levels.
Housing starts will probably come at their lowest in 17 years, after 975K houses got started in May, it is expected that this number will drop to 960K annual pace in June, highlighting the ongoing contraction in the housing sector, while building permits are expected to decline to 965K in June, down from 969K annual pace.
The housing market is still one of the most sectors that we need to keep an eye on, as it was the first to start all of the slowing growth and the financial turmoil, and the way we see it, if the feds could not manage to make sure that this es-sence is properly soled, it does not matter how hard they try to do for other sec-tors, they are still going down.
The housing sector is correlated with every other angle in the economy, and that's why when the housing slump deepened, the leak has reached to the econ-omy and ruined every good was in it, and that's why we need to see an im-provement, and we need to see that soon, if the FOMC to ever hike rates again, they need to be sure that the housing market will not deteriorate any further.
In another report, weekly jobless claims are expected to reach 380K last week, up from 346K a week earlier, highlighting risky jobs market in July, and increas-ing fears about the health of the jobs market up to the end of the year, and you know how significant that can be for an economy which is striving to get out of a recession.
From the manufacturing sector, the Philly fed index is expected to drop by 15 in July, following a drop of 17.1 in June, showing some stabilization in the manufac-turing sector, and waiting for the better to come.
Another day that will be vital for the U.S. economy is upon us, and again, we need to be fully ready and open to anything might happen with that.
Crown Forex
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Sunrise Market Commentary
| Daily Forex Fundamentals | Written by KBC Bank | Jul 17 08 07:16 GMT | | |
The Sunrise Headlines
Currencies: Dollar Rebounds As Credit Tensions Ease And Oil Price DropsOn Wednesday, some calm returned the markets and this was also the case for EUR/USD trading. For most of the day the pair held a rather tight sideways trading pattern in the 1.59 area. The pair traded slightly above that level in the morning in Europe, but the USD received a better bid as soon as US traders joined the action. The higher US inflation data and better-than-expected US industrial production were also marginally dollar supportive. However, the most significant move of the day occurred after the publication of the US oil inventory data. Inventories were higher than expected and for a second day in a row this triggered a sharp sell-off in oil, which in turn supported the US currency. EUR/USD fell back to the 1.5820 area. In the Q&A session of its appearance before House Financial Services Committee, Mr. Bernanke also addressed the item of currency interventions. He said that dollar strength in the long term will depend on the fundamentals and that it is up to the policymakers to get the fundamentals right. Currency interventions were mentioned as something that should be done rarely, but in disorderly markets some temporary action may be justified. We don't see this as an implicit signal that the Fed is preparing USD interventions. Later in the session the easing of global (credit) tensions helped the dollar to keep its intra-day gains and the pair closed the session at 1.5826, compared to 1.5912 on Tuesday. Overnight, an FT report said that large sovereign wealth funds are scaling back USD exposure, but at least for now the impact on USD trading remains rather limited. Today, European market calendar is empty (except for the non-monetary policy meeting of the ECB). In the US, the housing starts, jobless claims and the Philadelphia Fed survey are scheduled for release. However, over the previous sessions the news headlines regarding the credit crisis, the stock market reaction and the oil price tribulations were the most significant factors for the US currency. With the earnings' season in the US coming into full swing (e.g. J.P. Morgan and Merrill Lunch results today), these factors will continue to play an important role. On Tuesday, the assumption that EUR/USD was capped in a consolidation pattern, confined by the 1.6020 to 1.5285 medium term trading range, was seriously questioned, but the first test of the topside was rejected. Over the previous sessions, the flaring up of credit concerns (GSE's) clearly was a negative for the US currency. However, this was not able to trigger a new up-leg in EUR/USD. It's still early days as to whether to credit storm is over its top, but, if US credit headlines turn less aggressive, markets might conclude that the longer-term economic picture for both the US and Europe is not that different. Both the Fed and the ECB face a similar problem of too high inflation and low/slowing growth and have little room of maneuver to fix this difficult situation. So, we assume that extremely high profile negative news from the US is needed to force a break above the key 1.6020/40 area. Over the previous days, we argued that EUR/USD had to move away from the EUR/USD 1.60 area soon and in a convincing way to avoid to risk of an additional USD stop-loss selling move. The risk is not completely out of the way yet with EUR/USD still less than 200 ticks from the highs, but the dollar has again some breathing space. Regarding the day-to-day tactics, we hold on to approach that courageous dollar optimists may to try to sell EUR/USD on up-ticks hoping that the range holds. Stop-loss protection (e.g. in the 1.6050 area) is still warranted
EUR/USD: dollar supported by oil price decline Support stands at 1.5801/00 (MTMA/ST low + Break-up daily). at 1.5769 (Daily Channel bottom/Daily envelope), at 1.5753/51 (Boll Midline/ 38% retracement) and 1.5729 (Break-up) and at 1.5657 (LTMA). Resistance is seen at 1.5960 (Breakdown), at 1.5992 (Boll Top), 1.6018 (Daily envelope), at 1.6040 (All-time high), and at 1.6076 (Daily Channel top), at 1.6182 (Weekly envelope) The pair is again in neutral territory. USD/JPYOn Wednesday, USD/JPY trading showed two faces. In Asia and early in European trade, the yen extended its gains supported ongoing credit woes and a poor open at the European stock markets. However, after the Wells Fargo results and even more after the sharp drop in oil prices the sentiment turned again more dollar positive and USD/JPY recouped the losses. However, given the sharp decline in oil prices and the decent performance of the US equity markets, the rebound in USD/JPY was not really convincing. The pair closed the session at 105.15, compared to 104.72 on Tuesday. Overnight, USD/JPY even drifted slightly lower again. Headlines on sovereign wealth funds reducing dollar holdings might have played a role. The gains of the Nikkei (and other Asian stock markets) are also not really spectacular if compared to the move yesterday evening in the US. In China, slowing growth could become an 'excuse' for Chinese authorities to slow the recent appreciation of the yuan. Looking at the charts, the turmoil on global markets caused USD/JPY (and EUR/JPY) to drop below first important support levels. USD/JPY fell below the 104.99 level, painting a short-term double top pattern on the charts. The jury is still out as to whether this break will be confirmed (USD/JPY hovers in the 105-area this morning). The signals from the most obvious drivers for USD/JPY (oil and stocks) are not that clear yet. For now we still have a slight preference for some further follow-through price action to the downside in USD/JPY. The first target of the short-term double top pattern is at 102.23.
USD/JPY: 104.99 support broken. Support stands at 104.68 (Boll Bottom), at 103.77/68 (ST low/38% retracement), at 102.70/55 (Reaction lows), at 102.23 (Target double bottom). Resistance comes in at 105.38/41 (STMA/Daily envelope), at 105.46 (Break-down), at 106.02/21 (Breakdown/ MTMA), at 106.81 (ST high), at 106.91/08 (Break-down/weekly envelope). The pair is in oversold territory EUR/GBPOn Wednesday, EUR/GBP was again traded in a very narrow range. The sterling made a step backward after the publication of a slightly weaker than expected UK labour market report, with EUR/GBP setting intraday highs in the 0.7955 area after the release. However, later in the session global euro selling spilling over from EUR/USD dragged EUR/GBP lower again. The pair closed the session at 0.7916, slightly lower form the 0.7933 close on Tuesday. Today, the UK calendar is empty. Since mid April, EUR/GBP developed a very uninspiring consolidation pattern (0.7766/0.8098). We turned neutral on EUR/GBP as the pair shows no trading momentum at all. An attempt to move higher early this month again ran into resistance and also at the end of last week and early this week a test of the key 0.8033/34 area was rejected. EUR/GBP is now again in the middle of the long-standing trading pattern. So, the short-term alert on sterling is again called off. In a longer term perspective we hold on to our sterling skeptic attitude.
EUR/GBP: again in the middle of the sideways range. Support comes in at 0.7906/00 (ST low/07 July low), at 0.7885/82 (MTBU/daily envelope), at 0.7868/61 (01 July/Boll bottom) and at 0.7847/31 (MT reaction lows). Resistance stands at 0.7934/45 (Daily envelope/MTMA), at 0.7955/68 (Reaction high), 0.7995 (Boll top), at 0.8022 (ST Reaction high), at 0.8033/34 (Reaction highs), at 0.8051 (Reaction high) and at 0.8098 (Alltime high). The pair is again in neutral territory. NewsUS: Inflation surges in June.The June CPI report disappointed, as it showed that inflationary pressures remain ubiquitous. The headline CPI surged higher by 1.1% M/M and 5% Y/Y, largely exceeding expectations for a 0.7% M/M. It is the largest increase since May 1991. Energy rose a strong 6.6% M/M (24.7% Y/Y), but also food up 0.7% M/M (5.2% Y/Y) contributed to the steep rise in headline inflation. Core CPI, which excludes energy and food, was up 0.3% M/M and 2.4% Y/Y following 2.3% Y/Y previously. Core CPI behaved better in the past year, but didn't decline either, which is disappointing given the slow growth in previous quarters. In the core CPI, housing costs increased 0.5% M/M (3.5% Y/Y) for the second month in a row. Besides transportation (3.8% M/M) and tobacco (1.5% M/M), also education costs (0.5% M/m) increased strongly. The report confirms Bernanke's concerns at his testimony that upside inflation risks remain important, even as the Fed expects that slower growth translates in lower inflation pressures in 2009/10. June industrial production topped expectations as it rose by 0.5% M/M following a 0.2% M/M drop in May. Expectations were for a more modest 0.1% M/M. The upward surprise was due to the weather-related utility output that jumped 2.1% M/M. The more important cyclical manufacturing output rose 0.2% M/M after a 0.1% M/M drop in May and is down 0.6% Y/Y, which also exceeded expectations, as a sharp decline in aggregate hours worked for the month suggested a weaker outcome. The third monthly Y/Y decline nevertheless shows that conditions in the sector remain challenging. Mining was up 1.1% M/M. The NAHB survey on building sentiment showed a further worsening of homebuilders' sentiment. The headline index dropped another 2 points in July to a new alltime low of only 16. It was the third consecutive drop and the deterioration was broadly based and touched all three sub-indices (current & future sales and traffic). The survey suggests that there are no signs of a bottoming in the housing sector. Other: Deterioration UK labour market keeps wage growth limitedIn the UK, the labour market showed further signs of deterioration, as the jobless claims rose for the fifth month in a row by 15.5K in June, the highest monthly increase since the early 90s. At the same time, earnings growth remained fairly subdued. As such, it appears so far that the deterioration of the labour market will prevent employees from securing large wage increases. This should reassure the Bank of England that the current spike in inflation will remain temporary and that it won't have to raise rates to quell inflation, which could throw the UK economy into a severe recession. | |
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Daily Financial Market Outlook
| Daily Forex Fundamentals | Written by Lloyds TSB | Jul 17 08 07:01 GMT | | |
| Overview & economic commentary Focus will remain on the US today, with some important housing and labour market figures due. Despite renewed credit market tensions and continuing fears of recession, the prospect of lower US interest rates was dealt a serious blow yesterday after the news that headline CPI inflation surged to 5% in June - a 17-year high. We believe there is a real risk US interest rates are raised later this year, particularly if long-term inflation expectations spiral higher. However, a rise in 2009 looks more likely. Prospects for consumer spending will be key to whether the US economy can avoid recession and so today's data should be informative. We forecast housing starts slowed to an annual pace of 970,000 in June, the lowest for 17 years, with permits also down compared to May. However, the risk is of a sharper downturn as confidence remains fragile. Another major influence on consumer spending will be the performance of the labour market. Although we look for a rebound in initial jobless claims in the week ended 12 July, the series average will remain some way short of recession levels. Weekly claims averaged about 415,000 during the last recession in 2001, compared with 362,000 so far this year. The latest Philly fed survey will attract extra attention after the strong rise in official industrial production in June. It is a relatively quiet day for non-US economic data, with Canadian international securities transactions in June the main highlight. The Bank of Canada publishes its Monetary Policy report update and the Fed's Kroszner takes to the stage in the afternoon. Currency commentary Currency markets were relatively quiet overnight, catching their breath after a rollercoaster session yesterday. With equity markets dictating flows in fx and fixed income, earnings by JPM, Black Rock and BoNY before the NY open are likely to make an impact on dollar majors and yen crosses. $/Y broke back above 105.0 on the recovery in equities in the US. Follow through buying in Asia, led by financials, pushed the Hang Seng and Nikkei up by over 1%. US housing starts and building permits are due this afternoon and should confirm that the weakness in construction was still very acute at the end of Q2. Weekly claims are also due and could well be the biggest mover, depending on whether they confirm last week's drop of 58,000, or whether they spike back up. In emerging markets, fears of risig inflation pushed u[ $/won back above 1,000 overnight. This will keep the central bank on alert. The squeeze in $/rand below 7.60 could trigger a move to 7.50 if US claims stay low. Major data and events today
Chart: US housing starts and building permits have fallen sharply from an unsustainable level, but a floor may be near if 1980/1990 are a guide
Lloyds TSB Bank | |
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Daily FX Report
| Daily Forex Technicals | Written by Varengold Bank | Jul 17 08 08:11 GMT | | |
| Good morning from Hamburg. It is Thursday and everybody knows what that means: half of the week is over, and we're steering straight to the weekend, which is a little bit like a project: it must be constructive with a lot of creativity. Yesterday, traders were able to enjoy a little break after the excitement on Tuesday, with a small rebound of the USD. But the strains are still in the market so look out for all messages that affect the market. Markets reviewJapanese manufactures business sentiment hit a fresh 5 year low as companies felt the pinch from surging energy and raw material costs and sluggish demand. The USD/JPY dipped 0.3% to a low of 103.75, but due to reports about the weakening Japanese economy, has since started creeping back. The conference Board of Canada lowered its forecasts of Canadian economic growth in 2008 and 2009 yesterday, citing declining exports to the struggling US market, especially in the auto sector. In its summer outlook the Conference Board forecast gross domestic product would advance 1.7 percent this year, down 2.2 percent in its spring forecast. While the Board said it has good expectations for 2009, helped by an improving trade performance and still healthy domestic demand, it lowered its growth target to 2.7 percent from 3 percent. The USD held gains after staging a big rebound the previous day. Oil will play a big part in the USD's upcoming developments, with traders still cool on the dollar before earnings reports from JP Morgan and Merryl Lynch later last day. The EUR lost 0.6% against the USD, and closed at 1.5822. The GBP lost a little less with 0.3%, and closed under the 2 USD mark at 1.9987 Technical analysisNZD/USDAfter a small M formation between June and July, the NZD/USD reached its upper line of the downward trading channel. As it breaks through the line, the dojis and the last candle with the long wick indicate an upcoming decrease. However, the iffy situation in the USA makes a drop arguable.
USD/CADAfter the good performance of the CAD in the last week it seems that there is a border at the 1-even level. Also in this pair, the doji and the candle with the fuse indicate a possible turn.
Pivot Points - Daily FX Support and Resistance Levels
Daily Calendar & Key FX Events
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Today's Key Points
| Daily Forex Fundamentals | Written by Danske Bank | Jul 17 08 07:23 GMT | | |
Danske Daily
Markets OvernightAfter an almost endless decline, US financial stocks experienced some tailwinds yesterday. A higher-thanestimated profit at Wells Fargo spurred the best day for financials ever, with an 11% increase. Wells Fargo, which avoided most of the fallout from the subprime crisis, had its best day since 1980 as it rallied as much as 33%, chalking up the steepest advance in the S&P500 index. The positive sentiment influenced the entire sector, and all banks saw substantial increases in their equity prices. A lower oil price was the finishing touch, and the broad S&P500 index rebounded from its lowest level since 2005, rising 2.5%. Only energy-related companies suffered and are now down almost 15% on average from their peak two months ago. US crude oil inventories surprised by rising almost 3mn barrels. Since a modest fall had been expected, oil prices dropped sharply immediately afterwards. Crude oil for August delivery is now trading just below $135 per barrel. US treasuries fell as risk appetite returned and the entire bond curve shifted slightly upwards. The yield on the 2Y note ended 7bp up, at 2.42%, while the yield on the 10Y note ended at 3.94%, up 12bp. The minutes of the Fed June 24-25 monetary policy meeting were released yesterday evening. After Bernanke 's semi-annual testimony, not much news was expected. The most interesting piece of information embedded in the minutes, was the increasing evidence of disagreement between the hawks and the doves on the FOMC. In several passages of the text, the disagreement among the members is stated in an exceptionally explicit way, literally portraying a fight between the hawks and the doves on the committee. After the solid US equity performance, one should think that the way was paved for a similar splendid Asian session. But this is only to some extent true. While the Hang Seng index is up 2.5% at the time of writing, the Nikkei225 index has only risen an unpretentious 1%. Reason for the modest increase is probably that data out of China shows that the Chinese economy in Q2 grew at its slowest pace since 2005. The growth of 10.1% is still remarkable, but the declining trend in the growth rate is now evident. China's consumer prices rose 7.1% in June, 0.2pp less than expected. In FX markets, the suddenly bullish equity market and the lower oil price have only had a minor impact. EUR/USD, which tends to be positively correlated with the oil price, has dropped to 158.50 after having touched 160.38 earlier this week. This is, however, a smaller decline than should be expected from the drop in oil prices alone, and even lesser when taking the good US equity performance into account. So either this suggests that other downside risks are keeping the dollar weak or some adjustment in EUR/USD is about to happen. SEK and NOK have regained a little strength overnight after a rough day yesterday, but these currencies seem to be fragile when markets are thin and liquidity is low. The dimmed Chinese export outlook led to the biggest drop in the CNY vs. USD in seven weeks. Global DailyAs the weekend approaches, the calendar of events is getting lighter. The focus today will be on housing data out of the US. At 14:30 CET, housing starts and building permits will be published. We are looking for a slightly weaker reading than the consensus. In any case, though, the numbers will confirm the continuing alignment on the supply side of the housing market. Later in the day, at 16:00 CET, the Philadelphia Fed manufacturing index is due out. We expect an improvement to a still suppressed -12 reading in July from -17.1 in June. Although our estimate is slightly more up-beat than the consensus expectation of -15.1, a reading in line with our estimate would probably not cause any major reaction in markets, given the usually high volatility of this index. In FX markets, the Bank of Canada monetary policy report, due at 16:30, could attract some attention late in the day. Finally, note that the minutes of the BoJ's June Monetary Policy Meeting will be published during the night before tomorrow, at 01:50. Generally, we do not believe that the incoming data, by itself, will cause much action in bond markets. Sentiment is likely to be driven by general risk aversion. As such, credit and equity markets are likely to set the tone for bond markets today. So far the big winner in FX markets this week has been the yen. That is no surprise as risk aversion has surged, credit risk has increased and uncertainty in general has risen. In such cases, the yen serves as a nice safe-haven currency and as a hedge against abomination. The curious thing, how-ever, is that the JPY by no means is supported by domestic factors: In fact, BoJ has cut its GDP forecast for 2008 from 1.5% to 1.2% and for 2009 from 1.7% to 1.5%. So if JPY should continue to appreciate vs. major currencies, stock markets should continue to tumble and risk aversion should remain high, as the good news-flow out of Japan is pretty downbeat. Another curiosity in FX markets is the relatively good performance of AUD and NZD despite the marked fall in oil prices. Rea-son for this might be that the central banks of Australia and New Zealand haven't been re-priced as much as other central banks. Combined with the fundamental prospects, this could serve as a nice sell opportunity, especially for NZD, which has the worst outlook. One event to look out for, how-ever, is the RBNZ meeting next week. As some expect the bank to begin cutting rates already and therefore end up disappointed, the NZD can accordingly appreciate a little afterwards. But as the outlook is for lower levels in NZD/USD (down to 0.70), establishing short positions might be wise in the near future. Scandi DailyThere is no news out of Scandinavia today. Once again, focus will be on international events. Key drivers will probably be a test of the suddenly bullish equity sentiment, if the lower oil price can be sustained and if risk aversion is on the decline. Danske Bank | |
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Daily Forex Analysis
Daily Forex Technicals | Written by FOREXYARD | Jul 17 08 07:42 GMT |
Headlines
Will US Building Permits Confirm Housing Deterioration?
Economic News
USD
The USD had a strong trading day against its currency crosses yesterday. The USD's rally was supported by a batch of better than forecasted economic releases and a hawkish speech by Fed Chairman, Bernake. The USD also took advantage of the falling Crude Oil prices which traded at around $134 a barrel yesterday. After trading at around 1.60 on Tuesday, the EUR/USD fell to the low of 1.58 as the USD gained momentum. The USD/JPY rose from around 104.00 to trade above 105.00 in yesterday's market following the releases from the U.S.
The USD took advantage of a batch of positive economic data that was released yesterday. Both the Core CPI and general CPI beat forecasts and kept an increasing trend compared to last month's results. The Capacity Utilization Rate, which measures the percentage of available resources being utilized by manufacturers, mines, and utilities, and the Industrial Production, both beat expectations with their results announced simultaneously. The icing on the cake in terms of economic data was the Crude Oil Inventories, which were measured at 3.0 million, compared to negative value last week, which further dropped the Crude Oil price as well. Around this time, Fed Chariman Bernake gave the semiannual monetary policy testimony before the House Committee on Financial Services, in Washington DC. In his words, Bernake said a 'top priority' for the central bank is to bring inflation to an acceptable level. He helped the greenback's rally by easing traders' worries as he said that he believes mortgage giants Fannie Mae and Freddie Mac are in 'no danger of failing'. There are more significant economic data releases for the USD today, however it seems like this time the momentum might shift to a bearish trend. The impactful Building Permits and Housing Starts are expected to slightly drop as traders are still waiting for a sign of a breakout from Housing Crisis. The Unemployment Claims are expected to significantly increase by 34K this week. It will be up to FOMC Member Kroszner, who is due to speak at the Interagency Minority Depository Institutions National Conference, in Chicago, to save the greenback from a weak trading day ahead. Kroszner's speech and the Philadelphia Fed Manufacturing Index, which is the only release which is expected to rise, will be the only indicators that might save the USD from a bearish trading day.
EUR
The EUR lost ground versus its major rivals yesterday, most notably losing more than 100 points against the USD. While the USD, GBP and CHF were supported by mostly better than forecasted economic data, the EUR's economic releases were all very steady and were valued at their forecast figures. The CPI's from France, Germany and the whole Euro-Zone were all measured very close to their previous figures and no there was no surprise to push the EUR ahead of its currency crosses. The French CPI was even lower than its previous measuring and the worry of very slow economic growth in the Euro-Zone is becoming more realistic. It also seems like in general the Crude Oil and EUR have matching trends, so as the Crude Oil prices fell sharply yesterday, so did the EUR.
There is only one significant economic data release expected today from the Euro-Zone. The morning will start off with the Italian Trade Balance which is expected to slightly rise, but stay in the negative zone. Against the USD, traders might no foresee a direction as both currencies might have bearish trends, but against all the other crosses, the EUR could lose even more grounds as no impactful surprises are expected in today's trading.
JPY
As expected, the JPY's trading trends were caused by its counterparts' momentum shifts yesterday. There was no economic data released from Japan yesterday and the trading was based on the USD's bullish momentum and the EUR's bearish momentum. The USD/JPY cross dropped in the morning to the low 104.00's before the USD's news were announced, but after the releases, the cross was traded above that 105.00 range. The low Crude Oil prices did not help the weak JPY and it seems like investors are very worried about a significant economic slowdown in Japan caused by the high material costs.
The only economic release in Japan today will be the Monetary Policy Meeting Minutes. Although the meeting was held about a month ago, this will be the traders' first opportunity to sense the Japanese financial issues and plans. One should doubt very optimistic minutes and they will probably focus on the plans by the BoJ to fix the current issues and revive the Japanese economy. The release of the minutes will be followed by a speech by BOJ Governor Shirakawa, that will seal off the trading day.
Oil
Oil prices tumbled yesterday, putting prices on track for a dizzying drop of more than $10 in just 2 days of volatile trading. The Crude Oil prices for August delivery were down $4.27 at $134.47 a barrel shortly before trading closed on the New York Mercantile Exchange, after earlier sinking as low as $132. Prices fell $6.44 Tuesday in the biggest one-day drop in dollar terms since the Gulf War.
The Energy Information Administration reported that U.S. crude oil supplies rose by 3 million barrels, or 1%, last week. That is the opposite of the 3 million barrel draw analysts surveyed by energy research firm expected. US Gasoline supplies also leapt unexpectedly. Yesterday's Wall Street rally on banks also contributed to the Oil price drop. U.S. stocks jumped after strong results at Wells Fargo (Home Mortgage giant) fueled a powerful rally in the battered banking sector. Optimism over Wells Fargo's earnings helped lift the USD against the EUR as the bank offered investors a glimpse of stability in the hard-hit U.S. financial system. Further USD gains came after Bernanke told lawmakers that currency intervention is 'something that should be done only rarely, but there may be conditions in which markets are disorderly where some temporary action may be justified.' All that, in addition to an unexpected leap in U.S. Crude Supplies - led Oil prices to fall sharply.
Technical News
EUR/USD
The bearish channel on the 4 hour chart remains in tact, as the pair is now floating on the bottom barrier. A bearish cross on the daily chart's Slow Stochastic confirms that the direction is indeed down. Going short appears to be preferable.
GBP/USD
After the recent local bullish correction has been halted, the cable is now floating in neutral territory. A fresh bullish cross on the 4 hour chart's Slow Stochastic indicates the continuation of the bullish move; however, all other oscillators are showing mixed results. Waiting for a clearer signal on the hourlies before entering the market might be the smart move today.
USD/JPY
There is a very distinct bearish channel forming on the daily chart, as the pair is now floating on the bottom barrier of it. A break beyond the 104.50 level will validate the ongoing of the bearish move. Traders should wait for the breach before swinging in.
USD/CHF
The range trading continues, as the pair shows no distinct price direction. However, a fresh bullish cross on the daily chart's Slow Stochastic, accompanied by positive signals on the 4 hour chart's Accelerator\Decelerator suggests the beginning of a bullish move. Going long with tight stops seems to be a good strategy today.
The Wild Card
Gold
The bearish move that embarked yesterday appears to have more steam in it, as the RSI on the daily chart has crossed the 70 line, indicating that the market is overbought. This is a great opportunity for forex traders to enter a very promising trend.
Indicators
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Headlines
Will US Building Permits Confirm Housing Deterioration?
Economic News
USD
The USD had a strong trading day against its currency crosses yesterday. The USD's rally was supported by a batch of better than forecasted economic releases and a hawkish speech by Fed Chairman, Bernake. The USD also took advantage of the falling Crude Oil prices which traded at around $134 a barrel yesterday. After trading at around 1.60 on Tuesday, the EUR/USD fell to the low of 1.58 as the USD gained momentum. The USD/JPY rose from around 104.00 to trade above 105.00 in yesterday's market following the releases from the U.S.
The USD took advantage of a batch of positive economic data that was released yesterday. Both the Core CPI and general CPI beat forecasts and kept an increasing trend compared to last month's results. The Capacity Utilization Rate, which measures the percentage of available resources being utilized by manufacturers, mines, and utilities, and the Industrial Production, both beat expectations with their results announced simultaneously. The icing on the cake in terms of economic data was the Crude Oil Inventories, which were measured at 3.0 million, compared to negative value last week, which further dropped the Crude Oil price as well. Around this time, Fed Chariman Bernake gave the semiannual monetary policy testimony before the House Committee on Financial Services, in Washington DC. In his words, Bernake said a 'top priority' for the central bank is to bring inflation to an acceptable level. He helped the greenback's rally by easing traders' worries as he said that he believes mortgage giants Fannie Mae and Freddie Mac are in 'no danger of failing'. There are more significant economic data releases for the USD today, however it seems like this time the momentum might shift to a bearish trend. The impactful Building Permits and Housing Starts are expected to slightly drop as traders are still waiting for a sign of a breakout from Housing Crisis. The Unemployment Claims are expected to significantly increase by 34K this week. It will be up to FOMC Member Kroszner, who is due to speak at the Interagency Minority Depository Institutions National Conference, in Chicago, to save the greenback from a weak trading day ahead. Kroszner's speech and the Philadelphia Fed Manufacturing Index, which is the only release which is expected to rise, will be the only indicators that might save the USD from a bearish trading day.
EUR
The EUR lost ground versus its major rivals yesterday, most notably losing more than 100 points against the USD. While the USD, GBP and CHF were supported by mostly better than forecasted economic data, the EUR's economic releases were all very steady and were valued at their forecast figures. The CPI's from France, Germany and the whole Euro-Zone were all measured very close to their previous figures and no there was no surprise to push the EUR ahead of its currency crosses. The French CPI was even lower than its previous measuring and the worry of very slow economic growth in the Euro-Zone is becoming more realistic. It also seems like in general the Crude Oil and EUR have matching trends, so as the Crude Oil prices fell sharply yesterday, so did the EUR.
There is only one significant economic data release expected today from the Euro-Zone. The morning will start off with the Italian Trade Balance which is expected to slightly rise, but stay in the negative zone. Against the USD, traders might no foresee a direction as both currencies might have bearish trends, but against all the other crosses, the EUR could lose even more grounds as no impactful surprises are expected in today's trading.
JPY
As expected, the JPY's trading trends were caused by its counterparts' momentum shifts yesterday. There was no economic data released from Japan yesterday and the trading was based on the USD's bullish momentum and the EUR's bearish momentum. The USD/JPY cross dropped in the morning to the low 104.00's before the USD's news were announced, but after the releases, the cross was traded above that 105.00 range. The low Crude Oil prices did not help the weak JPY and it seems like investors are very worried about a significant economic slowdown in Japan caused by the high material costs.
The only economic release in Japan today will be the Monetary Policy Meeting Minutes. Although the meeting was held about a month ago, this will be the traders' first opportunity to sense the Japanese financial issues and plans. One should doubt very optimistic minutes and they will probably focus on the plans by the BoJ to fix the current issues and revive the Japanese economy. The release of the minutes will be followed by a speech by BOJ Governor Shirakawa, that will seal off the trading day.
Oil
Oil prices tumbled yesterday, putting prices on track for a dizzying drop of more than $10 in just 2 days of volatile trading. The Crude Oil prices for August delivery were down $4.27 at $134.47 a barrel shortly before trading closed on the New York Mercantile Exchange, after earlier sinking as low as $132. Prices fell $6.44 Tuesday in the biggest one-day drop in dollar terms since the Gulf War.
The Energy Information Administration reported that U.S. crude oil supplies rose by 3 million barrels, or 1%, last week. That is the opposite of the 3 million barrel draw analysts surveyed by energy research firm expected. US Gasoline supplies also leapt unexpectedly. Yesterday's Wall Street rally on banks also contributed to the Oil price drop. U.S. stocks jumped after strong results at Wells Fargo (Home Mortgage giant) fueled a powerful rally in the battered banking sector. Optimism over Wells Fargo's earnings helped lift the USD against the EUR as the bank offered investors a glimpse of stability in the hard-hit U.S. financial system. Further USD gains came after Bernanke told lawmakers that currency intervention is 'something that should be done only rarely, but there may be conditions in which markets are disorderly where some temporary action may be justified.' All that, in addition to an unexpected leap in U.S. Crude Supplies - led Oil prices to fall sharply.
Technical News
EUR/USD
The bearish channel on the 4 hour chart remains in tact, as the pair is now floating on the bottom barrier. A bearish cross on the daily chart's Slow Stochastic confirms that the direction is indeed down. Going short appears to be preferable.
GBP/USD
After the recent local bullish correction has been halted, the cable is now floating in neutral territory. A fresh bullish cross on the 4 hour chart's Slow Stochastic indicates the continuation of the bullish move; however, all other oscillators are showing mixed results. Waiting for a clearer signal on the hourlies before entering the market might be the smart move today.
USD/JPY
There is a very distinct bearish channel forming on the daily chart, as the pair is now floating on the bottom barrier of it. A break beyond the 104.50 level will validate the ongoing of the bearish move. Traders should wait for the breach before swinging in.
USD/CHF
The range trading continues, as the pair shows no distinct price direction. However, a fresh bullish cross on the daily chart's Slow Stochastic, accompanied by positive signals on the 4 hour chart's Accelerator\Decelerator suggests the beginning of a bullish move. Going long with tight stops seems to be a good strategy today.
The Wild Card
Gold
The bearish move that embarked yesterday appears to have more steam in it, as the RSI on the daily chart has crossed the 70 line, indicating that the market is overbought. This is a great opportunity for forex traders to enter a very promising trend.
Indicators
| Date | Time (GMT) | Country | Event | Period | Previous | Forecast | Importance |
|---|---|---|---|---|---|---|---|
| 2008-07-17 | 01:30:00 | AUD | RBA Bulletin | * | * | * | |
| 2008-07-17 | 08:00:00 | EUR | Italian Trade Balance | -1.00B | -0.90B | * | |
| 2008-07-17 | 09:00:00 | CHF | ZEW Expectations | -63.8 | -66.8 | *** | |
| 2008-07-17 | 12:30:00 | CAD | Foreign Securities Purchases | 9.8B | 3.5B | *** | |
| 2008-07-17 | 12:30:00 | USD | Housing Starts | 0.98M | 0.96M | *** | |
| 2008-07-17 | 12:30:00 | USD | Residential Building Permits | 0.98M | 0.96M | ***** | |
| 2008-07-17 | 12:30:00 | USD | Unemployment Claims | 346K | 380K | *** | |
| 2008-07-17 | 13:10:00 | USD | FOMC Member Kroszner Speaks | * | * | *** | |
| 2008-07-17 | 14:00:00 | USD | Philadelphia Fed Man. Index | -17.1 | -15.0 | *** | |
| 2008-07-17 | 14:30:00 | CAD | BOC Monetary Policy Report | * | * | **** | |
| 2008-07-17 | 14:35:00 | USD | Natural Gas Storage | 90B | 88B | ** | |
| 2008-07-17 | 15:15:00 | CAD | BOC Governor Carney Speaks | * | * | **** | |
| 2008-07-17 | 23:50:00 | JPY | Monetary Policy Meeting Minutes | * | * | *** |
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By Philip Lagerkranser
July 17 (Bloomberg) -- China's banking regulator told policy makers that forcing banks to increase reserves has hurt the industry's ability to repay debt, according to a person with knowledge of the matter.
The People's Bank of China raised its reserve ratio requirement to a record 17.5 percent last month to rein in loan growth and inflation. The China Banking Regulatory Commission has warned against ordering further increases, the person said, declining to be identified as he isn't authorized to speak publicly on the matter.
China's push to remove funds from the banking system resulted in the slowest loan growth in more than two years last month. The risk is that more banks will fall below the minimum requirement for short-term financial strength, the person said.
``While helping to control liquidity, further RRR hikes run the risk of repressing the financial system,'' wrote Sun Mingchun, a Hong Kong-based economist at Lehman Brothers Holdings Inc., in a July 15 note to clients. China may be approaching ``the limit where further hikes do more harm than good,'' he said.
CBRC's recommendations were sent to the State Council, China's cabinet, the person said. China's state radio said yesterday that the nation needs a ``tight'' monetary policy, citing the legislature's Financial and Economic Affairs Committee.
The central bank has boosted the reserve ratio requirement by 3 percentage points this year, freezing up an estimated 1.3 trillion yuan ($191 billion) of bank funds. Meanwhile, it has left interest rates unchanged after six increases in 2007.
Lehman's Sun forecast the reserve ratio will rise by another 2.5 percentage points this year.
Liquidity Threshold
The number of Chinese banking institutions whose liquidity ratio, a measure of ability to meet short-term funding needs, had dropped below the 25 percent regulatory minimum increased by 85 to 392 in the five months to May 31, the person said.
The so-called excess reserve ratio at Chinese banks -- the share of bank deposits that lenders voluntarily lodge with the central bank in addition to required reserves -- dropped to 1.95 percent in June, the lowest since at least 2001, reflecting the strain on banks' finances, according to Sun.
Efforts to drain surplus funds from the financial system should focus on measures such as issuing central bank bills, the banking regulator told the State Council, according to the person. The central bank auctioned 15 billion yuan of one-year bills on July 15 and mopped up 20 billion yuan through repurchase agreements.
Further interest rate increases could exacerbate declines in stock markets and real estate prices, the banking regulator said. The nation's benchmark lending rate stands at 7.47 percent, more than two percentage points higher than in neighboring Hong Kong.
Bad-Loan Rebound?
In its proposals to the State Council, the regulator called for exempting some smaller banks and rural credit cooperatives from more reserve ratio increases, or even lowering the proportion of cash they must keep in reserve, the person said.
So-called special mention loans at Chinese banks, credits that may become non-performing unless amended, increased by 35.8 billion yuan in the first five months of the year to 2.16 trillion yuan, according to the regulator. That may be a precursor to a rebound in bad loans, as shrinking corporate profits in some industries erode companies' ability to repay debts, the person said.
Chinese banks' bad-loan ratio dropped to 7.5 percent at the end of May, down 1.74 percentage points from a year earlier, the person said. Total non-performing loans fell 5.3 percent to 2.25 trillion yuan.
``There's no need for further reserve ratio hikes in the near term as lending controls have been effective,'' said Samuel Chen, an analyst at JPMorgan Chase & Co. ``Liquidity risk at Chinese banks remains relatively low at present, but it's good for the regulator to prepare for rainy days.''
To contact the reporter for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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Global Economic Confidence Drops on Market Turmoil, Oil Surge
By Simon Kennedy
July 17 (Bloomberg) -- Confidence in the global economy deteriorated this month from Asia to the U.S. as the oil price rose to a record and the financial crisis deepened, a survey of Bloomberg users on six continents showed.
The Bloomberg Professional Global Confidence Index fell to 10.3 from 21 in June as sentiment toward the U.S., German, Japanese, French and U.K. economies weakened. That was the lowest reading since the survey began in November. Participants in Asia replaced those in Western Europe as the least optimistic.
``We're starting to approach that tipping point when the oil price is really going to impact economies,'' said Nick Kounis, an economist at Fortis Bank NV in Amsterdam who participated in the survey. ``We're much more pessimistic about the global economy.''
The oil price has almost doubled over the past year, reaching a record above $147 a barrel last week. That's hurting consumers and companies and fanning inflation enough to force central banks to raise interest rates. With the U.S. housing recession eroding confidence in financial institutions such as Fannie Mae and Freddie Mac, global stocks have tumbled into a bear market.
The survey was conducted between July 7 and July 11 and collated the responses of 5,450 Bloomberg users from Tokyo to New York. The index of Asian confidence in the world economy fell to 7 from 19.4. Respondents in Japan reported that the world's second- largest economy was in worse shape than a month ago and predicted the country's stocks to fall during the rest of this year.
U.S. participants predicted that the dollar will continue its slide below $1.60 per euro. Respondents in Spain were the most pessimistic about their own economy, while participants in Brazil were alone in expressing optimism.
The survey also included questions about bonds, currencies, stocks and interest rates over the next six months.
Global Economy
The U.S. housing slump last year sparked a credit market rout that's still rippling through the global economy. Higher borrowing costs are causing housing-led expansions to crumble in the U.S. and Europe, and banks have recorded more than $415 billion in losses and writedowns.
The market crisis worsened over the past week amid concern Fannie Mae and Freddie Mac don't have enough capital to survive the housing downturn. That forced Treasury Secretary Henry Paulson on July 13 to seek authority to buy unlimited stakes in the companies and lend to them.
The MSCI World Index of stocks has dropped more than 20 percent since its October record and yesterday fell to a two-year low.
Policy makers are also combating inflation just as global growth slows. Federal Reserve Chairman Ben S. Bernanke said July 15 that inflation risks have ``intensified.''
Challenging Year
``The world economy is facing a challenging second half of the year,'' said Kenneth Broux, an economist at Lloyds TSB Group Plc in London who participated in the survey. ``The big question is whether the U.S. economy slows from here on the back of higher oil prices and the crisis at the mortgage lenders.''
Investors, analysts and traders in the U.S. were less optimistic about growth than in June. A measure of confidence in the economy fell to 8.8, the lowest since March, from 16.1. An index of dollar sentiment dropped to 45.4 after two months above 50. The measure for equities fell to 28.4 from 35.4.
The dollar has lost 14 percent of its value against the euro in the past year, declining to a record $1.6038 on July 15.
U.S. respondents trimmed expectations that the Fed will raise interest rates by the end of the year, with the relevant index slipping to 57.4 from 60.4. Bernanke this week signaled policy makers are unclear about the direction of rates because the risks to both growth and inflation have increased.
ECB Split
Those surveyed in Europe were the most worried about the outlook for their economy since the survey began and the regional index dropped to 15.5 from 22.3. The 15-nation euro area may have contracted last quarter for the first time since the single currency began trading in 1999 and investor confidence in Germany fell to a record low in July.
Respondents split over the direction of the euro. Those in Germany and France predicted it will continue to rise and participants in Italy and Spain say it will decline.
Bloomberg users in Spain, where a decade-long housing boom has collapsed, were the most downbeat about their own country. Most European respondents say the European Central Bank, which raised its key rate to a seven-year high of 4.25 percent this month, won't cut interest rates.
In the U.K., faith in growth and stocks waned and respondents reversed their forecast for rate cuts. Participants in South America were more confident in their region than in the global economy and the index for the continent was at 29.8.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net
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