By Alaric Nightingale
Aug. 12 (Bloomberg) -- Nobu Su, a shipping investor who predicted oil-tanker rates would double six months ago, said he expects rental costs to advance threefold by the first quarter of next year as energy prices gain on political instability.
With a fleet of 20 very large crude carriers, or VLCCs, Su is now the third-largest operator in the single-voyage, or spot, market, behind Frontline Ltd. and Tankers International Ltd. Su, chief executive officer of TMT Co. Ltd., said in February the cost of hiring a VLCC would gain because ships were traveling farther.
``Winter will be very strong,'' Su said in an interview in London yesterday. Political instability will cause oil prices to strengthen, increasing demand for tankers from refineries seeking to secure supply, he said.
The cost of shipping Saudi Arabian crude oil to Japan, the industry benchmark, doubled to 244.53 Worldscale points on July 1 from 122.19 points when Su made his prediction. Rental income since then has dropped 80 percent to $29,279 a day, on signs that higher oil prices are reducing consumption.
Chinese crude-oil imports fell to their lowest this year, curbing demand for shipping, as high prices discouraged refineries from buying cargoes, the nation's Customs General Administration said on its Web site yesterday.
In the U.S., gasoline consumption has fallen for 15 weeks, according to an Aug. 5 MasterCard survey. At least 24 airlines filed for bankruptcy or stopped flying because of fuel costs.
Crude oil traded in New York has declined about 22 percent since reaching a record $147.27 a barrel on July 11.
Sailing Slower
Shipowners are responding to the slump by telling captains to sail their tankers more slowly, three shipbrokers said Aug. 5. The last time that happened, in the final quarter of 2007, the market posted its biggest two-month gain in rates for at least 16 years in November and December.
Su, 49 and known in the industry as ``Elephant Man'' because some of his vessels' names end with ``Elephant,'' made $1 billion in 2006 betting coal and iron-ore shipping costs would gain, according to TradeWinds newspaper.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
To contact the reporter on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net
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Tuesday, August 12, 2008
Oil Falls for a Third Day as Economic Slowdown May Cut Demand
By Christian Schmollinger
Aug. 12 (Bloomberg) -- Crude oil fell for a third day on signs that a U.S. economic slump will extend into 2009, paring fuel demand in the world's biggest oil consumer.
The U.S. economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year, a Bloomberg News survey showed. The dollar is trading near a 5 1/2-month high against the euro, reducing the need for commodities as a hedge against inflation. China, the second-largest oil consumer, said yesterday imports fell in July.
``The market focus has shifted to the weakness in demand, and also the firmer U.S. dollar is playing a part as well,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The Chinese economy isn't growing as strong as last year.''
Crude oil for September delivery fell as much as 69 cents, or 0.6 percent, to $113.76 a barrel, in after-hours electronic trading on the New York Mercantile Exchange. It was at $113.96 a barrel at 10:42 a.m. Singapore time.
Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1. Oil has declined 23 percent from the record $147.27 reached on July 11.
Prices are also down as the dollar traded near a 5 1/2- month high to the euro, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar traded at $1.4872 against the euro at 10:23 a.m. in Tokyo from $1.4909 yesterday.
China's July crude-oil imports fell 7 percent from a year earlier after global prices increased to a record, discouraging refiners from purchasing raw materials to process into fuels.
Hedge Funds Short
Hedge funds and other speculators increasing their net- short positions in futures contracts have also spurred crude oil's decline, said Jonathan Kornafel, director for Asia at Hudson Capital Energy in Singapore.
Speculative short positions, or bets prices will fall, outnumbered long positions by 5,550 contracts on the New York Mercantile Exchange in the week ended Aug. 5, the Commodity Futures Trading Commission said in its Commitments of Traders report on Aug. 8. Net-short positions rose by 4,890 contracts, or 741 percent, from a week earlier.
``Everyone sees that the hedge funds are reversing their positions,'' said Kornafel. ``Everyone is out of the short dollar, long crude position and that's what seems to be driving the market.''
Tankers Move
Prices rose in early trading yesterday as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
Brent crude oil for September settlement fell as much as 67 cents, or 0.6 percent, to $112 a barrel on London's ICE Futures Europe exchange at 10:34 a.m. Singapore time. It fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel yesterday, the lowest since May 1.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Aug. 12 (Bloomberg) -- Crude oil fell for a third day on signs that a U.S. economic slump will extend into 2009, paring fuel demand in the world's biggest oil consumer.
The U.S. economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year, a Bloomberg News survey showed. The dollar is trading near a 5 1/2-month high against the euro, reducing the need for commodities as a hedge against inflation. China, the second-largest oil consumer, said yesterday imports fell in July.
``The market focus has shifted to the weakness in demand, and also the firmer U.S. dollar is playing a part as well,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The Chinese economy isn't growing as strong as last year.''
Crude oil for September delivery fell as much as 69 cents, or 0.6 percent, to $113.76 a barrel, in after-hours electronic trading on the New York Mercantile Exchange. It was at $113.96 a barrel at 10:42 a.m. Singapore time.
Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1. Oil has declined 23 percent from the record $147.27 reached on July 11.
Prices are also down as the dollar traded near a 5 1/2- month high to the euro, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar traded at $1.4872 against the euro at 10:23 a.m. in Tokyo from $1.4909 yesterday.
China's July crude-oil imports fell 7 percent from a year earlier after global prices increased to a record, discouraging refiners from purchasing raw materials to process into fuels.
Hedge Funds Short
Hedge funds and other speculators increasing their net- short positions in futures contracts have also spurred crude oil's decline, said Jonathan Kornafel, director for Asia at Hudson Capital Energy in Singapore.
Speculative short positions, or bets prices will fall, outnumbered long positions by 5,550 contracts on the New York Mercantile Exchange in the week ended Aug. 5, the Commodity Futures Trading Commission said in its Commitments of Traders report on Aug. 8. Net-short positions rose by 4,890 contracts, or 741 percent, from a week earlier.
``Everyone sees that the hedge funds are reversing their positions,'' said Kornafel. ``Everyone is out of the short dollar, long crude position and that's what seems to be driving the market.''
Tankers Move
Prices rose in early trading yesterday as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
Brent crude oil for September settlement fell as much as 67 cents, or 0.6 percent, to $112 a barrel on London's ICE Futures Europe exchange at 10:34 a.m. Singapore time. It fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel yesterday, the lowest since May 1.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Chevron Brings Forward Plans for West Australian Gas
By Angela Macdonald-Smith
Aug. 12 (Bloomberg) -- Chevron Corp. said its Gorgon liquefied natural gas venture in Western Australia will bring forward plans to build a plant to supply fuel to the local market and help prevent energy shortages in the state.
The Gorgon partners will assess whether to construct the local plant at the same time as they consider sanctioning the LNG export project, a decision expected next year, Colin Beckett, San Ramon, California-based Chevron's manager for the Greater Gorgon area, said today. The partners include Royal Dutch Shell Plc and Exxon Mobil Corp.
Western Australia, which generates a third of the nation's exports, has experienced an energy shortage since a June 3 explosion at an Apache Corp. plant that supplies about 30 percent of the state's natural gas. The disruption has boosted gas prices and left mining companies and businesses scrambling to secure alternative fuels to prevent shutting down operations.
``Certainly the domestic gas market in Western Australia is more buoyant from a supply point of view than it has been,'' Beckett said today in a telephone interview. ``This does start to provide some certainty for the market that there will be another supply, another infrastructure link to the coast.''
The gas plant would have a capacity of 300 terajoules a day, compared with the existing Western Australian market of about 1,150 terajoules a day, Beckett said. He declined to estimate the cost of the plant, which would be built on the Barrow Island nature reserve, within the site of the LNG project.
Contract Tenders
The Gorgon partners approved funding for all the work on the project that will take place before the final decision to proceed, Beckett said. That will allow the venture to invite bids for A$300 million ($263 million) of contracts, to be followed over the next five months by tenders for contracts for ``several billions of dollars'' that will be awarded once the project gets final approval, he said.
The LNG venture will comprise three production units of 5 million metric tons a year each. The local gas plant will start up at the same time as the third LNG production unit, which will be about 12 months after the first two start, Beckett said.
The project will boost the net present value of Australia's Gross Domestic Product by A$64.3 billion and provide government revenues of about A$39.8 billion, Beckett said today in an e- mailed address, citing a study by economic consulting firm ACIL Tasman Pty.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- Chevron Corp. said its Gorgon liquefied natural gas venture in Western Australia will bring forward plans to build a plant to supply fuel to the local market and help prevent energy shortages in the state.
The Gorgon partners will assess whether to construct the local plant at the same time as they consider sanctioning the LNG export project, a decision expected next year, Colin Beckett, San Ramon, California-based Chevron's manager for the Greater Gorgon area, said today. The partners include Royal Dutch Shell Plc and Exxon Mobil Corp.
Western Australia, which generates a third of the nation's exports, has experienced an energy shortage since a June 3 explosion at an Apache Corp. plant that supplies about 30 percent of the state's natural gas. The disruption has boosted gas prices and left mining companies and businesses scrambling to secure alternative fuels to prevent shutting down operations.
``Certainly the domestic gas market in Western Australia is more buoyant from a supply point of view than it has been,'' Beckett said today in a telephone interview. ``This does start to provide some certainty for the market that there will be another supply, another infrastructure link to the coast.''
The gas plant would have a capacity of 300 terajoules a day, compared with the existing Western Australian market of about 1,150 terajoules a day, Beckett said. He declined to estimate the cost of the plant, which would be built on the Barrow Island nature reserve, within the site of the LNG project.
Contract Tenders
The Gorgon partners approved funding for all the work on the project that will take place before the final decision to proceed, Beckett said. That will allow the venture to invite bids for A$300 million ($263 million) of contracts, to be followed over the next five months by tenders for contracts for ``several billions of dollars'' that will be awarded once the project gets final approval, he said.
The LNG venture will comprise three production units of 5 million metric tons a year each. The local gas plant will start up at the same time as the third LNG production unit, which will be about 12 months after the first two start, Beckett said.
The project will boost the net present value of Australia's Gross Domestic Product by A$64.3 billion and provide government revenues of about A$39.8 billion, Beckett said today in an e- mailed address, citing a study by economic consulting firm ACIL Tasman Pty.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Malaysia Ringgit Drops in Longest Losing Streak Since Peg Ended
By David Yong
Aug. 12 (Bloomberg) -- Malaysia's ringgit fell for an eighth day, the longest losing streak since a peg to the dollar was scrapped in July 2005, on speculation the economy will cool as exports slow and faster inflation curbs consumer spending.
The currency has dropped every day this month and its 2.1 percent slide against the greenback is second only to the Singapore dollar's among Asia's 10 most traded currencies outside Japan. Malaysia's $147 billion economy expanded at a ``moderate'' pace in the second quarter, Prime Minister Abdullah Ahmad Badawi said yesterday.
``Recent data signal more downside risk to the currency,'' said Joanna Tan, a Singapore-based economist at Forecast Pte. ``Malaysian exports are susceptible to headwinds and won't escape the erosion in global demand.''
The ringgit fell 0.4 percent to 3.3285 per dollar as of 9:10 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency earlier touched 3.3295 per dollar, its low for the year.
JPMorgan Chase & Co. today cut its ringgit forecast for a second time in two weeks, reducing its year-end target to 3.38 per dollar from 3.20. Electronics exports from South Korea, Taiwan, Singapore and Malaysia will bear the brunt of a slowdown in the U.S., Japan and Germany, the bank said in a research note.
Governor Zeti Akhtar Aziz yesterday said any market intervention won't be done to affect the underlying trend of the ringgit. The central bank will report second-quarter gross domestic product on Aug. 29 and the government will present its 2009 budget on the same day.
Malaysia's economy grew 7.1 percent from a year earlier in the first quarter, after expanding 7.3 percent in the final three months of 2007. Singapore, which was Malaysia's biggest overseas market in the first half, yesterday reported the slowest economic growth in five years and forecast exports would drop this year for the first time since 2001.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- Malaysia's ringgit fell for an eighth day, the longest losing streak since a peg to the dollar was scrapped in July 2005, on speculation the economy will cool as exports slow and faster inflation curbs consumer spending.
The currency has dropped every day this month and its 2.1 percent slide against the greenback is second only to the Singapore dollar's among Asia's 10 most traded currencies outside Japan. Malaysia's $147 billion economy expanded at a ``moderate'' pace in the second quarter, Prime Minister Abdullah Ahmad Badawi said yesterday.
``Recent data signal more downside risk to the currency,'' said Joanna Tan, a Singapore-based economist at Forecast Pte. ``Malaysian exports are susceptible to headwinds and won't escape the erosion in global demand.''
The ringgit fell 0.4 percent to 3.3285 per dollar as of 9:10 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency earlier touched 3.3295 per dollar, its low for the year.
JPMorgan Chase & Co. today cut its ringgit forecast for a second time in two weeks, reducing its year-end target to 3.38 per dollar from 3.20. Electronics exports from South Korea, Taiwan, Singapore and Malaysia will bear the brunt of a slowdown in the U.S., Japan and Germany, the bank said in a research note.
Governor Zeti Akhtar Aziz yesterday said any market intervention won't be done to affect the underlying trend of the ringgit. The central bank will report second-quarter gross domestic product on Aug. 29 and the government will present its 2009 budget on the same day.
Malaysia's economy grew 7.1 percent from a year earlier in the first quarter, after expanding 7.3 percent in the final three months of 2007. Singapore, which was Malaysia's biggest overseas market in the first half, yesterday reported the slowest economic growth in five years and forecast exports would drop this year for the first time since 2001.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.
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Australian Dollar Falls to 6 1/2-Month Low; N.Z. Dollar Drops
By Ron Harui and Candice Zachariahs
Enlarge Image/Details
Aug. 12 (Bloomberg) -- Australia's dollar fell to the lowest in more than six months as the yield premium on the nation's two- year government bonds over Treasuries shrank to the least in about eight months. New Zealand's dollar dropped.
The Australian dollar, also known as the Aussie, declined for an 11th day, the longest losing streak since at least 1975, after the Reserve Bank of Australia said yesterday that a ``significant moderation'' in domestic demand would give it room to lower borrowing costs. The Australian and New Zealand currencies also dropped as prices slid for commodities the two countries export such as gold, copper, lumber and lamb.
``This reflects a very big change in expectations in domestic money markets from the RBA,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. With yield differentials narrowing ``and commodity prices moving lower that removes a relative support for the Aussie.''
The Australian dollar declined as much as 1.6 percent to 87.58 U.S. cents, the lowest since Jan. 25, and traded at 87.74 at 11:37 a.m. in Sydney from 89.02 cents late in Asia yesterday. The currency fell 1.1 percent to 96.67 yen from 97.72 yen.
The New Zealand dollar dropped 1 percent to 69.70 U.S. cents from 70.39 cents late in Asia yesterday. It reached 69.50 cents, the lowest since Sept. 11. The currency weakened 0.7 percent to 76.76 yen from 77.27 yen.
The Aussie was the second-worst performer among the 16 most- traded currencies versus the U.S. dollar in Asian trading today as the difference in yield between two-year Australian and U.S. government bonds narrowed to 3.37 percentage points, the lowest since Nov. 16. The differential reached a high of 5.10 points on Feb. 29.
`Fairly Slow'
The RBA said yesterday that ``economic growth will be fairly slow in the period ahead,'' in its quarterly policy statement. Gross domestic product will probably expand 2 percent this year compared with 4.3 percent in 2007 and less than the 2.25 percent forecast by the bank in May, the RBA also said.
Traders are certain the RBA will lower its 7.25 percent benchmark rate by at least a quarter-percentage point when it meets next on Sept. 2, according to a Credit Suisse Group index based on interest-rate swaps. They expect the central bank to reduce rates by 91 basis points, or 0.91 percentage point, over the next 12 months, another Credit Suisse index shows.
The Australian dollar also dropped as gold, the nation's third most-valuable raw material export, tumbled to its lowest price since December. Oil, the fourth most-valuable, fell to a 14-week low and copper slipped to its lowest in six months.
Commodity prices influence the Australian and New Zealand dollars because raw materials account for 60 percent of Australia's exports, while sales of commodities including lumber make up 70 percent of New Zealand's overseas shipments.
`Most Vulnerable'
The New Zealand dollar, or kiwi, slid to an 11-month low as falling commodity prices may diminish the outlook for economic growth in the South Pacific nation, prompting traders to add to bets on further central bank rate reductions.
``Both the kiwi and the Aussie are probably most vulnerable, especially against the correlation that they exhibit against the commodity side,'' said Mike Moran, a senior currency strategist at Standard Chartered Bank in New York. ``Those are probably going to see the more pronounced retracement.''
The UBS Bloomberg Constant Maturity Commodity Index of 26 commodities declined 0.3 percent to 1,416.804 yesterday, the lowest since March 20. New Zealand's Treasury Department said Aug. 4 the economy probably contracted in the second quarter, pushing the country into its first recession in a decade.
The Aussie and kiwi had correlations of 0.81 and 0.87, respectively, with the UBS Bloomberg Constant Maturity Commodity Index in the past month, according to data compiled by Bloomberg. A reading of 1 would mean they move in lockstep.
RBNZ Rate Bets
The Reserve Bank of New Zealand lowered its official cash rate by a quarter-percentage point to 8 percent on July 24. New Zealand's benchmark interest rate compares with 2 percent in the U.S. and 0.5 percent in Japan, making the kiwi a favorite target for investors seeking higher returns.
Traders are betting that the RBNZ will lower its benchmark rate by 1.46 percentage points over the next 12 months, up from 1.34 percentage points two weeks ago, according to a Credit Suisse Group index.
Australian 10-year government bonds advanced for a fourth day, pushing the yield down 3 basis points, or 0.03 percentage point, to 5.89 percent. The price of the 5.25 percent bond maturing in March 2019 rose 0.217, or A$2.17 per A$1,000 face amount, to 95.037.
New Zealand's government debt was little changed. The yield on the benchmark 10-year note was at 6.16 percent, and the yield on the three-year security climbed to 6.23 percent from 6.22 percent. 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
Read more...
Enlarge Image/Details
Aug. 12 (Bloomberg) -- Australia's dollar fell to the lowest in more than six months as the yield premium on the nation's two- year government bonds over Treasuries shrank to the least in about eight months. New Zealand's dollar dropped.
The Australian dollar, also known as the Aussie, declined for an 11th day, the longest losing streak since at least 1975, after the Reserve Bank of Australia said yesterday that a ``significant moderation'' in domestic demand would give it room to lower borrowing costs. The Australian and New Zealand currencies also dropped as prices slid for commodities the two countries export such as gold, copper, lumber and lamb.
``This reflects a very big change in expectations in domestic money markets from the RBA,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. With yield differentials narrowing ``and commodity prices moving lower that removes a relative support for the Aussie.''
The Australian dollar declined as much as 1.6 percent to 87.58 U.S. cents, the lowest since Jan. 25, and traded at 87.74 at 11:37 a.m. in Sydney from 89.02 cents late in Asia yesterday. The currency fell 1.1 percent to 96.67 yen from 97.72 yen.
The New Zealand dollar dropped 1 percent to 69.70 U.S. cents from 70.39 cents late in Asia yesterday. It reached 69.50 cents, the lowest since Sept. 11. The currency weakened 0.7 percent to 76.76 yen from 77.27 yen.
The Aussie was the second-worst performer among the 16 most- traded currencies versus the U.S. dollar in Asian trading today as the difference in yield between two-year Australian and U.S. government bonds narrowed to 3.37 percentage points, the lowest since Nov. 16. The differential reached a high of 5.10 points on Feb. 29.
`Fairly Slow'
The RBA said yesterday that ``economic growth will be fairly slow in the period ahead,'' in its quarterly policy statement. Gross domestic product will probably expand 2 percent this year compared with 4.3 percent in 2007 and less than the 2.25 percent forecast by the bank in May, the RBA also said.
Traders are certain the RBA will lower its 7.25 percent benchmark rate by at least a quarter-percentage point when it meets next on Sept. 2, according to a Credit Suisse Group index based on interest-rate swaps. They expect the central bank to reduce rates by 91 basis points, or 0.91 percentage point, over the next 12 months, another Credit Suisse index shows.
The Australian dollar also dropped as gold, the nation's third most-valuable raw material export, tumbled to its lowest price since December. Oil, the fourth most-valuable, fell to a 14-week low and copper slipped to its lowest in six months.
Commodity prices influence the Australian and New Zealand dollars because raw materials account for 60 percent of Australia's exports, while sales of commodities including lumber make up 70 percent of New Zealand's overseas shipments.
`Most Vulnerable'
The New Zealand dollar, or kiwi, slid to an 11-month low as falling commodity prices may diminish the outlook for economic growth in the South Pacific nation, prompting traders to add to bets on further central bank rate reductions.
``Both the kiwi and the Aussie are probably most vulnerable, especially against the correlation that they exhibit against the commodity side,'' said Mike Moran, a senior currency strategist at Standard Chartered Bank in New York. ``Those are probably going to see the more pronounced retracement.''
The UBS Bloomberg Constant Maturity Commodity Index of 26 commodities declined 0.3 percent to 1,416.804 yesterday, the lowest since March 20. New Zealand's Treasury Department said Aug. 4 the economy probably contracted in the second quarter, pushing the country into its first recession in a decade.
The Aussie and kiwi had correlations of 0.81 and 0.87, respectively, with the UBS Bloomberg Constant Maturity Commodity Index in the past month, according to data compiled by Bloomberg. A reading of 1 would mean they move in lockstep.
RBNZ Rate Bets
The Reserve Bank of New Zealand lowered its official cash rate by a quarter-percentage point to 8 percent on July 24. New Zealand's benchmark interest rate compares with 2 percent in the U.S. and 0.5 percent in Japan, making the kiwi a favorite target for investors seeking higher returns.
Traders are betting that the RBNZ will lower its benchmark rate by 1.46 percentage points over the next 12 months, up from 1.34 percentage points two weeks ago, according to a Credit Suisse Group index.
Australian 10-year government bonds advanced for a fourth day, pushing the yield down 3 basis points, or 0.03 percentage point, to 5.89 percent. The price of the 5.25 percent bond maturing in March 2019 rose 0.217, or A$2.17 per A$1,000 face amount, to 95.037.
New Zealand's government debt was little changed. The yield on the benchmark 10-year note was at 6.16 percent, and the yield on the three-year security climbed to 6.23 percent from 6.22 percent. 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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Korea Won Halts 3-Day Loss on Intervention Signs: Bonds Steady
By Kim Kyoungwha and Judy Chen
Aug. 12 (Bloomberg) -- South Korea's won was little changed on speculation the nation's foreign-exchange authorities will purchase the local currency to help stem its recent weakness. Bonds held near yesterday's closing level.
The currency halted a three-day loss after a finance ministry official expressed concern yesterday about the won's ``rapid'' decline. The won has been the worst performer this year after the Thai baht of the 10 most-active currencies in Asia outside Japan, according to data compiled by Bloomberg.
``Traders are cautious that the authorities might intervene again,'' said Kim Sung Soon, a currency dealer at Industrial Bank of Korea in Seoul. ``Otherwise, the market's mood is still expecting the dollar to advance.''
The won traded at 1,032.90 per dollar as of 10:08 a.m. local time, from 1,031.90 yesterday, according to Seoul Money Brokerage Services Ltd. Central banks intervene in the currency market, either selling or buying foreign exchange.
``The government is concerned about the overly rapid decline in the currency,'' Choi Jong Ku, the director general of the finance ministry's international finance bureau, said in a statement yesterday. ``We will take necessary steps.''
Any losses in the currency may be limited as fund managers outside the nation bought more Korean shares than they sold for the first time in three days, according to stock exchange data.
The won will trade between 1,025 and 1,038 per dollar today, Kim said.
Bonds Little Changed
Government bonds were little changed on concern that the central bank may raise interest rates as inflation shows no signs of abating.
Central Bank Governor Lee Seong Tae and his colleagues last week unexpectedly raised the nation's benchmark interest rate, saying rising prices posed a greater threat than slowing economic growth.
Prices paid to producers jumped 12.5 percent from a year earlier after gaining 10.5 percent in June, the Bank of Korea said on Aug. 8. That's the biggest increase since July 1998.
The yield on the 5.25 note due March 2013 stood little changed at 5.74 percent, according to Korea Securities Dealers Association. A basis point is 0.01 percentage point.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- South Korea's won was little changed on speculation the nation's foreign-exchange authorities will purchase the local currency to help stem its recent weakness. Bonds held near yesterday's closing level.
The currency halted a three-day loss after a finance ministry official expressed concern yesterday about the won's ``rapid'' decline. The won has been the worst performer this year after the Thai baht of the 10 most-active currencies in Asia outside Japan, according to data compiled by Bloomberg.
``Traders are cautious that the authorities might intervene again,'' said Kim Sung Soon, a currency dealer at Industrial Bank of Korea in Seoul. ``Otherwise, the market's mood is still expecting the dollar to advance.''
The won traded at 1,032.90 per dollar as of 10:08 a.m. local time, from 1,031.90 yesterday, according to Seoul Money Brokerage Services Ltd. Central banks intervene in the currency market, either selling or buying foreign exchange.
``The government is concerned about the overly rapid decline in the currency,'' Choi Jong Ku, the director general of the finance ministry's international finance bureau, said in a statement yesterday. ``We will take necessary steps.''
Any losses in the currency may be limited as fund managers outside the nation bought more Korean shares than they sold for the first time in three days, according to stock exchange data.
The won will trade between 1,025 and 1,038 per dollar today, Kim said.
Bonds Little Changed
Government bonds were little changed on concern that the central bank may raise interest rates as inflation shows no signs of abating.
Central Bank Governor Lee Seong Tae and his colleagues last week unexpectedly raised the nation's benchmark interest rate, saying rising prices posed a greater threat than slowing economic growth.
Prices paid to producers jumped 12.5 percent from a year earlier after gaining 10.5 percent in June, the Bank of Korea said on Aug. 8. That's the biggest increase since July 1998.
The yield on the 5.25 note due March 2013 stood little changed at 5.74 percent, according to Korea Securities Dealers Association. A basis point is 0.01 percentage point.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
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Gold Price Slumps to Lowest in More Than Seven Months on Dollar
By Glenys Sim
Aug. 12 (Bloomberg) -- Gold plunged to the lowest in more than seven months as the dollar gained against the euro, reducing the metal's appeal as an alternative investment to assets denominated in the U.S. currency.
Gold fell to $802.34 an ounce, the lowest since Dec. 21, and 22 percent below its March 17 record of $1,032.70 an ounce. The metal traded at $807.08 at 9:57 a.m. Singapore time.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Aug. 12 (Bloomberg) -- Gold plunged to the lowest in more than seven months as the dollar gained against the euro, reducing the metal's appeal as an alternative investment to assets denominated in the U.S. currency.
Gold fell to $802.34 an ounce, the lowest since Dec. 21, and 22 percent below its March 17 record of $1,032.70 an ounce. The metal traded at $807.08 at 9:57 a.m. Singapore time.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Oil Trades Near 3-Month Low as Economic Slowdown May Cut Demand
By Christian Schmollinger
Aug. 12 (Bloomberg) -- Crude oil was little changed after falling to a three-month low yesterday on signs that a U.S. economic slump will extend into 2009, paring fuel demand in the world's biggest oil consumer.
The U.S. economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year, a Bloomberg News survey showed. China's July crude- oil imports fell 7 percent from a year earlier after global prices increased to a record, discouraging refiners from purchasing raw materials to process into fuels.
``The market focus has shifted to the weakness in demand,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The Chinese economy isn't growing as strong as last year.''
Crude oil for September delivery was at $114.10 a barrel, down 35 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:20 a.m. Singapore time. Prices are up 59 percent from a year ago. Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1.
Oil has declined 23 percent from the record $147.27 reached on July 11.
Prices are also down as the dollar traded near a 5 1/2- month high to the euro, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar traded near a 5 1/2-month high against the euro, at $1.4872 at 10:23 a.m. in Tokyo from $1.4909 yesterday.
Tankers Move
Prices rose in early trading yesterday as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
Brent crude oil for September settlement was at $112.41 a barrel, down 26 cents, on London's ICE Futures Europe exchange at 10:06 a.m. Singapore time. It fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel yesterday, the lowest since May 1.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Aug. 12 (Bloomberg) -- Crude oil was little changed after falling to a three-month low yesterday on signs that a U.S. economic slump will extend into 2009, paring fuel demand in the world's biggest oil consumer.
The U.S. economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year, a Bloomberg News survey showed. China's July crude- oil imports fell 7 percent from a year earlier after global prices increased to a record, discouraging refiners from purchasing raw materials to process into fuels.
``The market focus has shifted to the weakness in demand,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The Chinese economy isn't growing as strong as last year.''
Crude oil for September delivery was at $114.10 a barrel, down 35 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:20 a.m. Singapore time. Prices are up 59 percent from a year ago. Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1.
Oil has declined 23 percent from the record $147.27 reached on July 11.
Prices are also down as the dollar traded near a 5 1/2- month high to the euro, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar traded near a 5 1/2-month high against the euro, at $1.4872 at 10:23 a.m. in Tokyo from $1.4909 yesterday.
Tankers Move
Prices rose in early trading yesterday as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
Brent crude oil for September settlement was at $112.41 a barrel, down 26 cents, on London's ICE Futures Europe exchange at 10:06 a.m. Singapore time. It fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel yesterday, the lowest since May 1.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Australia Stocks: APN, Coeur, Lihir, St. George, WorleyParsons
By Shani Raja
Aug. 12 (Bloomberg) -- The S&P/ASX 200 Index advanced 4.60 points, or 0.1 percent, to 5,030.70 at 10:20 a.m. in Sydney. The broader All Ordinaries Index declined 0.2 points to 5,069.10, while the futures index expiring in September lost 0.1 percent to 5,016.
Gold producers: Newcrest Mining Ltd. (NCM AU) slumped A$1.61, or 6.6 percent, to A$22.64, the lowest since Sept. 6, 2007. Lihir Gold Ltd. (LGL AU) plunged 16 cents, or 7.1 percent, to A$2.11, the lowest since Feb. 21, 2006.
Gold futures for December delivery dropped $36.50, or 4.2 percent, to $828.30 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price for a most- active contract since Dec. 24. A measure of six metals including copper and zinc fell 1 percent in London.
APN News & Media Ltd. (APN AU), the publisher of more than 100 newspapers in Australia and New Zealand, dropped 18 cents, or 5.2 percent, to A$3.27, among the benchmark's ten biggest losers. APN said first-half profit declined as slower economic growth forced companies to cut back on advertising.
Bendigo & Adelaide Bank Ltd. (BEN AU), an Australian regional lender, rose for a second day, adding 37 cents, or 3.2 percent, to A$11.78, the highest since June 16, after saying full-year profit increased 40 percent after gaining new customers.
Coeur d'Alene Mines Corp. (CXC AU), the biggest decliner on the Philadelphia Stock Exchange Gold and Silver Index this year, tumbled 40 cents, or a record 17 percent, headed for a record low A$2.01. The company, whose shares slumped 9.4 percent in Sydney yesterday, plunged the most in six years in New York after earnings missed estimates and metal prices fell. Coeur was the biggest loser on the S&P/ASX 200 Index.
St. George Bank Ltd. (SGB AU), which has agreed to be bought by Westpac Banking Corp., gained 79 cents, or 2.6 percent, to A$31.02, the highest since June 2. St. George said profit will grow after it avoided the credit-market turmoil that wiped $66 billion off the value of the nation's biggest banks this year.
WorleyParsons Ltd. (WOR AU), Australia's biggest engineering company, rose A$1.21, or 3.6 percent, to A$34.66, poised for its highest close since July 2, after saying full-year profit rose 53 percent on acquisitions and increased demand from the energy and mining industries.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Aug. 12 (Bloomberg) -- The S&P/ASX 200 Index advanced 4.60 points, or 0.1 percent, to 5,030.70 at 10:20 a.m. in Sydney. The broader All Ordinaries Index declined 0.2 points to 5,069.10, while the futures index expiring in September lost 0.1 percent to 5,016.
Gold producers: Newcrest Mining Ltd. (NCM AU) slumped A$1.61, or 6.6 percent, to A$22.64, the lowest since Sept. 6, 2007. Lihir Gold Ltd. (LGL AU) plunged 16 cents, or 7.1 percent, to A$2.11, the lowest since Feb. 21, 2006.
Gold futures for December delivery dropped $36.50, or 4.2 percent, to $828.30 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price for a most- active contract since Dec. 24. A measure of six metals including copper and zinc fell 1 percent in London.
APN News & Media Ltd. (APN AU), the publisher of more than 100 newspapers in Australia and New Zealand, dropped 18 cents, or 5.2 percent, to A$3.27, among the benchmark's ten biggest losers. APN said first-half profit declined as slower economic growth forced companies to cut back on advertising.
Bendigo & Adelaide Bank Ltd. (BEN AU), an Australian regional lender, rose for a second day, adding 37 cents, or 3.2 percent, to A$11.78, the highest since June 16, after saying full-year profit increased 40 percent after gaining new customers.
Coeur d'Alene Mines Corp. (CXC AU), the biggest decliner on the Philadelphia Stock Exchange Gold and Silver Index this year, tumbled 40 cents, or a record 17 percent, headed for a record low A$2.01. The company, whose shares slumped 9.4 percent in Sydney yesterday, plunged the most in six years in New York after earnings missed estimates and metal prices fell. Coeur was the biggest loser on the S&P/ASX 200 Index.
St. George Bank Ltd. (SGB AU), which has agreed to be bought by Westpac Banking Corp., gained 79 cents, or 2.6 percent, to A$31.02, the highest since June 2. St. George said profit will grow after it avoided the credit-market turmoil that wiped $66 billion off the value of the nation's biggest banks this year.
WorleyParsons Ltd. (WOR AU), Australia's biggest engineering company, rose A$1.21, or 3.6 percent, to A$34.66, poised for its highest close since July 2, after saying full-year profit rose 53 percent on acquisitions and increased demand from the energy and mining industries.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Japan's Stocks Retreat, Led by Steelmakers; Honda Climbs
By Masaki Kondo and Patrick Rial
Enlarge Image/Details
Aug. 12 (Bloomberg) -- Japan's stocks declined for the first time in three days, led by steelmakers.
Nippon Steel Corp. fell 1.5 percent, while smaller rival Sumitomo Metal Industries Ltd. slumped 1.3 percent. Honda Motor Co., Japan's second-biggest carmaker, advanced 1.4 percent to a two-week high after oil prices retreated and the dollar strengthened against the yen, boosting its earnings outlook.
The Nikkei 225 Stock Average fell 92.99, or 0.7 percent, to 13,337.92 as of 9:10 a.m. in Tokyo. The broader Topix index slumped 0.95, or 0.1 percent, to 1,279.05.
Japan's wholesale inflation rate accelerated to a 27-year high in July as companies raised prices to offset oil and commodity costs, the Bank of Japan said in today before the stock market opened. Producer prices climbed 7.1 percent from a year earlier, compared with the median estimate of 5.7 percent by 31 economists surveyed by Bloomberg News.
Nikkei futures expiring in September lost 0.4 percent to 13,340 in Osaka and dropped 0.2 percent to 13,345 in Singapore.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
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Enlarge Image/Details
Aug. 12 (Bloomberg) -- Japan's stocks declined for the first time in three days, led by steelmakers.
Nippon Steel Corp. fell 1.5 percent, while smaller rival Sumitomo Metal Industries Ltd. slumped 1.3 percent. Honda Motor Co., Japan's second-biggest carmaker, advanced 1.4 percent to a two-week high after oil prices retreated and the dollar strengthened against the yen, boosting its earnings outlook.
The Nikkei 225 Stock Average fell 92.99, or 0.7 percent, to 13,337.92 as of 9:10 a.m. in Tokyo. The broader Topix index slumped 0.95, or 0.1 percent, to 1,279.05.
Japan's wholesale inflation rate accelerated to a 27-year high in July as companies raised prices to offset oil and commodity costs, the Bank of Japan said in today before the stock market opened. Producer prices climbed 7.1 percent from a year earlier, compared with the median estimate of 5.7 percent by 31 economists surveyed by Bloomberg News.
Nikkei futures expiring in September lost 0.4 percent to 13,340 in Osaka and dropped 0.2 percent to 13,345 in Singapore.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
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Asian Stocks Drop, Led by Commodities Producers, on Gold, Oil
By Patrick Rial
Aug. 12 (Bloomberg) -- Asian stocks declined, led by commodities producers, as gold tumbled to the lowest level since December and oil traded near a 14-week low.
Newcrest Mining Ltd., Australia's largest gold producer, fell in Sydney and Sumitomo Metal Mining Co. dropped in Japan. South Korea's Posco led steelmakers lower amid signs the Chinese market is weakening and after Japanese producers received fewer orders for the alloy. Singapore Telecommunications Ltd., Southeast Asia's largest phone company, slumped the most in three months after first-quarter profit missed analyst estimates.
The MSCI Asia Pacific Index lost 0.3 percent to 128.25 as of 10:43 a.m. in Tokyo, extending this year's decline to 19 percent.
Japan's Nikkei 225 Stock Average dropped 0.7 percent to 13,331.12. The country's wholesale inflation rate accelerated to a 27-year high as companies raised prices to offset oil and commodity costs. Most Asian benchmark indexes fell.
U.S. stocks climbed yesterday, with the Standard & Poor's 500 Index gaining 0.9 percent, after oil's drop below $115 a barrel boosted retailers and credit card companies.
Newcrest fell 5.3 percent to A$22.96, the lowest since September. BHP Billiton Ltd., the world's largest mining company, lost 0.9 percent to A$36.13. Sumitomo Metal, Japan's biggest nickel maker, declined 4.8 percent to 1,266 yen.
Gold dropped 4.2 percent to $828.30, the lowest since Dec. 24. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 1 percent yesterday. Crude prices have slumped 21 percent from a record on July 14 to close at $114.45 in New York.
Steelmakers Retreat
Raw-material producers on MSCI's Asian gauge have tumbled 10 percent this month, compared with a 2.7 percent decline on the broader index.
Posco, Asia's third-largest steelmaker, fell 1.5 percent to 470,000 won. Nippon Steel Corp., the region's biggest, declined 3 percent to 525 yen. JFE Holdings Inc., Japan's No. 2, slumped 3.6 percent to 4,600 yen.
China exported a record amount of steel, the nation's customs bureau said yesterday, as prices for the domestic market have started to weaken. The Japan Iron and Steel Federation said yesterday June orders for steel fell 0.8 percent from the previous month.
``The price downtrend is gathering speed in China,'' Atsushi Yamaguchi, a Tokyo-based steel analyst at UBS AG, wrote in a note to clients. ``If market sentiment becomes even weaker, we may need to be cautious, as prices tend to move in one direction in China.''
Singapore Telecommunications reported first-quarter profit fell 5.3 percent to S$878.1 million ($622 million) as a stronger currency eroded overseas earnings. Profit, the lowest in two years, missed the S$902 million median of analyst estimates in a Bloomberg survey.
Japanese Earnings
Ajinomoto Co., Japan's biggest food producer, lost 3.1 percent to 1,043 yen after saying yesterday first-quarter profit dropped 57 percent to 3.75 billion yen ($34 million.) The Tokyo- based company's rating was lowered to ``hold'' from ``buy'' by Nikko Citigroup analyst Nobuyoshi Miura.
Nippon Sheet Glass Co. climbed 6.4 percent to 482 yen. Asia's second-largest glassmaker reported a 17 percent slide in operating profit yesterday as energy costs increased and sales dropped in North America and Japan. The company's results were better than anticipated, Shinya Yamada, an analyst at Credit Suisse Group, said in a note to clients, because its building and automotive products divisions stayed profitable due to restructuring efforts.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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Aug. 12 (Bloomberg) -- Asian stocks declined, led by commodities producers, as gold tumbled to the lowest level since December and oil traded near a 14-week low.
Newcrest Mining Ltd., Australia's largest gold producer, fell in Sydney and Sumitomo Metal Mining Co. dropped in Japan. South Korea's Posco led steelmakers lower amid signs the Chinese market is weakening and after Japanese producers received fewer orders for the alloy. Singapore Telecommunications Ltd., Southeast Asia's largest phone company, slumped the most in three months after first-quarter profit missed analyst estimates.
The MSCI Asia Pacific Index lost 0.3 percent to 128.25 as of 10:43 a.m. in Tokyo, extending this year's decline to 19 percent.
Japan's Nikkei 225 Stock Average dropped 0.7 percent to 13,331.12. The country's wholesale inflation rate accelerated to a 27-year high as companies raised prices to offset oil and commodity costs. Most Asian benchmark indexes fell.
U.S. stocks climbed yesterday, with the Standard & Poor's 500 Index gaining 0.9 percent, after oil's drop below $115 a barrel boosted retailers and credit card companies.
Newcrest fell 5.3 percent to A$22.96, the lowest since September. BHP Billiton Ltd., the world's largest mining company, lost 0.9 percent to A$36.13. Sumitomo Metal, Japan's biggest nickel maker, declined 4.8 percent to 1,266 yen.
Gold dropped 4.2 percent to $828.30, the lowest since Dec. 24. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 1 percent yesterday. Crude prices have slumped 21 percent from a record on July 14 to close at $114.45 in New York.
Steelmakers Retreat
Raw-material producers on MSCI's Asian gauge have tumbled 10 percent this month, compared with a 2.7 percent decline on the broader index.
Posco, Asia's third-largest steelmaker, fell 1.5 percent to 470,000 won. Nippon Steel Corp., the region's biggest, declined 3 percent to 525 yen. JFE Holdings Inc., Japan's No. 2, slumped 3.6 percent to 4,600 yen.
China exported a record amount of steel, the nation's customs bureau said yesterday, as prices for the domestic market have started to weaken. The Japan Iron and Steel Federation said yesterday June orders for steel fell 0.8 percent from the previous month.
``The price downtrend is gathering speed in China,'' Atsushi Yamaguchi, a Tokyo-based steel analyst at UBS AG, wrote in a note to clients. ``If market sentiment becomes even weaker, we may need to be cautious, as prices tend to move in one direction in China.''
Singapore Telecommunications reported first-quarter profit fell 5.3 percent to S$878.1 million ($622 million) as a stronger currency eroded overseas earnings. Profit, the lowest in two years, missed the S$902 million median of analyst estimates in a Bloomberg survey.
Japanese Earnings
Ajinomoto Co., Japan's biggest food producer, lost 3.1 percent to 1,043 yen after saying yesterday first-quarter profit dropped 57 percent to 3.75 billion yen ($34 million.) The Tokyo- based company's rating was lowered to ``hold'' from ``buy'' by Nikko Citigroup analyst Nobuyoshi Miura.
Nippon Sheet Glass Co. climbed 6.4 percent to 482 yen. Asia's second-largest glassmaker reported a 17 percent slide in operating profit yesterday as energy costs increased and sales dropped in North America and Japan. The company's results were better than anticipated, Shinya Yamada, an analyst at Credit Suisse Group, said in a note to clients, because its building and automotive products divisions stayed profitable due to restructuring efforts.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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Japan's July Corporate Goods Price Index: Summary (Table)
By Minh Bui
Aug. 12 (Bloomberg) -- Following is the summary table for the Corporate Goods Price Index from the Bank of Japan in Tokyo. (Index 2005=100)
SOURCE: Bank of Japan http://www.boj.or/jp/en
To contact the reporter on this story: Minh Bui in Tokyo at mbui@bloomberg.net
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Aug. 12 (Bloomberg) -- Following is the summary table for the Corporate Goods Price Index from the Bank of Japan in Tokyo. (Index 2005=100)
===============================================================================
July June May April March Feb. Jan.
2008 2008 2008 2008 2008 2008 2008
===============================================================================
-------------Month-on-Month Percent Change-------------
Corporate goods prices 2.0% 0.9% 1.2% 0.7% 0.6% 0.5% 0.2%
export prices 1.2% 2.7% 1.8% 2.4% -2.9% 0.4% -2.5%
import prices 2.8% 8.2% 4.3% 4.9% -2.7% 1.6% -2.2%
---------------Year-on-Year Percent Change--------------
Corporate goods prices 7.1% 5.7% 4.8% 3.9% 3.9% 3.5% 3.0%
Export prices -2.8% -4.2% -5.6% -5.9% -6.8% -5.3% -5.8%
Import prices 21.6% 18.1% 10.8% 10.0% 8.3% 11.0% 7.1%
------------------------Yen level-----------------------
Yen 106.8 106.9 104.2 102.5 101.0 107.2 107.7
MoM percent change -0.1% 2.6% 1.6% 1.6% -5.9% -0.4% -4.2%
===============================================================================
SOURCE: Bank of Japan http://www.boj.or/jp/en
To contact the reporter on this story: Minh Bui in Tokyo at mbui@bloomberg.net
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U.K. July House Prices Drop as Loan Squeeze Locks Out Buyers
By Jennifer Ryan
Aug. 12 (Bloomberg) -- U.K. house prices fell in July as the squeeze on credit locked out buyers and brought the property market to a ``virtual standstill,'' the Royal Institution of Chartered Surveyors said.
The number of real-estate agents and surveyors saying prices dropped exceeded those reporting gains by 83.9 percentage points, the group said today in London. The reading was 94.7 percentage points in April, the most since the series began in 1978.
U.K. banks approved the fewest mortgages since at least 1999 in June and data yesterday showed that they haven't passed on most of the Bank of England's interest-rate cuts since December. The housing-market slump risks pushing the country into a recession that policy makers can do little to prevent as they combat inflation, which probably reached an 11-year high in July.
``The lack of mortgage finance has brought the housing market to a virtual standstill, with first-time buyers rapidly becoming an endangered species,'' Ian Perry, a spokesman for RICS, said in a statement.
All 11 regions tracked by RICS showed negative price balances on the month, led by the West Midlands, with a reading of minus 93. In London, the balance of prices measured was at minus 72, compared with minus 78 in June.
House prices fell the most in at least a quarter-century from a year earlier in July, according to HBOS Plc. Banks have curbed lending as they nurse losses and writedowns from the U.S. subprime mortgage market collapse totaling almost $500 billion worldwide.
Price `Fear'
``Falling prices and the fear of further reductions yet to come have caused both buyers and the lending institutions to withdraw from the arena,'' RICS cited Andrew Grant, a real-estate agent in Worcester in the West Midlands, as saying.
The average cost of a loan fixed for 24 months with a 25 percent deposit was 6.36 percent last month, down from an eight- year high of 6.6 percent in June, the central bank said yesterday. The bank kept its main interest rate unchanged for a fourth month at 5 percent last week after three cuts since December.
The squeeze on credit has also prompted consumers to spend less. Sales in U.K. shops open at least a year fell an annual 0.9 percent in July, the British Retail Consortium, which represents 80 percent of stores, said in a separate report. Clothing, footwear, furniture and household goods led the decline.
Accelerating inflation has still prevented the Bank of England from cutting interest rates to stave off a recession. Consumer prices probably rose 4.2 percent in July, more than double the Bank of England's 2 percent target, the median forecast of 38 economists in a Bloomberg News survey shows.
The Office for National Statistics will release the inflation data at 9:30 a.m. today in London and the central bank will publish new quarterly economic forecasts tomorrow.
To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net
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Aug. 12 (Bloomberg) -- U.K. house prices fell in July as the squeeze on credit locked out buyers and brought the property market to a ``virtual standstill,'' the Royal Institution of Chartered Surveyors said.
The number of real-estate agents and surveyors saying prices dropped exceeded those reporting gains by 83.9 percentage points, the group said today in London. The reading was 94.7 percentage points in April, the most since the series began in 1978.
U.K. banks approved the fewest mortgages since at least 1999 in June and data yesterday showed that they haven't passed on most of the Bank of England's interest-rate cuts since December. The housing-market slump risks pushing the country into a recession that policy makers can do little to prevent as they combat inflation, which probably reached an 11-year high in July.
``The lack of mortgage finance has brought the housing market to a virtual standstill, with first-time buyers rapidly becoming an endangered species,'' Ian Perry, a spokesman for RICS, said in a statement.
All 11 regions tracked by RICS showed negative price balances on the month, led by the West Midlands, with a reading of minus 93. In London, the balance of prices measured was at minus 72, compared with minus 78 in June.
House prices fell the most in at least a quarter-century from a year earlier in July, according to HBOS Plc. Banks have curbed lending as they nurse losses and writedowns from the U.S. subprime mortgage market collapse totaling almost $500 billion worldwide.
Price `Fear'
``Falling prices and the fear of further reductions yet to come have caused both buyers and the lending institutions to withdraw from the arena,'' RICS cited Andrew Grant, a real-estate agent in Worcester in the West Midlands, as saying.
The average cost of a loan fixed for 24 months with a 25 percent deposit was 6.36 percent last month, down from an eight- year high of 6.6 percent in June, the central bank said yesterday. The bank kept its main interest rate unchanged for a fourth month at 5 percent last week after three cuts since December.
The squeeze on credit has also prompted consumers to spend less. Sales in U.K. shops open at least a year fell an annual 0.9 percent in July, the British Retail Consortium, which represents 80 percent of stores, said in a separate report. Clothing, footwear, furniture and household goods led the decline.
Accelerating inflation has still prevented the Bank of England from cutting interest rates to stave off a recession. Consumer prices probably rose 4.2 percent in July, more than double the Bank of England's 2 percent target, the median forecast of 38 economists in a Bloomberg News survey shows.
The Office for National Statistics will release the inflation data at 9:30 a.m. today in London and the central bank will publish new quarterly economic forecasts tomorrow.
To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net
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LDP's Nakagawa Says Japan Should Cut Corporate Tax by a Quarter
By Keiko Ujikane and Kyoko Shimodoi
Aug. 12 (Bloomberg) -- Japan should cut the nation's corporate tax by a quarter to encourage investment and growth in the world's second-largest economy, said Shoichi Nakagawa, former policy chief for the ruling Liberal Democratic Party.
``Even if tax revenue falls in the near term, a tax cut may help revitalize business activity and eventually lead to a rebound in tax receipts,'' Nakagawa, 55, said in an interview in Tokyo on Aug. 7. He recommended lowering the level to about 30 percent from 40.7 percent, the highest among Organization for Economic Cooperation and Development nations.
Calls to ease the tax burden on companies have grown among policy makers who want to attract investment into what European Union Trade Commissioner Peter Mandelson in April called the developed world's ``most closed market.'' The government isn't likely to act soon as it struggles to meet a goal of balancing the budget by 2011 to cut the world's largest public debt.
``It's necessary to cut corporate taxes from the point of view of international competitiveness, but it's difficult to do it now because the government has pledged fiscal reform,'' said Keisuke Naito, a senior economist at Mizuho Research Institute in Tokyo. ``Policy makers acknowledge they have to do something to shore up the faltering economy.''
The government said last week the economy is ``weakening'' for the first time since May 2001. Prime Minister Yasuo Fukuda yesterday described the economic situation as ``severe.''
Foreign Direct Investment
Nakagawa, now a lower house legislator, was LDP policy chief from September 2006 until August last year. He estimates a 10 percentage point tax cut may boost foreign direct investment by 30 percent, or about 1.2 trillion yen ($11 billion).
Foreign direct investment represented about 3 percent of Japan's gross domestic product at the end of 2007, according to the Cabinet Office. That compared with 45 percent in the U.K., 14 percent in the U.S. and 8.8 percent in South Korea. Japan's government is aiming to boost foreign investment to 5 percent of GDP by 2010.
Japan should also broaden its tax base and increase the sales tax, which at 5 percent is the lowest in the OECD, the Paris-based organization said in its April survey on Japan.
Only about one third of Japanese companies pay taxes and a quarter of employees are exempt from personal income levies because of ``generous'' exemptions and deductions, according to the OECD report.
Total Burden
Nakagawa said Japan needs to find a way to broaden the tax base not only on companies but also individuals and other bodies. Still, he said Japan should also consider allowing more deductions to ease the total burden on companies by as much as 3 trillion yen.
Japan's total tax revenue was 51.02 trillion yen in the year ended March 31, with corporate tax of 14.7 trillion yen, according to the Ministry of Finance.
New ministers in Fukuda's Cabinet, which he reshuffled this month, have also indicated support for a tax cut. Financial Services Minister Toshimitsu Motegi said he will consider lowering taxes to attract investment from abroad and Economy Minister Kaoru Yosano said that he wouldn't rule out reductions.
The U.K., Germany, China and South Korea cut company tax this year to spur economic growth and lure foreign investment.
``Everybody in the world is cutting corporate taxes,'' said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo. Japan ``will have to do it in the long run.''
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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Aug. 12 (Bloomberg) -- Japan should cut the nation's corporate tax by a quarter to encourage investment and growth in the world's second-largest economy, said Shoichi Nakagawa, former policy chief for the ruling Liberal Democratic Party.
``Even if tax revenue falls in the near term, a tax cut may help revitalize business activity and eventually lead to a rebound in tax receipts,'' Nakagawa, 55, said in an interview in Tokyo on Aug. 7. He recommended lowering the level to about 30 percent from 40.7 percent, the highest among Organization for Economic Cooperation and Development nations.
Calls to ease the tax burden on companies have grown among policy makers who want to attract investment into what European Union Trade Commissioner Peter Mandelson in April called the developed world's ``most closed market.'' The government isn't likely to act soon as it struggles to meet a goal of balancing the budget by 2011 to cut the world's largest public debt.
``It's necessary to cut corporate taxes from the point of view of international competitiveness, but it's difficult to do it now because the government has pledged fiscal reform,'' said Keisuke Naito, a senior economist at Mizuho Research Institute in Tokyo. ``Policy makers acknowledge they have to do something to shore up the faltering economy.''
The government said last week the economy is ``weakening'' for the first time since May 2001. Prime Minister Yasuo Fukuda yesterday described the economic situation as ``severe.''
Foreign Direct Investment
Nakagawa, now a lower house legislator, was LDP policy chief from September 2006 until August last year. He estimates a 10 percentage point tax cut may boost foreign direct investment by 30 percent, or about 1.2 trillion yen ($11 billion).
Foreign direct investment represented about 3 percent of Japan's gross domestic product at the end of 2007, according to the Cabinet Office. That compared with 45 percent in the U.K., 14 percent in the U.S. and 8.8 percent in South Korea. Japan's government is aiming to boost foreign investment to 5 percent of GDP by 2010.
Japan should also broaden its tax base and increase the sales tax, which at 5 percent is the lowest in the OECD, the Paris-based organization said in its April survey on Japan.
Only about one third of Japanese companies pay taxes and a quarter of employees are exempt from personal income levies because of ``generous'' exemptions and deductions, according to the OECD report.
Total Burden
Nakagawa said Japan needs to find a way to broaden the tax base not only on companies but also individuals and other bodies. Still, he said Japan should also consider allowing more deductions to ease the total burden on companies by as much as 3 trillion yen.
Japan's total tax revenue was 51.02 trillion yen in the year ended March 31, with corporate tax of 14.7 trillion yen, according to the Ministry of Finance.
New ministers in Fukuda's Cabinet, which he reshuffled this month, have also indicated support for a tax cut. Financial Services Minister Toshimitsu Motegi said he will consider lowering taxes to attract investment from abroad and Economy Minister Kaoru Yosano said that he wouldn't rule out reductions.
The U.K., Germany, China and South Korea cut company tax this year to spur economic growth and lure foreign investment.
``Everybody in the world is cutting corporate taxes,'' said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo. Japan ``will have to do it in the long run.''
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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Japan's Wholesale Inflation Rate Reaches 27-Year High
By Mayumi Otsuma
Aug. 12 (Bloomberg) -- Japan's wholesale inflation rate accelerated to a 27-year high in July as companies raised prices to offset oil and commodity costs.
Producer prices climbed 7.1 percent from a year earlier, after a revised 5.7 percent increase in June, the Bank of Japan said in Tokyo today. The median estimate of 31 economists surveyed by Bloomberg News was for 5.7 percent.
The central bank last month raised its inflation forecast and cut its economic growth estimate, saying higher costs are squeezing companies and households. Corporate bankruptcies caused by rising raw-material costs in the first half of 2008 already outnumbered those for all of last year, according to Teikoku Databank Ltd.
``Even though oil prices have been coming down in recent weeks, companies will keep trying to raise prices because they've made up for only a fraction of the cost increases they've suffered,'' said Azusa Kato, an economist at BNP Paribas in Tokyo.
The yen traded at 110.09 per dollar at 8:58 a.m. in Tokyo from 110.14 before the report was published.
The government is considering raising prices of wheat it sells to millers as much as 20 percent in October, the second increase this year, Kyodo News reported yesterday, citing farm ministry officials. It raised wheat prices 30 percent in April, prompting bread, pasta and noodle makers to follow suit.
Iranian Revolution
Nippon Paper Group Inc., Japan's second-largest paper maker, said last month it will raise prices by 10 percent in September, the second increase this year. Fuel and raw materials are ``rising so rapidly that it's too difficult to recover profits with cost-cutting efforts alone,'' the company said on July 30.
The increase in producer prices was the steepest since January 1981. From a month earlier, prices climbed 2 percent, the fastest pace since April 1980, when oil prices surged in the wake of the 1979 Iranian Revolution.
Higher commodity costs are also feeding into retail inflation. Consumer prices excluding fresh food, fish and vegetables climbed 1.9 percent in June from a year earlier, the fastest pace in a decade.
Some 235 companies went bust in the six months ended June because of rising costs, exceeding the 229 bankruptcies recorded for the same reason in all of 2007, Teikoku Databank reported. Transport, food and metal companies led the failures.
Oil Eases
Producer price gains will probably ease in coming months as oil falls and a global slowdown reduces demand for raw materials.
Crude oil has dropped 21 percent since reaching a record $147.27 a barrel on July 11. Retail gasoline prices climbed to a record 185.1 yen a liter ($6.39 a gallon) this month.
Wholesale inflation ``will probably stay around 5 percent through the end of this year and then gradually head in the opposite direction next year,'' said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo.
Even so, producer costs will keep fueling consumer prices for a while, economists said. Ajinomoto Co., the country's biggest foodmaker, last week announced plans to raise prices, and McDonald's Holdings Co. Japan said a Big Mac may soon cost Japanese consumers 30 yen more.
``We expect core prices will rise 2.2 percent in July and 2.3 percent in September,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Even though crude oil prices are being adjusted now, the ongoing cost-push inflation won't weaken easily.''
To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
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Aug. 12 (Bloomberg) -- Japan's wholesale inflation rate accelerated to a 27-year high in July as companies raised prices to offset oil and commodity costs.
Producer prices climbed 7.1 percent from a year earlier, after a revised 5.7 percent increase in June, the Bank of Japan said in Tokyo today. The median estimate of 31 economists surveyed by Bloomberg News was for 5.7 percent.
The central bank last month raised its inflation forecast and cut its economic growth estimate, saying higher costs are squeezing companies and households. Corporate bankruptcies caused by rising raw-material costs in the first half of 2008 already outnumbered those for all of last year, according to Teikoku Databank Ltd.
``Even though oil prices have been coming down in recent weeks, companies will keep trying to raise prices because they've made up for only a fraction of the cost increases they've suffered,'' said Azusa Kato, an economist at BNP Paribas in Tokyo.
The yen traded at 110.09 per dollar at 8:58 a.m. in Tokyo from 110.14 before the report was published.
The government is considering raising prices of wheat it sells to millers as much as 20 percent in October, the second increase this year, Kyodo News reported yesterday, citing farm ministry officials. It raised wheat prices 30 percent in April, prompting bread, pasta and noodle makers to follow suit.
Iranian Revolution
Nippon Paper Group Inc., Japan's second-largest paper maker, said last month it will raise prices by 10 percent in September, the second increase this year. Fuel and raw materials are ``rising so rapidly that it's too difficult to recover profits with cost-cutting efforts alone,'' the company said on July 30.
The increase in producer prices was the steepest since January 1981. From a month earlier, prices climbed 2 percent, the fastest pace since April 1980, when oil prices surged in the wake of the 1979 Iranian Revolution.
Higher commodity costs are also feeding into retail inflation. Consumer prices excluding fresh food, fish and vegetables climbed 1.9 percent in June from a year earlier, the fastest pace in a decade.
Some 235 companies went bust in the six months ended June because of rising costs, exceeding the 229 bankruptcies recorded for the same reason in all of 2007, Teikoku Databank reported. Transport, food and metal companies led the failures.
Oil Eases
Producer price gains will probably ease in coming months as oil falls and a global slowdown reduces demand for raw materials.
Crude oil has dropped 21 percent since reaching a record $147.27 a barrel on July 11. Retail gasoline prices climbed to a record 185.1 yen a liter ($6.39 a gallon) this month.
Wholesale inflation ``will probably stay around 5 percent through the end of this year and then gradually head in the opposite direction next year,'' said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo.
Even so, producer costs will keep fueling consumer prices for a while, economists said. Ajinomoto Co., the country's biggest foodmaker, last week announced plans to raise prices, and McDonald's Holdings Co. Japan said a Big Mac may soon cost Japanese consumers 30 yen more.
``We expect core prices will rise 2.2 percent in July and 2.3 percent in September,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Even though crude oil prices are being adjusted now, the ongoing cost-push inflation won't weaken easily.''
To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
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Australian Dollar Falls to 6 1/2-Month Low as Yield Gap Shrinks
By Candice Zachariahs
Aug. 12 (Bloomberg) -- The Australian dollar dropped to the weakest level in 6 1/2 months as the yield advantage of the nation's two-year government bonds over similar-dated U.S. Treasuries shrank to the lowest in more than eight months.
The currency, known as the Aussie, declined for the 11th day, the longest losing streak since at least 1975, after the Reserve Bank of Australia said yesterday that a ``significant moderation'' in domestic demand would give it room to reduce borrowing costs. The local dollar also fell as the prices of commodities that the nation exports such as gold and copper slid.
``This reflects a very big change in expectations in domestic money markets from the RBA,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. With yield differentials narrowing ``and commodity prices moving lower that removes a relative support for the Aussie.''
The Australian dollar declined to 88.16 U.S. cents at 9:04 a.m. in Sydney, from 89.02 cents in late Asian trading yesterday. It earlier touched 87.94 cents, the weakest since Jan. 29. It reached a 25-year high of 98.49 cents on July 16. The Aussie fell to 97.04 yen, from 97.72 yen yesterday.
The currency declined as the difference in yield between two-year Australian and similar-maturity U.S. government debt narrowed to 3.38 percentage points, the lowest since Nov. 28. The differential reached a high of 5.1 points on Feb. 29.
`Fairly Slow'
The RBA said yesterday that ``economic growth will be fairly slow in the period ahead,'' in its quarterly policy statement. Gross domestic product will probably expand 2 percent this year compared with 4.3 percent in 2007 and less than the 2.25 percent forecast by the bank in May, the RBA said.
Traders are certain the Reserve Bank will lower its 7.25 percent benchmark rate by at least a quarter-percentage point when it meets next on Sept. 2, according to a Credit Suisse Group index based on overnight swaps trading yesterday. They expect the bank to reduce rates by 89 basis points, or 0.89 percentage point, over the next 12 months, another index shows.
Australian 10-year government bonds fell for the first time in four days, pushing the yield up 2 basis points to 5.93 percent. The price of the 5.25 percent bond maturing in March 2019 declined 0.115, or A$1.15 per A$1,000 face amount, to 94.705. Bond yields move inversely to prices.
The Australian dollar also dropped as gold, the nation's third most-valuable raw material export, tumbled to its lowest price since December. Oil, it fourth most-valuable, fell to a 14-week low and copper slipped to its lowest in six months. Commodity exports contribute 17 percent to the nation's economy.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
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Aug. 12 (Bloomberg) -- The Australian dollar dropped to the weakest level in 6 1/2 months as the yield advantage of the nation's two-year government bonds over similar-dated U.S. Treasuries shrank to the lowest in more than eight months.
The currency, known as the Aussie, declined for the 11th day, the longest losing streak since at least 1975, after the Reserve Bank of Australia said yesterday that a ``significant moderation'' in domestic demand would give it room to reduce borrowing costs. The local dollar also fell as the prices of commodities that the nation exports such as gold and copper slid.
``This reflects a very big change in expectations in domestic money markets from the RBA,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. With yield differentials narrowing ``and commodity prices moving lower that removes a relative support for the Aussie.''
The Australian dollar declined to 88.16 U.S. cents at 9:04 a.m. in Sydney, from 89.02 cents in late Asian trading yesterday. It earlier touched 87.94 cents, the weakest since Jan. 29. It reached a 25-year high of 98.49 cents on July 16. The Aussie fell to 97.04 yen, from 97.72 yen yesterday.
The currency declined as the difference in yield between two-year Australian and similar-maturity U.S. government debt narrowed to 3.38 percentage points, the lowest since Nov. 28. The differential reached a high of 5.1 points on Feb. 29.
`Fairly Slow'
The RBA said yesterday that ``economic growth will be fairly slow in the period ahead,'' in its quarterly policy statement. Gross domestic product will probably expand 2 percent this year compared with 4.3 percent in 2007 and less than the 2.25 percent forecast by the bank in May, the RBA said.
Traders are certain the Reserve Bank will lower its 7.25 percent benchmark rate by at least a quarter-percentage point when it meets next on Sept. 2, according to a Credit Suisse Group index based on overnight swaps trading yesterday. They expect the bank to reduce rates by 89 basis points, or 0.89 percentage point, over the next 12 months, another index shows.
Australian 10-year government bonds fell for the first time in four days, pushing the yield up 2 basis points to 5.93 percent. The price of the 5.25 percent bond maturing in March 2019 declined 0.115, or A$1.15 per A$1,000 face amount, to 94.705. Bond yields move inversely to prices.
The Australian dollar also dropped as gold, the nation's third most-valuable raw material export, tumbled to its lowest price since December. Oil, it fourth most-valuable, fell to a 14-week low and copper slipped to its lowest in six months. Commodity exports contribute 17 percent to the nation's economy.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
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New Zealand Dollar Weakens to 11-month Low on Interest Outlook
By Candice Zachariahs
Aug. 12 (Bloomberg) -- The New Zealand dollar plunged to an 11-month low as the U.S. currency strengthened and investors bet that the Reserve Bank of New Zealand will lower rates to boost a slowing economy.
The currency, called the kiwi, also fell against the Japanese yen on expectations that the central bank will cut interest rates further over the next 12 months, making the nation's assets less attractive to international investors seeking higher returns. The Reserve Bank of New Zealand lowered interest rates to 8 percent from 8.25 percent on July 24.
``It's basically a move into U.S. dollars,'' said Tony Allen, head of currency trading in Wellington at ANZ National Bank Ltd. ``It seems that everyone is happy to be piling back in to U.S. assets.''
New Zealand's dollar dropped 0.7 percent to 69.89 U.S. cents at 9:18 a.m. in Wellington from 70.39 cents late in Asian trading yesterday. It earlier reached 69.76 cents, the lowest since Sept. 12. It bought 76.92 yen, from 77.27 yesterday.
The kiwi fell against 14 of the 16 most-traded currencies as sliding commodity prices helped the U.S. dollar rise to a 5 1/2-month high against the euro amid speculation the U.S. slowdown is spreading to the global economy.
Reserve Bank Governor Alan Bollard had kept New Zealand's official cash rate at a record 8.25 percent since July 2007 before last month's cut.
``There's been a shift from rewarding central banks that were more inflation-focused to central banks that are more mindful of protecting the down-side risks to growth,'' Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Bank of New York Mellon, said yesterday. The company is the world's largest custodian bank, with about $23 trillion in assets under custody.
Pressure on Kiwi
New Zealand's benchmark interest rate compares with 2 percent in the U.S. and 0.5 percent in Japan, making the nation's currency a favorite target for investors seeking higher returns. Traders expect the Reserve Bank to lower the benchmark rate 1.47 percentage points over the next 12 months, according to a Credit Suisse Group index based on overnight swaps trading yesterday.
Further cuts will put ``downward pressure'' on the kiwi against the Japanese yen, Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote yesterday. The bank forecast that the New Zealand dollar will buy 76 yen by year-end and almost 73 by the middle of 2009.
``However, the risks are skewed in favor of the currency falling more quickly and further than currently anticipated,'' Hampton wrote.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- The New Zealand dollar plunged to an 11-month low as the U.S. currency strengthened and investors bet that the Reserve Bank of New Zealand will lower rates to boost a slowing economy.
The currency, called the kiwi, also fell against the Japanese yen on expectations that the central bank will cut interest rates further over the next 12 months, making the nation's assets less attractive to international investors seeking higher returns. The Reserve Bank of New Zealand lowered interest rates to 8 percent from 8.25 percent on July 24.
``It's basically a move into U.S. dollars,'' said Tony Allen, head of currency trading in Wellington at ANZ National Bank Ltd. ``It seems that everyone is happy to be piling back in to U.S. assets.''
New Zealand's dollar dropped 0.7 percent to 69.89 U.S. cents at 9:18 a.m. in Wellington from 70.39 cents late in Asian trading yesterday. It earlier reached 69.76 cents, the lowest since Sept. 12. It bought 76.92 yen, from 77.27 yesterday.
The kiwi fell against 14 of the 16 most-traded currencies as sliding commodity prices helped the U.S. dollar rise to a 5 1/2-month high against the euro amid speculation the U.S. slowdown is spreading to the global economy.
Reserve Bank Governor Alan Bollard had kept New Zealand's official cash rate at a record 8.25 percent since July 2007 before last month's cut.
``There's been a shift from rewarding central banks that were more inflation-focused to central banks that are more mindful of protecting the down-side risks to growth,'' Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Bank of New York Mellon, said yesterday. The company is the world's largest custodian bank, with about $23 trillion in assets under custody.
Pressure on Kiwi
New Zealand's benchmark interest rate compares with 2 percent in the U.S. and 0.5 percent in Japan, making the nation's currency a favorite target for investors seeking higher returns. Traders expect the Reserve Bank to lower the benchmark rate 1.47 percentage points over the next 12 months, according to a Credit Suisse Group index based on overnight swaps trading yesterday.
Further cuts will put ``downward pressure'' on the kiwi against the Japanese yen, Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote yesterday. The bank forecast that the New Zealand dollar will buy 76 yen by year-end and almost 73 by the middle of 2009.
``However, the risks are skewed in favor of the currency falling more quickly and further than currently anticipated,'' Hampton wrote.
To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net
Read more...
Dollar Trades Near 5 1/2-Month High on Drop in Commodity Prices
By Stanley White and Ye Xie
Aug. 12 (Bloomberg) -- The dollar traded near a 5 1/2-month high against the euro on speculation tumbling commodity prices will give a boost to the world's largest economy.
The U.S. currency was also close to a seven-month high against the yen as crude oil traded near a 14-week low, copper fell to the weakest in six months and gold to the cheapest since December. The Australian dollar declined to the lowest in 6 1/2 months as the yield advantage of the nation's two-year bonds over U.S. Treasuries shrank to the least since November.
``The trend is for commodities to weaken and the dollar to strengthen,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``The U.S. economy is facing a slowdown, so lower energy prices are a source of relief.''
The dollar traded at $1.4898 per euro at 8:36 a.m. in Tokyo from $1.4909 yesterday, when it touched $1.4881, the strongest since Feb. 26. The dollar bought 110.14 yen, near a seven-month high of 110.40 yen. The euro was little changed at 164.08 yen after reaching 163.65 yen yesterday, the lowest since June 5. The dollar may rise to 110.40 yen today, Ishikawa forecast.
The Australian dollar declined to 88.33 U.S. cents from 89.02 cents in late Asian trading yesterday. It earlier touched 87.94 cents, the weakest since Jan. 29. The currency fell to 97.21 yen, from 97.72 yesterday.
The yield spread on two-year Australian government bonds over similar maturity Treasuries narrowed to 3.38 percentage points yesterday, the lowest since Nov. 28. The differential has shrunk from 5.1 percentage points on Feb. 29.
Commodities Plunge
Crude oil last traded at $114.60 a barrel after yesterday falling to 14-week low of $112.72. It has plunged 22 percent since touching a record high of $147.27 on July 11. The UBS Bloomberg Constant Maturity Commodity Index dropped to the lowest since March 20. The euro-dollar exchange rate and oil had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they move in lockstep.
``It looks like there's more downside risk to oil prices, and it gives some support to the dollar,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto.
Should the dollar stay beyond a resistance level of $1.4907 per euro, it may extend to $1.4550, according to Osborne. A resistance level is where selling orders concentrate.
Dollar Index
The Dollar Index rose for a eighth straight day, rising 0.2 percent to 76.24. It touched 76.362 yesterday, the highest level since Feb. 20. The index climbed 1.7 percent on Aug. 8, the biggest jump in six years.
Europe's currency sank 2.1 percent versus the dollar that day, the most since September 2000, as traders reduced bets that the European Central Bank will raise interest rates. Last week's 3.6 percent decline in the euro was the biggest weekly drop since January 2005.
Germany's economy, the largest in the 15-nation region that uses the euro, probably contracted in the second quarter for the first time in almost four years, according to the median forecast of 41 economists surveyed by Bloomberg News before the government report on Aug. 14.
``We clearly have weaker growth outside the U.S.,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut, in an interview on Bloomberg Television. ``That's enough for the dollar to sustainably gain ground.''
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netYe Xie in New York at yxie6@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- The dollar traded near a 5 1/2-month high against the euro on speculation tumbling commodity prices will give a boost to the world's largest economy.
The U.S. currency was also close to a seven-month high against the yen as crude oil traded near a 14-week low, copper fell to the weakest in six months and gold to the cheapest since December. The Australian dollar declined to the lowest in 6 1/2 months as the yield advantage of the nation's two-year bonds over U.S. Treasuries shrank to the least since November.
``The trend is for commodities to weaken and the dollar to strengthen,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``The U.S. economy is facing a slowdown, so lower energy prices are a source of relief.''
The dollar traded at $1.4898 per euro at 8:36 a.m. in Tokyo from $1.4909 yesterday, when it touched $1.4881, the strongest since Feb. 26. The dollar bought 110.14 yen, near a seven-month high of 110.40 yen. The euro was little changed at 164.08 yen after reaching 163.65 yen yesterday, the lowest since June 5. The dollar may rise to 110.40 yen today, Ishikawa forecast.
The Australian dollar declined to 88.33 U.S. cents from 89.02 cents in late Asian trading yesterday. It earlier touched 87.94 cents, the weakest since Jan. 29. The currency fell to 97.21 yen, from 97.72 yesterday.
The yield spread on two-year Australian government bonds over similar maturity Treasuries narrowed to 3.38 percentage points yesterday, the lowest since Nov. 28. The differential has shrunk from 5.1 percentage points on Feb. 29.
Commodities Plunge
Crude oil last traded at $114.60 a barrel after yesterday falling to 14-week low of $112.72. It has plunged 22 percent since touching a record high of $147.27 on July 11. The UBS Bloomberg Constant Maturity Commodity Index dropped to the lowest since March 20. The euro-dollar exchange rate and oil had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they move in lockstep.
``It looks like there's more downside risk to oil prices, and it gives some support to the dollar,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto.
Should the dollar stay beyond a resistance level of $1.4907 per euro, it may extend to $1.4550, according to Osborne. A resistance level is where selling orders concentrate.
Dollar Index
The Dollar Index rose for a eighth straight day, rising 0.2 percent to 76.24. It touched 76.362 yesterday, the highest level since Feb. 20. The index climbed 1.7 percent on Aug. 8, the biggest jump in six years.
Europe's currency sank 2.1 percent versus the dollar that day, the most since September 2000, as traders reduced bets that the European Central Bank will raise interest rates. Last week's 3.6 percent decline in the euro was the biggest weekly drop since January 2005.
Germany's economy, the largest in the 15-nation region that uses the euro, probably contracted in the second quarter for the first time in almost four years, according to the median forecast of 41 economists surveyed by Bloomberg News before the government report on Aug. 14.
``We clearly have weaker growth outside the U.S.,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut, in an interview on Bloomberg Television. ``That's enough for the dollar to sustainably gain ground.''
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netYe Xie in New York at yxie6@bloomberg.net
Read more...
Oil Trades Near 14-Week Low as Economic Slowdown May Cut Demand
By Mark Shenk
Aug. 12 (Bloomberg) -- Crude oil was little changed after falling to a 14-week low yesterday on signs that the U.S. economic slump will extend into 2009, paring fuel demand.
Oil prices retreated as a Bloomberg News survey showed that the U.S. will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year. Prices rose in early trading as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
``It's become clear that demand is cratering, which is making it hard to rally,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``It's hard to imagine that the market will shrug off the potential loss of 1 million barrels a day of pretty good quality crude, but that appears to be the case.''
Crude oil for September delivery rose 19 cents to $114.64 a barrel at 8:40 a.m. Sydney time on the New York Mercantile Exchange. Prices are up 60 percent from a year ago. Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1.
Gasoline for September delivery rose 0.99 cent, or 0.4 percent, to $2.8765 a gallon in New York. Yesterday it fell 2.08 cents, or 0.7 percent, to settle $2.8666 a gallon, the lowest since April 14. Gasoline reached a record $3.631 a gallon on July 11.
Pump prices are following futures lower. Regular gasoline, averaged nationwide, fell 0.8 cents to $3.81 a gallon, AAA, the nation's largest motorist organization, said on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
`Significant Change'
``I think we are looking at a significant change in market sentiment,'' David Kirsch, an energy markets analyst at PFC Energy in Washington, said in an interview with Bloomberg Radio. ``We are really only focusing on the bearish aspects of a dramatic slowdown in demand and increased supplies.''
Prices also fell because the dollar climbed to the strongest against euro in more than five months, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar increased versus the euro for a fifth day, advancing 0.5 percent to $1.4928 at 2:59 p.m. in New York, from $1.5005 on Aug. 8. It touched $1.4881, the strongest level since Feb. 26.
The Standard & Poor's GSCI Index of commodities fell as much as 1.2 percent to 695.444 and lost 22 percent from a record 893.859 on July 3, descending into bear territory.
Chinese Imports
China's July crude-oil imports fell 7 percent to about 3.25 million barrels a day, the lowest since December, the Beijing- based Customs General Administration of China said in a posting on its Web site yesterday. China is the world's second-biggest oil consumer. The U.S. is the biggest.
``The primary driving factor of the market is the sluggish economy,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``We are looking for any evidence that the economic contagion in the U.S. and Western Europe is spreading to the Far East, where demand has been strong. The Chinese demand numbers may be a sign that demand is starting to flag in Asia.''
The fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
`Double Digits'
``The threat to Caspian oil supplies appears to have been written off,'' McGillian said. ``There will have to be a more frightening development in the Caucasus or some other trouble spot to make this market rally.''
Oil tankers collecting cargoes from the Georgian port of Batumi moved farther out into the Black Sea after the town was bombed last night, a local shipping agent said.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
``The explosion on the BP pipeline in Turkey is the more critical as far as supply is concerned,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York. ``Once the pipeline is back up and running, the situation at Georgia's Black Sea ports will become less of an issue.''
Brent crude oil for September settlement fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel on London's ICE Futures Europe exchange yesterday, the lowest since May 1.
``I think it would be very easy for prices to dip down to double digits before the end of the year,'' Kirsch said.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Aug. 12 (Bloomberg) -- Crude oil was little changed after falling to a 14-week low yesterday on signs that the U.S. economic slump will extend into 2009, paring fuel demand.
Oil prices retreated as a Bloomberg News survey showed that the U.S. will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year. Prices rose in early trading as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
``It's become clear that demand is cratering, which is making it hard to rally,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``It's hard to imagine that the market will shrug off the potential loss of 1 million barrels a day of pretty good quality crude, but that appears to be the case.''
Crude oil for September delivery rose 19 cents to $114.64 a barrel at 8:40 a.m. Sydney time on the New York Mercantile Exchange. Prices are up 60 percent from a year ago. Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1.
Gasoline for September delivery rose 0.99 cent, or 0.4 percent, to $2.8765 a gallon in New York. Yesterday it fell 2.08 cents, or 0.7 percent, to settle $2.8666 a gallon, the lowest since April 14. Gasoline reached a record $3.631 a gallon on July 11.
Pump prices are following futures lower. Regular gasoline, averaged nationwide, fell 0.8 cents to $3.81 a gallon, AAA, the nation's largest motorist organization, said on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
`Significant Change'
``I think we are looking at a significant change in market sentiment,'' David Kirsch, an energy markets analyst at PFC Energy in Washington, said in an interview with Bloomberg Radio. ``We are really only focusing on the bearish aspects of a dramatic slowdown in demand and increased supplies.''
Prices also fell because the dollar climbed to the strongest against euro in more than five months, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar increased versus the euro for a fifth day, advancing 0.5 percent to $1.4928 at 2:59 p.m. in New York, from $1.5005 on Aug. 8. It touched $1.4881, the strongest level since Feb. 26.
The Standard & Poor's GSCI Index of commodities fell as much as 1.2 percent to 695.444 and lost 22 percent from a record 893.859 on July 3, descending into bear territory.
Chinese Imports
China's July crude-oil imports fell 7 percent to about 3.25 million barrels a day, the lowest since December, the Beijing- based Customs General Administration of China said in a posting on its Web site yesterday. China is the world's second-biggest oil consumer. The U.S. is the biggest.
``The primary driving factor of the market is the sluggish economy,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``We are looking for any evidence that the economic contagion in the U.S. and Western Europe is spreading to the Far East, where demand has been strong. The Chinese demand numbers may be a sign that demand is starting to flag in Asia.''
The fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
`Double Digits'
``The threat to Caspian oil supplies appears to have been written off,'' McGillian said. ``There will have to be a more frightening development in the Caucasus or some other trouble spot to make this market rally.''
Oil tankers collecting cargoes from the Georgian port of Batumi moved farther out into the Black Sea after the town was bombed last night, a local shipping agent said.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
``The explosion on the BP pipeline in Turkey is the more critical as far as supply is concerned,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York. ``Once the pipeline is back up and running, the situation at Georgia's Black Sea ports will become less of an issue.''
Brent crude oil for September settlement fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel on London's ICE Futures Europe exchange yesterday, the lowest since May 1.
``I think it would be very easy for prices to dip down to double digits before the end of the year,'' Kirsch said.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Japan's Nikkei Futures Rise After Oil Falls, Dollar Strengthens
By Patrick Rial
Aug. 12 (Bloomberg) -- Japan's Nikkei 225 Stock Averagefutures climbed in Chicago as oil prices retreated to the lowest since May and the dollar strengthened against the yen.
Oil fell for a second day to close below $115 per barrel for the first time since May 1, boosting the outlook for companies such as Toyota Motor Corp. that rely on consumer spending. Komatsu Ltd., the world's second-biggest maker of earthmovers, posted the biggest gain among Japan's actively traded American receipts as the dollar rose to the highest since January versus the yen, improving the profitability of overseas sales.
``Things are looking good for the market as there's been no change in the trend of oil weakness and dollar strength,'' said Mamoru Shimode, Tokyo-based chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. ``On the other hand, there aren't many people trading at this point, which could put a cap on gains in the indexes.''
Nikkei 225 futures expiring in September closed in Chicago yesterday at 13,425, up from 13,390 earlier in Osaka and 13,365 in Singapore. The Bank of New York Japan ADR Index, which tracks the nation's American depositary receipts, advanced 1.1 percent.
Yesterday, the Nikkei rose 2 percent to 13,430.91, the highest in more than two weeks, and the Topix index gained 1.6 percent to 1,280.00.
Crude has fallen 21 percent from a record on July 14 to its close of $114.45 in New York yesterday. Lower fuel prices reduce production and shipping costs for manufacturers and increase discretionary income for consumers as gasoline bills drop.
Nippon Sheet
The yen recently traded at 110.06 versus the dollar, after earlier falling to as low as 110.40 in New York, a level not seen since Jan. 2. Japan's currency strengthened to as much as 95.76 this year, prompting companies such as Toyota, which generates more than half its sales overseas, to predict a drop in earnings.
Toyota's receipts added 1.1 percent from yesterday's close in Tokyo, while Komatsu increased 1.6 percent.
Nippon Sheet Glass Co., Asia's second-largest glassmaker, reported a 17 percent slide in operating profit yesterday as energy costs increased, sales dropped in North America and Japan.
The company's results were better than anticipated, Shinya Yamada, an analyst at Credit Suisse Group, said in a note to clients, as building and automotive products divisions stayed profitable due to restructuring efforts.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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Aug. 12 (Bloomberg) -- Japan's Nikkei 225 Stock Averagefutures climbed in Chicago as oil prices retreated to the lowest since May and the dollar strengthened against the yen.
Oil fell for a second day to close below $115 per barrel for the first time since May 1, boosting the outlook for companies such as Toyota Motor Corp. that rely on consumer spending. Komatsu Ltd., the world's second-biggest maker of earthmovers, posted the biggest gain among Japan's actively traded American receipts as the dollar rose to the highest since January versus the yen, improving the profitability of overseas sales.
``Things are looking good for the market as there's been no change in the trend of oil weakness and dollar strength,'' said Mamoru Shimode, Tokyo-based chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. ``On the other hand, there aren't many people trading at this point, which could put a cap on gains in the indexes.''
Nikkei 225 futures expiring in September closed in Chicago yesterday at 13,425, up from 13,390 earlier in Osaka and 13,365 in Singapore. The Bank of New York Japan ADR Index, which tracks the nation's American depositary receipts, advanced 1.1 percent.
Yesterday, the Nikkei rose 2 percent to 13,430.91, the highest in more than two weeks, and the Topix index gained 1.6 percent to 1,280.00.
Crude has fallen 21 percent from a record on July 14 to its close of $114.45 in New York yesterday. Lower fuel prices reduce production and shipping costs for manufacturers and increase discretionary income for consumers as gasoline bills drop.
Nippon Sheet
The yen recently traded at 110.06 versus the dollar, after earlier falling to as low as 110.40 in New York, a level not seen since Jan. 2. Japan's currency strengthened to as much as 95.76 this year, prompting companies such as Toyota, which generates more than half its sales overseas, to predict a drop in earnings.
Toyota's receipts added 1.1 percent from yesterday's close in Tokyo, while Komatsu increased 1.6 percent.
Nippon Sheet Glass Co., Asia's second-largest glassmaker, reported a 17 percent slide in operating profit yesterday as energy costs increased, sales dropped in North America and Japan.
The company's results were better than anticipated, Shinya Yamada, an analyst at Credit Suisse Group, said in a note to clients, as building and automotive products divisions stayed profitable due to restructuring efforts.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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Australia Stocks Preview: GPT, Newcrest, Rio Tinto, Woodside
By Shani Raja
Aug. 12 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in September gained 0.4 percent to 5,040 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index dropped 1.8 percent in New York.
The S&P/ASX 200 Index rose 39.90, or 0.8 percent, to 5,026.10.
Mining shares: Gold futures for December delivery dropped $36.50, or 4.2 percent, to $828.30 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price for a most-active contract since Dec. 24. A measure of six metals including copper and zinc fell 1 percent in London.
Newcrest Mining Ltd. (NCM AU) slumped A$2.15, or 8.1 percent, to A$24.25. American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, declined 2.8 percent to the equivalent of A$36.28 a share in New York, 19 cents lower than the A$36.47 close in Sydney.
Separately, China may seek to increase its stake in Rio Tinto Group to block BHP's hostile takeover attempt, the Australian Financial Review said, citing Ivanhoe Mines Ltd. founder Robert Friedland. Aluminum Corp. of China, known as Chinalco, may increase its 9 percent stake in Rio to prevent BHP creating an iron ore cartel, Friedland said in an interview with the newspaper.
Rio (RIO AU), the world's third-largest mining company, dropped A$4.34, or 3.7 percent, to A$111.66.
Oil companies: Crude oil fell to a 14-week low on signs that the U.S. economic slump will extend into 2009, crimping fuel demand. Crude for September delivery fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel at 2:50 p.m. on the New York Mercantile Exchange, the lowest close since May 1.
Woodside Petroleum Ltd. (WPL AU), Australia's second-largest oil and gas producer, was unchanged at A$51.50.
GPT Group (GPT AU): The listed property trust is considering selling its A$400 million homemaker center portfolio, less than a month after putting A$900 million worth of tourism and hotel assets up for sale, the Australian newspaper reported, citing Head of Retail Mark Fookes. GPT advanced 3 cents, or 1.8 percent, to A$1.74.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Aug. 12 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in September gained 0.4 percent to 5,040 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index dropped 1.8 percent in New York.
The S&P/ASX 200 Index rose 39.90, or 0.8 percent, to 5,026.10.
Mining shares: Gold futures for December delivery dropped $36.50, or 4.2 percent, to $828.30 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price for a most-active contract since Dec. 24. A measure of six metals including copper and zinc fell 1 percent in London.
Newcrest Mining Ltd. (NCM AU) slumped A$2.15, or 8.1 percent, to A$24.25. American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, declined 2.8 percent to the equivalent of A$36.28 a share in New York, 19 cents lower than the A$36.47 close in Sydney.
Separately, China may seek to increase its stake in Rio Tinto Group to block BHP's hostile takeover attempt, the Australian Financial Review said, citing Ivanhoe Mines Ltd. founder Robert Friedland. Aluminum Corp. of China, known as Chinalco, may increase its 9 percent stake in Rio to prevent BHP creating an iron ore cartel, Friedland said in an interview with the newspaper.
Rio (RIO AU), the world's third-largest mining company, dropped A$4.34, or 3.7 percent, to A$111.66.
Oil companies: Crude oil fell to a 14-week low on signs that the U.S. economic slump will extend into 2009, crimping fuel demand. Crude for September delivery fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel at 2:50 p.m. on the New York Mercantile Exchange, the lowest close since May 1.
Woodside Petroleum Ltd. (WPL AU), Australia's second-largest oil and gas producer, was unchanged at A$51.50.
GPT Group (GPT AU): The listed property trust is considering selling its A$400 million homemaker center portfolio, less than a month after putting A$900 million worth of tourism and hotel assets up for sale, the Australian newspaper reported, citing Head of Retail Mark Fookes. GPT advanced 3 cents, or 1.8 percent, to A$1.74.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
Read more...
Dollar Index at Crucial Resistance
Daily Forex Fundamentals | Written by CMS Forex | Aug 11 08 22:05 GMT |
The greenback continued its ascent Monday on falling crude oil prices and rising US stocks. Supported by weaker growth outside the US, the dollar also got some safe-haven flow from the fighting between Russia and Georgia. Sterling fell to a 21-month low and the euro traded near a 6-month low on declining European economic growth. The Australian and Canadian dollars continued their declines as commodity prices fell again today. The USD/JPY was little changed and the yen rose against most other major currencies.
The EUR/USD fell for a fifth day, testing the 1.49 support. If it is broken, the next major support is the long-term uptrend at 1.45. The pair is oversold, possibly requiring some consolidation. The US equity market, having rallied, is at important resistance; meanwhile, the oil and commodity markets, having fallen dramatically, are at logical support. These factors have pressured the EUR/USD. Unless stocks break resistance, the EUR/USD is likely to find support here as the pair is oversold.
Financial and Economic News and Comments
US & Canada
The dollar index is testing the 76-area resistance, which is the resistance from the long-term downtrend that started early 2006. If this resistance is broken, the greenback could rally to 82. Last week's strong USD rally was supported by weak economic outlooks for the European, Australian, Canadian and Japanese economies as the US economic weakness has spread to the rest of the world. The US economy has not yet recovered, but US growth disadvantage has diminished. US interest rate disadvantage has also narrowed, but the real federal funds rate is too low, which could inhibit further dollar gains.
The Federal Reserve said more banks made it harder for businesses and consumers to borrow money as defaults and delinquencies on home loans increased. "Domestic institutions reported having tightened their lending standards and terms on all major loan categories over the previous three months," the Fed said in its quarterly Senior Loan Officer Survey. About 75% of US banks surveyed indicated they tightened standards on prime mortgage loans, up from 60% in the previous survey, the Fed said.
Canada's new-home prices increased 3.5% y/y in June, the smallest gain since March 2002, due to "a softening housing market in Western Canada," after rising 4.1% y/y in May, Statistics Canada said. New-home prices rose 0.1% m/m in June.
Canada's housing starts fell to 186,500 units in July on an annualized basis, the lowest this year, from a revised 215,900 in June, Canada Mortgage and Housing Corp. reported.
Europe
UK producer prices rose 10.2% y/y in July, the most since 1986, after rising 10.0% y/y in June, the Office for National Statistics reported. July's PPI increased 0.4% m/m. Raw material costs jumped 30.1% y/y in July, compared with 30.8% y/y in June. July's PPI rise adds pressure on the Bank of England to wait before lowering interest rates as the UK economy is heading into a recession.
UK exports rose 4.2% in June, outpacing the 4.1% increase in imports, the statistics office said. Still, the goods-trade gap widened to £7.7 billion ($15 billion), as the deficit with non-European Union countries rose to a record.
Asia-Pacific
China's trade surplus unexpectedly widened 4% y/y to $25.3 billion, the first gain in four months, the customs bureau said. Producer prices rose 10%, the fastest pace in 12 years, the statistics bureau said. The figures add pressure on the Chinese government to let the yuan resume its appreciation.
The Reserve Bank of Australia said it will have more room to lower interest rates due to a "significant moderation" in domestic demand. "Economic growth will be fairly slow in the period ahead," the RBA said in its quarterly policy statement. Australia's GDP will probably expand 2% in 2008, compared with 4.3% in 2007 and less than the 2.25% forecast in May. "On the assumption that the subdued demand conditions are likely to continue, scope to move to a less restrictive monetary policy stance in the period ahead is increasing," the RBA said. RBA Governor Glenn Stevens expects a "significant reduction in inflation over time." The RBA said "demand pressures in the economy now appear to be easing" and it expects a "significant period" of slower growth.
Hans Nilsson
Capital Market Services, L.L.C.
www.cmsfx.com
©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C.
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The greenback continued its ascent Monday on falling crude oil prices and rising US stocks. Supported by weaker growth outside the US, the dollar also got some safe-haven flow from the fighting between Russia and Georgia. Sterling fell to a 21-month low and the euro traded near a 6-month low on declining European economic growth. The Australian and Canadian dollars continued their declines as commodity prices fell again today. The USD/JPY was little changed and the yen rose against most other major currencies.
The EUR/USD fell for a fifth day, testing the 1.49 support. If it is broken, the next major support is the long-term uptrend at 1.45. The pair is oversold, possibly requiring some consolidation. The US equity market, having rallied, is at important resistance; meanwhile, the oil and commodity markets, having fallen dramatically, are at logical support. These factors have pressured the EUR/USD. Unless stocks break resistance, the EUR/USD is likely to find support here as the pair is oversold.
Financial and Economic News and Comments
US & Canada
The dollar index is testing the 76-area resistance, which is the resistance from the long-term downtrend that started early 2006. If this resistance is broken, the greenback could rally to 82. Last week's strong USD rally was supported by weak economic outlooks for the European, Australian, Canadian and Japanese economies as the US economic weakness has spread to the rest of the world. The US economy has not yet recovered, but US growth disadvantage has diminished. US interest rate disadvantage has also narrowed, but the real federal funds rate is too low, which could inhibit further dollar gains.
The Federal Reserve said more banks made it harder for businesses and consumers to borrow money as defaults and delinquencies on home loans increased. "Domestic institutions reported having tightened their lending standards and terms on all major loan categories over the previous three months," the Fed said in its quarterly Senior Loan Officer Survey. About 75% of US banks surveyed indicated they tightened standards on prime mortgage loans, up from 60% in the previous survey, the Fed said.
Canada's new-home prices increased 3.5% y/y in June, the smallest gain since March 2002, due to "a softening housing market in Western Canada," after rising 4.1% y/y in May, Statistics Canada said. New-home prices rose 0.1% m/m in June.
Canada's housing starts fell to 186,500 units in July on an annualized basis, the lowest this year, from a revised 215,900 in June, Canada Mortgage and Housing Corp. reported.
Europe
UK producer prices rose 10.2% y/y in July, the most since 1986, after rising 10.0% y/y in June, the Office for National Statistics reported. July's PPI increased 0.4% m/m. Raw material costs jumped 30.1% y/y in July, compared with 30.8% y/y in June. July's PPI rise adds pressure on the Bank of England to wait before lowering interest rates as the UK economy is heading into a recession.
UK exports rose 4.2% in June, outpacing the 4.1% increase in imports, the statistics office said. Still, the goods-trade gap widened to £7.7 billion ($15 billion), as the deficit with non-European Union countries rose to a record.
Asia-Pacific
China's trade surplus unexpectedly widened 4% y/y to $25.3 billion, the first gain in four months, the customs bureau said. Producer prices rose 10%, the fastest pace in 12 years, the statistics bureau said. The figures add pressure on the Chinese government to let the yuan resume its appreciation.
The Reserve Bank of Australia said it will have more room to lower interest rates due to a "significant moderation" in domestic demand. "Economic growth will be fairly slow in the period ahead," the RBA said in its quarterly policy statement. Australia's GDP will probably expand 2% in 2008, compared with 4.3% in 2007 and less than the 2.25% forecast in May. "On the assumption that the subdued demand conditions are likely to continue, scope to move to a less restrictive monetary policy stance in the period ahead is increasing," the RBA said. RBA Governor Glenn Stevens expects a "significant reduction in inflation over time." The RBA said "demand pressures in the economy now appear to be easing" and it expects a "significant period" of slower growth.
Hans Nilsson
Capital Market Services, L.L.C.
www.cmsfx.com
©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C.
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Economic Calendar Forex Brokers Eco Data 8/12/08
GMT Ccy Events Actual Consensus Previous Revised
23:01 GBP U.K. RICS house prices Jul -90.00% -88.00%
23:01 GBP U.K. BRC retail sales Jul N/A -0.40%
23:50 JPY Japan Domestic CGPI M/M Jul 0.80% 0.80%
23:50 JPY Japan Domestic CGPI Y/Y Jul 5.70% 5.60%
01:30 AUD Australia NAB business confidence Jul N/A -9
04:30 JPY Japan Industrial prod'n M/M Jul -2.00% -2.00%
04:30 JPY Japan Industrial prod'n Y/Y Jul -0.20% -0.20%
04:30 JPY Japan Capacity utilisation Jul N/A 2.20%
05:00 JPY Japan Consumer confidence Jul N/A 32.9
08:30 GBP U.K. CPI M/M Jul -0.20% 0.70%
08:30 GBP U.K. CPI Y/Y Jul 4.20% 3.80%
08:30 GBP U.K. CPI core Y/Y Jul 1.70% 1.60%
08:30 GBP U.K. RPI M/M Jul -0.30% 0.80%
08:30 GBP U.K. RPI Y/Y Jul 4.90% 4.60%
08:30 GBP U.K. RPI - X M/M Jul -0.50% 0.80%
08:30 GBP U.K. RPI - X Y/Y Jul 5.20% 4.80%
08:30 GBP U.K. DCLG house prices Y/Y Jun 1.50% 3.70%
12:30 CAD Canada Trade balance (cad) Jun 5.80B 5.54B
12:30 CAD Canada Imports Jun N/A 36.57B
12:30 CAD Canada Exports Jun N/A 42.11B
12:30 USD U.S. Trade balance (usd) Jun -61.0B -59.8B
18:00 USD U.S. Fed budget Jul -68.6B -36.45B
Read more...
23:01 GBP U.K. RICS house prices Jul -90.00% -88.00%
23:01 GBP U.K. BRC retail sales Jul N/A -0.40%
23:50 JPY Japan Domestic CGPI M/M Jul 0.80% 0.80%
23:50 JPY Japan Domestic CGPI Y/Y Jul 5.70% 5.60%
01:30 AUD Australia NAB business confidence Jul N/A -9
04:30 JPY Japan Industrial prod'n M/M Jul -2.00% -2.00%
04:30 JPY Japan Industrial prod'n Y/Y Jul -0.20% -0.20%
04:30 JPY Japan Capacity utilisation Jul N/A 2.20%
05:00 JPY Japan Consumer confidence Jul N/A 32.9
08:30 GBP U.K. CPI M/M Jul -0.20% 0.70%
08:30 GBP U.K. CPI Y/Y Jul 4.20% 3.80%
08:30 GBP U.K. CPI core Y/Y Jul 1.70% 1.60%
08:30 GBP U.K. RPI M/M Jul -0.30% 0.80%
08:30 GBP U.K. RPI Y/Y Jul 4.90% 4.60%
08:30 GBP U.K. RPI - X M/M Jul -0.50% 0.80%
08:30 GBP U.K. RPI - X Y/Y Jul 5.20% 4.80%
08:30 GBP U.K. DCLG house prices Y/Y Jun 1.50% 3.70%
12:30 CAD Canada Trade balance (cad) Jun 5.80B 5.54B
12:30 CAD Canada Imports Jun N/A 36.57B
12:30 CAD Canada Exports Jun N/A 42.11B
12:30 USD U.S. Trade balance (usd) Jun -61.0B -59.8B
18:00 USD U.S. Fed budget Jul -68.6B -36.45B
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Closing Market Recap: Markets Bounced Around by Oil Volatility
Market Updates | Written by CEP News | Aug 11 08 20:40 GMT |
(CEP News) - Energy traders were in the driver's seat on Monday as equity and currency markets looked to oil for direction in a day that lacked a clear trading focus.
U.S. equity markets opened the day in negative territory but the S&P 500 strengthened as crude prices declined. The index was up more than 16 points shortly after midday, and hit 1300 for the first time since June 26, but halved its gains into the close.
Equity markets moved in tandem with crude oil prices. Crude was higher overnight as the Russian-Georgia conflict escalated over the weekend. But oil prices were unable to mount a strong rally and the bears once again took charge, pushing WTI as low as $112.76.
Crude later mounted a modest recovery but it was the selloff that caught the attention of equity and forex markets.
"The impact of Russia's military incursion into Georgia has not been enough to stem the drop in oil prices, but the conflict might still have an impact, and oil prices did begin to edge upward early in the Asian session weighing on U.S. stocks and USD/JPY," wrote currency strategists from RBC Capital Markets in a client note.
At its highs, the U.S. dollar was able to break the 1.07 mark against Canadian dollar and the 1.49 handle against the euro.
The Canadian dollar was down 0.0027 to 0.9352 against the U.S. dollar (1.0694 USD/CAD) and down 0.27 to 103.01 against the yen.
The U.S. dollar was down 0.03 to 110.15 against the yen and the Dollar Index was up 0.389 to 76.234.
The euro was down 0.0106 to 1.4899 against the U.S. dollar, down 0.0078 to 1.5933 against the Canadian dollar, down 0.0010 to 0.7803 against the pound sterling and was lower by 1.26 to 164.11 against the yen.
The pound sterling was down 0.0118 to 1.9094 against the U.S. dollar and down 0.0076 to 2.0420 against the Canadian dollar.
WTI crude oil was unchanged at $115.20. The front month gold contract at the Chicago Board of Trade was down $34.50 to $830.00 per ounce.
Toronto's S&P/TSX composite index closed down 139 points to 13203, the Dow Jones industrial average clsoed up 48 points to 11782, the S&P 500 finished the day up 9 points to 1305 and the Nasdaq closed up 26 points to 2440.
In fixed income, the Canadian market outperformed in a U.S. selloff. Strategists point to Canadian housing starts figures that fell much more than expected in July to 186,500, down from a downwardly revised 215,900, according to the Canada Mortgage and Housing Corporation. Economists expected housing starts to fall to 210,000.
Millan Mulraine, an economics strategist at TD Securities, called the decline in starts "massive," noting it was the biggest decline since last December and "much worse than the drop to 210k expected by the markets."
Yields on two-year Canadian government bonds were up 4.9 bps to 2.76%, with five-year yields up 4.2 bps to 3.13%, 10-year yields up 2.5 bps to 3.64% and 30-year yields flat at 4.06%. The December 08 BAX contract was down 4.0 ticks to 97.20.
U.S. market watchers took note of the Federal Reserve's July Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey showed 57.7% of banks raising standards with 38% indicating "considerable" tightening - both are cyclical highs.
Treasuries were selling off throughout the session but mounted a 2-3 basis point recovery following the survey and late-session weakness in stocks.
Traders complained of volumes that were less than 65% of normal and focused in the 6-month bill sector.
"We saw very few flows of significance," UBS strategist Benjamin Cheng wrote in a note.
Looking ahead, the energy market should get some guidance from the U.S. Department of Energy's short-term outlook on Tuesday. Otherwise, overnight CPI data from the UK and North American trade balance figures are the only releases of note.
All data taken at 4:28 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.
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(CEP News) - Energy traders were in the driver's seat on Monday as equity and currency markets looked to oil for direction in a day that lacked a clear trading focus.
U.S. equity markets opened the day in negative territory but the S&P 500 strengthened as crude prices declined. The index was up more than 16 points shortly after midday, and hit 1300 for the first time since June 26, but halved its gains into the close.
Equity markets moved in tandem with crude oil prices. Crude was higher overnight as the Russian-Georgia conflict escalated over the weekend. But oil prices were unable to mount a strong rally and the bears once again took charge, pushing WTI as low as $112.76.
Crude later mounted a modest recovery but it was the selloff that caught the attention of equity and forex markets.
"The impact of Russia's military incursion into Georgia has not been enough to stem the drop in oil prices, but the conflict might still have an impact, and oil prices did begin to edge upward early in the Asian session weighing on U.S. stocks and USD/JPY," wrote currency strategists from RBC Capital Markets in a client note.
At its highs, the U.S. dollar was able to break the 1.07 mark against Canadian dollar and the 1.49 handle against the euro.
The Canadian dollar was down 0.0027 to 0.9352 against the U.S. dollar (1.0694 USD/CAD) and down 0.27 to 103.01 against the yen.
The U.S. dollar was down 0.03 to 110.15 against the yen and the Dollar Index was up 0.389 to 76.234.
The euro was down 0.0106 to 1.4899 against the U.S. dollar, down 0.0078 to 1.5933 against the Canadian dollar, down 0.0010 to 0.7803 against the pound sterling and was lower by 1.26 to 164.11 against the yen.
The pound sterling was down 0.0118 to 1.9094 against the U.S. dollar and down 0.0076 to 2.0420 against the Canadian dollar.
WTI crude oil was unchanged at $115.20. The front month gold contract at the Chicago Board of Trade was down $34.50 to $830.00 per ounce.
Toronto's S&P/TSX composite index closed down 139 points to 13203, the Dow Jones industrial average clsoed up 48 points to 11782, the S&P 500 finished the day up 9 points to 1305 and the Nasdaq closed up 26 points to 2440.
In fixed income, the Canadian market outperformed in a U.S. selloff. Strategists point to Canadian housing starts figures that fell much more than expected in July to 186,500, down from a downwardly revised 215,900, according to the Canada Mortgage and Housing Corporation. Economists expected housing starts to fall to 210,000.
Millan Mulraine, an economics strategist at TD Securities, called the decline in starts "massive," noting it was the biggest decline since last December and "much worse than the drop to 210k expected by the markets."
Yields on two-year Canadian government bonds were up 4.9 bps to 2.76%, with five-year yields up 4.2 bps to 3.13%, 10-year yields up 2.5 bps to 3.64% and 30-year yields flat at 4.06%. The December 08 BAX contract was down 4.0 ticks to 97.20.
U.S. market watchers took note of the Federal Reserve's July Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey showed 57.7% of banks raising standards with 38% indicating "considerable" tightening - both are cyclical highs.
Treasuries were selling off throughout the session but mounted a 2-3 basis point recovery following the survey and late-session weakness in stocks.
Traders complained of volumes that were less than 65% of normal and focused in the 6-month bill sector.
"We saw very few flows of significance," UBS strategist Benjamin Cheng wrote in a note.
Looking ahead, the energy market should get some guidance from the U.S. Department of Energy's short-term outlook on Tuesday. Otherwise, overnight CPI data from the UK and North American trade balance figures are the only releases of note.
All data taken at 4:28 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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Monday, August 11, 2008
London Session Recap
| Daily Forex Fundamentals | Written by Forex.com | Aug 11 08 11:40 GMT | | |
| Elevated inflation data out of the Euro-zone helped EURUSD pare losses in the London session. German wholesale prices rose a higher than expected 1.4% in July after a 0.9% increase the previous month. This took the annual growth rate to a whopping 9.9% from 8.9% -- the highest run-rate on record -- and is likely to keep the inflation hawks on the ECB quite vocal. The weaker French industrial production, which fell -0.4% on the month in June while the market expected a 0.6% increase, limited the EUR gains however. EURUSD rose from an open near 1.4985 to a close around the 1.5015 mark in London trading. Inflation data in the UK were more tame than expected, with input producer prices falling -0.6% in July while output prices rose just 0.4%. The trade balance was worse than expected at -£4414 in June from a prior -£4073. Despite the weaker tone to economic data, USD weakness helped GBPUSD rally a touch in London. The pair opened near 1.9200 and was sitting near 1.9215 at the close. USDCAD continued to trade sideways as the market awaits Canadian housing starts data in the NY morning. The market is looking for a decline to 210K in July from 218K the prior month. Meanwhile, crude oil is trading a touch above Friday's close at just over $116/bbl and this is containing USDCAD gains as well. The pair opened the London session near 1.0660 and was sitting just a touch higher near 1.0665 at the close. Upcoming Economic Data Releases (NY Session) Prior Estimate
Forex.com DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions. | |
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