Reports

World stock markets news summary (US, UK, Europe, Asia) (September 01, 2010)

Contributed by Paddy Power Trader

By Paddy Power Trader

The housing market faces a double dip downturn this year. (Independent) With falling prices and a rising ride of negative equity hitting homeowners hard, the Independent reports. Latest data from the Bank of England shows mortgages lending is stuck at about half the level usually associated with a healthy market. Observers say the latest BOE lending data will increase pressure on the Bank to resume its economy to prevent a full-blown slump.

UK News

Bad news for first-time buyers: prices will fall. (Times) According to Anatole Kaletsky he believes that the normal level for house prices will remain higher than it has been in previous decades, because he expects interest rates to remain below 2% for at least the next five years and probably until the end of this decade. But higher does not mean rising – because housing is still expensive by historical standards, interest rates cannot be reduced much further and house prices are more likely to fall than to rise from this point. In future, deposits of 20% will be a minimum. The riskiest borrowers, including most first-time buyers, should expect to stump up deposits of 30 or even 40 % or to pay penal interest rates to reflect the risks of default.

UK’s need to borrow from markets eases. (FT) Britain will borrow less from the markets than expected in the remaining months of the year, giving a boost to the economy. The UK is expected to borrow a further GBP 45bln in the final four months of the year, against previous predictions of about GBP 55bln, according to analysts. Their lower forecasts were made as a government outlined plans for its debt auctions to the end of December. The fall is due to debt managers raising more than expected since April, the start of fiscal year.

Fears for house prices as mortgage lending hits new low. (Telegraph) Despite a small rise in the number of mortgages approved and an unexpected rise in consumer confidence, economists said it was not enough to stop continued housing market weakness, with knock-on effects for consumer spending. Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: “Yesterday’s figures provide further confirmation that the housing market is heading for a double dip, with net mortgage lending pretty much flat and the number of mortgage approvals remaining very low.”

Double-dip fears ‘overdone’ as fund managers plough back into UK shares. (Telegraph) A survey of 11 British institutions showed that the average exposure to equities jumped more than 3% from a month earlier, while allocations to bonds fell from 25.5% to 24.2%. Investors buy shares when they are confident about a company’s prospects, while bonds are a more defensive asset class.

US News

T-notes finished in positive territory following a mixed bag of US economic data. Treasuries managed to hang on to gains after the minutes release revealed several Fed officials saw the need to consider steps to add policy stimulus if outlook weakened significantly. At the pit close t-notes closed up 11 ticks at 125.20. At 0638 BST UST’s were trading 9 ticks lower at 125.11.

FOMC minutes of the 10th of August meeting revealed several members saw need to consider steps to add policy stimulus if outlook weakens ‘appreciably’. (RTRS) Minutes showed that Fed officials saw treasuries reinvestment as preferable, but MBS reinvestment might be desirable if market conditions change. Says some worried reinvesting securities could send a wrong signal about the intent to resume large-scale asset purchases. Also says officials saw more modest growth in the near term, but still anticipate a pickup in 2011. The minutes also revealed that Fed members generally believed outlook softer than expected and saw growing downside risks to growth and inflation. In addition members saw employment and inflation falling short of desirable levels for longer than had been anticipated and some judged risk of further near-term disinflation increased somewhat, but none saw appreciable deflation risk.

Fed’s Hoenig said that the US economy is continuing to show modest growth and will continue to do so until the end of the year. (RTRS)

US ABC Consumer Confidence (Aug 29) W/W -45 vs. Prev. -44 (RTRS)

European News

French PM Fillon says sees 2010 GDP at +1.5%, says employment market stabilising, however is still fragile. (Sources)

Spanish PM Zapatero said that sovereign bond auctions show the government is able to meet its financing needs as the country implements austerity measures to lower public debt. He reiterated that the government will meet its target of reducing its budget deficit to 6% of GDP in 2011. (RTRS/China Business News) He said he wants China to buy more Spanish bonds. He praised China’s increase in Spanish bonds this year and said it was a wise decision as the bonds are safe and have good rates. (China Business News)

Chinese Premier Wen Jiabao said China and western countries should work together to enhance the world’s confidence in EUR and European Union’s economy. (People’s Daily) Wen also called for joint measures to maintain stability of EU and international financial markets.

Asian News

JGBs fell overnight as dealers and investors sold to make room for a 10-year debt sale, and the yield curve resumed steepening as superlongs sagged on the underlying prospect of potential political change watering down the government’s stance on fiscal austerity. JGBs were trading at 142.67 (-0.32) at 0621 BST. (RTRS)

S&P said that Japanese economic recovery is losing steam because of an uncertain outlook for the global economy and slack domestic demand. (Sources) It added that Japan’s GDP will probably expand about 2.5% this year and cool to 1.6% in 2011. It further said that economy will grow 2% in the year ending March 31st and 1.5% in the following fiscal period.

China will continue to strictly implement existing policies to curb speculative buying in the property market, according to, Ye Yanfei, an official with the China Banking Regulatory Commission. (RTRS/China Business News) In other news, China should ease the upper limit for deposit rates, allowing increase of 10% to 15%, so as to make interest rates more market oriented, according to Chen Daofu, a researcher with the Development Research Centre under the State council.

Chinese Manufacturing PMI (Aug) M/M 51.7 vs. Exp. 51.5 (Prev. 51.2) (RTRS)

Forex

Australian GDP (Q2) Q/Q 1.2% vs. Exp. 0.9% (Prev. 0.5%, Rev. to 0.5%); Y/Y 3.3% vs. Exp. 2.8% (Prev. 2.7%, Rev. to 2.7%) (RTRS) Australia’s economy grew at the fastest pace in three years last quarter as households spent far more than expected while exports enjoyed an Asian-driven boom, reviving the risk of a further rise in interest rate.

Australian PM Gillard forged an alliance with the Greens Party to take her party closer to forming a government, but vowed not to allow the deal to change her plans for a tax on miners’ profits. (RTRS)

Ichiro Ozawa, who is challenging Japan’s PM Kan to lead the ruling party, said he would take every measure to stem the JPY’s rise. He added that steps to control the currency would include intervention. (Sources)

Trade on global currency markets has jumped by a fifth over the past three years to USD 4trl a day, roughly equal to the annual economic output of Germany, according to a three yearly survey by the BIS. (RTRS)

US Commerce Department says will not investigate if China currency practices are a countervailable subsidy. (RTRS)

Commodities

Oil rebounded half a percent to top USD 72 a barrel overnight after China’s manufacturing industry accelerated last month, easing investors’ concern about the faltering pace of global economic recovery. WTI crude futures were trading at USD 72.43, up USD 0.51, at 0621 BST. (RTRS)

Hurricane Earl churned towards the eastern US seaboard and looked to sidewipe the densely populated coast from North Carolina to New England, according to the US National Hurricane Centre. (RTRS)

Investors must be cautious in buying into Gold and alert to possible Gold price plunges caused by heavy selling by overseas central banks, according to Zou Pingzuo, a researcher with the PBOC. (RTRS)

Company News

BP – Co. will sell Malaysian Ethylene and Polyethylene interests to Petronas. Petronas will, at closing, pay USD 363mln in cash to co. Both parties anticipate completing the transaction by the end of 2010. (RTRS)

UK

BHP Billiton – China may launch an antimonopoly probe into co.’s USD 38.6bln bid for Canada’s Potash, citing a source familiar with the matter. (China Business News) In other news, co.’s minimum shareholder acceptance threshold of 50.1% of Potash holdings, leaves a 20% Potash stake available for acquisition. (Australian Financial Review) Elsewhere, steelmakers and co. agree to 7% cut in Oct.-Dec. coking coal prices. (Nikkei)

Companies going Ex-Dividend: ARM holdings (GBP 0.0116), Capita Group (GBP 0.0660), Legal & General Group (GBP 0.1330), Serco (GBP 0.0200), Tui Travel (GBP 0.0320)

Encore Oil – Premier Oil may be a prospective bidder for co. (FT)

US

Equities finished the session mixed after what can only be described as a volatile session. Despite moving into negative territory post the FOMC minutes release, equities staged a remarkable rebound in the closing hour to finish largely unchanged. However the same cannot be said for the NASDAQ 100 which underperformed throughout the session, weighed on by Research in Motion (-6.00%) on the back of report that loyalty for co.’s products is fading. Finally, at the closing bell DJIA closed up 0.05% at 10014.72, S&P 500 closed up 0.04% at 1049.32 and NASDAQ 100 closed down 0.26% at 1767.43.

US Banks – Expect an “explosion in bank acquisitions” after November, said Dick Bove, analyst at Rochdale Securities. “That’s when the capital rules are supposed to be set for the sector”, Bove said. “As a result, there’s a whole bunch of banks that are selling at significant discounts to their book value, perhaps 50% of them will be bought out within the next 12 months”, he said. (CNBC)

JPMorgan – There are no layoffs are planned in Asia after co.’s move to shut proprietary trading in US and UK, according to sources. (RTRS)

Morgan Stanley – Fed approves proposal by China Investment Corp to acquire up to 10% of voting shares of co. (Sources)

Genzyme – Co.’s Chief Executive Henri Termeer said he is willing to sell co. he built up over 25 years, but not for USD 69 per share. (RTRS)

Europe

Sanofi Aventis – Co. says continues to stand ready to engage in constructive talks with Genzyme and its board ‘at any time’. (RTRS)

Vivendi – Co.’s H1 adjusted net EUR 1.53bln vs. Exp. EUR 1.49bln. Co. says 2010 dividend to be EUR 1.40 per share, and 2010 adjusted to exceed 2009. (Sources)

Vinci – H1 EPS EUR 1.34 vs. Prev. EUR 1.42, H1 net EUR 703mln vs. Prev. EUR 690mln and H1 operating profit EUR 1.423bln vs. Exp. EUR 1.38bln. Co. declares interim dividend of EUR 0.52/share for 2010. (RTRS)

Bouygues – H1 net falls 3% to EUR 532mln, H1 sales fall 1% to EUR 14.7bln and H1 operating profit fell 10% at EUR 698mln. Co. also raises 2010 sales target to EUR 30.4bln. (RTRS)

Carrefour – Retailers from Europe and Southeast Asia are expected to submit bids for co. roughly USD 1bln-worth of Asian assets, with first-round offers due on Wednesday, sources said. (RTRS) Deutsche Bank/Commerzbank – Deutsche Bank and Commerzbank might have to raise billions of euros in capital as Germany’s two biggest banks confront key decisions about long-awaited transactions.  Deutsche Bank is considering a deal that will define the last years of Josef Ackermann’s tenure as chief executive: the takeover of Deutsche Postbank, which would give Deutsche Bank a coveted position as Germany’s biggest bank for retail customers. The problem for Commerzbank is not how to integrate a rival, but how to extricate a reluctant investor – the German government, which during the financial crisis has propped up the bank with more than EUR 18bln. Analysts believe Commerzbank is certain to have to ask investors for capital to repay the government. Deutsche Bank is also widely expected to raise capital for a Postbank deal. (Sources)

STOXX Ltd, have announced changes to their benchmark EUROSTOXX 50 and STOXX Europe 50 indices. The new share numbers and free float factors will be announced on Wednesday 15/09/10, with changes to be implemented at the close of business on Friday 17/09/2010, effective on Monday 20/09/10

EUROSTOXX 50: Added: BMW

Removed: AEGON

STOXX EUROPE 50: Added: Standard Chartered, Anheuser-Busch, Zurich Financial Services, Hennes Mauritz

Removed: RWE, Iberdrola, Arcelormittal, Assicurazioni Generali