Market Rumours

European Stocks Rise, Led By Techs
2010-04-14 04:23 LONDON -- European stocks were higher Wednesday as technology stocks tracked gains in their Asian peers following Intel's strong earnings report.The basic-resources sector also lent support as metals prices firmed, with Xstrata up 2.1% and ArcelorMittal up 1.1%."We're up this morning in reaction to a strong earnings report from Intel. We've now got some major bank results ahead and most investors feel that these should be decent. So there's plenty of support for the market as we go into the earnings season," said David Morrison, strategist at GFT.By 0750 GMT, the Stoxx Europe 600 index had added 0.2% to 269.3. The three main European indexes were all up by 0.4%: London's FTSE 100 was at 5784.9, Frankfurt's DAX was at 6255.50 and Paris's CAC-40 was at 4049.0.Intel kicked off a cheery earnings season for the tech sector after the New York market closed Tuesday, posting the strongest first quarter in its history, helped by strong demand for its new line of chips and a return of business spending on technology. Quarterly profit nearly quadrupled, beating analysts' projections, while revenues and gross margins were also well above expectations. Intel shares were 4.0% higher in after-hours trade.Also providing a boost to the technology sector, Dutch semiconductor equipment maker ASML rose 1.4% after its first-quarter profit beat expectations. The company said net profit more than doubled compared to the fourth quarter and raised its second-quarter sales guidance as confidence in a prolonged recovery of the semiconductor industry grows. Also among tech stocks, Infineon Technologies rose 2.9%.Nonetheless, gains were fairly limited, with many investors reluctant to take up positions until they see further evidence of a recovery in U.S. earnings, traders said. "There will be some caution until we're further into it [the U.S. earnings season] and, in the meantime, Greek yields will be watched closely," said Morrison.On the economic front, euro-zone industrial production data are due at 0900 GMT, but the main focus is likely to be on the U.S., where the consumer price index and retail sales are expected at 1230 GMT and business inventories are due at 1400 GMT. Meanwhile, as the first-quarter U.S. earnings season moves into full swing, investors will eye results from JPMorgan, the first of the major banks to report. In addition, Ben Bernanke, chairman of the U.S. Federal Reserve, will testify before a U.S. panel on the economic outlook at 1400 GMT.On Wall Street Tuesday, stocks edged up for a fourth-straight session despite disappointing first-quarter report from Alcoa, as a drop in crude-oil prices helped boost consumer-discretionary companies such as Home Depot, while the technology sector gained on hopes for strong earnings results from Intel.The Dow Jones Industrial Average rose 0.1% to 11,019.42, its highest close since Sept. 26, 2008. The Nasdaq Composite climbed 0.3% to 2465.99 and the Standard & Poor's 500 index advanced 0.1% to 1197.30. The energy and materials sectors fell, but the declines were outweighed by gains in the consumer-discretionary and technology sectors.Disappointment over Alcoa's report had sent stocks lower Tuesday morning, but, as the session continued, stocks turned positive as investors grew more hopeful for strong results from Intel after Tuesday's close.In Asia, stock markets were mixed on Wednesday, but technology stocks were strong on the back of Intel's good results.Japan's Nikkei 225 ended up 0.4% and South Korea's Kospi Composite gained 1.4% but China's Shanghai Composite Index and Hong Kong's Hang Seng Index both fell 0.1%.Singapore's central bank tightened monetary policy aggressively Wednesday to cool an economy that had posted the fastest growth on record in the first quarter and faces rising inflationary risks.In the European currency markets, the euro gained against the dollar. At 0815 GMT, the single currency was quoted at $1.3637, up from $1.3614 in late New York trade Tuesday. The dollar rose to Y93.58 from Y93.20.Among commodities, spot gold was trading at $1157.80 per troy ounce, up $6.90 from the New York close, benefiting from a stronger euro. May Nymex crude oil futures were up 63 cents at $84.68 per barrel.Elsewhere, the European government bond markets were lower, with the June bund future down 0.01 at 122.97 and June gilts down 0.22 at 113.85.
Fitch Says China At High Risk Of Souring Loans
2010-04-14 02:45 TAIPEI -- Chinese banks' fast lending growth poses a "very high risk" of loans going sour and asset quality deteriorating in the medium term, Fitch Ratings' senior director for financial institutions, Jonathan Lee, said Wednesday."There's an asset bubble in China and some day (the loans) may turn into non-performing loans," Lee said at a media briefing in Taipei.The Chinese government encouraged banks to lend to local enterprises last year to boost growth amid the global economic downturn. New loans in China rose 32% last year, Fitch said, adding new loans are likely to rise 20%, or CNY8 trillion, this year."Hidden sales and re-packaging of loans remains sizeable and distorts credit growth and credit exposure figures. Consequently, some banks are carrying more credit risk than balance sheets indicate," Fitch said.Fitch also sees "very limited" economic benefits from the cross-strait liberalization of the banking sector because of limited access and the much-larger scale of the Chinese banking sector compared with Taiwan's, Lee said.Taiwan's Financial Supervisory Commission said last month it will allow local banks, securities houses and insurers to own a stake in a single Chinese peer, and open the island's banking sector to investment from China, but limited the size of the stakes. The new rules will take effect after the two sides sign a trade pact, which Taiwan has said it aims to sign by June.The massive loan growth in China last year and stricter regulatory requirements have prompted Chinese banks to raise funds to replenish their capital, and any Taiwanese financial institutions that take a stake in one of their peers on the mainland could face heavy burdens in any future fund-raising, the ratings agency said."The timing for investing in Chinese banks may not be the best for Taiwan banks," Lee said.Still, Fitch expects the profitability of Taiwan banks to improve this year because the island's interest rates will likely rise and the economy improve. Fitch forecast Taiwan banks' return on assets to more than double to 0.50% this year from 0.2% last year.
Crude A Bit Higher In Asia On Weak Dollar
2010-04-14 02:51 SINGAPORE -- Crude oil futures were slightly higher in Asia trade Wednesday, boosted by a weakening dollar and higher regional equities ahead of key U.S. oil inventory data due later today.On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $84.35 a barrel at 0635 GMT, up 30 cents in the Globex electronic session. May Brent crude on London's ICE Futures exchange rose $0.19 to $84.91 a barrel."It's mainly the dollar today," said Clarence Chu at Hudson Capital Energy. "The IEA report yesterday was not surprising, despite the small upward revision in its demand forecast."The International Energy Agency yesterday raised its 2010 global oil demand forecast by 30,000 barrels a day on the back of rising consumption in China and Saudi Arabia, but also cautioned that rising oil prices could hurt economic recovery in the industrialized world."Crude is basically fluctuating without any real trend," Chu said. "It's trading on technicals. Fundamentally it's still a bearish market but market sentiment appears to be bullish."The market is closely watching the U.S. Energy Information Administration's weekly inventory statistics after the American Petroleum Institute reported larger-than-expected builds in crude and distillate stocks and a surprise increase in gasoline inventories overnight.Analysts surveyed by Dow Jones Newswires expected EIA data to show crude inventories rose by 1.1 million barrels, gasoline stocks fell by 700,000 barrels and distillate stocks rose by 600,000 barrels. Refiners were expected to increase operations relative to capacity by 0.1 percentage point from 84.5% a week ago, which was the highest operating level since October.Today's weekly inventory report may have more of an impact on crude prices than reports in recent weeks as oil markets have mostly moved independently of financial factors over the last few days, said Jim Ritterbusch at Ritterbusch and Associates.The "unusually large" contango in the crude curve may prompt more speculators to push their long positions to farther months to take advantage of an expected improvement in demand, he saidA contango that steepens is a sign that the market is concerned with too much product available on the spot market, noted Stephen Schork of the Schork Report. "As such, it pays you to take those barrels off of the spot market and put them into storage. In other words, it is stark bearish fundamental metric.". Nevertheless, oil prices remain strong, he said.Nymex reformulated gasoline blendstock for May--the benchmark gasoline contract--fell 28 points to $2.3065 a gallon, while May heating oil traded at $2.2174, 32 points higher.ICE gasoil for May changed hands at $706.75 a metric ton, up $6.75 from yesterday's settlement.
US Trade Deficit Widens, Import Prices Rise
2010-04-13 10:38 WASHINGTON -- The U.S. trade deficit widened in February, spurring economists to revise down estimates for first-quarter gross domestic product growth as a separate report showed that inflation in the U.S. economy remains subdued.US Import Prices Rise 0.7% In MarchThe U.S. deficit in international trade of goods and services rose 7.4% to $39.7 billion in February from a revised $36.95 billion the month before, the Commerce Department said in a report Tuesday.The February deficit was higher than the $39 billion shortfall Wall Street was expecting. The January trade gap was originally reported to be $37.29 billion."From a GDP accounting perspective, the January and February trade data point to trade being a modest drag on real GDP growth in the first quarter," John Ryding and Conrad DeQuadros of RDQ Economics wrote in a client note.Trade has helped to support the economy during the recent recession with net exports adding 0.27 of a percentage point to gross domestic product in the fourth quarter, when the economy grew a revised 5.6%.Zach Pandl, an economist with Nomura Global Economics, is expecting U.S. first-quarter GDP growth of 2.5%, down from a previous estimate of 2.9%. Tuesday's report suggests "net trade subtracted a significant amount from Q1 GDP growth," he said.Despite the overall widening in the trade gap in February, the U.S. trade deficit with China in February narrowed to its lowest level in nearly a year. The U.S. trade deficit with China in February fell to to $16.51 billion from $18.3 billion the month before, hitting its lowest level since March 2009.Exports to China fell to $6.86 billion in February from $6.89 billion in January while imports slipped to $23.36 billion from $25.19 billion. Imports from China in February stood at their lowest level since May 2009.Overall, U.S. exports rose by 0.2% to $143.17 billion in February, their highest level since October 2008, from a revised $142.89 billion the previous month. Imports grew by 1.7% to $182.88 billion from $179.84 billion in January.The real, or inflation-adjusted deficit, which economists use to measure the impact of trade on GDP, rose to $42.45 billion in February from $40.93 billion in January, Commerce said Tuesday.A separate report from the Labor Department Tuesday showed U.S. import prices rose in March for the seventh time in the past eight months, led by higher oil prices. Still, broader price measures in the report showed inflation in March remained tame in the world's largest economy.The Labor Department said Tuesday that prices of goods imported into the U.S. rose by 0.7% in March, after a revised 0.2% drop in February.The price index for personal consumption expenditure excluding food and energy rose by an annual 1.3% in February, down half a percentage point from a year earlier and down more than a full percentage point from the start of the recession in late 2007.Fuel import prices rose by a monthly 2.9% in March, following a revised 1.2% decline in February. A 4% rise in petroleum import prices was slightly offset by a 12.4% decline in natural gas prices.Excluding petroleum, import prices fell by 0.2% in March versus February, the first drop since July 2009. Excluding all fuels, import prices rose 0.2% last month.The Labor Department said import prices were up 11.4% for the year ended in March, indicating some price pressure from imported inflation.However, the broader picture is one of tame inflation. Over the past 12 months, the more important consumer price index has risen by about 2%. Consumer prices for March, which are set to be released on Wednesday, are forecast to have edged up only 0.1% from February. Measures of inflation that strip out volatile energy and food prices, meantime, have been slowing recently.Inflation is a key indicator the U.S. Federal Reserve looks at to decide whether to keep short-term interest rates at a record low in order to help bolster the economy's recovery. With the U.S. economy improving only slowly, inflation has remained subdued over the past year
US Stocks Rise To Nearly 19-Month Highs
2010-04-13 17:16 Industrial Average rose 13.45 points, or 0.12%, to 11019.42, its highest close since Sept. 26, 2008. Alcoa was the measure's worst performer with a drop of 23 cents, or 1.6%, to 14.34. The aluminum giant reported a narrower quarterly loss, but its earnings excluding items merely met analysts' estimates while revenue came in weaker than expected. UBS cut its investment rating on the stock to neutral from buy following the report.Chip giant Intel (Nasdaq) rose 23 cents, or 1%, to 22.77, ahead of its report after Tuesday's close.Home Depot also climbed, closing up 86 cents, or 2.6%, to 34.34, as investors were encouraged by a drop in crude-oil prices. The market had been concerned that crude's recent ascent could affect consumer spending, but Tuesday's tumble in crude futures helped alleviate those worries.The Nasdaq Composite climbed 8.12, or 0.33%, to 2465.99, its highest close since June 16, 2008.The Standard & Poor's 500 index advanced 0.82, or 0.07%, to 1197.30, its highest close since Sept. 26, 2008. The energy and materials sectors fell, but the declines were outweighed by gains in the consumer-discretionary and technology sectors.Disappointment over Alcoa's report had sent stocks lower Tuesday morning, but as the session continued, stocks turned positive as investors grew more hopeful for strong results from Intel after Tuesday's close.Thomas Nyheim, portfolio manager at Christiana Bank & Trust, said investors shouldn't look at Alcoa's results as a sign that the rest of the first-quarter earnings season could be similarly disappointing. "Is it indicative of the country? I don't think so," he said.Nevertheless, Nyheim added, "We're cautious going forward. A lot of the problems are still out there, especially in the financial sector. It's a tepid outlook we're having."Fastenal (Nasdaq) rose 1.10, or 2.1%, to 53. The maker of industrial and construction supplies posted a 15% increase in first-quarter profit, topping analysts' expectations, as its manufacturing customers drove sales growth. Sales in that segment grew 16% during the period, more than offsetting a 15% decline in the company's business selling parts to nonresidential construction companies.Regional banks fell after a round of ratings cuts from UBS. The firm lowered its investment ratings on KeyCorp, Regions Financial, Huntington Bancshares and TCF Financial to sell from neutral and downgraded Commerce Bancshares to neutral from buy, saying it sees more headwinds to the earnings recovery, and that the pace of a recovery will fall short of expectations. KeyCorp dropped 20 cents, or 2.4%, to 8.14, while Regions Financial fell 40 cents, or 4.6%, to 8.34. Huntington Bancshares (Nasdaq) slipped 34 cents, or 5.6%, to 5.69. TCF declined 67 cents, or 4%, to 16.31, and Commerce (Nasdaq) dropped 1.24, or 3%, to 40.80.CF Industries Holdings predicted first-quarter sales below Wall Street's expectations on a 6% drop in volume because of declining sales in its nitrogen and phosphate segments. The fertilizer producer also said it plans to sell at least 10.8 million shares and $1.6 billion in debt to raise funds to repay borrowings under its $1.75 billion senior secured bridge facility. The stock fell 3.12, or 3.4%, to 88.91.Shares of for-profit education companies rose after Credit Suisse said a new draft by the Department of Education of its potential regulation of for-profit educators has an exemption for universities with a 50% completion rate, reintroducing an idea that had been removed from previous drafts, but lowering the rate from a previous 70% threshold. The firm listed ITT Educational Services, DeVry and Education Management among the expected beneficiaries of such an exemption, and upgraded its investment ratings on ITT and DeVry to outperform. ITT rose 10.42, or 9.6%, to 119.20, while DeVry climbed 6.67, or 10%, to 71.73, and Education Management (Nasdaq) advanced 3.02, or 13%, to 25.56.Petrohawk Energy edged up 57 cents, or 2.5%, to 23.18, after the energy company agreed to sell a 50% interest in its Haynesville Shale gathering and processing business to Kinder Morgan Energy Partners LP for $875 million in a deal that will form a strategic partnership with the pipeline operator. Kinder Morgan slipped 73 cents, or 1.1%, to 66.50.American depositary shares of Infosys Technologies (Nasdaq) rose 1.62, or 2.6%, to 63.05, after the IT company posted a slight drop in fourth-quarter profit but issued a strong outlook for the current fiscal year, indicating a revival in India's outsourcing industry is continuing to gather momentum. Shares of competitor Cognizant Technology Solutions (Nasdaq) climbed 1.71, or 3.3%, to 53.67.Avon Products dropped 2.77, or 8%, to 31.99. The company suspended four executives amid an internal investigation into alleged bribery that began with the beauty-products company's China operation and now involves a dozen or more countries, people familiar with the matter told The Wall Street Journal.Goodyear Tire & Rubber climbed 99 cents, or 7.6%, to 13.95. The tire maker's new Chief Executive Richard J. Kramer said at the company's annual meeting he is confident in its ability to grow even as conditions remain "somewhat uncertain." Kramer said the company would benefit from cost-cutting efforts, a $1 billion decrease in inventories and improved liquidity.
Greek Treasury Bills Attract Strong Demand
2010-04-13 07:35 ATHENS -- The Greek government's sale of EUR1.56 billion of Treasury bills Tuesday met with strong demand and reassured investors that it can meet its short-term financial needs.But the Greek government still finds itself having to pay very high interest rates, which will have to fall rapidly in future bond sales for plans to cut the budget deficit to remain on track.The offering was the first test of investor demand for Greek government debt since finance ministers of the 16-member euro zone Sunday agreed to lend Greece up to EUR30 billion in the first year of any aid program, to which the International Monetary Fund is expected to add an estimated EUR15 billion."These auctions will be seen as a positive endorsement of the bailout measures announced over the weekend and perhaps reduce the chances of the support package from the euro zone being activated in the short term," said Ben May, an economist at Capital Economics. "But with bond yields at maturities of two years or more still at least 6%, the government will have to pay a high price to borrow the EUR40 billion that it needs over the remainder of 2010."The debt agency offered EUR600 million apiece of the six- and 12-month T-bills and sold EUR780 million of each. The amounts sold include a 30% noncompetitive tranche. The uniform yields came in at 4.55% and 4.85%, respectively, while the offerings were 7.67 times and 6.54 times oversubscribed, respectively.The bills were sold at yields that were half a percentage below the yields at which bills of a similar maturity were trading prior to the auction.However, the sale didn't make it cheaper for the Greek government to borrow at longer maturities. Spreads on two- and 10-year Greek bond yields widened briefly in the moments after the results were out, but narrowed back to previous levels of around 4.92 percentage points in the two-year segment and 3.48 percentage points for the 10-year bonds."I think the market is content with the auction results, which came in at slightly better yields than market prices, but they are still expensive for the Greek state given their short-term nature," said a local bond trader.The warm reaction to the T-bills helped the euro firm by 0.16% against the dollar to $1.3613, but the European currency swiftly fell below its original levels shortly afterwards, highlighting continuing concerns.The fact that yields were below 5% for both maturities is "certainly encouraging," said Luca Cazzulani, strategist at UniCredit Bank in Milan.Nevertheless, those levels are still way above levels at the previous T-bill auctions in January, when Greece sold the six-month T-bills at a uniform yield of 1.38% and the 12-month T-bills at a uniform yield of 2.20%.The auction dispelled fears for now but longer-term worries remain.The next test will be a three-month tender next Tuesday.Commerzbank AG's Frankfurt-based strategist David Schnautz said the bank holds to its view of being long in Greek Treasury bills and short-end Greek government bonds, with the shorter-dated paper being the main beneficiary of the weekend agreement.Euro-zone policy makers continued to insist that even with an aid package on standby, the Greek government can only improve the country's economic situation through its own efforts."It's important to underline that the primary responsibility for solving Greece's problems still lies with Greece," European Central Bank governing council member Ewald Nowotny said Tuesday.Greek Finance Minister George Papaconstantinou said his government hasn't requested that the aid package be initiated, and still intends to avoid having to do so."The Greek government has not asked for the (EU-IMF bailout) mechanism to be activated," he said. "Our aim is to continue to borrow from international markets without disruption, as we successfully did today."Euro-zone policy makers hope the aid package will mark the beginning of the end of the Greek financial crisis, and reassure investors that they don't need to fear similar problems in other members of the currency area.French Finance Minister Christine Lagarde said Tuesday the financial aid plan could serve as a mechanism for dealing with future such crises
IEA Says Rising Oil Price Could Impact Recovery
2010-04-13 09:38 LONDON -- The International Energy Agency Tuesday warned that rising oil prices, up recently near 18-month highs, could squeeze economic recovery in the U.S. and other industrialized nations.The Paris-based agency said there was plenty of oil around to sate increasing demand, but said rising prices could "stall [rich nations'] economic recovery or render it more "oil less' than we currently envisage."U.S. crude prices have eased off the $87 a barrel level hit last week but are still safely above the $70-80 range that persisted for many months and gave a semblance of stability to global energy markets.The IEA, which tracks oil industry trends on behalf of its mostly industrialized-nation members, revised up its 2010 global oil demand forecast by 30,000 barrels a day, a slight amount, due to rising consumption in China and Saudi Arabia.World oil demand this year is seen growing 1.7 million barrels a day to 86.6 million barrels a day, which would be the highest level on record, according to IEA data.