| Firms’ optimism slips in Q1 www.bworldonline.com OPTIMISM among businesses in the country slipped this quarter, weighed partly by concerns over rising prices of oil and other commodities, results of the latest Business Expectations Survey which the central bank released yesterday showed. Still, the Bangko Sentral ng Pilipinas (BSP) noted that the overall confidence index -- computed as the percentage of respondents who answered in the affirmative less the percentage of those who answered in the negative with respect to their views on specific indicators -- remained "strong" at 47.5% this quarter. Specifically, the first quarter 2011 index slid from 50.6% in the fourth quarter last year, but was still better than the 39.1% recorded in Jan.-March 2010, the BSP data showed. The central bank attributed the survey respondents’ "less upbeat" quarter-on-quarter outlook to the usual slowdown in business activity after the Christmas and harvest seasons, rising prices of oil and other commodities, and the expected impact of "abnormal weather conditions," apparently referring to the heavy rains and floods that hit the country’s eastern provinces from southern Luzon to Mindanao. World oil prices have been on the rise, fueled by fears of long-drawn unrest in the Middle East. Brent on Wednesday increased 5.3% to settle at $111.25 per barrel (/bbl). It averaged $102.67/bbl on Feb. 1-23 from $96.91/bbl last Jan. 3-31. Dubai crude, a benchmark for local fuel prices, eased slightly to $102.55/bbl on Wednesday from $103.44/bbl the day before. But its average rose to $98.50/bbl on Feb. 1-23 from $92.55/bbl last Jan. 3-31. Prices of all oil products at home rose by 50 centavos last Monday. The central bank also noted that respondents’ outlook for the second quarter improved to an all-time-high 59.4% from the 51% recorded in Oct.-Dec. 2010. It noted that the second quarter outlook was the highest since the survey started in 2001. It attributed this to respondents’ continued confidence in the current administration, as well as expectations of faster recovery among developing economies, robust growth of merchandise exports, continued strong inflows of remittances and foreign capital, and the government’s "front-loading" of spending and plans to undertake big-ticket infrastructure projects under the public-private sector partnership (PPP) scheme. "Sustained business optimism indicates that growth momentum could continue in 2011," a BSP statement read. Among the sectors monitored, construction and industry displayed the most optimism for the current quarter due to expected opportunities in the state’s PPP thrust, as well as the increase in demand for residential and commercial buildings. However, expectations dipped in services -- consisting of financial intermediation, hotels and restaurants, renting and business activities, as well as community and social services -- a development the central bank blamed on the seasonal slack in demand after the holidays, rising cost of operations and higher fuel prices. The outlook for the second quarter, however, was more upbeat across all sectors, the same data showed. The latest survey was conducted among representatives of 1,630 firms nationwide last Jan. 6-Feb. 14. It had a 78.2% response rate.
"The fare adjustment for [Light Rail Transit lines 1 and 2] and [Metro Rail Transit-3] has been deferred," LRTA spokesman Hernando T. Cabrera told reporters in Filipino after an LRTA board meeting yesterday. "This does not mean the new fares will no longer take effect; only that implementation has been deferred. There is a need to consult LTFRB and for publication." Executive Order 603, issued on July 12, 1980, formed the LRTA and imbued it with the power to determine fares, but said it has to consult LTFRB -- referred to in the order by its former name, the Board of Transportation -- on this matter. Mr. Cabrera said the LRTA board has yet to determine a "definite date" for the fare hike implementation." The LRTA board also decided on a 20% discount for students on all three light railways, adding to the current beneficiaries composed of senior citizens and the disabled, he added. The provisional fare adjustment announced last Jan. 11 would add an average P10 to current rates, which now range from P12 to P20 for all three lines. |
Most U.S. Stocks Rise as Crude Oil's Retreat Eases Concern About Recovery Most U.S. stocks rose, erasing most of the 123-point drop in the Dow Jones Industrial Average, as oil’s retreat from the highest level since 2008 eased concern that surging energy prices will hurt the economic recovery. Boeing Co. added 0.8 percent as government data showed more demand for aircraft. Priceline.com Inc. soared 8.5 percent as the online travel agency’s earnings forecast beat analyst estimates. General Motors Co. tumbled to $32.05, the lowest intraday price since its initial public offering in November, as the 15 percent surge in oil since Feb. 15 dimmed the outlook for truck sales. Exxon Mobil Corp. andSchlumberger Ltd. dropped more than 1.2 percent as oil fell to $97.28 a barrel. More than four stocks advanced for every three that declined on U.S. exchanges as of 4 p.m. in New York. The Standard & Poor’s 500 Index retreated 0.1 percent to 1,306.10, after losing as much as 1 percent amid oil’s surge to $103.41. The Dow decreased 37.28 points, or 0.3 percent, to 12,068.50. “We’re certainly watching a battle between nerves and economic fundamentals,” said Bruce McCain, who oversees $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “For the most part, economic data points in the U.S. have been good. However, the focus will be on oil, rumors and their implications. For the time being, no matter how strong the economy is, we’ll have that oil overhang.”
Ten-year yields reached a three-week low as the U.S. auctioned $29 billion in seven year notes in the final of three sales this week totaling $99 billion. The yield touched the lowest since Feb. 2 as loyalists of Muammar Qaddafi sought to crush dissent in Libya, which sent crude oil to a 29-month high. The Fed purchased $5 billion in Treasuries with maturities ranging from November 2012 to August 2013 today as part of its planned $600 billion in purchases to support the economy. “The driver continues to be Libya,” said David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors. “The price of oil is driving everything.” The yield on 30-year Treasuries fell four basis points, or 0.04 percentage point, to 4.54 percent at 5:01 p.m. in New York, according to BGCantor Market Data, after touching the lowest level since Jan. 31, The price of the 4.75 percent security maturing in February 2041 increased 21/32, or $6.56 per $1,000 face amount, to 103 12/32. The 10-year note yield dropped four basis points to 3.45 percent after touching the lowest since Feb. 2. The yield on the current seven-year note fell two basis points to 2.85 percent. |
| Oil Retreats on Assurances Libyan Shipments Can Be Replaced Crude in New York retreated from the highest level in 29 months on assurances from the U.S., Saudi Arabia and the International Energy Agency that they can compensate for any disruption of Libyan shipments. Oil slipped after President Barack Obama said the U.S. will be able to “ride out” a cut resulting from turmoil in Libya. The crisis has trimmed supply by 500,000 to 750,000 barrels a day, the IEA said today. The cuts create “significant upside risk” to prices, Goldman Sachs Group Inc. said. “It looks like the assurances that any missing barrels will be made up are finally having an impact,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Nothing appears to have changed in Libya and there’s still quite a geopolitical premium in the market.” Crude oil for April delivery declined 82 cents, or 0.8 percent, to settle at $97.28 a barrel on the New York Mercantile Exchange. The contract touched $103.41, the highest intraday price since Sept. 29, 2008. Futures are up 22 percent from a year ago. Brent oil for April settlement rose 11 cents to $111.36 a barrel on the London-based ICE Futures Europe exchange, the highest close since Aug. 29, 2008. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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