Reports

World stock markets news summary (US, UK, Europe, Asia) (September 06, 2010)

Contributed by Paddy Power Trader

By Paddy Power Trader

UK factory production grew at a record pace in the third quarter on surging export demand, the Engineering Employers Federation said. (Sources) The number of manufacturers saying sales rose in the three months through September exceeded those reporting declines by 33%, compared with 30% in the second quarter. That’s the highest since the report began in 1995. A gauge of exports also rose to a record.

UK News

Tories head off rebellion over AV. (FT) A threatened Conservative rebellion on voting reform that could have raised serious tensions within the coalition seems to have been averted after intense pressure by the Tory whips. David Cameron told whips to ensure that coalition did not suffer its first defeat, in the Commons tonight, when Nick Clegg, deputy Prime Minister, presents a bill allowing a referendum next May on adopting the alternative vote to elect MPs.

Job vacancy decline knocks confidence. (Telegraph) Industries including engineering, manufacturing, financial services, training and IT all suffered a drop in the number of jobs available in August compared with July, according to the Reed Jobs Index.

On Thursday, the BoE’s MPC is expected to maintain interest rates at 0.5% for the 19th successive month. (Sunday Times) Five members if the shadow MPC voted to keep interest rates on hold, highlighting the weak credit conditions, de-leveraging of company balance sheets, and the fiscal tightening announced in the June budget. “There was also fear that the world recovery was running out of momentum, especially in America where a double dip recession seemed increasingly possible,” the shadow committee said. However, four members of the panel – twice as many as last month – voted to raise rates to 1%, citing concerns that inflation remained more “stubborn” than the BoE had expected. Two of the members who opted for a rate rise wanted to extend the BoE’s GBP 200bln QE programme.

Warning of ’sharp interest rate rise’ in 2012. (Telegraph) The Bank of England is this week set to hold interest rates at 0.5%, with a growing expectation that when rates do start to rise they will do so quickly.

New homes data spell declining market. (FT FrontPage) The nascent recovery in the house building market appears to have ground to a halt as a leading industry survey, which measures the number of people reserving new homes to buy, dropped to its lowest level on record. The survey, conducted weekly by the Home Builders Federation, is for internal use only and is regarded by the industry as the best guide to housing demand. But its latest report, seen by the Financial Times, shows that deposits on new properties have dropped below those recorded in 2008, the nadir of the market. The HBF declined to comment.

US News

No defence left against double-dip recession, says Nouriel Roubini. (Telegraph) “The US has run out of bullets,” said Nouriel Roubini, professor at New York University, and one of a caste of luminaries with grim forecasts at the annual Ambrosetti conference on Lake Como. “More quantitative easing by the Federal Reserve is not going to make any difference. Treasury yields are already down to 2.5% yet credit spreads are widening again. Monetary policy can boost liquidity but it can’t deal with solvency problems,” he told Europe’s policy elite.

Former Fed ’s Kohn said the Fed should do more if the recovery slows (NY Times) The former Fed Governor who retired on September 1st, said that the Fed should take further steps to support the economy such as buying government bonds if the recovery continues to slow. He added that real interest rates could start to rise if inflation expectations drop, and that the current economic rebound is likely to be slower than previous ones.

European News

ECB’s Trichet says Greece exit from Euro “worst possible option” and says possibility of a double-dip recession has fallen in the past few weeks. (CNBC/Sources/Il Sore 24 Ore) ECB’s Trichet says EU countries need to take care of competitiveness. He added that governments have no alternative to sound fiscal and economic policies. Elsewhere, ECB’s Bini-Smaghi says “unacceptable” betting on country defaults and that naked CDS should be tackled. Also says that Germany setting the example on public finances and that excessive public debt “risks choking economies and jeopardise democracies”.

Italian finance minister says country’s economy and public finances “aren’t facing an emergency” and that no new budget measures are needed this year. (Repubblica) In other European news of note, Spain’s opposition People’s Party widened its lead over the ruling Socialists to 8.9% from 7.7% in August. (El Pais)

Do not fall for talk of European solvency (FT – Wolfgang Munchau) Manchau writes that even if you make a moderately optimistic assessment about policy in Greece, solvency is far from assured. He adds that although its possible Greece will get through the crisis and repay all its debt it is far more likely, looking at the bond markets, that peripheral Europe will only end up repaying parts of its debt.

Euro-zone borrowing set to rise (FT) Eurozone governments will try to raise EUR80bln in September compared with new bond issues of EUR 43bln in August. Spain is expected to borrow EUR 7bln in September compared with EUR 3.5bln in August, according to ING Financial Markets.

One of Belgium’s top politicians warned that the country’s citizens to “get ready for the break-up of Belgium”, as King Albert 2 seeks to re-launch coalition talks. That’s after leading francophone Socialist Onkelinx, considered a potential successor to party chief Elio Di Rupo, gave up on negations with separatist Flemish leaders. (Sources)

Asian News

JGBs fell overnight, with the futures dropping to an eight-week low, after better-than-expected US jobs data further eased concerns over the health of the global economy and hurt demand for safe haven debt. JGBs were trading at 141.23 (-0.67) at 0636 BST. (RTRS)

Nearly two-thirds of Japanese voters prefer Japanese PM Kan to powerbroker Ozawa as premier, according to media polls ahead of a September 14th ruling party leadership race that appears too close to call. (RTRS)

Japan’s new economic growth panel, headed by PM Kan, may meet for the first time on September 9th to discuss corp tax cuts and other growth strategies it compiled in June. (Nikkei)

China may record a smaller trade surplus of USD 150bln in 2010 vs. USD 196bln in 2009, as imports will likely rise in the next few months while exports growth slows. (China Securities Journal/Xinhua) Also, foreign direct investment into China is likely to pass USD 100bln this year for the first time, according to Xinhua News Agency.

China central bank adviser Li Daokui said he’s not worried about the impact that future property price declines may have on banks as China doesn’t have subprime mortgages like western countries. (Oriental Morning Post)

Forex

Japanese finance minister Noda said Tokyo would take decisive steps to stem the JPY’s rise when needed, while suggesting that coordinated currency market intervention was a difficult option. (RTRS)

Russian First Deputy PM says that CNY will “sooner or later” become an international reserve currency and Russia plans to allow the CNY to be used to settle trade with China. (China Reform Magazine)

ECB’s Trichet says EUR not created to compete with USD. (Sources)

Australia’s Labour Prime Minister Gillard is strongly tipped to form a new minority government within 48 hours, with the backing of three kingmaker independents. (RTRS)

Commodities

Oil fell for a second straight session overnight as the end of the driving season in the US and record petroleum stockpiles there fuelled doubt that supplies would drain in the face of tepid economic growth. WTI crude futures were trading at USD 74.36, down USD 0.24, at 0636 BST. (RTRS)

Tropical storm Gaston could soon come back to life over the central Atlantic ocean, according to the NHC. (RTRS)

Company News

UK banks – Britain is set to fight Franco-German plans to tax every currency transaction carried out by the UK’s banks, when European Union finance ministers meet on Tuesday. The UK Treasury is said to be vehemently opposed to a so-called Tobin Tax on banks’ currency and financial transactions as it would damage the City’s competitiveness. (Sunday Express)

UK

BP – Co. increased the target for its asset sales to USD 40bln from USD 30bln to cover the rising clean-up cost of the Gulf of Mexico oil spill, the Sunday Times reported, citing unidentified sources. Paper also writes that put its USD 20bln shareholding in the Prudhoe Bay oil field on the market. (Sunday Times) Co. is thought to be holding advanced negotiations to sell global assets valued at USD 5bln and USD 10bln to TNK-BP. (Sources) Elsewhere, US National Incident Commander Allen said that co.’s Macondo well is no longer “a threat”. (Sources) – Co. has revived the sale of its Alaskan assets after failing to offload them to US oil and gas company Apache in July. (FT)

GlaxoSmithKline – Co.’s diabetes drug Avandia should be pulled from sale because of concerns about heart risks, British drug regulators said on Monday ahead of a special European meeting on the drugs safety. (RTRS)

Vodafone – Sir John Bond is preparing to step down as co.’s chairman, with the mobile group hoping to appoint a successor by next year’s annual meeting. (FT)

BHP Billiton – The Chinese government has backed Sinochem, the state owned chemical group, to pursue a counterbid that could trump co.’s GBP 25bln hostile offer for Potash in a sign of Beijing’s interest in securing global resources. (FT FrontPage)

British Airways – Co.’s chief Willie Walsh, and top Iberia executives have drawn up a list of 12 candidates to buy or merge with once their own tie-up is finalised in plan that would create the world’s largest airline and shake up the aviation world. (FT)

Morrisons – Co.’s chief executive Dalton Philips will this week give the order for an assault on the online grocery market, challenging established competitors Tesco and Asda. Philips, in his first big presentation to the City since his arrival in March, will signal his intention to launch internet trials in several stores that could be extended nationwide. (The Mail on Sunday)

Prudential – Some institutional investors in the co. remain intent on ousting chairman Harvey McGrath. (Telegraph)

ARM Holdings – CO. played down recent takeover speculation, according to co.’s spokesperson. (Australian Financial Review)

US

Equities finished higher following a stronger than expected nonfarm payrolls report. However, did come under some pressure following poor ISM non-manufacturing data. Financials and the tech sector lead the S&P 500, whilst the NASDAQ 100 outperformed its peers, as Apple (+2.62%) continued its rally after co. upgraded its iPod lineup. At the closing bell DJIA closed up 1.24% at 10448.08, S&P 500 closed up 1.32% at 1104.49 and NASDAQ 100 closed up 1.62% at 1870.31.

Europe

Sanofi-Aventis – Co. would be prepared to moderately raise its USD 69 per share offer for Genzyme if the US biotech agreed to negotiate, citing a person familiar with the matter. (RTRS)

France Telecom – Co. says Polish unit TP fined EUR 396mln by Arbitration tribunal in Vienna. Co. also says potential financial impact of provision is excluded from the group’s organic cash flow guidance. Co. reaffirms commitment to pay a dividend of EUR 1.40 per share for 2010, 2011 and 2012. (RTRS)

Vivendi- Co. plans to invest as much as USD 866mln in Brazil this year. (Estado)

EADS – Airbus won’t meet 2010 A380 superjumbo delivery target. (Sources)

Carrefour – Carrefour Taiwan denies that it is going to be sold. (Economic Daily News)

Pernod Ricard – Co. aims to lower its net debt to Ebitda ratio to below 4x, says CFO. (Sources)

Utility companies – Germany’s government has struck a ground-breaking deal on energy policy that will see the lifetimes of the country’s nuclear power stations extended substantially – and utility companies in exchange paying towards the development of renewable alternatives. (FT)

Lufthansa – Co. aims to pay 2010 dividend., however co.’s CFO says there is no plan for a capital increase in 2010. (Boersen-Zeitung)

Fresenius – Co. expects 15% growth in earnings this year but still intends to raise its dividend payment by only half the rate of profit growth, according to the CEO. (FAZ)

Spanish banks/lenders – Roubini says stress tests carried out at Spanish lenders underestimated possible losses. (ABC)

Santander – Co. is set to launch a recruitment drive that could see it hire 6,000 people as it presses ahead with UK expansion. (FT)

Anglo Irish Bank – According to reports co. has reportedly started selling its US loans and intends to divest EUR 700mln of loans other than those being transferred to Nama. (Irish Independent) In other news, the European Commission wants to wind down the nationalised bank while management still believes it would better to keep a rump open, according to the bank’s chief executive. (Sunday Business Post)

Enel – Co. plans to sell its gas distribution assets in Spain by September and its stake in Bulgarian power plant soon after. (Sources)

Endesa – Co. expects to receive binding offers for its gas assets in September. (Il Sore 24 Ore)

ABB – Co. is in talks with Aggreko over takeover which is valued at around GBP 4.15bln. (De Tijd)

Julius Baer – Co. plans to double Asia’s contribution to 20-25% of assets in five years as it recruits new staff and opens more offices in the region. (RTRS)

Swatch Group – Co.’s may reach sales of USD 980mln next year, according co. CEO. (Le Temps)