Swiss Stocks Worst in Developed World as Rally Bypasses Nestle

By Daniela Silberstein and Julie Cruz

June 12 (Bloomberg) -- The rally in global stocks prompted by investor expectations for an economic recovery is leaving Switzerland behind.

The benchmark Swiss Market Index of the country’s 20 largest companies has fallen 0.9 percent this year, the worst among the world’s 20 biggest markets in developed nations, according to data compiled by Bloomberg. It’s also the most expensive in western Europe, with the SMI trading at an average price of 2 times the assets of its companies.

Switzerland’s so-called defensive stocks, which allowed the market to avoid the worst of last year’s 42 percent rout in the MSCI World Index, are holding the country’s equities back this year as investors look for companies that benefit the most in a recovering economy. About 57 percent of the SMI consists of food and health-care stocks, led by Nestle SA, which makes up 22 percent of the market.

“The SMI will continue to underperform as the inflow is into cyclical segments and out of defensives,” said Matthias Fankhauser, a Zurich-based fund manager at Clariden Leu AG, which oversees about $100 billion. Other European indexes “are predestined to benefit,” he said, citing Germany’s DAX.

Fankhauser has cut his holdings of pharmaceutical stocks and is “overweight” so-called cyclical shares such as steelmakers and construction companies whose profits are most tied to swings in the economy.

Novartis, Roche

The SMI, which gets 33 percent of its value from Basel, Switzerland-based drugmakers Novartis AG and Roche Holding AG, rose 0.9 percent to 5,483.85 yesterday. The gauge has gained 38 percent in dollar terms since the MSCI World Index of 23 developed countries began its rebound from a 13-year low on March 9, trailing the global measure’s 45 percent rise.

Every other developed market among the world’s 20 largest has advanced in 2009, with Norway’s OBX Index posting the biggest gain at 41 percent. The five largest emerging markets -- China, India, Brazil, South Korea and Taiwan -- have all surged more than 26 percent.

The only markets worse than Switzerland among 90 indexes tracked by Bloomberg are in developing nations. Ghana’s All- Share Index has lost 37 percent, while the OMX Riga Index has dropped 15 percent in Latvia, where the government is fighting to stave off a devaluation of the lats.

“If the economy stabilizes, cyclicals will benefit and the Swiss market will be left behind,” said Peter Braendle, who oversees $50 billion in European equities at Swisscanto Asset Management in Zurich.

Italy, Germany

Italy’s FTSE MIB Index, which gets about 4.1 percent of its value from makers of drugs, food and household products, surged 83 percent in dollar terms for the biggest advance in western Europe during the three-month rally, data compiled by Bloomberg show. Germany’s DAX, which has added 55 percent, gets about 4.5 percent of its value from health-care, food and household product companies, Bloomberg data show.

Companies in Switzerland’s SMI trade at 2 times book value, or their assets minus liabilities, the most expensive in western Europe, data compiled by Bloomberg show. The index’s price is 1.5 times the combined sales of its companies, also the highest level in the region.

The SMI is valued at 26.6 times the profits of its companies, 29 percent above the five-year average. Only the DAX and the U.K.’s FTSE 100 are more expensive in Europe, with ratios of 27.3 and 31.9, respectively, Bloomberg data show.

‘Slow Winner’

For Huntington Financial Advisors’ Madelynn Matlock, it’s worth paying for Swiss stocks with the fallout from the global recession still battering earnings across the region. While profits at 2,364 companies in western Europe tracked by Bloomberg dropped 49 percent last quarter, earnings per share at health-care companies slipped 2.5 percent. Income for makers of so-called consumer staples declined 9.9 percent.

“The Swiss index is more of a steady index and a slow winner,” said Matlock, a Cincinnati-based fund manager at Huntington, which has $15 billion. “If there is one thing we’ve learned in the last year though, it’s that you don’t want to have all stocks in your portfolio aimed at gaining the most.”

The Swiss National Bank is forecasting a contraction of as much as 3 percent in 2009 for the domestic economy, which would be the worst slump in 34 years. The median estimate of 10 economists in a Bloomberg survey is for a decline of 2 percent.

Nestle’s sales in the first three months of this year unexpectedly fell for a second straight quarter as consumers bought cheaper alternatives to the Vevey, Switzerland-based company’s San Pellegrino and Perrier bottled waters.

Nestle Earnings

Nestle will post a 43 percent drop in net profit this year, the first decline since 2003, according to the average of 16 analysts surveyed by Bloomberg. The shares have underperformed the MSCI World by 34 percentage points in the three-month rally, after beating the MSCI World by 26 percentage points during the bear market that ended in March, Bloomberg data show.

Earnings at Novartis, Europe’s second-largest drugmaker, will be 30 percent lower than in 2007, estimates compiled by Bloomberg show. Profits for Roche, the world’s biggest maker of cancer medicines, will be 3.2 percent below 2007’s level, the data show.

“The SMI is clearly at a disadvantage,” said Urs Eilinger, Zurich-based chief investment officer at Infidar Investment Advisory Ltd., which oversees $3.2 billion. “If you play on an economic recovery, the SMI will underperform.”

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

Read more...

Emerging Equity Funds Post 14th Week of Net Inflows, EPFR Says

By Garfield Reynolds

June 12 (Bloomberg) -- Emerging-market equity funds received $3.4 billion in the week to June 10, the 14th-straight week of net inflows, led by $1.65 billion invested in vehicles focusing on Asia excluding Japan, EPFR Global said.

Investors have poured a net $30.3 billion into emerging- market stock funds since the second week of March, exceeding the $11.8 billion in net outflows for that period from developed- market funds buy equities in the U.S., Europe and Japan, EPFR said.

China funds attracted $404 million in the week to June 10, the investment tracker said in an e-mailed statement. Globally, equity funds received $6.8 billion in the week. Money-market funds had net outflows of $11.3 billion and investors have now removed $104.4 billion this year from such funds, EPFR said.

To contact the reporter on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net

Read more...

Citigroup Bailout Pays Taxpayers Three Times as Much as S&P 500

By Michael J. Moore and Jeff Kearns

June 12 (Bloomberg) -- U.S. taxpayers have reaped a 7.5 percent return on the $45 billion used to rescue Citigroup Inc., more than three times as much as if the money had been invested in the Standard & Poor’s 500 Index.

Chief Executive Officer Vikram Pandit, summoned by Congress in February to explain his bank’s use of the funds, vowed to “make this a profitable investment for the American people.” The return since the government first purchased a stake in the bank on Oct. 28, which includes dividends, compares with 2.4 percent for the S&P 500 on that basis.

“Anything that they make is positive,” said Frederic Dickson, who manages $17 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. “After making a huge investment, that seems, on the surface, like a reasonable return for taxpayers.”

The government pumped $25 billion in rescue funds into the New York-based bank in October and another $20 billion a month later. Dividends on preferred shares linked to that money total about $1.6 billion, according to data compiled by Bloomberg. Returns have also been boosted by the tripling of the stock price since March, which will benefit the government through the planned conversion of as much as $25 billion of its preferred shares into common stock.

The conversion will give the government a 34 percent stake in the bank, which will also exchange as much as $33 billion of preferred securities not held by the government.

Share Conversion

The difference between the $3.25 conversion price on the preferred share swap and the closing price of $3.48 at 4 p.m. in New York Stock Exchange composite trading yesterday would yield a profit of $1.77 billion on a full conversion. The transaction will eliminate the dividend, which ranges from 5 percent to 8 percent.

Citigroup racked up more than $100 billion of credit losses and writedowns during the global credit contraction that began in 2007 and is selling businesses and reducing head count to preserve capital.

The government’s $45 billion investment in Bank of America Corp. has been less lucrative. The Charlotte, North Carolina- based company has paid $1.1 billion in dividends on the Treasury’s preferred shares, CEO Kenneth Lewis said yesterday in testimony before the House Oversight Committee in Washington yesterday. That means taxpayers have received 2.5 percent on their $45 billion bailout of the bank through the Troubled Asset Relief Program as of the end of the first quarter.

“The returns came a little bit quicker than one would have expected,” said William Fitzpatrick, who helps manage $1.6 billion at Optique Capital Management in Milwaukee, Wisconsin. “It looked like the end of the world three months ago, but the truth is once our financial system stabilized the opportunities were enormous, and I think the taxpayer will participate in those types of returns.”

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.

Read more...

BlackRock Seeks to Balance Index, Active Funds With BGI Deal

By Christopher Condon

June 12 (Bloomberg) -- BlackRock Inc.’s purchase of Barclays Global Investors for a record $13.5 billion is the first attempt by a top-ranked fund manager to unite two opposing investment philosophies.

Managers at New York-based BlackRock, who oversee $1.31 trillion, select investments based on research, and have a reputation for spotting value in hard-to-sell fixed-income securities. BGI, based in San Francisco, has $1.5 trillion in assets, mostly in funds whose holdings are determined by the indexes they are designed to mimic.

“If you want to be a dominant money manager, you have to be agnostic about style and strategy,” Dan Culloton, an analyst at fund research firm Morningstar Inc. in Chicago, said in an interview. “You have to offer everything a potential client might want.”

The debate over which style produces better returns for investors over the long term has carried on since index-based funds first appeared in the mid-1970s. Money managers focus primarily on one approach or the other. Active managers look for companies they expect to beat the market. Passive investors try to track benchmarks such as the Standard & Poor’s 500.

“For BlackRock, which is renowned in fixed-income investing, this will be a significant departure,” Geoff Bobroff, president of Bobroff Consulting Inc., an East Greenwich, Rhode Island, firm that advises mutual-fund companies, said in an interview.

There has never been a marriage of this scale between managers with differing investing styles, he said.

Topping State Street

BlackRock, which acquired Merrill Lynch & Co.’s asset- management business in 2006, will become the world’s biggest money manager with BGI. The combined company, with more than $2.7 trillion under management, will dwarf Boston-based rivals State Street Corp., which oversaw $1.44 trillion as of Dec. 31, and Fidelity Investments, with $1.25 trillion.

BlackRock’s Chief Executive Officer Larry Fink called the deal a “transformational transaction” in a conference call with reporters.

BlackRock will pay $6.6 billion in cash and the rest in stock for Barclays Global Investors, the company said today in a statement. Barclays will hold a 19.9 percent stake in the combined company. Financing will include $2.8 billion from the sale of equity to unnamed institutional investors and as much as $2 billion in loans from Barclays and other banks.

Big Enough World

The new BlackRock may thrive if Fink can combine sales efforts without forcing too much integration between the investment-management operations, said Scott Burns, an analyst at Morningstar.

“The world is big enough for both,” Burns said in an interview. “Although you don’t want to put someone used to active managers in charge of passive.”

One risk of the deal is losing customers as BlackRock seeks to fold in BGI, investment consultants said.

Marc Friedberg, a managing director at Santa Monica, California-based Wilshire Associates Inc., said any large merger between asset managers can make big clients of both firms nervous.

“It might spark getting put on a watch list, and it can slow down a firm’s pipeline of new business, especially in alternative investments, until they see what is the outcome,” Friedberg said in an interview.

He said investors will watch for changes in personnel and the processes they follow in handling clients and their money.

“Those are two major red flags -- people and processes. If those are being changed it can be viewed as a negative and cause departures,” he said.

Beating Indexes

Diversified U.S. equity index funds declined 38 percent in 2008, edging out their active peers, which fell 39 percent. That helped persuade more investors to move to passive investing.

Index funds attracted $34 billion in net deposits last year while all U.S.-registered stock and bond mutual funds lost $230 billion in redemptions. Exchange-traded funds, which also follow indexes and trade throughout the day like stocks, added $177 billion through new sales.

Active funds have performed better so far this year. Diversified active U.S. equity funds returned an average 10 percent through June 10, compared with a gain of 7.3 percent for diversified equity index funds.

Index and exchange-traded funds had a combined $1.14 trillion in assets at Dec. 31, or 18 percent of the U.S. fund industry. That compares with 11 percent in 2003, according to data compiled by the Investment Company Institute in Washington.

Vanguard Group Inc. founder John Bogle opened the first index mutual fund, the Vanguard 500 Index Fund, in 1976. He believed index funds would outperform most active competitors because of their lower management fees and trading costs. State Street opened the first ETF in 1993.

Ivy League Endorsement

Yale University’s investment chief David Swensen, the top- ranked college endowment officer in the past decade, endorsed index funds for individual investors because they provide diversification and low fees.

“They’re a low-cost way of getting exposure to the market,” said Swensen, 55, in a May 22 interview with the “Consuelo Mack WealthTrack” television show. In the mutual- fund industry, the quality of management “is not particularly high and you pay an extraordinarily high price for that not- very-good management,” he said.

Index and ETF companies preserved more of their assets than active investors in recent years as markets fell. In the three years ended Dec. 31, BGI’s assets, excluding money-market funds, declined 18 percent. The S&P 500 Index fell 28 percent during the period. State Street, the second-biggest index-based investor, saw assets dip 2.8 percent. Fidelity, which has about 90 percent of its mutual fund-money in active strategies, saw those assets fall 34 percent.

Fund Inflows

State Street and BGI have both focused on providing index- based investing for institutional clients and ETFs for retail customers, helping to attract inflows during the decline in financial markets. Fidelity, which continues to embrace active management, has suffered outflows. Its stock and bond funds have seen an estimated $1.7 billion in net inflows this year through April, according to Morningstar. They lost $32 billion in net withdrawals last year, according to Fidelity.

Index funds charge fees averaging $81 per $10,000 invested, compared with $137 for active funds, according to Morningstar. ETFs charge $56 per $10,000.

“Passive strategies have been gaining inexorably over the years as people realize the benefits of their low cost and diversification,” Morningstar’s Culloton said.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

Read more...

COM DEV, Le Chateau, Patheon Inc.: Canadian Equity

By Matt Townsend

June 11 (Bloomberg) -- Shares of the following companies may have unusual moves in Canadian trading tomorrow. Stock symbols are in parentheses.

COM DEV International Ltd. (CDV CN): The maker of satellite systems posted second-quarter earnings of 7 Canadian cents a share, meeting the average analysts’ estimate in a Bloomberg survey.

Le Chateau Inc. (CTU/A CN): The apparel retailer reported first-quarter earnings of 21 Canadian cents a share, compared with 22 cents a year earlier.

Patheon Inc. (PTI CN): The drug manufacturer will report second-quarter results. The average estimate of four analysts surveyed by Bloomberg was 3 Canadian cents a share.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net.

Read more...

ArcSight, Ezcorp, Rambus, Yahoo!: U.S. Equity Market

By Eric Martin

June 12 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

ArcSight Inc. (ARST US): The developer of computer security software forecast first-quarter adjusted profit of 3 to 8 cents a share, trailing the 9-cent average estimate of analysts surveyed by Bloomberg.

Ezcorp Inc. (EZPW US): The short-term cash lender cut its third-quarter earnings forecast, saying it expects profit of 29 to 31 cents a share, less than its previous prediction and the average analyst estimate of 34 cents.

Rambus Inc. (RMBS US): The designer of high-speed computer- memory chips is nearing a settlement to end a two-year-old European Union antitrust probe, the Wall Street Journal reported, citing a person familiar with the matter.

Yahoo! Inc. (YHOO US): The owner of the second-ranked U.S. Internet search engine named former General Electric Co. executive Tim Morse as its chief financial officer.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Read more...

U.S. Stock Futures Fall; Baker Hughes, Freeport-McMoRan Drop

By Daniela Silberstein

June 12 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may retreat from a seven-month high, as commodity producers slid with oil and metals.

Baker Hughes Inc. and Freeport-McMoRan Copper & Gold Inc. dropped more than 1.7 percent as crude, copper and lead decreased. National Semiconductor Corp. slipped 2.8 percent as Chief Executive Officer Brian Halla said the computer-chip market shows no signs of rebounding yet.

Standard & Poor’s 500 Index futures expiring in September dropped 0.4 percent to 934.9 at 12:44 p.m. in London, indicating the measure may trim its fourth straight weekly advance. Dow Jones Industrial Average futures lost 0.3 percent to 8,676 and Nasdaq-100 Index futures slipped 0.3 percent to 1,487.

Shares in Asia climbed for a third day, while European equities dropped.

“The upward potential is limited but it’s not looking bad,” said Rudolf Buxtorf, who manages about $114 million at RBS Coutts Bank in Zurich. “A bit of a decline would be deserved after the recent rally.”

U.S. stocks rose yesterday, sending the S&P 500 to a seven- month high, as a drop in Treasury yields eased concern higher borrowing costs will stifle an economic recovery and a rally in oil lifted energy shares.

The S&P 500 has rebounded 40 percent from its 12-year low in March after the government and Federal Reserve pledged $12.8 trillion to end the first global recession since World War II. The index trades at about 14.9 times the earnings of its companies, near the seven-month high of 15.2 reached in May and below the 19.9 average over the last decade.

Economy Watch

Consumer confidence probably rose for a fourth straight month on signs the worst recession in at least five decades may end this year, economists said before a report today.

The Reuters/University of Michigan preliminary index of consumer sentiment probably climbed to 69.5 percent in June, the highest reading since September, according to economists in a Bloomberg News survey. The report is scheduled for 10 a.m. in Washington.

A Labor Department report scheduled for 8:30 a.m. may show import prices rose 1.4 percent in May, following a 1.6 percent gain in April, as oil prices increased, according to a Bloomberg survey of economists.

Baker Hughes, the world’s third-largest oilfield-services provider, lost 1.7 percent to $41.62. Schlumberger Ltd., the biggest, declined 1.4 percent to $61.32. Crude oil retreated for the first time in four days as a record plunge in European industrial production prompted speculation that hopes for an economic recovery are premature.

Freeport, National Semiconductor

Freeport-McMoRan, the largest publicly traded copper producer, slipped 1.9 percent to $59.30. Copper dropped in New York and London and aluminum also declined as the dollar advanced and investors sold commodities after recent gains.

National Semiconductor, which supplies the top five mobile- phone manufacturers, fell 2.8 percent to $14.07.

“I don’t think anyone in this industry is positive enough to say that we’ve recovered,” Halla said.

BlackRock Inc. climbed 1.5 percent to $185.49 in Germany after agreeing to buy Barclays Plc’s investment unit for $13.5 billion to create a company overseeing $2.7 trillion in assets, more than the Federal Reserve.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

Read more...

USD Surges Despite Twin Deficit Data

by Korman Tam

The dollar sharply rallied against the euro and sterling, reversing yesterday’s losses and climbing to 1.39 versus the euro and 1.6242 against the sterling. The 10-year Treasury note edged up toward the 4% level, reflecting underlying fears of forthcoming rate hikes, while the major US equity bourses slid by nearly 1%.

Traders analyzed the US twin deficit data released earlier in the session. The April trade deficit was slightly higher than expectations, edging up to $29.16 billion, from an upwardly revised $28.5 billion from March. US exports slid to its lowest level in 3-years, falling by $2.2 billion to $121.1 billion, while imports fell by $2.2 billion to $150.3 billion. The US Treasury released the May budget deficit earlier, revealing a record $189.5 billion deficit – higher than forecast and up from a $165.93 billion budget deficit a year earlier. The 2009 fiscal deficit climbed closer to the $1 trillion at $991.95 billion.

The Federal Reserve’s Beige Book said economic conditions in the 12 Fed districts either remained weak or worsened through May. The report saw five districts acknowledging the downward trend beginning to show signs of moderating while some districts said there are nascent signs that job losses may be moderating. The Fed said districts mostly saw prices at all stages of production to be generally flat or falling, with the notable exception to downward pricing pressures is the widely reported increase in the price of oil. The Beige Book also noted that retail spending remained soft and that real estate markets continued to deteriorate in all districts.

The economic calendar for Thursday consists of May retail sales, weekly jobless claims, and business inventories. The upbeat consumer confidence survey from yesterday bodes well for retail sales with improved sentiment likely to result in increased consumer spending. The headline May retail sales report is expected to reverse a 0.4% decline in April to improve by 0.2%. The core retail sales figure is seen increasing by 0.3% in May, improving markedly from a 0.5% decline in the previous month. Weekly jobless claims are expected to improve to 615k, down slightly from a week earlier at 621k. Lastly, April business inventories are expected to post a 0.8% decline, improving marginally from a 1.0% decline in March.

Yen Slips ahead of GDP

In the coming session, Japan’s revised Q1 GDP will be released, with consensus estimates looking for a slightly improved 15% annualized decline from the previous figure of 15.2%. The quarterly figure is estimated to remain unchanged, revealing a Q1 economic contraction of 4.0% on the quarter. The data will reiterate current challenging economic conditions facing the world’s second largest economy. Also to be released on Thursday will be capacity utilization, industrial output and consumer confidence.

source : www.forexnews.com


Read more...

Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Jun 11 09 03:49 GMT |

EUR/USD closed lower on Wednesday and the low-range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain bearish signalling that sideways to lower prices is possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews this spring's rally, the 87% retracement level of the December-March decline crossing is the next upside target. USD/JPY closed lower on Wednesday and the low-range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends last week's decline, the reaction low crossing is the next downside target. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted. GBP/USD closed slightly higher on Wednesday as it consolidated some of the decline off last week's high. The high-range close sets the stage for a steady to higher opening on Thursday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends the decline off last week's high, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the near-term bearish outlook in the market. USD/CHF closed lower on Wednesday as it consolidated some of Tuesday's rally. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends the decline off last week's high, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the near-term bearish outlook in the market. HY Markets http://www.hymarkets.com

Read more...

The Daily Forecaster: USDJPY

Daily Forex Technicals | Written by FX-Forecaster | Jun 11 09 03:55 GMT |

Price: 98.16 Bias: We need a swift move above 98.43 to maintain gains for 99.12 and 99.64 else expect a dip to 96.66-80 Daily Bullish We saw the decline down to 97.08 and from there a solid bounce that could have the structure to really press through to new highs. However, the 98.00-10 area does seem to be important support and must hold to retain a directly bullish stance. If so, a move back above the 98.43 high should spur price higher to retest the 98.87 high and while it could provide a brief pullback I feel the risk is higher to 99.22 at least. Take care here. If I have to state my preference then I feel that the 99.64-74 area is a more likely stalling point... Only above there extends to 100.42. Medium Term Bullish 10th June: The manner in which the move higher is developing does seem more corrective in nature and as such while I can see potential for a move to 99.64-74 I feel this may hold. Thus, only a break above here would open up 100.42-71 and maybe the 101.43 high... Daily Bearish The support between 96.80-97.10 held perfectly and we have seen a solid recovery but price seems reluctant to push higher. The 98.00-10 support looks crucial here and any breach of this support area would generate a deeper pullback at the very least. If seen then we should note the 97.70 pivot support, break of which would maintain the downside for 97.08 again but I feel then a dip to 96.66-80 is more likely. Take care if seen as this could hold. Only breach extends losses to around 96.02. Medium Term Bearish 10th June: I still see this decline as more corrective in nature and only a break of 96.02-13 would cause me to revert to a bearish stance for a move back to 95.02, maybe 94.44-56 en route 93.84 and below. Resistance 98.43 98.87 99.22 99.64 99.92 100.42 Support 98.00-10 97.70 97.49 97.08 96.66-80 96.13 I shall be presenting a seminar in Hong Kong on Saturday 27th June at the Excelsior Hotel in Causeway Bay. Please see http://www.earlthorn.com/ for details. Ian Copsey FX-Forecaster Legal disclaimer and risk disclosure The Daily Forecaster is an analytical tool only and is not intended to replace individual research. The service is offered as an opinion on the current state of the market with anticipated trading signals but not recommendations. The information provided in The Daily Forecaster should not be relied on as a substitute for extensive independent research before making your trading/investment decisions. Ian Copsey is merely providing this service for your general information. No representation is being made that any view or opinion will guarantee profits or not result in losses from trading. In addition any projections or views of the market provided may not prove to be accurate. The opinions are subject to change without notice. Opinions or views expressed in The Daily Forecaster are not meant to be either investment advice or a solicitation or recommendation to establish market positions. Ian Copsey will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this service. The information contained is private and may not be distributed or shared.

Read more...

Japan Stocks Advance on Resources; Shippers Jump on Ratings

By Masaki Kondo

June 10 (Bloomberg) -- Japanese stocks rose, led by resource producers as oil and metal prices jumped, outweighing a bigger-than-expected drop in the nation’s machinery orders.

Mitsubishi Corp., which gets more than half its profit from commodities, increased 4.5 percent as crude rose a second day and copper gained the most in a week. Japan Petroleum Exploration Co., the nation’s No. 2 oil explorer, jumped 5 percent. Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. climbed at least 3.7 percent after analysts boosted their ratings.

“Capital spending is still low and the job market is harsh, but investors are focusing more on the possibility that the economy is emerging from its worst period,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees about $7.7 billion. “The recovery in the commodity market and ample liquidity with low interest rates are spurring investor appetite for risk.”

The Nikkei 225 Stock Average added 141.51, or 1.5 percent, to 9,928.33 as of 12:38 p.m. in Tokyo, rebounding from yesterday’s 0.8 percent decline. The broader Topix index rose 14.93, or 1.6 percent, to 933.17, with more than four stocks advancing for each that slumped.

Companies on the Topix trade at 43.3 times their estimated net income for this fiscal year, the highest level among benchmark indexes in the world’s five biggest stock markets, according to Bloomberg data. The gauge has risen 6.9 percent this year through yesterday as central banks in Japan, the U.S. and Europe cut key interest rates and pumped money into the economy to curb the global credit crisis.

Machinery Orders

Japan’s machinery orders, which indicate capital investment in the next three to six months, fell 5.4 percent in April from the previous month, a government report released this morning showed. Economists had estimated a 0.6 percent drop from March.

Mitsubishi, the nation’s biggest trading company by value, surged 4.5 percent to 1,961 yen. Japan Petroleum leapt 5 percent to 5,640 yen, while metal producer Sumitomo Metal Mining Co. added 6.3 percent.

Dowa Holdings Co., Japan’s No. 2 zinc smelter, soared 7.1 percent, breaking a four-day losing streak. The Nikkei newspaper said its metal business may post a profit in the year to March 2010 as the company cuts costs, though Dowa is projecting a loss.

Crude rose 2.8 percent to $70.01 a barrel yesterday in New York, the highest settlement in seven months, and extended its gain today. A gauge of six metals jumped 3.8 percent in London. Copper surging 5 percent in New York, the most since June 1.

Shippers Advance

A gauge of maritime transport companies rebounded from a four-day retreat after Credit Suisse Group AG raised Japan’s three-biggest shippers to “outperform” from “neutral” on expectations earnings will bottom this year. Deutsche Bank AG also boosted ratings on Nippon Yusen and Mitsui O.S.K.

Nippon Yusen, Japan’s top shipping line by sales, rose 3.7 percent to 453 yen, while closest rival Mitsui O.S.K. added 5 percent to 688 yen. Kawasaki Kisen Kaisha Ltd., the No. 3, jumped 5.9 percent to 447 yen, also benefiting from comments by President Hiroyuki Maekawa that the company may cut more costs.

Nikkei futures expiring in June added 1.6 percent to 9,940 in Osaka and gained 1.5 percent to 9,930 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Read more...

NYSE Comments May End Six Months of Deutsche Boerse Speculation

By Edgar Ortega

June 10 (Bloomberg) -- NYSE Euronext Chief Executive Officer Duncan Niederauer squashed six months of speculation that he was considering a merger with Deutsche Boerse AG.

The world’s largest owner of stock exchanges isn’t in negotiations with the Frankfurt-based Deutsche Boerse and has no plans to enter them, Reuters reported, citing remarks yesterday by Niederauer at the Japan Society in New York. Richard Adamonis, a spokesman for the exchange, declined to comment.

NYSE Euronext, owner of the New York Stock Exchange and four bourses in Europe, held preliminary talks with Deutsche Boerse last year, people familiar with the matter said at the time. NYSE Euronext shares rallied 14 percent April 23 and jumped 23 percent on Dec. 8 after reports in German magazines raised the prospect of a deal.

Niederauer told investors last week that he is focused on squeezing more profit from NYSE Group Inc.’s $12.4 billion purchase of Paris-based Euronext NV by overhauling trading systems on both sides of the Atlantic to reduce costs. Niederauer said earlier this year that consolidation among exchanges may slow as companies integrate operations from a wave of deals since 2006 valued at about $54 billion, according to data compiled by Bloomberg.

Deutsche Boerse, the second-largest exchange operator, is also seeking to cut costs to sustain growth after the Dow Jones Stoxx 600 Index lost 46 percent in 2008, posting its steepest yearly drop in more than three decades. CEO Reto Francioni told shareholders last month that expanding without an acquisition “remains the highest priority,” and declined to comment on “rumors” about merger talks with NYSE Euronext.

Yesterday, NYSE Euronext shares rose $1.21 to $30.68 in New York trading, while Deutsche Boerse declined 1.80 euros to 59 euros in Frankfurt. NYSE Euronext has a market value of $7.98 billion, less than half Deutsche Boerse’s $16.2 billion, according to Bloomberg data.

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.

Read more...

Barnes, LaSalle, Oxford, Shuffle Master: U.S. Equity Preview

By Lu Wang

June 10 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Barnes Group Inc. (B US): The maker of components for automobiles and aircraft withdrew its full-year earnings forecast, citing “increased uncertainty in the transportation sector.”

ITT Corp. (ITT US): The maker of “jammers” that prevent remotely triggered roadside bombs from detonating won a U.S. Army contract valued at $363.1 million for radio systems.

LaSalle Hotel Properties (LHO US): The real estate investment trust focused on luxury and upscale full-service hotels said it plans to sell 6.5 million common shares.

Oxford Industries Inc. (OXM US): The maker of Tommy Bahama clothing reported earnings of 42 cents a share in the first quarter, beating the average analyst estimate by 71 percent.

Shuffle Master Inc. (SHFL US): The maker of casino-chip sorters and card shufflers reported second-quarter profit excluding some items of 10 cents a share, more than double the average analyst estimate.

Stone Energy Corp. (SGY US): The independent oil and gas company said it’s offering 6 million shares, raising money to pay back debt.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

Read more...

Asian Stocks Climb on Commodity Prices, Australian Confidence

By Patrick Rial and Masaki Kondo

June 10 (Bloomberg) -- Asian stocks rose for the first time in three days, as higher metal and oil prices boosted commodity companies and the biggest gain in Australian consumer confidence in 22 years added to evidence the global recession is easing.

Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, jumped 9.7 percent, while Mitsubishi Corp., a trading company that gets more than half its profit from commodities, climbed 5.2 percent in Tokyo. David Jones Ltd., Australia’s No. 2 department store chain, surged 5.4 percent as a consumer sentiment index showed the country’s optimists outnumbered pessimists for the first time since January 2008.

“Investors are focusing more on the possibility that the economy is emerging from its worst period,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees the equivalent of $7.7 billion. “Improved sentiment is resulting in this resilient market.”

The MSCI Asia Pacific Index gained 2.1 percent to 104.25 as of 1:48 p.m. in Tokyo, following a two-day, 1.2 percent drop. The gauge has surged 48 percent from a five-year low on March 9 as equities from Mumbai to Shanghai rallied on rising confidence the worst of the global recession is over.

Japan’s Nikkei 225 Stock Average rose 1.8 percent as Mitsui O.S.K. Lines Ltd., Japan’s second-biggest bulk shipper, surged 5.3 percent after brokerages recommended buying the shares. Taiwan Semiconductor Manufacturing Co. climbed 2.7 percent after saying the worst is over for the global chip industry.

South Korea’s retailers rallied after Shinsegae Co. reported higher sales. Stocks climbed in all Asian markets except Vietnam. China’s CSI 300 Index rose 0.5 percent to the highest since Aug. 1 as a report showed consumer prices fell for a fourth month, making it easier for the government to keep interest rates low.

Higher Valuations

Futures on the Standard & Poor’s 500 Index rose 0.4 percent. Most U.S. stocks rose yesterday, lifting the S&P 500 up by 0.4 percent as a better-than-estimated forecast at Texas Instruments Inc. spurred gains in technology companies.

The three-month stock rally has driven the average valuations of companies on the MSCI Asia Pacific Index to 1.5 times the book value of assets, the highest since Sept. 26. Analyst profit forecasts have been increasing since the end of March, according to data compiled by Bloomberg. Nomura Holdings Inc. yesterday narrowed its estimate for how much profit at Japan’s non-financial companies will decline in fiscal 2009.

Fortescue soared 9.7 percent to A$3.41 in Sydney. Mitsubishi Corp. added 5.2 percent to 1,974 yen. BHP Billiton Ltd., the world’s largest mining company and Australia’s top oil producer, jumped 3.3 percent to A$37.70.

Best Performers

Crude oil rose 2.8 percent to $70.01 a barrel yesterday in New York, the highest settlement since Nov. 4. A gauge of six metals jumped 3.8 percent in London, the most since June 1. Copper surged 5 percent in New York.

Measures of energy and material stocks have been the top performers among the MSCI Asia Pacific Index’s 10 industry groups in the past month on speculation demand for commodities will increase as global growth picks up.

Signs of a global recovery have increased in recent weeks, fueling the stock rally since March. Australia unexpectedly reported growth in its economy last week, while Japan’s government two weeks ago raised its view of the economy for the first time in three years.

The International Monetary Fund said in April it expects Asia’s developing markets to grow 4.8 percent in 2009, compared with a global contraction of 1.3 percent.

Optimists Increase

An Australian consumer sentiment index compiled by Westpac Banking Corp. and the Melbourne Institute that was released today showed an increase of 12.7 percent in June from the previous month to 100.1 points. It’s the first time since January 2008 that the index was above 100, indicating optimists outnumber pessimists.

David Jones climbed 5.4 percent to A$4.11. Commonwealth Bank of Australia, the nation’s second-biggest lender, added 2 percent to A$37.73. Harvey Norman Holdings Ltd., Australia’s biggest electronics retailer, climbed 2 percent to A$3.09.

Mitsui O.S.K. rallied 5.3 percent to 690 after Osuke Itazaki, an analyst at Credit Suisse Group AG and Deutsche Bank AG’s Seigo Ando recommended investors buy the shares.

“Any short-term reduction in share prices is an investment opportunity,” Itazaki wrote in a report. “If the March 2010 fiscal year marks the bottom for earnings, then there is a strong possibility of an upturn in the basic share price trend.”

Shippers Gain

Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, jumped 5.9 percent to 447 yen, while Nippon Yusen K.K., the largest, rose 4.1 percent to 455 yen, after Itazaki gave “outperform” ratings to both.

In Taipei, Taiwan Semiconductor, the world’s largest custom-chip maker, climbed 2.9 percent to NT$57.70 as comments made by Chairman Morris Chang at the company’s annual shareholder meeting fueled optimism industry demand will pick up.

United Microelectronics Corp., the world’s second-biggest maker of custom semiconductors, gained 3.6 percent to NT$12.85. Samsung Electronics Co., the world’s largest computer memory chipmaker, jumped 3.5 percent to 585,000 won.

Shinsegae, which runs South Korea’s biggest discount-store chain, climbed 6.9 percent to 472,500 won after saying sales in May rose 20 percent. Lotte Shopping Co., South Korea’s biggest department-store chain, added 6.4 percent to 251,000 won.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Read more...

Currency Trading Summary

Daily Forex Fundamentals | Written by Easy Forex | Jun 10 09 01:35 GMT |

U.S. Dollar Trading (USD) resumed weakening after a brief period of strengthening as speculation of future rate hikes in the US were dampened. In a survey of the major US bond traders all 16/16 thought the US would not raise rates this year. USD/JPY was lower even as stocks rallied on banking and mining stocks. Oil broke and closed above $70 a barrel. Crude Oil closed up $1.92 to finish the day at $70.01. In US share markets, the Nasdaq was up 17 points or 0.96% and the Dow Jones was down 1 points or -0.02%. Looking ahead, April Trade Balance forecast at -29BN vs. -28Bn previously. The Euro (EUR) regained above 1.4000 after Goldman Sachs put out a buy recommendation and the USD weakened after traders pared back bets of the US Fed raising rates this year. German Industrial Production was down -1.9% in April vs. 0.0% forecast. Overall the EUR/USD traded with a low of 1.4004 and a high of 1.3804 before closing at 1.3910. Looking ahead, May German CPI is forecast at -0.1%. The Japanese Yen (JPY) strengthened against the USD as Yields dropped on the above news. Support at 98 gave weigh but crosses continued to provide support on dips so the downside may be limited while risk appetite is strong. Core Machinery Orders fell -5.4% vs. 0.1% forecast. Overall the USDJPY traded with a low of 97.24 and a high of 98.57 before closing the day around 97.40 in the New York session. The Sterling (GBP) continued the rally that began yesterday on route back above 1.6300 towards year highs above 1.66. Better than expected RICS house price balance helped propel the pair with gains above 1% for the day. Overall the GBP/USD traded with a low of 1.5985 and a high of 1.6365 before closing the day at 1.6330 in the New York session. Industrial Output is forecast at -0.1% vs. 0.0%. Also released, April Trade balance is forecast at -6.4Bn vs. -6.59Bn. The Australian Dollar (AUD) regained 0.8000 as USD weakened and commodities surged. The major topside target at year highs of 0.8260 could come under threat as June consumer confidence increased the most on record up 12%. Overall the AUD/USD traded with a low of 0.7851 and a high of 0.8046 before closing the US session at 0.8015. Looking ahead, Australian June Unemployment is forecast at -30k vs. +27.2K previously. Gold (XAU) couldn’t rally on the USD weakness with improving risk sentiment and inflation pressures yet to materialize. Overall trading with a low of USD$942 and high of USD$960 before ending the New York session at USD$953 an ounce. Easy Forex http://www.easy-forex.com Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

Read more...

Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | Jun 10 09 01:43 GMT |

News And Views Dollar slips. The S&P500 hovered around its flat open, closing up 0.4%. The US Treasury said 10 big banks will repay about $68 billion to the government, but the market was undecided whether that was positive (banks in good shape) or negative (banks have less to lend) for the economy. The US dollar index lost around 1.3%, which then helped metals - copper gaining 4.6% and nickel 6.2%. Treasury bond supply concerns were absent at a 3yr auction, foreign (e.g. central bank) bidders more noticeable. Of course the real test will be the 10yr and 30yr auctions this week. The 2yr yield rallied by 10bp while 10yrs did 2bp, in a partreversal of the rate-hike-expectations prevailing during the past few days. EUR bounced from 1.3855 to 1.4100, a US investment bank's long-EUR trade recommendation coinciding with a moderately positive tone in risk sentiment last night. GBP rallied from around 1.6000 to 1.6360 in the standout performance of the evening, helped by talk of inflows related to the Barclay Global sale, improving housing data, and receding political volatility. USD was weaker against even the yen, falling from 98.50 to 97.25. AUD went for the ride with the other majors, rallying from 0.7900 (noon London) to 0.8045 (late NY), opening in NZ at 0.8020. NZD copied the action, gaining a cent to the current 0.6270. AUD/NZD marched higher, from 1.2700 to 1.2800. US wholesale inventories down 1.4% in April. Another sharp rundown in stocks at the start of Q2, following a downward revision to March from -1.6% to -1.8%. No evidence at this early stage of a positive contribution to Q2 GDP growth from inventory accumulation. US IBD-TIPP economic optimism up from 48.6 to 50.8 in June. This first read on consumer confidence this month shows a further modest gain, driven by all three of the economic outlook, personal finances and federal policies. Japan April leading composite index rose 1.0, extending the 2.1 March rebound from prolonged sharp drop that saw it decline 9 of the 10 previous month. The coincident composite index rose 1.0 in April, the first increase in 11 month. The April indices reflect recent hints of a bottoming out in the sharp contraction in the manufacturing sector. German industrial production down 1.9% in April. This weak monthly outcome pulled annual growth down from -20.2% yr to -21.6% yr. UK house prices update. The May RICS (surveyor) index rose to an 18 month high, with just 44.1% of respondents reporting lower house prices. The DCLG (government) house price index improved from -13.6% yr to -13.0% yr. Both add to the body of evidence suggesting the UK housing market may be stabilising. UK BRC retail sales monitor very soft. May same store sales growth dropped from 4.6% yr to -0.8% yr, confirming that April's strength was mostly Easter and hot weather driven. Outlook We have a negative NZD bias for a 2-month outlook, having expressed that yesterday via the purchase of a NZD put (USD call) option. The motivation for using an option was to remove the daily noise from a medium-term structural trade. We have a target of around 0.55 in mind, but expect the path will be choppy. Today, the 0.6300 level should cap the action, and a move to 0.6150 is our preferred scenario. Watch the terms of trade report this morning - we think it could be much worse than the -3.8% q/q consensus. Events Today Country Release Last Forecast NZ Q1 Terms of Trade -0.9% -6.6% May Electronic Card Transactions 0.70% - Aus Jun Westpac-MI Consumer Sentiment 88.8 - Apr Housing Finance 4.90% -1.0% US Apr Trade Balance $bn -27.6 -29.0 May Federal Budget Balance $bn -166 -181 Fed Beige Book Apr Current Account €bn Fedspeak: Governor Duke Jpn Apr Machinery Orders -1.3% -0.7% May Corp. Goods Prices %yr -0.4% -0.3% UK Apr Visible Trade Balance £bn -6.6 -6.4 Apr Industrial Production -0.6% 0.20% Can Apr Trade Balance C$bn 1.1 1.1 Apr New House Prices -0.5% -0.5% Westpac Institutional Bank http://www.wib.westpac.co.nz/ Disclaimer All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.

Read more...

Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Jun 10 09 03:31 GMT |

EUR/USD closed sharply higher on Tuesday due to short covering as it consolidated some of its decline off last week's low. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices is possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews this spring's rally, the 87% retracement level of the December-March decline crossing is the next upside target. USD/JPY closed higher due to short covering on Tuesday as it consolidated some of the decline off May's high. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends last week's decline, the reaction low crossing is the next downside target. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted. GBP/USD closed sharply higher due to short covering on Tuesday as it consolidates some of last week's decline. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews the rally off April's low, the 50% retracement level of the 2008-2009 decline crossing is the next upside target. USD/CHF closed higher due to short covering on Tuesday as it consolidated some of the decline off last week's high. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends the decline off last week's high, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the near-term bearish outlook in the market. HY Markets http://www.hymarkets.com

Read more...

Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | Jun 10 09 03:26 GMT |

EUR/USD Today's support: - 1.4025, 1.3990 and 1.3953(main), where correction is possible. Break would give 1.3922, where correction also may be. Then follows 1.3904. Break of the latter would result in 1.3891. If a strong impulse, we would see 1.3872. Continuation will give 1.3858. Today's resistance: - 1.4123(main). Break would give 1.4176, where a correction is possible. Then goes 1.4220. Break of the latter would result in 1.4247. If a strong impulse, we'd see 1.4266. Continuation will give 1.4290. USD/JPY Today's support: - 96.90(main). Break would bring 96.77, where correction is possible. Then 96.53, where a correction may also happen. Break of the latter will give 96.40. If a strong impulse, we would see 96.17. Continuation would give 95.86. Today's resistance: - 97.88 and 98.21(main), where a correction may happen. Break would bring 98.58, where also a correction may be. Then 98.78. If a strong impulse, we would see 99.26 Continuation will give 99.47. DOW JONES INDEX Today's support: -8724.32, 8673.70, 8634.17 and 8561.40(main), where a delay and correction may happen. Break of the latter will give 8495.80, where correction also can be. Then follows 8463.00. Be there a strong impulse, we would see 8426.22. Continuation will bring 8392.44. Today's resistance: - 8808.80 and 8842.72(main), where a delay and correction may happen. Break would bring 8858.37, where a correction may happen. Then follows 8887.46, where a delay and correction could also be. Be there a strong impulse, we'd see 8910.00. Continuation would bring 8927.28. FXtechtrade http://www.fxtechtrade.com Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.

Read more...

Various Economic Data Indicate Asia Is On Its Way To Stabilize

Daily Forex Fundamentals | Written by ecPulse.com | Jun 09 09 08:02 GMT |

The economic agenda did not carry with it any important economic data from the Asian region today, however lately we were pleasantly surprised with some evident signs that the worst is behind us therefore stability is about to take control next indicating that recovery from the worst financial crisis since the great depression is close. However some data that have a mild affect on markets was released today starting with Australia in which business confidence for the month of May fell to -2 however better than the previous reading which indicated a wider fall reaching -14, meanwhile the business conditions also for the month of May also fell to -14 but this time it was worst than the previous -10. The improvement in Australia's business confidence could've been based on the government stimulus plan which reached to 22 billion Australian dollars and which was directed to building roads, railways, schools and other infrastructure projects that help to support growth and strengthened the country to be able to face the crisis that ruined exports around the world. The interest rates reductions performed by the Reserve Bank of Australia, driving it to the lowest level in 49 years at 3.0% helped to support domestic spending, direct investments to internal projects and support companies. The Central Bank held rates steady during its last meeting following some signs indicating that the country is stabilizing which were later confirmed by the GDP reading for the first quarter that proved to be positive preventing the economy from falling into recession. More data were today released from Australia as the Job Advertisements for the month of May fell by 0.2% however improving from the previous reading when it fell by 7.5%, its clear that the fiscal policy adopted by the Reserve Bank of Australia had improved the business sector and slowed down the layoffs, however unemployment remains high at 5.4% during the month of May because of the pressures faced by large companies in the past few months after exports fell sharply and domestic consumption declined. Moving to South Korea that witnessed the release if its yearly Producer Price Index for the month of May which dropped by 1.3% and for the first time since 2002 compared to the previous rise of 1.5%, obviously the decline is very much influenced by the fall in energy and row material prices that help decrease manufacturing prices but also by the decline in domestic consumption, however the Korean central bank benefited from the decline in inflation levels by lowering interest rates to 2.0% yet in its last meeting it held rates steady as a reaction to the stability signs that began to emerge from the US and the recovery signs started in China. Moving to the second largest economy in the world Japan which today released the preliminary reading for the leading index which reached in April to 76.5 from the previous revised reading of 75.5 however worst than the expected 77.2, meanwhile the preliminary reading for the coincident index reached to 85.8 in April from the previous revised reading of 84.8 yet worst than the expected 86.0, but the improvement in April from the previous month indicate that stability is finding its way into the economy, still the main focus remain on exports are they are the main supportive factor to growth in Japan. Japan holds today a meeting of the government's Council on Economic and Fiscal Policy where it is expected to announce the outline of monetary and fiscal policy in Japan, the Nikkei newspaper published today said that the government is expected for it to cut the deficit of the country by half until 2014 and start achieving surplus in the upcoming 10 years. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

Read more...