By Shizuka Muragishi
Aug. 8 (Bloomberg) -- Following is the summary table for Japan's bank lending released by the Bank of Japan in Tokyo.
=============================================================
July June May July
2008 2008 2008 Level
=============================================================
------Loans and discounts------
Total Banks, shinkin banks 1.8% 1.8% 1.5% 456.6
Total banks* 2.0% 2.0% 1.6% 394.1
City banks 1.0% 0.9% 0.2% 207.1
Total regional banks 3.2% 3.2% 3.2% 187.0
Regional banks 3.4% 3.4% 3.3% 145.1
Regional banks II 2.6% 2.6% 2.6% 41.9
Shinkin banks 0.6% 0.5% 0.5% 62.5
Foreign banks 28.0% 11.3% 4.2% 7.6
--------Issuance of CP---------
Underwritten by banks 2.0% 2.9% 6.2% 16.0
=============================================================
NOTE1: Percent changes are year-on-year. Levels in trillions of yen. Yen level for loans and discounts are average amount outstanding. NOTE2: Issuance of CP is the month-end figures underwritten by city banks, regional banks, regional banks II, Norinchukin Bank, Shoko Chukin Bank, Shinkin Central Bank, securities companies and foreign bank's branches which holds current accounts at the Bank of Japan. Figrures includes ABCP issued by foreign corporations but exclude other CP issued by foreign corporations. * = Excludes Japan Post Bank, Citibank Japan, Sony Bank, ORIX Trust and Banking Corporation, JSF Trust and Banking Co. and ShinGinko Tokyo.
SOURCE: Bank of Japan http://www.boj.or/jp/en
To contact the reporter on this story: Shizuka Muragishi in Tokyo at smuragishi@bloomberg.net
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Friday, August 8, 2008
China's Trade Surplus May Narrow, Tilting Polices to Growth
By Nipa Piboontanasawat
Aug. 8 (Bloomberg) -- China's trade surplus probably fell for a fourth straight month, increasing the likelihood of more government measures to sustain the economy's expansion rather than stamp out inflation.
The gap narrowed 17 percent to $20.25 billion in July from a year earlier, according to the median estimate of 16 economists surveyed by Bloomberg News.
China has loosened bank lending quotas, raised tax rebates for some exports and halted gains by the yuan to help manufacturers and small businesses as the world's fastest- growing major economy shifts down a gear. President Hu Jintao, hosting the Olympic Games from tonight, said Aug. 1 that the country needs to maintain ``steady and fast'' growth.
``The government has little choice but to loosen policies to protect company profits and employment,'' said Liao Qun, chief economist at Citic Ka Wah Bank in Hong Kong. ``China will probably keep slowing the pace of currency appreciation in the second half and announce more measures to help businesses.''
The government may release trade figures on Aug 11.
Exports may have climbed 16.8 percent in July from a year earlier, the least in five months, as the U.S. housing recession and global credit squeeze crimped demand.
Imports gained 27.2 percent, the Bloomberg News survey showed, down from 31 percent in June.
Warning Sign
Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong, said yesterday that a plunge in the growth of Taiwan's shipments to China may signal a looming Asian export slowdown. Shipments from the island to the mainland rose 4 percent in July after a 25.5 percent increase in June.
China's economy slowed for a fourth straight quarter in the three months to June 30, expanding 10.1 percent. GDP growth below 9 percent would be ``unacceptable'' for a government targeting 10 million new jobs a year, according to a Credit Suisse Group report this month.
Statements last month by the central bank and the Politburo, the Communist Party's top decision making body, suggested a shift toward growth rather than taming inflation that climbed to a 12-year high of 8.7 percent in February. Neither used the previous language of a ``tight'' monetary policy.
``As the Chinese economy moderates, official priorities are tilting towards maintaining growth and employment,'' said Jing Ulrich, JPMorgan's chairwoman of China equities. China will use fiscal policies to support exporters and smaller companies during the rest of the year, she said.
Currency Gains Halt
The yuan's gains against the dollar slowed from 4.2 percent in the first quarter to 2.3 percent in the three months through June. The currency has fallen 0.1 percent this quarter. A stronger yuan makes China's products more expensive and less attractive to buyers overseas.
China raised tax rebates on exports of textiles and garments to 13 percent from 11 percent from Aug. 1 to aid manufacturers also facing rising labor and raw-material costs. Textile exporters Jiangsu Sunshine Co. and Luthai Textile Co. said this month that the change will boost profits.
The People's Bank of China increased commercial banks' lending quotas for 2008 by 5 percent last month to aid small and medium-sized businesses and farmers, according to a central bank official and a bond trader briefed by the central bank. Neither would be identified because they weren't authorized to comment.
The central bank has kept interest rates unchanged at a decade high this year, while ratcheting up the proportion of deposits that banks must set aside as reserves to a record 17.5 percent.
The key one-year lending rate is 7.47 percent.
To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net
Read more...
Aug. 8 (Bloomberg) -- China's trade surplus probably fell for a fourth straight month, increasing the likelihood of more government measures to sustain the economy's expansion rather than stamp out inflation.
The gap narrowed 17 percent to $20.25 billion in July from a year earlier, according to the median estimate of 16 economists surveyed by Bloomberg News.
China has loosened bank lending quotas, raised tax rebates for some exports and halted gains by the yuan to help manufacturers and small businesses as the world's fastest- growing major economy shifts down a gear. President Hu Jintao, hosting the Olympic Games from tonight, said Aug. 1 that the country needs to maintain ``steady and fast'' growth.
``The government has little choice but to loosen policies to protect company profits and employment,'' said Liao Qun, chief economist at Citic Ka Wah Bank in Hong Kong. ``China will probably keep slowing the pace of currency appreciation in the second half and announce more measures to help businesses.''
The government may release trade figures on Aug 11.
Exports may have climbed 16.8 percent in July from a year earlier, the least in five months, as the U.S. housing recession and global credit squeeze crimped demand.
Imports gained 27.2 percent, the Bloomberg News survey showed, down from 31 percent in June.
Warning Sign
Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong, said yesterday that a plunge in the growth of Taiwan's shipments to China may signal a looming Asian export slowdown. Shipments from the island to the mainland rose 4 percent in July after a 25.5 percent increase in June.
China's economy slowed for a fourth straight quarter in the three months to June 30, expanding 10.1 percent. GDP growth below 9 percent would be ``unacceptable'' for a government targeting 10 million new jobs a year, according to a Credit Suisse Group report this month.
Statements last month by the central bank and the Politburo, the Communist Party's top decision making body, suggested a shift toward growth rather than taming inflation that climbed to a 12-year high of 8.7 percent in February. Neither used the previous language of a ``tight'' monetary policy.
``As the Chinese economy moderates, official priorities are tilting towards maintaining growth and employment,'' said Jing Ulrich, JPMorgan's chairwoman of China equities. China will use fiscal policies to support exporters and smaller companies during the rest of the year, she said.
Currency Gains Halt
The yuan's gains against the dollar slowed from 4.2 percent in the first quarter to 2.3 percent in the three months through June. The currency has fallen 0.1 percent this quarter. A stronger yuan makes China's products more expensive and less attractive to buyers overseas.
China raised tax rebates on exports of textiles and garments to 13 percent from 11 percent from Aug. 1 to aid manufacturers also facing rising labor and raw-material costs. Textile exporters Jiangsu Sunshine Co. and Luthai Textile Co. said this month that the change will boost profits.
The People's Bank of China increased commercial banks' lending quotas for 2008 by 5 percent last month to aid small and medium-sized businesses and farmers, according to a central bank official and a bond trader briefed by the central bank. Neither would be identified because they weren't authorized to comment.
The central bank has kept interest rates unchanged at a decade high this year, while ratcheting up the proportion of deposits that banks must set aside as reserves to a record 17.5 percent.
The key one-year lending rate is 7.47 percent.
To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net
Read more...
Japan Economy Probably Contracted, Bringing a Recession Closer
By Jason Clenfield
Aug. 8 (Bloomberg) -- Japan's economy probably contracted last quarter, bringing the country to the brink of its first recession in six years, as exports fell and consumers spent less.
Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of 25 economists surveyed by Bloomberg News. The Cabinet Office will release the report on Aug. 13 at 8:50 a.m. in Tokyo.
Prime Minister Yasuo Fukuda, who last week replaced his economic ministers in a bid to boost his popularity, is planning relief measures to help companies and consumers cope with record energy costs. Toyota Motor Corp. yesterday reported the biggest drop in earnings in five years as U.S. sales slumped.
``What you're going to see is a long, slow, modestly painful recession,'' said Robert Feldman, head of economic research at Morgan Stanley in Tokyo. ``It's going to fall heavily on both workers and stock holders who are suffering lower returns as profits come down.''
Exports probably fell 2.4 percent last quarter, robbing Japan of the engine that drove growth over the past six years, according to economists surveyed. Shipments abroad increased every quarter except one since the most recent recession in 2001.
The economy probably shrank 0.6 percent from the first quarter. Net exports -- the difference between exports and imports -- subtracted 0.1 percentage point from growth, economists said.
Toyota, Japan's biggest company, yesterday cut its sales forecast for the year ending March 2009 by 3.5 percent to 8.7 million vehicles. Since June, Toyota has fired 800 workers at a Kyushu-based subsidiary, where the company is cutting production of sport-utility vehicles and Lexus sedans bound for the U.S.
Shedding Workers
``The Toyota story is totally consistent with the macro data,'' said Kiichi Murashima, chief economist at Nikko Citigroup Ltd. in Tokyo. ``Companies have been quick to get rid of workers in response to slowdowns in some sectors.''
The unemployment rate jumped to 4.1 percent in June from 3.8 percent three months earlier. Wage growth is also slowing.
Summer bonuses at the country's biggest companies, which tend to pay more than their smaller counterparts, dropped this year for the first time since 2002, according to a survey by the Keidanren business lobby.
Domestic demand, which includes company and consumer spending, probably accounted for 0.5 percentage point of the economy's quarter-on-quarter contraction. The figures for household spending will probably exaggerate the decline from the first quarter, when the leap year gave consumers an extra shopping day in February, economists said.
Bank of Japan
The government yesterday said the economy is ``weakening'' for the first time since 2001. The worsening economy and the fastest inflation in a decade will compel the Bank of Japan to keep its benchmark interest rate at 0.5 percent for the rest of the year at least, according to economists surveyed last month.
Still, economists say the current slowdown is unlikely to be as severe as past recessions because the corporate sector is better able to handle higher costs and weakening U.S. demand. Businesses have trimmed excess debt, workers and capacity, Economic and Fiscal Policy Minister Kaoru Yosano said yesterday.
``Most of the measures suggest that things aren't as good as they were 12 months ago, but it's nothing like 2001, 1998, or 1993,'' said Richard Jerram, chief Japan economist at Macquarie Securities Ltd. in Tokyo.
Companies plan to increase capital investment by 4.1 percent in the year ending March, according to a survey released this week by the Tokyo-based Development Bank of Japan. While that's slower than last fiscal year's 7.7 percent, it's better than the 10 percent decline recorded during the 2001 recession.
The Bank of Japan's most recent business survey showed that labor demand is close to a 16-year high. The jobs-to-applicants ratio was at 0.91 in June, meaning almost every person who wants a job can get one. During the previous recession seven years ago, there were two applicants competing for every position.
``When you say recession, it triggers images of 1998 or 1993,'' Jerram said. ``You're having a period of sub-par growth, but it's not the sort of downturn we saw three times during the previous 15 years.''
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net
Read more...
Aug. 8 (Bloomberg) -- Japan's economy probably contracted last quarter, bringing the country to the brink of its first recession in six years, as exports fell and consumers spent less.
Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of 25 economists surveyed by Bloomberg News. The Cabinet Office will release the report on Aug. 13 at 8:50 a.m. in Tokyo.
Prime Minister Yasuo Fukuda, who last week replaced his economic ministers in a bid to boost his popularity, is planning relief measures to help companies and consumers cope with record energy costs. Toyota Motor Corp. yesterday reported the biggest drop in earnings in five years as U.S. sales slumped.
``What you're going to see is a long, slow, modestly painful recession,'' said Robert Feldman, head of economic research at Morgan Stanley in Tokyo. ``It's going to fall heavily on both workers and stock holders who are suffering lower returns as profits come down.''
Exports probably fell 2.4 percent last quarter, robbing Japan of the engine that drove growth over the past six years, according to economists surveyed. Shipments abroad increased every quarter except one since the most recent recession in 2001.
The economy probably shrank 0.6 percent from the first quarter. Net exports -- the difference between exports and imports -- subtracted 0.1 percentage point from growth, economists said.
Toyota, Japan's biggest company, yesterday cut its sales forecast for the year ending March 2009 by 3.5 percent to 8.7 million vehicles. Since June, Toyota has fired 800 workers at a Kyushu-based subsidiary, where the company is cutting production of sport-utility vehicles and Lexus sedans bound for the U.S.
Shedding Workers
``The Toyota story is totally consistent with the macro data,'' said Kiichi Murashima, chief economist at Nikko Citigroup Ltd. in Tokyo. ``Companies have been quick to get rid of workers in response to slowdowns in some sectors.''
The unemployment rate jumped to 4.1 percent in June from 3.8 percent three months earlier. Wage growth is also slowing.
Summer bonuses at the country's biggest companies, which tend to pay more than their smaller counterparts, dropped this year for the first time since 2002, according to a survey by the Keidanren business lobby.
Domestic demand, which includes company and consumer spending, probably accounted for 0.5 percentage point of the economy's quarter-on-quarter contraction. The figures for household spending will probably exaggerate the decline from the first quarter, when the leap year gave consumers an extra shopping day in February, economists said.
Bank of Japan
The government yesterday said the economy is ``weakening'' for the first time since 2001. The worsening economy and the fastest inflation in a decade will compel the Bank of Japan to keep its benchmark interest rate at 0.5 percent for the rest of the year at least, according to economists surveyed last month.
Still, economists say the current slowdown is unlikely to be as severe as past recessions because the corporate sector is better able to handle higher costs and weakening U.S. demand. Businesses have trimmed excess debt, workers and capacity, Economic and Fiscal Policy Minister Kaoru Yosano said yesterday.
``Most of the measures suggest that things aren't as good as they were 12 months ago, but it's nothing like 2001, 1998, or 1993,'' said Richard Jerram, chief Japan economist at Macquarie Securities Ltd. in Tokyo.
Companies plan to increase capital investment by 4.1 percent in the year ending March, according to a survey released this week by the Tokyo-based Development Bank of Japan. While that's slower than last fiscal year's 7.7 percent, it's better than the 10 percent decline recorded during the 2001 recession.
The Bank of Japan's most recent business survey showed that labor demand is close to a 16-year high. The jobs-to-applicants ratio was at 0.91 in June, meaning almost every person who wants a job can get one. During the previous recession seven years ago, there were two applicants competing for every position.
``When you say recession, it triggers images of 1998 or 1993,'' Jerram said. ``You're having a period of sub-par growth, but it's not the sort of downturn we saw three times during the previous 15 years.''
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net
Read more...
Asia Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 08 08 04:29 GMT |
After holding a range for a full four months from April to July, the week has brought a definitive breakout in the US dollar. The week is closing with fireworks, a climactic surge in the value of the Greenback. The fall of the Euro versus the USD has been swift and ruthless, with the effects sweeping through the FX arena and taking no prisoners. The writing has been on the wall, first and foremost by the $30/barrel fall in dollar-denominated crude oil, and the event has finally occurred. Traders that have shown patience and discipline have finally been greatly rewarded.
Heading into the new day, eyes were fixed upon several key spot on the EURUSD chart, all to the downside. Level #1 sat at 1.5300, which was the low from June. Next rung down the ladder was found at 1.5280, the low of the 4-month range. Lastly, and perhaps most important on a longer-term view, is the 200-day Simple Moving Average. This is a widely followed technical proxy for the overall health of a financial instrument. Straight out of the gate, the entire market, except a stubborn USDJPY, has moved in lockstep with a robust US dollar. Simply put, the magnitude of the price movement has been otherworldly relative to the recent tight conditions. The charts tell the full tale - and should certainly be thoroughly examined as we enter a new territory - but the summary will shed some light. EURUSD closed New York trading at 1.5330 and fell 140 pips to a low south of 1.5200. GBPUSD has followed the same route, diving over 150 pips below 1.9300. Traders may not even recognize AUDUSD and NADUSD on their new big figures of 0.8900 and 0.6900 respectively. Predictably, both USDCHF and USDCAD continue their march to the topside, each tacking on healthy gains today.
In retrospect, we may look back to this week as an inflection point of sorts. Aside from the numerical data - including that of stagnant interest rates from the Fed, BoE, and ECB - and instead focus upon the ever-important change in bias from financial leaders, namely Fed Chairman Ben Bernanke and ECB President Jean-Claude Trichet. The tide has turned. US rates now paint a picture of stability while the Euro Zone is clearly at risk of future rate eases in the face of an inevitable acknowledgment of a slowing economy
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Read more...
After holding a range for a full four months from April to July, the week has brought a definitive breakout in the US dollar. The week is closing with fireworks, a climactic surge in the value of the Greenback. The fall of the Euro versus the USD has been swift and ruthless, with the effects sweeping through the FX arena and taking no prisoners. The writing has been on the wall, first and foremost by the $30/barrel fall in dollar-denominated crude oil, and the event has finally occurred. Traders that have shown patience and discipline have finally been greatly rewarded.
Heading into the new day, eyes were fixed upon several key spot on the EURUSD chart, all to the downside. Level #1 sat at 1.5300, which was the low from June. Next rung down the ladder was found at 1.5280, the low of the 4-month range. Lastly, and perhaps most important on a longer-term view, is the 200-day Simple Moving Average. This is a widely followed technical proxy for the overall health of a financial instrument. Straight out of the gate, the entire market, except a stubborn USDJPY, has moved in lockstep with a robust US dollar. Simply put, the magnitude of the price movement has been otherworldly relative to the recent tight conditions. The charts tell the full tale - and should certainly be thoroughly examined as we enter a new territory - but the summary will shed some light. EURUSD closed New York trading at 1.5330 and fell 140 pips to a low south of 1.5200. GBPUSD has followed the same route, diving over 150 pips below 1.9300. Traders may not even recognize AUDUSD and NADUSD on their new big figures of 0.8900 and 0.6900 respectively. Predictably, both USDCHF and USDCAD continue their march to the topside, each tacking on healthy gains today.
In retrospect, we may look back to this week as an inflection point of sorts. Aside from the numerical data - including that of stagnant interest rates from the Fed, BoE, and ECB - and instead focus upon the ever-important change in bias from financial leaders, namely Fed Chairman Ben Bernanke and ECB President Jean-Claude Trichet. The tide has turned. US rates now paint a picture of stability while the Euro Zone is clearly at risk of future rate eases in the face of an inevitable acknowledgment of a slowing economy
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Read more...
Asian Market Update
Daily Forex Fundamentals | Written by Trade The News | Aug 08 08 04:27 GMT |
Greenback Comeback Gains Traction
Forex: The Asian forex market was driven by stops and real money funds returning to the USD assets. There is an emerging consensus that we are seeing a shift away from a focus on the U.S. to a more global problem, which means that the USD is getting a boost by default. The USD index has now closed above the 200day MA for the second straight day (above June 13 trend high at 74.31), and the currency has made some significant technical progress during today's Asian session.
EUR/USD moved from a high of 1.5335 to a low of 1.5196: The pair plummeted after stops below 1.5280 were triggered in the early part of the session. The pair even managed to move below the 200day MA at 1.5225. At the time of writing, EUR/USD has managed to stabilize around 1.5210, but the EUR looks vulnerable. Technical traders looking to sell EUR/USD could soon join the party, with mounting speculation that a double-top is in place. Ahead of the weekend, rallies should be confined to the breakdown level at 1.5280, traders say.
GBP/USD moved from a high of 1.9440 to a low of 1.9271: GBP/USD broke below the year's low at 1.9337, an extremely bearish development. The next level of support is found down at the March 2007 low around 1.9200.
USD/JPY moved from a low of 109.31 to a high of 109.78: Traders hear chatter of some very large stops above 110 in USD/JPY.
AUD/USD moved from a high of 0.9074 to a low of 0.8927: AUD/USD is the victim of a one-two punch, as real money accounts move out of commodities and into USD assets. There was some speculation in the Australian press that the Reserve Bank of Australia will cut interest rates by 50bps at the next meeting, as opposed to two consecutive 25bps cuts. There is some speculation that clever money will soon get out of short AUD positions, with some saying that that the easy money on the short AUD/USD trade has now been made.
Other notable currency moves: USD/CHF moved from a low of 1.0609 to a high of 1.0713, while NZD/USD moved from a high of 0.7152 to a low of 0.6984.
Japanese money supply increases less than expected in July: (JP July Money Stock M3 YoY: 0.8% v 1.0% expected, 0.9% prior; M2: 2.1% v 2.4% expected, 2.3% prior) Japan's money supply rose in July from a year earlier as quasi-money such as time deposits increased, the Bank of Japan (BoJ) said. The BoJ said investors seem to be shifting their money from investment trusts to more secured time deposits in the face of global financial turmoil.
Equities: At 0:10 Japan's Nikkei is +0.30%, the S&P/ASX200 is -0.03%, South Korea's KOSPI is +0.21%, Hong Kong's Hang Seng index is +0.08% and the Shanghai composite index is -0.53%. The S&P500 futures contract gained +0.23% since the U.S. close, last trading at 1,270.80. It is becoming clear that real money accounts are shifting back into USD assets, and it looks like some of these accounts are putting money into S&P500 futures. The gains seen on the S&P500 contract provided some support to Asian bourses, and most indices rebounded from early selling. The rising USD/JPY supported some of the Japanese exporters, while miners and banks dragged on the S&P/ASX200. Steelmakers and shipbuilding companies gained in Seoul, with Chinese stocks trading slightly lower ahead of the Olympic celebrations.
Commodities: Nymex crude oil lost -0.35% between 18:00 EDT and 0:09 EDT, last trading at $119.60/oz. Spot gold lost -0.53%, last trading at $877.20.
Trade The News Staff
Trade The News, Inc.
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.
Read more...
Greenback Comeback Gains Traction
Forex: The Asian forex market was driven by stops and real money funds returning to the USD assets. There is an emerging consensus that we are seeing a shift away from a focus on the U.S. to a more global problem, which means that the USD is getting a boost by default. The USD index has now closed above the 200day MA for the second straight day (above June 13 trend high at 74.31), and the currency has made some significant technical progress during today's Asian session.
EUR/USD moved from a high of 1.5335 to a low of 1.5196: The pair plummeted after stops below 1.5280 were triggered in the early part of the session. The pair even managed to move below the 200day MA at 1.5225. At the time of writing, EUR/USD has managed to stabilize around 1.5210, but the EUR looks vulnerable. Technical traders looking to sell EUR/USD could soon join the party, with mounting speculation that a double-top is in place. Ahead of the weekend, rallies should be confined to the breakdown level at 1.5280, traders say.
GBP/USD moved from a high of 1.9440 to a low of 1.9271: GBP/USD broke below the year's low at 1.9337, an extremely bearish development. The next level of support is found down at the March 2007 low around 1.9200.
USD/JPY moved from a low of 109.31 to a high of 109.78: Traders hear chatter of some very large stops above 110 in USD/JPY.
AUD/USD moved from a high of 0.9074 to a low of 0.8927: AUD/USD is the victim of a one-two punch, as real money accounts move out of commodities and into USD assets. There was some speculation in the Australian press that the Reserve Bank of Australia will cut interest rates by 50bps at the next meeting, as opposed to two consecutive 25bps cuts. There is some speculation that clever money will soon get out of short AUD positions, with some saying that that the easy money on the short AUD/USD trade has now been made.
Other notable currency moves: USD/CHF moved from a low of 1.0609 to a high of 1.0713, while NZD/USD moved from a high of 0.7152 to a low of 0.6984.
Japanese money supply increases less than expected in July: (JP July Money Stock M3 YoY: 0.8% v 1.0% expected, 0.9% prior; M2: 2.1% v 2.4% expected, 2.3% prior) Japan's money supply rose in July from a year earlier as quasi-money such as time deposits increased, the Bank of Japan (BoJ) said. The BoJ said investors seem to be shifting their money from investment trusts to more secured time deposits in the face of global financial turmoil.
Equities: At 0:10 Japan's Nikkei is +0.30%, the S&P/ASX200 is -0.03%, South Korea's KOSPI is +0.21%, Hong Kong's Hang Seng index is +0.08% and the Shanghai composite index is -0.53%. The S&P500 futures contract gained +0.23% since the U.S. close, last trading at 1,270.80. It is becoming clear that real money accounts are shifting back into USD assets, and it looks like some of these accounts are putting money into S&P500 futures. The gains seen on the S&P500 contract provided some support to Asian bourses, and most indices rebounded from early selling. The rising USD/JPY supported some of the Japanese exporters, while miners and banks dragged on the S&P/ASX200. Steelmakers and shipbuilding companies gained in Seoul, with Chinese stocks trading slightly lower ahead of the Olympic celebrations.
Commodities: Nymex crude oil lost -0.35% between 18:00 EDT and 0:09 EDT, last trading at $119.60/oz. Spot gold lost -0.53%, last trading at $877.20.
Trade The News Staff
Trade The News, Inc.
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.
Read more...
Asian Yahoos Don't Give a Google About Free Web: William Pesek
Commentary by William Pesek
Aug. 8 (Bloomberg) -- Will the Internet change China or will China change the Internet?
Events in Beijing, where the Olympic Games are getting under way, leave little doubt it's the latter. More interesting, though, is that many Asian governments may be following China's lead. It could be an ominous sign for Asia's economic outlook.
Reporters Without Borders calls China the ``world champion'' of cyberspace censorship. Journalists in Beijing were reminded of that when they couldn't access Web sites such as Amnesty International. The International Olympic Committee pressured China to allow access to blocked sites. Yet Reuters reported that the IOC had agreed to let China block them in the first place.
China's attempts to filter what its 1.3 billion people read or view may serve as a model of sorts for the region.
``Internet filtering has been on the rise in Asia for the past five years,'' says John Palfrey, executive director of Harvard University's Berkman Center for Internet & Society. ``It matters because it highlights the tension between the desire to grow the economy with the desire to control political speech.''
A free press is a key ingredient for economies to thrive over time. It reduces corruption, makes governments more efficient and holds corporate executives accountable. Things don't always turn out that way, as investors in the U.S. are learning. Greater access to information tends to be better than the alternative in Asia.
Internet Filtering
Governments' hearts are in the right place when they try to limit children's access to pornography or sites deemed to aid terrorists and fraudsters. It's a slippery slope, though, and a little censorship tends to pave the way for broader efforts. Here, Asia is a risk, particularly on the political front.
``Internet filtering is an attempt to make the Internet function much as traditional media have, yet where the state can serve as a gatekeeper over what is said and by whom,'' Palfrey says.
There's this Silicon-Valley-inspired view that the combination of the Internet, rapid broadband speeds and capitalism will facilitate a freer world. In theory, that may be true. The Internet does make governments more responsive to public opinion. It's harder today than it was 10 years ago to silence critics or keep scandals out of the headlines.
China's Pros
Here, it's worth noting the good news about China. Asia's No. 2 economy boasts 253 million Internet users, the largest number in the world. The Internet has informed more Chinese at least a bit about the darker chapters of the nation's past, like the Cultural Revolution.
The Internet also is offering a way for over-the-top nationalist rhetoric with no room for debate to be articulated. Yet ``netizens'' in China are helping to highlight corruption and abuses of power. The phenomenon has taken some government officials by shock, and that's a good thing.
Over time, though, advances in filtering also enable governments to skew people's view of the world as never before. The negatives outweigh the positives.
Whether free markets and communications are inevitable forces for good ``depends on specifically how they are deployed, by and with whom, and how transparently and openly that deployment happens,'' says Rebecca MacKinnon, a media professor at the University of Hong Kong and a widely read blogger.
Its Cons
It's troubling that companies such as Google Inc. and Yahoo! Inc. seem all too willing to help politicians control information. MacKinnon says such efforts are helping to institutionalize and legitimize the integration of censorship into global information technology.
When people think of censorship in Asia, nations such as China, Myanmar, North Korea and Vietnam may leap to mind first. India, Indonesia and Thailand aren't above blocking Web sites or certain content from time to time. South Korea, one of the most wired nations, is working up new Internet-content rules that are raising concerns about transparency and democracy. Japan is making similar noises.
Might Malaysian authorities, embarrassed by a variety of sex, murder and corruption scandals buzzing around cyberspace, try a hand at censorship? Now that jihad has found India, might officials in New Delhi try to rein in the Internet?
China's model seems to be gaining some currency in Asia. The strategy is to harness the Internet's business potential, while minimizing its role in free speech. China is serving as a massive testing ground for methods of filtering content, and Asian neighbors are taking note.
Question of When
It doesn't mean Web users won't eventually win this battle. ``Despite the growth in Internet filtering in Asia, the long-term prospects for censorship on the Web are not great,'' Palfrey says. ``Citizens in Asia, among other parts of the world like the Middle East, have often demonstrated their ingenuity when it comes to evading censorship online.''
The question is how long it takes for Asia to realize the evils of censorship. Two years? Five years? Ten years? Longer? In the meantime, governments and executives won't be held accountable to a level that investors demand.
The upshot will be slower Asian growth, weaker markets and a wider gap between rich and poor. It may just be a few mouse clicks away.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Read more...
Aug. 8 (Bloomberg) -- Will the Internet change China or will China change the Internet?
Events in Beijing, where the Olympic Games are getting under way, leave little doubt it's the latter. More interesting, though, is that many Asian governments may be following China's lead. It could be an ominous sign for Asia's economic outlook.
Reporters Without Borders calls China the ``world champion'' of cyberspace censorship. Journalists in Beijing were reminded of that when they couldn't access Web sites such as Amnesty International. The International Olympic Committee pressured China to allow access to blocked sites. Yet Reuters reported that the IOC had agreed to let China block them in the first place.
China's attempts to filter what its 1.3 billion people read or view may serve as a model of sorts for the region.
``Internet filtering has been on the rise in Asia for the past five years,'' says John Palfrey, executive director of Harvard University's Berkman Center for Internet & Society. ``It matters because it highlights the tension between the desire to grow the economy with the desire to control political speech.''
A free press is a key ingredient for economies to thrive over time. It reduces corruption, makes governments more efficient and holds corporate executives accountable. Things don't always turn out that way, as investors in the U.S. are learning. Greater access to information tends to be better than the alternative in Asia.
Internet Filtering
Governments' hearts are in the right place when they try to limit children's access to pornography or sites deemed to aid terrorists and fraudsters. It's a slippery slope, though, and a little censorship tends to pave the way for broader efforts. Here, Asia is a risk, particularly on the political front.
``Internet filtering is an attempt to make the Internet function much as traditional media have, yet where the state can serve as a gatekeeper over what is said and by whom,'' Palfrey says.
There's this Silicon-Valley-inspired view that the combination of the Internet, rapid broadband speeds and capitalism will facilitate a freer world. In theory, that may be true. The Internet does make governments more responsive to public opinion. It's harder today than it was 10 years ago to silence critics or keep scandals out of the headlines.
China's Pros
Here, it's worth noting the good news about China. Asia's No. 2 economy boasts 253 million Internet users, the largest number in the world. The Internet has informed more Chinese at least a bit about the darker chapters of the nation's past, like the Cultural Revolution.
The Internet also is offering a way for over-the-top nationalist rhetoric with no room for debate to be articulated. Yet ``netizens'' in China are helping to highlight corruption and abuses of power. The phenomenon has taken some government officials by shock, and that's a good thing.
Over time, though, advances in filtering also enable governments to skew people's view of the world as never before. The negatives outweigh the positives.
Whether free markets and communications are inevitable forces for good ``depends on specifically how they are deployed, by and with whom, and how transparently and openly that deployment happens,'' says Rebecca MacKinnon, a media professor at the University of Hong Kong and a widely read blogger.
Its Cons
It's troubling that companies such as Google Inc. and Yahoo! Inc. seem all too willing to help politicians control information. MacKinnon says such efforts are helping to institutionalize and legitimize the integration of censorship into global information technology.
When people think of censorship in Asia, nations such as China, Myanmar, North Korea and Vietnam may leap to mind first. India, Indonesia and Thailand aren't above blocking Web sites or certain content from time to time. South Korea, one of the most wired nations, is working up new Internet-content rules that are raising concerns about transparency and democracy. Japan is making similar noises.
Might Malaysian authorities, embarrassed by a variety of sex, murder and corruption scandals buzzing around cyberspace, try a hand at censorship? Now that jihad has found India, might officials in New Delhi try to rein in the Internet?
China's model seems to be gaining some currency in Asia. The strategy is to harness the Internet's business potential, while minimizing its role in free speech. China is serving as a massive testing ground for methods of filtering content, and Asian neighbors are taking note.
Question of When
It doesn't mean Web users won't eventually win this battle. ``Despite the growth in Internet filtering in Asia, the long-term prospects for censorship on the Web are not great,'' Palfrey says. ``Citizens in Asia, among other parts of the world like the Middle East, have often demonstrated their ingenuity when it comes to evading censorship online.''
The question is how long it takes for Asia to realize the evils of censorship. Two years? Five years? Ten years? Longer? In the meantime, governments and executives won't be held accountable to a level that investors demand.
The upshot will be slower Asian growth, weaker markets and a wider gap between rich and poor. It may just be a few mouse clicks away.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
Read more...
Australian Carbon Emissions Permit Price Rises in Latest Trade
By Angela Macdonald-Smith
Aug. 8 (Bloomberg) -- Australia's latest trade in carbon emissions drew a higher price than earlier transactions, said broker Newedge Australia Pty, as the government invites comment on plans to start a national system in 2010.
The over-the-counter sale of 20,000 metric tons of carbon dioxide in the so-called Calendar 11 contract for settlement Feb. 1, 2012, was priced at A$21.50 ($19.32) a ton, said Gary Cox, Sydney-based manager of environmental derivatives at the Australian unit of Newedge Group. Earlier transactions have been priced as low as A$18.
The latest price in Australia is still less than half the price of 26.15 euros ($39.92) for a similar contract in the European Union market on London's European Climate Exchange. The EU system, the world's biggest greenhouse gas market, has been operating since 2005. Trading in Australia started in May, with a transaction between AGL Energy Ltd., Australia's biggest electricity and gas retailer, and Westpac Banking Corp.
``I have a feeling this price is now getting a little bit towards the top'' given the government's indications it will have a ``nice, steady, easy-rolling start'' to emissions trading, Cox said by telephone. The government may set a cap for prices in the first five years of the system that may be ``not that much further away from the current price levels,'' he said.
About 12 over-the counter trades have taken place so far in Australia, either directly between parties or through brokers, all in the Calendar 11 contract, Cox said. The Calendar 12 contract is being offered at A$23.50 and bid at A$20, he said.
Climate Change
Australia's carbon market could be worth as much as A$11 billion a year within the first few years of operations, Oslo- based researcher Point Carbon said last month.
Climate Change Minister Penny Wong released a discussion paper on the government's carbon trading plans last month. The government has started consulting industry about the design of the system.
The Treasury department will release economic modeling in October, followed by a White Paper at the end of 2008 that will include medium-term emission-reduction targets. Legislation is due to be introduced in the third quarter of 2009.
The government has a long-term goal of cutting greenhouse gas emissions 60 percent from 2000 levels by 2050.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Aug. 8 (Bloomberg) -- Australia's latest trade in carbon emissions drew a higher price than earlier transactions, said broker Newedge Australia Pty, as the government invites comment on plans to start a national system in 2010.
The over-the-counter sale of 20,000 metric tons of carbon dioxide in the so-called Calendar 11 contract for settlement Feb. 1, 2012, was priced at A$21.50 ($19.32) a ton, said Gary Cox, Sydney-based manager of environmental derivatives at the Australian unit of Newedge Group. Earlier transactions have been priced as low as A$18.
The latest price in Australia is still less than half the price of 26.15 euros ($39.92) for a similar contract in the European Union market on London's European Climate Exchange. The EU system, the world's biggest greenhouse gas market, has been operating since 2005. Trading in Australia started in May, with a transaction between AGL Energy Ltd., Australia's biggest electricity and gas retailer, and Westpac Banking Corp.
``I have a feeling this price is now getting a little bit towards the top'' given the government's indications it will have a ``nice, steady, easy-rolling start'' to emissions trading, Cox said by telephone. The government may set a cap for prices in the first five years of the system that may be ``not that much further away from the current price levels,'' he said.
About 12 over-the counter trades have taken place so far in Australia, either directly between parties or through brokers, all in the Calendar 11 contract, Cox said. The Calendar 12 contract is being offered at A$23.50 and bid at A$20, he said.
Climate Change
Australia's carbon market could be worth as much as A$11 billion a year within the first few years of operations, Oslo- based researcher Point Carbon said last month.
Climate Change Minister Penny Wong released a discussion paper on the government's carbon trading plans last month. The government has started consulting industry about the design of the system.
The Treasury department will release economic modeling in October, followed by a White Paper at the end of 2008 that will include medium-term emission-reduction targets. Legislation is due to be introduced in the third quarter of 2009.
The government has a long-term goal of cutting greenhouse gas emissions 60 percent from 2000 levels by 2050.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
India's $10 Billion of Telecom, Power Sales to Lead IPO Revival
By M.C. Govardhana Rangan
Aug. 8 (Bloomberg) -- Bharat Sanchar Nigam Ltd., India's biggest telephone company, and NHPC Ltd. plan to raise more than $10 billion in share sales, leading a revival in offerings as stocks rebound from the worst start to the year in three decades.
The government plans to sell as much as 10 percent of Bharat Sanchar, Chairman Kuldeep Goyal said yesterday. State-run NHPC, India's largest generator of electricity from water, on Aug. 6 sought regulatory approval for a sale.
Finance Minister Palaniappan Chidambaram said July 24 the government will resume asset sales to raise funds for former oil, power and telecoms monopolies. Indian companies have completed the fewest IPOs in three years in 2008 as owners including billionaire Anil Ambani scrapped offers.
``Investors do find comfort with public sector IPOs since most of the companies are long standing and price reasonably,'' said Ravi Sardana, senior vice president at ICICI Securities Ltd. ``Names like BSNL and Oil India are quite well known.''
Bharat Sanchar, known as BSNL, is valued at about $100 billion, finance director S.D. Saxena said yesterday. That's a third more than the combined market value of Bharti Airtel Ltd., Reliance Communications Ltd., and Idea Cellular Ltd., India's largest listed telecommunications companies.
Reliance Infratel Ltd., a telecommunications tower company controlled by Ambani, and real estate developer Emaar MGF Land Ltd. were among companies that canceled offerings in the first six months as the benchmark Sensitive Index slumped 34 percent, the biggest first-half drop since it was created in 1979.
Ambani's Reliance Power Ltd. has declined 41 percent since the utility sold shares in January. Reliance Power gave additional shares to investors after the stock sank on debut.
Biggest Offer
The Bharat Sanchar offer will be the biggest by an Indian company and eclipse the $2.4 billion raised by the government in March 2004 by selling Oil & Natural Gas Corp. shares, a record for a state-run company.
``Investor appetite is all in the pricing,'' said S. Subramanian, head of investment banking at Enam Financial Consultants Ltd. ``Going by the past, the government should be able to give attractive pricing.''
Prime Minister Manmohan Singh is reviving sales after winning a confidence vote in parliament triggered by the withdrawal of support of communist parties. The communists had opposed asset sales and the opening up of banking, insurance and pensions to foreign investment.
Secure Approval
Still, the government will still need to secure approval from unions to complete the offerings.
Communications Minister Andimuthu Raja said yesterday the government will give shares to employees to secure support, as it needs to complete the offer before Singh's term ends in May. The government also plans to sell shares in exploration firm Oil India and Rites Ltd., the company involved in transport and infrastructure technology.
``We have done enough issues in the past in a short time and we can do it again,'' said Enam's Subramanian, who plans to bid to manage the state-run companies' share sales.
To contact the reporters on this story: M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.
Read more...
Aug. 8 (Bloomberg) -- Bharat Sanchar Nigam Ltd., India's biggest telephone company, and NHPC Ltd. plan to raise more than $10 billion in share sales, leading a revival in offerings as stocks rebound from the worst start to the year in three decades.
The government plans to sell as much as 10 percent of Bharat Sanchar, Chairman Kuldeep Goyal said yesterday. State-run NHPC, India's largest generator of electricity from water, on Aug. 6 sought regulatory approval for a sale.
Finance Minister Palaniappan Chidambaram said July 24 the government will resume asset sales to raise funds for former oil, power and telecoms monopolies. Indian companies have completed the fewest IPOs in three years in 2008 as owners including billionaire Anil Ambani scrapped offers.
``Investors do find comfort with public sector IPOs since most of the companies are long standing and price reasonably,'' said Ravi Sardana, senior vice president at ICICI Securities Ltd. ``Names like BSNL and Oil India are quite well known.''
Bharat Sanchar, known as BSNL, is valued at about $100 billion, finance director S.D. Saxena said yesterday. That's a third more than the combined market value of Bharti Airtel Ltd., Reliance Communications Ltd., and Idea Cellular Ltd., India's largest listed telecommunications companies.
Reliance Infratel Ltd., a telecommunications tower company controlled by Ambani, and real estate developer Emaar MGF Land Ltd. were among companies that canceled offerings in the first six months as the benchmark Sensitive Index slumped 34 percent, the biggest first-half drop since it was created in 1979.
Ambani's Reliance Power Ltd. has declined 41 percent since the utility sold shares in January. Reliance Power gave additional shares to investors after the stock sank on debut.
Biggest Offer
The Bharat Sanchar offer will be the biggest by an Indian company and eclipse the $2.4 billion raised by the government in March 2004 by selling Oil & Natural Gas Corp. shares, a record for a state-run company.
``Investor appetite is all in the pricing,'' said S. Subramanian, head of investment banking at Enam Financial Consultants Ltd. ``Going by the past, the government should be able to give attractive pricing.''
Prime Minister Manmohan Singh is reviving sales after winning a confidence vote in parliament triggered by the withdrawal of support of communist parties. The communists had opposed asset sales and the opening up of banking, insurance and pensions to foreign investment.
Secure Approval
Still, the government will still need to secure approval from unions to complete the offerings.
Communications Minister Andimuthu Raja said yesterday the government will give shares to employees to secure support, as it needs to complete the offer before Singh's term ends in May. The government also plans to sell shares in exploration firm Oil India and Rites Ltd., the company involved in transport and infrastructure technology.
``We have done enough issues in the past in a short time and we can do it again,'' said Enam's Subramanian, who plans to bid to manage the state-run companies' share sales.
To contact the reporters on this story: M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.
Read more...
Origin Seeks Partners for Drilling off New Zealand (Update1)
By Angela Macdonald-Smith
Aug. 8 (Bloomberg) -- Origin Energy Ltd., the Australian company seeking to fend off a A$13.8 billion ($12.5 billion) bid from BG Group Plc, said it is seeking partners to drill an exploration well off New Zealand's South Island.
The company decided to drill in the ``high risk, but potentially high-reward'' Carrack/Caravel area in the offshore Canterbury Basin, Sydney-based Origin said today in a statement to the Australian stock exchange. The well will require a rig able to drill in deep water, which is expensive and difficult to contract, it said.
Origin, Australia's biggest producer of natural gas from coal seams, is the largest holder of exploration acreage in New Zealand, where it is developing the offshore Kupe gas field, due to start output in the middle of next year. The Carrack/Caravel prospect may hold oil or gas in two separate sandstone deposits, which have both been shown to hold petroleum in the nearby Galleon 1 well drilled in 1985, Origin said.
``By any comparative standard, the Carrack/Caravel prospect complex is very large and is located in an established petroliferous basin,'' Rob Willink, Origin's general manager for exploration, said in the statement. ``That said, a well on this prospect remains subject to considerable technical risk.''
Discussions are under way with drilling management services companies and operators of nearby permits seeking to drill wells in the same timeframe to secure a suitable rig, Origin said.
The Carrack/Caravel area in the offshore Canterbury Basin may hold 750 million barrels of recoverable oil, or 2.7 trillion cubic feet of recoverable gas and 500 million barrels of condensates in the upper sandstones. Should petroleum also be trapped in the lower reservoirs, recoverable oil or gas could be more than double that amount, Origin said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Aug. 8 (Bloomberg) -- Origin Energy Ltd., the Australian company seeking to fend off a A$13.8 billion ($12.5 billion) bid from BG Group Plc, said it is seeking partners to drill an exploration well off New Zealand's South Island.
The company decided to drill in the ``high risk, but potentially high-reward'' Carrack/Caravel area in the offshore Canterbury Basin, Sydney-based Origin said today in a statement to the Australian stock exchange. The well will require a rig able to drill in deep water, which is expensive and difficult to contract, it said.
Origin, Australia's biggest producer of natural gas from coal seams, is the largest holder of exploration acreage in New Zealand, where it is developing the offshore Kupe gas field, due to start output in the middle of next year. The Carrack/Caravel prospect may hold oil or gas in two separate sandstone deposits, which have both been shown to hold petroleum in the nearby Galleon 1 well drilled in 1985, Origin said.
``By any comparative standard, the Carrack/Caravel prospect complex is very large and is located in an established petroliferous basin,'' Rob Willink, Origin's general manager for exploration, said in the statement. ``That said, a well on this prospect remains subject to considerable technical risk.''
Discussions are under way with drilling management services companies and operators of nearby permits seeking to drill wells in the same timeframe to secure a suitable rig, Origin said.
The Carrack/Caravel area in the offshore Canterbury Basin may hold 750 million barrels of recoverable oil, or 2.7 trillion cubic feet of recoverable gas and 500 million barrels of condensates in the upper sandstones. Should petroleum also be trapped in the lower reservoirs, recoverable oil or gas could be more than double that amount, Origin said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Coal Fires Up Dreadlocked `Climate Camp' Protesting E.ON Plant
By Alex Morales
Aug. 8 (Bloomberg) -- In a sloping field near the village of Hoo, 30 miles east of London, environmentalists with dreadlocks, lawmakers and academics are protesting plans to build the U.K.'s first new coal-fired power plant in 30 years.
E.ON AG, Germany's largest utility, proposed replacing the existing Kingsnorth station at the site in Kent with a more efficient, $2.9 billion model. The new plant may be equipped with experimental technology to reduce carbon dioxide emissions blamed for global warming.
Business Secretary John Hutton said on June 30 that ``coal is and will continue to be a feature of the U.K.'s electricity mix'' so the country can meet its energy needs. Protesters gathered at a tent city near the station have joined James Hansen, NASA's top climate scientist, demanding the plant be scuttled. They want expanded wind and solar power to help meet U.K.'s target for cutting emissions 60 percent by 2050.
``Given everything we know about climate change and the need to reduce emissions, this flies in the face of it,'' Simon Lewis, an University of Leeds Earth-science researcher who wears a nose-ring, said in an interview at the week-long camp. ``It's not just a thousand people in a field: this is a really important message to the world that we should stop using unabated coal.''
If the Kingsnorth plan is approved, it will open the way for six more coal-fired stations, committing the U.K. to a ``high-carbon future,'' Caroline Lucas, who represents the U.K. Green Party in the European Parliament, said yesterday in an interview from her office in Brussels.
`Climate Chaos'
``Kingsnorth is absolutely on the frontline of whether or not we manage to avoid the worst of climate chaos,'' said Lucas, who attended the camp on Aug. 4 and plans to go again tomorrow. ``If Britain, one of the richest countries in the world, can't deal with climate change without resorting to coal, it undermines our message to any other countries to try to do differently.''
The new plant would be 20 percent more efficient than the existing one, which burns coal and oil and will be decommissioned by 2015, E.ON says. The project has been short- listed in a competition for government funding to test whether so-called carbon capture and storage technology can reduce coal- fired plant emissions.
``A third of U.K. power stations are closing in the next 10 to 15 years,'' Emily Highmore, spokeswoman for Dusseldorf-based E.ON, said in an interview in Hoo. ``That's a very urgent deadline we are facing. If we don't fill that gap, the lights are going to go out.''
Queen Elizabeth II
All energy sources, including coal and renewable power, will be needed, Highmore said. Coal prices are more stable than those for oil and natural gas, and renewables such as wind and solar can be unreliable, she said.
The new plant's two 800-megawatt burners will cost about 1.5 billion pounds ($2.9 billion) and carbon capture and storage could add up to 400 million pounds more, said Highmore. Competition for government funding to test the approach is pitting E.ON against BP Plc, Peel Power Ltd. and Iberdrola SA's Scottish Power Plc, with a decision due next year.
In a Dec. 19 letter to Prime Minister Gordon Brown that he copied to Queen Elizabeth II, Hansen, the U.S. National Aeronautics and Space Administration's top climate scientist, said using more coal without the emission-reducing technology may accelerate floods, droughts and heat waves.
``If we continue to build coal-fired power plants without carbon capture, we will lock in future climate disasters,'' Hansen wrote.
The E.ON plans were approved on Jan. 2 by Medway District Council. The national government must make the final decision, and no firm deadline has been set by the Department for Energy, Business and Regulatory Reform. For some residents, approval is vital.
`We Want Coal'
``The power station generates not just work for this area but finance: all the retail outlets rely on it,'' Gill Hannah, 56, a Hoo resident of 40 years, said in an interview at her house, which overlooks Kingsnorth station. Hannah, whose partner Terence Wheeldon works for E.ON, posted a sign in her window saying ``We want coal.''
The protesters say the new plant will emit at least 6 million tons of CO2 a year. They plan tomorrow to try to shut down Kingsnorth's existing power station by entering the premises by land, sea and air. Lucas, the lawmaker, said she hasn't decided whether to participate.
At the camp on Aug. 6, a boat made of plywood and plastic bottles was used to advertise the planned sea invasion, which calls for a flotilla of rafts to follow the tide down the River Thames. Protesters were also shown how to vault fences.
``A lot of us are ready to break the law, because sometimes that's necessary to make change happen,'' Isabelle Michel, a spokeswoman for the camp, said in an interview. ``This is how the domino effect starts: by saying this is not going to happen here.''
To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.
Read more...
Aug. 8 (Bloomberg) -- In a sloping field near the village of Hoo, 30 miles east of London, environmentalists with dreadlocks, lawmakers and academics are protesting plans to build the U.K.'s first new coal-fired power plant in 30 years.
E.ON AG, Germany's largest utility, proposed replacing the existing Kingsnorth station at the site in Kent with a more efficient, $2.9 billion model. The new plant may be equipped with experimental technology to reduce carbon dioxide emissions blamed for global warming.
Business Secretary John Hutton said on June 30 that ``coal is and will continue to be a feature of the U.K.'s electricity mix'' so the country can meet its energy needs. Protesters gathered at a tent city near the station have joined James Hansen, NASA's top climate scientist, demanding the plant be scuttled. They want expanded wind and solar power to help meet U.K.'s target for cutting emissions 60 percent by 2050.
``Given everything we know about climate change and the need to reduce emissions, this flies in the face of it,'' Simon Lewis, an University of Leeds Earth-science researcher who wears a nose-ring, said in an interview at the week-long camp. ``It's not just a thousand people in a field: this is a really important message to the world that we should stop using unabated coal.''
If the Kingsnorth plan is approved, it will open the way for six more coal-fired stations, committing the U.K. to a ``high-carbon future,'' Caroline Lucas, who represents the U.K. Green Party in the European Parliament, said yesterday in an interview from her office in Brussels.
`Climate Chaos'
``Kingsnorth is absolutely on the frontline of whether or not we manage to avoid the worst of climate chaos,'' said Lucas, who attended the camp on Aug. 4 and plans to go again tomorrow. ``If Britain, one of the richest countries in the world, can't deal with climate change without resorting to coal, it undermines our message to any other countries to try to do differently.''
The new plant would be 20 percent more efficient than the existing one, which burns coal and oil and will be decommissioned by 2015, E.ON says. The project has been short- listed in a competition for government funding to test whether so-called carbon capture and storage technology can reduce coal- fired plant emissions.
``A third of U.K. power stations are closing in the next 10 to 15 years,'' Emily Highmore, spokeswoman for Dusseldorf-based E.ON, said in an interview in Hoo. ``That's a very urgent deadline we are facing. If we don't fill that gap, the lights are going to go out.''
Queen Elizabeth II
All energy sources, including coal and renewable power, will be needed, Highmore said. Coal prices are more stable than those for oil and natural gas, and renewables such as wind and solar can be unreliable, she said.
The new plant's two 800-megawatt burners will cost about 1.5 billion pounds ($2.9 billion) and carbon capture and storage could add up to 400 million pounds more, said Highmore. Competition for government funding to test the approach is pitting E.ON against BP Plc, Peel Power Ltd. and Iberdrola SA's Scottish Power Plc, with a decision due next year.
In a Dec. 19 letter to Prime Minister Gordon Brown that he copied to Queen Elizabeth II, Hansen, the U.S. National Aeronautics and Space Administration's top climate scientist, said using more coal without the emission-reducing technology may accelerate floods, droughts and heat waves.
``If we continue to build coal-fired power plants without carbon capture, we will lock in future climate disasters,'' Hansen wrote.
The E.ON plans were approved on Jan. 2 by Medway District Council. The national government must make the final decision, and no firm deadline has been set by the Department for Energy, Business and Regulatory Reform. For some residents, approval is vital.
`We Want Coal'
``The power station generates not just work for this area but finance: all the retail outlets rely on it,'' Gill Hannah, 56, a Hoo resident of 40 years, said in an interview at her house, which overlooks Kingsnorth station. Hannah, whose partner Terence Wheeldon works for E.ON, posted a sign in her window saying ``We want coal.''
The protesters say the new plant will emit at least 6 million tons of CO2 a year. They plan tomorrow to try to shut down Kingsnorth's existing power station by entering the premises by land, sea and air. Lucas, the lawmaker, said she hasn't decided whether to participate.
At the camp on Aug. 6, a boat made of plywood and plastic bottles was used to advertise the planned sea invasion, which calls for a flotilla of rafts to follow the tide down the River Thames. Protesters were also shown how to vault fences.
``A lot of us are ready to break the law, because sometimes that's necessary to make change happen,'' Isabelle Michel, a spokeswoman for the camp, said in an interview. ``This is how the domino effect starts: by saying this is not going to happen here.''
To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.
Read more...
Total May Sell Condom, Glove Unit to Focus on Oil; Hires SocGen
By Anne-Sylvaine Chassany and Tara Patel
Aug. 8 (Bloomberg) -- Total SA, Europe's third-largest oil company, may put its glove and condom-making unit up for sale to exit businesses that aren't related to energy, three people familiar with the matter said.
Total hired Societe Generale SA to arrange the sale, which may start as soon as next month, said the people, who declined to be identified because the transaction is private. Paris-based Total expects bids of about 500 million euros ($773 million).
The company failed three years ago to sell the unit, which is part of the Hutchinson rubber-processing division, after offers fell short of price expectations, the people said. Now Total wants to seek bids again as Chief Executive Officer Christophe de Margerie focuses on divisions that will profit from oil trading close to $120 a barrel.
``These consumer activities don't fit in Total's strategy and dilute the company's return on capital,'' said Chicuong Dang, an analyst at Richelieu Finance in Paris, which has $6.2 billion under management. ``The market for buyouts may be more difficult but Total is in no hurry.''
``Total plans to continue to optimize its asset portfolio,'' the company said in the annual report published on its Web site April 3. Spokesman Kevin Church declined to comment.
Hutchinson's consumer unit, which sells rubber gloves, sponges, baby bottles, pacifiers and Billy Boy condoms, generated about 450 million euros of sales in 2007, according to the company's Web site. Earnings before interest, taxes, depreciation and amortization were about 11 percent of sales, the people said.
Rubber Gloves
Total may struggle to get the target price because leveraged buyout firms, which would be likely bidders, find it hard to raise debt financing as the credit crunch forces investors to spurn all but the safest forms of debt. Banks in Europe have curtailed lending while they unload loans provided to previous deals. Only one company has sold high-yield, high-risk bonds in Europe this year.
Sales at the Hutchinson rubber unit, which operates plants in Europe, U.S. and Asia, rose 5 percent to 3.02 billion euros in 2007, according to the annual report. The company supplies rubber products including anti-vibration and insulation parts for carmakers such as General Motors Corp., as well as for train and aircraft manufacturers.
Total is getting rid of other assets that aren't part of its oil business. In May 2006 it floated the Arkema chemicals unit, with a market value of 1.75 billion euros. De Margerie also said he plans to sell Total's 13 percent stake in drugmaker Sanofi- Aventis SA, having sold 0.4 percent in the fourth quarter for 316 million euros.
Boost Investment
Total is seeking to increase oil production an average 4 percent a year until 2010 and plans to boost investment by 19 percent this year to a record $19 billion.
The company posted a 39 percent increase in second-quarter profit on Aug. 1, helped by record crude prices. Net income climbed to 4.73 billion euros from 3.41 billion euros a year earlier while adjusted profit rose 20 percent to 3.7 billion euros. Oil and gas production rose 1.3 percent to 2.353 million barrels of oil equivalent a day in the quarter.
To contact the reporter on this story: Anne-Sylvaine Chassany in Paris achassany@bloomberg.net
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Aug. 8 (Bloomberg) -- Total SA, Europe's third-largest oil company, may put its glove and condom-making unit up for sale to exit businesses that aren't related to energy, three people familiar with the matter said.
Total hired Societe Generale SA to arrange the sale, which may start as soon as next month, said the people, who declined to be identified because the transaction is private. Paris-based Total expects bids of about 500 million euros ($773 million).
The company failed three years ago to sell the unit, which is part of the Hutchinson rubber-processing division, after offers fell short of price expectations, the people said. Now Total wants to seek bids again as Chief Executive Officer Christophe de Margerie focuses on divisions that will profit from oil trading close to $120 a barrel.
``These consumer activities don't fit in Total's strategy and dilute the company's return on capital,'' said Chicuong Dang, an analyst at Richelieu Finance in Paris, which has $6.2 billion under management. ``The market for buyouts may be more difficult but Total is in no hurry.''
``Total plans to continue to optimize its asset portfolio,'' the company said in the annual report published on its Web site April 3. Spokesman Kevin Church declined to comment.
Hutchinson's consumer unit, which sells rubber gloves, sponges, baby bottles, pacifiers and Billy Boy condoms, generated about 450 million euros of sales in 2007, according to the company's Web site. Earnings before interest, taxes, depreciation and amortization were about 11 percent of sales, the people said.
Rubber Gloves
Total may struggle to get the target price because leveraged buyout firms, which would be likely bidders, find it hard to raise debt financing as the credit crunch forces investors to spurn all but the safest forms of debt. Banks in Europe have curtailed lending while they unload loans provided to previous deals. Only one company has sold high-yield, high-risk bonds in Europe this year.
Sales at the Hutchinson rubber unit, which operates plants in Europe, U.S. and Asia, rose 5 percent to 3.02 billion euros in 2007, according to the annual report. The company supplies rubber products including anti-vibration and insulation parts for carmakers such as General Motors Corp., as well as for train and aircraft manufacturers.
Total is getting rid of other assets that aren't part of its oil business. In May 2006 it floated the Arkema chemicals unit, with a market value of 1.75 billion euros. De Margerie also said he plans to sell Total's 13 percent stake in drugmaker Sanofi- Aventis SA, having sold 0.4 percent in the fourth quarter for 316 million euros.
Boost Investment
Total is seeking to increase oil production an average 4 percent a year until 2010 and plans to boost investment by 19 percent this year to a record $19 billion.
The company posted a 39 percent increase in second-quarter profit on Aug. 1, helped by record crude prices. Net income climbed to 4.73 billion euros from 3.41 billion euros a year earlier while adjusted profit rose 20 percent to 3.7 billion euros. Oil and gas production rose 1.3 percent to 2.353 million barrels of oil equivalent a day in the quarter.
To contact the reporter on this story: Anne-Sylvaine Chassany in Paris achassany@bloomberg.net
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Australian Dollar Falls Below 90 U.S. Cents as Rate Cuts Seen
By Candice Zachariahs and Ron Harui
Enlarge Image/Details
Aug. 8 (Bloomberg) -- The Australian dollar fell below 90 U.S. cents for the first time since March, extending its longest losing streak since 1980 on speculation the Reserve Bank of Australia will reduce borrowing costs from a 12-year high.
Australia's currency headed for a third weekly loss as speculation a drop in consumer spending will cool inflation pushed the two-year government bond yield down to the lowest since October 2006. The Australian dollar also declined after prices of commodities the nation exports such as crude oil slid this week because the outlook for global growth deteriorated.
``There is growing talk of RBA rate cuts and commodity prices are plunging,'' said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Co. in Tokyo. ``A selling scenario seems to be under way for the Aussie,'' he said, referring to the currency by its nickname.
Australia's dollar dropped for a ninth day, touching 89.84 U.S. cents, the lowest since March 24, before trading at 90 cents at 11:19 a.m. in Sydney, from 91.10 cents late in Asia yesterday. The currency slipped to 99.15 yen from 99.71 yen yesterday.
The Aussie fell 3.1 percent the past week after Reserve Bank Governor Glenn Stevens said Aug. 6 that slowing demand meant ``scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing.''
A benchmark rate of 7.25 percent in Australia, compared with 0.5 percent in Japan and 2 percent in the U.S., has made the currency a favorite with investors looking to invest in higher- yielding assets.
Interest-Rate Traders
Traders are betting the Reserve Bank will lower borrowing costs by 97 basis points over the next 12 months, compared with the 32 points of cuts estimated two weeks ago, according to a Credit Suisse Group index based on interest-rate swaps. They are certain of a rate cut in September, a similar index shows. A basis point is 0.01 percentage point.
The currency dropped this week along with the prices of gold and crude oil, Australia's third and fourth most-valuable exports.
Gold fell for a fifth straight session in New York yesterday, the longest losing streak since June 2007. Crude oil futures fell as low as $117.11 a barrel on Aug. 7, 20 percent below the July 11 record of $147.27. Commodity shipments contribute 17 percent to Australia's economy.
The Aussie is approaching a support band between 89.55 cents and 90.25 cents, Kevin Edgeley, a London-based technical analyst at Goldman Sachs Group Inc., wrote yesterday in a report. A close below this level would ``point back'' to 85 cents, he said. Support is a level where buy orders may be clustered.
Australian government bonds gained. The yield on the 10-year bond fell 6 basis points to 5.92 percent. The price of the 5.25 percent bond maturing in March 2019 rose 0.433, or A$4.33 per A$1,000 face amount, to 94.771.
Returns on the two-year securities fell for a 13th day, declining 4 basis points to 5.915 percent. The price gained 0.082 to 98.76. Yields move inversely to prices.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Enlarge Image/Details
Aug. 8 (Bloomberg) -- The Australian dollar fell below 90 U.S. cents for the first time since March, extending its longest losing streak since 1980 on speculation the Reserve Bank of Australia will reduce borrowing costs from a 12-year high.
Australia's currency headed for a third weekly loss as speculation a drop in consumer spending will cool inflation pushed the two-year government bond yield down to the lowest since October 2006. The Australian dollar also declined after prices of commodities the nation exports such as crude oil slid this week because the outlook for global growth deteriorated.
``There is growing talk of RBA rate cuts and commodity prices are plunging,'' said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Co. in Tokyo. ``A selling scenario seems to be under way for the Aussie,'' he said, referring to the currency by its nickname.
Australia's dollar dropped for a ninth day, touching 89.84 U.S. cents, the lowest since March 24, before trading at 90 cents at 11:19 a.m. in Sydney, from 91.10 cents late in Asia yesterday. The currency slipped to 99.15 yen from 99.71 yen yesterday.
The Aussie fell 3.1 percent the past week after Reserve Bank Governor Glenn Stevens said Aug. 6 that slowing demand meant ``scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing.''
A benchmark rate of 7.25 percent in Australia, compared with 0.5 percent in Japan and 2 percent in the U.S., has made the currency a favorite with investors looking to invest in higher- yielding assets.
Interest-Rate Traders
Traders are betting the Reserve Bank will lower borrowing costs by 97 basis points over the next 12 months, compared with the 32 points of cuts estimated two weeks ago, according to a Credit Suisse Group index based on interest-rate swaps. They are certain of a rate cut in September, a similar index shows. A basis point is 0.01 percentage point.
The currency dropped this week along with the prices of gold and crude oil, Australia's third and fourth most-valuable exports.
Gold fell for a fifth straight session in New York yesterday, the longest losing streak since June 2007. Crude oil futures fell as low as $117.11 a barrel on Aug. 7, 20 percent below the July 11 record of $147.27. Commodity shipments contribute 17 percent to Australia's economy.
The Aussie is approaching a support band between 89.55 cents and 90.25 cents, Kevin Edgeley, a London-based technical analyst at Goldman Sachs Group Inc., wrote yesterday in a report. A close below this level would ``point back'' to 85 cents, he said. Support is a level where buy orders may be clustered.
Australian government bonds gained. The yield on the 10-year bond fell 6 basis points to 5.92 percent. The price of the 5.25 percent bond maturing in March 2019 rose 0.433, or A$4.33 per A$1,000 face amount, to 94.771.
Returns on the two-year securities fell for a 13th day, declining 4 basis points to 5.915 percent. The price gained 0.082 to 98.76. Yields move inversely to prices.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Dollar Heads for Weekly Gain as Oil Extends Decline From Record
By Stanley White and Kosuke Goto
Aug. 8 (Bloomberg) -- The dollar headed for its biggest weekly gain against the yen in two months on speculation cheaper crude oil will bolster economic growth in the world's largest consumer of the fuel.
The euro slumped to a five-month low against the dollar and a three-week low against the yen after European Central Bank President Jean-Claude Trichet said risks to economic growth are ``materializing,'' reducing expectations policy makers will raise interest rates. The Australian dollar fell for a ninth day, its longest losing streak since 1980, as traders added to bets the nation's central bank will cut borrowing costs.
``Oil prices have turned out to be much more supportive of the dollar than I expected,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``It does temporarily relieve some concern that the U.S. economy will weaken further. This is a plus for sentiment.''
The dollar traded at 109.65 yen at 10:35 a.m. in Tokyo, from 109.44 late yesterday and up 1.8 percent from the end of last week. The U.S. currency reached a seven-month high of 109.88 yen on Aug. 6.
The euro fell to $1.5195, the lowest since March 5, before trading at $1.5222 from $1.5325 late yesterday. It's set for a fourth weekly decline, the worst losing streak since May 2007. The euro weakened to 166.90 yen from 167.70 yesterday and 167.55 at the end of last week. It earlier reached 166.55 yen, the lowest since July 17.
Australian Dollar
Australia's dollar dropped to 90.01 U.S. cents from 91.10 cents late in Asia yesterday and 92.91 cents on Aug. 1 in New York. It earlier reached 89.84 cents, the lowest since March 24. The currency slipped to 98.61 yen from 99.71 yen yesterday and 100.07 yen last week. The Reserve Bank of Australia said it may lower borrowing costs, after keeping its key interest rate at a 12-year high of 7.25 percent on Aug. 6.
Crude oil for September delivery was $119.79 a barrel in New York, on course for a 4.2 percent decline this week. The price has dropped 19 percent since touching a record $147.27 a barrel on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending.
The ECB's Trichet said yesterday he has ``no bias'' or ``pre-commitment'' toward future rate movements after the central bank left the main refinancing rate at 4.25 percent. He told reporters at a press conference in Frankfurt that while inflation remains a threat, economic growth will be ``particularly weak'' through the third quarter.
`Pretty Grim'
European retail sales dropped by the most in at least 13 years in June, the European Union said on Aug. 5. Consumer confidence slid in July by the most since the Sept. 11, 2001, terrorist attacks, the EU said July 30.
``The market is entitled to be scaling back significantly further ECB tightening,'' said David Simmonds, London-based global head of currency strategy at Royal Bank of Scotland Group Plc. ``Policy makers will continue to focus on inflation, but some of the real economic data has been pretty grim. In my opinion, 2009 will include a European rate cut and a weak euro story.''
Traders pared bets the ECB will raise the main refinancing rate for a second time this year. The three-month Euribor contract for December yielded 4.95 percent yesterday, down from 5.03 percent on Aug. 6.
Two-year German bunds rose yesterday, pushing the yield down 15 basis points to 4.09 percent. That's 1.66 percentage points higher than the same-maturity U.S. Treasury notes and compares with 2.03 points almost a month ago.
`Dollar Bull Phase'
A drop in the European currency below $1.53 signals ``a longer-term dollar bull phase,'' pointing to a further decline to $1.46, Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London, wrote in a research note yesterday. He uses charts to predict currency moves.
The last time the euro traded below $1.53 was May 8.
The pound fell 1.9 percent from a week ago to $1.9374 after the Bank of England yesterday kept borrowing costs unchanged for a fourth month at 5 percent. The decision was predicted by all 60 economists in a Bloomberg News survey.
Any gains in the yen may be limited by speculation a slowing economy will prevent the Bank of Japan from raising interest rates from 0.5 percent, the lowest among industrialized economies.
There is ``a high possibility'' the economy has entered a recession, Shigeru Sugihara, head of business statistics at the Cabinet Office in Tokyo, said on Aug. 6. Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of economists surveyed by Bloomberg. The report is due on Aug. 13.
``Officials confirmed Japan may have entered a recession,'' said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany's second-largest bank. ``This is a catalyst for Japan selling, such as Japanese stocks and the yen. With interest rates low, Japanese investors will keep sending money abroad.''
Japan's currency may fall to 109.80 a dollar today, Muramatsu said.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.netKosuke Goto in Tokyo at kgoto2@bloomberg.net
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Aug. 8 (Bloomberg) -- The dollar headed for its biggest weekly gain against the yen in two months on speculation cheaper crude oil will bolster economic growth in the world's largest consumer of the fuel.
The euro slumped to a five-month low against the dollar and a three-week low against the yen after European Central Bank President Jean-Claude Trichet said risks to economic growth are ``materializing,'' reducing expectations policy makers will raise interest rates. The Australian dollar fell for a ninth day, its longest losing streak since 1980, as traders added to bets the nation's central bank will cut borrowing costs.
``Oil prices have turned out to be much more supportive of the dollar than I expected,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``It does temporarily relieve some concern that the U.S. economy will weaken further. This is a plus for sentiment.''
The dollar traded at 109.65 yen at 10:35 a.m. in Tokyo, from 109.44 late yesterday and up 1.8 percent from the end of last week. The U.S. currency reached a seven-month high of 109.88 yen on Aug. 6.
The euro fell to $1.5195, the lowest since March 5, before trading at $1.5222 from $1.5325 late yesterday. It's set for a fourth weekly decline, the worst losing streak since May 2007. The euro weakened to 166.90 yen from 167.70 yesterday and 167.55 at the end of last week. It earlier reached 166.55 yen, the lowest since July 17.
Australian Dollar
Australia's dollar dropped to 90.01 U.S. cents from 91.10 cents late in Asia yesterday and 92.91 cents on Aug. 1 in New York. It earlier reached 89.84 cents, the lowest since March 24. The currency slipped to 98.61 yen from 99.71 yen yesterday and 100.07 yen last week. The Reserve Bank of Australia said it may lower borrowing costs, after keeping its key interest rate at a 12-year high of 7.25 percent on Aug. 6.
Crude oil for September delivery was $119.79 a barrel in New York, on course for a 4.2 percent decline this week. The price has dropped 19 percent since touching a record $147.27 a barrel on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending.
The ECB's Trichet said yesterday he has ``no bias'' or ``pre-commitment'' toward future rate movements after the central bank left the main refinancing rate at 4.25 percent. He told reporters at a press conference in Frankfurt that while inflation remains a threat, economic growth will be ``particularly weak'' through the third quarter.
`Pretty Grim'
European retail sales dropped by the most in at least 13 years in June, the European Union said on Aug. 5. Consumer confidence slid in July by the most since the Sept. 11, 2001, terrorist attacks, the EU said July 30.
``The market is entitled to be scaling back significantly further ECB tightening,'' said David Simmonds, London-based global head of currency strategy at Royal Bank of Scotland Group Plc. ``Policy makers will continue to focus on inflation, but some of the real economic data has been pretty grim. In my opinion, 2009 will include a European rate cut and a weak euro story.''
Traders pared bets the ECB will raise the main refinancing rate for a second time this year. The three-month Euribor contract for December yielded 4.95 percent yesterday, down from 5.03 percent on Aug. 6.
Two-year German bunds rose yesterday, pushing the yield down 15 basis points to 4.09 percent. That's 1.66 percentage points higher than the same-maturity U.S. Treasury notes and compares with 2.03 points almost a month ago.
`Dollar Bull Phase'
A drop in the European currency below $1.53 signals ``a longer-term dollar bull phase,'' pointing to a further decline to $1.46, Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London, wrote in a research note yesterday. He uses charts to predict currency moves.
The last time the euro traded below $1.53 was May 8.
The pound fell 1.9 percent from a week ago to $1.9374 after the Bank of England yesterday kept borrowing costs unchanged for a fourth month at 5 percent. The decision was predicted by all 60 economists in a Bloomberg News survey.
Any gains in the yen may be limited by speculation a slowing economy will prevent the Bank of Japan from raising interest rates from 0.5 percent, the lowest among industrialized economies.
There is ``a high possibility'' the economy has entered a recession, Shigeru Sugihara, head of business statistics at the Cabinet Office in Tokyo, said on Aug. 6. Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of economists surveyed by Bloomberg. The report is due on Aug. 13.
``Officials confirmed Japan may have entered a recession,'' said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany's second-largest bank. ``This is a catalyst for Japan selling, such as Japanese stocks and the yen. With interest rates low, Japanese investors will keep sending money abroad.''
Japan's currency may fall to 109.80 a dollar today, Muramatsu said.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.netKosuke Goto in Tokyo at kgoto2@bloomberg.net
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Singapore Dollar Falls Most in 2 Years on Concern Growth Slower
By Patricia Lui
Aug. 8 (Bloomberg) -- Singapore's dollar fell the most in two years on concern the economy is slowing, encouraging the central bank to allow the currency to weaken to support growth.
The local dollar headed for its biggest weekly loss since May 2004 after Finance Minister Tharman Shanmugaratnam said the economy is moving toward a slowdown and growth is unlikely to rebound ``anytime soon,'' according to a report in the Straits Times newspaper today. Prime Minister Lee Hsien Loong will deliver his annual eve of National Day speech today and may announce revised second-quarter and full-year growth forecasts.
``Tharman's dovish comments confirm expectations that the central bank won't be seeking any further policy tightening,'' said Emmanuel Ng, economist at Oversea-Chinese Banking Corp. in Singapore. ``Second-quarter GDP and the full-year growth numbers also run the risk of being revised downwards at Prime Minister Lee's speech later today.''
The local dollar weakened 1.1 percent to S$1.3987 against the U.S. currency, the biggest loss since May 15, 2006, according to data compiled by Bloomberg. It has declined 2 percent this week, heading for the biggest five-day slump since the period ended May 14, 2004.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net.
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Aug. 8 (Bloomberg) -- Singapore's dollar fell the most in two years on concern the economy is slowing, encouraging the central bank to allow the currency to weaken to support growth.
The local dollar headed for its biggest weekly loss since May 2004 after Finance Minister Tharman Shanmugaratnam said the economy is moving toward a slowdown and growth is unlikely to rebound ``anytime soon,'' according to a report in the Straits Times newspaper today. Prime Minister Lee Hsien Loong will deliver his annual eve of National Day speech today and may announce revised second-quarter and full-year growth forecasts.
``Tharman's dovish comments confirm expectations that the central bank won't be seeking any further policy tightening,'' said Emmanuel Ng, economist at Oversea-Chinese Banking Corp. in Singapore. ``Second-quarter GDP and the full-year growth numbers also run the risk of being revised downwards at Prime Minister Lee's speech later today.''
The local dollar weakened 1.1 percent to S$1.3987 against the U.S. currency, the biggest loss since May 15, 2006, according to data compiled by Bloomberg. It has declined 2 percent this week, heading for the biggest five-day slump since the period ended May 14, 2004.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net.
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Asia Commodities Day Ahead: EPA Refuses to Ease Biofuel Rule
Aug. 8 (Bloomberg) -- U.S. officials rejected Texas Governor Rick Perry's request to ease requirements on the use of corn-based ethanol. Corn, soybeans and wheat climbed. U.S. farmers are paying record prices for fertilizer, feed and fuel, which may be reducing profits as crop prices fall. Copper, gold and platinum declined. Cia. Vale do Rio Doce rose in Sao Paulo trading after second-quarter profit increased 22 percent.
AGRICULTURAL COMMODITIES
EPA Rejects Texas Request to Ease U.S. Biofuels Rule
U.S. officials rejected Texas Governor Rick Perry's request to ease requirements on the use of corn-based ethanol in gasoline, saying he didn't prove that the rules are straining grain supplies and causing ``severe economic harm.''
U.S. Farm Costs for Feed, Fertilizer, Fuel Surge
U.S. farmers are paying record prices for fertilizer, feed and fuel, which may be reducing profits as crop prices fall from all-time highs.
Corn, Soybeans Rise After Price Plunge Boosts Export Demand
Corn and soybeans rebounded in Chicago on speculation the price slump in the past five sessions will spur demand for shipments from the U.S., the biggest producer and exporter of both crops. Corn rose 14.25 cents, or 2.7 percent, to $5.42 a bushel. Soybeans gained 17 cents, or 1.4 percent, to $12.39 a bushel.
Wheat Surges Most Since June as U.S. Export Shipments Climb
Wheat soared the most since mid-June on speculation that importers will snap up supplies from the U.S., the world's biggest exporter, after prices plunged 41 percent from a record in February. Wheat rose 56.25 cents, or 7.1 percent, to $8.47 a bushel in Chicago.
Hogs Rise on Signs of Shrinking U.S. Pork Output; Cattle Fall
Hogs rose to a six-week high on speculation that high grain prices might force producers to sell animals to meatpackers at lighter weights. Hogs climbed 0.075 cent, or 0.1 percent, to 76.975 cents a pound in Chicago. Cattle fell 1.35 cents, or 1.2 percent, to $1.072 a pound. Feeder cattle dropped 1.325 cents, or 1.1 percent, to $1.15875 a pound.
PULP & PAPER PRODUCTS
AbitibiBowater May Speed North American Capacity Cuts
AbitibiBowater Inc., the world's largest newsprint maker, may accelerate cuts to North American production capacity if demand continues to contract faster than expected, Chief Executive Officer David J. Paterson said.
INDUSTRIAL METALS, MINING
Lundin Posts Net Loss on Lower Zinc Prices, Writedown
Lundin Mining Corp., owner of the Neves-Corvo deposit in Portugal, posted a second-quarter net loss of $108.4 million after zinc prices fell and the company wrote down the value of its Aljustrel mine.
OM Group Soars Most Since 2003 as Cobalt Prices Rise
OM Group Inc., the world's largest cobalt producer, rose the most in more than five years in New York trading after second-quarter profit topped analysts' estimates because of higher cobalt prices. OM Group climbed $5.46, or 18 percent, to $35.16 at 4:15 p.m. in New York.
FNX Mining Quarterly Profit Falls 68% on Nickel Prices
FNX Mining Co., the Canadian nickel and copper producer that sells ore to Cia. Vale do Rio Doce, said second-quarter profit dropped 68 percent because of lower nickel prices.
Copper Falls in New York, Erasing Gain, as Oil Pares Advance
Copper fell, erasing earlier gains, as crude-oil prices pared an advance and reduced the appeal of commodities as a hedge against inflation. Copper declined 0.55 cent, or 0.2 percent, to $3.418 a pound in New York.
PRECIOUS METALS, GEMS
Gold Extends Slide to 1 Week as Dollar Rebounds; Silver Falls
Gold fell for a fifth straight session, the longest losing streak since June 2007, as a rebound in the dollar eroded the appeal of the precious metal as an alternative investment. Gold declined $5.10, or 0.6 percent, to $877.90 an ounce in New York. Silver tumbled 24.8 cents, or 1.5 percent, to $16.257 an ounce.
Platinum, Palladium Decline on Speculation Demand to Slide
Platinum and palladium fell on speculation that demand for the metals used in emission-control parts for cars will fall as U.S. auto sales decline. Platinum fell $27.40, or 1.7 percent, to $1,582.60 an ounce. Palladium dropped $6.10, or 1.7 percent, to $348 an ounce.
STEEL, IRON ORE, COAL & URANIUM
Vale Rises After Iron-Ore Price Fuels Record Profit
Cia. Vale do Rio Doce, the world's biggest iron-ore producer, rose in Sao Paulo trading after the company said second-quarter profit increased 22 percent to a record, beating analysts' forecasts. Vale increased 0.1 percent to close at 36.75 reais in Sao Paulo, after earlier climbing as much as 2.2 percent.
SOFT COMMODITIES
Nestle First-Half Net Growth Slows on Coffee, Cocoa
Nestle SA, the world's largest food company, reported the slowest profit growth in four years in its first half after higher cocoa and coffee prices and a weaker dollar cut into earnings.
Sugar Falls, Reversing Gain, as Dollar Rises and Crude Slips
Sugar fell in New York, paring an earlier gain, as the dollar's rise increased the cost of commodities in U.S. markets and crude oil dropped. Sugar declined 0.4 cent, or 2.8 percent, to 13.79 cents a pound.
Cotton Rises on Speculation Price Slump to Spur Mill Purchases
Cotton rose the most in more than seven weeks on speculation that a recent price slump will spur textile mills to purchase more from the U.S., the biggest exporter. Cotton gained 1.82 cents, or 2.6 percent, to 71.38 cents a pound in New York.
Coffee Rises as Producers Delay Sales, Expecting Higher Prices
Coffee rose for the second day in three on speculation producers are delaying sales for higher prices. Coffee gained 2.55 cents, or 1.9 percent, to $1.4045 a pound in New York.
Orange Juice Climbs as U.S. Storm Forecast Tops May Estimate
Orange juice rose for the second straight day after the U.S. projection for the number of Atlantic storms this year topped a May estimate, heightening crop concerns in Florida, the world's second-biggest grower. Orange juice climbed 1.2 cents, or 1.2 percent, to 99.9 cents a pound.
Cocoa Rises in New York on Commodities Gain, Supply Speculation
Cocoa rose in New York as commodities rallied and traders speculated that supplies from Ivory Coast and Indonesia may be curtailed. Cocoa climbed $28, or 1 percent, to $2,813 a metric ton.
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AGRICULTURAL COMMODITIES
EPA Rejects Texas Request to Ease U.S. Biofuels Rule
U.S. officials rejected Texas Governor Rick Perry's request to ease requirements on the use of corn-based ethanol in gasoline, saying he didn't prove that the rules are straining grain supplies and causing ``severe economic harm.''
U.S. Farm Costs for Feed, Fertilizer, Fuel Surge
U.S. farmers are paying record prices for fertilizer, feed and fuel, which may be reducing profits as crop prices fall from all-time highs.
Corn, Soybeans Rise After Price Plunge Boosts Export Demand
Corn and soybeans rebounded in Chicago on speculation the price slump in the past five sessions will spur demand for shipments from the U.S., the biggest producer and exporter of both crops. Corn rose 14.25 cents, or 2.7 percent, to $5.42 a bushel. Soybeans gained 17 cents, or 1.4 percent, to $12.39 a bushel.
Wheat Surges Most Since June as U.S. Export Shipments Climb
Wheat soared the most since mid-June on speculation that importers will snap up supplies from the U.S., the world's biggest exporter, after prices plunged 41 percent from a record in February. Wheat rose 56.25 cents, or 7.1 percent, to $8.47 a bushel in Chicago.
Hogs Rise on Signs of Shrinking U.S. Pork Output; Cattle Fall
Hogs rose to a six-week high on speculation that high grain prices might force producers to sell animals to meatpackers at lighter weights. Hogs climbed 0.075 cent, or 0.1 percent, to 76.975 cents a pound in Chicago. Cattle fell 1.35 cents, or 1.2 percent, to $1.072 a pound. Feeder cattle dropped 1.325 cents, or 1.1 percent, to $1.15875 a pound.
PULP & PAPER PRODUCTS
AbitibiBowater May Speed North American Capacity Cuts
AbitibiBowater Inc., the world's largest newsprint maker, may accelerate cuts to North American production capacity if demand continues to contract faster than expected, Chief Executive Officer David J. Paterson said.
INDUSTRIAL METALS, MINING
Lundin Posts Net Loss on Lower Zinc Prices, Writedown
Lundin Mining Corp., owner of the Neves-Corvo deposit in Portugal, posted a second-quarter net loss of $108.4 million after zinc prices fell and the company wrote down the value of its Aljustrel mine.
OM Group Soars Most Since 2003 as Cobalt Prices Rise
OM Group Inc., the world's largest cobalt producer, rose the most in more than five years in New York trading after second-quarter profit topped analysts' estimates because of higher cobalt prices. OM Group climbed $5.46, or 18 percent, to $35.16 at 4:15 p.m. in New York.
FNX Mining Quarterly Profit Falls 68% on Nickel Prices
FNX Mining Co., the Canadian nickel and copper producer that sells ore to Cia. Vale do Rio Doce, said second-quarter profit dropped 68 percent because of lower nickel prices.
Copper Falls in New York, Erasing Gain, as Oil Pares Advance
Copper fell, erasing earlier gains, as crude-oil prices pared an advance and reduced the appeal of commodities as a hedge against inflation. Copper declined 0.55 cent, or 0.2 percent, to $3.418 a pound in New York.
PRECIOUS METALS, GEMS
Gold Extends Slide to 1 Week as Dollar Rebounds; Silver Falls
Gold fell for a fifth straight session, the longest losing streak since June 2007, as a rebound in the dollar eroded the appeal of the precious metal as an alternative investment. Gold declined $5.10, or 0.6 percent, to $877.90 an ounce in New York. Silver tumbled 24.8 cents, or 1.5 percent, to $16.257 an ounce.
Platinum, Palladium Decline on Speculation Demand to Slide
Platinum and palladium fell on speculation that demand for the metals used in emission-control parts for cars will fall as U.S. auto sales decline. Platinum fell $27.40, or 1.7 percent, to $1,582.60 an ounce. Palladium dropped $6.10, or 1.7 percent, to $348 an ounce.
STEEL, IRON ORE, COAL & URANIUM
Vale Rises After Iron-Ore Price Fuels Record Profit
Cia. Vale do Rio Doce, the world's biggest iron-ore producer, rose in Sao Paulo trading after the company said second-quarter profit increased 22 percent to a record, beating analysts' forecasts. Vale increased 0.1 percent to close at 36.75 reais in Sao Paulo, after earlier climbing as much as 2.2 percent.
SOFT COMMODITIES
Nestle First-Half Net Growth Slows on Coffee, Cocoa
Nestle SA, the world's largest food company, reported the slowest profit growth in four years in its first half after higher cocoa and coffee prices and a weaker dollar cut into earnings.
Sugar Falls, Reversing Gain, as Dollar Rises and Crude Slips
Sugar fell in New York, paring an earlier gain, as the dollar's rise increased the cost of commodities in U.S. markets and crude oil dropped. Sugar declined 0.4 cent, or 2.8 percent, to 13.79 cents a pound.
Cotton Rises on Speculation Price Slump to Spur Mill Purchases
Cotton rose the most in more than seven weeks on speculation that a recent price slump will spur textile mills to purchase more from the U.S., the biggest exporter. Cotton gained 1.82 cents, or 2.6 percent, to 71.38 cents a pound in New York.
Coffee Rises as Producers Delay Sales, Expecting Higher Prices
Coffee rose for the second day in three on speculation producers are delaying sales for higher prices. Coffee gained 2.55 cents, or 1.9 percent, to $1.4045 a pound in New York.
Orange Juice Climbs as U.S. Storm Forecast Tops May Estimate
Orange juice rose for the second straight day after the U.S. projection for the number of Atlantic storms this year topped a May estimate, heightening crop concerns in Florida, the world's second-biggest grower. Orange juice climbed 1.2 cents, or 1.2 percent, to 99.9 cents a pound.
Cocoa Rises in New York on Commodities Gain, Supply Speculation
Cocoa rose in New York as commodities rallied and traders speculated that supplies from Ivory Coast and Indonesia may be curtailed. Cocoa climbed $28, or 1 percent, to $2,813 a metric ton.
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Crude Oil Is Steady After Rising on Turkish Pipeline Disruption
By Margot Habiby and Samantha Zee
Aug. 8 (Bloomberg) -- Crude oil was little changed after rising for the first time in four days yesterday as Turkey said a pipeline carrying crude to the Mediterranean from Azerbaijan may remain shut for two weeks following an explosion on Aug. 5.
The pipeline is able to ship 1 million barrels a day, Ali Gungor, governor of the Erzincan province, where the blast occurred, said yesterday. A Kurdish separatist group claimed responsibility for bombing the link.
``This is a global market, so it does have an impact'' around the world, said Peter Beutel, president of Connecticut- based Cameron Hanover Inc. ``This is a pipeline that hasn't been attacked before. To have it now politicized by the Kurds opens up a whole new realm of political frustration and supply loss.''
Crude oil for September delivery fell 23 cents, or 0.2 percent, to $119.79 a barrel at 9:07 a.m. Sydney time on the New York Mercantile Exchange.
Yesterday, oil rose $1.44, or 1.2 percent, to settle at $120.02 a barrel in New York. Futures dropped as low as $117.11 a barrel earlier this week after U.S. inventories unexpectedly increased. That's more than 20 percent below the record $147.27 on July 11, a threshold commonly seen as the start of a bear market.
``That there's no significant follow-through selling after going through some stops yesterday shows there's strength in the market,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. That's adding support along with concern about the Turkish pipeline, he said.
Pipeline operator BP Plc canceled export obligations.
Still Burning
``The fire is still continuing,'' Murat Lecompte, a spokesman for BP in Turkey, said by phone from Istanbul at around 7 p.m. local time. ``Until the fire is out, there is no way we can tell what the damage is, what caused it.''
The Kurdistan Workers' Party, or PKK, said it bombed the pipeline, Firat, the Kurdish news agency, said on its Web site yesterday. The PKK, which has been fighting for autonomy in largely Kurdish southeast Turkey for two decades, attacked a section of the pipeline in east Turkey late Aug. 5, it said.
``Flows from the Caspian play an important role in non-OPEC supply growth this year, given an increasingly deteriorating growth outlook for Russia,'' said Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London. ``The region is one of the fastest areas of crude supply growth.''
Output from Russia and the other former Soviet states averaged 12.8 million barrels a day in 2007, including 868,000 barrels a day from Azerbaijan, according to the BP Statistical Review of World Energy. The U.S. imported 68,000 barrels a day from Azerbaijan in May, the latest data from the Energy Department shows.
Ex-Soviet States
Azerbaijan plans to pump 1.2 million barrels a day next year, President Ilham Aliyev said in June.
Output in Russia, the largest producer outside OPEC, fell to 9.78 million barrels a day last month, down 1.1 percent from last year, the government said. Drillers in the country face aging fields and rising costs.
Oil may trade near $115 a barrel in the coming months as demand slows and supply increases, according to Thomas O'Malley, chairman of Petroplus Holdings AG, Europe's biggest independent refiner by capacity.
Brent crude for September settlement rose 86 cents, or 0.7 percent, to settle at $117.86 a barrel on London's ICE Futures Europe exchange yesterday. Earlier, it touched $119.75 a barrel.
Hurricanes Forecast
U.S. forecasters said yesterday that as many as six major hurricanes may form in the Atlantic basin in the season that runs from June 1 to Nov. 30. They previously forecast two to five. Meteorologists with the National Oceanic and Atmospheric Administration's Climate Prediction Center also raised their forecasts for the total number of storms.
Hurricanes Katrina and Rita, both Category 5 storms of the highest intensity, devastated New Orleans and the Gulf Coast's oil output and refineries in 2005, churning oil and gas markets.
Crude-oil supplies rose 1.61 million barrels last week, and fuel consumption was 2.6 percent lower in the four weeks ended Aug. 1 from a year earlier, the U.S. Energy Department said. Gasoline supplies fell 4.34 million barrels, or 2 percent, to 209.2 million barrels, the biggest drop since April.
Gasoline for September delivery rose 5.34 cents, or 1.8 percent, to $3.0027 a gallon. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the motor fuel.
Regular gasoline at the pump, averaged nationwide, fell 1.3 cents to $3.849 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.
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Aug. 8 (Bloomberg) -- Crude oil was little changed after rising for the first time in four days yesterday as Turkey said a pipeline carrying crude to the Mediterranean from Azerbaijan may remain shut for two weeks following an explosion on Aug. 5.
The pipeline is able to ship 1 million barrels a day, Ali Gungor, governor of the Erzincan province, where the blast occurred, said yesterday. A Kurdish separatist group claimed responsibility for bombing the link.
``This is a global market, so it does have an impact'' around the world, said Peter Beutel, president of Connecticut- based Cameron Hanover Inc. ``This is a pipeline that hasn't been attacked before. To have it now politicized by the Kurds opens up a whole new realm of political frustration and supply loss.''
Crude oil for September delivery fell 23 cents, or 0.2 percent, to $119.79 a barrel at 9:07 a.m. Sydney time on the New York Mercantile Exchange.
Yesterday, oil rose $1.44, or 1.2 percent, to settle at $120.02 a barrel in New York. Futures dropped as low as $117.11 a barrel earlier this week after U.S. inventories unexpectedly increased. That's more than 20 percent below the record $147.27 on July 11, a threshold commonly seen as the start of a bear market.
``That there's no significant follow-through selling after going through some stops yesterday shows there's strength in the market,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. That's adding support along with concern about the Turkish pipeline, he said.
Pipeline operator BP Plc canceled export obligations.
Still Burning
``The fire is still continuing,'' Murat Lecompte, a spokesman for BP in Turkey, said by phone from Istanbul at around 7 p.m. local time. ``Until the fire is out, there is no way we can tell what the damage is, what caused it.''
The Kurdistan Workers' Party, or PKK, said it bombed the pipeline, Firat, the Kurdish news agency, said on its Web site yesterday. The PKK, which has been fighting for autonomy in largely Kurdish southeast Turkey for two decades, attacked a section of the pipeline in east Turkey late Aug. 5, it said.
``Flows from the Caspian play an important role in non-OPEC supply growth this year, given an increasingly deteriorating growth outlook for Russia,'' said Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London. ``The region is one of the fastest areas of crude supply growth.''
Output from Russia and the other former Soviet states averaged 12.8 million barrels a day in 2007, including 868,000 barrels a day from Azerbaijan, according to the BP Statistical Review of World Energy. The U.S. imported 68,000 barrels a day from Azerbaijan in May, the latest data from the Energy Department shows.
Ex-Soviet States
Azerbaijan plans to pump 1.2 million barrels a day next year, President Ilham Aliyev said in June.
Output in Russia, the largest producer outside OPEC, fell to 9.78 million barrels a day last month, down 1.1 percent from last year, the government said. Drillers in the country face aging fields and rising costs.
Oil may trade near $115 a barrel in the coming months as demand slows and supply increases, according to Thomas O'Malley, chairman of Petroplus Holdings AG, Europe's biggest independent refiner by capacity.
Brent crude for September settlement rose 86 cents, or 0.7 percent, to settle at $117.86 a barrel on London's ICE Futures Europe exchange yesterday. Earlier, it touched $119.75 a barrel.
Hurricanes Forecast
U.S. forecasters said yesterday that as many as six major hurricanes may form in the Atlantic basin in the season that runs from June 1 to Nov. 30. They previously forecast two to five. Meteorologists with the National Oceanic and Atmospheric Administration's Climate Prediction Center also raised their forecasts for the total number of storms.
Hurricanes Katrina and Rita, both Category 5 storms of the highest intensity, devastated New Orleans and the Gulf Coast's oil output and refineries in 2005, churning oil and gas markets.
Crude-oil supplies rose 1.61 million barrels last week, and fuel consumption was 2.6 percent lower in the four weeks ended Aug. 1 from a year earlier, the U.S. Energy Department said. Gasoline supplies fell 4.34 million barrels, or 2 percent, to 209.2 million barrels, the biggest drop since April.
Gasoline for September delivery rose 5.34 cents, or 1.8 percent, to $3.0027 a gallon. Futures fell 13 percent last month, the biggest drop since September 2006, as a slowing economy cut demand for the motor fuel.
Regular gasoline at the pump, averaged nationwide, fell 1.3 cents to $3.849 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.
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Australia Stocks: Mincor, National Australia, Telecom, Tower
By Shani Raja
Aug. 8 (Bloomberg) -- The S&P/ASX 200 Index fell 61.60 points, or 1.2 percent, to 4,921.70 at 10:25 a.m. in Sydney, snapping two days of gains. The broader All Ordinaries Index declined 54.40, or 1.1 percent, to 4,975.60, while the futures index expiring in September lost 1.8 percent to 4,888.
Financial stocks: National Australia Bank Ltd. (NAB AU), the nation's biggest by assets, lost 70 cents, or 2.7 percent, to A$25.07, the most since July 31. Commonwealth Bank of Australia (CBA AU), the biggest mortgage lender, fell A$1.03, or 2.3 percent, to A$42.92, the most since July 29. Westpac Banking Corp. (WBC AU), seeking to become Australia's biggest mortgage lender by buying St. George Bank Ltd., slipped 35 cents, or 1.5 percent, to A$22.80.
AIG, the largest insurer, slumped by a record in the U.S. as subprime-related writedowns wiped out profit and spurred concern it will raise more capital. Citigroup Inc., the biggest U.S. bank by assets, slid after settling regulatory claims it improperly saddled customers with untradeable bonds. The Standard & Poor's 500 Index lost 23.12 points, or 1.8 percent, to 1,266.07.
Separately, Westpac said provisions for bad debts are set to rise in the second half as the economy slows.
Mincor Resources NL (MCR AU), Australia's third-largest publicly traded nickel producer, was the index's second-biggest gainer, rising 7 cents, or 4.1 percent, to A$1.66. Mincor said yesterday it finished mining at its Wannaway Mine, three and a half years after it originally planned to. Separately, the price of nickel rose 5.9 percent in London.
Tower Australia Group Ltd. (TAL AU) added 15 cents, or 5.4 percent, to A$2.94, the most since April 23 and the benchmark's biggest gainer. Dai-ichi Mutual Life Insurance Co., which has more than 30 trillion yen ($274 billion) in assets, agreed to buy 30 percent of Tower, entering the Australian insurance market.
Telecom Corp. (TEL AU), New Zealand's biggest telephone company, plunged 25 cents, or 8.6 percent, to A$2.65, the most since 2002 and the biggest loser on the index. The company said fourth-quarter earnings fell 31 percent and forecast a second year of declining profit.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Aug. 8 (Bloomberg) -- The S&P/ASX 200 Index fell 61.60 points, or 1.2 percent, to 4,921.70 at 10:25 a.m. in Sydney, snapping two days of gains. The broader All Ordinaries Index declined 54.40, or 1.1 percent, to 4,975.60, while the futures index expiring in September lost 1.8 percent to 4,888.
Financial stocks: National Australia Bank Ltd. (NAB AU), the nation's biggest by assets, lost 70 cents, or 2.7 percent, to A$25.07, the most since July 31. Commonwealth Bank of Australia (CBA AU), the biggest mortgage lender, fell A$1.03, or 2.3 percent, to A$42.92, the most since July 29. Westpac Banking Corp. (WBC AU), seeking to become Australia's biggest mortgage lender by buying St. George Bank Ltd., slipped 35 cents, or 1.5 percent, to A$22.80.
AIG, the largest insurer, slumped by a record in the U.S. as subprime-related writedowns wiped out profit and spurred concern it will raise more capital. Citigroup Inc., the biggest U.S. bank by assets, slid after settling regulatory claims it improperly saddled customers with untradeable bonds. The Standard & Poor's 500 Index lost 23.12 points, or 1.8 percent, to 1,266.07.
Separately, Westpac said provisions for bad debts are set to rise in the second half as the economy slows.
Mincor Resources NL (MCR AU), Australia's third-largest publicly traded nickel producer, was the index's second-biggest gainer, rising 7 cents, or 4.1 percent, to A$1.66. Mincor said yesterday it finished mining at its Wannaway Mine, three and a half years after it originally planned to. Separately, the price of nickel rose 5.9 percent in London.
Tower Australia Group Ltd. (TAL AU) added 15 cents, or 5.4 percent, to A$2.94, the most since April 23 and the benchmark's biggest gainer. Dai-ichi Mutual Life Insurance Co., which has more than 30 trillion yen ($274 billion) in assets, agreed to buy 30 percent of Tower, entering the Australian insurance market.
Telecom Corp. (TEL AU), New Zealand's biggest telephone company, plunged 25 cents, or 8.6 percent, to A$2.65, the most since 2002 and the biggest loser on the index. The company said fourth-quarter earnings fell 31 percent and forecast a second year of declining profit.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Asian Stocks Drop on Sanyo Earnings, Mounting Growth Concerns
By Patrick Rial
Enlarge Image/Details
Aug. 8 (Bloomberg) -- Asian stocks fell, capping a second week of declines, after Sanyo Electric Co.'s operating profit dropped and UBS AG cut its rating on shipping companies.
Sanyo, the world's largest maker of rechargeable batteries, and Mitsui O.S.K. Lines Ltd. slumped in Tokyo. Mitsubishi UFJ Financial Group Inc., Japan's No. 1 bank by market value, and advertiser Dentsu Co. retreated after the government said the country may be in a recession. Telecom Corp., New Zealand's biggest telephone company, fell the most in almost six years after net income dropped.
``There aren't many bullish companies left with the economic outlook so murky,'' said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo.
The MSCI Asia Pacific Index declined 0.6 percent to 127.30 as of 10:27 a.m. in Tokyo. For the week, the gauge has lost 2.6 percent. Japan's Nikkei 225 Stock Average sank 0.3 percent to 13,089.30. Most other benchmark indexes slid in the region.
U.S. stocks fell the most in a week yesterday, with the Standard & Poor's 500 Index losing 1.8 percent. American International Group Inc. plunged the most since listing in 1969 after reporting an unexpected loss, while Wal-Mart Stores Inc., the world's largest retailer, dropped after saying sales are likely to slow. Jobless claims in the biggest economy unexpectedly rose.
Sanyo
Sanyo dropped 5.6 percent to 219 yen. The company reported a 24 percent slide in operating profit yesterday due to higher materials costs and falling demand for semiconductors.
Telecom tumbled 9.5 percent to NZ$3.33, the steepest retreat since November 2002. Price competition and declining revenues at its mobile and fixed-line businesses were responsible for a 31 percent decrease in fourth-quarter earnings.
Mitsubishi UFJ fell 4.4 percent to 831 yen, while Dentsu dropped 3.3 percent to 216,800 yen. The company reported an 8.7 percent drop in July sales yesterday.
Japan's Cabinet Office said yesterday the economy ``may be in a recession'' due to slower growth in the U.S. Economists surveyed by Bloomberg expect gross domestic product figures set to be released next week to show that the world's second-largest economy contracted 2.3 percent in the April to June quarter.
Mitsui O.S.K., Japan's second-biggest bulk shipper, plunged 7.5 percent to 1,180 yen, the most since August 2007. Jun Harada, an analyst at UBS AG in Tokyo, lowered his recommendation on Japan's three largest shipping lines, citing dimming prospects for higher rates.
Baltic Index
The Baltic Dry Index, a measure of coal, iron ore and grain shipping costs, extended its losing streak to a 20th day, the longest string of declines since August 2005, amid concern demand in China is slowing.
Hanjin Shipping Co., the largest in South Korea, fell 3.7 percent to 30,100 won. Mitsui Engineering & Shipbuilding Co., Japan's second-largest shipyard, retreated 11 percent to 261 yen after lowering its profit forecast, prompting at least three brokerages to downgrade the shares.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net
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Enlarge Image/Details
Aug. 8 (Bloomberg) -- Asian stocks fell, capping a second week of declines, after Sanyo Electric Co.'s operating profit dropped and UBS AG cut its rating on shipping companies.
Sanyo, the world's largest maker of rechargeable batteries, and Mitsui O.S.K. Lines Ltd. slumped in Tokyo. Mitsubishi UFJ Financial Group Inc., Japan's No. 1 bank by market value, and advertiser Dentsu Co. retreated after the government said the country may be in a recession. Telecom Corp., New Zealand's biggest telephone company, fell the most in almost six years after net income dropped.
``There aren't many bullish companies left with the economic outlook so murky,'' said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo.
The MSCI Asia Pacific Index declined 0.6 percent to 127.30 as of 10:27 a.m. in Tokyo. For the week, the gauge has lost 2.6 percent. Japan's Nikkei 225 Stock Average sank 0.3 percent to 13,089.30. Most other benchmark indexes slid in the region.
U.S. stocks fell the most in a week yesterday, with the Standard & Poor's 500 Index losing 1.8 percent. American International Group Inc. plunged the most since listing in 1969 after reporting an unexpected loss, while Wal-Mart Stores Inc., the world's largest retailer, dropped after saying sales are likely to slow. Jobless claims in the biggest economy unexpectedly rose.
Sanyo
Sanyo dropped 5.6 percent to 219 yen. The company reported a 24 percent slide in operating profit yesterday due to higher materials costs and falling demand for semiconductors.
Telecom tumbled 9.5 percent to NZ$3.33, the steepest retreat since November 2002. Price competition and declining revenues at its mobile and fixed-line businesses were responsible for a 31 percent decrease in fourth-quarter earnings.
Mitsubishi UFJ fell 4.4 percent to 831 yen, while Dentsu dropped 3.3 percent to 216,800 yen. The company reported an 8.7 percent drop in July sales yesterday.
Japan's Cabinet Office said yesterday the economy ``may be in a recession'' due to slower growth in the U.S. Economists surveyed by Bloomberg expect gross domestic product figures set to be released next week to show that the world's second-largest economy contracted 2.3 percent in the April to June quarter.
Mitsui O.S.K., Japan's second-biggest bulk shipper, plunged 7.5 percent to 1,180 yen, the most since August 2007. Jun Harada, an analyst at UBS AG in Tokyo, lowered his recommendation on Japan's three largest shipping lines, citing dimming prospects for higher rates.
Baltic Index
The Baltic Dry Index, a measure of coal, iron ore and grain shipping costs, extended its losing streak to a 20th day, the longest string of declines since August 2005, amid concern demand in China is slowing.
Hanjin Shipping Co., the largest in South Korea, fell 3.7 percent to 30,100 won. Mitsui Engineering & Shipbuilding Co., Japan's second-largest shipyard, retreated 11 percent to 261 yen after lowering its profit forecast, prompting at least three brokerages to downgrade the shares.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net
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Gold Declines to Eight-Week Low in Asia on Dollar's Strength
By Glenys Sim
Aug. 8 (Bloomberg) -- Gold dropped to an eight-week low in Asia, heading for a fourth weekly decline, as energy costs fell and the dollar rallied, reducing the precious metal's appeal as a haven investment.
Bullion has lost 4.7 percent this week as the dollar gained 2 percent against the euro and 1.6 percent against the yen, while oil prices tumbled 4.6 percent.
``The dollar is the main reason for gold weakness,'' Ronald Leung, director, Lee Cheong Gold Dealers (Hong Kong) Ltd. , said today by phone from Hong Kong. ``I think $850 is just a matter of time if the dollar continues to go up.''
Bullion for immediate delivery fell as much as $6.30, or 0.7 percent, to $866.75 an ounce, the lowest since June 13 and traded at $867.09 at 9:02 a.m. in Singapore. Silver for immediate delivery was down 0.3 percent at $16.15 an ounce.
The dollar headed for its fourth weekly gain against the euro after European Central Bank President Jean-Claude Trichet said risks to economic growth are ``materializing,'' reducing expectations interest rates will be lifted. The dollar also headed for its biggest weekly gain against the yen in two months.
The dollar was at $1.5247 against the euro compared with $1.5325 yesterday in New York.
Crude Oil for September delivery on the New York Mercantile Exchange was down 49 cents at $119.79 a barrel, down 19 percent from its record of $147.27 on July 11.
Gold for December delivery fell 0.2 percent to $875.90 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Gold for June delivery on the Tokyo Commodity Exchange was 1.3 percent lower at 3,081 yen a gram ($875 an ounce).
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Aug. 8 (Bloomberg) -- Gold dropped to an eight-week low in Asia, heading for a fourth weekly decline, as energy costs fell and the dollar rallied, reducing the precious metal's appeal as a haven investment.
Bullion has lost 4.7 percent this week as the dollar gained 2 percent against the euro and 1.6 percent against the yen, while oil prices tumbled 4.6 percent.
``The dollar is the main reason for gold weakness,'' Ronald Leung, director, Lee Cheong Gold Dealers (Hong Kong) Ltd. , said today by phone from Hong Kong. ``I think $850 is just a matter of time if the dollar continues to go up.''
Bullion for immediate delivery fell as much as $6.30, or 0.7 percent, to $866.75 an ounce, the lowest since June 13 and traded at $867.09 at 9:02 a.m. in Singapore. Silver for immediate delivery was down 0.3 percent at $16.15 an ounce.
The dollar headed for its fourth weekly gain against the euro after European Central Bank President Jean-Claude Trichet said risks to economic growth are ``materializing,'' reducing expectations interest rates will be lifted. The dollar also headed for its biggest weekly gain against the yen in two months.
The dollar was at $1.5247 against the euro compared with $1.5325 yesterday in New York.
Crude Oil for September delivery on the New York Mercantile Exchange was down 49 cents at $119.79 a barrel, down 19 percent from its record of $147.27 on July 11.
Gold for December delivery fell 0.2 percent to $875.90 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Gold for June delivery on the Tokyo Commodity Exchange was 1.3 percent lower at 3,081 yen a gram ($875 an ounce).
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Japan Stocks Fall as Recession Concern Heightens; Toyota Gains
By Masaki Kondo
Enlarge Image/Details
Aug. 8 (Bloomberg) -- Japan's stocks fell a second day after the government suggested the country is in recession and slowing demand for commodities cut cargo rates for shipping lines.
Sanyo Electric Co., the world's largest maker of rechargeable batteries, fell the most in more than two months after profit fell by a quarter. Mitsui O.S.K. Lines Ltd. led marine transport companies to their biggest drop in six months after shipping costs dropped a 20th day and UBS AG cut ratings. Toyota Motor Corp. surged the most in two weeks after its profit, which fell the most in five years, still beat analyst estimates.
``Looking at company earnings reported so far, I see no new vista opening up,'' Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., said in an interview with Bloomberg Television.
The Nikkei 225 Stock Average dipped 18.62, or 0.1 percent, to 13,106.37 as of 10:23 a.m. in Tokyo. The broader Topix index retreated 6.02, or 0.5 percent, to 1,252.79. The Nikkei headed for a weekly gain of 0.1 percent, while the Topix was set to lose 1.6 percent.
Japan's government said yesterday the economy is ``weakening'' for the first time since May 2001 and may be in a recession. Meanwhile, the number of Americans filing first-time claims for unemployment benefits climbed to the highest in six years, according to a report released by the Labor Department, while economists had expected claims would fall.
Sanyo shares dropped 6.5 percent to 217 yen, the sharpest drop since May 26 after saying first-quarter operating profit dropped 24 percent to 5 billion yen ($46 million), citing the stronger yen and higher materials costs. Konica Minolta Holdings Inc., the world's second-largest maker of film used in liquid- crystal displays, sank 5.4 percent to 1,655 yen after reporting a quarterly drop in operating profit.
Shipping Companies
Mitsui O.S.K., the nation's second-biggest shipper, tumbled 7.3 percent to 1,182 yen, set for the biggest plunge since Feb. 6, while market leader Nippon Yusen K.K. declined 5.6 percent to 821 yen. Kawasaki Kisen Kaisha Ltd. retreated 6.3 percent to 700 yen. Shipping companies as a group headed for the sharpest drop since August 2007, and were the biggest loser among 33 industry groups on the Topix.
UBS slashed its rating on the three shippers from ``buy,'' citing a decline in Europe-bound container charges. The Baltic Dry Index, a measure of coal, iron ore and grain shipping costs, slid for a 20th day as commodity prices fell, the longest losing streak in three years.
Crane Accident
Mitsui Engineering & Shipbuilding Co., Japan's second- largest shipyard, plummeted 14 percent to 251 yen, headed for the biggest retreat since August 2007. The company yesterday cut its first-half profit forecast by 83 percent on higher steel prices and costs linked to a crane accident.
Toyota, the world's second-largest carmaker, jumped 3.9 percent to 4,760 yen. The company posted a 28 percent drop in first-quarter net income to 353.7 billion yen, which was better than the 329 billion yen median estimate by five analysts compiled by Bloomberg.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Enlarge Image/Details
Aug. 8 (Bloomberg) -- Japan's stocks fell a second day after the government suggested the country is in recession and slowing demand for commodities cut cargo rates for shipping lines.
Sanyo Electric Co., the world's largest maker of rechargeable batteries, fell the most in more than two months after profit fell by a quarter. Mitsui O.S.K. Lines Ltd. led marine transport companies to their biggest drop in six months after shipping costs dropped a 20th day and UBS AG cut ratings. Toyota Motor Corp. surged the most in two weeks after its profit, which fell the most in five years, still beat analyst estimates.
``Looking at company earnings reported so far, I see no new vista opening up,'' Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., said in an interview with Bloomberg Television.
The Nikkei 225 Stock Average dipped 18.62, or 0.1 percent, to 13,106.37 as of 10:23 a.m. in Tokyo. The broader Topix index retreated 6.02, or 0.5 percent, to 1,252.79. The Nikkei headed for a weekly gain of 0.1 percent, while the Topix was set to lose 1.6 percent.
Japan's government said yesterday the economy is ``weakening'' for the first time since May 2001 and may be in a recession. Meanwhile, the number of Americans filing first-time claims for unemployment benefits climbed to the highest in six years, according to a report released by the Labor Department, while economists had expected claims would fall.
Sanyo shares dropped 6.5 percent to 217 yen, the sharpest drop since May 26 after saying first-quarter operating profit dropped 24 percent to 5 billion yen ($46 million), citing the stronger yen and higher materials costs. Konica Minolta Holdings Inc., the world's second-largest maker of film used in liquid- crystal displays, sank 5.4 percent to 1,655 yen after reporting a quarterly drop in operating profit.
Shipping Companies
Mitsui O.S.K., the nation's second-biggest shipper, tumbled 7.3 percent to 1,182 yen, set for the biggest plunge since Feb. 6, while market leader Nippon Yusen K.K. declined 5.6 percent to 821 yen. Kawasaki Kisen Kaisha Ltd. retreated 6.3 percent to 700 yen. Shipping companies as a group headed for the sharpest drop since August 2007, and were the biggest loser among 33 industry groups on the Topix.
UBS slashed its rating on the three shippers from ``buy,'' citing a decline in Europe-bound container charges. The Baltic Dry Index, a measure of coal, iron ore and grain shipping costs, slid for a 20th day as commodity prices fell, the longest losing streak in three years.
Crane Accident
Mitsui Engineering & Shipbuilding Co., Japan's second- largest shipyard, plummeted 14 percent to 251 yen, headed for the biggest retreat since August 2007. The company yesterday cut its first-half profit forecast by 83 percent on higher steel prices and costs linked to a crane accident.
Toyota, the world's second-largest carmaker, jumped 3.9 percent to 4,760 yen. The company posted a 28 percent drop in first-quarter net income to 353.7 billion yen, which was better than the 329 billion yen median estimate by five analysts compiled by Bloomberg.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Economic Calendar Eco Data 8/8/08
GMT Ccy Events Actual Consensus Previous Revised
05:00 JPY Japan Economic watch DI Jul N/A 29.5
07:45 CHF Swiss Unemployment rate Jul 2.30% 2.30%
11:00 CAD Canada Employment change Jul 5K -5K
11:00 CAD Canada Unemployment rate Jul 6.20% 6.20%
12:30 USD U.S. Productivity Q2 2.60% 2.60%
12:30 USD U.S. Labour cost Q2 1.40% 2.20%
14:00 USD U.S. Wholesale inventories Jun 0.60% 0.80%
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05:00 JPY Japan Economic watch DI Jul N/A 29.5
07:45 CHF Swiss Unemployment rate Jul 2.30% 2.30%
11:00 CAD Canada Employment change Jul 5K -5K
11:00 CAD Canada Unemployment rate Jul 6.20% 6.20%
12:30 USD U.S. Productivity Q2 2.60% 2.60%
12:30 USD U.S. Labour cost Q2 1.40% 2.20%
14:00 USD U.S. Wholesale inventories Jun 0.60% 0.80%
Read more...
New York Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 07 08 21:37 GMT |
The ECB press statement was the focus in NY trading as Trichet's mild recognition of economic deterioration in the Euro-zone sent the USD higher. Trichet only went as far as saying that the recent data suggest some of the downside risks to growth may be materializing, but that was enough to send EURUSD down nearly 140 pips in the session.
EURUSD opened NY trading near 1.5460 and initially shot up to 1.5500 on the ECB's continued hawkish inflation rhetoric. The pair would close near 1.5325 as it became clear that the central bank is recognizing the very real downside risks to growth.
GBPUSD followed suit, dipping from an open near 1.9505 to a close around the 1.9440 mark. Dollar strength resonated in USDCAD as well, with the pair extending gains from an open near 1.0475 to a close of 1.0530 despite flat oil prices.
USDJPY was flat in the session as the USD strength battled a US stock market rout. Stocks plummeted -2% in the session on an earnings disappointment from a major insurance company, with the sector plunging -5% on the day. This left USDJPY sitting near 109.45 after opening right around that area.
Upcoming Economic Data Releases (Asia Session) Prior Estimate
* 8/7/2008 23:50 GMT JN Loans Individual Hfund YoY 2Q 3.70% - -
* 8/7/2008 23:50 GMT JN Japan Money Stock M3 YoY JUL 0.90% 1.00%
* 8/7/2008 23:50 GMT JN Japan Money Stock M2 YoY JUL 2.30% 2.40%
* 8/7/2008 23:50 GMT JN Bank Lending incl Trusts(YoY) JUL 1.80% - -
* 8/7/2008 23:50 GMT JN Bank Lending Banks ex-Trust Y% JUL 2.00% - -
* 8/7/2008 23:50 GMT JN Bank Lending Banks Adjust YoY JUL 2.40% - -
* 8/8/2008 4:30 GMT JN Bankruptcies (YoY) JUL 11.70% - -
* 8/8/2008 5:00 GMT JN Eco Watchers Survey: Current JUL 29.5 - -
* 8/8/2008 5:00 GMT JN Eco Watchers Survey: Outlook JUL 32.1 - -
* 8/8/2008 5:45 GMT SZ Unemployment Rate JUL 2.30% 2.30%
* 8/8/2008 5:45 GMT SZ Unemployment Rate (sa) JUL 2.50% 2.50%
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Read more...
The ECB press statement was the focus in NY trading as Trichet's mild recognition of economic deterioration in the Euro-zone sent the USD higher. Trichet only went as far as saying that the recent data suggest some of the downside risks to growth may be materializing, but that was enough to send EURUSD down nearly 140 pips in the session.
EURUSD opened NY trading near 1.5460 and initially shot up to 1.5500 on the ECB's continued hawkish inflation rhetoric. The pair would close near 1.5325 as it became clear that the central bank is recognizing the very real downside risks to growth.
GBPUSD followed suit, dipping from an open near 1.9505 to a close around the 1.9440 mark. Dollar strength resonated in USDCAD as well, with the pair extending gains from an open near 1.0475 to a close of 1.0530 despite flat oil prices.
USDJPY was flat in the session as the USD strength battled a US stock market rout. Stocks plummeted -2% in the session on an earnings disappointment from a major insurance company, with the sector plunging -5% on the day. This left USDJPY sitting near 109.45 after opening right around that area.
Upcoming Economic Data Releases (Asia Session) Prior Estimate
* 8/7/2008 23:50 GMT JN Loans Individual Hfund YoY 2Q 3.70% - -
* 8/7/2008 23:50 GMT JN Japan Money Stock M3 YoY JUL 0.90% 1.00%
* 8/7/2008 23:50 GMT JN Japan Money Stock M2 YoY JUL 2.30% 2.40%
* 8/7/2008 23:50 GMT JN Bank Lending incl Trusts(YoY) JUL 1.80% - -
* 8/7/2008 23:50 GMT JN Bank Lending Banks ex-Trust Y% JUL 2.00% - -
* 8/7/2008 23:50 GMT JN Bank Lending Banks Adjust YoY JUL 2.40% - -
* 8/8/2008 4:30 GMT JN Bankruptcies (YoY) JUL 11.70% - -
* 8/8/2008 5:00 GMT JN Eco Watchers Survey: Current JUL 29.5 - -
* 8/8/2008 5:00 GMT JN Eco Watchers Survey: Outlook JUL 32.1 - -
* 8/8/2008 5:45 GMT SZ Unemployment Rate JUL 2.30% 2.30%
* 8/8/2008 5:45 GMT SZ Unemployment Rate (sa) JUL 2.50% 2.50%
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Read more...
Closing Market Recap: Equities Slump and Fixed Income Rallies
Market Updates | Written by CEP News | Aug 07 08 20:45 GMT |
(CEP News) - Worries about the financial sector and speculation that central banks will not raise rates led to an equity selloff and fixed income rally on Thursday. The U.S. dollar also continued its impressive recent rally as it gained against the euro, Canadian dollar and pound sterling.
Toronto's S&P/TSX composite index closed down 68 points to 13385, the Dow Jones industrial average closed down 225 points to 11431, the S&P 500 closed down 23 points to 1266 and the Nasdaq finished the day down 23 points to 2356.
U.S. two-year yields were down 13.8 bps to 2.43%, with five-year yields down 17.1 bps to 3.15%, 10-year yields down 13.2 bps to 3.92% and 30-year yields down 14.3 bps to 4.55%. The Eurodollar March 09 contract was up 12.5 ticks to 96.97.
Traders and strategists offered a variety of reasons for the equity selloff and Treasury rally:
- Central bankers in Europe and the UK opted to leave interest rates unchanged. And in the press conference following the ECB decision, President Jean-Claude Trichet said policy-makers have "no bias" on interest rates while adding that the second and third quarter of the year will be "particularly weak."
- There was a troubling report on first-time jobless claims released from the U.S. Department of Labor. Claims jumped above the 425k consensus to a six-year high of 455k.
- An auction of $10 billion 30-year Treasury bonds drew a high yield of 4.609% versus a 4.640% yield at the time of the announcement.
- U.S. chain store sales rose only 2.6% year-over-year in July, compared to a 4.2% increase in June, according to a report released by the International Council of Shopping Centers.
- Financial worries surrounded American International Group, or AIG, whose shares were down 17%. The company announced a worse-than-expected $5.36 billion loss, its third straight multi-billion dollar quarterly loss.
- Investors were scared by Fannie Mae, which will be reporting quarterly results Friday. Shares of Fannie and Freddie were down 15% and 12% respectively.
- Oil prices rebounded with WTI crude up $1.44 to $120.02 on pipeline worries in Turkey.
- In Canada, building permits issued in June were down 5.3% against the -1.0% consensus.
On the positive side, U.S. pending home sales were up 5.3% in June. Economists were expecting a 1.0% decline following a 4.9% decline a day ago.
Michael Herring, fixed income strategist at BMO Capital Markets, said worries about the worldwide economy are overblown, but that low interest rates and financial sector problems are likely to remain.
"There's a gap at global banks between how much they've written down and how much capital they've raised. I think we're seeing less of an appetite from investors to help raise capital," Herring said.
Derivatives traders were aggressively pricing out rate increases with the chance of a Fed hike by the end of the year at 36% compared to 55% a day ago. In Canada, BAX contracts rallied on very high volume. The Sept. contract was up 4 ticks to 96.895 and the Dec. contract was up 10 ticks to 97.190.
Eric Lascelles, fixed income strategist at TD Securities, said those figures suggest a 10% chance of a cut at the upcoming meeting and a nearly 100% probability of two cuts by the end of the year.
Markets are "telling us the Bank of Canada is going to cut quite aggressively and I have to say that I disagree strongly," Lascelles said.
Yields on two-year Canadian government bonds were down 8.9 bps to 2.77%, with five-year yields down 8.1 bps to 3.12%, 10-year yields down 5.6 bps to 3.65% and 30-year yields down 4.4 bps to 4.07%. The December 08 BAX contract was up 9.0 ticks to 97.18. The Canadian 10-year note was yielding 27.21 bps less than the U.S. 10-year note.
In Germany, returns on two-year German bonds were down 15.3 bps to 4.09%, with five-year yields down 16.4 bps to 4.09%, 10-year yields down 7.8 bps to 4.26% and 30-year yields down 1.2 bps to 4.66%.
Yields on UK two-year bonds were down 6.8 bps to 4.64%, with five-year yields down 7.3 bps to 4.61%, 10-year yields down 6.3 bps to 4.68% and 30-year yields down 4.0 bps to 4.45%.
The Canadian dollar was down 0.0038 to 0.9495 against the U.S. dollar (1.0530 USD/CAD) and down 0.72 to 103.95 against the yen.
The U.S. dollar was down 0.33 to 109.46 against the yen and the Dollar Index was up 0.292 to 74.536.
The euro was down 0.0096 to 1.5313 against the U.S. dollar, down 0.0041 to 1.6125 against the Canadian dollar, down 0.0029 to 0.7881 against the pound sterling and was lower by 1.55 to 167.60 against the yen.
The pound sterling was down 0.0050 to 1.9429 against the U.S. dollar and up 0.0026 to 2.0461 against the Canadian dollar.
The front month gold contract at the Chicago Board of Trade was down $2.80 to $880.10 per ounce.
All data taken at 4:17 p.m. EDT.
By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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(CEP News) - Worries about the financial sector and speculation that central banks will not raise rates led to an equity selloff and fixed income rally on Thursday. The U.S. dollar also continued its impressive recent rally as it gained against the euro, Canadian dollar and pound sterling.
Toronto's S&P/TSX composite index closed down 68 points to 13385, the Dow Jones industrial average closed down 225 points to 11431, the S&P 500 closed down 23 points to 1266 and the Nasdaq finished the day down 23 points to 2356.
U.S. two-year yields were down 13.8 bps to 2.43%, with five-year yields down 17.1 bps to 3.15%, 10-year yields down 13.2 bps to 3.92% and 30-year yields down 14.3 bps to 4.55%. The Eurodollar March 09 contract was up 12.5 ticks to 96.97.
Traders and strategists offered a variety of reasons for the equity selloff and Treasury rally:
- Central bankers in Europe and the UK opted to leave interest rates unchanged. And in the press conference following the ECB decision, President Jean-Claude Trichet said policy-makers have "no bias" on interest rates while adding that the second and third quarter of the year will be "particularly weak."
- There was a troubling report on first-time jobless claims released from the U.S. Department of Labor. Claims jumped above the 425k consensus to a six-year high of 455k.
- An auction of $10 billion 30-year Treasury bonds drew a high yield of 4.609% versus a 4.640% yield at the time of the announcement.
- U.S. chain store sales rose only 2.6% year-over-year in July, compared to a 4.2% increase in June, according to a report released by the International Council of Shopping Centers.
- Financial worries surrounded American International Group, or AIG, whose shares were down 17%. The company announced a worse-than-expected $5.36 billion loss, its third straight multi-billion dollar quarterly loss.
- Investors were scared by Fannie Mae, which will be reporting quarterly results Friday. Shares of Fannie and Freddie were down 15% and 12% respectively.
- Oil prices rebounded with WTI crude up $1.44 to $120.02 on pipeline worries in Turkey.
- In Canada, building permits issued in June were down 5.3% against the -1.0% consensus.
On the positive side, U.S. pending home sales were up 5.3% in June. Economists were expecting a 1.0% decline following a 4.9% decline a day ago.
Michael Herring, fixed income strategist at BMO Capital Markets, said worries about the worldwide economy are overblown, but that low interest rates and financial sector problems are likely to remain.
"There's a gap at global banks between how much they've written down and how much capital they've raised. I think we're seeing less of an appetite from investors to help raise capital," Herring said.
Derivatives traders were aggressively pricing out rate increases with the chance of a Fed hike by the end of the year at 36% compared to 55% a day ago. In Canada, BAX contracts rallied on very high volume. The Sept. contract was up 4 ticks to 96.895 and the Dec. contract was up 10 ticks to 97.190.
Eric Lascelles, fixed income strategist at TD Securities, said those figures suggest a 10% chance of a cut at the upcoming meeting and a nearly 100% probability of two cuts by the end of the year.
Markets are "telling us the Bank of Canada is going to cut quite aggressively and I have to say that I disagree strongly," Lascelles said.
Yields on two-year Canadian government bonds were down 8.9 bps to 2.77%, with five-year yields down 8.1 bps to 3.12%, 10-year yields down 5.6 bps to 3.65% and 30-year yields down 4.4 bps to 4.07%. The December 08 BAX contract was up 9.0 ticks to 97.18. The Canadian 10-year note was yielding 27.21 bps less than the U.S. 10-year note.
In Germany, returns on two-year German bonds were down 15.3 bps to 4.09%, with five-year yields down 16.4 bps to 4.09%, 10-year yields down 7.8 bps to 4.26% and 30-year yields down 1.2 bps to 4.66%.
Yields on UK two-year bonds were down 6.8 bps to 4.64%, with five-year yields down 7.3 bps to 4.61%, 10-year yields down 6.3 bps to 4.68% and 30-year yields down 4.0 bps to 4.45%.
The Canadian dollar was down 0.0038 to 0.9495 against the U.S. dollar (1.0530 USD/CAD) and down 0.72 to 103.95 against the yen.
The U.S. dollar was down 0.33 to 109.46 against the yen and the Dollar Index was up 0.292 to 74.536.
The euro was down 0.0096 to 1.5313 against the U.S. dollar, down 0.0041 to 1.6125 against the Canadian dollar, down 0.0029 to 0.7881 against the pound sterling and was lower by 1.55 to 167.60 against the yen.
The pound sterling was down 0.0050 to 1.9429 against the U.S. dollar and up 0.0026 to 2.0461 against the Canadian dollar.
The front month gold contract at the Chicago Board of Trade was down $2.80 to $880.10 per ounce.
All data taken at 4:17 p.m. EDT.
By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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Will A Rebound In Job Growth End The Loonie's Slide?
Daily Forex Fundamentals | Written by DailyFX | Aug 07 08 21:48 GMT |
Trading the News: Canadian Net Change In Employment
What's Expected
Time of release: 08/08/2008 11:00 GMT, 07:00 EST
Primary Pair Impact : USDCAD
Expected: 5.0K
Previous: -5.0K
How To Trade This Event Risk
The Canadian labor market is expected to have rebounded in July with job creation of 5,000 jobs. The Canadian economy continues to feel the effects of the U.S. downturn, as growth fell 0.1% in May as exports declined. The manufacturing industry continues to weaken which was evidenced by the decline in job growth from 28,600 in May to 300 in June. Additionally, the Ivey PMI fell to 65.5 from 69.6 as its employment component fell to 46.3 from 58.2 signaling that more job losses could be forthcoming. The softening labor market has weighed on consumer consumption which slowed to 0.4% from 0.6% in April. Also, oil prices falling 20% may have spelled the end of the commodity boom which has been the main engine of growth for the economy. If oil related companies start to draw down their payrolls then there could be a significant drop in jobs. Yet, despite growth falling 0.1% in May and three of the last four months, the BoC has left their benchmark rate unchanged the last two policy meetings as inflation risks have grown. Indeed, consumer prices rose to 3.1% in June from 2.2% the month prior, breaching the central bank's 1%-3% target band.
The Canadian consumer has proved to be resilient and with wholesale sales rising 1.6% in May could be a sign that domestic growth will continue. This may give lead to a rise in service sector hiring which has declined the last two months. Additionally, the recent easing by the BoC should have a greater impact on growth that the efforts of the Fed, since the Canadian housing picture is considerably stronger. Therefore we would look for rebound in employment, with job creation returning to double digits for a long Canadian dollar trade (short USDCAD). If we have this bullish fundamental mix, we will look for a red, five-minute candle to confirm entry on two lots of USDCAD at market. Our stop will be placed at the nearby swing low (or reasonable distance considering the level of surprise) and the first lot's target will be immediately set equal to this initial risk. The second target will be determined by discretion. To preserve profit, we will move the stop on the second lot to breakeven when the first takes profit.
Alternatively, a second month of job losses will spark bearish loonie sentiment. For a short we will look for a growth to remain flat or slightly improved and follow the same setup as the short, just in reverse.
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 collects several opinions related to the decision and verifies facts from at least several independent sources.
Read more...
Trading the News: Canadian Net Change In Employment
What's Expected
Time of release: 08/08/2008 11:00 GMT, 07:00 EST
Primary Pair Impact : USDCAD
Expected: 5.0K
Previous: -5.0K
How To Trade This Event Risk
The Canadian labor market is expected to have rebounded in July with job creation of 5,000 jobs. The Canadian economy continues to feel the effects of the U.S. downturn, as growth fell 0.1% in May as exports declined. The manufacturing industry continues to weaken which was evidenced by the decline in job growth from 28,600 in May to 300 in June. Additionally, the Ivey PMI fell to 65.5 from 69.6 as its employment component fell to 46.3 from 58.2 signaling that more job losses could be forthcoming. The softening labor market has weighed on consumer consumption which slowed to 0.4% from 0.6% in April. Also, oil prices falling 20% may have spelled the end of the commodity boom which has been the main engine of growth for the economy. If oil related companies start to draw down their payrolls then there could be a significant drop in jobs. Yet, despite growth falling 0.1% in May and three of the last four months, the BoC has left their benchmark rate unchanged the last two policy meetings as inflation risks have grown. Indeed, consumer prices rose to 3.1% in June from 2.2% the month prior, breaching the central bank's 1%-3% target band.
The Canadian consumer has proved to be resilient and with wholesale sales rising 1.6% in May could be a sign that domestic growth will continue. This may give lead to a rise in service sector hiring which has declined the last two months. Additionally, the recent easing by the BoC should have a greater impact on growth that the efforts of the Fed, since the Canadian housing picture is considerably stronger. Therefore we would look for rebound in employment, with job creation returning to double digits for a long Canadian dollar trade (short USDCAD). If we have this bullish fundamental mix, we will look for a red, five-minute candle to confirm entry on two lots of USDCAD at market. Our stop will be placed at the nearby swing low (or reasonable distance considering the level of surprise) and the first lot's target will be immediately set equal to this initial risk. The second target will be determined by discretion. To preserve profit, we will move the stop on the second lot to breakeven when the first takes profit.
Alternatively, a second month of job losses will spark bearish loonie sentiment. For a short we will look for a growth to remain flat or slightly improved and follow the same setup as the short, just in reverse.
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 collects several opinions related to the decision and verifies facts from at least several independent sources.
Read more...
Thursday's News Recap: U.S. Jobless Claims Soar, U.S. Pending Home Sales Rebound
News Recap | Written by CEP News | Aug 07 08 20:28 GMT |
(CEP News) - North American markets received some mixed data today with the release of worse-than-expected weekly U.S. jobless claims data, but better-than-expected U.S. pending home sales for June. In Canada, the value of building permits dropped sharply in June, while overseas the Bank of England and European Central Bank announced interest rate decisions.
Despite a worse-than-expected U.S. initial jobless claims reading of 455k in the week ending Aug. 2, many economists dismissed the figure, saying much of the boost is due to a change in eligibility rules making it easier for recipients to file claims. Economists had expected initial claims to drop to 425k. Continuing claims also trended higher, rising to 3.311 million for the week ending July 26.
"These data look alarming but they have been lifted by people claiming for extended benefits but proving eligible to make new claims," said Ian Shepherdson, chief U.S. economist from HFE. "The labor market is weak, no doubt about that, but just how weak it is right now is anyone's guess."
U.S. pending home sales rebounded by 5.3% in June, according to the National Association of Realtors (NAR), against expectations that the index would fall by 1.0%. The bounce is better than the most optimistic forecasts and follows a downwardly revised 4.9% drop in the prior month. This is the second unexpected bounce in the past three months. April's index rebounded 7.1% after the seven-year index hit an all-time low in March.
The consensus was expecting the PHSI to fall by 1.0% in the month, with estimates ranging from -3.0% to +3.5%. The PHSI now stands at 89.0, up from 84.5 in the previous month. From a year prior, the index has declined by 12.1%, compared with the previous month's 15.7% annual decline.
"The stabilization in sales seems rather cosmetic though, driven by bargain hunters picking up foreclosed homes," said Dimitry Fleming from ING.
U.S. consumer debt increased by $14.3 billion in June, according to data released Thursday from the U.S. Federal Reserve, which also showed that total consumer credit had risen to $2.586 trillion from the prior month's $2.572 trillion. As a percentage, consumer credit rose at an annual rate of 6.75%.
Comparable U.S. chain store sales rose 2.6% year-over-year in July, following a revised 4.2% increase in June, according to a report released by the International Council of Shopping Centers on Thursday. Total sales rose by an annual 7.5%, slower than the previous month's 8.7% gain.
According to the RBC Consumer Attitudes and Spending by Household (CASH) index, consumers are feeling a lot better about their financial circumstances these days, as lower oil prices and a rebounding stock market have stalled a downward spiral in U.S. consumer confidence. According to the index, overall consumer confidence grew in at 33.8 in August, a 19.2 point increase from last month's 14.6 reading.
Underground natural gas storage in the United States increased 56 billion cubic feet in the week ending Aug 1, the Energy Information Administration (EIA) said Thursday. The weekly increase was below the +62 Bcf Bloomberg estimate. In the previous week, the EIA reported a supply increase of 65 Bcf.
Citigroup Inc. agreed on Thursday to buy back roughly $7 billion worth of auction-rate securities that it sold to customers, in addition to about $100 million in penalties it must pay to settle charges of misrepresentations in its marketing of those securities. The announcement was made by the Securities and Exchange Commission and New York State officials.
In Canada, the value of building permits issued by municipalities dropped sharply in June, falling 5.3% from the previous month to $6.3 billion, Statistics Canada reported. The decrease was significantly larger than the 1.0% decline expected by analysts and reflected weakness in both the residential and non-residential sectors.
Housing permits fell 4.4% from May to $3.6 billion and non-residential permits were down 6.6% at $2.8 billion. Multi-family housing permits dragged down the residential totals for June, plunging 13.8% to $1.3 billion, while single-family permits staged a small rally, increasing 1.8% to $2.3 billion.
The Conference Board of Canada released a survey showing that higher costs and slowing markets have sapped the confidence from Canadian business leaders. Many of those surveyed expect economic conditions to remain tough for the rest of the year, the survey showed. More than 30% of respondents said they are concerned about weak market demand.
Canadians are flocking to snatch up property in the U.S. as a result of affordable house prices and attractive exchange rates, the National Association of Realtors said in its 2008 Profile of International Home Buying Activity survey. Since May 2007, NAR estimates that between 150,000 and 190,000 homes in the U.S. were bought by foreign nationals. This year, Canada replaced Mexico as the country with the largest share of foreign buyers in the U.S., with the percentage of Canadian buyers doubling to 23.5% from 11% last year, NAR said.
Earlier in the morning, the European Central Bank announced that it would keep its main refinancing rate unchanged at 4.25%, as expected. The ECB also reported that the marginal lending rate and deposit rate will remain at 5.25% and 3.25% respectively.
Following the rate decision, ECB President Jean-Claude Trichet warned that inflation will remain at elevated levels for a protracted period of time. Trichet also said labour costs had been growing over the past quarters and that the central bank would be monitoring wage negotiations "with particular attention." In a question and answer session, Trichet reiterated that the ECB never pre-commits and that the ECB has no bias regarding rates.
"The ECB is in a 'wait and see' position, to assess new information regarding the outlook for inflation and economic growth," said Jürgen Michels, an analyst from Citigroup. "In toughening the language regarding indirect effects of the rise in food and energy prices, the ECB remains a hawkish tilt."
Soaring inflation and weakening growth threatening to push the economy into recession were insufficient to sway the Bank of England from its monetary policy stance on Thursday as the bank held the benchmark 5.00% interest rate unchanged.
In overnight news, the German Economic Ministry reported that German industrial production rose 1.7% in June on an annualized basis, up from both the 1.5% gain expected and the 0.8% increase seen in May.
Seasonally adjusted labour force figures released by the Australian Bureau of Statistics (ABS) indicate that employment in Australia increased by 10,900 to 10,721,500 in July. The unemployment rate for the nation remained steady at 4.3%.
By Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , Geoff Matthews, gmatthews@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it and Erik Kevin Franco, efranco@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, ssussman@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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(CEP News) - North American markets received some mixed data today with the release of worse-than-expected weekly U.S. jobless claims data, but better-than-expected U.S. pending home sales for June. In Canada, the value of building permits dropped sharply in June, while overseas the Bank of England and European Central Bank announced interest rate decisions.
Despite a worse-than-expected U.S. initial jobless claims reading of 455k in the week ending Aug. 2, many economists dismissed the figure, saying much of the boost is due to a change in eligibility rules making it easier for recipients to file claims. Economists had expected initial claims to drop to 425k. Continuing claims also trended higher, rising to 3.311 million for the week ending July 26.
"These data look alarming but they have been lifted by people claiming for extended benefits but proving eligible to make new claims," said Ian Shepherdson, chief U.S. economist from HFE. "The labor market is weak, no doubt about that, but just how weak it is right now is anyone's guess."
U.S. pending home sales rebounded by 5.3% in June, according to the National Association of Realtors (NAR), against expectations that the index would fall by 1.0%. The bounce is better than the most optimistic forecasts and follows a downwardly revised 4.9% drop in the prior month. This is the second unexpected bounce in the past three months. April's index rebounded 7.1% after the seven-year index hit an all-time low in March.
The consensus was expecting the PHSI to fall by 1.0% in the month, with estimates ranging from -3.0% to +3.5%. The PHSI now stands at 89.0, up from 84.5 in the previous month. From a year prior, the index has declined by 12.1%, compared with the previous month's 15.7% annual decline.
"The stabilization in sales seems rather cosmetic though, driven by bargain hunters picking up foreclosed homes," said Dimitry Fleming from ING.
U.S. consumer debt increased by $14.3 billion in June, according to data released Thursday from the U.S. Federal Reserve, which also showed that total consumer credit had risen to $2.586 trillion from the prior month's $2.572 trillion. As a percentage, consumer credit rose at an annual rate of 6.75%.
Comparable U.S. chain store sales rose 2.6% year-over-year in July, following a revised 4.2% increase in June, according to a report released by the International Council of Shopping Centers on Thursday. Total sales rose by an annual 7.5%, slower than the previous month's 8.7% gain.
According to the RBC Consumer Attitudes and Spending by Household (CASH) index, consumers are feeling a lot better about their financial circumstances these days, as lower oil prices and a rebounding stock market have stalled a downward spiral in U.S. consumer confidence. According to the index, overall consumer confidence grew in at 33.8 in August, a 19.2 point increase from last month's 14.6 reading.
Underground natural gas storage in the United States increased 56 billion cubic feet in the week ending Aug 1, the Energy Information Administration (EIA) said Thursday. The weekly increase was below the +62 Bcf Bloomberg estimate. In the previous week, the EIA reported a supply increase of 65 Bcf.
Citigroup Inc. agreed on Thursday to buy back roughly $7 billion worth of auction-rate securities that it sold to customers, in addition to about $100 million in penalties it must pay to settle charges of misrepresentations in its marketing of those securities. The announcement was made by the Securities and Exchange Commission and New York State officials.
In Canada, the value of building permits issued by municipalities dropped sharply in June, falling 5.3% from the previous month to $6.3 billion, Statistics Canada reported. The decrease was significantly larger than the 1.0% decline expected by analysts and reflected weakness in both the residential and non-residential sectors.
Housing permits fell 4.4% from May to $3.6 billion and non-residential permits were down 6.6% at $2.8 billion. Multi-family housing permits dragged down the residential totals for June, plunging 13.8% to $1.3 billion, while single-family permits staged a small rally, increasing 1.8% to $2.3 billion.
The Conference Board of Canada released a survey showing that higher costs and slowing markets have sapped the confidence from Canadian business leaders. Many of those surveyed expect economic conditions to remain tough for the rest of the year, the survey showed. More than 30% of respondents said they are concerned about weak market demand.
Canadians are flocking to snatch up property in the U.S. as a result of affordable house prices and attractive exchange rates, the National Association of Realtors said in its 2008 Profile of International Home Buying Activity survey. Since May 2007, NAR estimates that between 150,000 and 190,000 homes in the U.S. were bought by foreign nationals. This year, Canada replaced Mexico as the country with the largest share of foreign buyers in the U.S., with the percentage of Canadian buyers doubling to 23.5% from 11% last year, NAR said.
Earlier in the morning, the European Central Bank announced that it would keep its main refinancing rate unchanged at 4.25%, as expected. The ECB also reported that the marginal lending rate and deposit rate will remain at 5.25% and 3.25% respectively.
Following the rate decision, ECB President Jean-Claude Trichet warned that inflation will remain at elevated levels for a protracted period of time. Trichet also said labour costs had been growing over the past quarters and that the central bank would be monitoring wage negotiations "with particular attention." In a question and answer session, Trichet reiterated that the ECB never pre-commits and that the ECB has no bias regarding rates.
"The ECB is in a 'wait and see' position, to assess new information regarding the outlook for inflation and economic growth," said Jürgen Michels, an analyst from Citigroup. "In toughening the language regarding indirect effects of the rise in food and energy prices, the ECB remains a hawkish tilt."
Soaring inflation and weakening growth threatening to push the economy into recession were insufficient to sway the Bank of England from its monetary policy stance on Thursday as the bank held the benchmark 5.00% interest rate unchanged.
In overnight news, the German Economic Ministry reported that German industrial production rose 1.7% in June on an annualized basis, up from both the 1.5% gain expected and the 0.8% increase seen in May.
Seasonally adjusted labour force figures released by the Australian Bureau of Statistics (ABS) indicate that employment in Australia increased by 10,900 to 10,721,500 in July. The unemployment rate for the nation remained steady at 4.3%.
By Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , Geoff Matthews, gmatthews@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it and Erik Kevin Franco, efranco@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, ssussman@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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