Reports

World stock markets news summary (US, UK, Europe, Asia) (August 30, 2010)

Contributed by Paddy Power Trader

By Paddy Power Trader

President Obama said that the US economy was expanding, but not quickly enough, and there was no magic bullet that will fix its problems. He added that the batch of grim economic data over the past few weeks was something his administration had anticipated. (RTRS)

US News

T-notes finished the session sharply lower after a combination of smaller than expected revision to the GDP data, as well as reluctance by Bernanke to announce another round of Treasury purchases weighed on prices. At the pit close T-notes finished down 1 point at 125.06. At 0637BST UST’s were trading up 6+ ticks to 125.12+ rising after the market was somewhat disappointed by the latest easing from the BoJ which sent the Nikkei off its initial daily high.

The Obama administration has not decided whether it should resurrect a popular tax credit for first time homebuyers, according to US Housing and Urban Development Secretary Donovan. (RTRS)

US economists are sharply divided on just how the US can avoid a double-dip recession and keep its dwindling recovery afloat in the coming year, according to a survey released today by the National Association of Business Economists. (Sources) Weighing in on Europe, more than 80% of US economists predicted that at least one of the continent’s cash-strapped governments will either require a bailout or restructure their debt in the next 12 months. Of the 242 economists surveyed, only 39% believed President Obama’s current fiscal policy is “about right”, while 37% argued Obama should cut back on public spending and 27% said he should inject more stimulus into the economy.

European News

ECB’s Trichet said governments risk a “lost decade” of weak economic growth if they delay reversing the surge in public debt triggered by the financial crisis. (Sources)

ECB to extend emergency bank aid. (FT) The ECB this week is expected this week to extend emergency support for Eurozone banks until early next year as it gauges how well the 16-country region might withstand a big US or global slowdown. Trichet is expected on Thursday to announce that at least until the start of 2011, banks’ demands for weekly, monthly and probably three-month liquidity will continue to be met in full.

European Commission President Barroso has advised Italy to work harder to control its deficit and public debt even if the country is in a better position than its European peers in banking, unemployment and private debt. (La Repubblica)

Asian News

JGBs trimmed the bulk of losses made earlier on Monday, with the JPY bouncing back in disappointment as markets questioned whether the latest easing by the BOJ would help weaken the currency. JGBs were trading at 142.39 (-0.16) at 0616 BST. (RTRS)

The Bank of Japan expanded a bank loan programme, stepping up its monetary stimulus for the first time since March after the economy’s recovery weakened and the government pressured the central bank to act. (Sources) The BOJ will boost the amount of funds in the facility by JPY 10trl to a total of JPY 30trl, the bank said in a statement after an emergency meeting in Tokyo. Also the duration of the lending programme has been increased from 3 months to 6 months. The BOJ also kept the key overnight loan rate at 0.10%, and the rate decision was unanimous. The BOJ said that economy is showing further signs of moderate recovery, however uncertainty about economy, particularly US, is growing. It added that forex and stock markets have been unstable recently, emphasising the need to pay more attention to the downside risk. BOJ said that beating deflation is a critical challenge, and reiterated that the economy will stay on recovery path.

Poll boosts Japan’s embattled leader Kan. (WSJ) Japanese Prime Minister Kan, received a boost in his bid to hold on to office, with a public opinion poll showing an overwhelming majority of voters favour him over challenger Ozawa.

China’s Q4 economic growth could be at 8%. (China Business News) According to Ba Shusong, deputy head of the financial institute of the state council’s Development Research Centre. Meanwhile, Xia Bin, a PBOC adviser said that the government won’t change its economic policies as growth slows. He also called for the introduction of a floating interest rate for bank deposits. (Shanghai Securities News). And In order to support the development of small and medium sized businesses in China, companies may receive large tax cuts as unidentified official from the State Administration of Taxation said. (China Times)

Forex

The JPY pared early losses after the BoJ’s latest easing plan, which was largely expected, prompted market participants to fret over the possibility that the move may not be enough to stem the domestic currency’s gains against the USD which remains near 15yr highs.(RANsquawk) At 0621BST USD/JPY was trading 85.38 (+9) after initially touching a session high at 85.92 pre BoJ announcement.

Asian currencies rose, led by the biggest gain in South Korea’s Won in two weeks (KWS spot trading 1190.20 (-6.61) at 0610 BST), as the Federal Reserve pledged to shore up the economy and Japan extended a bank-loan programme to help stimulate growth. (Sources)

IMF’s Lipsky said there is no doubt the USD will stay as the reserve currency. (Sources)

Further state support may be required to shore up the weak recovery in the global economy, the Bank of England’s deputy governor Charlie Bean warned this weekend citing incomplete deleveraging and a fragile recovery. (Sunday Times) In other news, The British Chambers of Commerce (BCC) will this week increase its growth forecast for this year from 1.3% to 1.7%, and next year’s figure from 2% to 2.2%. Also related to the UK, hopes of tax cuts for the middle classes before the next election were dashed last night when a senior Treasury minister ruled out any reduction for at least five years.

SNB’s Vice Chairman Jordan said the central bank is following the CHF very closely and that monetary policy is complex at the moment. He added that the SNB doesn’t have an exchange rate target, adding that there is a small risk of the return of a deflation scenario in the short term. Jordan also said that inflation could exceed 2% in the longer term if we don’t correct our expansive monetary policy. (Sources)

Commodities

Oil stayed near an eight-day high above USD 75 a barrel overnight as sustained momentum from Federal Reserve Chairman Bernanke’s speech last week boosted Asian stock markets. WTI crude futures were trading at USD 75.14, down USD 0.03, at 0635 BST. (RTRS)

Hurricane Earl strengthened to a Category 2 storm on a track towards island in the eastern Caribbean on Sunday, while Hurricane Danielle weakened to a Category 1 storm, according to the US National Hurricane Centre.

Company News

UK Banks – The companies, which include members of the FTSE100, are preparing to argue publicly that dividing the banks’ retail and investment banking arms will make everyday business activities more expensive and less efficient. The campaign will be the first large-scale intervention by Britain’s corporations – the banks’ biggest customers – in the highly-charged debate on financial reform. (Telegraph)

UK

UK (FTSE closed for Bank Holiday)

BP – Co. is set to come under renewed fire from US politicians this week as it reveals it has spent more than USD 1mln (GBP 644,000) a week on television and radio advertising since the April 20 oil explosion in the Gulf of Mexico. (Telegraph)

Vodafone – Co. is preparing to raise more than GBP 4bln by selling its shares in China Mobile, the first in a string of planned disposals by the mobile giant. Investors expect the deal to be rubber stamped next month before an update on the co.’s strategy in November. (Sunday Times)

RBS – Co. is considering a cut-price sale of Direct Line insurance business after a flood of interest from potential bidders, including the billionaire investor Warren Buffett. The bank has been ordered to sell Direct Line by the European Commission as punishment for receiving state aid during the credit crunch. (Sunday Times) In other news, the Russian anti-trust regulator, FAS, has rejected an application from the co. to increase its stake to a controlling one in Russia-based RBS. (Kommersant)

Anglo American – Co. may be offered about USD 1bln for its Scaw Metals steel assets, excluding the main Scaw plant in South Africa which is not for sale, according to an unidentified banker. (Independent)

BHP Billiton – Hedge funds are understood to set ranks with other investors in Potash Corp, by accepting an offer from Co. At USD 150 per share. (Sunday Express)

Rio Tinto – Co. has approved USD 1.6bln for the Hope Downs 4 mine, which will have annual capacity of 15 mln tonnes of high quality iron ore, with the first production seen in 2013. (RTRS)

Tesco – Co. is slashing about 2,000 management roles at its Express convenience stores as part of a restructuring plan. (The Mail on Sunday)

Centrica – Co. and some unidentified companies have approached Connaught to buy its GasForce unit, however Connaught chairman has rebuffed the interest. (FT)

Tullow Oil – Co.’s row with the government of Uganda escalated at the weekend when officials ordered the company to stop work on the second of the company’s three exploration blocks in the country. (Sunday Times)

Diageo – Co. is to reveal it is minded to support a ban on selling alcohol below the cost of duty and VAT, although it denies any link between price and alcohol-related harm. (Telegraph)

Vedanta – Co. is stripped of international safety awards amid concerns that it won without declaring an Indian industrial disaster that cost 40 lives. (Observer) Encore Oil – The company’s latest big discovery off the Shetland Islands could lead to a takeover approach. (Sunday Times)

Heritage Oil – Co. is targeting Iraq after the Uganda pull-out according to co.’s finance director. (Telegraph)

US

Broad based rally was witnessed on the Wall Street post better than expected GDP data and also on the fact that Bernanke refused to signal further QE to prevent the economic recovery from collapsing. As such, equities were on a steady uptick throughout the session, led by basic materials and oil & gas sectors. Finally, at the closing bell DJIA closed up 1.65% at 10150.95, S&P 500 closed up 1.66% at 1064.59 and NASDAQ 100 closed up 1.28% at 1791.64

US Airliners – American regulators have cleared the way for a merger of United and Continental airlines, a deal that will create the world’s largest carrier. (Sunday Times)

Microsoft – Co. may spend USD 500mln or more promoting and subsidizing its new smartphone – the Windows Phone 7 – during the upcoming holiday season. (TechCrunch)

Intel – Co. and Infineon have entered into a definite agreement to transfer Infineon’s Wireless Solution business to co. in a cash transaction valued at approximately USD 1.4bln. (Sources)

Google – Co. is in talks with Hollywood movie studios to start a pay-per-view video service on its YouTube website by the end of the year, according to sources. (FT)

Disney – Co. says Toy Story 3 to cross USD 1bln today (Friday). (Sources)

Chevron – Co. agreed with Turkey’s state-owned oil company Turkiye Petrolleri A0 to invest USD 500mln to explore in two wells in the country’s Black Sea waters, according to sources. (Sabah)

AIG – Japanese and Qatari firms may consider a bid for co.’s Taiwan unit if a current bid for it does not go through, according to Taiwan’s Commercial Times newspaper. The paper cited a former Taiwanese diplomat as saying he had set up a company to make a bid and had talked to Japan-based Firix Partners and a Qatari fund about funding for a bid worth some USD 2.5bln. (Taiwan’s Commercial Times)

Europe

Sanofi-Aventis – Co. publicly disclosed its USD18.5bln bid for Genzyme on Sunday, upping the ante in its effort to take over the company. (NY Times) Siemens – Nokia and co. have confirmed talks with private equity firms over a possible investment into Nokia Siemens Networks. Company executives told that both partners were committed to completing a turnaround before considering their options after their joint venture ends in 2013. (FT)

BASF – Wintershall, the oil arm of the co. is to reveal that the Cladhan field, northwest of the Shetland Islands, holds between 100mln and 200mln barrels, according to industry sources. The find is in collaboration with Encore Oil. (Sunday Times)

Infineon – Intel and co. have entered into a definite agreement to transfer co.’s Wireless Solution business to Intel in a cash transaction valued at approximately USD 1.4bln. (Sources)

Daimler – Sales of co.’s Smart two-seater car are plummeting because of a lack of different models and sinking US demand. (Der Spiegel) Nokia – Co. and Siemens have confirmed talks with private equity firms over a possible investment into Nokia Siemens Networks. Company executives told that both partners were committed to completing a turnaround before considering their options after their joint venture ends in 2013. (FT)

Santander – Co. and Apax Partners have held discussions regarding a potential joint offer for Allied Irish Banks’ stake in the Polish banking group BZ WBK. (Irish Times) In other news, co. said it has agreed to buy USD 4.3bln of car loans from HSBC for USD 4bln (Sources)

Repsol – Co. and Gas Natural are understood to be prospecting for gas in waters off the Costa del Sol. (Sources)  

Unilever – The EU has extended the review period for the Co. purchase of Sara Lee’s personal care business by 3 weeks. (Sources) Novartis – Elinogrel, an experimental blood thinner being developed by co. and Portola Pharmaceuticals, is to move into final-stage clinical testing following promising Phase II results. (RTRS)

Roche – Co. will make a decision on job cuts this week, according to unidentified people familiar with the situation. The layoffs will be in all areas of the pharmaceutical division and will not be focus on one country. (Sonntag) However, co. says no decision on job cuts this week has been made.