Reports

World stock markets news summary (US, UK, Europe, Asia) (February 08, 2010)

Contributed by Paddy Power Trader

By Paddy Power Trader

Pimco’s CEO El-Erian said that UK’s Sovereign is most at risk to lose AAA rating. (Sources/BBC)

UK News

Simon Johnson, a former IMF chief economist, said the UK should be added to the list of countries whose government debt ratings are facing severe pressure.

Spectre of hung parliament haunts bond market. (FT/Independent) David Cameron’s opinion poll lead over Labour again fell below 10 points yesterday, heightening fears in the government bond market that the coming election could produce a hung parliament. Also, Independent’s ComRes survey showed the Conservative party’s lead cut to single figures.

Bank of England panel condemns draft EU hedge fund legislation. (Times) Draft European Union legislation designed to regulate the hedge fund industry would trigger “systemic failure and widespread market disruption” if it became law.

Lenders warn of mortgage shortages. (FT FrontPage) Britain’s banks and building societies have warned that they will have to slash mortgage lending and raise rates on home loans if the government insists on prompt and full repayment of the GBP 300bln they have received in state support since 2008.

Weak 2010 forecast for construction industry. (Independent) Construction Trade Survey suggested a bleak environment for 2010 with the industry facing rising material costs and increasing fuel and energy prices, coupled with decreasing orders and enquiries.

Employers set to keep squeezing pay. (Independent) The Labour Research Department (LRD), an independent consultancy that conducts research on behalf of trades unions, said that many workers would face a pay freeze for the second year running over the next 12 months, despite Britain’s economy moving into recovery. and signs that inflation is now beginning to return.

BOE to cut UK growth forecast. (Sunday Express) The BOE is set to cut its growth forecasts for the UK economy in 2010 and raise its inflation expectations in the wake of recent economic data. The forecasts will be published in this week’s quarterly inflation report for February, which will be closely scanned for further insights into the likely future course of monetary policy.

UK Businesses are nervous about the economy as a survey of more than 400 firms by the British Chambers of Commerce (BCC) shows that three-quarters fear a “double-dip” recession (Sunday Times)

US News

T-notes were on an upward trend on Friday as investors sought the relative safety of treasuries following a mixed NFP report and continued fears over the fiscal health of Portugal and Greece. At the pit close t-notes finished up 17+ ticks at 118.25+. At 0558 GMT UST’s were trading down 9 ticks to 118.18+ ahead of this weeks USD 81bln of supply.

Fed to outline plan for future tightening. (WSJ) Fed’s Bernanke is to discuss “unwinding” of liquidity plans before House Financial Committee on Feb. 10. The centrepiece of the strategy, described by Fed officials in interviews and recent speeches, will be a new tool Congress gave the central bank in October 2008, the interest rate the Fed pays banks on money they leave on reserve at the central bank. Known as “interest on excess reserves”, this rate is now 0.25%.

Fed’s Hoenig says job growth to be ‘modest but consistently improving’. (Sources/RTRS) Hoenig says expects economic recovery to be ‘modest’, says Fed no longer needs ‘extended period’ language and needs to broaden options for policy outlook. Says doesn’t see mortgage rates shooting up as Fed support ends and also need to think about how to implement Volcker Rule.

Greenspan says unemployment not likely to fall soon (BBG/AP) Former Fed Chairman Alan Greenspan said it is “very difficult” to see U.S. unemployment falling soon and that an economic recovery is “going to be a slow, trudging thing.” He also expressed concern about falling stock prices. However, US president Barack Obama said on Sunday the US economy has turned the corner and resumed growth. In other news, U.S. President Barack Obama said on Sunday the U.S. economy has turned the corner and resumed growth.

House Representative Barney Frank says financial reform debate impasse declared by Dodd will speed Senate towards vote and will force Republicans’ hand. (RTRS) Frank expects House-Senate conference to agree on final financial reform bill before summer.

US Consumer Credit (Dec) M/M (USD) -1.7bln vs. Exp. -10.0bln (Prev. -17.5bln, Rev. to -21.8bln)

European News

German Chancellor Merkel pushes Weber for ECB helm in 2011. (WirtschaftsWoche)

Pimco’s El-Erian says on Monday he would prefer to invest in German government bonds over US Treasuries in the current environment. (RTRS)

Forex

New Zealand’s central bank governor said the worst-than-expected unemployment data last week has not altered the bank’s view on when it might start raising interest rates. (RTRS)

Major economies with inflexible currencies must consider strengthening them if the global economy is to be weaned off its dependence on US spending and Asian savings, according to a G7 report (BBG/RTRS)

Spain’s Zapatero says all EU countries support all countries in Eurozone, says ‘we will defend the EUR’.

Commodities

US crude prices reversed some of last week’s losses and rose towards USD 72 a barrel overnight, supported by a technical rebound as a powerful storm across the US mid-Atlantic boosted hopes of increased fuel demand. WTI crude futures were trading at USD 71.35, up USD 0.16, at 0617 GMT. (RTRS)

Nigerian militants claim attack on Shell pipeline (AP) The Joint Revolutionary Council says on Sunday it attacked a pipeline operated by Shell’s Nigerian subsidiary in Rivers state.

Company News

RBS is about to announce losses of more than GBP 7bln for 2009 but will still hand out enormous bonuses to its profitable investment bankers. Huge losses have been suffered on loans to businesses, on property deals and on complex derivatives. Once exceptional items are taken into account, these should be cut to GBP 5bln. (Sunday Times) In other news, co. and its private banking unit Coutts plan to expand in Qatar. (Gulf Times)

UK

UK Businesses are nervous about the economy as a survey of more than 400 firms by the British Chambers of Commerce (BCC) shows that three-quarters fear a “double-dip” recession (Sunday Times)

Lenders warn of mortgage shortages. (FT FrontPage)

Britain’s banks and building societies have warned that they will have to slash mortgage lending and raise rates on home loans if the government insists on prompt and full repayment of the GBP 300bln they have received in state support since 2008.

BP – Co. said it planned to shut a unit at its Texas City, Texas, oil refinery yesterday to repair a steam leak on a furnace. In other news, co. put a resolution protesting the investment risks of the co.’s Canadian-oil sands project on the agenda for the shareholder meeting April 15. (BBG)

Rio Tinto – Co. is expected to report a drastic profits slump this week due to a lull in the price of key metals in the first half of 2009. Analysts expect underlying earnings of USD 6bln in 2009 against USD 10.3bln in 2008. Profits were dragged down by the low price of aluminium and copper among others. However, the co. is expected to reveal it has halved its debt pile. Co. may reinstate its dividend after halving its debt. (Sunday Express/Sunday Telegraph)

Xstrata – Co. 2009 net profit USD 2.773bln vs. USD 4.698bln and 2009 sales USD 23.53bln vs. USD 27.95bln, dividend USD 0.08. Co. says mid-term commodity outlook “very promising”. Co. said production at its Talmoor coal mine in New South Wales will be halted from today until Feb 14 because of a strike by Construction, Forestry, Mining and Energy Union members. (BBG)

Heritage Oil/ Tullow – Deal termination should expedite Heritage/Tullow Jan 26 accord. Heritage/Tullow working with Uganda to get approval and transaction to close within Q1. (BBG)

Tullow Oil – Co. will this week sell half its USD 5bln stake in one of the biggest oil finds in Africa to China National Offshore Oil Corporation (CNOOC). (Sunday Times)

Heritage Oil – Eni pulls out of contract to acquire Uganda assets [Il Sole 24 Ore] Co. confirmed that Eni had terminated the sale and purchase agreement it entered into with co. in December. The move follows Tullow Oil’s exercise of a pre-emption right over the sale. (BBG)

British Airways – Co. has given its clearest warning yet that it may have to close its final-salary pension schemes to existing members. The news comes as co. is fighting with a GBP 3.7bln pensions shortfall that could bring the airline down. (Sunday Express) In other news, co. rules out speeding up its merger with Iberia, but the company still thinks an agreement will be reached by the end of the year. (Expansion)

Tesco – Co. is facing a double blow from proposals by the Conservatives if they are elected to government. A leaked document shows that the party will support a competition test for planning proposals which will make it easier for Tesco rivals to open where it is already dominate and harder for Tesco to expand. Tories are also seeking to reintroduce a needs test to force developers to prove there is demand for any new project. (Sunday Times)

International Power – According to person familiar with the matter, GDF Suez may revise an offer for co. after talks collapsed last month. (Independent)

Pearson – Co. may get as many as 12 bids for its 61% stake in market data service Interactive Data Corporation. (Sunday Telegraph)

US

Equities finished mixed as risk appetite was reduced following the mixed U.S. employment report and also on continued concerns surrounding the fiscal states of certain Eurozone nations. The NASDAQ 100 outperformed its peers supported by decent gains from the likes of Apple (+1.78%) and Intel (+2.37%). Heading into the close, stocks pared back the earlier losses and succeeded with a finish in positive territory. At the closing bell; the S&P 500 closed up 0.29% at 1066.19, the DJIA closed up 0.10% at 10012.23 and the NASDAQ 100 closed up 0.76% at 1746.12.

Goldman Sachs / AIG – U.S. regulators are investigating whether the mortgage insurance market was improperly distressed in 2008 because of payment demands that Goldman Sachs and other banks made on AIG. (New York Times)

Citigroup – The epic legal battle over beleaguered music company EMI is set to intensify this week as co. counters the arguments of private equity tycoon Guy Hands. Mr Hands, who bought EMI for GBP 4.2bln in 2007 through his Terra Firma vehicle, is suing co. for damages over the deal. (Independent) In other news, co. discusses USD 3bln car-loan portfolio sale with hedge funds and private-equity houses. (FT)

Boeing – Co.’s giant 747-8 freighter should make its first flight Monday after performing well on taxi tests and reaching a top speed of about 103.5 mph, the company said. (AP)

Motorola – Co. may raise as much as 40% over the next year if the co. spins off its mobile-phone unit and revenue from the radio and data-communications equipment division increases. (Barron’s)

Europe

Deutsche Bank – Co. plans to expand its equity capital markets and merger advisory presence in Asia to help boost regional revenue to more than EUR 4bln by 2011. (FT)

Deutsche Telekom – Decision on T-Mobile USA not expected until end of the year. (Frankfurter Allgemeine Zeitung)

SAP – Co. CEO has resigned after his contract was not renewed and two new co-CEOs have been named, the company said Sunday. (AP)

Bayer – Co. CEO said acquisitions are part of the co.’s goal for expanding its business. (Frankfurter Allgemeine Sonntagszeitung)

Allianz – Co. to significantly cut back Asia business. (Handelsblatt)

BMW – Co. confirms it could pull out of a power-train partnership with Motors Liquidation Company. (Sueddeutsche Zeitung)

Deutsche Post – Co. to introduce emails that are legally equivalent to written documents for about EUR 0.20 apiece. (WirtschaftsWoche)

GDF Suez – The French power giant, is considering a revamped bid for International Power (IP), a GBP 5bln independent power generator. (Independent)

AXA – Co. is looking for acquisitions in Latin America to expand distribution in the region. (El Mundo)

EADS – Co. is considering sharing some of the costs of the A400M military transport plane with suppliers. (FT Deutschland)

Air France – Co. January 2010 passenger traffic falls 1.6%, capacity down 3.4% and load factor rose 1.4pts to 78%. (BBG)

European Banks – Finance ministers from the world’s most advanced nations have begun to coalesce around the idea of imposing levies on banks to help insure the global economy against future financial crises, officials said on Saturday at the end of a Group of Seven meeting in northern Canada. (FT)

Santander – Co. is considering listing its UK business on the LSE, an offering that may value the unit at more than GBP 15bln. (Sunday Times)