On Tuesday Asian markets moved on contrasting directions. Japan's Nikkei Stock Average lost 1.3%, China's Shanghai Composite dropped 0.2%, while South Korea's Kospi slipped 0.8%. In contrast, Hong Kong's Hang Seng Index closed flat and Australia's S&P/ASX 200 index gained 0.5%. Positive moves were associated with hopes that Greece will obtain next funding package, whereas declining indices reflected investors' concerns regarding Italy political chaos.
EU financial leaders are planning to start implementation of bailout programmes in December. Greece is required to deliver written approval of bailout rules to receive EUR 8.0 bn credit in one month. Italy is ordered to bring expenditure cut into reality. According to Olli Rehn, EU Monetary Commissioner, it is crucial for both countries to restore the political confidence.
Premier George Papandreou and opposition leader Antonis Samaras have made a step closer to name the new prime minister of Greek Unity parliament, said Elias Mosialo, Greek parliament spokesperson. The agreement on new PM is essential in order to secure funding from EFSF. Today the talks will continue in Athens.
According to survey done by Federal Reserve, the number of banks that lessened business loan conditions has decreased in the 3rd quarter. Creditors have also squeezed loan terms on debt to European financial institutions and their partners. About 50% of US banks admit they have provided loans to European contemporaries and consider tightening as reasonable strategy amid EU debt crisis.
Indonesian GDP added 6.54% throughout July to September. The country experiences growth for a 4th quarter indicating economy recovery. National consumption together with exports and investment are the main contributors to Indonesia growth. According to Dariusz Kowalczyk, Credit Agricole CIB strategist, the growth proves country's strength against external global weakness. Nevertheless, Bank Indonesia said, it is not planning to decrease borrowing rates.
UK retail business faced a decline in October rising traders concerns about approaching Christmas sales. According to British Retail Consortium (BRC), trading at shops opened in last 12 months has decreased by 0.6 % compared to previous year. Significant drop in sales was detected also in furniture and food industries. Stephen Robertson, BRC general director claimed a fall in sales to indicate weak consumer confidence.
US equities experienced increase after Juergen Stark, the ECB's executive board member claimed the Eurozone debt turmoil will be restrained and controlled in two years. S&P 500 gained 0.6% reaching 1,261.12 in New York evening trading session while Dow added 0.7& climbing to 12,068.39 today. According to Stark, in two years Eurozone won't need political intervention.
Consumer borrowing increased substantially in September reaching $7.4 bn which was 2.2bn more than Bloomberg survey had forecast. The increase was mainly stimulated by surging non-revolving loans containing funding for car purchases and study credits. While loans ascended for big scale commodities, the debt including credit cards and other non-revolving loan declined, suggesting Americans cut other liabilities.
US Securities and Exchange Commission (SEC) is planning to offer overhauled reforms to improve the stability of money market funds. SEC is going to focus on possibilities to implement net asset value floating and require capital buffers for financial intermediaries. According to Mary Schapiro, chairwoman of SEC, US should never again have to choose between supporting private investors and risking to trigger a collapse of wider
On Monday Japan claimed it purchased 10% of Euro rescue bonds issued by EFSF. Japanese government bought debt worth EUR 300 m. Earlier Japan suggested, it may acquire 20% of EFSF bonds, however, according to Junko Nishioka, RBS Securities chief economist in Tokyo, the amount purchased has been reduced due to potential losses associated euro depreciation risk.
On Tuesday afternoon the Italian parliament will vote on a budget plan of 2010. This routine vote will show whether Berlusconi still has majority in government. It is the first vote since 3 premier's affiliates entered opposition party and six his alliances required Berlusconi to resign. According to Peter Schaffri, RBC Capital Markets, strategist, market favours Berlusconi resignation, reflecting it in Italian bond price fluctuations when
US dollar ascended against 13 of 16 major counterparties and climbed 1.3740 EUR/USD in Asian session afternoon whereas Treasury 10-year notes recoiled 3 basis points reaching 6.68%. Appreciation of dollar and 10 year national bonds takes place shortly before Italian premier faces a vote that will determine Berlusconi's majority in government.
Demand for short-term bonds has been increasing rapidly as investors remain cautious regarding Eurozone debt turmoil. Traders have submitted $748.5 bn in offers for the $54.4 bn of short term assets maturing 2012 - 2014. 13.8 to 1 ratio beats the typical 3-to-1 offer. The bids indicate that the Federal Reserve borrowing rate may remain at record low.
Gail Kelly, CEO of Westpac Banking Corp, claimed the additional money gained coming from central bank's interest rate cut most likely will be used either to increase savings or to repay loans. She indicated that Australian consumers currently are very cautions towards extra spending. Kelly suggested the Reserve Bank of Australia should apply further repo reduction. According to her, Australia economy will experience growth when
Italian PM Berlusconi's majority is collapsing ahead of government vote tomorrow as allies pressure him to step down. During past few days nine premier's affiliates have quitted. According to Giuliano Ferrara, newspaper Il Foglio editor, Berlusconi may resign within hours. Roberto Maroni, Interior Minister claims PM's majority most likely to be unravelled. Maroni supports early elections.
Chinese equities experienced sharp decline reaching biggest low in two weeks. Shanghai Composite Index decreased 18.5 points, or 0.7%, closing at 2,509.8 which is the biggest drop since October 21. Fall in markets is associated with investors' fears that Chinese government will not apply expansionary monetary policy despite economy slowdown. Concerns were fuelled by Chinese PM's announcement that country will stick to curbing property industry
European finance leaders today meet in Brussels to work on aspects of plan how to increase the leverage of European Financial Stability Facility (EFSF). According to EU officials' estimations, EFSF power should reach EUR 1 trillion. One of the key goals of meeting is to persuade world leaders that Spain and Italy can be protected from of debt crisis by extending their bailout package.
According to European Central Bank (ECB), overnight deposits parked by banks reached 2011 high last week. On Friday banks lent ECB EUR 288.429 bn compared to EUR 275.226 bn on Thursday. Amount of deposits indicates that banks favour lending money to ECB instead of giving it to their counterparties. Such reluctance might be caused by uncertainty regarding other banks' exposure to Eurozone debt.
Latest reports show that US economy is gradually moving forward. Economists say the hiring and consumption have increased faster than expected. Nevertheless, they indicate that customers are unable to spend enough money to boost rapid economic growth. Although during July-September period there have been added about 117,000 jobs, wages are increasing very slowly advancing only by 1.8% in the past 12 months. Therefore, economists are sceptic
Currently Japanese home debt is rising at a faster pace than was previously predicted and according to Ministry of Finance might surpass 1 quadrillion yen ($12.8 trillion) at the end of March 2012. Japan had planned to stick to deficit of ВҐ995.92 bln earlier this year; however, after updating forecasts, additional borrowing will be undertaken. Representatives of Finance Ministry say the surge in national debt was mainly
Greek Prime Minister George Papandreou has confirmed his resignation. Papandreou and Antonis Samaras, leader of opposition, have agreed to create a national unity government to provide the execution of European Council bailout programme. According to Papandreou and Samaras, new elections will be held straight away after the completion of EU bailout plan. Both officials will meet on Monday to select the next prime minister.
Asian stocks experienced a drop on Monday. Both Australia's S&P/ASX 200 index and Japan's Nikkei Stock Average fell by 0.5%, while South Korea's Kospi declined 0.4%. China's Shanghai Composite lost 0.3%, whereas Hong Kong's Hang and Seng traded down 0.2%. According to Tom Kaan, Louis Capital Markets manager of equity trading, Asian investors are concerned with ongoing events in Europe as Greek PM agreed to resign.
Chief executive of Industrial & Commercial Bank of China Ltd., Jiang Jianqing, said that worries over the nation's real estate market are overstated and that the Fed is likely to introduce next round of quantitative easing to stimulate U.S. economic growth.
US stocks experienced a sharp growth on Thursday following Greece's abandonment of bailout referendum and surprising ECB interest rate cut. Dow Jones Industrial Average gained 1.8% or 208.43 points, S&P 500 Index rose 1.9% or 23.24 points, while Nasdaq Composite Index climbed 2.2% or 57.99 points. According to Paul Nolte, Dearborn Partners managing director, the cut of ECB repo rate to 1.25% contributed significantly to growth in US