Today in the markets 03/07/2013 - ASIA

Asia stocks drop after China data; Hong Kong hit

 

Asian stocks fell Wednesday as concerns about growth in China's services sector added to the selling pressure amid caution ahead of U.S. jobs data later in the week, dragging on Hong Kong and Australian equities in particular.

Hong Kong's Hang Seng Index declined 2.5%, and the Shanghai Composite ended 0.6% lower.

Australia's S&P/ASX 200 tumbled 1.9%, returning most of the gains made in the previous session, when it jumped 2.6% after the country's central bank left its policy interest rate unchanged.

The performance came ahead of a U.S. holiday Thursday, leading into the key nonfarm payrolls data for June due on Friday.

'Financial markets remain edgy ahead of the U.S. jobs data due for release later in the week, with the result of nonfarm payrolls likely to shape the Federal Open Market Committee course towards the quantitative easing tapering,' said Tim Waterer, a senior trader at CMC Markets. 'A sense of nervousness among investors is likely to keep levels of volatility high in the interim.'

Stocks on Wall Street ended lower Tuesday amid caution over U.S. employment trends, with economists polled by MarketWatch anticipating an increase of 155,000 jobs in June, lower than the addition of 175,000 payrolls in May.

An official measure of the Purchasing Managers' Index (PMI) in China's services sector eased to 53.9 in June, down from 54.3 in May. In a separate survey by HSBC, the services PMI ticked up to 51.3 from 51.2 in May. HSBC's chief China economist Hongbin Qu, however, said growth in the sector was expected to slow in coming months as the effect of value-added-tax reforms filter through.

Meanwhile, Japan's Nikkei Stock Average finished 0.3% lower for its first decline in five trading days. Taiwan's Taiex gave up 1.3%, and South Korea's Kospi dropped 1.6%.

Shares of footwear major Belle International Holdings Ltd. (BELLF.NaE) skidded 4.2%, China Coal Energy Co. (CCOZF.NaE) slumped 6.6% and China Overseas Land & Investment Ltd. dropped 4% in Hong Kong, accelerating their losses after the Chinese services PMI data.

In Shanghai, property firm Gemdale Corp. retreated 3.1%, and China Southern Airlines Co. (ZNH.NaE) dropped 2.9%.

In Tokyo trading, utility Tokyo Electric Power Co. (TKECF.NaE) plunged 10.3% a day after it soared 19%, with the Nikkei newspaper reporting its plans to restart a nuclear power plant looked 'premature' and hinted of 'haste.'

Shares of Suntory Beverage & Food Ltd. rose modestly as they began trading in Tokyo after raising nearly $4 billion from an initial public offering, Japan's largest this year. The stock ended at ?3,145 ($31.30), up from its IPO price of ?3,100.

Mitsubishi UFJ Financial Group Inc. (MTU.NaE) gained 0.8% in choppy trading action, on plans to buy a majority stake in Thai lender Bank of Ayudhya PCL for about $5.6 billion.

Also posting gains, Nissan Motor Co. (NSANF.NaE) climbed 0.6%, and Honda Motor Co. (HMC.NaE) rose 0.4%, after reporting an increase in their U.S. sales for June.

The gains were aided as the U.S. dollar rose above the ?100 level for the first time since early June. The greenback had moved in the mid-?99 range during the previous Tokyo stock session.

Shares of internationally-exposed South Korean firms also suffered losses, with Samsung Electronics Co. (SSNLF.NaE) dropping 2.6% and LG Electronics Inc. (LGEAF.NaE) sliding 3.8%.

Mining issues and banks pulled back in Sydney after Tuesday's advances. Rio Tinto Ltd. (RTNTF.NaE) skidded 3%, and BHP Billiton Ltd. (BHP.NaE) slumped 3.2%, while National Australia Bank Ltd. (NAUBF.NaE) gave up 1.9%.

Data released earlier on Wednesday showed retail sales grew a slower-than-expected 0.1% in May. Trade data surprised positively, meanwhile, with the country recording a trade surplus of 670 million Australian dollars ($615 million) during the month, as exports grew 4% from a year earlier, while imports rose 2%.

Shares of a few regional energy producers rose as Nymex August crude-oil futures briefly climbed past the $102-a-barrel level during Asian trading hours.

PetroChina Co. (PTR.NaE) gained 2.2% in Shanghai, Linc Energy Ltd. (LNCYF.NaE) rose 4.1% in Sydney and Inpex Corp. (IPXHF.NaE) added 2.8% in Tokyo.

Source: https://www.fidelity.co.uk/investor/news-views/today-in-the-markets/asia-detail.page?resId=201307022121MRKTWTCHNEWS_SVC_CB8CB294-E375-11E2-ACAD-002128040CF6&requestId=1&showChain=true&FullArticle=true

Today in the market 03/07/2013 - US

Europe stocks tumble on global worries, Portugal

 

Europe stocks turned sharply lower on Wednesday as global worries piled on investors. Fears of a government collapse in Portugal, turmoil in Egypt and downbeat data from China dented sentiment, with all sectors in the red.

A downgrade from Standard & Poor's hit three of Europe's biggest banks.

The Stoxx Europe 600 index fell 1.4% to 283.24, a day after closing 0.4% lower in the prior session.

On the worry list was fears of another crisis in Europe. The biggest hits were seen in Portugal, where the PSI 20 index tumbled 6.5% to 5,160.05, with Banco Comercial Portugues SA sinking 13% and Banco Espirito Santo SA dropping 12%. The yield on Portugal's 10-year government bond shot above 8%.

Portugal assets tumbled on fears the government may not survive the second resignation of a cabinet minister, as Reuters reported more ministers may be ready to go.

Prime Minister Pedro Passos Coelho said he will not step down after Foreign Minister Paulo Portas resigned Tuesday afternoon in protest over the country's austerity policies. On Monday, the country's finance minister, Vitor Gaspar, stepped down.

'Expect the government to fall in the course of the next 48 hours. A new election will be called amid a huge drive towards 'anti-austerity,'' said Steen Jakobsen, chief economist with Saxo Bank. 'This is EXACTLY what German Chancellor Angela Merkel does not need.'

Losses in Europe pressured U.S. stock futures, which were sharply lower ahead of a shortened day for Wall Street and a busy one for data.

Investors were also keeping a close eye on turmoil in Egypt, with crude-oil prices soaring above $102 a barrel as President Mohammed Morsi refused to step down, as clashes amid protests over his rule turned deadly on Tuesday. Morsi has just a few hours to go to a deadline imposed by the military, which called on him to resolve the country's political crisis or the army will step in. Read: Egypt's Morsi rebuffs calls to step down

Banks in Portugal were not the only ones suffering. Shares of Barclays PLC (BCS.NaE) and Deutsche Bank AG (DB.NaE) dropped over 4% and Credit Suisse SA fell over 3% after Standard & Poor's lowered its long-term ratings on those banks. The ratings firm said new regulations and uncertain market conditions will make it tougher for those banks to operate.

The German DAX 30 index fell 2% to 7,748.42 as shares of Adidas AG (ADDYY.NaE) sank 5% after Deutsche Bank (DB.NaE) cut shares to hold from buy. BMW AG fell 3% after J.P. Morgan Cazenove cut the automaker to neutral from overweight. The investment bank said it was switching out of BMW (BAMXF.NaE) into Daimler AG (DDAIF.NaE) , which it lifted to overweight from neutral. Shares of Daimler fell 1.6%.

The French CAC 40 index fell 1.6% to 3,678.56, with BNP Paribas SA (BNPQF.NaE) sinking over 4% in line with European banks. Shares of heavyweight Total SA (TOT.NaE) fell 1%, not helped by a sharp rise in crude prices.

London stocks were under equal pressure as losses for Barclays (BCS.NaE) helped knock 1.6% off the FTSE 100 index to 6,204.40. Mining stocks were among those losing ground -- BHP Billiton PLC (BBL.NaE) slid 3.7% and Rio Tinto PLC (RIO.NaE) sank 2.8% -- after China services data showed sluggish growth in June.

ARM Holdings PLC (ARMH.NaE) was nearly the only gainer in London, up 1% after UBS lifted those shares to buy from neutral on the view a pullback in shares due to news-flow looks overdone.

Source: https://www.fidelity.co.uk/investor/news-views/today-in-the-markets/us-detail.page?resId=201307030445MRKTWTCHNEWS_SVC_42B28FCE-E3AD-11E2-ACAD-002128040CF6&requestId=1&showChain=true&FullArticle=true

Elderly people's care: government to set out role for volunteers

Social care minister Norman Lamb will outline neighbourhood watch-style scheme to help meet needs as care budget shrinks.

Local communities should set up "neighbourhood watch" groups to support elderly people living alone or needing help with everyday tasks, according to the government's social care minister.

Norman Lamb risks criticism that he is calling on volunteers to step in to meet people's needs after deep government cuts in funding for councils that pay for care services.

But the minister will insist in a speech on Wednesday evening that he is not suggesting replacing "the safety net and essential care and support the NHS and local government provides, which is substantial and effective".

Rather, he will say, the rapid ageing of the population demands fresh thinking and action to meet growing care needs: "We have a grassroots movement to keep an eye on our neighbours' houses and property to guard against crime. So what about one to guard against isolation?"

The number of older people in England with care needs is forecast to rise by 60% over the next 20 years, but means-tested state funding will be guaranteed under government plans only for those whose needs are judged "substantial".

The number of people who received some form of council-funded care and support in their own homes dropped from 958,000 in 2009-10 to 802,000 in 2011-12.

Lamb, a Liberal Democrat, is due to float the idea of a neighbourhood watch scheme for the care of older and vulnerable people when he speaks at a Guardian debate on the challenges and opportunities presented by the ageing society.

The minister is expected to say: "I want to explore how we can reawaken communities' natural volunteer spirit to help provide an extra layer of support for older people. That means tapping into the energy of communities, bridging the gap between generations and encouraging everyone to help avoid leaving people lonely and isolated."

According to the Campaign to End Loneliness, one in 10 old people feels lonely "always" or "severely", and the effect of this on their health is equivalent to smoking 15 cigarettes a day.

Source: http://www.guardian.co.uk/society/2013/jul/03/elderly-people-care-volunteers-norman-lamb?CMP=twt_fd

U.K. Services Growth Accelerates as Recovery Evidence Builds



U.K. services growth unexpectedly accelerated to its fastest pace in more than two years in June, evidence the economic recovery is gaining strength.

A factory gauge rose to 56.9 from 54.9 in May, Markit Economics and the Chartered Institute of Purchasing and Supplysaid today in London. Economists had forecast 54.5 in June, according to the median of 33 estimates in a Bloomberg News survey. Readings above 50 indicate expansion. The pound rose after the data.

Reports this week showed manufacturing grew at the fastest in more than two years in June and construction expanded for a second month. Markit said its three indexes together point to economic growth of at least 0.5 percent in the second quarter, adding to signs of recovery just as Mark Carney leads his first Monetary Policy Committee meeting after taking over at the Bank of England.

“The U.K. services sector finished off the second quarter with a stellar performance in June, giving the clearest signal yet that the worst days of the financial crisis are behind us,”CIPS Chief Executive Officer David Noble said. The data “mark a good first week for the new Bank of England governor.”

The pound rose against dollar after the report. It was at $1.5241 as of 9:57 a.m. in London, up 0.6 percent from yesterday. The yield on the 10-year U.K. government bond dropped 4 basis points to 2.34 percent.

Stimulus Decision
The BOE will probably keep its quantitative-easing programat 375 billion pounds ($571 billion) tomorrow, according to all 44 economists in a poll. All 53 economists in a separate survey say it will hold the key interest rate at a record low of 0.5 percent.

Markit said the improving surveys “will ease pressure on the MPC to embark on another round of QE.” Its U.K. construction index rose to 51 in June from 50.8 in May, while the factory gauge climbed to a two-year high of high of 52.5 from 51.5.

“Evidence that a recovery in the economy may be finally taking root is becoming more telling,” said Martin Beck, an economist at Capital Economics in London. “The recovery still faces some headwinds, but, for now at least, things seem to be moving in the right direction.”

Europe Woes
In the euro region, the picture is less positive, with aservices gauge showing the industry contracted at a faster pace than initially estimated in June as the 17-nation currency bloc struggled to emerge from a record-long recession. The index rose to 48.3 from 47.2 in May, Markit said separately today. That’s below an initial estimate of 48.6 on June 20. A composite gauge of euro-area services and manufacturing output increased to 48.7 from 47.7.

Growth in China’s service industries slowed last month, according to a separate report today. The official non-manufacturing purchasing managers’ index from the National Bureau of Statistics and the China Federation of Logistics and Purchasing fell to 53.9 in June, a nine-month low, from 54.3 in May. Another service PMI released today by HSBC Holdings Plc and Markit rose to 51.3 last month from 51.2 in May. 

Source: https://www.google.co.uk/search?gs_rn=19&gs_ri=psy-ab&cp=13&gs_id=1e&xhr=t&q=economy+growing&bav=on.2,or.r_qf.&bvm=bv.48705608,d.d2k&biw=1093&bih=428&wrapid=tljp1372844117877024&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=YvDTUb7aOsyp0AX29ICQBw

RBS to announce independent review into its failure to lend to small firms

Royal Bank of Scotland today announces an independent review into its lending to small firms. It will be led by Sir Andrew Large, a former deputy governor of the Bank of England, who will work with the management consultancy Oliver Wyman.

RBS, 81 per cent owned by the taxpayer, said the review will "identify steps" that can be taken to support lending to small firms. The review, which will report in the autumn, is also designed to promote a "common understanding" of the way the bank makes decisions on whether to lend.

"If there are loans that we could and should be making, but are not, then that will change. If there are things we can do better, we will" said Chris Sullivan, RBS's head of UK corporate banking.

Since the financial crisis broke in 2008, RBS has been continuously lambasted for refusing loan and overdraft requests from small firms. Net new lending to small and medium-sized enterprises (SMEs) by UK banks has been negative for much of the past five years, despite a host of official programmes designed to support the flow of credit to SMEs.

John Allan, of the Federation of Small Businesses, described the RBS review as a "positive step in getting to the root of the problem" and urged small firms to tell the inquiry about their experiences of banking with RBS.

Last month, the Chancellor announced a separate review into whether RBS should be split into a good and a bad bank. This review, which is expected to be conducted by Rothschild, will report in September.

In a sign of the ongoing troubles in RBS, the lender announced yesterday that its subsidiary, Ulster Bank, will close 39 branches across Ireland by the end of 2014. The consolidation plans could ultimately result in the loss of some 1,800 jobs.

Separately, at the Treasury Select Committee yesterday, Bank of England officials delivered a rebuke to banks that have been lobbying ministers to water down regulation of the sector. "Of course it's unacceptable, it's also pointless" said Paul Tucker, the Bank's Deputy Governor. Andrew Bailey, head of the Bank's Prudential Regulation Authority, said he had not personally been approached by ministers to dilute demands, but added: "These conversations did take place."

Robert Jenkins, a former member of the Financial Policy Committee, has cast doubt on the favoured strategy of Mark Carney, the Bank's new Governor, to provide markets with "forward guidance" on monetary policy. "[It] could be consistent and credible when the economic challenge was clear and compelling. How can it possibly be as effective... on the bumpy road back?" he writes in The Independent.

Source: http://www.independent.co.uk/news/business/news/rbs-to-announce-independent-review-into-its-failure-to-lend-to-small-firms-8684091.html

FTSE falls after China data, Portugal crisis unnerve investors

 

The FTSE 100 fell early on Wednesday as lacklustre Chinese economic data and a political crisis in Portugal cast a shadow.

The FTSE 100 was down 101.4 points, or 1.6 percent, at 6,202.51 points at 0853 BST.
Construction materials and mining stocks were among the biggest losers as data highlighted a slowdown in construction activity in China, the world's largest consumer of metals and a driver of global economic growth.

"There's more we need to see out of China before we feel we can buy any commodity stocks," said Dan Reed, head of contract-for-difference trading at Beaufort Securities. "I've been shorting the FTSE since about the 6,300 level."

Short sellers borrow a security and sell it, betting they will be able to buy it back at a lower price before returning it to the lender, pocketing the difference.

Reed said he was awaiting decisions from central banks in Britain and the euro zone, as well as jobs data from the United States later this week before taking any long-term positions on the FTSE.

Financial stocks knocked 30 points off the FTSE as a political crisis in Portugal threatened to derail Lisbon's exit from an international bailout programme and to reignite a crisis in the euro zone sovereign debt market.

Appetite for shares was further dented by concerns that turmoil in Egypt could destabilise the Middle East. That hit energy companies such as BG Group, which has operations in the region and fell 2 percent.

Africa-focused oil explorer and producer Tullow Oil outperformed its peers, rising 2.8 percent to the top of the FTSE after announcing a "very successful" exploration programme in Kenya.
Source: http://uk.reuters.com/article/2013/07/03/uk-markets-britain-stocks-idUKBRE8710BE20130703

What to Expect From the Bank of England Meeting

Rogge Global Partners' Ranjiv Mann discusses the monetary policies of the Federal Reserve, Bank of Japan and Bank of England with Mark Barton and Anna Edwards on Bloomberg Television's "Countdown." (Source: Bloomberg)



VTB Capital's Neil Mackinnon discusses the outlook for Bank of England monetary policy with Mark Carney at the helm. He speaks with Anna Edwards and Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)