By Dan Levy
July 5 (Bloomberg) -- The vacancy rate for U.S. rental apartment buildings was unchanged at 5.9 percent in the second quarter as the housing slump and a weakening economy deterred people from buying homes, Reis Inc. reported.
The average monthly U.S. asking rent rose 1 percent to $1,047, the 25th consecutive quarter that rents increased or stayed the same, according to Reis, a New York-based research firm.
Home prices in 20 U.S. metropolitan areas declined in April by the most on record and new home sales fell 40 percent in May from a year ago. The slumping housing market means apartment rents should remain steady even as gasoline prices rise and U.S. companies cut jobs, Sam Chandan, chief economist for Reis, said in an interview. Payrolls fell by 62,000 in June and 438,000 in the first half, the Labor Department said July 3.
``Our projection is rent growth will moderate through 2009, but we don't think it will turn negative as it did in the early 2000s,'' Chandan said. ``The bias will be weighted toward rental, in our view. People fear home prices will fall further.''
The last time U.S. rents fell was the first quarter of 2002, when they declined by 0.2 percent, according to Reis.
The five-year housing boom that ended in 2006 attracted investment to homebuilding, so fewer apartment buildings were constructed, Chandan said.
``There has been very little apartment development because all the money was made in housing development,'' he said. ``We don't have a strong pipeline of apartments.''
San Francisco
San Francisco asking rents grew the most in the second quarter from the previous 12 months, increasing 9.4 percent. New York gained 7.7 percent, Seattle rose 7.4 percent, San Jose, California increased 7.3 percent and Salt Lake City increased 6.1 percent, according to Reis.
New York had the highest average U.S. rent at $2,847 a month, followed by San Francisco at $1,825, Fairfield County, Connecticut at $1,757, Boston at $1,646 and Long Island, New York at $1,521, Reis said.
Orange County, California, ranked sixth at $1,520, followed by San Jose at $1,504, Northern New Jersey at $1,460, Ventura County, California at $1,409 and Los Angeles at $1,408, according to Reis.
New York had the lowest vacancy rate at 2.2 percent, followed by Long Island at 2.9 percent, Central New Jersey at 3 percent, San Jose at 3.2 percent and New Haven, Connecticut at 3.3 percent, Northern New Jersey at 3.5 percent, Syracuse, New York at 3.6 percent, San Diego and San Francisco at 3.8 percent and Minneapolis at 3.0 percent, Reis said.
To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net
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Saturday, July 5, 2008
Merrill nears deal to sell Bloomberg stake: report
Fri Jul 4, 2008 2:26pm EDT
NEW YORK (Reuters) - Merrill Lynch & Co may sell its 20 percent stake in financial news and data provider Bloomberg LP to a blind trust controlled by New York City Mayor Michael Bloomberg, The New York Post reported on Friday.
Details about the terms of a sale remain sketchy, the Post said, and sources warned that a deal could still fall apart.
The sale is part of a broader plan by cash-strapped Merrill to raise about $50 billion through various asset sales, the Post said, citing bankers who have looked at marketing materials.
Merrill in 1981 provided seed money for Bloomberg to launch the business. Analysts have valued Merrill's stake at between $5 billion and $10 billion, the Post said.
Last month, John Thain, Merrill's chief executive hinted to Wall Street that his firm might sell one of its more treasured assets following a deterioration in the value of its balance sheet from mortgage-related losses, the Post said.
A Merrill representative could not be reached for immediate comment.
Michael Bloomberg, who became New York's mayor in January 2002, retains a majority stake in the company, but has said he has given up day-to-day control.
Privately-held Bloomberg LP is a competitor of Thomson Reuters.
Read more...
NEW YORK (Reuters) - Merrill Lynch & Co may sell its 20 percent stake in financial news and data provider Bloomberg LP to a blind trust controlled by New York City Mayor Michael Bloomberg, The New York Post reported on Friday.
Details about the terms of a sale remain sketchy, the Post said, and sources warned that a deal could still fall apart.
The sale is part of a broader plan by cash-strapped Merrill to raise about $50 billion through various asset sales, the Post said, citing bankers who have looked at marketing materials.
Merrill in 1981 provided seed money for Bloomberg to launch the business. Analysts have valued Merrill's stake at between $5 billion and $10 billion, the Post said.
Last month, John Thain, Merrill's chief executive hinted to Wall Street that his firm might sell one of its more treasured assets following a deterioration in the value of its balance sheet from mortgage-related losses, the Post said.
A Merrill representative could not be reached for immediate comment.
Michael Bloomberg, who became New York's mayor in January 2002, retains a majority stake in the company, but has said he has given up day-to-day control.
Privately-held Bloomberg LP is a competitor of Thomson Reuters.
Read more...
BCE, Ontario Teachers' Reach Final Agreement on Sale
By Chris Fournier and Frederic Tomesco
July 4 (Bloomberg) -- BCE Inc., Canada's biggest phone company, signed a final agreement with a group led by the Ontario Teachers' Pension Plan to complete the world's largest leveraged buyout after scrapping its quarterly dividend. The stock had its biggest gain in more than six years.
The C$52 billion ($51 billion) purchase of BCE, first announced a year ago, will be done by Dec. 11 at the original price of C$42.75 a share, the Montreal-based company said in a statement today. BCE won't pay dividends on its common shares, preserving as much as C$900 million to appease the banks financing the purchase.
BCE's financing accord is an exception in a leveraged buyout market that's been stalled by the subprime mortgage crisis and rising borrowing costs. Buyout loan defaults may be ``significantly higher'' than ratings companies' estimates as about $500 billion of debt used to fund the takeovers comes due, the Bank for International Settlements said in a report today.
``BCE's release is uplifting news, signaling the ability to close transactions with big funding requirements, at least for highly cash-generative assets,'' said Edward Nash, managing director and head of mergers at CIBC World Markets in Toronto.
BCE rose C$4.49, or 13 percent, to C$39.64 in 4:10 p.m. trading on the Toronto Stock Exchange, the biggest gain since April 2002.
Bank Financing
BCE shares last month traded as much as 25 percent below the offer price on concern that banks funding the purchase, including Citigroup Inc. and Deutsche Bank AG, may back out or reduce the price as financing costs rise and the U.S. economy slows.
``It's a morale booster,'' said Ian Nakamoto, research director at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.8 billion, including BCE shares. ``People were pessimistic after all the talk of, `It won't get done' or `only at a lower price.'''
The buyout group and BCE made several changes to the agreement to win the backing of the bankers, who will provide C$34 billion in financing. The closing was pushed back almost three months from Sept. 30, giving the bankers more time to sell debt to pay for the purchase.
The common share dividend, which had been deferred last week, won't be paid, though preferred shareholders will get a dividend. The buyers must also pay a break fee of C$1.2 billion, or 20 percent more than in the original agreement, if the purchase doesn't get done.
Concession to Banks
Scrapping the dividend ``is obviously a concession, but in light of current market conditions, it's not unexpected,'' said Jim Hall, who manages about $1 billion, including 400,000 BCE shares, at Mawer Investment Management in Calgary. ``This is the way the world is supposed to work, and the 12 months of nonsense before this was trying.''
Toronto-based Ontario Teachers', Canada's third-largest pension manager, and Providence, Rhode Island-based Providence Equity agreed a year ago to pay C$42.75 a share, or C$34.2 billion, to take BCE private. Madison Dearborn Partners LLC in Chicago and New York-based Merrill Lynch & Co. joined the deal.
The Supreme Court of Canada on June 20 approved the takeover, reversing a lower court ruling that said the deal didn't treat bondholders fairly.
Funding Risk
Today's agreement ``largely eliminates the funding risk for the deal,'' National Bank Financial analyst Greg MacDonald said in a note to clients. Retaining the dividend for two to three quarters may be worth C$588 million to C$882 million to BCE, and was a ``concession for the banks to close the deal,'' he said.
The dividend cut reduces the cost to the buyers by as much as C$1.10 a share, MacDonald said.
George Cope, 46, chief operating officer of BCE's Bell Canada phone business, will succeed Michael Sabia as chief executive officer on July 11. Sabia had said he would step down when the sale closes.
``Work is now largely done,'' Sabia, 54, said in the statement. ``We have been planning this transition for some time. Now is the time to get on with it.''
BCE's priority will be to hang on to its customers, former Teachers' Chief Executive Officer Claude Lamoureux said last week. Lamoureux will join the BCE board.
The company lost 511,000 local-phone subscribers in 2007, compared with 463,000 in 2006 and 297,000 in 2005, according to last year's annual report.
``Rule No. 1 is, let's make sure everybody is happy,'' Lamoureux, 65, said when asked about BCE. ``If the clients are happy, then the owners are going to make some money.''
In addition to New York-based Citigroup and Deutsche Bank of Frankfurt, lenders on the BCE deal are Royal Bank of Scotland Group Plc and Toronto-Dominion Bank in Toronto.
To contact the reporters on this story: Chris Fournier in Montreal Cfournier3@bloomberg.net. Frederic Tomesco in Montreal at tomesco@bloomberg.net.
Read more...
July 4 (Bloomberg) -- BCE Inc., Canada's biggest phone company, signed a final agreement with a group led by the Ontario Teachers' Pension Plan to complete the world's largest leveraged buyout after scrapping its quarterly dividend. The stock had its biggest gain in more than six years.
The C$52 billion ($51 billion) purchase of BCE, first announced a year ago, will be done by Dec. 11 at the original price of C$42.75 a share, the Montreal-based company said in a statement today. BCE won't pay dividends on its common shares, preserving as much as C$900 million to appease the banks financing the purchase.
BCE's financing accord is an exception in a leveraged buyout market that's been stalled by the subprime mortgage crisis and rising borrowing costs. Buyout loan defaults may be ``significantly higher'' than ratings companies' estimates as about $500 billion of debt used to fund the takeovers comes due, the Bank for International Settlements said in a report today.
``BCE's release is uplifting news, signaling the ability to close transactions with big funding requirements, at least for highly cash-generative assets,'' said Edward Nash, managing director and head of mergers at CIBC World Markets in Toronto.
BCE rose C$4.49, or 13 percent, to C$39.64 in 4:10 p.m. trading on the Toronto Stock Exchange, the biggest gain since April 2002.
Bank Financing
BCE shares last month traded as much as 25 percent below the offer price on concern that banks funding the purchase, including Citigroup Inc. and Deutsche Bank AG, may back out or reduce the price as financing costs rise and the U.S. economy slows.
``It's a morale booster,'' said Ian Nakamoto, research director at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.8 billion, including BCE shares. ``People were pessimistic after all the talk of, `It won't get done' or `only at a lower price.'''
The buyout group and BCE made several changes to the agreement to win the backing of the bankers, who will provide C$34 billion in financing. The closing was pushed back almost three months from Sept. 30, giving the bankers more time to sell debt to pay for the purchase.
The common share dividend, which had been deferred last week, won't be paid, though preferred shareholders will get a dividend. The buyers must also pay a break fee of C$1.2 billion, or 20 percent more than in the original agreement, if the purchase doesn't get done.
Concession to Banks
Scrapping the dividend ``is obviously a concession, but in light of current market conditions, it's not unexpected,'' said Jim Hall, who manages about $1 billion, including 400,000 BCE shares, at Mawer Investment Management in Calgary. ``This is the way the world is supposed to work, and the 12 months of nonsense before this was trying.''
Toronto-based Ontario Teachers', Canada's third-largest pension manager, and Providence, Rhode Island-based Providence Equity agreed a year ago to pay C$42.75 a share, or C$34.2 billion, to take BCE private. Madison Dearborn Partners LLC in Chicago and New York-based Merrill Lynch & Co. joined the deal.
The Supreme Court of Canada on June 20 approved the takeover, reversing a lower court ruling that said the deal didn't treat bondholders fairly.
Funding Risk
Today's agreement ``largely eliminates the funding risk for the deal,'' National Bank Financial analyst Greg MacDonald said in a note to clients. Retaining the dividend for two to three quarters may be worth C$588 million to C$882 million to BCE, and was a ``concession for the banks to close the deal,'' he said.
The dividend cut reduces the cost to the buyers by as much as C$1.10 a share, MacDonald said.
George Cope, 46, chief operating officer of BCE's Bell Canada phone business, will succeed Michael Sabia as chief executive officer on July 11. Sabia had said he would step down when the sale closes.
``Work is now largely done,'' Sabia, 54, said in the statement. ``We have been planning this transition for some time. Now is the time to get on with it.''
BCE's priority will be to hang on to its customers, former Teachers' Chief Executive Officer Claude Lamoureux said last week. Lamoureux will join the BCE board.
The company lost 511,000 local-phone subscribers in 2007, compared with 463,000 in 2006 and 297,000 in 2005, according to last year's annual report.
``Rule No. 1 is, let's make sure everybody is happy,'' Lamoureux, 65, said when asked about BCE. ``If the clients are happy, then the owners are going to make some money.''
In addition to New York-based Citigroup and Deutsche Bank of Frankfurt, lenders on the BCE deal are Royal Bank of Scotland Group Plc and Toronto-Dominion Bank in Toronto.
To contact the reporters on this story: Chris Fournier in Montreal Cfournier3@bloomberg.net. Frederic Tomesco in Montreal at tomesco@bloomberg.net.
Read more...
Japanese Bonds Complete Biggest Gain in a Week on ECB Comments
By Theresa Barraclough
July 5 (Bloomberg) -- Japan's bonds advanced yesterday after European Central Bank President Jean-Claude Trichet's comments eased speculation the Bank of Japan will increase borrowing costs this year.
Benchmark debt yesterday completed its biggest gain in a week after Trichet on July 3 said he isn't ``pre-committed'' to lifting interest rates to combat inflation, after the central bank boosted borrowing costs for the first time in a year. Bonds also gained on a report that showed U.S. employers cut jobs for the sixth consecutive month in June.
``The Bank of Japan is now under less pressure for a coordinated effort by central banks,'' said Takashi Nishimura, an analyst at Mitsubishi UFJ Securities Co. in Tokyo. ``Investors are focusing more on fundamentals.''
The yield on 10-year securities auctioned on June 3 with a 1.7 percent coupon fell 3 basis points yesterday, the biggest decline since June 27, to 1.64 percent in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. A basis point is 0.01 percentage point.
Ten-year yields may decline to as low as 1.55 percent by the end of September, Nishimura said. Should his predictions prove accurate, investors would stand to make a 1.1 percent return, according to Bloomberg calculations.
Ten-year bond futures for September delivery yesterday rose 0.32 to 135.18 as of the afternoon close at the Tokyo Stock Exchange.
Weekly Decline
Bonds completed a weekly decline on speculation a government report on July 10 will show wholesale prices rose last month. Ten-year yields added 3 basis points this week.
``Inflation remains a concern in the long run,'' said Tatsuo Ichikawa, a fixed-income strategist at ABN Amro Securities Japan Ltd. in Tokyo. ``Inflation-linked bonds are a good investment. It has limited downside.''
Japan's producer-price inflation accelerated to 5.3 percent in June from 4.7 percent in May, according to the median estimate of 26 economists surveyed by Bloomberg News.
Consumer prices, excluding fresh food, rose 1.5 percent in May from a year earlier, the statistics bureau said in Tokyo on June 27. Crude oil for August delivery rose to a record $145.85 a barrel yesterday. Accelerating inflation reduces the value of the fixed interest debt pays.
The extra yield paid by 10-year conventional government debt compared with similar-maturity inflation-linked bonds was about 59 basis points yesterday from 46 basis points a week ago, according to data compiled by Bloomberg.
The so-called breakeven inflation rate reflects investors' expectations for average annual increases in consumer prices over the next decade.
Bunds Versus JGBs
German two-year bunds on July 3 rallied the most in 3 1/2 months after Trichet's comments, dropping about 19 basis points to 4.45 percent. The spread between two-year German and Japanese yields shrunk to about 3.60 percentage points that day, the narrowest since June 12, according Bloomberg data.
``Japan's yield curve will be under pressure to steepen,'' Mitsubishi UFJ's Nishimura said. A yield curve is a chart that plots the yields of bonds with different maturities.
The difference in yields between two- and 10-year debt was about 80 basis points yesterday, compared with 77 basis points three months ago, according to data compiled by Bloomberg. The spread will probably widen to 83 basis points by September, according to a Bloomberg News survey of economists and analysts. The estimate puts a heavier weighting on more recent forecasts.
There was a 27 percent chance yesterday the Bank of Japan will raise its target rate by a quarter-percentage point to 0.75 percent by Dec. 31, according to calculations by JPMorgan Chase & Co., using overnight interest-rate swaps. The odds were 31 percent on July 3 and as high as 92 percent on June 11.
U.S. employers cut 62,000 jobs in June, the Labor Department said on June 3, larger than a 60,000 drop estimated by economists. The U.S. is Japan's largest export market.
To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.
Read more...
July 5 (Bloomberg) -- Japan's bonds advanced yesterday after European Central Bank President Jean-Claude Trichet's comments eased speculation the Bank of Japan will increase borrowing costs this year.
Benchmark debt yesterday completed its biggest gain in a week after Trichet on July 3 said he isn't ``pre-committed'' to lifting interest rates to combat inflation, after the central bank boosted borrowing costs for the first time in a year. Bonds also gained on a report that showed U.S. employers cut jobs for the sixth consecutive month in June.
``The Bank of Japan is now under less pressure for a coordinated effort by central banks,'' said Takashi Nishimura, an analyst at Mitsubishi UFJ Securities Co. in Tokyo. ``Investors are focusing more on fundamentals.''
The yield on 10-year securities auctioned on June 3 with a 1.7 percent coupon fell 3 basis points yesterday, the biggest decline since June 27, to 1.64 percent in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. A basis point is 0.01 percentage point.
Ten-year yields may decline to as low as 1.55 percent by the end of September, Nishimura said. Should his predictions prove accurate, investors would stand to make a 1.1 percent return, according to Bloomberg calculations.
Ten-year bond futures for September delivery yesterday rose 0.32 to 135.18 as of the afternoon close at the Tokyo Stock Exchange.
Weekly Decline
Bonds completed a weekly decline on speculation a government report on July 10 will show wholesale prices rose last month. Ten-year yields added 3 basis points this week.
``Inflation remains a concern in the long run,'' said Tatsuo Ichikawa, a fixed-income strategist at ABN Amro Securities Japan Ltd. in Tokyo. ``Inflation-linked bonds are a good investment. It has limited downside.''
Japan's producer-price inflation accelerated to 5.3 percent in June from 4.7 percent in May, according to the median estimate of 26 economists surveyed by Bloomberg News.
Consumer prices, excluding fresh food, rose 1.5 percent in May from a year earlier, the statistics bureau said in Tokyo on June 27. Crude oil for August delivery rose to a record $145.85 a barrel yesterday. Accelerating inflation reduces the value of the fixed interest debt pays.
The extra yield paid by 10-year conventional government debt compared with similar-maturity inflation-linked bonds was about 59 basis points yesterday from 46 basis points a week ago, according to data compiled by Bloomberg.
The so-called breakeven inflation rate reflects investors' expectations for average annual increases in consumer prices over the next decade.
Bunds Versus JGBs
German two-year bunds on July 3 rallied the most in 3 1/2 months after Trichet's comments, dropping about 19 basis points to 4.45 percent. The spread between two-year German and Japanese yields shrunk to about 3.60 percentage points that day, the narrowest since June 12, according Bloomberg data.
``Japan's yield curve will be under pressure to steepen,'' Mitsubishi UFJ's Nishimura said. A yield curve is a chart that plots the yields of bonds with different maturities.
The difference in yields between two- and 10-year debt was about 80 basis points yesterday, compared with 77 basis points three months ago, according to data compiled by Bloomberg. The spread will probably widen to 83 basis points by September, according to a Bloomberg News survey of economists and analysts. The estimate puts a heavier weighting on more recent forecasts.
There was a 27 percent chance yesterday the Bank of Japan will raise its target rate by a quarter-percentage point to 0.75 percent by Dec. 31, according to calculations by JPMorgan Chase & Co., using overnight interest-rate swaps. The odds were 31 percent on July 3 and as high as 92 percent on June 11.
U.S. employers cut 62,000 jobs in June, the Labor Department said on June 3, larger than a 60,000 drop estimated by economists. The U.S. is Japan's largest export market.
To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.
Read more...
Toronto-Dominion Error to Cut Profit by C$96 Million
By Sean B. Pasternak
July 4 (Bloomberg) -- Toronto-Dominion Bank, Canada's second-largest lender, said one of its traders in London incorrectly priced credit derivatives, costing the bank about C$96 million ($94.3 million) in pretax earnings.
The employee linked to the pricing error, a senior male trader, left TD Securities on June 23 when the mistake was discovered, bank spokeswoman Simone Philogène said today in a telephone interview from Toronto. She declined to name the employee.
``We are very disappointed that this has occurred,'' Chief Executive Officer Ed Clark said in a statement. ``Our company has a strong risk culture, and we deeply regret this incident.''
Toronto-Dominion has avoided debt writedowns in the last year, while its five biggest competitors in Canada have recorded combined costs of about C$10 billion related to the U.S. subprime mortgage market.
``It's too bad; it's such a small amount yet it sort of spoils the track record,'' said Blackmont Capital Inc. analyst Brad Smith. ``It's got to be a disappointment to management, who've rightfully pointed to their ability to sidestep a lot of these problems.''
The Toronto-based bank reported the incident to the Financial Services Authority in the U.K. and Canada's Office of the Superintendent of Financial Institutions, Philogène said. The bank is cooperating with authorities.
Toronto-Dominion's estimated charge is equal to about 11 percent of its C$852 million in second-quarter net income. The lender is scheduled to release third-quarter earnings on Aug. 28.
Toronto-Dominion fell 25 cents to C$63.09 at 4:10 p.m. in trading on the Toronto Stock Exchange.
To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.
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July 4 (Bloomberg) -- Toronto-Dominion Bank, Canada's second-largest lender, said one of its traders in London incorrectly priced credit derivatives, costing the bank about C$96 million ($94.3 million) in pretax earnings.
The employee linked to the pricing error, a senior male trader, left TD Securities on June 23 when the mistake was discovered, bank spokeswoman Simone Philogène said today in a telephone interview from Toronto. She declined to name the employee.
``We are very disappointed that this has occurred,'' Chief Executive Officer Ed Clark said in a statement. ``Our company has a strong risk culture, and we deeply regret this incident.''
Toronto-Dominion has avoided debt writedowns in the last year, while its five biggest competitors in Canada have recorded combined costs of about C$10 billion related to the U.S. subprime mortgage market.
``It's too bad; it's such a small amount yet it sort of spoils the track record,'' said Blackmont Capital Inc. analyst Brad Smith. ``It's got to be a disappointment to management, who've rightfully pointed to their ability to sidestep a lot of these problems.''
The Toronto-based bank reported the incident to the Financial Services Authority in the U.K. and Canada's Office of the Superintendent of Financial Institutions, Philogène said. The bank is cooperating with authorities.
Toronto-Dominion's estimated charge is equal to about 11 percent of its C$852 million in second-quarter net income. The lender is scheduled to release third-quarter earnings on Aug. 28.
Toronto-Dominion fell 25 cents to C$63.09 at 4:10 p.m. in trading on the Toronto Stock Exchange.
To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.
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Asian Stocks Fall for Fourth Week as Oil Prices Surge to Record
By Hanny Wan and Shani Raja
July 5 (Bloomberg) -- Asian stocks fell for a fourth week, on concern record crude oil prices will slow global economic growth and erode earnings. Japan's Nikkei 225 Stock Average posted its longest losing streak in 54 years.
BHP Billiton Ltd., the world's largest mining company, led declines on concern metals demand will drop. Toyota Motor Corp., the world's second-largest automaker, dropped after its U.S. sales slumped last month. Posco led steelmakers lower on speculation lower vehicle sales will reduce demand for the metal.
``The world has definitely turned bearish and sentiment is very negative,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``The price of oil at this time is choking demand. That's what the world's equity markets are reacting to.''
The MSCI Asia Pacific Index dropped 3.1 percent to 132.78 in the past five days, with a gauge tracking material producers posting the biggest losses among 10 industry groups. The four weeks of declines were the most since a six-week losing streak that ended Feb. 8.
Japan's Nikkei 225 Stock Average retreated 2.3 percent this week to 13,237.89. The measure has fallen for 12 straight days, the longest losing streak since 1954.
Malaysia's Kuala Lumpur Composite Index dropped 4.7 percent this week to the lowest since March 6, 2007 on concern rising political tension will hurt investments. Trading on the country's stock market was suspended July 3 due to a systems failure.
Biggest Threat
The MSCI Asia Pacific has slumped 16 percent this year amid mounting credit losses at the biggest financial institutions and as central banks across Asia raised borrowing costs to curb inflation. Finance ministers from the Group of Eight nations said last month surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.
BHP retreated 5.1 percent to A$40.70 this week. Rio Tinto Group, the world's third-biggest mining company, declined 4.8 percent to A$125.70. Jiangxi Copper Co., China's largest publicly traded producer of the metal, dropped 5.6 percent to HK$14.26 in Hong Kong.
BHP, the world's sixth-largest producer of primary aluminum, also fell after Credit Suisse Group cut its earnings estimate for Alcoa Inc. and Century Aluminum Co. Analysts said profits will be hurt by higher energy and materials costs and a lower average price for the metal.
Toyota, which derives a third of its revenue from North America, dropped 3 percent to 4,920 yen this week. Its U.S. sales slumped 21 percent in June, the company said this week. Honda Motor Co., Japan's second-largest automaker, lost 1.9 percent to 3,580 yen. Vehicle sales plunged 18 percent in the U.S. last month, the steepest slump in almost six years.
`Disappointing' Earnings
General Motors Corp. yesterday tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy as U.S. auto demand slows.
Posco, Asia's third-biggest steelmaker, fell 9.6 percent this week to 482,000 won. BlueScope Steel Ltd., Australia's No. 1 steelmaker, tumbled 12 percent to A$9.76. JSW Steel Ltd., India's third-largest steelmaker, slumped 23 percent to 753 rupees.
Cathay Pacific Airways Ltd., Hong Kong's largest airline, lost 5.4 percent to HK$13.98 this week after saying on July 2 that earnings will be ``disappointing'' because of rising fuel prices. Jet fuel has more than doubled in the past year, reflecting the surge in oil. Oil futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.
``Nobody wants to hold on to stocks right now,'' said Choi Min Jai, who helps manage about $5 billion at KTB Asset Management Co. in Seoul. ``The slowdown in the global economy is being felt. There is rising concern higher oil prices will mean higher inflation, which means lower demand.''
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
Read more...
July 5 (Bloomberg) -- Asian stocks fell for a fourth week, on concern record crude oil prices will slow global economic growth and erode earnings. Japan's Nikkei 225 Stock Average posted its longest losing streak in 54 years.
BHP Billiton Ltd., the world's largest mining company, led declines on concern metals demand will drop. Toyota Motor Corp., the world's second-largest automaker, dropped after its U.S. sales slumped last month. Posco led steelmakers lower on speculation lower vehicle sales will reduce demand for the metal.
``The world has definitely turned bearish and sentiment is very negative,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``The price of oil at this time is choking demand. That's what the world's equity markets are reacting to.''
The MSCI Asia Pacific Index dropped 3.1 percent to 132.78 in the past five days, with a gauge tracking material producers posting the biggest losses among 10 industry groups. The four weeks of declines were the most since a six-week losing streak that ended Feb. 8.
Japan's Nikkei 225 Stock Average retreated 2.3 percent this week to 13,237.89. The measure has fallen for 12 straight days, the longest losing streak since 1954.
Malaysia's Kuala Lumpur Composite Index dropped 4.7 percent this week to the lowest since March 6, 2007 on concern rising political tension will hurt investments. Trading on the country's stock market was suspended July 3 due to a systems failure.
Biggest Threat
The MSCI Asia Pacific has slumped 16 percent this year amid mounting credit losses at the biggest financial institutions and as central banks across Asia raised borrowing costs to curb inflation. Finance ministers from the Group of Eight nations said last month surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.
BHP retreated 5.1 percent to A$40.70 this week. Rio Tinto Group, the world's third-biggest mining company, declined 4.8 percent to A$125.70. Jiangxi Copper Co., China's largest publicly traded producer of the metal, dropped 5.6 percent to HK$14.26 in Hong Kong.
BHP, the world's sixth-largest producer of primary aluminum, also fell after Credit Suisse Group cut its earnings estimate for Alcoa Inc. and Century Aluminum Co. Analysts said profits will be hurt by higher energy and materials costs and a lower average price for the metal.
Toyota, which derives a third of its revenue from North America, dropped 3 percent to 4,920 yen this week. Its U.S. sales slumped 21 percent in June, the company said this week. Honda Motor Co., Japan's second-largest automaker, lost 1.9 percent to 3,580 yen. Vehicle sales plunged 18 percent in the U.S. last month, the steepest slump in almost six years.
`Disappointing' Earnings
General Motors Corp. yesterday tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy as U.S. auto demand slows.
Posco, Asia's third-biggest steelmaker, fell 9.6 percent this week to 482,000 won. BlueScope Steel Ltd., Australia's No. 1 steelmaker, tumbled 12 percent to A$9.76. JSW Steel Ltd., India's third-largest steelmaker, slumped 23 percent to 753 rupees.
Cathay Pacific Airways Ltd., Hong Kong's largest airline, lost 5.4 percent to HK$13.98 this week after saying on July 2 that earnings will be ``disappointing'' because of rising fuel prices. Jet fuel has more than doubled in the past year, reflecting the surge in oil. Oil futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.
``Nobody wants to hold on to stocks right now,'' said Choi Min Jai, who helps manage about $5 billion at KTB Asset Management Co. in Seoul. ``The slowdown in the global economy is being felt. There is rising concern higher oil prices will mean higher inflation, which means lower demand.''
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
Read more...
Friday, July 4, 2008
Nikkei sets longest losing run in over half century
07.04.08, 3:04 AM ET
Japan - *Nikkei sets 12-day losing streak, longest since 1954
*Nikkei sheds 8.4 percent during the 12-day losing run
*Property firms hit on credit fears
(Adds trade volume, detail)
By Aiko Hayashi
TOKYO, July 4 (Reuters) - The Nikkei share average fell 0.2 percent on Friday to set its longest losing streak in more than half a century, dragged down by property stocks such as Sumitomo Realty & Development on credit fears.
Shares of apartment developer Urban Corp tumbled nearly 30 percent, leading a sharp decline among some midsize property companies on speculation they could be risky investments following a handful of recent bankruptcies in the sector.
"A 12-day losing streak sounds big but there were days when the market didn't fall much and the amount of decline is only about 1,200 points. It's just a matter of words," said Masaru Hamasaki, senior strategist at Toyota (nyse: TM - news - people ) Asset Management.
"Still, we have to stay alert as Japanese stocks couldn't avoid being sharply hit if a spiral of interest rate hikes in Europe, the expansion of difference in interest rates, a weaker dollar, high oil prices and weak stock prices emerges."
The benchmark Nikkei fell 27.51 points to 13,237.89, down for a 12th day and its longest losing run since a 15-day period in 1954.
The Nikkei fell 2.3 percent during the week, and gave up 8.4 percent during the 12-day losing run.
The broader Topix shed 0.01 percent to 1,297.88.
"The afternoon's market fall is due to property shares that are under huge pressure on credit worries. Investors think the real estate sector will have a tough time going forward," said Hiroaki Kuramochi, general manager of the financial institutions service department at Tokai Tokyo Securities.
PROPERTY STOCKS DOWN
Shares of Sumitomo Realty & Development dropped 3 percent to 2,075 yen and Mitsubishi Estate Co Ltd (other-otc: MITEF.PK - news - people ) fell 1.3 percent to 2,375 yen.
Urban tumbled 28.1 percent to 189 yen, while Zephyr Co which announced the bankruptcy of a subsidiary in May, dropped 6.3 percent to 19,800 yen.
"I don't know what kind of information people are basing their sell-off on, but at this point, a lot of people are selling on worries about credit risks," said Credit Suisse analyst Masahiro Mochizuki, referring to Urban's shares.
Last month's bankruptcy of real estate developer Suruga Corp has led investors to worry that others in the sector might go bust as they suffer from tight financing, soaring construction material prices and weak apartment sales.
Shares of Secom Co and Sohgo Security Services Co fell after Morgan Stanley (nyse: MS - news - people ) cut its ratings on Japan's top two security service firms to "equal-weight" from "overweight", predicting their earnings will fall short of market expectations.
"We doubt that the security services industry is the safe, defensive industry that the stock market expects it to be this term," Morgan Stanley analyst Naoshi Nema wrote in a note to clients.
Secom fell 3.8 percent to 5,080 yen. Sohgo Security Services slid 3.4 percent to 1,238 yen.
One bright spot was Tokai Carbon Co Ltd The stock jumped 11.4 percent to 1,132 yen after the firm said it had started negotiating with overseas customers to raise the price of its graphite electrodes, used in electric steel furnaces.
Trade was moderate on the Tokyo exchange's first section, with 1.83 billion shares changing hands, in line with last week's daily average.
Advancing stocks narrowly outpaced declining ones by 839 to 748. (Reporting by Aiko Hayashi; Editing by Sophie Hardach)
Read more...
Japan - *Nikkei sets 12-day losing streak, longest since 1954
*Nikkei sheds 8.4 percent during the 12-day losing run
*Property firms hit on credit fears
(Adds trade volume, detail)
By Aiko Hayashi
TOKYO, July 4 (Reuters) - The Nikkei share average fell 0.2 percent on Friday to set its longest losing streak in more than half a century, dragged down by property stocks such as Sumitomo Realty & Development on credit fears.
Shares of apartment developer Urban Corp tumbled nearly 30 percent, leading a sharp decline among some midsize property companies on speculation they could be risky investments following a handful of recent bankruptcies in the sector.
"A 12-day losing streak sounds big but there were days when the market didn't fall much and the amount of decline is only about 1,200 points. It's just a matter of words," said Masaru Hamasaki, senior strategist at Toyota (nyse: TM - news - people ) Asset Management.
"Still, we have to stay alert as Japanese stocks couldn't avoid being sharply hit if a spiral of interest rate hikes in Europe, the expansion of difference in interest rates, a weaker dollar, high oil prices and weak stock prices emerges."
The benchmark Nikkei fell 27.51 points to 13,237.89, down for a 12th day and its longest losing run since a 15-day period in 1954.
The Nikkei fell 2.3 percent during the week, and gave up 8.4 percent during the 12-day losing run.
The broader Topix shed 0.01 percent to 1,297.88.
"The afternoon's market fall is due to property shares that are under huge pressure on credit worries. Investors think the real estate sector will have a tough time going forward," said Hiroaki Kuramochi, general manager of the financial institutions service department at Tokai Tokyo Securities.
PROPERTY STOCKS DOWN
Shares of Sumitomo Realty & Development dropped 3 percent to 2,075 yen and Mitsubishi Estate Co Ltd (other-otc: MITEF.PK - news - people ) fell 1.3 percent to 2,375 yen.
Urban tumbled 28.1 percent to 189 yen, while Zephyr Co which announced the bankruptcy of a subsidiary in May, dropped 6.3 percent to 19,800 yen.
"I don't know what kind of information people are basing their sell-off on, but at this point, a lot of people are selling on worries about credit risks," said Credit Suisse analyst Masahiro Mochizuki, referring to Urban's shares.
Last month's bankruptcy of real estate developer Suruga Corp has led investors to worry that others in the sector might go bust as they suffer from tight financing, soaring construction material prices and weak apartment sales.
Shares of Secom Co and Sohgo Security Services Co fell after Morgan Stanley (nyse: MS - news - people ) cut its ratings on Japan's top two security service firms to "equal-weight" from "overweight", predicting their earnings will fall short of market expectations.
"We doubt that the security services industry is the safe, defensive industry that the stock market expects it to be this term," Morgan Stanley analyst Naoshi Nema wrote in a note to clients.
Secom fell 3.8 percent to 5,080 yen. Sohgo Security Services slid 3.4 percent to 1,238 yen.
One bright spot was Tokai Carbon Co Ltd The stock jumped 11.4 percent to 1,132 yen after the firm said it had started negotiating with overseas customers to raise the price of its graphite electrodes, used in electric steel furnaces.
Trade was moderate on the Tokyo exchange's first section, with 1.83 billion shares changing hands, in line with last week's daily average.
Advancing stocks narrowly outpaced declining ones by 839 to 748. (Reporting by Aiko Hayashi; Editing by Sophie Hardach)
Read more...
European shares pull back on U.S. holiday, Banks, miners fall; UBS bucks trend after update reassures
By Sarah Turner, MarketWatch
July 4, 2008
LONDON (MarketWatch) - European shares drifted lower on Friday in subdued trade as banks declined and miners also lost ground, though UBS rallied after the Swiss bank quelled fears that it would have to make another major fund raising effort.
The pan-European Dow Jones Stoxx 600 index dipped 0.2% to 282.55, after closing with strong gains on Thursday on the back of a rebound in the banking sector.
But banks struggled to hold onto those gains on Friday as traders weighed up better news from the investment banking sector with more downbeat news from a lender more sensitive to domestic economic conditions.
On the plus side, shares in Swiss banking giant UBS jumped 5% after it said that it expects to roughly break even in the second quarter, after a 3 billion Swiss franc ($2.93 billion) tax credit helped offset further write-downs, and added it doesn't need to raise more capital
The bank's statement came as a relief to investors following fears that it could face a loss of 4 billion or 5 billion francs, potentially leading it to ask shareholders for a further cash injection. See UBS story.
Peer Credit Suisse also traded higher, up 2%.
However, shares in stricken U.K. mortgage bank Bradford & Bingley fell 7.4% after it said that U.S. private equity group TPG Capital has withdrawn from a deal to inject cash, but that major shareholders will still back a 400 million pound ($793 million) capital raising.
The bank said TPG withdrew after rating agency Moody's downgraded the group's long-term debt ratings to Baa1 from A3.
Other banks under pressure included Royal Bank of Scotland , down 1.4% and Barclays , down 1%.
Of national indexes, the U.K. FTSE 100 index lost 0.8% to 5,434.60, the German DAX 30 index lost 0.3% to 6,333.84 and the French CAC-40 index declined 0.5% to 4,323.53.
U.S. stocks ended mostly higher on Thursday after a benign reaction to the government's report on employment, which declined only a bit more than expected in June. See Thursday's Market Snapshot.
U.S. markets are closed on Friday for the July 4 Independence Day holiday. In Asia, Japan's Nikkei 225 lost ground for the 12th time in a row. See Asia Markets.
Miners lost ground again, extending a steep drop earlier in the week sparked by lower coal prices. Shares in BHP Billiton fell 1.4% while Anglo American shares declined 2%.
Natural gas producer BG Group dipped 0.4% after Origin Energy , Australia's largest coal seam gas producer, rejected its A$13.8 billion ($13.3 billion) takeover bid.
Origin said that the offer does not adequately reflect the company's assets and business prospects.
BG Group unveiled the A$15.50-a-share hostile bid last week.
However, autos moved higher, despite light sweet crude prices staying over $145 a barrel in electronic trading, with Porsche shares up 1.2%.
The gains followed reports, citing traders, that Merrill Lynch upgraded the luxury sports car maker to neutral from underperform. End of Story
Read more...
July 4, 2008
LONDON (MarketWatch) - European shares drifted lower on Friday in subdued trade as banks declined and miners also lost ground, though UBS rallied after the Swiss bank quelled fears that it would have to make another major fund raising effort.
The pan-European Dow Jones Stoxx 600 index dipped 0.2% to 282.55, after closing with strong gains on Thursday on the back of a rebound in the banking sector.
But banks struggled to hold onto those gains on Friday as traders weighed up better news from the investment banking sector with more downbeat news from a lender more sensitive to domestic economic conditions.
On the plus side, shares in Swiss banking giant UBS jumped 5% after it said that it expects to roughly break even in the second quarter, after a 3 billion Swiss franc ($2.93 billion) tax credit helped offset further write-downs, and added it doesn't need to raise more capital
The bank's statement came as a relief to investors following fears that it could face a loss of 4 billion or 5 billion francs, potentially leading it to ask shareholders for a further cash injection. See UBS story.
Peer Credit Suisse also traded higher, up 2%.
However, shares in stricken U.K. mortgage bank Bradford & Bingley fell 7.4% after it said that U.S. private equity group TPG Capital has withdrawn from a deal to inject cash, but that major shareholders will still back a 400 million pound ($793 million) capital raising.
The bank said TPG withdrew after rating agency Moody's downgraded the group's long-term debt ratings to Baa1 from A3.
Other banks under pressure included Royal Bank of Scotland , down 1.4% and Barclays , down 1%.
Of national indexes, the U.K. FTSE 100 index lost 0.8% to 5,434.60, the German DAX 30 index lost 0.3% to 6,333.84 and the French CAC-40 index declined 0.5% to 4,323.53.
U.S. stocks ended mostly higher on Thursday after a benign reaction to the government's report on employment, which declined only a bit more than expected in June. See Thursday's Market Snapshot.
U.S. markets are closed on Friday for the July 4 Independence Day holiday. In Asia, Japan's Nikkei 225 lost ground for the 12th time in a row. See Asia Markets.
Miners lost ground again, extending a steep drop earlier in the week sparked by lower coal prices. Shares in BHP Billiton fell 1.4% while Anglo American shares declined 2%.
Natural gas producer BG Group dipped 0.4% after Origin Energy , Australia's largest coal seam gas producer, rejected its A$13.8 billion ($13.3 billion) takeover bid.
Origin said that the offer does not adequately reflect the company's assets and business prospects.
BG Group unveiled the A$15.50-a-share hostile bid last week.
However, autos moved higher, despite light sweet crude prices staying over $145 a barrel in electronic trading, with Porsche shares up 1.2%.
The gains followed reports, citing traders, that Merrill Lynch upgraded the luxury sports car maker to neutral from underperform. End of Story
Read more...
RPT-UPDATE 1-BSkyB mulls $4 bln bid for Spain's Digital Plus-FT
Fri Jul 4, 2008 6:07am EDT
(Repeats to reach more subscribers) (Adds analysts, company comment, shares)
LONDON, July 4 (Reuters) - British pay-TV firm BSkyB (BSY.L: Quote, Profile, Research, Stock Buzz) is considering a bid of more than 2.5 billion euros ($4 billion)for Spanish pay-TV platform Digital Plus, the Financial Times said on Friday.
The newspaper quoted people familiar with the situation as saying there had been no decision to proceed, but that BSkyB's strong cash flow could allow it to finance an acquisitions.
BSkyB declined to comment.
Analysts were sceptical that a bid would materialise, estimating that BSkyB is unlikely to take on the level of debt needed to complete the acquisition.
"Sky bidding for Digital Plus would be a negative. It doesn't have sufficient debt capacity to afford it," Credit Suisse analyst Simon Baker wrote in a research note.
BSkyB shares were 1.3 per cent higher at 452 pence by 0905 GMT, while shares in Spanish media group Prisa (PRS.MC: Quote, Profile, Research, Stock Buzz), Digital Plus' parent company, were up 2.13 per cent at 6.7 euros.
According to the Financial Times, Spanish groups Telefonica (TEF.MC: Quote, Profile, Research, Stock Buzz) and ONO, France's Vivendi (VIV.PA: Quote, Profile, Research, Stock Buzz) and French Telecom's (FTE.PA: Quote, Profile, Research, Stock Buzz) Orange unit were also likely to be interested in buying Digital Plusd. (Reporting by Myles Neligan and Mark Potter; Editing by Quentin Bryar)
Read more...
(Repeats to reach more subscribers) (Adds analysts, company comment, shares)
LONDON, July 4 (Reuters) - British pay-TV firm BSkyB (BSY.L: Quote, Profile, Research, Stock Buzz) is considering a bid of more than 2.5 billion euros ($4 billion)for Spanish pay-TV platform Digital Plus, the Financial Times said on Friday.
The newspaper quoted people familiar with the situation as saying there had been no decision to proceed, but that BSkyB's strong cash flow could allow it to finance an acquisitions.
BSkyB declined to comment.
Analysts were sceptical that a bid would materialise, estimating that BSkyB is unlikely to take on the level of debt needed to complete the acquisition.
"Sky bidding for Digital Plus would be a negative. It doesn't have sufficient debt capacity to afford it," Credit Suisse analyst Simon Baker wrote in a research note.
BSkyB shares were 1.3 per cent higher at 452 pence by 0905 GMT, while shares in Spanish media group Prisa (PRS.MC: Quote, Profile, Research, Stock Buzz), Digital Plus' parent company, were up 2.13 per cent at 6.7 euros.
According to the Financial Times, Spanish groups Telefonica (TEF.MC: Quote, Profile, Research, Stock Buzz) and ONO, France's Vivendi (VIV.PA: Quote, Profile, Research, Stock Buzz) and French Telecom's (FTE.PA: Quote, Profile, Research, Stock Buzz) Orange unit were also likely to be interested in buying Digital Plusd. (Reporting by Myles Neligan and Mark Potter; Editing by Quentin Bryar)
Read more...
Asian Currencies: Peso Falls on Inflation; Korean Won Declines
By Lilian Karunungan and Clarissa Batino
July 4 (Bloomberg) -- The Philippine peso led losses in Asian currencies this week after June inflation accelerated to the fastest in 14 years.
The peso, the worst performer in the region in the past three months, traded near the lowest since September as the government said consumer prices rose 11.4 percent last month from a year earlier, exceeding forecasts from economists and the central bank. Crude oil's advance to a record and a rally in rice prices have stoked inflation in the Southeast Asian nation.
``There's no end in sight for inflation and oil prices remain a wild card,'' said Sergio Edeza, treasurer at Rizal Commercial Banking Corp. in Manila. ``Higher commodity prices increase demand for U.S. dollars and that's hitting the peso, which also impacts on imported inflation.''
The Philippine currency fell 1.5 percent to 45.445 as of 4:12 p.m. in Manila, from 44.75 last week, according to Tullett Prebon Plc. The won fell 0.9 percent this week to 1,050.40 per dollar, according to Seoul Money Brokerage Services Ltd. The currency weakened 0.5 percent today, extending its decline this year to 10.8 percent.
The peso, which posted its biggest weekly loss since May, may weaken to as low as 47 this quarter as oil prices continue to advance, Rizal Bank's Edeza said.
Last month's inflation was the fastest since May 1994, according to data compiled by Bloomberg. Crude oil reached a record $145.85 a barrel yesterday in New York.
South Korea's won fell for a second week on speculation record crude oil prices mean refiners and importers have to buy more dollars to pay for the fuel.
Inflation Focus
The won had its lowest close since October 2005 today as oil prices above $145 a barrel push up import costs and widen the nation's trade deficit. The financial authorities bought about $7 billion of won since the end of May to help support the currency, JoongAng Ilbo newspaper reported July 1.
``The market is seeing a repeat of the pattern that oil is driving people to bid the dollar higher and the authorities emerge to stifle the attempt,'' said Ko Yun Jin, a currency dealer in Seoul at Kookmin Bank, the nation's largest lender.
Finance Minister Kang Man Soo reiterated today that the government should focus on restraining inflation at the fastest in a decade. A stronger currency reduces the cost of imports.
Top policy makers held a meeting yesterday to discuss how to curb the won's decline, Internet newswire MoneyToday reported, citing a finance ministry official it did not identity.
The currency also approached the weakest since October 2005 as overseas investors sold more local shares than they bought for a fourth week, according to data from the stock exchange. Global funds have been net sellers for the past 20 days.
Won to Rise
Korea's currency may gain in the second half of the year, as rising exports narrow the trade deficit, Samsung Electronics Co., Korean Air Lines Co. and SK Energy Co. said.
Exports typically rise in the final six months of the year as demand increases before the Christmas and New Year holidays, said Chu Woo Sik, head of investor relations at Samsung, the nation's largest exporter. The won may rise 5 percent by the end of the 2008, said Bae Yong Chul, head of the foreign-exchange department at SK Energy, South Korea's biggest oil refiner.
The three companies, with a combined market value of $102 billion, said their forecasts may be threatened if oil prices keep climbing beyond $145 a barrel, cooling global demand for Korea's exports and making fuel imports more expensive.
Malaysia's ringgit fell for a second week on concern record oil prices will stoke inflation and slow economic growth.
The currency dropped to a five-month low this week as crude oil extended gains and political risks increased amid calls for Prime Minister Abdullah Ahmad Badawi to resign. The ringgit was little changed after a government report today showed Malaysian export growth accelerated in May to the fastest pace in more than three years, led by palm oil shipments.
Growth Concern
``Inflation and growth are real concerns and it will be hard for the ringgit to perform in the short run,'' said Wan Murezani Mohamad, an analyst at Malaysian Rating Corp. in Kuala Lumpur. ``There are going to be humps along the way and political concerns will not fade away this year.''
The ringgit traded at 3.2660 per dollar in Kuala Lumpur versus 3.2685 late yesterday, according to data compiled by Bloomberg. The ringgit declined 0.1 percent this week, touching 3.2825 on July 2, the weakest since Jan. 24.
Consumer prices in Malaysia may rise 5 percent from a year earlier in June, the most in nine years, compared with 3.8 percent in May, Bank Negara said on June 5 when the government raised gasoline prices by 41 percent.
Export Growth
Overseas sales rose 22 percent from a year earlier to a record 60.6 billion ringgit ($18.6 billion), the Trade Ministry said in Kuala Lumpur today. The gain exceeded all forecasts in a Bloomberg survey of 17 economists where the median estimate was for a 12.5 percent increase.
Malaysian police in the past week confirmed investigations of Deputy Prime Minister Najib Razak and former Deputy Prime Minister Anwar Ibrahim. Both have called the claims against them fabrications intended to destroy their political careers.
Elsewhere, Taiwan's dollar was at NT$30.401 from NT$30.388 last week. The Singapore dollar rose 0.1 percent to S$1.3614. The Thai baht gained 0.2 percent to 33.49. The Indonesian rupiah was unchanged at 9,215, while Vietnam's dong traded at 16,846.50 compared with 16,843.00 last week.
To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Clarissa Batino in Manila at cbatino@bloomberg.net.
Read more...
July 4 (Bloomberg) -- The Philippine peso led losses in Asian currencies this week after June inflation accelerated to the fastest in 14 years.
The peso, the worst performer in the region in the past three months, traded near the lowest since September as the government said consumer prices rose 11.4 percent last month from a year earlier, exceeding forecasts from economists and the central bank. Crude oil's advance to a record and a rally in rice prices have stoked inflation in the Southeast Asian nation.
``There's no end in sight for inflation and oil prices remain a wild card,'' said Sergio Edeza, treasurer at Rizal Commercial Banking Corp. in Manila. ``Higher commodity prices increase demand for U.S. dollars and that's hitting the peso, which also impacts on imported inflation.''
The Philippine currency fell 1.5 percent to 45.445 as of 4:12 p.m. in Manila, from 44.75 last week, according to Tullett Prebon Plc. The won fell 0.9 percent this week to 1,050.40 per dollar, according to Seoul Money Brokerage Services Ltd. The currency weakened 0.5 percent today, extending its decline this year to 10.8 percent.
The peso, which posted its biggest weekly loss since May, may weaken to as low as 47 this quarter as oil prices continue to advance, Rizal Bank's Edeza said.
Last month's inflation was the fastest since May 1994, according to data compiled by Bloomberg. Crude oil reached a record $145.85 a barrel yesterday in New York.
South Korea's won fell for a second week on speculation record crude oil prices mean refiners and importers have to buy more dollars to pay for the fuel.
Inflation Focus
The won had its lowest close since October 2005 today as oil prices above $145 a barrel push up import costs and widen the nation's trade deficit. The financial authorities bought about $7 billion of won since the end of May to help support the currency, JoongAng Ilbo newspaper reported July 1.
``The market is seeing a repeat of the pattern that oil is driving people to bid the dollar higher and the authorities emerge to stifle the attempt,'' said Ko Yun Jin, a currency dealer in Seoul at Kookmin Bank, the nation's largest lender.
Finance Minister Kang Man Soo reiterated today that the government should focus on restraining inflation at the fastest in a decade. A stronger currency reduces the cost of imports.
Top policy makers held a meeting yesterday to discuss how to curb the won's decline, Internet newswire MoneyToday reported, citing a finance ministry official it did not identity.
The currency also approached the weakest since October 2005 as overseas investors sold more local shares than they bought for a fourth week, according to data from the stock exchange. Global funds have been net sellers for the past 20 days.
Won to Rise
Korea's currency may gain in the second half of the year, as rising exports narrow the trade deficit, Samsung Electronics Co., Korean Air Lines Co. and SK Energy Co. said.
Exports typically rise in the final six months of the year as demand increases before the Christmas and New Year holidays, said Chu Woo Sik, head of investor relations at Samsung, the nation's largest exporter. The won may rise 5 percent by the end of the 2008, said Bae Yong Chul, head of the foreign-exchange department at SK Energy, South Korea's biggest oil refiner.
The three companies, with a combined market value of $102 billion, said their forecasts may be threatened if oil prices keep climbing beyond $145 a barrel, cooling global demand for Korea's exports and making fuel imports more expensive.
Malaysia's ringgit fell for a second week on concern record oil prices will stoke inflation and slow economic growth.
The currency dropped to a five-month low this week as crude oil extended gains and political risks increased amid calls for Prime Minister Abdullah Ahmad Badawi to resign. The ringgit was little changed after a government report today showed Malaysian export growth accelerated in May to the fastest pace in more than three years, led by palm oil shipments.
Growth Concern
``Inflation and growth are real concerns and it will be hard for the ringgit to perform in the short run,'' said Wan Murezani Mohamad, an analyst at Malaysian Rating Corp. in Kuala Lumpur. ``There are going to be humps along the way and political concerns will not fade away this year.''
The ringgit traded at 3.2660 per dollar in Kuala Lumpur versus 3.2685 late yesterday, according to data compiled by Bloomberg. The ringgit declined 0.1 percent this week, touching 3.2825 on July 2, the weakest since Jan. 24.
Consumer prices in Malaysia may rise 5 percent from a year earlier in June, the most in nine years, compared with 3.8 percent in May, Bank Negara said on June 5 when the government raised gasoline prices by 41 percent.
Export Growth
Overseas sales rose 22 percent from a year earlier to a record 60.6 billion ringgit ($18.6 billion), the Trade Ministry said in Kuala Lumpur today. The gain exceeded all forecasts in a Bloomberg survey of 17 economists where the median estimate was for a 12.5 percent increase.
Malaysian police in the past week confirmed investigations of Deputy Prime Minister Najib Razak and former Deputy Prime Minister Anwar Ibrahim. Both have called the claims against them fabrications intended to destroy their political careers.
Elsewhere, Taiwan's dollar was at NT$30.401 from NT$30.388 last week. The Singapore dollar rose 0.1 percent to S$1.3614. The Thai baht gained 0.2 percent to 33.49. The Indonesian rupiah was unchanged at 9,215, while Vietnam's dong traded at 16,846.50 compared with 16,843.00 last week.
To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Clarissa Batino in Manila at cbatino@bloomberg.net.
Read more...
Vietnam Dong Investors Use Black Market for Dollars
By Patricia Lui and Wes Goodman
July 4 (Bloomberg) -- Vietnam's currency controls are forcing foreign investors into the black market to obtain dollars, aggravating declines in the world's worst-performing stock market and pushing benchmark bond yields above 20 percent.
Businesses that aren't controlled by the government pay about 7 percent more than the official rate when using the dong to buy dollars because the state gives its trading companies priority access to the U.S. currency, the World Bank said. The premium is reducing demand for the nation's stocks and bonds, according to PXP Vietnam Asset Management.
``There is clearly a shortage of dollars,'' said Kevin Snowball, a money manager at PXP Vietnam in Ho Chi Minh City, which oversees $117 million. ``If you have dollars and you want to buy dong, you will get the official rate, but if you have dong and you want to buy dollars it's a completely different story.''
Vietnam's financial markets are tumbling after the central bank raised interest rates three times this year to 14 percent to tame inflation that accelerated to a 16-year high of 26.8 percent in June. The economy expanded 6.5 percent in the first half, the slowest in at least seven years, while the trade deficit more than doubled to $14.8 billion.
Rally to Rout
Vietnam's benchmark stock index, which climbed 168 percent in the past two years as Prime Minister Nguyen Tan Dung encouraged state companies to raise cash and finance expansion, slumped 53 percent since December. Yields on five-year government bonds jumped to 20.53 percent on June 13, the highest since at least July 2006, from 8.71 percent on Jan. 3.
The dong has dropped 5 percent this year, its biggest decline since 1998, to 16,846.5 per dollar as of 4:40 p.m. in Hanoi. Traders are pricing in an 18 percent drop in the coming year to 20,500, according to offshore 12-month non-deliverable forwards. The contract was at 16,080 on Dec. 31. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars.
The official rate will fall 6.4 percent to 18,000 by the end of the year, according to Calyon, the investment banking arm of Credit Agricole SA. HSBC Holdings Plc, Europe's biggest bank by market value, predicts it will strengthen 4.4 percent to 16,140 by year-end.
`Currency Crisis'
Vietnam may suffer a ``currency crisis'' similar to the slump in the Thai baht that triggered the regional collapse in 1997, Morgan Stanley analysts said in a report May 28.
``The central bank is not providing dollars, except to some importers and some working capital for exporters,'' said Noritaka Akamatsu, a Hanoi-based economist for the World Bank. ``That's why there is some depreciation pressure.''
The State Bank of Vietnam allows the currency to trade 2 percent either side of its daily reference rate. Gold shops and street money changers offer a black market rate of about 18,000, said Akamatsu. Banks offer a similar rate by adding fees to sell dollars, he said. The rate was as high as 19,500, he said.
The dong slumped in the forwards market in May as foreign investors trapped in the bond market bet against the currency to hedge against losses, Akamatsu said.
Frozen Market
Rajeev De Mello, who helps oversee about $600 billion as head of Asian bonds at Western Asset Management Co.'s Singapore office, sold Vietnamese bonds in April and says the market has frozen. Western Asset, part of Baltimore-based Legg Mason Inc., also couldn't get a price for dong forwards, he said.
``Even when things were good, it was difficult to buy bonds in any size,'' said De Mello. ``Now when things are bad, it's impossible to either buy or sell.''
Union Investment in Frankfurt, Germany's third-biggest fund manager, forecasts a smaller decline in the dong than the forward market and is buying contracts, said Sergey Dergachev, the firm's emerging-market investor, who helps oversee the equivalent of $285 billion. Union Investment expects an 11 percent drop to 19,000 by Dec. 31.
The risk is Vietnam exhausts its currency reserves of $22 billion supplying dollars or that ``overkill'' in cooling growth causes losses at state banks, said the World Bank's Akamatsu.
Pramerica Fixed Income Asia, a unit of Prudential Financial Inc., the second-biggest U.S. life insurer, is staying away.
``It's a shocking and timely reminder of problems that developing countries face,'' said Clifford Lau, a Singapore- based portfolio manager at Pramerica that oversees $7.6 billion in emerging-market debt. ``Everyone is taking a step back.''
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.netWes Goodman in Singapore at wgoodman@bloomberg.net
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Polish Zloty Climbs to Record Against Euro, Trades at 3.3247
By Ewa Krukowska
July 4 (Bloomberg) -- The Polish zloty rose to an all-time high against the euro, gaining for a second consecutive day.
The zloty advanced as much as 0.3 percent to 3.3247 per euro and traded at 3.3267 at 10 a.m. in Warsaw, from 3.3337 late yesterday.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
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July 4 (Bloomberg) -- The Polish zloty rose to an all-time high against the euro, gaining for a second consecutive day.
The zloty advanced as much as 0.3 percent to 3.3247 per euro and traded at 3.3267 at 10 a.m. in Warsaw, from 3.3337 late yesterday.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
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India's Edible Oil Imports May Surge to Meet Domestic Shortfall
By Thomas Kutty Abraham
July 4 (Bloomberg) -- India may increase edible oil imports by more than 80 percent in the four months to October, straining global stockpiles, to meet a shortfall in domestic supplies and cool the fastest inflation in 13 years.
Average monthly imports by the world's second-biggest buyer of cooking fat may total 550,000 tons, compared with 300,000 tons bought in April and May, Govindlal G. Patel, managing partner at Dipak Enterprise Ltd., said in a phone interview. Patel, 69, has been trading the commodity for more than four decades.
Increased imports may further deplete global reserves of vegetable oils, supporting palm oil prices that have climbed 19 percent this year. Soybean oil has surged 39 percent in the same period in Chicago on concern that supplies, reduced by the U.S. Midwest floods, will trail demand.
``Imports will be the only channel of supply for India as it enters the lean period as far domestic supplies are concerned,'' Patel said from the western Indian city of Rajkot. ``We are going to see more imports.''
Palm oil futures in Malaysia, the global benchmark, traded near a two-week high today at 3,618 ringgit ($1,107) a ton. The price has risen 40 percent in the past year. Soybean oil futures gained 0.4 percent to 69.17 cents a pound overnight in Chicago.
Palm oil, typically used as cooking oil or in soaps, is the world's most-consumed vegetable oil and can be mixed with diesel to stretch fossil fuel supplies. Soybean oil, the main rival, is used in food as well as for biodiesel. Both the commodities rose to records on March 4.
Government Curbs
India's edible oil imports in May fell 39 percent to 302,345 tons from 494,184 tons a year earlier, after private traders cut inventories of the commodity because of local government curbs on stockpiling, according to the Solvent Extractors' Association, a trade body comprising 800 oilseed processors.
``The restrictions have reduced the stocks in the pipeline and pushed up local edible oil prices,'' Patel said.
Prime Minister Manmohan Singh's government has scrapped the import duty on crude vegetable oils and asked state-run companies to import and sell 1 million tons of the commodity through ration shops at subsidized rates in year to March 31, 2009.
``The government may think of abolishing the import duty on refined edible oils as well as a last resort,'' Patel said. ``It has done everything possible to control prices.''
The imports, second only to those of China, rose 15 percent to 2.54 million tons in the seven months ended May from the same period a year earlier, the trade body said. Palm oil purchases climbed 40 percent to 2.3 million tons in the period from a year earlier, according to the solvent extractors' group.
Purchases may total 5.2 million tons in the year to October, up 11 percent from last year, Patel said.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net.
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July 4 (Bloomberg) -- India may increase edible oil imports by more than 80 percent in the four months to October, straining global stockpiles, to meet a shortfall in domestic supplies and cool the fastest inflation in 13 years.
Average monthly imports by the world's second-biggest buyer of cooking fat may total 550,000 tons, compared with 300,000 tons bought in April and May, Govindlal G. Patel, managing partner at Dipak Enterprise Ltd., said in a phone interview. Patel, 69, has been trading the commodity for more than four decades.
Increased imports may further deplete global reserves of vegetable oils, supporting palm oil prices that have climbed 19 percent this year. Soybean oil has surged 39 percent in the same period in Chicago on concern that supplies, reduced by the U.S. Midwest floods, will trail demand.
``Imports will be the only channel of supply for India as it enters the lean period as far domestic supplies are concerned,'' Patel said from the western Indian city of Rajkot. ``We are going to see more imports.''
Palm oil futures in Malaysia, the global benchmark, traded near a two-week high today at 3,618 ringgit ($1,107) a ton. The price has risen 40 percent in the past year. Soybean oil futures gained 0.4 percent to 69.17 cents a pound overnight in Chicago.
Palm oil, typically used as cooking oil or in soaps, is the world's most-consumed vegetable oil and can be mixed with diesel to stretch fossil fuel supplies. Soybean oil, the main rival, is used in food as well as for biodiesel. Both the commodities rose to records on March 4.
Government Curbs
India's edible oil imports in May fell 39 percent to 302,345 tons from 494,184 tons a year earlier, after private traders cut inventories of the commodity because of local government curbs on stockpiling, according to the Solvent Extractors' Association, a trade body comprising 800 oilseed processors.
``The restrictions have reduced the stocks in the pipeline and pushed up local edible oil prices,'' Patel said.
Prime Minister Manmohan Singh's government has scrapped the import duty on crude vegetable oils and asked state-run companies to import and sell 1 million tons of the commodity through ration shops at subsidized rates in year to March 31, 2009.
``The government may think of abolishing the import duty on refined edible oils as well as a last resort,'' Patel said. ``It has done everything possible to control prices.''
The imports, second only to those of China, rose 15 percent to 2.54 million tons in the seven months ended May from the same period a year earlier, the trade body said. Palm oil purchases climbed 40 percent to 2.3 million tons in the period from a year earlier, according to the solvent extractors' group.
Purchases may total 5.2 million tons in the year to October, up 11 percent from last year, Patel said.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net.
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Shanghai Copper Falls for First Day in Three on London Decline
By Glenys Sim
July 4 (Bloomberg) -- Copper futures in Shanghai fell for the first day in three, tracking a decline in London overnight, as a strengthening dollar curbed demand for raw materials as alternative investments.
Copper fell yesterday on the euro's decline to a one-week low against the dollar after European Central Bank President Jean-Claude Trichet signaled he may not lift the benchmark interest rate again this year.
``Shanghai is just mimicking the fall on the international markets last night,'' said Yang Wenhu, a trader at Northern Futures Co. in Dalian.
Copper for September delivery lost as much as 1,010 yuan, or 1.6 percent, to 63,220 yuan ($9,216) a metric ton on the Shanghai Futures Exchange. The most-active contract stood at 63,340 yuan at 2:46 p.m. local time.
Copper for delivery in three months rose $19.75, or 0.2 percent, to $8,664.75 a ton on the London Metal Exchange at the same time, after falling as much as 1 percent to $8,630 yesterday. Copper, headed for its third weekly gain, climbed to $8,940 a ton July 2, the highest ever.
Pressuring prices was the end of a three-day work stoppage at three mining operations in Peru, the world's third-largest producer of the metal.
``Supply disruptions which occur during the slow seasonal period only serve to improve sentiment and provide some support,'' said Yang. ``The international copper market will continue to be dictated by moves in the dollar, equities and the rest of the commodities complex.''
Among other LME-traded metals, aluminum was little changed at $3,183 a ton, zinc was up 1 percent at $1,800, and nickel added 0.7 percent to $21,000. Lead slipped 2.5 percent to $1,570, while tin had not traded as of 2:47 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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July 4 (Bloomberg) -- Copper futures in Shanghai fell for the first day in three, tracking a decline in London overnight, as a strengthening dollar curbed demand for raw materials as alternative investments.
Copper fell yesterday on the euro's decline to a one-week low against the dollar after European Central Bank President Jean-Claude Trichet signaled he may not lift the benchmark interest rate again this year.
``Shanghai is just mimicking the fall on the international markets last night,'' said Yang Wenhu, a trader at Northern Futures Co. in Dalian.
Copper for September delivery lost as much as 1,010 yuan, or 1.6 percent, to 63,220 yuan ($9,216) a metric ton on the Shanghai Futures Exchange. The most-active contract stood at 63,340 yuan at 2:46 p.m. local time.
Copper for delivery in three months rose $19.75, or 0.2 percent, to $8,664.75 a ton on the London Metal Exchange at the same time, after falling as much as 1 percent to $8,630 yesterday. Copper, headed for its third weekly gain, climbed to $8,940 a ton July 2, the highest ever.
Pressuring prices was the end of a three-day work stoppage at three mining operations in Peru, the world's third-largest producer of the metal.
``Supply disruptions which occur during the slow seasonal period only serve to improve sentiment and provide some support,'' said Yang. ``The international copper market will continue to be dictated by moves in the dollar, equities and the rest of the commodities complex.''
Among other LME-traded metals, aluminum was little changed at $3,183 a ton, zinc was up 1 percent at $1,800, and nickel added 0.7 percent to $21,000. Lead slipped 2.5 percent to $1,570, while tin had not traded as of 2:47 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Gold Falls in London on Reduced Hedge Demand; Silver Also Drops
By Claudia Carpenter
July 4 (Bloomberg) -- Gold fell in London as a decline in energy costs may reduce demand for precious metals as a hedge against inflation. Silver, platinum and palladium also dropped.
Crude-oil futures declined for the first day in four sessions after jumping to a record yesterday on concern a possible attack on Iran's nuclear facilities would disrupt petroleum supplies. Gold dropped yesterday after European Central Bank President Jean- Claude Trichet signaled interest rates may be high enough to control inflation.
``We have peaked for the time being and now trying to find some support,'' said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at refiner Heraeus Holding GmbH in Hanau, Germany. ``I don't foresee a big drop right now.''
Gold for immediate delivery fell $2.83, or 0.3 percent, to $931.63 an ounce as of 10 a.m. in London, narrowing this week's gain to 0.5 percent. Prices have climbed 43 percent in the past year as the Federal Reserve slashed borrowing costs, undermining the value of the dollar.
Short-term stochastics indicators signal gold may fall to $918 before a rebound, said Dhiren Sarin, an analyst at Barclays Capital in London. Stochastic charts measure the price of a security relative to its highs and lows during a particular period to try to predict a gain or decline.
The metal rose to a record $1,032.70 an ounce on March 17.
Platinum fell $4 to $2,023.50 an ounce, silver declined 22 cents to $18.04 an ounce and palladium dropped $4 to $459.25 an ounce. The UBS Bloomberg CMCI Index of 26 raw materials has advanced 34 percent this year.
The New York Mercantile Exchange is closed today for the U.S. Independence Day holiday.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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July 4 (Bloomberg) -- Gold fell in London as a decline in energy costs may reduce demand for precious metals as a hedge against inflation. Silver, platinum and palladium also dropped.
Crude-oil futures declined for the first day in four sessions after jumping to a record yesterday on concern a possible attack on Iran's nuclear facilities would disrupt petroleum supplies. Gold dropped yesterday after European Central Bank President Jean- Claude Trichet signaled interest rates may be high enough to control inflation.
``We have peaked for the time being and now trying to find some support,'' said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at refiner Heraeus Holding GmbH in Hanau, Germany. ``I don't foresee a big drop right now.''
Gold for immediate delivery fell $2.83, or 0.3 percent, to $931.63 an ounce as of 10 a.m. in London, narrowing this week's gain to 0.5 percent. Prices have climbed 43 percent in the past year as the Federal Reserve slashed borrowing costs, undermining the value of the dollar.
Short-term stochastics indicators signal gold may fall to $918 before a rebound, said Dhiren Sarin, an analyst at Barclays Capital in London. Stochastic charts measure the price of a security relative to its highs and lows during a particular period to try to predict a gain or decline.
The metal rose to a record $1,032.70 an ounce on March 17.
Platinum fell $4 to $2,023.50 an ounce, silver declined 22 cents to $18.04 an ounce and palladium dropped $4 to $459.25 an ounce. The UBS Bloomberg CMCI Index of 26 raw materials has advanced 34 percent this year.
The New York Mercantile Exchange is closed today for the U.S. Independence Day holiday.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Palm Oil Futures Near Two-Week High on Soybean, Crude Oil Rally
By Feiwen Rong
July 4 (Bloomberg) -- Palm oil futures in Malaysia, the global benchmark, traded near a two-week high as crude oil hovered near its all-time high and soybeans rallied to a record, improving prospect for higher demand for the tropical oil.
Oil in New York rose to its highest ever of $145.85 a barrel yesterday and traded above $145 today. Demand for crude palm oil and its main substitute soybean oil has increased as the use of vegetable oils for bio-diesel feedstock has cut availability for cooking. Soybean reached a record $16.31 a bushel yesterday on U.S. Midwest floods.
``Crude oil and soybean markets are supporting the palm oil market,'' Kan Heen Sing, trader at HLG Futures Sdn.
Palm oil for June delivery traded at 3,618 ringgit ($1,107) a ton on the Malaysia Derivatives Exchange at the midday break. Futures rallied to 3,647 ringgit yesterday, the highest since June 18. The price has risen 19 percent this year.
Still, palm oil has lagged behind gains in soybean oil, the main substitute for cooking and biofuels, Kan said. Soybean oil traded in Chicago is up 81 percent this year, faster than the 51 percent advance in crude oil.
Soybean oil prices traded at 37 percent premium to the palm oil prices today, widening from 25 percent at the end of May, according to Bloomberg data.
``There's rumor that Malaysia palm oil stockpiles may hit 2 million tons last month,'' Kan said.
Stockpiles of palm oil in Malaysia rose 6.9 percent to 1.91 million metric tons in May from April as production expanded and exports slowed, the Malaysian Palm Oil Board said June 10. That's the most since the February record of 1.93 million tons. The June stockpile is scheduled to be announced July 10.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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July 4 (Bloomberg) -- Palm oil futures in Malaysia, the global benchmark, traded near a two-week high as crude oil hovered near its all-time high and soybeans rallied to a record, improving prospect for higher demand for the tropical oil.
Oil in New York rose to its highest ever of $145.85 a barrel yesterday and traded above $145 today. Demand for crude palm oil and its main substitute soybean oil has increased as the use of vegetable oils for bio-diesel feedstock has cut availability for cooking. Soybean reached a record $16.31 a bushel yesterday on U.S. Midwest floods.
``Crude oil and soybean markets are supporting the palm oil market,'' Kan Heen Sing, trader at HLG Futures Sdn.
Palm oil for June delivery traded at 3,618 ringgit ($1,107) a ton on the Malaysia Derivatives Exchange at the midday break. Futures rallied to 3,647 ringgit yesterday, the highest since June 18. The price has risen 19 percent this year.
Still, palm oil has lagged behind gains in soybean oil, the main substitute for cooking and biofuels, Kan said. Soybean oil traded in Chicago is up 81 percent this year, faster than the 51 percent advance in crude oil.
Soybean oil prices traded at 37 percent premium to the palm oil prices today, widening from 25 percent at the end of May, according to Bloomberg data.
``There's rumor that Malaysia palm oil stockpiles may hit 2 million tons last month,'' Kan said.
Stockpiles of palm oil in Malaysia rose 6.9 percent to 1.91 million metric tons in May from April as production expanded and exports slowed, the Malaysian Palm Oil Board said June 10. That's the most since the February record of 1.93 million tons. The June stockpile is scheduled to be announced July 10.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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U.S. Stocks Enter Bear Market as Dow Retreats 20% From Record
By Elizabeth Stanton
July 4 (Bloomberg) -- U.S. stocks fell this week, giving the Dow Jones Industrial Average a 20 percent bear-market drop since October's all-time high, as record oil threatened global growth.
Monsanto Co. and Nucor Corp. led raw-material producers in the Standard & Poor's 500 Index to the steepest drop since January. General Motors Corp. tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy. Lehman Brothers Holdings Inc. slumped to an eight-year low on speculation credit losses will force it to merge with a bigger securities firm.
The S&P 500 lost 1.2 percent to 1,262.90 for the fifth straight weekly retreat, the longest streak of declines in four years. The index sank to 1,261.52 on July 2, down 19.4 percent since Oct. 9 and the lowest since July 2006. The Dow slipped 0.5 percent to 11,288.54. The MSCI World Index of 23 developed markets fell 18.4 percent from its October peak through yesterday.
Among large companies, ``the biggest losers are names with international exposure,'' said Mark Freeman, a Dallas-based money manager at Westwood Holdings Group, which manages $8 billion. ``The market is calling into doubt that element of support is going to be with us going forward.''
U.S. markets are closed today for the Independence Day holiday.
Materials companies in the S&P 500 lost 5.8 percent, the most among 10 industries. Monsanto, the world's biggest seed producer, fell 6.3 percent to $120.21. It closed at a record $142.69 on June 17. Nucor, the largest U.S. steelmaker by market value, slumped 16 percent to $62.54. The company dropped 24 percent since an all-time high in May.
Coal Producers Fall
Massey Energy Co. led coal producers in the S&P 500 to a 12 percent retreat that pared their 2008 gain to 27 percent. Massey Energy tumbled 17 percent to $75.46 this week.
Caterpillar Inc., the world's biggest maker of earthmoving equipment, contributed most to the Dow's weekly drop, followed by Boeing Co., the second-largest commercial plane maker, and aluminum producer Alcoa Inc. Before U.S. stocks started falling on May 19, Alcoa had the top gain in the Dow for 2008. Caterpillar was No. 4.
Caterpillar slumped 4.7 percent to $70.31, the lowest since March 10. Boeing retreated 3.7 percent to $64.47, and Alcoa fell 7.4 percent to $32.78.
``It gives you a sense of how much momentum money had been attracted to some of these sectors, as well as a growing realization of the slowdown in front of us,'' said Daniel Manion, manager of the $1.3 billion Sentinel Common Stock Fund in Montpelier, Vermont.
29% Drop, 322 Days
This is the Dow's 12th bear market since 1962 and first since 2002, according to Westport, Connecticut-based research firm Birinyi Associates Inc. Prior declines averaged 29 percent and lasted 322 days, Birinyi data show. The biggest was a 45 percent drop over 694 days starting in January 1973.
General Motors fell 12 percent to $10.12. Its July 3 closing price of $9.98 was the lowest since September 1954. Merrill Lynch analyst John Murphy said the automaker may need to raise as much as $15 billion and faces the possibility of bankruptcy.
The ``dramatic drop-off'' in the U.S. sales market probably will continue through 2009, forcing GM to find additional funding, Murphy wrote in a report. ``Bankruptcy is not impossible if the market continues to deteriorate.''
Lehman, the fourth-largest U.S. securities firm, fell to $19.81 on June 30, the lowest since May 2000. The shares rebounded to end the week at $22.85 after the company awarded mid-year bonuses to retain employees after posting its first quarterly loss since going public because of writedowns of mortgage-related assets.
Sagging Demand
Nvidia Corp. suffered the biggest drop in the S&P, falling 35 percent to $12.49, the lowest price since July 2006. Nvidia cut its second-quarter sales forecast because of a drop in demand and increased competition.
Family Dollar Stores Inc. rose the most in the S&P 500, gaining 16 percent to $22.52. The discount retailer reported 14 percent more third-quarter profit than analysts estimated as customers sought bargains while contending with higher gasoline and food costs.
Apollo Group Inc. climbed 15 percent to $55.18. The largest for-profit provider of college degrees beat per-share profit estimates by 9.7 percent, according to Bloomberg data.
Crude oil, which doubled in the past year, increased to a record $145.85 a barrel in New York yesterday. Its ascent is complicating the Federal Reserve's efforts to keep the economy out of recession amid bank losses stemming from the collapse of the U.S. subprime mortgage market, RBC Capital Markets strategist Myles Zyblock said in a report yesterday.
Shifting to Cash
He advised clients to cut equities to 55 percent of total investments from 60 percent and put the proceeds in cash. Zyblock downgraded financial shares to ``underweight,'' meaning the industry should represent a smaller slice of assets than is included in benchmark stock indexes.
``The equity market is without a parachute at the moment,'' he said. ``Financial and credit market-related stress is on the upswing.'' He added that ``surging energy costs are stealing from purchasing power and pressuring profitability.''
Yields on Treasury securities fell as traders pared bets the Fed will raise interest rates this year after lowering them seven times since September. The two-year note's yield declined to 2.53 percent from 2.63 percent on June 27.
U.S. employers cut jobs for a sixth straight month and service industries shrank in June, according to a government report yesterday. That's a sign the economic slowdown may deepen as the impact of federal tax rebates fades.
Jobs Losses
Payrolls fell by 62,000 after a 62,000 drop in May that was greater than first reported, the Labor Department said. The unemployment rate held at 5.5 percent after soaring the most in two decades in May. The Institute for Supply Management's non- manufacturing index sank to a five-month low.
As the Dow crossed the bear-market threshold on July 2, the benchmark index for U.S. stock options climbed to a three-month high. The VIX, as the Chicago Board Options Exchange Volatility Index is known, reached 25.92. It measures the cost of using options as insurance against declines in the S&P 500.
The Russell 2000 Index fell almost four times as fast as the S&P 500 this week, dragged down by companies added to the small- cap stock benchmark in its annual reconstitution. The Russell 2000, made up of companies with a median market value of $460.7 million, dropped 4.6 percent to 665.78. The losses cut the Russell 2000's advantage over the S&P 500 this year by more than half.
Alcoa is scheduled to report second-quarter results on July 8, becoming the first Dow company to do so. General Electric Co., the world's fifth-largest company by market value and also a Dow component, reports July 11. GE gained 2.5 percent to $26.91.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
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July 4 (Bloomberg) -- U.S. stocks fell this week, giving the Dow Jones Industrial Average a 20 percent bear-market drop since October's all-time high, as record oil threatened global growth.
Monsanto Co. and Nucor Corp. led raw-material producers in the Standard & Poor's 500 Index to the steepest drop since January. General Motors Corp. tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy. Lehman Brothers Holdings Inc. slumped to an eight-year low on speculation credit losses will force it to merge with a bigger securities firm.
The S&P 500 lost 1.2 percent to 1,262.90 for the fifth straight weekly retreat, the longest streak of declines in four years. The index sank to 1,261.52 on July 2, down 19.4 percent since Oct. 9 and the lowest since July 2006. The Dow slipped 0.5 percent to 11,288.54. The MSCI World Index of 23 developed markets fell 18.4 percent from its October peak through yesterday.
Among large companies, ``the biggest losers are names with international exposure,'' said Mark Freeman, a Dallas-based money manager at Westwood Holdings Group, which manages $8 billion. ``The market is calling into doubt that element of support is going to be with us going forward.''
U.S. markets are closed today for the Independence Day holiday.
Materials companies in the S&P 500 lost 5.8 percent, the most among 10 industries. Monsanto, the world's biggest seed producer, fell 6.3 percent to $120.21. It closed at a record $142.69 on June 17. Nucor, the largest U.S. steelmaker by market value, slumped 16 percent to $62.54. The company dropped 24 percent since an all-time high in May.
Coal Producers Fall
Massey Energy Co. led coal producers in the S&P 500 to a 12 percent retreat that pared their 2008 gain to 27 percent. Massey Energy tumbled 17 percent to $75.46 this week.
Caterpillar Inc., the world's biggest maker of earthmoving equipment, contributed most to the Dow's weekly drop, followed by Boeing Co., the second-largest commercial plane maker, and aluminum producer Alcoa Inc. Before U.S. stocks started falling on May 19, Alcoa had the top gain in the Dow for 2008. Caterpillar was No. 4.
Caterpillar slumped 4.7 percent to $70.31, the lowest since March 10. Boeing retreated 3.7 percent to $64.47, and Alcoa fell 7.4 percent to $32.78.
``It gives you a sense of how much momentum money had been attracted to some of these sectors, as well as a growing realization of the slowdown in front of us,'' said Daniel Manion, manager of the $1.3 billion Sentinel Common Stock Fund in Montpelier, Vermont.
29% Drop, 322 Days
This is the Dow's 12th bear market since 1962 and first since 2002, according to Westport, Connecticut-based research firm Birinyi Associates Inc. Prior declines averaged 29 percent and lasted 322 days, Birinyi data show. The biggest was a 45 percent drop over 694 days starting in January 1973.
General Motors fell 12 percent to $10.12. Its July 3 closing price of $9.98 was the lowest since September 1954. Merrill Lynch analyst John Murphy said the automaker may need to raise as much as $15 billion and faces the possibility of bankruptcy.
The ``dramatic drop-off'' in the U.S. sales market probably will continue through 2009, forcing GM to find additional funding, Murphy wrote in a report. ``Bankruptcy is not impossible if the market continues to deteriorate.''
Lehman, the fourth-largest U.S. securities firm, fell to $19.81 on June 30, the lowest since May 2000. The shares rebounded to end the week at $22.85 after the company awarded mid-year bonuses to retain employees after posting its first quarterly loss since going public because of writedowns of mortgage-related assets.
Sagging Demand
Nvidia Corp. suffered the biggest drop in the S&P, falling 35 percent to $12.49, the lowest price since July 2006. Nvidia cut its second-quarter sales forecast because of a drop in demand and increased competition.
Family Dollar Stores Inc. rose the most in the S&P 500, gaining 16 percent to $22.52. The discount retailer reported 14 percent more third-quarter profit than analysts estimated as customers sought bargains while contending with higher gasoline and food costs.
Apollo Group Inc. climbed 15 percent to $55.18. The largest for-profit provider of college degrees beat per-share profit estimates by 9.7 percent, according to Bloomberg data.
Crude oil, which doubled in the past year, increased to a record $145.85 a barrel in New York yesterday. Its ascent is complicating the Federal Reserve's efforts to keep the economy out of recession amid bank losses stemming from the collapse of the U.S. subprime mortgage market, RBC Capital Markets strategist Myles Zyblock said in a report yesterday.
Shifting to Cash
He advised clients to cut equities to 55 percent of total investments from 60 percent and put the proceeds in cash. Zyblock downgraded financial shares to ``underweight,'' meaning the industry should represent a smaller slice of assets than is included in benchmark stock indexes.
``The equity market is without a parachute at the moment,'' he said. ``Financial and credit market-related stress is on the upswing.'' He added that ``surging energy costs are stealing from purchasing power and pressuring profitability.''
Yields on Treasury securities fell as traders pared bets the Fed will raise interest rates this year after lowering them seven times since September. The two-year note's yield declined to 2.53 percent from 2.63 percent on June 27.
U.S. employers cut jobs for a sixth straight month and service industries shrank in June, according to a government report yesterday. That's a sign the economic slowdown may deepen as the impact of federal tax rebates fades.
Jobs Losses
Payrolls fell by 62,000 after a 62,000 drop in May that was greater than first reported, the Labor Department said. The unemployment rate held at 5.5 percent after soaring the most in two decades in May. The Institute for Supply Management's non- manufacturing index sank to a five-month low.
As the Dow crossed the bear-market threshold on July 2, the benchmark index for U.S. stock options climbed to a three-month high. The VIX, as the Chicago Board Options Exchange Volatility Index is known, reached 25.92. It measures the cost of using options as insurance against declines in the S&P 500.
The Russell 2000 Index fell almost four times as fast as the S&P 500 this week, dragged down by companies added to the small- cap stock benchmark in its annual reconstitution. The Russell 2000, made up of companies with a median market value of $460.7 million, dropped 4.6 percent to 665.78. The losses cut the Russell 2000's advantage over the S&P 500 this year by more than half.
Alcoa is scheduled to report second-quarter results on July 8, becoming the first Dow company to do so. General Electric Co., the world's fifth-largest company by market value and also a Dow component, reports July 11. GE gained 2.5 percent to $26.91.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
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Euro Trades Low Against The Dollar As Trichet Rules Out Anymore Hikes
Daily Forex Fundamentals | Written by Finotec Group | Jul 04 08 09:08 GMT |
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The euro headed for a weekly decline against the dollar on speculation a weakening European economic outlook will rule out future interest-rate increases. The Euro traded near a one-week low against the dollar after European Central Bank President Jean-Claude Trichet said he has 'no bias' and that economic growth is 'not flattering,' following the ECB's decision to raise borrowing costs yesterday. The euro touched a one-week low of $1.5675 and is currently trading at $1.5704 as of 7:30 am, GMT. The euro has fallen 0.5 percent this week.
'Trichet has confirmed that the central bank has shifted back to a more neutral stance,' BNP Paribas SA strategists led by Hans-Guenter Redeker wrote in a research note dated yesterday. 'We believe that interest rates are now on hold, suggesting that further downward pressure on the euro is now likely to develop.' The euro may fall to $1.53 on a break below $1.5650, according to BNP.
The Australian and New Zealand dollars rose against the euro on speculation the European Central Bank will refrain from adding to yesterday's interest- rate increase, bolstering demand for higher-yielding currencies. The South Pacific currencies climbed the most in seven weeks as ECB President Jean-Claude Trichet said he has 'no bias' on further moves after raising the region's main refinancing rate to 4.25 percent. The Australian dollar headed for a weekly gain as the difference in yield between two-year Australian and European bonds widened to near the most in a week.
The dollar may advance to 107.70 yen, according to charts traders watch to predict price movements, said Tomoko Fujii, head of economics and strategy for Japan at Bank of America Corp., the second-largest U.S. bank. A so-called candle chart that displays a currency's high, low, open and close for each day, indicated traders became bullish on the dollar. The upside target of 107.70 was on its 200-day moving average, she said. The dollar-yen's short-term technical momentum is bullish, and candle charts on July 2 and yesterday showed a so-called bullish engulfing pattern, a formation that shows the buying pressure exceeded selling pressure, reversing the dollar's bearish-trend, she said. In this formation, the first day's body, which is the area between the open and closing price, is engulfed by the second day's body. USD/JPY currently trading at 106.75 as of 7:57 am, GMT.
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Mirgor, Petrobras, Southern Copper: Latin Equity Preview
uitjBy Paulo Winterstein and James Attwood
July 4 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares fell 2.8 percent to 4,368.16 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Irsa Inversiones y Representaciones SA (IRSA AR): Argentina's biggest real-estate developer said it bought a 30 percent stake in Metropolitan 885 Third Avenue LLC for $22.6 million. Metropolitan 885 Third Avenue's main asset is an office building in Manhattan, New York, Irsa wrote in a regulatory filing yesterday. Irsa fell 2 percent to 3.4 pesos.
Mirgor Sacifia (MIRG AF): Argentine automakers increased production 7.7 percent in June from a year earlier, the country's Automaker Association said yesterday in a statement. Mirgor, which makes climate-control systems for vehicles, fell 0.8 percent to 189 pesos.
Brazil
Petroleo Brasileiro SA (PETR4 BS): Brazil's state- controlled oil company said its Brazilian crude oil and natural gas liquids output rose 0.7 percent in June compared with May, and 2.2 percent higher than a year earlier. Output from Brazil's domestic on-shore and offshore oil fields rose to 1.87 million barrels a day from 1.85 million barrels a day in the previous month, according to a statement posted yesterday on the Rio de Janeiro-based company's Web site. Petrobras fell 3.3 percent to 42.55 reais.
Telecomunicacoes de Sao Paulo SA (TLPP4 BS): Brazil's consumer protection agency said yesterday that users affected by disruptions in high-speed Internet connections provided by Telesp, as the Brazilian unit of Telefonica SA is known, can request compensation. Telesp fell 3.5 percent to 41.95 reais.
Peru
Southern Copper Corp. (PCU/C PE): Workers at a smelter owned by Southern Copper, the world's seventh-largest copper producer, ended a three-day stoppage after the government ruled a nationwide mining strike was illegal, a company spokesman said. The Ilo smelter was operating normally yesterday, said Alberto Giles, a spokesman for Phoenix-based Southern Copper. Southern Copper fell 2 percent to $100.50.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
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July 4 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares fell 2.8 percent to 4,368.16 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Irsa Inversiones y Representaciones SA (IRSA AR): Argentina's biggest real-estate developer said it bought a 30 percent stake in Metropolitan 885 Third Avenue LLC for $22.6 million. Metropolitan 885 Third Avenue's main asset is an office building in Manhattan, New York, Irsa wrote in a regulatory filing yesterday. Irsa fell 2 percent to 3.4 pesos.
Mirgor Sacifia (MIRG AF): Argentine automakers increased production 7.7 percent in June from a year earlier, the country's Automaker Association said yesterday in a statement. Mirgor, which makes climate-control systems for vehicles, fell 0.8 percent to 189 pesos.
Brazil
Petroleo Brasileiro SA (PETR4 BS): Brazil's state- controlled oil company said its Brazilian crude oil and natural gas liquids output rose 0.7 percent in June compared with May, and 2.2 percent higher than a year earlier. Output from Brazil's domestic on-shore and offshore oil fields rose to 1.87 million barrels a day from 1.85 million barrels a day in the previous month, according to a statement posted yesterday on the Rio de Janeiro-based company's Web site. Petrobras fell 3.3 percent to 42.55 reais.
Telecomunicacoes de Sao Paulo SA (TLPP4 BS): Brazil's consumer protection agency said yesterday that users affected by disruptions in high-speed Internet connections provided by Telesp, as the Brazilian unit of Telefonica SA is known, can request compensation. Telesp fell 3.5 percent to 41.95 reais.
Peru
Southern Copper Corp. (PCU/C PE): Workers at a smelter owned by Southern Copper, the world's seventh-largest copper producer, ended a three-day stoppage after the government ruled a nationwide mining strike was illegal, a company spokesman said. The Ilo smelter was operating normally yesterday, said Alberto Giles, a spokesman for Phoenix-based Southern Copper. Southern Copper fell 2 percent to $100.50.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
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Forex Technical Analysis
Daily Forex Technicals | Written by DeltaStock Inc. | Jul 04 08 08:16 GMT |
EUR/USD
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EUR/USD
The currency pair has set a local bottom at 1.5301 completing the slide from 1.5844. Technical indicators are neutral. Trading takes place above 50- day SMA, currently projected at 1.5609.
A weak intraday high was reached at 1.5909 after ECB's interest rate announcement, as the 0.25% hike was already priced in. The sharp sell-off that followed was fueled by Trichet's statement, that current hike will probably be enough to "anchor inflation expectations", that resulted in closing long positions built during last week. The effect was doubled by the fact, that due to today's national holiday in USA, all the US markets will remain closed, which practically made yesterday's trading session week's closing one. Expect calm, range trading below 1.5775 and above 1.5651 support zone.
Today's strategy: Stand aside.
| Resistance | Support | ||
| intraday | intraweek | intraday | intraweek |
| 1.5775 | 1.5852 | 1.5909 | 1.6020 |
| 1.5678 | 1.5651 | 1.5537 | 1.50+ |
USD/JPY
Current level - 106.84
The pair is in a corrective uptrend from the 95.75 short-term bottom. Technical indicators are flat and the upmove is dynamically supported at 104.74. The inner structure of the rise is by all means a corrective one, so from a larger point of view the overall downtrend from 124.14 is not over yet.
The acceleration of the downtrend has denied the possibility, that a final spike high around 109.30 is still possible and it is clear, that a mid-term top is set at 108.59 and current slide is aiming at 102.63 and 100.06 later on
Allow one more upswing to 107.12 resistance before exhaustion of the current corrective upmove and renewing the downtrend. If correct, next short-term target is projected at 103.83 and 102.63 later on
Today's strategy: Sell on a break below 105.79, stop above intraday high, target above 103.83.
| Resistance | Support | ||
| intraday | intraweek | intraday | intraweek |
| 107.12 | 107.83 | 108.42 | 109.51 |
| 105.79 | 105.19 | 104.75 | 102.63 |
GBP/USD
Current level- 1.9842
The pair is in a broad consolidation above 1.9338 and below 2.0397. Technical indicators are flat on the higher time-frames and trading is situated between the 50- and 200-day SMA, currently projected at 1.9685 and 1.9982
The expected consolidation phase since 2.0007 has reached the minimum target at 1.9801, but there are no signs for its completion, so allow one more spike low to 1.9767 before change of the direction. We hold on to our short-term view, that the uptrend from 1.9474 is still intact and it will target 2.0274 and 2.0397 later on. Keep an eye on the 1.9912 resistance, as a break beyond that level will directly aim at 2.0274.
Today's strategy : Buy on a break above 1.9912, stop below intraday low, target at 2.0274. Intraday sell current levels for 1.9783.
| Resistance | Support | ||
| intraday | intraweek | intraday | intraweek |
| 2.0007 | 2.0028 | 2.0193 | 2.0397 |
| 1.9801 | 1.9767 | 1.9767 | 1.9196 |
DeltaStock Inc. - Online Forex & Securities Broker
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Mattel Eclipses GM in Value on Toy-Car Gains: Chart of the Day
By Jeff Green and Heather Burke
July 4 (Bloomberg) -- Mattel Inc., helped by rising sales of Matchbox and Hot Wheels toy cars, has a larger market value than General Motors Corp. for the first time as record U.S. gasoline prices crimp sales of real cars and trucks.
GM shares fell to the lowest since 1954 this week after an analyst said bankruptcy was ``not impossible'' if the auto market continues to deteriorate. GM's U.S. unit sales fell 18 percent in June. The chart of the day shows a comparison of the change in market value for Mattel and GM.
Mattel is surpassing GM even after the toymaker reported its first quarterly loss in almost three years in April, a reflection of the diverging outlook for the two companies. Mattel may return to profitability after the first quarter, while GM will probably report losses through 2009 as buyers spurn pickup trucks and sport-utility vehicles, analysts said.
``Hot Wheels and Matchbox are basic, low-priced toys, so they appeal to consumers, in the U.S. and especially in less affluent countries, who may not be able to afford more expensive toys,'' Sean McGowan, a toy analyst at Needham & Co. in New York, said yesterday in an e-mail. He recommends buying Mattel shares.
GM, the world's largest automaker, rose 14 cents, or 1.4 percent, to $10.12 in New York Stock Exchange composite trading yesterday after a JP Morgan & Chase Co. analyst said GM has ``tough but manageable'' liquidity options. Mattel rose 8 cents to $17.22.
Mattel briefly passed Detroit-based GM in market value for the first time June 26 and regained its lead July 2. El Segundo, California-based Mattel is the world's biggest toymaker.
GM, turning 100 this year, reported its largest annual loss in 2007, $38.7 billion, after a tax accounting change, and hasn't had a profitable year since 2004. The carmaker's U.S. market share hovers at the lowest level since 1925, and last year GM was 3,000 cars away from being dethroned by Toyota Motor Corp. as the world's largest automaker.
Mattel said first-quarter revenue from toy cars rose 15 percent. The company had a $46.6 million loss in the quarter as Chinese manufacturing costs rose. The maker of Barbie dolls hasn't had an annual loss since 2000.
To contact the reporters on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; Heather Burke in New York at hburke2@bloomberg.net.
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European Stocks Fall; British Airways, Anglo American, B&B Drop
By Sarah Jones
July 4 (Bloomberg) -- European stocks fell, capping their fifth straight weekly decline, as oil prices near a record high weighed on airlines and a retreat in metals pushed commodity producers lower. Most Asian stocks fell, while U.S. markets were closed today for Independence Day.
British Airways Plc and Air France-KLM Group declined as crude traded above $145 a barrel. Anglo American Plc led mining shares lower as Goldman Sachs Group Inc. downgraded the industry. Bradford & Bingley Plc tumbled after TPG Inc. dropped plans to inject 179 million pounds ($354.7 million) into the company.
Europe's Dow Jones Stoxx 600 Index slipped 0.5 percent to 281.54 at 9:05 a.m. in London, extending this week's retreat to 2 percent. The fifth consecutive weekly drop is the longest losing streak since January.
``The focus is still very much strongly on the oil price because inflation is mainly driven by the oil price,'' said Bernd Meyer, head of pan-European equity strategy at Deutsche Bank AG in London.
The MSCI Asia Pacific Index was little changed today as the index completed a four-week, 12 percent slide, the longest losing streak since the period ended Feb. 8.
Credit-related losses topping $400 billion, record oil prices and accelerating inflation has led analysts to cut earnings estimates as the outlook for economic growth slows.
Earnings for Stoxx 600 companies will fall 1.7 percent this year, according to data compiled by Bloomberg. That's down from 11 percent growth predicted at the start of 2008.
National Markets
National benchmark indexes fell in 14 of the 17 western European markets that were open. The U.K.'s FTSE 100 lost 0.8 percent. France's CAC 40 slipped 0.7 percent, and Germany's DAX advanced 0.8 percent.
British Airways, Europe's third-largest airline, dropped 3 percent to 202.75 pence. Air France, Europe's biggest airline, retreated 1.4 percent to 14.20 euros.
Crude oil for August delivery was at $145.44 a barrel, up 15 cents, in after-hours electronic trading on the New York Mercantile Exchange.
Futures yesterday climbed to $145.85 a barrel, the highest since trading began in 1983. Prices have risen 3.6 percent this week and more than doubled in the past year.
Anglo American, the world's second-biggest mining company, lost 1.3 percent to 3,227 pence. Vedanta Resources Plc, India's largest zinc producer, declined 2 percent to 1,982 pence. Copper, lead and tin declined in London.
Goldman Sachs downgraded basic-resource shares to ``neutral,'' saying investor concerns about the impact from higher inflation will likely weigh on confidence in the sector.
``We are taking profits in basic resources,'' London-based analyst Peter Oppenheimer wrote in a note to investors. We have a ``view to upgrade again when risks subside.''
Bradford & Bingley
Bradford & Bingley fell 9 percent to 55.5 pence after TPG withdrew its offer to take a stake in the bank.
Britain's largest lender to landlords will continue with the capital-raising announced June 2 through an enlarged rights offer, the bank said. The rights offer is supported by some of the largest shareholders, including Legal & General Group Plc, Standard Life Plc., M&G Investment Managers and Insight Investment Management
Marks & Spencer Group Plc lost 3 percent to 229 pence, dropping for a seventh day. Citigroup Inc. downgraded the U.K.'s biggest clothing retailer to ``sell'' from ``buy'' after the company reported falling sales amid a slump in consumer spending.
The brokerage also cut its 2009 and 2010 pretax profit estimates 17 percent and 29 percent respectively and slashed its price estimate on the stock 54 percent to 205 pence.
``The current sharply deteriorating U.K. macro environment should drive a `Sell' stance on the U.K. general retailers,'' London-based analyst Richard Edwards wrote in a note.
UBS
UBS AG jumped 7.5 percent to 22.6 francs. The European bank hardest hit by the U.S. subprime crisis said it expects to post a second-quarter result ``at or slightly below break-even,'' helped by about 3 billion francs ($2.9 billion) in tax credits and that it sees ``no need to raise new equity.''
UBS, which posted a profit of 5.55 billion Swiss francs ($5.4 billion) a year earlier, said that market turmoil contributed to writedowns and a loss at the investment bank. The bank had a negative flow of net new money, which was worst in April. The results will be published Aug. 12 as planned.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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July 4 (Bloomberg) -- European stocks fell, capping their fifth straight weekly decline, as oil prices near a record high weighed on airlines and a retreat in metals pushed commodity producers lower. Most Asian stocks fell, while U.S. markets were closed today for Independence Day.
British Airways Plc and Air France-KLM Group declined as crude traded above $145 a barrel. Anglo American Plc led mining shares lower as Goldman Sachs Group Inc. downgraded the industry. Bradford & Bingley Plc tumbled after TPG Inc. dropped plans to inject 179 million pounds ($354.7 million) into the company.
Europe's Dow Jones Stoxx 600 Index slipped 0.5 percent to 281.54 at 9:05 a.m. in London, extending this week's retreat to 2 percent. The fifth consecutive weekly drop is the longest losing streak since January.
``The focus is still very much strongly on the oil price because inflation is mainly driven by the oil price,'' said Bernd Meyer, head of pan-European equity strategy at Deutsche Bank AG in London.
The MSCI Asia Pacific Index was little changed today as the index completed a four-week, 12 percent slide, the longest losing streak since the period ended Feb. 8.
Credit-related losses topping $400 billion, record oil prices and accelerating inflation has led analysts to cut earnings estimates as the outlook for economic growth slows.
Earnings for Stoxx 600 companies will fall 1.7 percent this year, according to data compiled by Bloomberg. That's down from 11 percent growth predicted at the start of 2008.
National Markets
National benchmark indexes fell in 14 of the 17 western European markets that were open. The U.K.'s FTSE 100 lost 0.8 percent. France's CAC 40 slipped 0.7 percent, and Germany's DAX advanced 0.8 percent.
British Airways, Europe's third-largest airline, dropped 3 percent to 202.75 pence. Air France, Europe's biggest airline, retreated 1.4 percent to 14.20 euros.
Crude oil for August delivery was at $145.44 a barrel, up 15 cents, in after-hours electronic trading on the New York Mercantile Exchange.
Futures yesterday climbed to $145.85 a barrel, the highest since trading began in 1983. Prices have risen 3.6 percent this week and more than doubled in the past year.
Anglo American, the world's second-biggest mining company, lost 1.3 percent to 3,227 pence. Vedanta Resources Plc, India's largest zinc producer, declined 2 percent to 1,982 pence. Copper, lead and tin declined in London.
Goldman Sachs downgraded basic-resource shares to ``neutral,'' saying investor concerns about the impact from higher inflation will likely weigh on confidence in the sector.
``We are taking profits in basic resources,'' London-based analyst Peter Oppenheimer wrote in a note to investors. We have a ``view to upgrade again when risks subside.''
Bradford & Bingley
Bradford & Bingley fell 9 percent to 55.5 pence after TPG withdrew its offer to take a stake in the bank.
Britain's largest lender to landlords will continue with the capital-raising announced June 2 through an enlarged rights offer, the bank said. The rights offer is supported by some of the largest shareholders, including Legal & General Group Plc, Standard Life Plc., M&G Investment Managers and Insight Investment Management
Marks & Spencer Group Plc lost 3 percent to 229 pence, dropping for a seventh day. Citigroup Inc. downgraded the U.K.'s biggest clothing retailer to ``sell'' from ``buy'' after the company reported falling sales amid a slump in consumer spending.
The brokerage also cut its 2009 and 2010 pretax profit estimates 17 percent and 29 percent respectively and slashed its price estimate on the stock 54 percent to 205 pence.
``The current sharply deteriorating U.K. macro environment should drive a `Sell' stance on the U.K. general retailers,'' London-based analyst Richard Edwards wrote in a note.
UBS
UBS AG jumped 7.5 percent to 22.6 francs. The European bank hardest hit by the U.S. subprime crisis said it expects to post a second-quarter result ``at or slightly below break-even,'' helped by about 3 billion francs ($2.9 billion) in tax credits and that it sees ``no need to raise new equity.''
UBS, which posted a profit of 5.55 billion Swiss francs ($5.4 billion) a year earlier, said that market turmoil contributed to writedowns and a loss at the investment bank. The bank had a negative flow of net new money, which was worst in April. The results will be published Aug. 12 as planned.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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U.K. Stocks Decline; Bradford & Bingley, Marks & Spencer Fall
By Adam Haigh
July 4 (Bloomberg) -- U.K. stocks fell, led by Bradford & Bingley Plc after TPG Inc. withdrew its offer to buy a stake in Britain's largest lender to landlords.
HBOS Plc declined as Societe Generale SA advised selling the shares. Marks & Spencer Group Plc fell for a seventh day, to the lowest since 2001, as Citigroup Inc. downgraded the stock to ``sell'' from ``buy.''
The benchmark FTSE 100 Index retreated 38.4, or 0.7 percent, to 5,438.2 at 8:44 a.m. in London, extending this week's decline to 1.6 percent its seventh straight weekly fall. The FTSE All- Share Index lost 0.6 percent today and Ireland's ISEQ Index dropped 0.5 percent.
Bradford & Bingley lost 3.7 percent to 58.75 pence, after briefly falling below the 55 pence strike price of its rights offering. The lender said it will raise 400 million ($793 million) in new capital without the buyout firm.
HBOS retreated 1.4 percent to 275.25 pence. Societe Generale cut its recommendation on the U.K.'s biggest mortgage lender to ``sell'' from ``hold.''
``Given the June downgrades to monoline insurers and continued weakening in the U.K. credit environment, we believe that interim results could disappoint the market,'' London-based analyst Asheefa Sarangi wrote in a note to clients.
Marks & Spencer lost 4.9 percent to 224.5, bringing this year's decline to 60 percent.
Citigroup lowered its 2009 and 2010 pretax profit estimates 17 percent and 29 percent respectively and slashed its price estimate on the stock 54 percent to 205 pence.
``Sector-wide revenue trends will weaken further as consumer demand patterns deteriorate,'' London-based analyst Richard Edwards wrote in a note.
Flying Brands Ltd., the U.K. mail-order flower seller that went public in 1993, slumped 11 percent to 46 pence after saying it will close its U.S. Greetings Direct business following ``extremely disappointing'' test results in June.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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July 4 (Bloomberg) -- U.K. stocks fell, led by Bradford & Bingley Plc after TPG Inc. withdrew its offer to buy a stake in Britain's largest lender to landlords.
HBOS Plc declined as Societe Generale SA advised selling the shares. Marks & Spencer Group Plc fell for a seventh day, to the lowest since 2001, as Citigroup Inc. downgraded the stock to ``sell'' from ``buy.''
The benchmark FTSE 100 Index retreated 38.4, or 0.7 percent, to 5,438.2 at 8:44 a.m. in London, extending this week's decline to 1.6 percent its seventh straight weekly fall. The FTSE All- Share Index lost 0.6 percent today and Ireland's ISEQ Index dropped 0.5 percent.
Bradford & Bingley lost 3.7 percent to 58.75 pence, after briefly falling below the 55 pence strike price of its rights offering. The lender said it will raise 400 million ($793 million) in new capital without the buyout firm.
HBOS retreated 1.4 percent to 275.25 pence. Societe Generale cut its recommendation on the U.K.'s biggest mortgage lender to ``sell'' from ``hold.''
``Given the June downgrades to monoline insurers and continued weakening in the U.K. credit environment, we believe that interim results could disappoint the market,'' London-based analyst Asheefa Sarangi wrote in a note to clients.
Marks & Spencer lost 4.9 percent to 224.5, bringing this year's decline to 60 percent.
Citigroup lowered its 2009 and 2010 pretax profit estimates 17 percent and 29 percent respectively and slashed its price estimate on the stock 54 percent to 205 pence.
``Sector-wide revenue trends will weaken further as consumer demand patterns deteriorate,'' London-based analyst Richard Edwards wrote in a note.
Flying Brands Ltd., the U.K. mail-order flower seller that went public in 1993, slumped 11 percent to 46 pence after saying it will close its U.S. Greetings Direct business following ``extremely disappointing'' test results in June.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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German Stocks Decline, Led by Deutsche Boerse, Linde, Henkel
By Stefanie Haxel
July 4 (Bloomberg) -- Germany's DAX Index dropped, erasing earlier gains. Deutsche Boerse AG, Linde Group and Henkel AG led declining shares.
The benchmark DAX fell 24.66, or 0.4 percent, to 6,329.08 as of 9:27 a.m. after advancing as much as 0.3 percent. The HDAX Index of the country's 110 biggest companies slipped 0.3 percent to 3,239.18.
Deutsche Boerse, operator of the Frankfurt exchange, lost 1.27 euros, or 1.8 percent, to 70.60.
Linde, Germany's largest maker of industrial gas, retreated 1 euro, to 1.1 percent, to 90.68. Henkel AG, the maker of Persil detergent, slipped 21 cents, or 0.8 percent, to 25.14 euros.
To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net
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July 4 (Bloomberg) -- Germany's DAX Index dropped, erasing earlier gains. Deutsche Boerse AG, Linde Group and Henkel AG led declining shares.
The benchmark DAX fell 24.66, or 0.4 percent, to 6,329.08 as of 9:27 a.m. after advancing as much as 0.3 percent. The HDAX Index of the country's 110 biggest companies slipped 0.3 percent to 3,239.18.
Deutsche Boerse, operator of the Frankfurt exchange, lost 1.27 euros, or 1.8 percent, to 70.60.
Linde, Germany's largest maker of industrial gas, retreated 1 euro, to 1.1 percent, to 90.68. Henkel AG, the maker of Persil detergent, slipped 21 cents, or 0.8 percent, to 25.14 euros.
To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net
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Goldman Says European Banks May Need as Much as EU90 Billion
By Alexis Xydias
July 4 (Bloomberg) -- European banks may need to raise between 60 billion euros ($94 billion) and 90 billion euros to keep their financial ratios at current levels amid a decline in credit markets, according to Goldman Sachs Group Inc.
In a note to investors distributed today a team of London- based analysts cut their recommendations on Carnegie & Co. and Swedbank AB of Sweden to ``sell'' from ``neutral.'' Banco Santander SA, Spain's largest bank, was downgraded to ``neutral'' from ``buy.''
``Regulatory pressures and a sharp turn in the European credit cycle are the two main causes for concern for bank investors,'' the report said. ``If, in addition to regulatory tightening, the sector returns to the early 1990s' level of credit losses, we estimate that the capital shortfall could amount to 90 billion euros.''
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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July 4 (Bloomberg) -- European banks may need to raise between 60 billion euros ($94 billion) and 90 billion euros to keep their financial ratios at current levels amid a decline in credit markets, according to Goldman Sachs Group Inc.
In a note to investors distributed today a team of London- based analysts cut their recommendations on Carnegie & Co. and Swedbank AB of Sweden to ``sell'' from ``neutral.'' Banco Santander SA, Spain's largest bank, was downgraded to ``neutral'' from ``buy.''
``Regulatory pressures and a sharp turn in the European credit cycle are the two main causes for concern for bank investors,'' the report said. ``If, in addition to regulatory tightening, the sector returns to the early 1990s' level of credit losses, we estimate that the capital shortfall could amount to 90 billion euros.''
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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