Oro Chamber: Oct 6, 2011

06 October 2011

USD/PhP: 43.86 - 0.22 PSEi: 3890.52 + 67.39

USD/JPY: 76.66 PFINC: 881.56 + 0.89

EUR/USD: 1.3317 BDO: 47.85 +

0.20

GBP/USD: 1.5476 BPI: 54.15 - 0.30

PDSTF3M: 2.9654 MBT: 62.50 + 0.50

Prices as of 4:00pm Source: Bloomberg, Reuters

Asia Stocks Rise First Day in Five on European, U.S. Optimism

2011-10-06 06:22:35.421 GMT

By Shani Raja and Yoshiaki Nohara

Oct. 6 (Bloomberg) -- Asian stocks rose for the first time

in five days as better-than-expected U.S. economic data and

optimism European leaders will contain the region’s debt crisis

boosted the earnings outlook for exporters.

Sony Corp., Japan’s No. 1 exporter of consumer electronics,

advanced 4.7 percent in Tokyo. Cathay Pacific Airways Ltd.,

Asia’s largest international carrier, jumped 7.1 percent in Hong

Kong. James Hardie Industries SE, a building-materials supplier

that gets almost 70 percent of its sales from the U.S., climbed

8.2 percent Sydney. BHP Billiton Ltd., the No. 1 global mining

company, gained 3.3 percent as commodity prices advanced.

The MSCI Asia Pacific Index rose 2.8 percent to 110.36 as

of 3:13 p.m. in Tokyo. About seven stocks advanced for each that

fell and all 10 industry groups climbed, led by commodity

producers and banks. The gauge tumbled 16 percent in the third

quarter, the biggest drop since 2008, amid concern that Europe’s

debt crisis and a U.S. economic slowdown will drag the world

back into recession.

“The market is a bit more optimistic about prospects for

European policy makers to find a solution, particularly with the

solvency of European banks,” said Tim Schroeders, who helps

manage $1 billion in equities at Pengana Capital Ltd. in

Melbourne. The latest U.S. data is “a good sign” that the

economy is stabilizing, he said.

Japan’s Nikkei 225 Stock Average gained 1.7 percent. South

Korea’s Kospi Index added 2.6 percent. Hong Kong’s Hang Seng

Index climbed 4.5 percent and is headed for its biggest gain in

more than two years. Australia’s S&P/ASX 200 advanced 3.7

percent, the biggest increase since December 2008.

U.S. Reports

Futures on the Standard & Poor’s 500 Index gained 0.1

percent today, erasing losses of as much as 0.4 percent. The S&P

500 climbed 1.8 percent yesterday in New York, increasing for a

second day, after a report from ADP Employer Services showed U.S.

companies added 91,000 jobs in September and the Institute for

Supply Management’s non-manufacturing index fell less than

forecast. Nasdaq-100 Index futures rebounded to rise 0.2 percent

after falling when Apple Inc. said co-founder Steve Jobs died

today. He was 56.

“The market sentiment is too pessimistic about the U.S.

economy, which hasn’t become that bad,” said Mitsushige Akino,

who oversees about $600 million in Tokyo at Ichiyoshi Investment

Management Co. “We can expect a rebound of stocks.”

The International Monetary Fund said European Union

officials are working on plans to boost bank capital. France and

Belgium said a “bad bank” will be set up to hold Dexia SA’s

troubled assets.

Last Resort

German Chancellor Angela Merkel said Europe’s rescue fund

will only be used as a last resort to save banks and that

investors may have to take deeper losses as part of a Greek

rescue.

HSBC Holdings Plc, Europe’s biggest lender by market value,

gained 2.5 percent to HK$58.05 in Hong Kong, while National

Australia Bank Ltd., the nation’s largest lender to businesses,

surged 5 percent to A$22.87 in Sydney.

Sony advanced 4.7 percent to 1,470 yen in Tokyo. Li & Fung

Ltd., a supplier of clothes and toys to retailers including Wal-

Mart Stores Inc., increased 3.8 percent to HK$12.02 in Hong Kong.

Cathay Pacific climbed 7.1 percent to HK$12.72 in Hong Kong,

while in Sydney, James Hardie rose 8.2 percent to A$5.84.

Samsung Electronics Co. increased 1.5 percent to 855,000

won in Seoul and LG Electronics Inc. surged 6.3 percent to

73,900 won on optimism South Korea’s two largest electronics

makers will gain market share against Apple.

Commodity Shares

Asian commodity stocks also rallied. BHP Billiton gained

3.3 percent to A$36.30 in Sydney and rival Rio Tinto Group

climbed 4.9 percent to A$63.28. Korea Zinc Co., which produces

metals including zinc, lead and gold, jumped 6 percent to

246,000 won in Seoul. Cnooc Ltd., China’s largest offshore

energy explorer, surged 8.6 percent to HK$12.32.

Crude oil for November delivery gained 5.3 percent on the

New York Mercantile Exchange yesterday after the U.S. government

reported an unexpected stockpile decline in the world’s biggest

crude-consuming country. The Thomson Reuters/Jefferies CRB Index

of raw materials advanced 1.9 percent yesterday.

The MSCI Asia Pacific Index declined 22 percent this year

through yesterday, compared with a 9 percent drop by the S&P 500

and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in

the Asian benchmark are valued at 10.9 times estimated earnings

on average, compared with 11.5 times for the S&P 500 and 9.4

times for the Stoxx 600.

PHILIPPINES

September inflation inches up to 4.8%

Bangko Sentral seen keeping rates steady

Philippine Daily Inquirer

The annual inflation rate edged up slightly in September, matching market forecasts, but economists said there was little doubt the central bank would keep interest rates steady at a review this month as it focuses on supporting growth.

After two typhoons hit the country last week and damaged crops, there have been concerns food prices would rise. But Governor Amando Tetangco of the Bangko Sentral ng Pilipinas said he did not expect a persistent impact, saying inflation should remain manageable.

Annual headline inflation in September was 4.8 percent, slightly higher than the previous month’s 4.7 percent, based on a new series using 2006 prices.

“The headline number is pretty much expected and it is good for policymakers. The central bank can now afford to focus its efforts on stimulating the economy by keeping the overnight borrowing rate low,” said Eugene Leow, an economist at DBS in Singapore.

The old series based on 2000 prices showed annual inflation at 4.6 percent, picking up from August’s 4.3 percent. The central bank is using this series to measure its 2011 target of keeping inflation between 3 and 5 percent, and the nine-month average of 4.3 percent suggested it would comfortably meet that.

The central bank is widely expected to keep interest rates steady at 4.5 percent for the fourth meeting in a row on October 20.

Tetangco also said the central bank was watching the developments abroad as doubts grew about whether a planned second bailout package for debt-laden Greece would go ahead.

“We also are watchful of policy developments to resolve the European debt crisis as these could impact on risk appetite and therefore capital flows in emerging market economies, including the Philippines,” he said in a text message to reporters.

Philippine economic growth slowed more than expected in the second quarter, helping keep inflation tame, and authorities have promised to ramp up spending in the remainder of the year to rev up activity.

“Rates will likely remain on hold this year and well into first half 2012 before the bias possibly shifts to an accommodative gear if growth risks heighten,” said Radhika Rao, an economist at Forecast Pte in Singapore.

Many central banks in Asia have put monetary tightening on hold and there were some signs that the policy focus could be shifting toward supporting growth amid increasing global economic uncertainties.—Reuters

WORLD

S&P 500 Caps Biggest Two-Day Advance Since August

By Rita Nazareth (Bloomberg)

U.S. stocks rallied, giving the Standard & Poor’s 500 Index its biggest two-day gain in more than a month, as economic data topped estimates and investors speculated Europe will act to contain the region’s debt crisis.

Alcoa Inc. (AA) and Cisco Systems Inc. (CSCO) added at least 2.7 percent to pace gains among companies most-tied to the economy. Financial stocks rebounded as Morgan Stanley jumped 3.4 percent. Monsanto Co. (MON) climbed 5.2 percent as the world’s largest seed company forecast higher-than-expected earnings. Yahoo! Inc. surged 10 percent, the most since 2008, after a report that Microsoft Corp. (MSFT) may make a bid. Apple Inc. (AAPL) gained 1.5 percent, preventing the longest decline since 1998.

The S&P 500 advanced 1.8 percent to 1,144.04 at 4 p.m. New York time, rallying 4.1 percent in two days. The Dow Jones Industrial Average added 131.24, or 1.2 percent, to 10,939.95.

“We are headed for the mother of all counter-trend rallies in equities,” said Michael A. Gayed, the chief investment strategist at Pension Partners LLC in New York. “We’ve seen tremendous panic. There’s likely to be some kind of reevaluation of the financial sector. It could be because of the realization that we’re going to have some sort of recapitalization in Europe. It could very well be that we saw the bottom."

Stocks reversed losses yesterday, rallying in the final hour of trading, amid speculation European Union officials are examining how to recapitalize the region’s banks. The S&P 500 was on the brink of a bear market during the worst of yesterday’s losses, falling more than 20 percent from an April peak. The index is now down 16 percent since April 29, on concern about Europe’s debt crisis.

‘Bad Bank’

The International Monetary Fund said EU officials are working on plans to boost bank capital. France and Belgium said a ‘‘bad bank” will be set up to hold Dexia SA’s troubled assets. German Chancellor Angela Merkel said Europe’s rescue fund will only be used as a last resort to save banks and that investors may have to take deeper losses as part of a Greek rescue.

Investors also weighed economic reports that topped forecasts. Private employment expanded last month, while the Institute for Supply Management’s non-manufacturing index fell to 53. The median forecast of 75 economists surveyed by Bloomberg News was for a drop to 52.8. Orders picked up.

‘Three Up Closes’

A rally in the S&P 500 tomorrow would represent “three up closes off a low,” a pattern that may result in a “sharp decline” a day later, according to Tom DeMark, the creator of indicators for identifying turning points in securities.

“People are not smart off of market bottoms,” DeMark said in an interview on Bloomberg Television. “If you do get three up closes off a low, we’ll see a vacuum in the market and that vacuum will accent the decline even more than the upside.”

DeMark, the founder of Market Studies LLC, said on Sept. 22 that the S&P 500 might drop as low as 1,076 before investor panic abated and stocks advanced. The benchmark index for American equities fell yesterday to 1,074.77 and has gained 6.4 percent since.

The Morgan Stanley (MS) Cyclical Index of companies most-tied to the economy rose 2.7 percent today. The Dow Jones Transportation Average, a proxy for the economy, added 2.7 percent. Alcoa, the largest U.S. aluminum producer, gained 2.7 percent to $9.37. Cisco increased 3.7 percent to $16.16.

Banks Rebound

The KBW Bank Index of 24 stocks rallied 1.1 percent after falling as much as 2.5 percent. Morgan Stanley jumped 3.4 percent to $14.48. Bank of America Corp. (BAC) added 0.2 percent to $5.77 after falling as much as 4.3 percent.

Monsanto advanced 5.2 percent to $66.25. The company forecast higher-than-forecast fiscal first-quarter profit as Latin American farmers increase demand for genetically modified crops. Profit will be 10 cents to 15 cents a share in the three months that began Sept. 1. Five analysts surveyed by Bloomberg estimated earnings of 8 cents, on average.

Yahoo surged 10 percent to $15.92. Microsoft might enlist a partner to go after Yahoo, Reuters reported today, citing sources close to the situation. Yahoo spurned a $47.5 billion bid from Microsoft in 2008. No decision has been made to come back to the negotiating table, and there are internal divisions at Microsoft over the idea, Reuters said.

Apple, the world’s largest technology company, rose 1.5 percent to $378.25, halting a string of consecutive declines. The stock fell 7.9 percent over the previous seven days.

Analyst Changes

Some stocks moved on analysts’ recommendations. Walt Disney Co., the largest theme-park operator, added 5.5 percent, the most in the Dow, to $31.51 after being raised to “buy” from “hold” at Citigroup Inc. Apollo Group Inc. (APOL), the biggest U.S. for-profit college, gained 8.5 percent to $42.22 as Credit Suisse Group AG boosted its rating to “outperform” from “neutral.”

The U.S. stock market probably hit bottom yesterday and will rebound as investors refocus on fundamentals and earnings after weeks of distraction from the European debt crisis, Oppenheimer & Co.’s Brian Belski said.

The U.S. stock market is positioned for a rally after weeks of defensive positioning and indiscriminate selling that has led to record declines, Belski, chief investment strategist at Oppenheimer in New York, said on Bloomberg Television’s “Inside Track With Deirdre Bolton and Erik Schatzker.” Investors have become overly focused on the daily news on the Greek sovereign debt crisis and have forgotten that earnings drive stock prices, not macroeconomic news, he said.

“Earnings will surprise to the upside -- earnings estimates have been slashed too much,” Belski said. “The market’s going to get squeezed and we’re going to have a nice year-end rally.”

COMMODITIES

Crude Oil Gains Most Since May on Economic Data, Decline in Inventories

By Mark Shenk (Bloomberg)

Oil in New York rose the most in almost five months after the U.S. government reported an unexpected supply decline and economic data exceeded estimates.

Futures climbed 5.3 percent after the Energy Department said stockpiles fell 4.68 million barrels to 336.3 million last week. A gain of 1.5 million barrels was expected, according to a Bloomberg News survey. ADP Employer Services showed U.S. companies added more jobs than expected in September, and the Institute for Supply Management reported growth in services.

“The DOE report is bullish, any way you look at it,” said Carl Larry, director of energy derivatives and research with Blue Ocean LLC in New York. “The key to where prices move from here is the economy.”

Crude oil for November delivery increased $4.01 to settle at $79.68 a barrel on the New York Mercantile Exchange. Yesterday, futures dropped to $75.67, the lowest close since Sept. 23, 2010. Prices are down 13 percent this year.

Brent oil for November settlement rose $2.94, or 2.9 percent, to end the session at $102.73 a barrel on the London- based ICE Futures Europe exchange. The contract’s close yesterday represented a 21 percent drop since April 8, when prices ended the session at $126.65 a barrel. A 20 percent drop is the common definition of a bear market.

Crude imports fell 10 percent to 8.7 million barrels a day last week, the report showed. Imports on the Gulf of Mexico coast, the region known as PADD 3, tumbled 16 percent to 4.26 million barrels a day.

‘Lot Less Bullish’

“The numbers are a lot less bullish than they initially appeared,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “It looks like refiners, especially along the Gulf Coast, are intentionally working down their stocks. It’s not a sign that there’s a shortage.”

Crude supplies at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, the U.S. benchmark, tumbled 831,000 barrels to 30.1 million, the lowest level since March 2010.

Gasoline supplies declined 1.14 million barrels to 213.7 million last week, the report showed. A 1.5 million-barrel increase was forecast, according to the median of 15 analyst projections in the Bloomberg News survey.

“Today’s report was bullish but I am still looking for spots to sell,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “We were at $90 a couple of weeks ago and have come down quite a lot. We dropped to the $75 area and found support and when it nears $80 I will sell.”

Recession Concern

Yesterday, oil dropped as much as 3.4 percent to $74.95, the lowest intraday level in more than a year, on concern the U.S. and Europe are moving into recession.

Economists surveyed by Bloomberg News projected that Roseland, New Jersey-based ADP would report an advance of 75,000 jobs. The Institute for Supply Management’s non-manufacturing index fell to 53 in September from 53.3 in August, beating the median forecast of 52.8. Readings above 50 indicate expansion.

Federal Reserve Chairman Ben S. Bernanke signaled yesterday he’ll push forward with further expansion of monetary stimulus if needed. He said that the Fed’s remaining tools to boost growth include giving more information about its pledge to keep interest rates low at least through mid-2013, reducing the rate paid on banks’ reserve deposits and buying more securities.

Macroeconomic Picture

“The inventory numbers were clearly bullish and supportive,” said Kyle Cooper, director of research for IAF Advisors in Houston. “Whether we hold onto today’s gains later this week will depend on the macroeconomic picture and what equities do.”

The Standard & Poor’s 500 Index rose 1.2 percent to 1,137.33 at 2:30 p.m., when the Nymex floor closed, and the Dow Jones Industrial Average gained 0.8 percent to 10,892.04. Both indexes extended gains after the close.

The Organization of Petroleum Exporting Countries’ basket of oil grades fell to $98.59 yesterday, the lowest level since Feb. 14. The group last met in June, when six members including Iran rejected a Saudi proposal to replace lost Libyan barrels. OPEC next meets on Dec. 14 in Vienna.

“I’m sure that when Brent dropped below $100 someone at OPEC was taking note,” said Adam Sieminski, chief energy economist at Deutsche Bank in Washington. “The recent price move will be taken into account when they meet in December.”

Saudi Arabia, OPEC’s biggest oil producer, vowed to use “an iron fist” after 11 members of the security forces were injured by attackers during unrest in the Shiite Muslim town of Awwamiya in the east, the official Saudi Press Agency said. The government accused an unnamed “foreign country” of seeking to undermine stability, the news service reported.

“There’s a little unrest in the Eastern Province of Saudi Arabia, which is always a cause for concern,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.3 billion.

Oil volume in electronic trading on the Nymex was 586,593 contracts as of 3:30 p.m. in New York. Volume totaled 789,626 contracts yesterday, 19 percent above the average of the past three months. Open interest was 1.43 million contracts.

Thursday, October 6, 2011

Philippine Markets: 6 October 2011

Morning Brief: 6 October 2011

Philippine Markets: 5 October 2011

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