PHILIPPINES
Peso, Asian currencies rebound as Euro gov’ts agree on debt rescue fund
By: Michelle V. Remo
The peso, together with other Asian currencies, recovered on Wednesday, following pronouncements from European governments that they would set up a fund to help in the rescue of debt-ridden countries in the eurozone.
The local currency closed at 43.45 against the US dollar, up by 42 centavos from Monday’s close of 43.87:$1. There was no foreign exchange trading on Tuesday, as the typhoon forced markets and banks to close.
Intraday high hit 43.43:$1, while intraday low settled at 43.75:$1. Volume of trade reached $774.77 million, down from $883.2 million previously.
Traders said the announcement from European governments that they would speed up the establishment of the fund, called the European Stability Mechanism, lifted the sentiment of foreign portfolio investors who were previously worried about the probability of a contagion of the European debt woes.
A worsening of the euro debt crisis was believed to adversely affect even better-performing developing economies in Asia, like the Philippines. Developing countries consider Europe as one of their major export markets.
WORLD
U.S. Stocks Retreat as Europe Debt Concern Grows
By Whitney Kisling and Inyoung Hwang
U.S. stocks declined, halting a three-day rally for the Standard & Poor’s 500 Index, amid growing concern that European leaders are divided over how to handle Greece’s debt crisis.
All 10 industry groups in the S&P 500 fell at least 0.6 percent, with companies most-tied to economic growth dropping the most. Dow Chemical Co. (DOW) and Alcoa Inc. (AA) slid at least 4.9 percent as commodities tumbled. Morgan Stanley and Bank of America Corp. (BAC) lost more than 4.9 percent, pacing declines among financial shares. Amazon.com Inc. (AMZN) rose 2.5 percent after the company launched its Kindle Fire tablet computer, taking aim at Apple Inc.’s bestselling iPad.
The S&P 500 lost 2.1 percent to 1,151.06 at 4 p.m. New York time, after rising as much as 0.8 percent earlier and rallying 4.1 over the previous three days. The Dow Jones Industrial Average fell 179.79 points, or 1.6 percent, to 11,010.90 today, with all 30 stocks retreating.
“Europe is the issue that is first and foremost in everyone’s mind, so any news that comes out on that does have a strong impact on the market,” Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “Any weakness there is going to be a drag worldwide.”
A four-day rout last week erased $1 trillion from U.S. equities amid concern Greek insolvency is inevitable and Europe can’t contain the damage. The decline left the S&P 500 trading at 12.4 times earnings in the past 12 months, 4.4 percent below its average valuation at the lowest point during the last nine bear markets, Bloomberg data shows.
Bigger Writedowns
Stocks fell today as an official said the European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit. The commission opposes ideas that are being floated by some government officials to get banks to accept bigger so-called haircuts and doesn’t want to have talks about any such attempt, the official said on condition of anonymity because the deliberations are private.
Italian and Spanish financial market regulators extended temporary bans on short selling of financial shares that were introduced last month in a bid to stem market volatility, the European Securities and Markets Authority said.
The S&P 500 had climbed over the past three days amid optimism that euro-area nations were making progress on plans to tame the region’s government debt crisis.
‘Pins and Needles’
“The market is on pins and needles over the whole European debt problem,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., which oversees about $75 billion, said in an e-mail. “Every new rumor or little piece of news moves the market in one direction or the other a percent or two. It’s frustrating!”
Stocks rose earlier today as a Commerce Department report showed orders for U.S. capital goods climbed in August by the most in three months, a sign business investment continues to support the recovery. Bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1 percent, the most since May. Demand for total durable goods dropped 0.1 percent, less than forecast.
The S&P 500 has been trading between about 1,100 and 1,300 since the beginning of August. The benchmark gauge for U.S. equities climbed as high as 1,363.61 on April 29, before starting a decline of as much as 18 percent through August. The index is down 8.5 percent for the year. Strategists estimate it will climb to 1,305 by year-end, representing a 13 percent advance, according to the average in a Bloomberg survey.
Commodity Companies
Raw-material companies fell the most among 10 groups in the S&P 500 today, tumbling 4.5 percent. Energy shares lost 3 percent as a group, as the Thomson Reuters/Jefferies CRB Index of 19 commodities fell 2.5 percent. The Morgan Stanley (MS) Cyclical Index of companies most-tied to the economy lost 3.3 percent. The Dow Jones Transportation Average, a proxy for the economy, lost 2.9 percent.
Alcoa fell 4.9 percent to $9.97. Dow Chemical, the largest U.S. chemical maker, slid 6.2 percent to $23.76.
The KBW Bank Index lost 3.5 percent, with Morgan Stanley falling 5.4 percent to $14.16. Bank of America slid 4.9 percent to $6.16, for the largest decline today for the Dow. A group of S&P 500 financial shares have plunged 27 percent since the April high, the biggest drop among the 10 industry groups. Utilities companies have been the only group to gain, adding 1.2 percent in the same period.
Amazon.com shares rose 2.5 percent, the second-most in the S&P 500, to $229.71. The world’s largest online retailer introduced its Kindle Fire, a device that’s smaller and less than half the price of Apple’s iPad. Chief Executive Officer Jeff Bezos is betting he can leverage Amazon’s dominance in e- commerce to pose a challenge to the iPad, after tablets from rivals such as Hewlett-Packard Co. and Research In Motion Ltd. have fallen short.
Jabil Circuit Inc., gained the most in the benchmark index, adding 8.4 percent to $18.84. The U.S. contract electronics manufacturer forecast first-quarter earnings will be at least 62 cents a share, exceeding the average analyst projection, data compiled by Bloomberg show.
COMMODITIES
Commodities Drop on Growth Risk, Deepening Worst Quarterly Loss Since 2008
By Elizabeth Campbell
Commodities fell, widening their biggest quarterly loss since 2008, as Europe’s sovereign-debt crisis threatened to slow global growth and reduce raw-material demand.
The Standard & Poor’s GSCI Spot Index slid 2.3 percent to 605.79 at 1:34 p.m. in New York. Since June 30, the gauge is down 9.4 percent, the most since a 44 percent plunge at the end of 2008 during the worst recession since the 1930s. Crude oil fell as much as 3.8 percent today in New York, while copper retreated as much as 7.6 percent.
The MSCI World (MXWO) Index of equities headed for the first decline in four sessions amid increasing concern that European leaders are divided on how to handle the region’s debt woes. A report tomorrow may confirm European consumer confidence dropped to a two-year low in September. Last week, a preliminary index of purchasing managers in China, the biggest consumer of everything from energy to copper, indicated manufacturing contraction.
“Concern for global growth and bad charts have kind of thrown some water on the commodities bull market here,” Walter “Bucky” Hellwig, who helps oversee $17 billion at BB&T Wealth Management in Birmingham, Alabama, said in a telephone interview.
The GSCI has slumped 21 percent since reaching a 32-month high on April 11. Investors have sold raw materials on concern the global economy is slowing three years after the global financial crisis that shut banks and spurred economic contractions.
Dollar, Confidence
The dollar rose for the first time this week against a basket of six major currencies, diminishing the investment appeal of raw materials. Confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying that it was difficult to find a job climbed to the highest level in almost three decades, a report said yesterday.
Most advanced nations are lapsing back into recession, while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, the chairman of Roubini Global Economics LLC.
Copper futures for December delivery fell 19.3 cents, or 5.6 percent, to settle at $3.2465 a pound at 1:16 p.m. on the Comex in New York. Crude-oil futures for November delivery slid 3.8 percent to $81.27 a barrel on the New York Mercantile Exchange.
Odds of Recession
The drop in copper indicates “the odds of a recession are still apparent,” Adam Klopfenstein, a senior market strategist at MF Global Holdings Inc. in Chicago, said in a telephone interview. “Even if the euro zone gets some money together to cause contagion fears to subside, it still means slower growth in the near term as the world economy is still digesting a deleveraging atmosphere.”
Money managers cut the combined net-long position across 18 futures and options by 20 percent in the week ended Sept. 20, the most since February 2010, data from the U.S. Commodity Futures Trading Commission show.
Gold futures for December delivery fell 2.1 percent to settle at $1,618.10 an ounce on the Comex. On the Chicago Board of Trade, wheat futures for December delivery 2.1 percent to $6.44 a bushel.
No comments:
Post a Comment