Reports

World stock markets news summary (US, UK, Europe, Asia) (November 18, 2009)

Contributed by Paddy Power Trader

By Paddy Power Trader

Prime Minister Gordon Brown’s government today will put a crackdown on UK banker bonuses at the heart of his Labour Party’s election-year agenda. Queen Elizabeth II, formally opening Parliament, will outline the Treasury’s Financial Services Bill along with at least 10 other measures Brown aims to enact in the next year, according to a draft agenda released by the government. Brown’s UK programme is to include a plan to halve deficit by 2014. (BBG/FT)

UK

Inflation figures trigger QE reversal fears. (Independent)

Fears that the Bank of England may have to reverse its policy of quantitative easing – injecting cash directly into the economy – and raise rates sooner than expected were heightened yesterday with the publication of the latest inflation figures. CPI in October came in 1.5% Y/Y vs. Exp. 1.4% (Prev. 1.1%)

UK house prices: peak for affordability “now over” (Telegraph)

House affordability peaked in the second quarter of the year and is now deteriorating as property prices rise, according to research produced by Lombard Street Research (LSR).

US

T-notes were slightly higher on Tuesday following lower homebuilder confidence and inflation data, as well as a worse than anticipated reading for industrial production. Nevertheless, t-notes were trading lower in early trade but gained some upside momentum after real money bought on the earlier dip. Further to that, there was some touted rate lock buying following a spate of corporate deal pricings. At the pit close t-notes finished up 2 ticks at 119.24. At 0625 GMT UST’s were trading near unchanged down 1 tick to 119.23 ahead of today’s CPI data and a 2, 5 and 7yr note re-funding announcement tomorrow.

Treasury’s Geithner says US economy is growing again and financial markets much more stable, however the US must avoid removing support ‘prematurely.’ (BBG/RTRS)

Geithner says recovery to require ‘continued policy support’ and policies to shift to ‘catalyzing’ private demand. Says encouraged by signs but environment is tough and challenging.

Fed’s Pianalto says housing industry, broader economy not out of woods yet but some signs worst may be over. (BBG/RTRS)

Pianalto says resource utilisation levels remain low, bank lending restrained and credit terms tight. Pianalto also says the US recovery to be a gradual and bumpy one and she sees recent progress in housing market.

US NAHB Housing Market Index (Nov) M/M 17 vs. Exp. 19 (Prev. 18, Rev. 17). (BBG)

NAHB says survey conducted before extension of first-time buyers tax credit. Says ‘now that Congress has done its job by both extending the tax credit into next year and expanding eligibility for it among potential buyers, we are very hopeful that this will have the intended stimulative effect on sales activity going forward.’

Europe

ECB’s Trichet says expects gradual recovery in 2010 and improved market conditions imply not all liquidity needed to the same extent. (BBG/RTRS)

Trichet says he expects inflation to turn positive in the coming months and the current monetary policy stance is appropriate. Trichet added that he appreciates the US comments on a strong USD and says Bernanke’s comments were very important.

EU’s Juncker says EUR has not reached problematic level yet and FX volatility is unwelcome. (BBG)

Juncker says EUR shielded European economy in crisis and EUR shouldn’t burden main imbalance burden. He said he sees signs of hope for European economy and the period of economic free fall is over, however, warns against premature economic euphoria. Juncker said he agrees with Trichet on support for Bernanke USD comment.

The European economy will be feeble in the near term, but future prospects for business are solid, citing several chief executive officers of major continental companies. (FT)

Concern grows on Greek debt levels. (WSJ)

Shakeout in government bonds comes as ECB hints it will unwind extraordinary measures to support banking system.

Asia

JGB futures were little changed overnight as the market took a wait-and-see stance after several days of sharp gains and ahead of a debt sale the next day. JGBs were trading at 139.32 (+0.11) at 0615 GMT, Nikkei down 0.6%. (RTRS)

World Economics

Iran said it temporarily boosted gasoline production by about 30% on Tuesday to show the West it can cope with any sanctions targeting its fuel imports. (RTRS)

Forex

China’s decision on whether to resume appreciation of the CNY is complicated as it will be made by the State Council, Fan Gang, a member of the PBOC’s monetary policy committee said. (RTRS/Economic Times)

Fan Gang also said that Chinese GDP could grow between 8% and 9% next year, adding that China needs to be alert to the danger of asset bubbles, but headline inflation is unlikely to be a risk for some time.

RBA will opt for 25-point hike next month according to RBA watcher Terry McCrann. (courriermail.com.au)

Commodities

Oil rose towards USD 80 a barrel overnight, supported by an industry report that showed crude stocks in the US fell steeply last week, but limited by US economic data that painted a picture of a slow recovery. WTI crude futures were trading at USD 79.48, up USD 0.34, at 0605 GMT. (RTRS)

US API Crude Oil Inventories W/W (Nov 13) -4367K vs. Prev. +1217K

US API Gasoline Inventories W/W (Nov 13) -963K vs. Prev. +1403K

US API Distillate Inventory W/W (Nov 13) +507K vs. Prev. +640K

Gold hit another all-time high overnight (USD 1144.42) on worries about future inflation and economic uncertainties. (RTRS)

Nigeria’s oil minister Lukman says OPEC is very likely to maintain quotas and the cartel’s move depends on events between now and meeting. (BBG)

Lukman says current oil price is not bad and OPEC is unlikely to ‘tamper too much’ with oil market. Says Nigeria aims to restore lost production in next 6 to 12 months.

One in 12 of the world’s largest crude oil tankers is being used to store oil rather than move it from one place to another, according to research by a London shipbroker. (FT)

No sign of recovery in global oil refining according to a BP executive. (Sources)

According to BP’s head of policy and strategy Ian Smale, there remains a large overhang of refining capacity, particularly in Asia, and as long as that exists the market for refined products will remain highly competitive and margins thin.

Company News

UK

UK Banks – Many banks are facing possible multi-notch downgrades to their hybrid bonds following the change in the methodology used by Moody’s Investors Services. The ratings agency yesterday confirmed a new system would take account of a wider range of factors and said it would announce within two days which hybrids would be put on review for downgrade. (FT)

BG Group – The UK’s third-largest natural-gas producer and Petroleo Brasileiro agreed on the development of floating liquefied natural-gas facilities at the Santos Basin off Brazil. (BBG)

BHP Billiton/Rio Tinto – Europe’s steel industry has voiced strong opposition to a planned USD 116bln iron ore joint venture and has called on European regulators to oppose the deal. (RTRS) Furthermore, according to JP Morgan analyst Ian Henderson, Rio Tinto has less desire to complete its Australian iron ore joint venture with BHP five months after the deal was agreed on. (BBG)

Lloyds – Co. to take less than 50% stake in Admiral Taverns, to take stake as part of debt-for-equity swap. (BBG)

Antofagasta – Co.’s CEO says sees Q3 and Q4 earnings better than company originally forecast earlier this year. (RTRS)

Cadbury – Chocolate maker Hershey and Ferrero are considering a joint bid for co. that could help the British confectioner fend off a hostile takeover by Kraft Foods. (RTRS) However Ferrero is understood to be divided about a possible bid for co. or a plan to tie-up with UK confectioner. The head of family which own Ferrero is keen to keep business independent while his sons may be more eager to get involved with co. and are talking to investment bankers about their options. (Times)

Cable & Wireless – Co.’s planned de-merger next year could lead to the sale of one or both units. (FT)

Land Securities – H1 adjusted NAV GBP 5.65 per share vs. Exp. GBP 5.61. H1 net income GBP 11.9mln vs. Prev. GBP 1.7bln loss. Co. cuts H1 dividend 53% to GBP 0.14 vs. GBP 0.298 a year earlier. (BBG)

Experian – H1 group revenue USD 1.9bln vs. Exp. USD 1.9bln. Co. sees modest organic revenue growth in H2 and says it is on track to grow profits at constant FX. (BBG)

Wolseley – Co. trading performance remain in line with management’s expectations. (RTRS)

BSkyB – Co. CEO says “well-positioned” to grow earnings, cash flow. (BBG)

Companies going Ex-dividend: Barclays (GBP 0.0100), Unilever (GBP 0.2422/ EUR 0.26950), Cable & Wireless (GBP 0.0316), HSBC (USD 0.0800), Sainsbury (GBP 0.0400), Vodafone (GBP 0.0266)

US

Equities spent much of the session in negative territory as retailers Home Depot (-2.4%) and Target (-3%) painted a gloomy outlook, but nevertheless stocks moved higher in the latter stages as the USD index pared gains. Basic materials were the outperforming sector closely followed by telecoms. Elsewhere, Exxon Mobil (+0.81%) was among the leading movers and led the DJIA higher following news that Buffett’s Berkshire increased their share holding in the co. At the closing bell, the S&P 500 closed +0.09% at 1110.32, the DJIA closed +0.29% at 10437.42 and the NASDAQ 100 closed +0.26% at 1812.21.

Kraft/Hershey – Hershey in talks with Ferrero on joint Cadbury bid. Talks have lasted several weeks and have yet to produce an offer. (WSJ)

Intel – Co.’s CFO says company is on track to meet its Q4 outlook. (RTRS) In other news, Co. CEO said demand for personal computers may rise by 12-18% next year and may lead to a shortage of components. (BBG)

Research In Motion – Co. CEO says confident of strategy despite mounting competition. (RTRS)

Goldman Sachs – Co. and Buffett start USD 500mln program to aid small US businesses. (BBG)

Home Depot – Co.’s CFO Tome says he ’suspects first half of 2010 would be soft’ in terms of demand, sees improvement in second half. Says economic and other indicators suggest a rather anaemic consumer recover, especially in 2010. He sees some recovery in professional segment sales in latter part of 2010. (RTRS)

EMC – Co. may be an eventual acquisition of Cisco according to sources (theflyonthewall.com)

OTHER US COMPANIES

GM – Co. could cut up to 10,000 jobs as part of its European restructuring plan and hopes to finalise the details within three weeks, a top executive said. (RTRS)

Europe

GERMANY

Siemens – Co. is in discussions to form a joint venture for the manufacturing of wind power turbine in China. (South China Morning Post)

Commerzbank – Co. wants to overtake Deutsche Bank as the leading manager of private wealth in Germany. (BBG)

Bayer – Abu Dhabi’s IPIC is in takeover talks with five companies including co.’s MaterialSciences division, IPIC managing director was quoted as saying. (RTRS) In other news, The US FDA has found a higher risk of skin disease associated with the use of co.’s contrast agents used with magnetic resonance imaging scans. (BBG)

K+S – Co. rumoured to be a target for the US investor Warren Buffett. (Die Welt)

OTHER GERMAN COMPANIES

TUI AG – Hapag-Lloyd loss in H2 could be below EUR 600mln. (Platow Brief)

FRANCE

GDF Suez – EDF will auction today 500 MW of electricity to alternative suppliers, Le Figaro reports. Adds that Co., the main alternative supplier, will not be part of the auction as it believes prices are not attractive enough. (Le Figaro)

Vivendi – According to sources, co. is seeking an increased price and deal protections in talks with GE over NBC Universal. (WSJ)

EDF – Co. may seek to control Areva’s nuclear reactor unit, formerly known as Framatome. (Les Echos)

PPR – The head of co. said that the French retail and luxury group has no plans for a special dividend and that proceeds of the listing of its Africa-focused CFAO distribution unit will help cut the group’s debt. (RTRS) Also in the news, co. is not interested in acquiring 100% of Puma. (Led Echos)

Dexia – Co. denied any plans to sell the Turkish bank Denizbank, quoting CEO. (Dunya)

Companies paying Dividend: Total (EUR 1.1400)

PAN-EUROPEAN

The European economy will be feeble in the near term, but future prospects for business are solid, citing several chief executive officers of major continental companies. (FT)

Banco Santander – Co. said it would merge its wealth management and private banking businesses in a reorganisation of the parts of units hardest hit by the financial crisis. (RTRS)

Repsol – According to sources, majority of co.’s board members will back a proposal for a dividend cut in a meeting scheduled Nov 25. (El Economista)

OTHER PAN-EUROPEAN COMPANIES

Ahold – Q3 net income EUR 238mln vs. Exp. EUR 179mln. Co. to cut costs by EUR 350mln through 2012 and to pursue growth opportunities in existing, new markets. (BBG)

Allied Irish Banks – Numbers much in-line with expectations. (RTRS)

SWISS

Richemont – IPO not on the agenda for Net-A-Porter, the online fashion retailer 28% owned by co. said. (BBG)