By Stefanie Haxel
Aug. 14 (Bloomberg) -- German stocks erased earlier gains after a report showed U.S. consumer prices rose more than forecast in July. Infineon Technologies AG and Bayerische Motoren Werke AG led declines.
The benchmark DAX Index dropped 14.04, or 0.2 percent, to 6,408.15 as of 2:36 p.m. in Frankfurt after climbing as much as 0.9 percent. The HDAX Index of the country's 110 biggest companies slipped 0.2 percent to 3,362.85.
The consumer price index gained 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest jump in 17 years. So-called core prices, which exclude food and energy, also rose more than projected.
Infineon, Europe's second-largest maker of semiconductors, sank 21 cents, or 3.6 percent, to 5.69 euros. BMW, the world's biggest luxury carmaker, dropped 50 cents, or 1.7 percent, to 28.72 euros.
To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net
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Thursday, August 14, 2008
U.K. Stocks Rise, Led by Energy, Mining Shares; Logica Soars
By Adam Haigh
Aug. 14 (Bloomberg) -- U.K. stocks rose the most in more than a week, led by commodity producers as higher oil and metals prices buoyed the earnings outlook for energy and mining companies.
Rio Tinto Group, Royal Dutch Shell Plc and BP Plc, which account for more than 20 percent of the benchmark FTSE 100 Index, led the gains. Investors said funds are being switched from financial stocks to raw-material producers. Logica Plc, the Anglo-Dutch computer-services provider, gained the most since September 2003 on an increased full-year sales forecast.
The FTSE 100 added 67.8, or 1.2 percent, to 5,516.4 at 12:28 p.m. in London, heading for its steepest climb since Aug. 5. The FTSE All-Share Index gained 1.1 percent and Ireland's ISEQ Index increased 1.2 percent.
``There has been a move from banks into the miners recently,'' said Keith Bowman, an equities analyst at Hargreaves Lansdown Stockbrokers in London. ``The broad perspective is that there is still growth in the industry and the longer term uptrend remains strong.''
Rio Tinto Group added 5 percent to 4,888 pence. The company has led the slump among the three biggest U.K.-traded metals producers from their May 19 highs as commodity prices tumbled more than 20 percent, the common definition of a bear market. Shares of the world's third-biggest mining company trade at 15.8 times earnings, the lowest since January.
BHP Billiton, the world's largest mining producer, gained 5.1 percent to 1,589 pence. Copper, lead, tin and zinc prices climbed in London.
Logica Surges
BP, Europe's second-largest oil producer, added 1.4 percent to 532 pence. Shell, the biggest, rose 2.9 percent to 1,860 pence. Crude traded more than $1 per barrel higher than at the close of the U.K. market yesterday. A U.S. Energy Department report yesterday showed a bigger-than-forecast decline in inventories of gasoline as refiners shut units and imports fell.
Logica soared 11 percent to 124.5 pence after saying it was increasing its sales forecast because of ``robust'' customer spending.
The following stocks also rose or fell in the U.K. and Irish markets. Stock symbols are in parentheses.
Bellway Plc (BWY LN) lost 9.5 pence, or 1.7 percent, to 567. The homebuilder said full-year sales fell 14 percent as banks granted fewer mortgages during the U.K.'s most widespread housing slump in three decades.
Protherics Plc (PTI LN) soared 13.5 pence, or 35 percent, to 51.75 after saying ``a number of parties'' have made takeover approaches for the U.K. biotechnology company.
Psion Plc (PON LN) lost 2.5 pence, or 2.7 percent, to 88.75. The maker of the Ikon wireless telephone reported a 26 percent fall in first-half profit on higher distribution and administrative expenses.
Irish companies:
Smurfit Kappa Group Plc (SKG ID) slid 32.4 cents, or 7.1 percent, to 4.23 euros. UBS AG added Europe's largest maker of cardboard boxes to its ``least preferred'' list of paper and forestry stocks, citing a weakening outlook for selling prices.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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Aug. 14 (Bloomberg) -- U.K. stocks rose the most in more than a week, led by commodity producers as higher oil and metals prices buoyed the earnings outlook for energy and mining companies.
Rio Tinto Group, Royal Dutch Shell Plc and BP Plc, which account for more than 20 percent of the benchmark FTSE 100 Index, led the gains. Investors said funds are being switched from financial stocks to raw-material producers. Logica Plc, the Anglo-Dutch computer-services provider, gained the most since September 2003 on an increased full-year sales forecast.
The FTSE 100 added 67.8, or 1.2 percent, to 5,516.4 at 12:28 p.m. in London, heading for its steepest climb since Aug. 5. The FTSE All-Share Index gained 1.1 percent and Ireland's ISEQ Index increased 1.2 percent.
``There has been a move from banks into the miners recently,'' said Keith Bowman, an equities analyst at Hargreaves Lansdown Stockbrokers in London. ``The broad perspective is that there is still growth in the industry and the longer term uptrend remains strong.''
Rio Tinto Group added 5 percent to 4,888 pence. The company has led the slump among the three biggest U.K.-traded metals producers from their May 19 highs as commodity prices tumbled more than 20 percent, the common definition of a bear market. Shares of the world's third-biggest mining company trade at 15.8 times earnings, the lowest since January.
BHP Billiton, the world's largest mining producer, gained 5.1 percent to 1,589 pence. Copper, lead, tin and zinc prices climbed in London.
Logica Surges
BP, Europe's second-largest oil producer, added 1.4 percent to 532 pence. Shell, the biggest, rose 2.9 percent to 1,860 pence. Crude traded more than $1 per barrel higher than at the close of the U.K. market yesterday. A U.S. Energy Department report yesterday showed a bigger-than-forecast decline in inventories of gasoline as refiners shut units and imports fell.
Logica soared 11 percent to 124.5 pence after saying it was increasing its sales forecast because of ``robust'' customer spending.
The following stocks also rose or fell in the U.K. and Irish markets. Stock symbols are in parentheses.
Bellway Plc (BWY LN) lost 9.5 pence, or 1.7 percent, to 567. The homebuilder said full-year sales fell 14 percent as banks granted fewer mortgages during the U.K.'s most widespread housing slump in three decades.
Protherics Plc (PTI LN) soared 13.5 pence, or 35 percent, to 51.75 after saying ``a number of parties'' have made takeover approaches for the U.K. biotechnology company.
Psion Plc (PON LN) lost 2.5 pence, or 2.7 percent, to 88.75. The maker of the Ikon wireless telephone reported a 26 percent fall in first-half profit on higher distribution and administrative expenses.
Irish companies:
Smurfit Kappa Group Plc (SKG ID) slid 32.4 cents, or 7.1 percent, to 4.23 euros. UBS AG added Europe's largest maker of cardboard boxes to its ``least preferred'' list of paper and forestry stocks, citing a weakening outlook for selling prices.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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European Stocks Erase Gain, U.S. Futures Fall on CPI, Jobs Data
By Michael Patterson
Aug. 14 (Bloomberg) -- European stocks erased their gains and U.S. index futures fell as American consumer prices rose more than forecast in July and jobless claims were higher than projected. Asian shares also declined.
Caterpillar Inc. and Royal Bank of Scotland Group Plc dropped after the Labor Department said the consumer price index climbed 0.8 percent, twice as much as anticipated. Daimler AG slipped after the number of first-time applications for unemployment benefits fell to 450,000 from a revised 460,000 the prior week that was higher than previously estimated.
Europe's Dow Jones Stoxx 600 Index lost 0.1 percent to 284.11 at 1:38 p.m. in London, after earlier rising as much as 1.1 percent. Futures on the Standard & Poor's 500 Index slipped 0.5 percent, while the MSCI Asia Pacific Index declined 0.5 percent as real-estate stocks declined.
Stocks climbed earlier in Europe and the U.S. as the cheapest mining shares in six months lured investors and better- than-estimated earnings from Wal-Mart Stores Inc. boosted retailers.
Europe's economy contracted in the second quarter for the first time since the launch of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.
Gross domestic product fell 0.2 percent from the first quarter, when it rose 0.7 percent, the European Union statistics office in Luxembourg said. Separate figures showed inflation held at 4 percent in July, less than initially estimated.
More than $12 trillion has been erased from global equity markets this year as credit-related losses at banks including UBS AG and HSBC Holdings Plc topped $500 billion and accelerating inflation threatened economic growth and prompted analysts to cut profit outlooks. The MSCI World Index, a benchmark for equities in 23 developed nations, dropped 15 percent this year.
Earnings for companies in the Stoxx 600 will slide 2.5 percent in 2008, according to analysts' estimates compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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Aug. 14 (Bloomberg) -- European stocks erased their gains and U.S. index futures fell as American consumer prices rose more than forecast in July and jobless claims were higher than projected. Asian shares also declined.
Caterpillar Inc. and Royal Bank of Scotland Group Plc dropped after the Labor Department said the consumer price index climbed 0.8 percent, twice as much as anticipated. Daimler AG slipped after the number of first-time applications for unemployment benefits fell to 450,000 from a revised 460,000 the prior week that was higher than previously estimated.
Europe's Dow Jones Stoxx 600 Index lost 0.1 percent to 284.11 at 1:38 p.m. in London, after earlier rising as much as 1.1 percent. Futures on the Standard & Poor's 500 Index slipped 0.5 percent, while the MSCI Asia Pacific Index declined 0.5 percent as real-estate stocks declined.
Stocks climbed earlier in Europe and the U.S. as the cheapest mining shares in six months lured investors and better- than-estimated earnings from Wal-Mart Stores Inc. boosted retailers.
Europe's economy contracted in the second quarter for the first time since the launch of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.
Gross domestic product fell 0.2 percent from the first quarter, when it rose 0.7 percent, the European Union statistics office in Luxembourg said. Separate figures showed inflation held at 4 percent in July, less than initially estimated.
More than $12 trillion has been erased from global equity markets this year as credit-related losses at banks including UBS AG and HSBC Holdings Plc topped $500 billion and accelerating inflation threatened economic growth and prompted analysts to cut profit outlooks. The MSCI World Index, a benchmark for equities in 23 developed nations, dropped 15 percent this year.
Earnings for companies in the Stoxx 600 will slide 2.5 percent in 2008, according to analysts' estimates compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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Bank Investment Funds Lure Most Money, Post Steepest Declines
By Elizabeth Stanton
Aug. 14 (Bloomberg) -- Funds that invest in banks and brokerages are luring the most money this year even as the shares they buy post their biggest declines in almost five decades because of mounting credit-market losses.
Exchange-traded funds linked to baskets of financial shares raised $8.67 billion during the first seven months of the year, the most of 94 investment categories tracked by research and investment firm Birinyi Associates Inc. More than $500 billion of subprime-related losses pushed banks in the Standard & Poor's 500 Index down 54 percent from their 2007 record, the biggest drop since at least 1962, Birinyi data show.
Investors were rewarded in the last month after the government agreed on a plan to rescue Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, while curbs on short selling spurred a rebound in banks. The Financial Select Sector SPDR Fund has surged 20 percent since sinking a month ago to the lowest level since its 1998 creation.
``It goes completely counter to what you read, that everybody is selling, everybody is bearish, everybody is shorting financial stocks,'' said Birinyi's Robert Leiphart, who helps manage $350 million in Westport, Connecticut. ``When people say, `It's the worst it's ever been,' it's usually the bottom and the time to start to buy.''
In a short sale, investors borrow securities and sell them on the expectation they can be purchased at a lower price later and returned to the holder.
Most Assets
Financial companies grew to the biggest of 10 industries in terms of ETF assets, with a combined $21.3 billion, Birinyi data show. Funds owning energy producers, the second-biggest category and the best-performing stocks for most of 2008, had outflows. ETFs track stocks, bonds, commodities and currencies.
State Street Corp.'s $7.33 billion Financial Select Sector SPDR Fund extended its year-to-date retreat to 41 percent on July 15, when it closed at $17.17 in American Stock Exchange composite trading. The so-called XLF peaked at $38.02 in June 2007.
The XLF reflects the value of the 88 banks, brokerages and insurers in the S&P 500, giving investors a stake in the group through a single investment.
Financial shares in the S&P 500 are this year's worst performers just as they were in 2007. Since last March, the world's biggest banks and brokerages have been forced to raise more than $350 billion to replenish capital, diluting existing shareholders, according to data compiled by Bloomberg.
Cheapest Since 1995
Investors in the ETFs are wagering the shares are inexpensive after the retreat left S&P 500 financial companies with a price-to-book value ratio as low as 0.97, the cheapest since at least January 1995, and a dividend yield exceeding 5 percent for the first time in that span, Bloomberg data show.
Some investors are putting money into bank funds to hedge short positions on financial stocks, not to bet on a rally, said Dodd Kittsley, San Francisco-based senior investment strategist at Barclays Global Investors, which manages 163 ETFs that trade in the U.S.
Short interest in financial companies rose in June to 4.6 percent of shares outstanding, the highest on record, Deutsche Bank AG data show. Traders pared bets against banks and brokerages and investors pulled money from ETFs in July as the stocks advanced, data compiled by Birinyi and Bloomberg show.
David Dreman, founder of Dreman Value Management LLC in Jersey City, New Jersey, said investors showed courage by pouring more money into bank funds as financial shares plummeted. His firm oversees $15 billion and had almost 29 percent of the assets of its large-company funds in financial shares as of March 31, its most recent public disclosure.
``The average investor is buying into ETFs and financial sector funds'' even as owners of financial stocks ``seem to be panicking,'' Dreman said. ``Normally investors shy away from groups that are getting clobbered.''
To contact the reporter on this story: Elizabeth Stanton in New York at stanton@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- Funds that invest in banks and brokerages are luring the most money this year even as the shares they buy post their biggest declines in almost five decades because of mounting credit-market losses.
Exchange-traded funds linked to baskets of financial shares raised $8.67 billion during the first seven months of the year, the most of 94 investment categories tracked by research and investment firm Birinyi Associates Inc. More than $500 billion of subprime-related losses pushed banks in the Standard & Poor's 500 Index down 54 percent from their 2007 record, the biggest drop since at least 1962, Birinyi data show.
Investors were rewarded in the last month after the government agreed on a plan to rescue Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, while curbs on short selling spurred a rebound in banks. The Financial Select Sector SPDR Fund has surged 20 percent since sinking a month ago to the lowest level since its 1998 creation.
``It goes completely counter to what you read, that everybody is selling, everybody is bearish, everybody is shorting financial stocks,'' said Birinyi's Robert Leiphart, who helps manage $350 million in Westport, Connecticut. ``When people say, `It's the worst it's ever been,' it's usually the bottom and the time to start to buy.''
In a short sale, investors borrow securities and sell them on the expectation they can be purchased at a lower price later and returned to the holder.
Most Assets
Financial companies grew to the biggest of 10 industries in terms of ETF assets, with a combined $21.3 billion, Birinyi data show. Funds owning energy producers, the second-biggest category and the best-performing stocks for most of 2008, had outflows. ETFs track stocks, bonds, commodities and currencies.
State Street Corp.'s $7.33 billion Financial Select Sector SPDR Fund extended its year-to-date retreat to 41 percent on July 15, when it closed at $17.17 in American Stock Exchange composite trading. The so-called XLF peaked at $38.02 in June 2007.
The XLF reflects the value of the 88 banks, brokerages and insurers in the S&P 500, giving investors a stake in the group through a single investment.
Financial shares in the S&P 500 are this year's worst performers just as they were in 2007. Since last March, the world's biggest banks and brokerages have been forced to raise more than $350 billion to replenish capital, diluting existing shareholders, according to data compiled by Bloomberg.
Cheapest Since 1995
Investors in the ETFs are wagering the shares are inexpensive after the retreat left S&P 500 financial companies with a price-to-book value ratio as low as 0.97, the cheapest since at least January 1995, and a dividend yield exceeding 5 percent for the first time in that span, Bloomberg data show.
Some investors are putting money into bank funds to hedge short positions on financial stocks, not to bet on a rally, said Dodd Kittsley, San Francisco-based senior investment strategist at Barclays Global Investors, which manages 163 ETFs that trade in the U.S.
Short interest in financial companies rose in June to 4.6 percent of shares outstanding, the highest on record, Deutsche Bank AG data show. Traders pared bets against banks and brokerages and investors pulled money from ETFs in July as the stocks advanced, data compiled by Birinyi and Bloomberg show.
David Dreman, founder of Dreman Value Management LLC in Jersey City, New Jersey, said investors showed courage by pouring more money into bank funds as financial shares plummeted. His firm oversees $15 billion and had almost 29 percent of the assets of its large-company funds in financial shares as of March 31, its most recent public disclosure.
``The average investor is buying into ETFs and financial sector funds'' even as owners of financial stocks ``seem to be panicking,'' Dreman said. ``Normally investors shy away from groups that are getting clobbered.''
To contact the reporter on this story: Elizabeth Stanton in New York at stanton@bloomberg.net.
Read more...
Merrill May Cut Dividend for First Time, Options Traders Say
By Bradley Keoun and Jeff Kearns
Enlarge Image/Details
Aug. 14 (Bloomberg) -- Merrill Lynch & Co. Chief Executive Officer John Thain, battered by $19 billion of losses, vowed last week to maintain the firm's 35-cent quarterly dividend. The options market doesn't believe him.
``The market is pricing in a significant cut, roughly 50 percent or more,'' said Steve Sosnick, who trades options at Interactive Brokers Group Inc. in Greenwich, Connecticut, which handles a seventh of global equity options trading.
A reduction would be Merrill's first since it went public in 1971 and represent another reversal for Thain, 53, who told analysts he had plenty of capital two weeks before last month's record $9.8 billion stock offering. The sale lifted the burden of quarterly payouts by boosting shares outstanding by half.
The company has paid 35 cents a share since the first quarter of 2007, when Merrill's board raised it from 25 cents. The board reaffirmed the payment on July 30. Yet a reduction to 18 cents for the fourth quarter is reflected in the market, Bloomberg data show. The data compare prices for different Merrill options and apply formulas commonly used by traders to reflect the probability and timing of dividend payments.
Merrill, the third-biggest U.S. securities firm by market value, has the highest dividend yield among peers, at 5.5 percent. The yield moves inversely to the stock price, which has tumbled 52 percent this year to $25.60. Jessica Oppenheim, a Merrill spokeswoman, declined to comment.
Goldman, Morgan Stanley
Goldman Sachs Group Inc., the biggest U.S. securities firm, pays a 0.9 percent dividend yield, while No. 2 Morgan Stanley pays 2.7 percent and No. 4 Lehman pays 4.4 percent.
Sanford Bernstein & Co. analystBrad Hintz estimated in an Aug. 6 report that Merrill should cut its dividend by 64 percent to about 13 cents, to free up $1.5 billion of capital a year. Fox-Pitt Kelton analyst David Trone said in an Aug. 12 report that Merrill may face more than $5 billion of writedowns in the second half of 2008 and may need the extra capital as a buffer.
Thain, who took over as CEO in December after the ouster of Stan O'Neal, said in an Aug. 4 interview with CNBC that he didn't plan to cut the dividend, in part because many Merrill employees own the stock. His board doesn't need to declare a change in the fourth-quarter dividend until October.
``We believe we will shortly be back to profitability and be able to earn the dividend,'' Thain said. ``I prefer to get the yield lower by getting the stock price higher.''
Citigroup, Wachovia
Thain wouldn't be alone in failing to honor a dividend pledge. Citigroup Inc. cut its dividend 41 percent last November, two months after Chief Financial Officer Gary Crittenden said the bank was ``fully committed'' to keeping it steady. In January, Wachovia Corp. CEO Kennedy Thompson said he ``didn't need'' to reduce the payments, only to lose his job as his bank slashed the dividend more than 90 percent.
Merrill has ``a credibility problem,'' said Peter Sorrentino, who helps manage $16.5 billion, including 318,000 Merrill shares, at Huntington Asset Management in Cincinnati. ``If they announce tomorrow they cut the dividend it wouldn't surprise me.''
The options market predicted Citigroup's January cut, said Sveinn Palsson, a derivatives strategist at Credit Suisse Group in New York. Palsson himself published a report predicting a reduction two months before it happened.
``The options market has proven to be a good indicator of upcoming dividend changes,'' Palsson said. His analysis shows Merrill may cut the dividend to as little as 15 cents a share.
To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.
Read more...
Enlarge Image/Details
Aug. 14 (Bloomberg) -- Merrill Lynch & Co. Chief Executive Officer John Thain, battered by $19 billion of losses, vowed last week to maintain the firm's 35-cent quarterly dividend. The options market doesn't believe him.
``The market is pricing in a significant cut, roughly 50 percent or more,'' said Steve Sosnick, who trades options at Interactive Brokers Group Inc. in Greenwich, Connecticut, which handles a seventh of global equity options trading.
A reduction would be Merrill's first since it went public in 1971 and represent another reversal for Thain, 53, who told analysts he had plenty of capital two weeks before last month's record $9.8 billion stock offering. The sale lifted the burden of quarterly payouts by boosting shares outstanding by half.
The company has paid 35 cents a share since the first quarter of 2007, when Merrill's board raised it from 25 cents. The board reaffirmed the payment on July 30. Yet a reduction to 18 cents for the fourth quarter is reflected in the market, Bloomberg data show. The data compare prices for different Merrill options and apply formulas commonly used by traders to reflect the probability and timing of dividend payments.
Merrill, the third-biggest U.S. securities firm by market value, has the highest dividend yield among peers, at 5.5 percent. The yield moves inversely to the stock price, which has tumbled 52 percent this year to $25.60. Jessica Oppenheim, a Merrill spokeswoman, declined to comment.
Goldman, Morgan Stanley
Goldman Sachs Group Inc., the biggest U.S. securities firm, pays a 0.9 percent dividend yield, while No. 2 Morgan Stanley pays 2.7 percent and No. 4 Lehman pays 4.4 percent.
Sanford Bernstein & Co. analystBrad Hintz estimated in an Aug. 6 report that Merrill should cut its dividend by 64 percent to about 13 cents, to free up $1.5 billion of capital a year. Fox-Pitt Kelton analyst David Trone said in an Aug. 12 report that Merrill may face more than $5 billion of writedowns in the second half of 2008 and may need the extra capital as a buffer.
Thain, who took over as CEO in December after the ouster of Stan O'Neal, said in an Aug. 4 interview with CNBC that he didn't plan to cut the dividend, in part because many Merrill employees own the stock. His board doesn't need to declare a change in the fourth-quarter dividend until October.
``We believe we will shortly be back to profitability and be able to earn the dividend,'' Thain said. ``I prefer to get the yield lower by getting the stock price higher.''
Citigroup, Wachovia
Thain wouldn't be alone in failing to honor a dividend pledge. Citigroup Inc. cut its dividend 41 percent last November, two months after Chief Financial Officer Gary Crittenden said the bank was ``fully committed'' to keeping it steady. In January, Wachovia Corp. CEO Kennedy Thompson said he ``didn't need'' to reduce the payments, only to lose his job as his bank slashed the dividend more than 90 percent.
Merrill has ``a credibility problem,'' said Peter Sorrentino, who helps manage $16.5 billion, including 318,000 Merrill shares, at Huntington Asset Management in Cincinnati. ``If they announce tomorrow they cut the dividend it wouldn't surprise me.''
The options market predicted Citigroup's January cut, said Sveinn Palsson, a derivatives strategist at Credit Suisse Group in New York. Palsson himself published a report predicting a reduction two months before it happened.
``The options market has proven to be a good indicator of upcoming dividend changes,'' Palsson said. His analysis shows Merrill may cut the dividend to as little as 15 cents a share.
To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.
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Ambev, Duke Paranapanema, Lojas Renner: Latin Equity Preview
By William Freebairn and Alexander Ragir
Aug. 14 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index rose 0.5 percent to 3,903.59.
Brazil
Cia. de Bebidas das Americas (AMBV4 BS): Latin America's biggest brewer posted an unexpected 10 percent decline in profit. Net income fell to 402.1 million reais ($249 million), or 66 centavos a share, from 448.7 million reais, or 72 centavos a share, a year earlier, the brewer said on its Web site. Profit trailed the average estimate of 722 million reais by six analysts surveyed by Bloomberg. Ambev fell 0.2 percent to 99.10 reais.
Cosan SA Industria e Comercio (CSAN3 BS): The world's biggest sugar-cane processor expects earnings to improve next year as declining sugar stockpiles push up prices, Vice Chairman Pedro Mizutani said in an interview. Sugar next year will likely stay above the 14 cents per pound needed for Cosan to profit from the sweetener as output in India and other countries declines, Mizutani said. Cosan fell 2.6 percent to 27.60 reais.
Duke Energy International Geracao Paranapanema SA (GEPA4 BS): The Brazilian unit of Duke Energy Corp. may sell 470 million reais ($292 million) of bonds in the local market, according to a filing posted yesterday on Brazil's securities regulator Web site. Duke Paranapanema canceled plans in March to sell 750 million reais of floating-rate senior notes because of ``unfavorable market conditions.'' Duke rose 4.4 percent to 39.50 reais when it last traded on Aug. 5.
Lojas Renner SA (LREN3 BS): Brazil's biggest clothing retailer said yesterday that second-quarter profit rose 15 percent from a year earlier to 46.6 million reais. That's less than the 52.7 million reais average of four analyst estimates compiled by Bloomberg. The stock was cut to ``neutral'' from ``buy'' at Merrill Lynch & Co. Renner fell 3.4 percent to 30 reais.
OGX Petroleo e Gas Participacoes SA (OGXP3 BS): The oil company controlled by billionaire Eike Batista said it had a second-quarter loss of 274.6 million reais ($170.1 million) in the company's first earnings report since its initial public offering on June 12. Profit excluding costs related to the company's IPO was 35.9 million reais. OGX fell 7.8 percent to 618 reais.
Cia. Vale do Rio Doce (VALE5 BS): Felix Resources Ltd., the coal company that appointed advisers last month following takeover approaches from several unnamed companies, rose the most in four years in Sydney trading on speculation Vale, the world's biggest iron ore miner, may seek a takeover. There's ``speculation that a bid may be pending for them by Vale,'' Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney, said by telephone. Vale gained 2.8 percent to 35.56 reais.
Chile
Cencosud SA (CENCOSUD CC): Chile's biggest retailer, which does almost a third of its business in Argentina, has retreated 6.9 percent in the two days since Standard & Poor's cut Argentina's foreign-debt rating to B from B+. Investors have probably overreacted, Ramon Lagos, head of research at Penta Estrategia y Inversiones, said by phone from Santiago yesterday. Cencosud fell 3.8 percent to 1,480.30 pesos.
Empresas Copec SA (COPEC CC): Second-quarter net income fell 5.1 percent to 148 billion pesos ($288 million), Chile's biggest wood-pulp producer wrote yesterday in an e-mailed statement, beating the 144 billion peso average forecast of five analysts surveyed by Bloomberg. Copec fell 1.7 percent to 6,490.20 pesos.
La Polar SA (LAPOLAR CC): Shares of the department store operator probably may rise after reporting second-quarter earnings before interest, taxes, depreciation and amortization yesterday that beat estimates, Bice Inversiones wrote. Ebitda jumped 28 percent to 22.9 billion pesos, exceeding Bice's forecast of 20.4 billion pesos, analysts wrote in a note to clients. La Polar advanced 1.6 percent to 1,890 pesos.
Mexico
Bolsa Mexicana de Valores SAB (BOLSA MM): Shareholders of the operator of Mexico's only stock exchange approved a plan to buy back as much as 400 million pesos ($39.4 million) of its own shares, the company said in a statement yesterday. Bolsa Mexicana shares gained 1.1 percent to 13.04 pesos.
Corporacion Durango SAB (CODUSA* MM): Mexico's largest paper maker had its credit rating reduced two levels to CCC-by Standard & Poor's Ratings Services, which said the company won't be able to pass increasing costs for materials and energy on to consumers. It is ``uncertain'' whether the company can meet an October coupon payment on notes, S&P said yesterday in a statement. Codusa, as the company is also known, rose 9.8 percent to 7.30 pesos.
Grupo Gigante SAB (GIGANTE* MM): The retailer that operates Office Depot and Radio Shack stores in Mexico was upgraded by Citigroup Inc. to ``hold'' from ``sell.'' Gigante, which sold its supermarket operations in December, may use the proceeds to buy control of the Office Depot chain in Latin America, increase real estate holdings or enter a new business, analyst Eduardo Estrada Lopez wrote in a research report dated yesterday. Gigante was unchanged today at 16 pesos.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index rose 0.5 percent to 3,903.59.
Brazil
Cia. de Bebidas das Americas (AMBV4 BS): Latin America's biggest brewer posted an unexpected 10 percent decline in profit. Net income fell to 402.1 million reais ($249 million), or 66 centavos a share, from 448.7 million reais, or 72 centavos a share, a year earlier, the brewer said on its Web site. Profit trailed the average estimate of 722 million reais by six analysts surveyed by Bloomberg. Ambev fell 0.2 percent to 99.10 reais.
Cosan SA Industria e Comercio (CSAN3 BS): The world's biggest sugar-cane processor expects earnings to improve next year as declining sugar stockpiles push up prices, Vice Chairman Pedro Mizutani said in an interview. Sugar next year will likely stay above the 14 cents per pound needed for Cosan to profit from the sweetener as output in India and other countries declines, Mizutani said. Cosan fell 2.6 percent to 27.60 reais.
Duke Energy International Geracao Paranapanema SA (GEPA4 BS): The Brazilian unit of Duke Energy Corp. may sell 470 million reais ($292 million) of bonds in the local market, according to a filing posted yesterday on Brazil's securities regulator Web site. Duke Paranapanema canceled plans in March to sell 750 million reais of floating-rate senior notes because of ``unfavorable market conditions.'' Duke rose 4.4 percent to 39.50 reais when it last traded on Aug. 5.
Lojas Renner SA (LREN3 BS): Brazil's biggest clothing retailer said yesterday that second-quarter profit rose 15 percent from a year earlier to 46.6 million reais. That's less than the 52.7 million reais average of four analyst estimates compiled by Bloomberg. The stock was cut to ``neutral'' from ``buy'' at Merrill Lynch & Co. Renner fell 3.4 percent to 30 reais.
OGX Petroleo e Gas Participacoes SA (OGXP3 BS): The oil company controlled by billionaire Eike Batista said it had a second-quarter loss of 274.6 million reais ($170.1 million) in the company's first earnings report since its initial public offering on June 12. Profit excluding costs related to the company's IPO was 35.9 million reais. OGX fell 7.8 percent to 618 reais.
Cia. Vale do Rio Doce (VALE5 BS): Felix Resources Ltd., the coal company that appointed advisers last month following takeover approaches from several unnamed companies, rose the most in four years in Sydney trading on speculation Vale, the world's biggest iron ore miner, may seek a takeover. There's ``speculation that a bid may be pending for them by Vale,'' Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney, said by telephone. Vale gained 2.8 percent to 35.56 reais.
Chile
Cencosud SA (CENCOSUD CC): Chile's biggest retailer, which does almost a third of its business in Argentina, has retreated 6.9 percent in the two days since Standard & Poor's cut Argentina's foreign-debt rating to B from B+. Investors have probably overreacted, Ramon Lagos, head of research at Penta Estrategia y Inversiones, said by phone from Santiago yesterday. Cencosud fell 3.8 percent to 1,480.30 pesos.
Empresas Copec SA (COPEC CC): Second-quarter net income fell 5.1 percent to 148 billion pesos ($288 million), Chile's biggest wood-pulp producer wrote yesterday in an e-mailed statement, beating the 144 billion peso average forecast of five analysts surveyed by Bloomberg. Copec fell 1.7 percent to 6,490.20 pesos.
La Polar SA (LAPOLAR CC): Shares of the department store operator probably may rise after reporting second-quarter earnings before interest, taxes, depreciation and amortization yesterday that beat estimates, Bice Inversiones wrote. Ebitda jumped 28 percent to 22.9 billion pesos, exceeding Bice's forecast of 20.4 billion pesos, analysts wrote in a note to clients. La Polar advanced 1.6 percent to 1,890 pesos.
Mexico
Bolsa Mexicana de Valores SAB (BOLSA MM): Shareholders of the operator of Mexico's only stock exchange approved a plan to buy back as much as 400 million pesos ($39.4 million) of its own shares, the company said in a statement yesterday. Bolsa Mexicana shares gained 1.1 percent to 13.04 pesos.
Corporacion Durango SAB (CODUSA* MM): Mexico's largest paper maker had its credit rating reduced two levels to CCC-by Standard & Poor's Ratings Services, which said the company won't be able to pass increasing costs for materials and energy on to consumers. It is ``uncertain'' whether the company can meet an October coupon payment on notes, S&P said yesterday in a statement. Codusa, as the company is also known, rose 9.8 percent to 7.30 pesos.
Grupo Gigante SAB (GIGANTE* MM): The retailer that operates Office Depot and Radio Shack stores in Mexico was upgraded by Citigroup Inc. to ``hold'' from ``sell.'' Gigante, which sold its supermarket operations in December, may use the proceeds to buy control of the Office Depot chain in Latin America, increase real estate holdings or enter a new business, analyst Eduardo Estrada Lopez wrote in a research report dated yesterday. Gigante was unchanged today at 16 pesos.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
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U.S. Stock Futures Drop After Consumer Inflation Tops Forecasts
By Lynn Thomasson
Aug. 14 (Bloomberg) -- U.S. stock-index futures fell, erasing an earlier advance, after consumer inflation grew at twice the rate economists had forecast for July and jobless claims topped estimates.
Caterpillar Inc., Microsoft Corp. and General Electric Co. led declines in Dow Jones Industrial Average stocks trading in Europe after the Labor Department said the consumer price index climbed 0.8 percent last month.
``It's a shock that the numbers were that far off course,'' said John Wilson, co-director of equity strategy and chief market technician at Morgan Keegan, which manages $120 billion in Memphis, Tennessee. ``Inflation is always the thing the bears want to harp on and they'll beat this drum pretty hard.''
Standard & Poor's 500 Index futures expiring in September lost 6.6, or 0.5 percent, to 1,278 as of 9:09 a.m. in New York. Dow futures decreased 49 to 11,473. Nasdaq-100 Index futures slid 5.75 to 1,935.75.
Futures advanced earlier after a rally in gold prices boosted the earnings outlook for commodity producers and Wal-Mart Inc. increased its profit forecast. European shares erased their gain after the report and Asian markets, which closed before the data were released, retreated.
Caterpillar, the largest maker of bulldozers, fell 23 cents to $69.60 in Germany, where Microsoft, the biggest software maker, slipped 29 cents $27.62. GE fell 16 cents to $29.15.
The government said so-called core prices, which exclude food and energy, increased 0.3 percent last month, also rose more than projected.
Rate Concern
The inflation report may intensify the debate between those Federal Reserve policy makers that forecast inflation will slow and those concerned that price pressures will accelerate. Increases beyond food and fuel make it less likely that central bankers will be able to keep interest rates unchanged for long.
Companies including Procter & Gamble Co. and McDonald's Corp. have boosted prices to cope with record high commodity prices. The Fed predicted inflation will ease through next year, according to the statement released at its interest rate meeting last week. There's an 84 percent chance policy makers will keep the benchmark lending rate at 2 percent after convening in September, futures contracts show.
Oil prices have slumped 20 percent since reaching a high on July 3, helping restrain inflation as economic growth decelerates.
Wal-Mart erased an earlier advance to fall 8 cents to $57.80 after the report. The company said second-quarter profit climbed to 87 cents a share because of price cuts and tax-rebate spending. The company also said full-year earnings would increase more than it previously forecast.
Profit for the year that ends in early 2009 will be $3.43 to $3.50 a share. Wal-Mart had forecast $3.30 to $3.43 in February.
GM's Plan
General Motors Corp., seeking to speed up the restructuring plan announced last month, added 9 cents to $10.35. The company said it may be able to reap more of the $10 billion in projected savings this year instead of in 2009.
Faster savings would afford Chief Executive Officer Rick Wagoner more flexibility under the plan he announced July 15 to boost liquidity by as much as $17 billion. The moves will give GM the cash to operate through next year, Wagoner has said.
U.S. stocks yesterday fell for a second day as earnings from Deere & Co. disappointed investors, retail sales declined and Merrill Lynch & Co. said the contagion from the collapse of the subprime mortgage market is far from over.
To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
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Estee Lauder, Heelys, PMI Group, Wal-Mart: U.S. Equity Preview
By Katherine Greene
Aug. 14 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 9 a.m. in New York.
Briggs & Stratton Corp. (BGG US) dropped 11 percent to $13.05. The designer of air-cooled gasoline engines for outdoor power equipment reported an unexpected loss of 15 cents a share. Two analysts estimated 22-cents in profit, the average forecast in a Bloomberg survey.
Estee Lauder Cos. (EL US) gained 6.8 percent to $48. The maker of Clinique and Bobbi Brown cosmetics said fourth-quarter profit rose 36 percent, exceeding estimates, on sales of skin lotions and lipstick in Europe and Asia.
Heelys Inc. (HLYS US) rose 14 percent to $5.55. Skechers USA Inc. (SKX US) made an unsolicited offer to buy Heelys for $142.8 million after an earlier proposal was rejected by the maker of wheeled sneakers. Skechers added 1.4 percent to $20.21.
Invesco Ltd. (IVZ US) climbed 6.5 percent to $25.10. The Atlanta-based fund manager will replace IAC/InterActiveCorp in the Standard & Poor's 500 Index. The addition may support its stock price as money managers tracking the S&P 500 purchase the shares.
NetApp Inc. (NTAP US) dropped 5 percent to $24.40. The maker of storage computers for companies such as Oracle Corp. (ORCL US) said fiscal second-quarter profit may be as low as 27 cents a share, or 10 percent less than the average analyst estimate, because of rising hiring costs.
PMI Group Inc. (PMI US) surged 52 percent to $4.24. QBE Insurance Group Ltd. (QBE AU) agreed to buy PMI's Asian and Australian businesses for A$1.03 billion ($896 million), a week after the U.S. mortgage insurer posted a fourth consecutive quarterly loss.
Wal-Mart Stores Inc. (WMT US): The world's largest retailer said profit this year may rise more than it forecast after the fastest sales growth in more than a year drove second-quarter net income up 17 percent. Wal-Mart fell 2.3 percent to $57.88 yesterday.
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
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Aug. 14 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 9 a.m. in New York.
Briggs & Stratton Corp. (BGG US) dropped 11 percent to $13.05. The designer of air-cooled gasoline engines for outdoor power equipment reported an unexpected loss of 15 cents a share. Two analysts estimated 22-cents in profit, the average forecast in a Bloomberg survey.
Estee Lauder Cos. (EL US) gained 6.8 percent to $48. The maker of Clinique and Bobbi Brown cosmetics said fourth-quarter profit rose 36 percent, exceeding estimates, on sales of skin lotions and lipstick in Europe and Asia.
Heelys Inc. (HLYS US) rose 14 percent to $5.55. Skechers USA Inc. (SKX US) made an unsolicited offer to buy Heelys for $142.8 million after an earlier proposal was rejected by the maker of wheeled sneakers. Skechers added 1.4 percent to $20.21.
Invesco Ltd. (IVZ US) climbed 6.5 percent to $25.10. The Atlanta-based fund manager will replace IAC/InterActiveCorp in the Standard & Poor's 500 Index. The addition may support its stock price as money managers tracking the S&P 500 purchase the shares.
NetApp Inc. (NTAP US) dropped 5 percent to $24.40. The maker of storage computers for companies such as Oracle Corp. (ORCL US) said fiscal second-quarter profit may be as low as 27 cents a share, or 10 percent less than the average analyst estimate, because of rising hiring costs.
PMI Group Inc. (PMI US) surged 52 percent to $4.24. QBE Insurance Group Ltd. (QBE AU) agreed to buy PMI's Asian and Australian businesses for A$1.03 billion ($896 million), a week after the U.S. mortgage insurer posted a fourth consecutive quarterly loss.
Wal-Mart Stores Inc. (WMT US): The world's largest retailer said profit this year may rise more than it forecast after the fastest sales growth in more than a year drove second-quarter net income up 17 percent. Wal-Mart fell 2.3 percent to $57.88 yesterday.
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
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Daily Market Commentary - Fundamental Outlook
Daily Forex Fundamentals | Written by GCI Financial | Aug 14 08 12:01 GMT |
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4850 level and was capped around the $1.4935 level. The common currency continues to consolidate some of the losses it has realized over the past couple of weeks. Data released in the eurozone revealed the EMU-15 economy shrank in size in the three months from April to June, down 0.2% q/q and up 1.5% y/y, for the first quarterly contraction since early 1995. These data render it less possible that European Central Bank policymakers will consider raising interest rates again right now and may move to cut rates soon. Revised July consumer price inflation data released today saw annualized inflation at 4.0% in the eurozone, down from the provisional 4.1% reading. Germany's economy contracted 0.5% in Q2 with France's economy off 0.3%. Other data saw German final July CPI up 0.6% m/m and 3.3% y/y. In U.S. news, traders await the release of July consumer price inflation data along with weekly initial jobless claims and continuing claims numbers. Euro bids are cited around the US$ 1.5175 levels.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥109.80 level and was supported around the ¥109.00 figure. Technically, today's intraday high was right around the 50% retracement of the move from ¥124.15 to ¥95.70. The Nikkei reported Bank of Japan will likely reduce its economic assessment next week when the BoJ Policy Board convenes. Traders are now pricing in a very small chance the central bank will lift interest rates in the next year. Data released in Japan overnight saw the June tertiary index fall 0.8% m/m, the second consecutive monthly decline. The Nikkei 225 stock index lost 0.51% to close at ¥12,956.80. Dollar bids are cited around the ¥106.40 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥163.65 level and was supported around the ¥162.50 level. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥205.60 and ¥100.95 levels, respectively. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8600 in the over-the-counter market, up from CNY 6.8570. Data released in China overnight saw industrial value-added output up 16.1% in the January to July period. People's Bank of China formed an exchange rate department to better manage the yuan. A report suggests Chinese CPI will continue to fall in H2 2008 and 2009.
₤
The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.8735 level and was supported around the $1.8615 level. Technically, today's intraday low was right around the 61.8% retracement of the move from $1.7045 to $2.1160. Sterling has fallen more than fourteen big figures over the past five weeks. Bank of England's quarterly inflation report was released yesterday and was more dovish than most traders expected. Cable bids are cited around the $1.8515 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.7955 level and was capped around the ₤0.7990 level.
CHF
The Swiss franc weakened vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0890 level and was supported around the CHF 1.0840 level. The pair continues to consolidate the gains made during the past couple of weeks. Data released in Switzerland today saw the SECO Q3 consumer sentiment index fall to -17 from +2 in Q2, its lowest level in 4.5 years and well below expectations. These data support growing expectations that Swiss National Bank may need to reduce interest rates to stimulate economic growth. U.S. dollar offers are cited around the CHF 1.1135 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6215 and CHF 2.0375 levels, respectively.
GCI Financial
http://www.gcitrading.com
DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
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€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4850 level and was capped around the $1.4935 level. The common currency continues to consolidate some of the losses it has realized over the past couple of weeks. Data released in the eurozone revealed the EMU-15 economy shrank in size in the three months from April to June, down 0.2% q/q and up 1.5% y/y, for the first quarterly contraction since early 1995. These data render it less possible that European Central Bank policymakers will consider raising interest rates again right now and may move to cut rates soon. Revised July consumer price inflation data released today saw annualized inflation at 4.0% in the eurozone, down from the provisional 4.1% reading. Germany's economy contracted 0.5% in Q2 with France's economy off 0.3%. Other data saw German final July CPI up 0.6% m/m and 3.3% y/y. In U.S. news, traders await the release of July consumer price inflation data along with weekly initial jobless claims and continuing claims numbers. Euro bids are cited around the US$ 1.5175 levels.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥109.80 level and was supported around the ¥109.00 figure. Technically, today's intraday high was right around the 50% retracement of the move from ¥124.15 to ¥95.70. The Nikkei reported Bank of Japan will likely reduce its economic assessment next week when the BoJ Policy Board convenes. Traders are now pricing in a very small chance the central bank will lift interest rates in the next year. Data released in Japan overnight saw the June tertiary index fall 0.8% m/m, the second consecutive monthly decline. The Nikkei 225 stock index lost 0.51% to close at ¥12,956.80. Dollar bids are cited around the ¥106.40 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥163.65 level and was supported around the ¥162.50 level. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥205.60 and ¥100.95 levels, respectively. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8600 in the over-the-counter market, up from CNY 6.8570. Data released in China overnight saw industrial value-added output up 16.1% in the January to July period. People's Bank of China formed an exchange rate department to better manage the yuan. A report suggests Chinese CPI will continue to fall in H2 2008 and 2009.
₤
The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.8735 level and was supported around the $1.8615 level. Technically, today's intraday low was right around the 61.8% retracement of the move from $1.7045 to $2.1160. Sterling has fallen more than fourteen big figures over the past five weeks. Bank of England's quarterly inflation report was released yesterday and was more dovish than most traders expected. Cable bids are cited around the $1.8515 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.7955 level and was capped around the ₤0.7990 level.
CHF
The Swiss franc weakened vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0890 level and was supported around the CHF 1.0840 level. The pair continues to consolidate the gains made during the past couple of weeks. Data released in Switzerland today saw the SECO Q3 consumer sentiment index fall to -17 from +2 in Q2, its lowest level in 4.5 years and well below expectations. These data support growing expectations that Swiss National Bank may need to reduce interest rates to stimulate economic growth. U.S. dollar offers are cited around the CHF 1.1135 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6215 and CHF 2.0375 levels, respectively.
GCI Financial
http://www.gcitrading.com
DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
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Mid-Day Report: Dollar Continues to Consolidate Despite Strong CPI Report
| Daily Forex Fundamentals | Written by ActionForex.com | Aug 14 08 12:57 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Headline inflation in US accelerated much more than expected to 5.6% yoy in Jul, the biggest jump in 17 years. Core CPI also climbed more than expected to 2.5% yoy. Jobless claims, on the other hand, remains elevated at 450k. Markets should little reaction to the data as strong inflation alone is not enough to push Fed to remove prior policy accommodations quicker. Bottoming in economic slowdown and housing recession is still the key. Nevertheless, note that there is some sign off topping in gold and oil's, more upside in the greenback in still in favor after finishing the current consolidation. Released earlier, flash estimate for Q2 GDP in Eurozone showed contraction of -0.2% qoq. Year on year growth slowed for a third straight quarter to 1.5%. Underlying components are not yet available but slowing demand and domestic spending are believed to be the reason behind the down turn. A separate report showed final HICP inflation in Eurozone was revised down to 4.0% yoy in Jul. Euro was unmoved by the data too. EUR/JPY Mid-Day OutlookDaily Pivots: (S1) 161.89; (P) 162.89; (R1) 164.39; More. EUR/JPY continues to consolidate above 161.38 today. With 4 hours MACD staying above signal line, further sideway trading could be seen but consolidation should be relatively brief as long as 164.40 minor resistance holds. Below 161.38 will indicate recent decline has resumed for mentioned 158.60 cluster support (61.8% retracement of 151.71 to 169.96 at 158.68). Though, touching of 164.40 resistance will indicate that a short term bottom is in place and bring lengthier consolidation. But break of 166.87 support turned resistance is needed to indicated that fall from 169.96 has completed. Otherwise, further decline is still in favor after consolidation. In the bigger picture, EUR/JPY is at a critical moment now. Firstly, bearish divergence conditions are being displayed in weekly MACD and RSI. Secondly, monthly MACD remains below signal line. Both are arguing that upside momentum is unconvincing. More importantly, completion of rise from 151.71 now put long term rising channel support (now at 158.58) back into focus. Sustained break of which will indicate that whole long term up trend from 88.97 (00 low) has completed too. Focus will then be shifted further down to 149.27 key medium term support for confirmation. On the upside, above 170 psychological resistance is now needed to confirm underlying momentum. Otherwise, downside risks will continue to grow.
Forex News Digest
Economic Indicators Update
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US CPI Soars To New 17 Year High, Dollar Unimpressed
Daily Forex Fundamentals | Written by DailyFX | Aug 14 08 13:02 GMT |
US Consumer Price Index (YoY) (JUL)
(Headline) (Core)
Actual: 5.6% 2.5%
Expected: 5.1% 2.4%
Previous: 5.0% 2.4%
The Federal Reserve's job has grown more difficult with inflation soaring; but the sharp increase in the Consumer Price Index is nonetheless heating up the outlook for an eventual rate hike. According to the Labor Department's monthly reading, front line inflation accelerated at a staggering 5.6 percent pace - a far greater increase than was expected by economists' consensus and the quickest clip of growth since December of 1990.
However, headline consumers and markets grown relatively accustomed to oppressive levels of headline inflation with record fuel prices and rising borrowing costs spreading into other areas of the market. Looking at the details of the July report, it was clear that energy was indeed one of the most taxxing components of the inflation reading. The energy component of the survey rose 4.0 percent (notabley the weakest increase in three months), though fuel and utilities jumped 3.3 percent and gasoline prices rose 4.1 percent. Elsewhere, food prices rose 0.9 percent while the average price for apparel jumped 1.2 percent due to seasonal trends. Altogether, this headline surge (while greater than the 5.1 percent clilp projected) was not unexpected. On a more stable footing, the core CPI number rose 2.5 percent - matching a 17 month high. After taking in this number, the dollar actually pulled back. Looking ahead, a shift in global central bank policy sees central bankers taking a greater interest in growth - validating the Fed's steady stance. What's more, with crude prices dropping precipitously over the past few weeks, there is likely expectations for gasoline costs to follow suit in the near future.
DailyFX
Disclaimer
Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader
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US Consumer Price Index (YoY) (JUL)
(Headline) (Core)
Actual: 5.6% 2.5%
Expected: 5.1% 2.4%
Previous: 5.0% 2.4%
The Federal Reserve's job has grown more difficult with inflation soaring; but the sharp increase in the Consumer Price Index is nonetheless heating up the outlook for an eventual rate hike. According to the Labor Department's monthly reading, front line inflation accelerated at a staggering 5.6 percent pace - a far greater increase than was expected by economists' consensus and the quickest clip of growth since December of 1990.
However, headline consumers and markets grown relatively accustomed to oppressive levels of headline inflation with record fuel prices and rising borrowing costs spreading into other areas of the market. Looking at the details of the July report, it was clear that energy was indeed one of the most taxxing components of the inflation reading. The energy component of the survey rose 4.0 percent (notabley the weakest increase in three months), though fuel and utilities jumped 3.3 percent and gasoline prices rose 4.1 percent. Elsewhere, food prices rose 0.9 percent while the average price for apparel jumped 1.2 percent due to seasonal trends. Altogether, this headline surge (while greater than the 5.1 percent clilp projected) was not unexpected. On a more stable footing, the core CPI number rose 2.5 percent - matching a 17 month high. After taking in this number, the dollar actually pulled back. Looking ahead, a shift in global central bank policy sees central bankers taking a greater interest in growth - validating the Fed's steady stance. What's more, with crude prices dropping precipitously over the past few weeks, there is likely expectations for gasoline costs to follow suit in the near future.
DailyFX
Disclaimer
Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader
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Trade Desk Thoughts - U.S. CPI (July)
| Daily Forex Fundamentals | Written by TheLFB-Forex.com | Aug 14 08 12:59 GMT | | |
| Actual 0.8%, Expected 0.2%, Previous 0.3% Release Explanation: CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore gives an overall read of Inflationary pressures. It is the most widely used Inflation indicator of Central Banks, Institutions, and Governments. It is used to calculate Cost of Living numbers for Government programs. It can sometimes overstate Inflation because it does not reflect price changes in new Technology goods which are often declining in price as new innovations come into the market. Despite these criticisms, it remains the benchmark Inflation Index worldwide. CPI can be greatly influenced in any given month by movement in volatile food and energy prices, and therefore it is important to look at CPI excluding food and energy, commonly called the “Core Rate" of inflation. Within the Core Rate, some of the more volatile and closely watched components are Apparel, Tobacco, Airfares, and New Car sales. In addition to tracking the month over month (m/m), the year over year (y/y) change in core CPI is seen by Economists as the most reliable read of the underlying inflation rate. This is the "be all and end all" of Economic Releases. This report sets the tone for economic growth or contraction, and therefore eventually effects most other releases. The Gauge of Inflation is a report that moves Markets because it gives a Central Bank the information they need to make rate decisions. This therefore is a big Market mover as Institutions adjust existing or planned positions in response to the rate of Inflation and its impact on a Currency, i.e. CPI higher, Currency appreciation, CPI lower, Currency depreciation. Trade Desk Thoughts: Core CPI increased 0.3% in July and the yearly core rate increased to 2.5%. The numbers are enough to get the Fed concerned, but don't expect to see the Fed tighten policy anytime soon despite that fact that the jump in the yearly rate to 5.9 was the biggest jump in 17 years. Taken together with the weekly report on unemployment, today's numbers indicate a stagflationary condition exists. Forex Technical Reaction: There as a big drop in USD/JPY after the release as S&P futures declined on the reports and the dollar also weakened against the euro and pound. Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174. The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC. | |
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WRAPUP 1-TUI Q2 profits beat expectations
By Matthew Scuffham and Sylvia Westall
LONDON/FRANKFURT, Aug 14 (Reuters) - German travel and shipping group TUI reported better-than-expected second-quarter profits on Thursday, as its container shipping business benefited from increased freight rates and consumers continued to book holidays despite an economic downturn.
TUI said underlying group earnings before interest, tax and amortisation (EBITA) were up sixfold to 216 million euros ($323.5 million). Sales rose 20 percent to 6.25 billion euros.
Ten analysts polled by Reuters had expected on average underlying EBITA of 158 million euros and sales of 6.26 billion.
"TUI...continues to expect a significant increase in underlying earnings by each of the two divisions, tourism and container shipping, for the year as a whole," the company said in a statement.
TUI said the separation process for its Hapag-Lloyd shipping unit was on track and the bidding process was expected to close by autumn at the earliest.
Neptune Orient Lines and a group of Hamburg investors have made the short list in the bidding for Hapag-Lloyd, a sale which could fetch over $7 billion.
TUI said on Wednesday it intends to withdraw completely from the shipping business and plans to sell 100 percent of the unit, denying a newspaper report that it was planning to sell only 75 percent of the world's fifth-biggest container shipping line.
SUMMER HOLIDAYS
The company's TUI Travel division, Europe's biggest travel company, reported a 39 percent rise in third-quarter underlying operating profit on Thursday to 65.4 million pounds ($124.5 million).
TUI Travel said consumer demand for package holidays remains strong and is confident its expectations for 2008 and 2009 can be achieved. Tourism made up roughly 75 percent of TUI's revenue in the second quarter.
The average forecasts for TUI Travel's 2008 and 2009 pretax profit are 317 million pounds and 403 million pounds respectively, according to Reuters Estimates.
The group and its rival, Thomas Cook , have been cutting capacity, leaving them with fewer holidays to sell and enabling them to avoid deep discounting on late bookings.
Thomas Cook said on Wednesday that current trading has been strong in the summer 2008 season, and trading for winter 2008/9 and summer 2009 is ahead of last year.
Earnings at TUI's Hapag-Lloyd unit, which it now books as a discontinued operation, rose almost seven fold with EBITA of 89 million euros and sales of 1.51 billion. Underlying EBITA for the unit was 115 million euros.
West LB reiterated its 'buy' recommendation on TUI AG, with a 20.4 euro price target.
"Despite the expected downturn in H2 2008 in the container shipping segment we stick to our positive outlook for 2008," it said in a research note.
Shares in TUI AG had risen by 0.6 percent to 14.6 euros by 0940 GMT.
Shares in TUI Travel were down 1.3 percent at 225 pence, having risen by over 30 percent over the past month due to the weakening oil price.
"Shares in the sector are inexpensive but remain exposed to profit taking following a strong recent bounce," said Investec Securities analyst Joe Thomas. (Editing by David Cowell)
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LONDON/FRANKFURT, Aug 14 (Reuters) - German travel and shipping group TUI reported better-than-expected second-quarter profits on Thursday, as its container shipping business benefited from increased freight rates and consumers continued to book holidays despite an economic downturn.
TUI said underlying group earnings before interest, tax and amortisation (EBITA) were up sixfold to 216 million euros ($323.5 million). Sales rose 20 percent to 6.25 billion euros.
Ten analysts polled by Reuters had expected on average underlying EBITA of 158 million euros and sales of 6.26 billion.
"TUI...continues to expect a significant increase in underlying earnings by each of the two divisions, tourism and container shipping, for the year as a whole," the company said in a statement.
TUI said the separation process for its Hapag-Lloyd shipping unit was on track and the bidding process was expected to close by autumn at the earliest.
Neptune Orient Lines and a group of Hamburg investors have made the short list in the bidding for Hapag-Lloyd, a sale which could fetch over $7 billion.
TUI said on Wednesday it intends to withdraw completely from the shipping business and plans to sell 100 percent of the unit, denying a newspaper report that it was planning to sell only 75 percent of the world's fifth-biggest container shipping line.
SUMMER HOLIDAYS
The company's TUI Travel division, Europe's biggest travel company, reported a 39 percent rise in third-quarter underlying operating profit on Thursday to 65.4 million pounds ($124.5 million).
TUI Travel said consumer demand for package holidays remains strong and is confident its expectations for 2008 and 2009 can be achieved. Tourism made up roughly 75 percent of TUI's revenue in the second quarter.
The average forecasts for TUI Travel's 2008 and 2009 pretax profit are 317 million pounds and 403 million pounds respectively, according to Reuters Estimates.
The group and its rival, Thomas Cook , have been cutting capacity, leaving them with fewer holidays to sell and enabling them to avoid deep discounting on late bookings.
Thomas Cook said on Wednesday that current trading has been strong in the summer 2008 season, and trading for winter 2008/9 and summer 2009 is ahead of last year.
Earnings at TUI's Hapag-Lloyd unit, which it now books as a discontinued operation, rose almost seven fold with EBITA of 89 million euros and sales of 1.51 billion. Underlying EBITA for the unit was 115 million euros.
West LB reiterated its 'buy' recommendation on TUI AG, with a 20.4 euro price target.
"Despite the expected downturn in H2 2008 in the container shipping segment we stick to our positive outlook for 2008," it said in a research note.
Shares in TUI AG had risen by 0.6 percent to 14.6 euros by 0940 GMT.
Shares in TUI Travel were down 1.3 percent at 225 pence, having risen by over 30 percent over the past month due to the weakening oil price.
"Shares in the sector are inexpensive but remain exposed to profit taking following a strong recent bounce," said Investec Securities analyst Joe Thomas. (Editing by David Cowell)
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S.Africa Eskom says Koeberg unit 2 back online
JOHANNESBURG, Aug 14 (Reuters) - South Africa's state-owned power utility Eskom [ESCJ.UL] said on Thursday it had returned to service Unit 2 at its Koeberg nuclear plant after a controlled shutdown on July 21 for repairs.
The unit was shut down after a hydrogen leak in the cooling system in the generator at Koeberg, South Africa's only nuclear power station, outside Cape Town.
Eskom said the unit was operating at 63 percent of capacity and full operating load of 900 MW was expected early on Friday morning. (Reporting by Marius Bosch)
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The unit was shut down after a hydrogen leak in the cooling system in the generator at Koeberg, South Africa's only nuclear power station, outside Cape Town.
Eskom said the unit was operating at 63 percent of capacity and full operating load of 900 MW was expected early on Friday morning. (Reporting by Marius Bosch)
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Cablevision to hold off on major acquisitions: report
(Reuters) - Cable television operator Cablevision Systems Corp said it will hold off on major acquisitions as it concluded a three-day investor roadshow to weigh strategic options, the Wall Street Journal reported Thursday, citing an investor.
"The company indicated they don't plan on making further forays into the news business or other large acquisition," the investor told the Journal.
Top executives also weighed previously outlined options to lift its stock price, including declaring a dividend, buying back shares, and spinning off assets such as its Rainbow cable network and Madison Square Garden, the paper said, citing an investor who was present at one meeting.
Cablevision did not immediately return a call seeking comment.
Cablevision said earlier this month it was exploring options to close the gap between its intrinsic value and its share price.
Last week, Mario Gabelli, whose Gamco Investors Inc owns about 8 percent of Cablevision's share float, told Reuters that the cable TV operator should sell one of its units to raise cash for an aggressive stock buyback rather than break up the whole business.
At the time, Gabelli also told Reuters he and other major stakeholders would discuss their plans with management in a series of meetings August 11 to 14.
Shares of the company closed at $30.96 Wednesday on the New York Stock Exchange.
(Reporting by Tenzin Pema in Bangalore; editing by Karen Foster)
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"The company indicated they don't plan on making further forays into the news business or other large acquisition," the investor told the Journal.
Top executives also weighed previously outlined options to lift its stock price, including declaring a dividend, buying back shares, and spinning off assets such as its Rainbow cable network and Madison Square Garden, the paper said, citing an investor who was present at one meeting.
Cablevision did not immediately return a call seeking comment.
Cablevision said earlier this month it was exploring options to close the gap between its intrinsic value and its share price.
Last week, Mario Gabelli, whose Gamco Investors Inc owns about 8 percent of Cablevision's share float, told Reuters that the cable TV operator should sell one of its units to raise cash for an aggressive stock buyback rather than break up the whole business.
At the time, Gabelli also told Reuters he and other major stakeholders would discuss their plans with management in a series of meetings August 11 to 14.
Shares of the company closed at $30.96 Wednesday on the New York Stock Exchange.
(Reporting by Tenzin Pema in Bangalore; editing by Karen Foster)
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Wal-Mart posts higher quarterly profit
NEW YORK (Reuters) - Wal-Mart Stores Inc reported a higher quarterly profit on Thursday as shoppers headed to its stores for low prices on food, health care products and electronics.
Net income rose to $3.45 billion or 87 cents per share, in the second quarter ended July 31, from $2.95 billion, or 72 cents per share, a year earlier.
In the past year, Wal-Mart has benefited both from internal efforts to improve its business and from a weak U.S. economy, which is driving shoppers to its stores in search of bargains.
The retailer also got a boost in the quarter from U.S. tax rebate checks as shoppers came into its stores to spend the excess cash, but its sales waned later in the period as those funds dried up.
In July, Wal-Mart raised its second-quarter earnings-per-share forecast to a range of 82 cents to 84 cents, up from an earlier outlook of 78 cents to 81 cents, citing "improved sales results during the quarter."
(Reporting by Nicole Maestri; Editing by Lisa Von Ahn)
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Net income rose to $3.45 billion or 87 cents per share, in the second quarter ended July 31, from $2.95 billion, or 72 cents per share, a year earlier.
In the past year, Wal-Mart has benefited both from internal efforts to improve its business and from a weak U.S. economy, which is driving shoppers to its stores in search of bargains.
The retailer also got a boost in the quarter from U.S. tax rebate checks as shoppers came into its stores to spend the excess cash, but its sales waned later in the period as those funds dried up.
In July, Wal-Mart raised its second-quarter earnings-per-share forecast to a range of 82 cents to 84 cents, up from an earlier outlook of 78 cents to 81 cents, citing "improved sales results during the quarter."
(Reporting by Nicole Maestri; Editing by Lisa Von Ahn)
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UPDATE 1-Ryanair CEO says fuel still unhedged in Q4
(Adds further CEO comment, background)
DUBLIN, Aug 14 (Reuters) - Ryanair Chief Executive Michael O'Leary said on Thursday the airline remained unhedged on fuel for its fourth quarter and its outlook was unchanged. "We're still unhedged for Q4, we haven't extended our hedging programme any further," O'Leary told Reuters in a telephone interview.
O'Leary said last month that a failure to hedge against high fuel prices and a consumer downturn could plunge Europe's largest low-cost carrier into the red for the first time in almost two decades.
Ryanair said in July it expected a full-year result between breakeven and a loss of 60 million euros ($89.86 million) on the basis of its existing fuel hedges, fourth-quarter oil prices estimated at around $130 per barrel and average fares falling by 5 percent.
Oil was trading at $117 a barrel on Thursday.
"We have not changed the guidance, but you don't need to be a genius to work out oil is not at $130 a barrel," O'Leary said on Thursday. (Reporting by Andras Gergely; Editing by Erica Billingham)
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DUBLIN, Aug 14 (Reuters) - Ryanair Chief Executive Michael O'Leary said on Thursday the airline remained unhedged on fuel for its fourth quarter and its outlook was unchanged. "We're still unhedged for Q4, we haven't extended our hedging programme any further," O'Leary told Reuters in a telephone interview.
O'Leary said last month that a failure to hedge against high fuel prices and a consumer downturn could plunge Europe's largest low-cost carrier into the red for the first time in almost two decades.
Ryanair said in July it expected a full-year result between breakeven and a loss of 60 million euros ($89.86 million) on the basis of its existing fuel hedges, fourth-quarter oil prices estimated at around $130 per barrel and average fares falling by 5 percent.
Oil was trading at $117 a barrel on Thursday.
"We have not changed the guidance, but you don't need to be a genius to work out oil is not at $130 a barrel," O'Leary said on Thursday. (Reporting by Andras Gergely; Editing by Erica Billingham)
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Euro Consolidates Despite Negative GDP and Flat CPI
| Daily Forex Fundamentals | Written by DailyFX | Aug 14 08 10:17 GMT | | |
| Talking Points
The Euro saw choppy trading throughout the overnight sessions after bouncing from support at 1.4850. Despite, the European GDP report confirming market expectations that the economy contracted 0.2% in the second quarter from a 0.7% increase the quarter prior, the pair managed to remain above the 1.4900 price level. It was the first decline in growth since the institution of the single currency, led by declines in the regions three biggest economies. Indeed, Germany, France and Italy saw growth fall 0.5%, 0.3% and 0.3% respectively. Meanwhile, inflation declined 0.2% in July and remained flat at 4.0% on an annualized basis as energy costs slowed from 2.7% to 2.6%. The core reading declined as most components were level and communication costs continued its downward trend, falling 2.2%. The European economy may be headed for a hard landing as the ECB continues its focus on price stability. The central bank's quarter point increase in July has accelerated the decline in growth as manufacturers now most contend with higher credit costs in addition to rising raw material prices and slowing demand. Indeed, France saw its non-farm payrolls fall for the first time since 2004 adding to the troubles that the German labor market has been experiencing. This month's German labor report will be critical after last month saw a reduction of 20,000 jobs. If employment conditions continue to worsen, it may force the central bank's hand and lead to a rate reduction sooner than expected. President Trichet's concerns of secondary effects of inflation may be unwarranted as French wages slowed to 0.9% from 1.1% in the first quarter, and with headline inflation remaining flat there may be few obstacles left to prevent future easing. Consumer prices in the U.S. are expected to have risen to 5.2% in July as record level fuel and food costs filter through to other sectors. Inflation has become a concern for the Fed as Americans continue to see their purchasing power erode, which had led to speculation that the central bank could increase rates as soon as their next policy meeting. Yet voting members Richard Fisher- who dissented to keep rates unchanged last meeting- and Gary Stern, recently delivered dour outlooks for the U.S. economy. Traders have significantly reduce their expectations of an increase in interest rates, as Fed fund futures odds of a quarter point hike at the September meeting have fallen to 16% from 54% a month ago. However, a significant increase in consumer prices combined with oil rising back above $117 per gallon on the back of a bigger than expected drop in U.S. gasoline and crude supplies, could lead to dollar strength as interest rate expectations increase.
Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources. | |
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European Market Update
| Daily Forex Fundamentals | Written by Trade The News | Aug 14 08 10:13 GMT | | |
| European GDP data suggests signs of potential recession ECONOMIC DATA (GE) German July Final CPI M/M: 0.6% v 0.6%e; Y/Y: 3.3% v 3.3%e (FR) French Q2 Preliminary Wages Q/Q: 0.9% v 0.7%e (FR) French Q2 Non-Farm payrolls Q/Q: -0.1% v 0.2%e (SP) Spain Q2 Preliminary GDP Q/Q: % v 0.1%; Y/Y: % v 1.8%e (CZ) Czech Jul PPI M/M: % v 0.3%e; Y/Y: % v 5.5%e (HU) Hungary Q2 Preliminary Y/Y: % v 1.9%e (NE) Dutch Q2 Preliminary GDP Q/Q: % v 0.1%e; Y/Y: % v 3.3%e (SW) Swedish Industrial Production M/M: 0.6% v -0.3%e, Y/Y: -1.5% v -1.0%e (EU) ECB Monthly Report for August reiterates Trichet's Aug 7th press conference views. Lower GDP outlook and hawkish on inflation (UK) Sold £925M 1.125% 2037 I/L Gilts with average yield of 0.519% and Bid-to-cover of 1.52x v 1.1x US July foreclosure M/M: +8%; Y/Y: + 55%; Bank repossessions Y/Y: +184% - RealtyTrac SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUMIn equities: German builder Hochtief [HOT.GE] Reported Q2 Net €47M v €43Me; Pretax €188.9M v €172.3Me; Rev €5.26B v €4.48Be; Sees order intake in line with 2007. Company rising demand for construction and mining work in Australia and Asia; RWE [RWE.GE] Reported H1 Net €1.16B v €1.99Be, EBITDA €4.63B v €4.62Be, Rev €24.7B v €22.5Be; Reaffirmed FY08 targets; InBev [INB.BE] Reported Q2 Net €542M v €490Me, Rev €3.71B v €3.72B y/y; Results seen in line. Earnings helped by a lower tax rate.; Salzgitter [SZG.GE] Reported H1 Net €436.9M v €398.7M y/y; Rev €6.23B v €4.7B y/y; Company Guideed FY08 Pretax "over" €1.0B; Tui Travel [TT.UK] Reported Q3 Underlying Profit £65.4M; Rev £3.62B v £3.32B y/y; Reaffirms FY08 targets, Sees strong demand for holiday packages; Tui [TUI1.GE] TUI1.GE: Reported Q2 Net Loss -€55.6M v -€74Me; EBITA €71M v €31M y/y; Rev €4.58B v €3.72B y/y; Logica [LOG.UK] Reported H1 Net £5.2M v £72.9Me; Adj Op Profit £118M v £114.5Me; Rev £1.77B v £1.68Be, Reaffirms FY08 Rev growth of 4% y/; SAS [SAS.SW] Reported Q2 Net loss -SEK411M v -SEK538Me; Rev SEK17.7B v SEK16.29B y/y; SAS stated that it saw economic Growth Significantly Lower In FY08 Than FY07; British Land [BLND.UK] Reported Q1 Net -£565M v -£502Me, Pretax £74M v £71.3Me, NAV1,212p (-10% y/y). Company stated occupancy is beginning to reflect economic slowdown and stated that investment markets are thin, nervous and negative. Swiss Life [SLHN.SZ] purchased Maschmeyer;s 26.74% stake in MLP [MLP.GE] for $456M. MLP added that Swiss Life would not increase the stake without its approval. Elsewhere on the macro economic front: China PBoC stated that it has created a new FX rate department to set and implement FX rate policy. Department to manage domestic FX supply and demand. German Economy Minister Glos reaffirmed German 2008 GDP growth at 1.7% y/y. Added that although Q2 GDP was weak, he did not see signs of a major economic downturn India PM provided details of higher pay plan for government workers. The Higher pay plan will be given with effect from Jan 1, 2006 with 60% of salary arrears to be paid in FY10 and 40% of wage arrears to be paid in FY09. India stated that the higher pay plan will cost INR178B annually Reportedly a fresh round of explosions were seen in and around town of Gori in Georgia. In currencies, there was little reaction in the price action during the session EUR/USD hovering around the 1.49 level. Dealers continue to note of possible sovereign bids under the 1.4870 area, but add that Euro sell stops are building below 1.4830 area. The GBP/USD recovered from it Asian session lows of 1.8619 to retest the 1.87 level. NOTESThe European session was marked by progression of GDP data, highlighted by the German GDP. The Q2 German GDP fell 0.5% Q/Q to register its first contraction in 4 years. Several factors were attributed to the negative GDP from the stronger euro and slower global growth, which have dampened demand for German exports coupled with higher inflation which has eroded domestic spending. Q1 revised down from 1.5% to 1.3%. However, markets remains steady throughout the session noting that the German data was not as bad as some had hoped or perhaps feared. Earlier in the week it was rumored that German GDP could register a -1.5% reading. European stocks were in positive territory for the first time in 3 days aided by stocks in the oil and commodity sectors. Looking ahead: The US CPI and claims data will highlight the NY morning and global demand concerns will assess emerging market handling of growth with Brazil Jun Retail Sales data . There are two central bank rate decision expected during the US morning. (SA) S.Africa Central bank is expected to leave interest rates unchanged at 12.00%; while Turkey Central bank is expected to leave its base rate unchanged at 16.75%. For Corporate earnings Walmart [WMT], Estee Lauder [EL] and JM Smucker [SJM] are expected to report before the NY equity market opens. Trade The News Staff Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing. | |
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Forex Technical Analysis
| Daily Forex Technicals | Written by DeltaStock Inc. | Aug 14 08 09:35 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||||
EUR/USDCurrent level-1.4915 EUR/USD is in а downtrend from 1.6039 (15 July 2008). Technical indicators are descending and trading is situated below the 50- and 200-Day SMA, currently projected at 1.5677 and 1.5227. Still in the broad consolidation since 1.4815 and we feel no need to change our outlook for 1.5081, while trading holds above 1.4815. After breaking beyond 1.4979, crucial will become current intraday low at 1.4850. Today's strategy: Stay on the long side for 1.5081, while above 1.4815.
USD/JPYCurrent level - 109.40 The pair is still in the broad consolidation since 95.75 short-term bottom, aiming at 111.03. Trading is situated above the 50- and 200-day SMA, currently projected at 107.09 and 106.62. The important dynamic support at 108.37-59 managed to hold yesterday's sell and provoked nice rebound, all the way up to 109.74. Still it looks a little bit corrective in nature, so have in mind, that an eventual break below 108.83 will challenge (most probably-successfully) once more 108.37. Below 108.37 next support lies at 106.12. Today's strategy: Stand aside.
GBP/USDCurrent level- 1.8705 The pair has finished the broad consolidation above 1.9338 and the general downtrend has been renewed, targeting levels below 1.85+. Trading is situated below the 50- and 200-day SMA, currently projected at 1.9752 and 1.9853. After breaking below 1.8931 the downtrend accelerated and reached minimum at 1.8620. We think, that this level is a final of the 1.9035-1.8620 downtrend, so a corrective phase is expected to challenge 1.8803 later today. Crucial for the expected consolidation is 1.8646. Today's strategy : Stand aside.
DeltaStock Inc. - Online Forex & Securities Broker RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice. | |||||||||||||||||||||||||||||||||||||||||||||||||
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Forex Depth Analysis: GBP/JPY
| Daily Forex Technicals | Written by Finotec Group | Aug 14 08 09:11 GMT | | |
| GBP/JPY looking for short recovery after harmful inflation report. The pounded fell sharply following the release of the Bank of England's inflation report, selling off to its lowest level since November 2006 at 1.8867. Further, UK futures markets immediately priced in a 60% probability for a December BoE rate cut, versus a 10% chance prior to the release. The Bank's inflation report highlighted the growing risks for a possible recession, stating that risks to GDP are on the downside, with the slowdown sharper than seen in May. While it added that inflation risk remains to the upside, it expects CPI to be below the 2% target in two years if interest rates hold steady at 5%. As such, the next rate move by the Bank of England will more likely be a cut rather than a hike in order to jumpstart the lackluster UK economy. The following technical analysis gives us a detailed lookout on what is expected to happen to GBP/JPY The buying point is at 204.13; based on a failure swing formation.
The selling point is at 202.10; based on a break of strong support level.
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of MACD line to the signal line below the equilibrium level and is pointing upwards. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. The ROC is very important to understand the demand of the market and as we see on the graph it is in an uptrend. Momentum oscillator breaks the zero line and the stochastic oscillator crosses %D line upwards. * The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.
Finotec Group Inc. Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein. | |
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Currency Pair Daily Forecasts
| Daily Forex Technicals | Written by Finotec Group | Aug 14 08 09:47 GMT | | |
EUR/USD Daily Technical ReportsEUR/USD-market strategy can be a sell from the level 1.4880$ Technical oscillators supporting the bearish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines after a bearish crossover below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction. Also, MA oscillators indicate a bearish cross on the short MA line. As seen on the chart there are two tops leading downwards to a selling trend, although slightly over sold according to Bollinger.
USD/JPY Daily Technical ReportsUSD/JPY-market strategy can be a buy from the level 109.80 Technical oscillators supporting the bullish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines after a bullish crossover above the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. Also, MA oscillators indicate a bullish cross on the short MA line. As seen on the chart there are two bottoms leading upwards to a buying trend.
GBP/USD Daily Technical ReportsGBP/USD-market strategy can be a sell from the level 1.8618$ Technical oscillators supporting the bearish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines after a bearish crossover below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction. Also, MA oscillators indicate a bearish cross on the short MA line. As seen on the chart there are two tops leading downwards to a selling trend.
USD/CHF Daily Technical ReportsUSD/CHF-market strategy can be a buy from the level 1.0810 Technical oscillators supporting the bullish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines after a bullish crossover above the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. Also, MA oscillators indicate a bullish cross on the short MA line. As seen on the chart there are two bottoms leading upwards to a buying trend. Although slightly over bought today.
Finotec Group Inc. Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein. | |
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Singapore Should Allow Stronger Currency, IMF Says
By Shamim Adam
Aug. 14 (Bloomberg) -- Singapore should allow its currency to strengthen at a faster pace to combat inflation, the International Monetary Fund said, even as the nation faces a worsening slowdown in economic growth.
``Ensuring that inflation expectations remain well anchored is a policy priority,'' the Washington-based lender said in a statement on its Web site late yesterday, predicting consumer price gains will stay ``elevated.''
The Singapore dollar, which climbed to its strongest in more than a decade earlier this year, has since slid and is Asia's worst performer this quarter amid concern growth will slump. The central bank, which guides the currency within a trading range against an undisclosed basket, may have to slow the pace of its appreciation, Standard Chartered Plc said.
``Exports have been lackluster for the past year and the stronger Singapore dollar would do more damage to exports,'' Alvin Liew, an economist at Standard Chartered in Singapore, said in an interview with Bloomberg Television today. The central bank ``will probably be switching to a more benign monetary policy, but still on an appreciation trend.''
Singapore last week cut its 2008 growth forecast for a second time this year as exports fell, joining its Asian neighbors in signaling a deeper slowdown. Still, the central bank said this week its currency stance remains ``appropriate.''
The Singapore dollar traded at S$1.4088 against the U.S. currency at 12:50 p.m. in Singapore, compared with S$1.4053 yesterday. The currency has dropped 3.5 percent this quarter, after climbing 5.7 percent in the first half.
`Downside Risks'
The economy faces ``downside risks to growth'' as global demand weakens, the IMF said. ``Macroeconomic policies should remain flexible and pragmatic and seek an appropriate balance to sustain solid growth while containing inflationary pressures and maintaining macroeconomic stability,'' the lender said in the report, known as an Article IV Consultation.
The Monetary Authority of Singapore has maintained an appreciation policy on its exchange rate since April 2004, and this year allowed the currency to rise at a faster pace against the U.S. dollar to combat the highest inflation rate since 1982.
``A moderately faster pace of appreciation would help ensure that price expectations remain well anchored and facilitate the needed external adjustment,'' the IMF said. ``The Singapore dollar remains weaker than the level implied by long- term fundamentals.''
Most economists expect the central bank to refrain from allowing faster currency appreciation at its next monetary policy review in October.
Growth Forecast
Singapore's government on Aug. 8 cut its forecast for growth this year to between 4 percent and 5 percent, from an earlier estimate of as much as 6 percent. The economy will expand 4.5 percent this year and next, the IMF forecasts.
The island's trade promotion agency now expects exports to drop between 2 percent and 4 percent in 2008, from an earlier estimate of growth of 2 percent to 4 percent.
The IMF ``acknowledged the difficulty of additional tightening when the external environment remains fragile,'' it said. Still, ``the width of the exchange rate policy band could provide flexibility to cope with adverse shocks.''
The central bank may want to assess the impact of the monetary tightening already planned before adjusting its policy stance, the IMF said.
Singapore's consumer prices rose 7.5 percent in June from a year earlier, and the central bank last month raised its 2008 inflation forecast to a range of 6 percent to 7 percent.
Consumer price gains will average 6.7 percent this year, before easing to 3.5 percent in 2009, the IMF predicts.
To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net
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Aug. 14 (Bloomberg) -- Singapore should allow its currency to strengthen at a faster pace to combat inflation, the International Monetary Fund said, even as the nation faces a worsening slowdown in economic growth.
``Ensuring that inflation expectations remain well anchored is a policy priority,'' the Washington-based lender said in a statement on its Web site late yesterday, predicting consumer price gains will stay ``elevated.''
The Singapore dollar, which climbed to its strongest in more than a decade earlier this year, has since slid and is Asia's worst performer this quarter amid concern growth will slump. The central bank, which guides the currency within a trading range against an undisclosed basket, may have to slow the pace of its appreciation, Standard Chartered Plc said.
``Exports have been lackluster for the past year and the stronger Singapore dollar would do more damage to exports,'' Alvin Liew, an economist at Standard Chartered in Singapore, said in an interview with Bloomberg Television today. The central bank ``will probably be switching to a more benign monetary policy, but still on an appreciation trend.''
Singapore last week cut its 2008 growth forecast for a second time this year as exports fell, joining its Asian neighbors in signaling a deeper slowdown. Still, the central bank said this week its currency stance remains ``appropriate.''
The Singapore dollar traded at S$1.4088 against the U.S. currency at 12:50 p.m. in Singapore, compared with S$1.4053 yesterday. The currency has dropped 3.5 percent this quarter, after climbing 5.7 percent in the first half.
`Downside Risks'
The economy faces ``downside risks to growth'' as global demand weakens, the IMF said. ``Macroeconomic policies should remain flexible and pragmatic and seek an appropriate balance to sustain solid growth while containing inflationary pressures and maintaining macroeconomic stability,'' the lender said in the report, known as an Article IV Consultation.
The Monetary Authority of Singapore has maintained an appreciation policy on its exchange rate since April 2004, and this year allowed the currency to rise at a faster pace against the U.S. dollar to combat the highest inflation rate since 1982.
``A moderately faster pace of appreciation would help ensure that price expectations remain well anchored and facilitate the needed external adjustment,'' the IMF said. ``The Singapore dollar remains weaker than the level implied by long- term fundamentals.''
Most economists expect the central bank to refrain from allowing faster currency appreciation at its next monetary policy review in October.
Growth Forecast
Singapore's government on Aug. 8 cut its forecast for growth this year to between 4 percent and 5 percent, from an earlier estimate of as much as 6 percent. The economy will expand 4.5 percent this year and next, the IMF forecasts.
The island's trade promotion agency now expects exports to drop between 2 percent and 4 percent in 2008, from an earlier estimate of growth of 2 percent to 4 percent.
The IMF ``acknowledged the difficulty of additional tightening when the external environment remains fragile,'' it said. Still, ``the width of the exchange rate policy band could provide flexibility to cope with adverse shocks.''
The central bank may want to assess the impact of the monetary tightening already planned before adjusting its policy stance, the IMF said.
Singapore's consumer prices rose 7.5 percent in June from a year earlier, and the central bank last month raised its 2008 inflation forecast to a range of 6 percent to 7 percent.
Consumer price gains will average 6.7 percent this year, before easing to 3.5 percent in 2009, the IMF predicts.
To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net
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German July Inflation Quickens More Than Initially Estimated
By Gabi Thesing
Aug. 14 (Bloomberg) -- The inflation rate in Germany, Europe's largest economy, rose more than initially estimated in July, led by surging costs for energy and package holidays.
Consumer prices rose 3.5 percent from a year earlier, the Federal Statistics Office said today, revising a flash estimate of 3.4 percent from July 29. That is the fastest pace since Germany first measured inflation under a harmonized European Union method in 1996. From June, prices rose 0.7 percent, more than the initially reported 0.6 percent.
Faster inflation may deepen an economic slowdown by boosting company production costs and eroding the purchasing power of households. The European Central Bank left its benchmark lending rate at a seven-year high last week to prevent a wage-price spiral. Still, the price of oil has fallen 22 percent from a July record, which may damp inflation pressures in the coming months.
``This should probably be the peak for German inflation, depending on how the price of oil develops,'' said Juergen Michels, an economist at Citigroup Inc. in London, the only economist out of 25 in a Bloomberg News survey to forecast the revision. ``At the same time, the ECB will remain on inflation alert over wages.''
Policy makers remain concerned that the fastest euro-area inflation rate in 16 years will prompt companies to pass on their costs and encourage trade unions to demand bigger wage deals to counter higher oil prices. Crude reached a record $147.27 a barrel on July 11 and at $116.47 today is still 58 percent more expensive than a year ago.
`Strong Concern'
There is ``very strong concern that price and wage-setting behavior could add to inflationary pressures,'' ECB President Jean-Claude Trichet said last week.
German negotiated wages jumped 3.5 percent in the year through April, the biggest gain in 12 years, as companies such as BASF AG and ThyssenKrupp AG bowed to union demands.
This year's wage rounds culminate next month, when IG Metall, Germany's biggest union, starts talks for 3.2 million employees in the electronics, metal and car industries whose collective contracts expire Oct. 31. The union won a 5.2 percent raise for about 85,000 steelworkers in February.
At the same time, the euro area's expansion is weakening. The German economy, which accounts for one-third of the region's gross domestic product, shrank 0.5 percent in the three months through June, data this morning showed. The European Union's statistics office may say later today that the euro-region economy contracted by 0.2 percent in the second quarter from the first, according to a survey of 40 economists by Bloomberg.
While growth is weakening, the ECB has ``only one needle'' in its compass, Trichet said last week. ``That needle is price stability.''
From June, German consumer prices calculated under a national measure increased 3.3 percent in the year and 0.6 percent from the previous month. Core inflation, which excludes heating oil and fuel costs, was at 1.9 percent.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net.
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Aug. 14 (Bloomberg) -- The inflation rate in Germany, Europe's largest economy, rose more than initially estimated in July, led by surging costs for energy and package holidays.
Consumer prices rose 3.5 percent from a year earlier, the Federal Statistics Office said today, revising a flash estimate of 3.4 percent from July 29. That is the fastest pace since Germany first measured inflation under a harmonized European Union method in 1996. From June, prices rose 0.7 percent, more than the initially reported 0.6 percent.
Faster inflation may deepen an economic slowdown by boosting company production costs and eroding the purchasing power of households. The European Central Bank left its benchmark lending rate at a seven-year high last week to prevent a wage-price spiral. Still, the price of oil has fallen 22 percent from a July record, which may damp inflation pressures in the coming months.
``This should probably be the peak for German inflation, depending on how the price of oil develops,'' said Juergen Michels, an economist at Citigroup Inc. in London, the only economist out of 25 in a Bloomberg News survey to forecast the revision. ``At the same time, the ECB will remain on inflation alert over wages.''
Policy makers remain concerned that the fastest euro-area inflation rate in 16 years will prompt companies to pass on their costs and encourage trade unions to demand bigger wage deals to counter higher oil prices. Crude reached a record $147.27 a barrel on July 11 and at $116.47 today is still 58 percent more expensive than a year ago.
`Strong Concern'
There is ``very strong concern that price and wage-setting behavior could add to inflationary pressures,'' ECB President Jean-Claude Trichet said last week.
German negotiated wages jumped 3.5 percent in the year through April, the biggest gain in 12 years, as companies such as BASF AG and ThyssenKrupp AG bowed to union demands.
This year's wage rounds culminate next month, when IG Metall, Germany's biggest union, starts talks for 3.2 million employees in the electronics, metal and car industries whose collective contracts expire Oct. 31. The union won a 5.2 percent raise for about 85,000 steelworkers in February.
At the same time, the euro area's expansion is weakening. The German economy, which accounts for one-third of the region's gross domestic product, shrank 0.5 percent in the three months through June, data this morning showed. The European Union's statistics office may say later today that the euro-region economy contracted by 0.2 percent in the second quarter from the first, according to a survey of 40 economists by Bloomberg.
While growth is weakening, the ECB has ``only one needle'' in its compass, Trichet said last week. ``That needle is price stability.''
From June, German consumer prices calculated under a national measure increased 3.3 percent in the year and 0.6 percent from the previous month. Core inflation, which excludes heating oil and fuel costs, was at 1.9 percent.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net.
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Vietnam Reduces Gasoline Prices After Oil Costs Fall
By Nguyen Kieu Giang
Aug. 14 (Bloomberg) -- Vietnam allowed fuel retailers to reduce gasoline prices by 5.3 percent from today to reflect lower international oil costs, the Ministry of Finance said.
The price of 92-RON gasoline, the most common grade used in the country, was cut to 18,000 dong ($1.09) a liter from 19,000 dong, and kerosene was cut to 19,000 dong from 20,000 dong, Deputy Finance Minister Tran Xuan Ha said by phone from Hanoi.
The decrease will ``reduce the cost of goods and ensure consumers benefit,'' the ministry said in a statement. Vietnamese fuel retailers are earning more as oil has fallen 18 percent from a record $147.27 a barrel on July 11 to trade at $116.84 at 11:42 a.m. in Singapore.
The Southeast Asian nation on July 21 allowed companies to raise gasoline prices by 31 percent and kerosene by 44 percent to take into account a 46 percent increase in the cost of crude oil in the first six months of 2008. The price increases triggered concern that inflation will quicken from 27 percent, and worsen living conditions for Vietnam's 85 million people.
To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net
Read more...
Aug. 14 (Bloomberg) -- Vietnam allowed fuel retailers to reduce gasoline prices by 5.3 percent from today to reflect lower international oil costs, the Ministry of Finance said.
The price of 92-RON gasoline, the most common grade used in the country, was cut to 18,000 dong ($1.09) a liter from 19,000 dong, and kerosene was cut to 19,000 dong from 20,000 dong, Deputy Finance Minister Tran Xuan Ha said by phone from Hanoi.
The decrease will ``reduce the cost of goods and ensure consumers benefit,'' the ministry said in a statement. Vietnamese fuel retailers are earning more as oil has fallen 18 percent from a record $147.27 a barrel on July 11 to trade at $116.84 at 11:42 a.m. in Singapore.
The Southeast Asian nation on July 21 allowed companies to raise gasoline prices by 31 percent and kerosene by 44 percent to take into account a 46 percent increase in the cost of crude oil in the first six months of 2008. The price increases triggered concern that inflation will quicken from 27 percent, and worsen living conditions for Vietnam's 85 million people.
To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net
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