Regions

[Muthukali]

Treasuries Rise a 2nd Day as Oil Gains, S&P 500 Retreats

Treasury 10-year notes rose for a second day as investors took advantage of a surge in yields, while oil jumped above $107 a barrel and U.S. stocks fell. The dollar strengthened against most major peers.

Ten-year Treasury yields decreased seven basis points to 2.29 percent at 4 p.m. in New York after yesterday falling for the first time in 10 days, halting the longest increase since 2006. The Standard & Poor’s 500 Index decreased 0.2 percent to 1,402.89 after yesterday retreating from the highest level in almost four years. Spanish bonds slid amid concern the nation faces an increasing risk of a debt restructuring.

Federal Reserve Chairman Ben S. Bernanke said the increase in oil may slow economic growth, at least in the short term. The Fed bought $4.03 billion in U.S. debt today as part of its program to swap $400 billion of shorter-term securities with longer-term bonds. Goldman Sachs Group Inc. said in a report that global stocks are set to follow a “steady upward trajectory,” and prospects for equities versus bonds are “as good as they have been in a generation.”

“Even though the U.S. data is picking up, it’s picking up from very low levels, and the housing market still has a lot of problems to deal with, which is why Treasury yields are still at these low levels,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities Corp., one of 21 primary dealers that trade with the Fed. “There are still Fed purchases this week and the sharp sell-off has stopped. And we are seeing investors start to take advantage of the higher rates.”

Treasuries, Equities
Ten-year and 30-year Treasury yields decreased for a second day after reaching the highest levels since October and September, respectively, on reduced speculation the Fed will announce another round of bond purchases. Ten-year yields surged 44 basis points in the nine sessions ended March 19. Two-year Treasury note yields lost three basis points to 0.37 percent today, while 30-year rates slipped seven points to 3.38 percent.

New York oil rebounded after falling 2.3 percent yesterday. The U.S. Energy Department said crude inventories unexpectedly dropped by 1.16 million barrels last week.

Bernanke and his colleagues on the Federal Open Market Committee are watching oil and gasoline prices that threaten U.S. growth and are likely to push up inflation “temporarily,” according to their statement last week, when they said interest rates are likely to remain near zero through at least late 2014.

Bernanke Speaks
“Higher energy prices would probably slow growth, at least in the short run,” Bernanke said today in response to questions from the House Committee on Oversight and Government Reform. Rising fuel prices “create at least short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.”

Bernanke also said the Fed has reviewed the credit-default swaps or contracts that U.S. banks have used to insure against defaults in Europe, and that they are “widely dispersed.” The central bank doesn’t expect a repeat of 2008, when American International Group Inc., a large counterparty on swaps, collapsed, Bernanke said.

Among U.S. stocks, energy and financial companies led losses among 10 groups in the S&P 500. Baker Hughes Inc. (BHI), the world’s third-largest oilfield-services provider, tumbled 5.8 percent after saying it expects operating profit before tax for the first quarter will fall as producers shift drilling from natural gas to crude. Hewlett-Packard Co., Alcoa Inc. and Caterpillar Inc. fell at least 1.6 percent to lead losses in the Dow Jones Industrial Average (INDU), which slipped 45.57 points to 13,124.62.

‘Internal Energy’
The S&P 500 has rallied almost 12 percent so far this year, poised for its best first quarter since 1998. Gains were triggered by a decline in the unemployment rate to a three-year low, growth in manufacturing and Europe’s efforts to tame its debt crisis.

The benchmark gauge of American equities closed at the highest level since May 2008 on March 19, while the S&P SmallCap 600 Index reached a record and the Nasdaq Composite Index rallied to an 11-year high that day.

“People won’t play real hard at these levels,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a phone interview. His firm oversees more than $300 billion. “I’m still pretty bullish. I don’t think you get bearish. Yet the market’s internal energy seems to be used up after the strong rally.”

Goldman Backs Rally
Goldman Sachs said the rally in stocks is set to continue for the next few years because any declines in economic growth are already reflected in share prices.

“Given current valuations, we think it’s time to say a ‘long good-bye’ to bonds, and embrace the ‘long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs in London, wrote in a report today.

The prospects for returns in equities versus bonds “are as good as they have been in a generation,” he wrote.

A gauge of 11 homebuilders in S&P indexes advanced, halting a three-day slump. Sales of previously owned U.S. houses held in February near an almost two-year high, adding to signs the market that triggered the recession is firming. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010, the National Association of Realtors said. The median price rose over the past year for the first time since November 2010.

Dollar, European Markets
The dollar strengthened against 11 of 16 major peers, climbing 0.1 percent to $1.3209 versus the euro.

The Stoxx Europe 600 Index slipped 0.1 percent. Banco Popolare SC (BP), Italy’s fifth-biggest bank, gained 3.3 percent after saying its core Tier 1 ratio, a key measure of financial health, rose to 7.1 percent. J Sainsbury Plc (SBRY) climbed 4.5 percent as the U.K.’s third-largest supermarket owner reported fourth- quarter sales growth that beat estimates.

The German 10-year bund rose, driving the yield six basis points lower to 1.98 percent. Spanish bonds fell, pushing 10- year yields to the highest level in a month, after Citigroup Inc. chief economist Willem Buiter said the nation faced an increasing risk of a debt restructuring.

Ten-year Spanish securities slid for an eighth day, sending their yield up 18 basis points to 5.41 percent and widening the extra yield over similar-maturity German bunds by 24 basis points to 3.43 percentage points.

‘Most Worried’
Spain is at “a greater risk than ever before” of a debt restructuring, Citigroup’s Buiter said in an interview with Tom Keene and Ken Prewitt on Bloomberg Radio. “Spain is the key country about which I’m most worried.” The country has “moved to the wrong side of the spectrum,” he said.

The MSCI Emerging Markets Index slipped 0.1 percent, falling for a fifth straight day. The Hang Seng China Enterprises Index of Chinese shares listed in Hong Kong fell 0.9 percent, its sixth straight decline in its longest losing streak of the year.

The Kospi Index slid 0.7 percent in Seoul, as Hyundai Steel Co. (004020) fell 3.4 percent on concern over falling growth in China. The BSE India Sensitive Index, or Sensex, added 1.7 percent as overseas funds bought a record amount of local shares.

 

[Muthukali]

Shares gain on inflation hopes - Vietnam

HA NOI — Money returned to the stock market yesterday, lifting shares on both of the country's stock exchanges even as global stock markets tumbled.

"Economic news from China, the world's second largest economy, showed that the country's growth was slowing," said Vietcombank Securities Co analyst Vuong Minh Giang.

The news slowed the rise of domestic stocks and caused an uptick in profit-taking during the course of yesterday morning's session, Giang said. However, he predicted that an optimistic outlook would continue in upcoming sessions as first quarter earnings were anticipated and monthly inflation data to be released this week was expected to remain at a low level.

"Inflation is showing signs of easing and could reach single-digit levels on an annual basis by the end of the second quarter," predicted the head of research for Dragon Capital, Le Anh Tuan.

On the Ha Noi Stock Exchange, the HNX-Index closed up yesterday by 1.7 per cent to 75.66 points. The value of trades climbed 10.8 per cent over Tuesday's level to nearly VND1.1 trillion (US$52.3 million), and advancers outnumbered decliners by a substantial margin of 242-55. Habubank (HBB) continued to be the most-active share with 19.8 million traded.

Thanks to positive trading in securities stocks in Ha Noi and a low price level, Sacombank Securities Co (SBS) hit the daily increase limit of 5 per cent and enjoyed a buy surplus from the opening minutes of trading.

On the HCM City Stock Exchange, the VN-Index rose by 1.24 per cent to 445.77 points, and advancers accounted for two thirds of all listed stocks. Market value jumped 41 per cent over Tuesday's session to about VND1.4 trillion ($66.6 million). Volume reached 98.4 million shares. None of the 10 leading shares by capitalisation lost value, although, after loads of orders placed at its ceiling price early in the session, real estate developer Hoang Anh Gia Lai (HAG) finally closed at its reference price of VND29,100 per share. — VNS

 

[Muthukali]

Jobless Claims in U.S. Fall to Lowest Level in Four Years

Applications (INJCJC) for unemployment benefits dropped last week to the lowest level in four years, reinforcing signs the U.S. labor market is picking up.

Jobless claims decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008, Labor Department figures showed today in Washington. The median forecast of 46 economists in a Bloomberg News survey projected 350,000. The number of people on unemployment benefit rolls and those getting extended payments also fell.

Dismissals have been waning and reports show companies are becoming more willing to expand workforces amid evidence sales are improving. Employment growth will help spur consumer spending, which accounts for about 70 percent of the economy.

“This is consistent with gradual improvement in labor market conditions,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who correctly projected the level of claims. “It’s good for consumer spending.”

Stock-index futures held earlier losses on concern the global economy was cooling as manufacturing in China and Europe slowed. The contract on the Standard & Poor’s 500 Index maturing in June fell 0.5 percent to 1,390.6 at 8:42 a.m. in New York.

Estimates in the Bloomberg survey ranged from 345,000 to 370,000. The Labor Department revised the previous week’s figure up to 353,000 from an initially reported 351,000.

There was nothing unusual in last week’s data, a Labor Department spokesman said.

Survey Week
Last week included the 12th of the month, which coincides with the period the Labor Department surveys employers to calculate monthly payroll growth. The March employment report will be released on April 6.

The four-week moving average, a less volatile measure than the weekly figures, declined to 355,000 last week from 356,250. The average during last month’s survey week was 359,500, indicating the job market may have continued to improve.

The number of people continuing to receive jobless benefits fell by 9,000 in the week ended March 10 to 3.35 million.

The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 16,000 to 3.31 million in the week ended March 3.

Jobless Rate
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, dropped to 2.6 percent, the lowest level since September 2008, from 2.7 percent in the prior week, today’s report showed.

Thirty-eight states and territories reported a decline in claims, while 15 reported an increase. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

Companies expanding their workforce include General Electric Co. (GE) The Fairfield, Connecticut-based company this week said it will add 600 jobs at a new Louisville, Kentucky, appliance plant producing refrigerators with freezers built into the bottom.

Federal Reserve policy makers are weighing whether the stimulus that helped fuel the best six-month streak of job growth since 2006 is sufficient for meeting the central bank’s goal of full employment. Joblessness (USURTOT) has fallen to 8.3 percent, the lowest in three years.

Central bankers, meeting last week, reiterated that conditions would probably warrant “exceptionally low” interest rates at least through late 2014.

“Labor market conditions have improved further, the unemployment rate has declined notably in recent months but remains elevated,” the central bank said in a statement.

 

[Muthukali]

Hong Kong as Dirtiest Financial Center Is Tsang’s Legacy

Harboring an unlicensed duck in Hong Kong can land a fine of HK$50,000 ($6,440) after the world’s first human deaths from bird flu were recorded in the city 15 years ago. That’s 50 times the penalty for driving a vehicle belching smoky fumes.

Failure to force aging buses and trucks off Hong Kong’s streets is a key cause of air pollution that results in more than 3,000 premature deaths a year, according to Civic Exchange, a think tank. In contrast, the H5N1 virus has killed 350 people worldwide since 1997, World Health Organization data show.

“People normally don’t realize that air pollution can cause cancer, heart and respiratory diseases,” said Carlos Dora, coordinator at the Geneva-based health agency’s Department of Public Health and Environment, who puts the global annual death toll from filthy urban air at 1.3 million. “Those are the diseases that really are the big, big plague.”

As Chief Executive Donald Tsang steps down after seven years in office, he leaves a city that boasts the world’s most valuable stock exchange, hosted three of the five biggest initial share sales in history, and is the best place on the globe for business, a new gauge by Bloomberg Rankings shows. Blotting the record is another superlative: the most polluted international financial center.

New York, London, Tokyo and Singapore all have cleaner air and more ambitious improvement targets, according to WHO data and the city governments’ websites. As China opens its economy, removing the capital controls that led investors to use Hong Kong as a proxy for Chinese growth, pollution risks undermining Tsang’s economic successes.

Singapore Bound
“I am leaving Hong Kong explicitly because of the air,” said Alex Turnbull, an Australian banker at a Wall Street firm, who plans a move to Singapore in May. “When capital controls leave, how on earth will this city stay competitive? Hong Kong is at risk of being irrelevant in the long run.”

The government will continue to strive for better air quality, “both for our citizens’ health and to attract overseas talents and enhance Hong Kong’s competitiveness as a financial hub and tourist destination,” Tsang’s office said in an e- mailed response to questions yesterday.

Sandwiched between the Asian headquarters of JPMorgan Chase & Co. (JPM) and a Tiffany & Co. (TIF) outlet, the air-quality meter in the Central business district has registered an average roadside pollution level of “high” or “very high” every day bar one this year. In 1999, 66 percent of days were at those levels. By 2010 and 2011, it was more than 90 percent. Today in Central the roadside reading was 70, and 89 in the Causeway Bay shopping district, government data show.

Lung Cancer
Airborne particles from vehicle exhausts and power stations have the greatest impact on human health, linked to 9 percent of lung cancer deaths globally, WHO estimates.

Hong Kong’s average reading of particulate matter with a diameter of 10 micrometers -- about 1/7th the width of a human hair -- or less in 2009 was 50 micrograms per cubic meter, according to a WHO survey of 1,100 cities. While that was less than half Beijing’s, it compares with 29 in Singapore and London, 23 in Tokyo and 21 in New York. The WHO guideline is 20.

Average annual roadside levels of nitrogen dioxide, which inflames lungs, increased 27 percent in Hong Kong last year from 2007, Environmental Protection Department data show. The 2011 levels were more than triple WHO safety limits.

Hong Kong also adopted the lowest or second-lowest interim targets WHO offers. The agency has a number of objectives aimed at poorer countries just “getting onto the curve,” said Anthony Hedley, honorary professor of community medicine at the University of Hong Kong’s School of Public of Health. “It’s not intended for a modern developed city like Hong Kong.”

Trends Down
The government says pollution trends are down, with a one- third drop in particulates since 1999. Nitrous oxide is 28 percent lower and sulphur dioxide has fallen 56 percent, government data show. Still, Nitrogen dioxide is up 24 percent, ozone 21 percent, and those pollutants that had dropped are either up or little changed since 2009.

The city’s observatory recorded 750 hours of reduced visibility that wasn’t caused by fog, cloud or rain in 1999; that rose to 1,399 hours last year.

“It is such a shame as Hong Kong is an incredibly beautiful place the 10 days a year when you actually realize that the tree-lined hills are dark green and not a washed out gray-green color,” said Alexander West, founder of Blue Pool Capital, a hedge fund.

Tens of thousands of finance professionals and other visitors to this week’s Credit Suisse Group AG (CSGN) Asian investment conference and the Hong Kong Rugby Sevens, the premier tournament in the truncated form of the game, were greeted by smoggy skies this week. The March 25 final of the Rugby pageant coincides with the election of Tsang’s replacement.

Peak Lookout
At Victoria Peak yesterday, tourists seeking the iconic view across Hong Kong’s skyscrapers to the mountains over the harbor were disappointed.

“I’ve been to the Peak six times and I’ve never seen the Kowloon mountains,” said Nadia Sturzengegger, from Lucern, Switzerland, who first flew into Hong Kong in 2007 when working for Swiss International Air Lines AG. “Maybe I was just unlucky.”

At the nearby Laurence Lai Gallery, Maurice Szeto, 48, mans the shop selling photographs of Hong Kong scenes. Tourists often complain about the visibility, he said.

“Some even take photos of our photos to show the skyline to their friends back home,” he said. “I used to come up here as a teenager and you could see everything.”

Tsang repeatedly pledged to tackle the problem, including a vow in May to introduce air quality objectives before leaving office June 30. That timeline has slipped to 2014.

Economic Impact
The government has to “carefully assess the economic and social impacts” of tightening air-quality rules, Tsang said last year.

The laissez faire ideology of “big market, small government” that underpins policy in the city has enabled industries such as financial services and real estate development to flourish, generating taxes that endowed the government with a HK$595 billion pot of savings. It has also created the most unequal society in Asia, where the poorest 10 percent earned a median wage of HK$3,500 a month in the third quarter of last year, down from HK$4,400 in the comparable period of 1997, government figures show.

Unlike most big cities, Hong Kong’s bus services are run by private franchises under government supervision. Forcing operators to modernize fleets would mean higher fares that many Hong Kong people already struggle to meet. The government last year allocated HK$5.17 billion to help low-income workers with travel costs.

Tourism, Infrastructure
Policies to spur economic growth and create jobs -- such as more tourism and infrastructure spending -- add to pollution. Tour buses ferrying some of the 28 million mainland Chinese visitors last year choke roads; the planned third runway at Chek Lap Kok would only be able to operate at 40 percent capacity to meet the proposed air-quality guidelines, a study found. The two-year delay in introducing the objectives may allow the project to go ahead using current standards.

Outside of environmental impact assessments for specific projects, the EPD has few legal powers to force change where it has no jurisdiction, such as transport.

For issues like bird flu that affect “all stakeholders -- businesspersons, government officials and the general public” the government will be “highly motivated,” said Ming Sing, an associate professor of social sciences at the Hong Kong University of Science and Technology. “If interests are divided, such as for tackling air pollution, that’s another story.”

New York, Tokyo
In New York, Mayor Michael Bloomberg brought together 25 city agencies in 2007 to target climate change, green buildings, air quality and solid waste. The city legislated emissions cuts from school buses and heating oil, and reduced pollution from ferries, private trucks and construction vehicles. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

The Tokyo 2008 environmental plan seeks to “realize the cleanest air among the world’s largest cities.”

In Hong Kong, a ban on idling engines that came into effect on Dec. 15 took four years to pass from public consultation to law, and with so many exemptions that critics said it was meaningless. No drivers have been fined to date, the EPD said in an e-mailed response to questions this week.

The government also spent HK$90 million to fund a study on electronic road pricing in 1997, which was never implemented. Singapore’s ERP project, started in 1998, decreased traffic volumes up to 25 percent, according to a 2010 report sponsored by the U.S. Federal Highway Administration.

Bus Fleet
Hong Kong has lagged behind rivals in upgrading its bus fleet. More than half of the 5,798 buses plying franchised routes in the city at the end of last year were Euro II standard or earlier, according to a Feb. 22 statement from the EPD. London has about 1,000 Euro II buses in its fleet of about 8,500 vehicles, according to Transport for London. Singapore phased out its Euro I buses last year, leaving fewer than 600 Euro II vehicles out of more than 4,000, according to a document from Hong Kong’s legislature.

Euro II models emit 2 1/2 times as much particulate matter as Euro III standard buses, and 12 1/2 times as much as Euro V, according to Hong Kong-based Civic Exchange.

Policy Delays
The Hong Kong government plans to retrofit buses with catalytic converters that scrub out noxious fumes, as well as trialing hybrid and electric vehicles.

To date, six buses have been fitted with the filters in a year-long test that started in September. The trial of hybrids is due to begin at the end of next year, while no funding has yet been provided to buy six electric buses, the EPD said in a Feb. 22 response to a question from a lawmaker.

“These delays in policy are accountable in terms of illnesses, damage to quality of life,” Hedley said. “We’ve got cohorts of children that have been exposed to the most intensive levels of exposure to very toxic air pollutants for quite a long time.”

Meantime, construction of roads, including an expressway beneath an existing highway through Central, Causeway Bay and Wanchai, as well as a 19-mile (30-kilometer) bridge linking Zhuhai and Macau to Hong Kong, may spur demand for cars that offset their impact on current congestion. In the decade to the end of last year, the number of private cars jumped 21 percent, Transport Department data show.

“The trend for many cities is to take care of the quality of urban life because they are competing for the same kinds of industries: finance, services, tourism,” WHO’s Dora said. “Cities are striving to be better, and those which don’t will suffer.”

 

[Muthukali]

Stocks, Commodities, Euro Drop on Economic Growth Concern

Stocks and commodities dropped while Treasuries rose for a third day after European and Chinese manufacturing contracted and FedEx (FDX) Corp. predicted slower growth, undermining confidence in the global economy.

The Standard & Poor’s 500 Index slipped 0.7 percent, the most in two weeks, to 1,392.78 at 4 p.m. in New York and the Stoxx Europe 600 Index (SXXP) fell for a fourth straight day, tumbling 1.2 percent. The euro depreciated 0.2 percent to $1.3188. Ten- year Treasury yields declined two basis points to 2.28 percent and the rate on the German bund decreased seven basis points to 1.91 percent. Copper and oil sank at least 1.8 percent and nickel slid to the lowest price this year.

A gauge of European manufacturing fell to 47.7 as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics. A preliminary measure of Chinese manufacturing slipped to 48.1 in March, the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics. FedEx, operator of the world’s largest cargo airline, predicted “below-trend” growth in coming quarters.

“Most people recognize that China growth has slowed,” said Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments, in Irvington, New York. “It’s a question of: is it going to be a sharp or a mild slowdown? The data in Europe shouldn’t be a big surprise to anyone. Yet there’s enough of a reason there after the sharp run-up in stocks for the market to pull back or go sideways in the short term.”

Three-Day Drop
The S&P 500, which reached the highest level since May 2008 on March 19, retreated for a third day as concern about global growth overshadowed a drop in jobless claims to a four-year low and better-than-forecast growth in an index of leading economic indicators. Initial applications for unemployment benefits decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008, Labor Department figures showed today. The median forecast of 46 economists in a Bloomberg News survey projected 350,000.

The Conference Board’s gauge of the outlook for the next three to six months increased 0.7 percent after a revised 0.2 percent gain in January that was less than initially reported, the New York-based group said today. The median forecast of economists surveyed by Bloomberg News called for a 0.6 percent rise.

Commodity, industrial and financial companies helped lead losses among the 10 main groups in the S&P 500 today. FedEx tumbled after the low end of its profit forecast for the current fiscal quarter trailed analysts’ estimates amid slowing express- shipment demand. Chevron Corp. (CVX), Caterpillar Inc. (CAT) and Alcoa Inc. (AA) were among the biggest declines in the Dow Jones Industrial Average. (INDU)

First-Quarter Rally
The S&P 500 has rallied 11 percent so far this year, poised for its best first quarter since 1998, amid growing optimism in the world’s largest economy. The MSCI All-Country World Index has also climbed 11 percent in 2012.

Global equities may have a “correction” of between 5 percent and 9 percent after the first quarter as investors sell holdings to lock in profit from recent rallies, according to Jefferies Group Inc.

Sean Darby, chief global equity strategist at New York- based Jefferies, said in a Bloomberg Television interview from Hong Kong today that Europe’s debt crisis is still “not over” because of high borrowing costs in Spain and Portugal,

The Stoxx 600 declined to the lowest level since March 12 as mining and construction companies led losses. Randgold Resources Ltd. (RRS), which operates three mines in Mali, plunged 13 percent as an army officer said the West African country’s government has been overthrown. Baloise Holding AG sank 6.6 percent as Switzerland’s third-largest insurer said profit dropped 86 percent last year.

Yields Retreat
Yields on 10-year and 30-year Treasuries retreated for a third straight day after reaching the highest levels in more than four months on March 19. The 30-year bond rate decreased two basis points to 3.37 percent.

The euro fell for a third day versus the dollar. The yen gained against all 16 of its major peers, advancing 1.3 percent versus the euro and 2 percent against Australia’s currency. Japan’s exports unexpectedly exceeded imports by 32.9 billion yen ($395 million) in February, the government said. The Dollar Index rose less than 0.1 percent.

The S&P GSCI gauge of commodities declined 1.1 percent as coffee, natural gas and cocoa fell more than 3 percent to pace declines in 16 of 24 raw materials.

The MSCI Emerging Markets Index fell 0.7 percent, heading for its sixth straight decline. The Micex Index slid 1.4 percent in Moscow and the FTSE/JSE Africa All Shares Index retreated 1 percent in Johannesburg. The BSE India Sensitive Index fell 2.3 percent. The Hang Seng China Enterprises Index lost 0.1 percent, its seventh straight drop and its longest losing streak since June.

 

[Muthukali]

SET rises 3.44 points - Thailand

The Stock Exchange of Thailand main index went up 3.44 points or 0.29% to close at 1,194.44 points at the end of trading session on Friday afternoon. The trade value was 30.79 billion baht, with 4.98 billion shares traded.

The SET50 index ended at 841.76 points, up 2.54 points or 0.30%, with a total trade value of 21.08 billion baht.

The SET100 index rose 5.96 points or 0.33% to stand at 1,826.74 points, with a total turnover of 26.80 billion baht.

The SETHD index went up 6.84 points or 0.61% to 1,129.04 points with a total trade value of 8.00 billion baht.

The MAI index rose 0.05 point or 0.02% to close at 291.25 points, with total transaction value of 373.62 million baht.

Top five most active values were as follows;

JAS - stood at 2.76 baht, down 0.02 baht (0.72%)
SCB - stood at 145.50 baht, down 2.00 baht (1.36%)
KBANK - stood at 152.00 baht, down 3.00 baht (1.94%)
BBL - stood at 189.00 baht, up 2.00 baht (1.07%)
PTT - stood at 349.00 baht, up 2.00 baht (0.58%)

 

[Muthukali]

U.S. Stocks Are Little Changed Before Home-Sales Data

U.S. stocks were little changed ahead of a report on new-home sales as the Standard & Poor’s 500 Index headed for its biggest weekly drop of the year.

The S&P 500 rose less than 0.1 percent to 1,393.07 at 9:31 a.m. in New York. The benchmark index for American equities is down 0.8 percent for the week.

“The market is catching its breath a little,” Jim Russell, the Cincinnati, Ohio-based head equity investment strategist at U.S. Bank Wealth Management, which oversees about $103 billion, said in a telephone interview. “The data that came in yesterday is consistent with moderate slowdowns that are occurring in Europe and China. The market is keying off some of that slowdown. A few percentage-point pullback is going to prove to be healthy and be the pause that refreshes.”

U.S. stocks retreated yesterday as manufacturing contracted in China and Europe and FedEx Corp. (FDX) tumbled amid a disappointing forecast. The S&P 500 slumped 1.2 percent in three days. The gauge is still headed for its longest monthly rally since September 2009 as economic data topped forecasts and the European Central Bank disbursed more than 1 trillion euros ($1.3 trillion) to lenders.

New home sales rose to a 325,000 annual rate in February from 321,000 the previous month, according to a Bloomberg News survey of 78 economists ahead of a Commerce Department report at 10 a.m. New York time. That would be the fastest since December 2010.

 

[Muthukali]

Purchases of New Houses in U.S. Decrease for Second Month

Purchases of new homes in the U.S. unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven.

Sales dropped 1.6 percent to a 313,000 annual pace, the slowest since October, from a 318,000 rate in January that was weaker than previously reported, figures from the Commerce Department showed today in Washington. The median estimate of 78 economists surveyed by Bloomberg News called for 325,000.

Sales of new homes are struggling to gain momentum amid increasing competition from foreclosures, which are hurting all property values. Nonetheless, a pickup in hiring, growing incomes and mortgage rates near a record low are making all houses more affordable, which may help underpin the market.

“There are signs of life in the market in certain regions, but we’re not seeing a broad-based recovery,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York, who forecast a 310,000 sales pace. “Builders are still competing with existing inventories. The spring selling season should show some modest improvement, but it will be limited.”

Stocks dropped after the report. The Standard & Poor’s 500 Index fell 0.4 percent to 1,387.71 at 10:13 a.m. in New York.

Economists’ estimates ranged from 310,000 to 350,000. The rate for January was previously reported at 321,000.

Taking Longer
The recent slowdown in demand has pushed up the amount of time it takes to sell a new house. There were 150,000 new houses on the market at the end of February, matching the prior month’s record low. The supply of homes at the current sales rate climbed to 5.8 months’ worth from 5.7 months in January.

Purchases, tabulated when contracts are signed, fell in two of the four U.S. regions, led by a 7.2 percent drop in the South. Sales fell 2.4 percent in the Midwest and rose 14 percent in the Northeast and 8 percent in the West.

The regional breakdown affected prices as demand fell in the South and Midwest where homes are less expensive and rose in the Northeast and West where they are costlier.

The median sales price increased 6.2 percent in February from the same month last year to $233,700, today’s report showed.

New-home sales have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing homes are calculated when a deal closes about a month or two later. New properties made up almost 7 percent of the market last year, down from a high of 15 percent during the last decade’s housing boom.

Existing Homes
Existing-home purchases eased to a 4.59 million annual rate last month from a 4.63 million pace in January, the National Association of Realtors reported this week. Even with the decline, January and February sales marked the strongest start to a year since 2007.

Home foreclosures remain a concern for builders. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, RealtyTrac Inc. said last week.

“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, RealtyTrac’s chief executive officer, said in the statement. “That should result in more states posting annual increases in the coming months.”

To hold down borrowing costs like mortgage rates, Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist.

More Affordable
The NAR’s affordability index climbed to a record high in January, underpinning demand. That may be why builders are gaining confidence.

Builders this year have broken ground on homes at the fastest pace since October-November 2008, according to Commerce Department figures released this week. Permits for construction climbed to the highest level since 2008, the same report showed.

The National Association of Home Builders/Wells Fargo index of builder confidence in March held at the highest level since June 2007. Sales expectations climbed for a sixth month, according to the March 19 report.

Ryland Group Inc. (RYL), which builds homes with an average price of $255,000 in 13 states, said it has a positive outlook for 2012.

“We finished the year on a strong note, entered the year optimistic and still feel fairly optimistic today,” Larry Nicholson, president and chief executive officer at the Westlake Village, California-based company, said March 6 at an investor conference. “The good thing about the traffic we are seeing is it’s new traffic. We feel a lot better than we did a year ago. Hopefully, we can keep this trend up.”

 

[Muthukali]

Stocks Rise on Euro Optimism, Fed; Treasuries Pare Loss

Stocks rose, rebounding from last week’s losses, as Federal Reserve Chairman Ben S. Bernanke said accommodative policy is still needed and investors speculated the European Union will increase the size of its bailout fund. Treasuries pared losses, while commodities climbed.

The Standard & Poor’s 500 Index rallied 1.4 percent to close at 1,416.51 at 4 p.m. New York time, returning to its highest level in almost four years. The Stoxx Europe 600 Index (SXXP) added 0.9 percent. Treasury 10-year yields climbed two basis point to 2.25 percent after increasing as much as six points earlier. Oil increased 16 cents to $107.03 a barrel. The Dollar Index, a gauge of the U.S. currency against six major peers, fell for a second day while gold and silver rallied.

Bernanke said that while he’s encouraged by the unemployment rate’s drop to 8.3 percent, further improvement in the job market will require continuing the central bank’s stimulative monetary policies. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall.

“Bernanke made it clear that while the Fed is not going to be revving the engine anytime soon, they are going to keep their foot on the gas,” Stephen Wood, the New York-based chief market strategist for Russell Investments, said in a telephone interview. His firm oversees $140.8 billion. “At the same time, the Europeans appear to be more serious about addressing risks. They’ve addressed shorter-term liquidity, but solvency remains an issue.”

The S&P 500 erased last week’s 0.5 percent drop, the bigger of two weekly declines in 2012. Gauges of health-care, technology, consumer-discretionary and financial companies rose at least 1.6 percent to lead gains in all 10 of the main industry groups in the S&P 500.

Market Leaders
American Express Co., JPMorgan Chase & Co. and United Technologies Corp. rose more than 2 percent to lead gains in the Dow average. Lions Gate Entertainment Corp. rose 4.5 percent as “The Hunger Games” film collected $155 million in weekend sales in the U.S. and Canada, a record for the month of March.

The S&P 500 is up about 13 percent so far this year, poised for its best first-quarter rally since 1998. The benchmark index of American equity has rebounded about 109 percent from its bear-market low three years ago, trimming the retreat since its 2007 record to less than 10 percent.

Hedge funds trailing the S&P 500 for the last five months are giving up on bearish bets and buying stocks at the fastest rate in two years.

Hedge Fund Bulls
A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 48.6 last week from 42 at the end of November 2011, the biggest increase since April 2010, according to data compiled by the International Strategy & Investment Group. The Bloomberg aggregate hedge fund index gained 1.4 percent last month, lagging behind the S&P 500 by 2.65 percentage points.

Treasuries pared declines today after Bernanke, in a speech in Arlington, Virginia, said the drop in the unemployment rate may reflect a reversal of the large layoffs that occurred during late 2008 and over 2009.

“To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies,” he said.

‘Cautious Optimism’
Philadelphia Fed President Charles Plosser said he doesn’t currently see any need for additional monetary stimulus as the economy recovers.

“The economy’s doing better, we’re gaining some traction,” Plosser said in an interview with Bloomberg Television in Paris today. “We’re not entirely out of the woods. But I’ve got some cautious optimism.”

Benchmark 10-year yields have risen 27 basis points since the end of February, headed for their steepest monthly increase since December 2010. The U.S. is scheduled to sell $35 billion of two-year notes tomorrow, $35 billion of five-year debt on the following day and $29 billion of seven-year securities on March 29.

Merkel told reporters in Berlin today: “We could imagine that the program that has already been agreed with 200 billion” euros “could run parallel” with the permanent European Stability Mechanism, which comes into force in July.

‘Reinforcement of the Firewalls’
EU Economic and Monetary Affairs Commissioner Olli Rehn said he’s confident ministers will resolve their differences on providing more bailout funding. Speaking yesterday to reporters in Saariselkae, Finland, Rehn said officials “will take a convincing decision on the reinforcement of the firewalls.”

The Stoxx 600 rallied after falling 2.5 percent last week, the biggest drop of 2012. EasyJet Plc (EZJ) climbed 7.5 percent as Europe’s second-biggest discount carrier forecast a narrower six-month loss. Aberdeen Asset Management Plc, a Scottish fund manager, advanced 4.4 percent after assets under management rose 6 percent in the first two months of the year.

European equities also gained after German business confidence unexpectedly rose in March. The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, increased to 109.8 from a revised 109.7 in February. Economists forecast it would remain unchanged at the initial February reading of 109.6, according to the median of 44 estimates in a Bloomberg survey.

Emerging Markets
The MSCI Emerging Markets Index (MXEF) added 0.4 percent after slumping 2 percent last week. The Hang Seng China Enterprises Index (HSCEI) slid 0.6 percent, its ninth consecutive decline, its longest losing streak since July 2010. The BSE India Sensitive Index (SENSEX), or Sensex, fell 1.8 percent amid concern the government will find it difficult to rein in the fiscal deficit, and as the rupee weakened to a 10-week low. Russia’s Micex Index gained 1.7 percent.

The euro climbed for a second day against its Japanese counterpart and rose 0.4 percent to $1.3329. China’s yuan rose 0.01 percent to 6.312 per dollar, according to the China Foreign Exchange Trade System, after the central bank set the daily reference rate at a record high.

The S&P GSCI (SPGSCI) commodities gauge increased 0.3 percent as copper, silver and gold climbed at least 1.7 percent to lead gains among 19 of 24 materials.

Hedge funds wagered the wrong way on commodity prices for a fourth consecutive week, boosting bullish holdings just before reports showing a contraction in manufacturing from China to Europe drove prices lower.

Money managers lifted net-long positions in 18 U.S. futures and options by 2.9 percent to 1.17 million contracts in the week ended March 20, Commodity Futures Trading Commission data show. The S&P GSCI of 24 raw materials dropped 1 percent last week, led by declines in lead and corn. Orange juice tumbled 11 percent, the most since August.

 

[Muthukali]

SET surges on FED measures - Thailand

The Stock Exchange of Thailand main index went up sharply on Tuesday on the back of an assurance by chairman of the US Fed that it would stimulate the US economy, reports said.

The Stock Exchange of Thailand main index opened at 1,202.98 points, up 14.66 points or 1.23% from Monday’s close. The trade value was 2.10 billion baht, with 269.77 million shares traded.

The main index went further went up 15.49 points or 1.30% to close at 1,203.81 points at the end of trading session on Tuesday morning. The trade value was 15.78 billion baht, with 2.13 billion shares traded.

At 3.52pm, The SET index stood at 1,205.54, up 17.22 points or 1.45%. The trade value was 25.03 billion baht.

Theerada Chanyingyong, deputy director of Securities Analysis at Phillips Securities, said on Tuesday that the SET index passed through the 1,200 points level today because of a statement made by the chairman of the US Federal Reserve, Ben Bernanke, that the FED was ready to implement measures to stimulate the US economy if needed.

The remarks raised optimism that the FED might implement QE3 financial measures that will boost the US economy and this had created confidence among investors, she added.

At 4.18pm, the SET index went up 17.33 points, or 1.46%, to stand at 1,205.65 points. The turnover was 27.77 billion baht and 3.68 shares were traded.

The main index continued to go up, rising by 18.97 points, or 1.60%, to close at 1,207.29 points at the end of trading session on Tuesday afternoon. The trade value was 33.17 billion baht, with 4.49 billion shares traded.

 

[Muthukali]

SET down 3.28 points - Thailand

The Stock Exchange of Thailand main index went down 3.28 points or 0.27% to close at 1,204.01 points at the end of trading session on Wednesday afternoon. The trade value was 28.55 billion baht, with 4.96 billion shares traded.

The SET50 index ended at 849.51 points, down 2.74 points or 0.32%, with a total trade value of 18.90 billion baht.

The SET100 index fell 6.20 points or 0.34% to stand at 1,842.11 points, with a total turnover of 23.45 billion baht.

The SETHD index went down 2.29 points or 0.20% to 1,141.29 points with a total trade value of 6.40 billion baht.

The MAI index dropped 0.70 point or 0.24% to close at 292.06 points, with total transaction value of 471.76 million baht.

Top five most active values were as follows;

BANPU - stood at 618.00 baht, unchanged
PTT - stood at 359.00 baht, up 3.00 baht (0.84%)
IVL - stood at 38.00 baht, down 0.25 baht (0.65%)
DTAC - stood at 84.00 baht, down 1.50 baht (1.75%)
JAS - stood at 2.84 baht, down 0.06 baht (2.07%)

 

[Muthukali]

Orders for Durable Goods in U.S. Increased 2.2% in February

Orders for U.S. durable goods rose in February, the fourth monthly gain in the last five and spurred by demand for cars, computers and capital equipment.

Bookings for goods meant to last at least three years advanced 2.2 percent, less than projected, after a revised 3.6 percent decline the prior month, data from the Commerce Department showed today in Washington. Economists forecast a 3 percent gain, according to the median forecast in a Bloomberg News survey.

Corporate equipment upgrades and consumer purchases of new cars are bolstering production, prompting factories to hire and keeping the industry a source of strength for the expansion. Nonetheless, higher fuel costs and slowdowns in Europe and China may limit the pace of manufacturing this year.

“Business spending will remain a key driver of the U.S. economy, not to the same extent as last year, but still a positive force,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who accurately forecast the durables figure. “The auto industry looks to be coming back because of stronger demand.”

Estimates of 83 economists surveyed by Bloomberg ranged from a drop of 1.4 percent to an increase of 6.4 percent.

Stock-index futures were little changed after the figures. The contract on the Standard & Poor’s 500 Index expiring in June climbed less than 0.1 percent to 1,407.1 at 8:41 a.m. in New York.

Orders for durables excluding transportation equipment increased 1.6 percent after a 3 percent decline.

Aircraft Orders
Demand for transportation equipment climbed 3.9 percent, led by a 6 percent advance in civilian aircraft orders. Boeing Co., the largest U.S. aircraft maker, said it received 237 orders last month, up from 150 in January.

Bookings for automobiles and parts increased 1.6 percent, the most since October, after a 1.3 percent rise the previous month.

Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. Light-vehicle sales accelerated to a 15 million annual rate, the strongest since February 2008, according to data from Ward’s Automotive Group.

“Based on what we see in terms of pent-up demand and importantly the strength of the economy, we do not believe that short-term fluctuations in pump prices will curtail industry growth this year,” Don Johnson, vice president of U.S. sales operation for GM, said on a March 1 conference call. “American consumers and the overall economy are in much better shape than they were a year ago.”

Business Equipment
Today’s report showed bookings for non-defense capital goods excluding aircraft -- a proxy for business investment in items such as computers, engines and communications gear -- increased 1.2 percent.

Orders advanced 11.2 percent for communications equipment, the most since June 2011. Bookings climbed 2.7 percent for computers and electronic products, the most since December 2010, and 5.7 percent for machinery. Orders minus defense hardware rose 1.7 percent.

One category to show a decline was electrical equipment and appliances, which fell 2.5 percent.

Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, increased 1.4 percent in February after falling 3 percent.

Unfilled Orders
The report also showed unfilled orders for durable goods increased 1.3 percent. Unfilled orders for non-defense capital goods minus aircraft climbed 0.7 percent after a 0.8 percent increase that shows demand may be sustained.

“A lot of our production is tight,” Michael DeWalt, director of investor relations at Caterpillar Inc. (CAT), said at a March 6 industrial conference in New York. “We have very long lead times on some product. For large mining trucks, we’re taking orders now into 2014 the business is so strong.”

Other gauges show manufacturing continued to expand this month even as orders ease. Regional reports from the Federal Reserve show manufacturing accelerating in the New York and Philadelphia areas, while bookings cooled.

At the same time, rising oil prices may increase the cost of production for some manufacturers. Crude oil futures on the New York Mercantile Exchange have climbed 8.5 percent this year, reaching $107.26 a barrel yesterday, after surging 25 percent in the last three months of 2011.

Recent “better news” on the economy has included a “slight bit of encouraging news here and there in the housing market” as well as strength in manufacturing, Federal Reserve Chairman Ben S. Bernanke this week said in response to audience questions following a speech in Arlington, Virginia.

 

[Muthukali]

Asian Stocks Fall on U.S. Durable Goods; Oil, Kiwi Climb

Asian stocks fell for a second day as growth in U.S. durable-goods orders trailed estimates and Leighton Holdings Ltd. cut its profit forecast. Oil rose after slumping yesterday and the New Zealand dollar climbed.

The MSCI Asia Pacific Index (MXAP) slipped 0.2 percent as of 9:23 a.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed and the Nikkei 225 Stock Average retreated 0.5 percent. Oil gained 0.2 percent in New York after tumbling 1.8 percent yesterday. New Zealand’s currency added 0.3 percent as a gauge of the nation’s business confidence rose to a seven-month high.

Industrial & Commercial Bank of China Ltd., PetroChina Co., Hutchison Whampoa Ltd. and Bank of China Ltd. are scheduled to report earnings today. Economic reports may show Germany’s unemployment held at the lowest in more than two decades in March and U.S. jobless claims stayed at a four-year low.

“With all good news being factored in, we are coming to a tougher period, and markets are vulnerable,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management.

South Korea’s Kospi Index (KOSPI) slid 0.4 percent and Australia’s S&P/ASX 200 Index was little changed. The MSCI Asia Pacific Index has rallied 12 percent this year after tumbling 17 percent in 2011.

Leighton sank 6.2 percent. Australia’s largest construction company and German parent Hochtief AG cut profit forecasts for the 2012 fiscal year after wet weather and lower-than-expected productivity raised costs.

 

[Muthukali]

SET down 0.10 point - Thailand

The Stock Exchange of Thailand main index went down 0.10 point or 0.01% to close at 1,203.91 points at the end of trading session on Thursday afternoon. The trade value was 26.96 billion baht, with 3.77 billion shares traded.

The SET50 index ended at 849.34 points, down 0.17 point or 0.02%, with a total trade value of 19.16 billion baht.

The SET100 index fell 0.33 point or 0.02% to stand at 1,841.78 points, with a total turnover of 22.65 billion baht.
The SETHD index went down 0.17 point or 0.01% to 1,141.12 points with a total trade value of 7.94 billion baht.

The MAI index dropped 0.36 point or 0.12% to close at 291.70 points, with total transaction value of 496.97 million baht.

Top five most active values were as follows;

TCAP - stood at 34.25 baht, up 1.50 baht (4.58%)
BBL - stood at 185.00 baht, down 2.00 baht (1.07%)
PTT - stood at 358.00 baht, down 1.00 baht (0.28%)
IVL - stood at 38.00 baht, unchanged
KBANK - stood at 157.00 baht, up 3.50 baht (2.28%)

 

[Muthukali]

S&P 500 Trims Loss on Speculation Selloff Was Overdone

The Standard & Poor’s 500 Index (SPX) trimmed losses in the final two hours of trading ahead of data forecast to show growth in consumer confidence and spending tomorrow, the final day of the best first quarter since 1998.

The S&P 500 retreated 0.2 percent to 1,403.28 at 4 p.m. New York time, paring a loss of as much as 1 percent. The Dow Jones Industrial Average (INDU) rose 19.61 points, or 0.2 percent, to 13,145.82 after reversing a drop of as much as 94 points to halt a two-day decline.

“It’s buying on weakness,” Tim Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York, said in a phone interview. “The corrections seem to be very short lived because money just seems to be flowing right in. The end of the quarter is imminent. Given that it’s been a positive quarter for stocks, many managers don’t want to show any cash in their client portfolios.”

The S&P 500 has risen 12 percent since the beginning of 2012 amid better-than-estimated economic data and expectations Europe would tame its crisis. The index has gained 2.8 percent in March, rallying for a fourth straight month and poised for the longest streak of monthly gains since September 2009.

Alcoa Inc. (AA), Caterpillar Inc. (CAT) and Coca-Cola Co. climbed more than 1.5 percent for the biggest gains in the Dow today. Red Hat Inc. (RHT) surged 20 percent after profit and sales topped projections. Bank of America Corp. and Citigroup Inc. fell more than 1.4 percent to pace losses in financial companies. Best Buy (BBY) Co., the largest consumer-electronics retailer, slumped 7 percent on plans to close 50 stores as sales missed forecasts.

‘Down the Road’
Benchmark equity indexes slumped earlier as S&P said Greece may have to restructure its debt again. There may be “down the road, I’m not predicting today when, another restructuring of the outstanding debt,” said Moritz Kraemer, head of sovereign ratings at S&P. In the U.S., claims for unemployment benefits fell to the lowest since April 2008. The economy grew at a 3 percent annual rate from October through December, separate data showed.

“People are taking some chips off the table,” said Matt McCormick, who helps oversee $5.8 billion at Bahl & Gaynor Inc. in Cincinnati. “It’s been a good run and people are questioning: is that sustainable? The measures taken by European authorities have put those issues in the back burner. If that narrative changes, it makes people address something that they thought was already taken care of.”

Gauges of utility and health-care companies in the S&P 500 gained, while financial shares slumped. Alcoa added 2 percent to $10.03. Caterpillar rose 1.7 percent to $106.02. Coca-Cola advanced 1.6 percent to $73.81.

Corporate Demand
Red Hat surged 20 percent, the most in the S&P 500, to a 12-year high of $61.43. The company was surprised by demand for its Red Hat Enterprise Linux software from corporations preparing to move more applications to the so-called cloud, where they can be delivered to users over the Internet, Chief Executive Officer Jim Whitehurst said in an interview. Profit for the current fiscal year will be as much as $1.20 a share, the company projected, exceeding estimates.

Health maintenance organizations rose. Investors speculated the Supreme Court will overturn aspects of the Affordable Care Act, benefiting managed care companies, according to Dave Shove, an analyst at BMO Capital Markets. Aetna Inc. (AET) added 6.5 percent to $49.56. UnitedHealth Group Inc. (UNH) rallied 4.8 percent to $58.11.

Illumina Inc. (ILMN) climbed 5.1 percent to $52.40. Roche Holding AG raised its hostile takeover offer for Illumina by 15 percent to about $6.7 billion, yielding to demands for a higher price from shareholders of the U.S. maker of gene-mapping tools.

Collective Brands
Collective Brands Inc. (PSS) jumped 8.4 percent to $19.99. South Korean clothing company E-Land Group said it will bid for the retailer, which owns the Payless ShoeSource chain.

Global dealmaking slumped for a third straight quarter as chief executive officers funneled cash into share buybacks and new products, a trend that may reverse in the coming months as the economic recovery gains momentum. Mergers and acquisitions so far this quarter fell 14 percent from the fourth quarter to $418 billion, making it the slowest three-month period in 2 1/2 years, according to data compiled by Bloomberg.

“I still think big cash surpluses will lead to more M&A because companies fundamentally want to grow,” said Peter Tague, who started as co-head of global M&A at Citigroup (C) in New York this month.

The KBW Bank Index (BKX) slumped 1.1 percent as 23 of its 24 stocks declined. A measure of European lenders dropped 2.9 percent. Bank of America lost 2.3 percent to $9.53. Citigroup slid 1.5 percent to $36.51.

Best Buy
Best Buy tumbled 7 percent to $24.77. Chief Executive Officer Brian Dunn trimmed discounts after the holiday shopping season, sacrificing sales to maintain profitability. The retailer is closing big-box stores and cutting jobs to reduce costs while boosting online sales and opening smaller locations.

Mosaic Co. (MOS) slid 5.1 percent to $55.27. The largest U.S. potash producer said earnings fell to 64 cents a share in the quarter ended Feb. 29 from $1.21 a year earlier. That missed the 69-cent average estimate of 19 analysts compiled by Bloomberg.

Big Lots Inc. (BIG) sank 4.8 percent to $43.42. The discount retailer’s sales trends are “not as good as we’d hoped,” Charles Grom, an analyst with Deutsche Bank AG, wrote in a note after meeting with the company’s management.

The S&P 500 will likely remain stuck in the 500-point range where it’s been four-fifths of the time since 2000 until the Federal Reserve allows interest rates to rise, according to Piper Jaffray Cos.

Trading Range
The benchmark measure fell in the previous two days after reaching 1,416.51, the highest level since May 2008 and 9.5 percent below its record high of 1,565.15 from 2007. The index has traded between 1,000 and 1,500 for about 80 percent of the time since 2000, according to data compiled by Bloomberg.

Equity gains stalled in the past 12 years as the economy suffered from the bursting of bubbles in technology and real estate, forcing the central bank to cut its benchmark interest rate to near zero from 6.5 percent to spur growth. Fed Chairman Ben S. Bernanke has pledged to keep borrowing costs low through at least late 2014.

“The S&P 500 is approaching the upper end of the secular trading range,” Craig W. Johnson, a Minneapolis-based technical market strategist with Piper Jaffray, wrote in a note yesterday. “This resistance will likely remain intact until 2014-2015, and will correspond with a secular change in bond yields.”

 

[Muthukali]

Bernanke Says Central Banks Should Defuse Financial Threats

Federal Reserve Chairman Ben S. Bernanke said financial stability is no longer a “junior partner” to monetary policy and central banks should try to fend off threats in the future.

“The crisis underscored that maintaining financial stability is an equally critical responsibility,” Bernanke said today in Washington. “As much as possible, central banks and other regulators should try to anticipate and defuse threats to financial stability and mitigate the effects when a crisis occurs,” Bernanke said.

Bernanke’s comments represent a break from the Fed’s past hands-off stance toward asset bubbles such as the housing boom that triggered the 2007-2009 crisis. Former Chairman Alan Greenspan was skeptical of the Fed’s ability to identify bubbles or decide when asset prices were too high, and he said it should focus on cleaning up the damage after bubbles popped by lowering interest rates.

That approach was criticized by officials such as Otmar Issing, the former chief economist for the European Central Bank, who argued that leaning against credit-fueled financial bubbles was a responsibility of central banks.

Fed officials may still not use interest-rates as a first tool to pop a bubble, said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.

“They have seen the costs of ignoring incipient bubbles can be unacceptably high,” said Crandall. Fed officials “have a variety of other resources” they can bring to bear against bubbles before using monetary policy, which is likely to be reserved for the objectives of stable prices and full employment, Crandall said.

Three Tools
Federal Reserve Bank of New York President William C. Dudley has said regulators have three tools to respond to bubbles: talk, regulatory policy, and monetary policy. Dudley, in a 2010 speech, said monetary policy was “inferior” to regulatory tools, although he didn’t rule out using tighter credit to reduce leverage in the financial system.

The Fed has set up an Office of Financial Stability Policy and Research headed by Nellie Liang, who was co-leader of the Fed’s 2009 stress tests intended to see if banks had adequate capital. The office was instrumental in spotting falling standards in the leveraged loan market, prompting the Fed this week to issue tougher guidance to banks involved in high-risk, high-yield corporate lending.

Explaining Policies
Bernanke commented today in the last of four lectures to undergraduates at George Washington University. He is using the lectures as part of a broader effort by the Fed to explain its policies and role to the public as lawmakers and political candidates scrutinize its actions. The chairman has also started holding press conferences after meetings of the Federal Open Market Committee.

Bernanke defended the Fed’s $2.3 trillion of large-scale asset purchases, or quantitative easing, saying they had helped “promote recovery, though the effect on housing was weaker than hoped.” He said the purchases reduced the risk of deflation, or a general decline in prices and wages.

The Fed embarked on the asset purchases after lowering its target overnight interest rate to a record of zero to 0.25 percent in December 2008 as it battled the 18-month recession, which ended in June 2009.

Operation Twist
Last September, the Federal Open Market Committee announced a move, dubbed Operation Twist, to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to reduce borrowing costs further and support the economic rebound. In January, the panel said rates were likely to stay low at least through late 2014, extending an earlier date of mid-2013.

While Fed policy has helped the economy heal, the pace of expansion has been “extremely sluggish” compared with previous recoveries since World War II, he said, and unemployment remains “quite high” at 8.3 percent.

At the same time, banking system is “significantly stronger” than it was three years ago, in part because of strengthened oversight by the Fed and other regulators, and credit is more available to households and businesses.

Bernanke used his March 27 lecture to focus on the Fed’s response to the financial crisis, asserting that policy makers helped prevent it from becoming a worldwide catastrophe. In previous lectures, he examined the roots of the crisis, including the boom and bust in home prices and the Fed’s failure to recognize vulnerabilities in the financial system.

Today, Bernanke, a scholar of the Great Depression, received a gift from the students: a framed front page of the April 20, 1933, edition of The New York Times, with a four- column headline that said: “Gold Standard Dropped Temporarily to Aid Prices and Our World Position; Bill Ready for Controlled Inflation.”

 

[Muthukali]

European Stocks Rise as Ministers Meet on Rescue Funds

European stocks rose as euro-area finance ministers meet to discuss boosting the region’s rescue funds and investors await a report that may show spending by American consumers increased. U.S. index futures climbed and Asian shares fluctuated.

Roche Holding AG (ROG) gained after saying its breast cancer drug showed positive results in clinical trials. Credit Agricole advanced 1.6 percent as it began talks with China’s Citic Securities Co. to sell its CLSA brokerage unit. HeidelbergCement AG (HEI) climbed 2.9 percent after HSBC Holdings Plc raised its recommendations on the stock.

he Stoxx Europe 600 Index added 0.6 percent to 262.23 at 8:04 a.m. in London. The gauge has rallied 7.2 percent this year as the European Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders. Futures on the Standard & Poor’s 500 Index expiring in June advanced 0.2 percent. The MSCI Asia Pacific Index rose 0.1 percent.

“The U.S. recovery is now sustainable and, of course, Europe is still at pains but northern Europe remains one of the stronger areas in terms of growth,” said Larry Hatheway, a London-based economist and asset-allocation strategist at UBS AG. He spoke to Linda Yueh and Mark Barton in a Bloomberg Television interview.

The Stoxx Europe 600 Index fell 1.3 percent yesterday, the most in three weeks, as Standard & Poor’s said Greece may have to restructure its debt again and more Americans than forecast filed claims for jobless benefits.

Financial Firewall
German Finance Minister Wolfgang Schaeuble said late yesterday in Copenhagen that governments will agree on a firewall of about 800 billion euros ($1.1 trillion). That sum includes the 500 billion-euro permanent rescue fund and bailouts already in place for Ireland, Portugal and Greece’s second rescue package, he said.

While ministers are nearing an agreement to raise the limit on rescue funds to 940 billion euros until mid-2013, the amount they will be able to deploy immediately to protect Spain and Italy will range between 340 billion euros and 640 billion euros.

Spanish Prime Minister Mariano Rajoy will today unveil the most austere budget since before the nation’s return to democracy in 1978, risking a deeper recession in a bid to avoid succumbing to the debt crisis. Budget details will be released by about 2 p.m. in Madrid after the weekly Cabinet meeting.

In the U.S., consumer spending probably climbed in February as an improving job market prompted Americans to buy more cars, economists said before a Commerce Department report today at 8:30 a.m. in Washington.

Purchases rose 0.6 percent, the most in five months, after a 0.2 percent gain in January, according to the median estimate of 83 economists surveyed by Bloomberg News.

Separately, the Thomson Reuters/University of Michigan final March confidence index fell to 74.5 from 75.3 the previous month, the median forecast in another survey showed. That would be the first monthly decline since August.

 

[Muthukali]

SET down 7.14 points - Thailand

The Stock Exchange of Thailand main index went down 7.14 points or 0.59% to close at 1,196.77 points at the end of trading session on Friday afternoon. The trade value was 28.42 billion baht, with 3.16 billion shares traded.

The SET50 index ended at 842.91 points, down 6.43 points or 0.76%, with a total trade value of 20.12 billion baht.

The SET100 index fell 13.05 points or 0.71% to stand at 1,828.73 points, with a total turnover of 23.61 billion baht.

The SETHD index went down 5.78 point or 0.51% to 1,135.34 points with a total trade value of 8.40 billion baht.

The MAI index rose 0.45 point or 0.15% to close at 292.15 points, with total transaction value of 575.31 million baht.

Top five most active values were as follows;

SCC - stood at 355.00 baht, down 7.00 baht (1.93%)
CPF - stood at 37.25 baht, up 0.75 baht (2.05%)
PTTGC - stood at 71.00 baht, down 1.25 baht (1.73%)
PTT - stood at 354.00 baht, down 4.00 baht (1.12%)
ADVANC - stood at 184.00 baht, unchanged

 

[Muthukali]

Consumer Spending in U.S. Climbs 0.8%, More Than Forecast

Consumer spending in the U.S. rose in February by the most in seven months, showing the biggest part of the economy is strengthening.

Purchases climbed 0.8 percent, the largest gain since July, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase. Incomes advanced less than projected, sending the saving rate to a more than two-year low.

Households may be poised to take a more active role in the expansion as the biggest payroll gains since 2006 underpin confidence. While wages are climbing, other forms of income like interest receipts are lagging behind, raising the risk that higher fuel costs will limit gains in consumer spending, which accounts for 70 percent of the economy.

“Consumers are spending a little bit more aggressively,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “Consumers simply aren’t saving enough to sustain spending in the long run.”

Stock-index futures held earlier gains after the report, indicating the Standard & Poor’s 500 Index will extend its biggest first-quarter advance since 1998. The contract on the S&P 500 expiring in June rose 0.4 percent to 1,403.9 at 8:47 a.m. in New York.

Projections for spending in the Bloomberg survey of 83 economists ranged from gains of 0.1 percent to 0.8 percent.

Incomes Gain
Incomes climbed 0.2 percent for a second month after January’s gain was revised down. They were projected to increase 0.4 percent, according to the Bloomberg survey median.

Wages and salaries climbed 0.3 percent in February, while interest payments were little changed for a second month.

Income after taxes and adjusted for inflation declined 0.1 percent in February, the third decrease in the past four months. The decrease combined with the jump in spending pushed the saving rate down to 3.7 percent, the lowest level since August 2009, from 4.3 percent in January.

Adjusted for inflation, which are the figures used to calculate gross domestic product, consumer spending increased 0.5 percent, the most in five months.

Some consumers are becoming more optimistic. The Bloomberg Consumer Comfort Index last week reached the second-highest level in four years. Over the past three weeks, at least 30 percent of households said they had a favorable view of the buying climate, the longest stretch since early 2008.

Gaining Confidence
A firming labor market is helping household sentiment. The jobless rate held at a three-year low of 8.3 percent in February, and employers capped the best six months of employment since 2006, according to data from the Labor Department.

While job gains are lifting Americans’ spirits, higher gasoline prices remain a concern. The price of a gallon of regular unleaded gas was $3.93 as of March 29, up 65 cents since the end of last year, according to AAA, the nation’s largest automobile association.

“As we look to the second half of fiscal 2012, we are beginning to see some signs that the economy is slowly starting to improve,” Howard Levine, chairman and chief executive officer of Family Dollar Stores Inc. (FDO), said on a March 28 conference call. “Yet consumers still face some headwinds, especially from rising gas prices, which could strain discretionary purchases and impact the pace of the recovery.”

Federal Reserve Chairman Ben S. Bernanke shares those concerns when he spoke before Congress this month.

Bernanke’s View
“Higher energy prices would probably slow growth, at least in the short run,” Bernanke said March 21. Rising fuel costs create “short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.”

Today’s report showed the Fed’s preferred price gauge, which is tied to consumer spending patterns, climbed 0.3 in February from the prior month. It was up 2.3 percent from the same time last year.

Fed policy makers set a goal to keep inflation at around 2 percent when they met in January.

 

[Muthukali]

Stocks Advance on Europe Aid, U.S. Data; Treasuries Drop

Global stocks extended the best first-quarter rally since 1998 and the euro gained as European finance ministers agreed to increase rescue funds and U.S. personal spending and consumer confidence topped forecasts. Oil rebounded from its biggest drop of the year and Treasuries slid.

The MSCI All-Country World Index (MXWD) increased 0.6 percent at 4 p.m. in New York, extending its three-month gain to 11 percent. The Standard & Poor’s 500 Index climbed 0.4 percent and is up 12 percent this year, also the best first-quarter advance in 14 years. The euro rose 0.3 percent versus the dollar and the cost of insuring European sovereign debt against default snapped a two-day gain. Agricultural crops led commodities higher as a U.S. government report signaled tighter supplies. Ten-year Treasury yields surged five basis points to 2.21 percent.

European governments capped fresh rescue lending at 500 billion euros ($666 billion), bringing the size of the firewall to 800 billion euros, according to a statement after a meeting in Copenhagen today. U.S. consumer purchases rose the most in seven months, according to Commerce Department data, while the Thomson Reuters/University of Michigan final index of consumer sentiment reached the highest level in more than a year.

“Things are not going gangbusters, but they are more positive,” Ann Miletti, senior portfolio manager for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. Her firm manages $213 billion. “The tail risk of Europe seems to have gone away. In an environment where you have stocks trading at discounts to their historical levels, it does create a sweet spot.”

Stocks Rally
Gains in the S&P 500 (SPXL1) this year have been led by financial and technology companies, with gauges of both groups increasing about 21 percent in the first quarter. Even after rallying 28 percent from last year’s low in October and reaching an almost four-year high on March 26, the S&P 500 is trading at about 14.6 times (SPX) reported earnings, below the average multiple of 16.4 since 1954. The Nasdaq Composite Index rallied almost 19 percent this quarter, the most to start a year since 1991.

Walt Disney Co. (DIS), the largest U.S. entertainment company by market value, advanced 1.8 percent for the biggest gain in the Dow Jones Industrial Average after Lazard Ltd. recommended buying the shares. Pfizer Inc. and Hewlett-Packard Co. (HPQ) also rose more than 1 percent to pace gains in the Dow, which rose 66.22 points to 13,212.04 to complete an 8.1 percent first-quarter rally. Dow Chemical Co. and Monsanto Co. advanced with commodities.

Apple Retreats
Apple Inc. retreated 1.7 percent today and pared its first- quarter rally to 48 percent after an audit of Foxconn Technology Group, its biggest manufacturer, found “serious and pressing” violations of Chinese labor laws.

Stocks started the session higher after Commerce Department data today showed consumer purchases climbed 0.8 percent in February, the largest gain since July. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase. Incomes advanced less than projected, the data showed. The Michigan confidence index rose to 76.2, topping the median economist forecast of 74.5.

Thirty-year Treasury bonds also declined, sending yields up seven basis points to 3.34 percent. Two-year yields were little changed at 0.34 percent.

Treasuries
Treasuries had the steepest quarterly drop since the last three months of 2010, while corporate bonds surged as the world’s largest economy showed signs of improvement. U.S. government securities lost 1 percent since Dec. 31 as of yesterday, according to Bank of America Merrill Lynch indexes. An index of investment-grade and high-yield corporate bonds returned 3.2 percent, the most since July to September 2010

The Stoxx Europe 600 Index (SXXP) rallied 1 percent, snapping three days of losses, as automakers and construction companies rallied. The regional benchmark index extended its first-quarter advance to 7.7 percent. HeidelbergCement AG (HEI) climbed 4.3 percent as HSBC Holdings Plc recommended the cement maker.

The euro strengthened almost 3 percent against the dollar in the first quarter, its biggest quarterly gain in a year, and jumped 11 percent versus the yen in the period for its biggest quarterly gain in 11 years. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, fell 0.3 percent today, leaving it 1.5 percent lower since the end of 2011.

Italian 10-year bonds rose today, driving the yield down nine basis points to 5.12 percent, with similar-maturity Spanish yields falling 11 basis points and Belgian yields dropping six basis points.

European Bonds
Portuguese bonds returned 14 percent this quarter, the best-performing market according to Bloomberg/EFFAS indexes. Irish government bonds returned 11 percent in the first quarter, the second-biggest gain, after Portugal, as measured by indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian debt was third with a 10.5 percent return, and Belgian securities earned 4.7 percent for fourth place, according to the gauge.

The Markit iTraxx SovX Western Europe Index of credit- default swaps tied to the debt of 15 governments dropped 3.8 basis points to 268.5.

Crude climbed 24 cents to $103.02 a barrel, rebounding from yesterday’s 2.5 percent drop and capping a second straight quarterly gain. Wheat, corn and soybeans surged at least 3.5 percent to lead gains in 15 of 24 commodities tracked by the S&P GSCI Index.

U.S. farmers will plant 73.902 million acres with soybeans this year, down 1.4 percent, the U.S. Department of Agriculture said in a report today. Analysts surveyed by Bloomberg forecast 75.429 million. In a separate report, the USDA said corn inventories on March 1 fell 7.9 percent from a year earlier and were the lowest for that time of year since 2004, while wheat supplies fell 16 percent.

The MSCI Emerging Markets Index (MXEF) gained 0.9 percent and is up 14 percent this year, its best first-quarter rally since 1992. The Hang Seng China Enterprises Index (HSCEI) of companies listed in Hong Kong gained 1 percent as Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. reported better-than-estimated earnings. India’s Sensex Index climbed 2 percent.