US stock futures rose on hopes that European leaders and ECB are planning to implement reforms to struggle with debt crisis and boost economic growth. ECB is going to buy bonds of peripheral countries. S&P 500 index increased by 0.3% and Dow Jones Industrial Average went up 0.2%.
Italy's 10-year bond yield increased by 1 basis point to 6.72% while Spain's went down by 9 basis points to 6.35%, reported FactSet Research. France's cost of borrowing decreased by about 10 basis points to 3.53%. Analysts also announced that ECB plans second round of purchases.
British banks drastically cut loans to Greece, Italy and Spain as confidence in these countries' ability to resolve financial difficulties remains low. The biggest UK banks decreased loans to peripheral countries by 24% to 10.5 billion pounds over Q3. HSBC the largest banks by number of loans slashed its exposure by 40% as reported by Financial Times.
ECB requires prompt implementation of policies worked out by the Eurozone leaders in order to struggle with debt crisis, said Mario Draghi, ECB President. Time is passing by very fast and decisions have to be implemented otherwise it will be too late. Absence of changes in the Europe increases investors risk aversion thus triggering downturn, he added.
In October Chinese home price dropped in 33 out of 70 cities observed by government, the weakest performance since the implementation of property curbs. According to Shen Jian-guang, economist at Mizuho Securities Asia Ltd, the drop is the breaking point for Chinese home market as prices begin to fall not only in big cities and for new built real estate but also in smaller cities
The incapability of European officials to stop debt crisis has reintroduced Franco-German clash over the role of European Central Bank as well as increased investor doubt over policy makers' competence. As Greek debt holder began talks of accepting 50% of losses, German and French counterparties unexpectedly showed resistance and bond yields outside Germany reached euro-era highs.
Today the new Greece's premier Lucas Papademos will present the final version of next year's budget. PM's government is rushing to meet 3-month deadline to acquire international loans and escape a country's default. New government is supported by three out of five Greek governmental parties. Papademos must put into action budget measures to guarantee a bailout fund worth $176 bn.
European uncertainty severely impacted large stock markets. The STOXX Europe 600 index dropped by 0.77% to 232.18 today at early trading. Germany's DAX 30 index went down 0.97% to 5,793.65, France's CAC-40 index declined by 0.85% to 2,984.33, FTSE 100 index lost 0.86% to 5,377.64.
On Thursday Spanish Treasury sold 10-year bonds worth € 3.562 bn at a rate of 7.088% the highest yield since foundation of euro. However, the bond denotes new series, thus it cannot properly be compared with results after prior 10-year note auction. Borrowing costs on 10-year Italian notes were above 7.0%. The markets are looking forward for French domestic bond auction.
Boeing has signed its largest order with Lion Air worth $21.7bn. Lion Air, largest Indonesian carrier ordered 230 short-haul 737 planes. The growing demand for transportation coupled with higher disposable income in Asian region created a need for expansion for Lion Air. When the order is finished the Lion Air will become one of the largest companies by the number of planes in the region.
According to Labour Department statistics, claims for unemployment compensations declined to 7-month low. Applications for jobless allowances slipped 5000 last week. On annual basis the jobless claims decreased by 628,000 in October. Decreased number of firings is a signal that companies are considering more employees cutting current employment rate at 9%.
On Thursday China's government disclosed details of testing program for new VAT in Shanghai aimed at boosting development in services sector. The VAT will also ease the pressure of tightening monetary policy on small firms. The new tax will come into effect in 1 January 2012 and it will replace current business tax for companies mainly involved in service industry.
According to Daily Telegraph, Germany is developing strategy how to stop UK referendum on overhaul of EU amid worries, British could disrupt Eurozone release package. German chancellor is expected to try to persuade Britain's premier David Cameron that UK does not need a poll on EU agreement changes. Nevertheless, representatives of Conservative party already are demanding to return more control rights to Britain.
Permal Group, the world leading hedge fund of funds, plans to increase investment in yuan assets. China's potential as profitable investment option is growing in the light of Europe's financial problems, fund official saidl. Despite anticipation of yuan decrease Permal strategy of exposure to yuan assets will prove to be viable as analysts predict that after slight fall yuan will appreciate by 30% in the
Mario Monti's government has won the confidence vote in parliament yesterday evening. He had 281 votes versus 25. Mario Monti's government strategy is to implement austerity measures in order to prevent debt crisis and boost economic growth. Today he faces vote in lower house. Meanwhile, students in many Italian cities organize protests against technocrats' government of Mario Monti.
Chinese banking regulator alerts lenders that several projects financed by local municipalities may experience problems with funding liquidity. Regulator also admitted that loans on real estate are expected to taint as sales decline. Last week China Banking Regulatory Commission advised banks to reduce high risk loans to local governments. In October property sales experienced drop of 25% compared to September.
Greenback declined against euro in Asia trading as global economic situation remains uncertain thus pushing investors' confidence down. The dollar index went down to 78.143 from 78.298. Australian dollar also suffers losses going below the US dollar first time since October as risk acceptance fell on the European woes.
At Association of Southeast Asian Nations summit Barack Obama and Indian PM discussed the prospects of further cooperation and Indian nuclear liability law. US consider new law too strict as it envisages operator of nuclear plant has a full legal responsibility in case of accident and US companies suppose the compensation sum may be enormous. New regulation makes US energy companies less competitive with French
On Thursday Occupy Wall Street protesters were attempting to interrupt the New York Stock Exchange. Nearly 1,000 activists sealed Financial District near Zuccotti Park and the NYSE to protest against income inequality. Police blocked streets by placing metal barricades and NYSE employees were required to show identification cards to enter. Despite demonstrations NYSE opened on time.
UBS AG the biggest bank in Switzerland said it will aim to reach return on equity between 12% and 17% starting from 2013. UBS AG also is planning to pay out cash dividends of 10 centimes per share. Bank is going to pay first dividends in five years and claimed that it is going shift more towards wealth management instead of investment banking. New CEO
Oil prices are again above USD 100 per barrel. Higher oil prices will lead to more expensive refined products - gasoline and heating oil. Prices for West Texas Intermediate crude oil were more than USD 102 barrel as traders were inspired by the news about new pipeline that will ease oil delivery.
US Labor Department today reported a decrease in jobless claims by 5,000 to 388,000 in the last week being seven-month low. Retail sales in US increased more than expected thus stimulating output. More output creates more demand for new employees. Decrease in layoffs might be a sign of US labor market recovery after severe downturn, said Omair Sharif, an economist at RBS Securities Inc.
Morgan Stanley reported today that gold futures are likely to be top gainer among all the commodities. As European turmoil continues investors tend to buy more yellow metal in order to save their wealth. There is a chance the gold price will set a historically high level in next years, said Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd. Gold may achieve USD
Investments from US into China's economy continued to fall in October because of changes in manufacturing activity, increasing costs of labor in China and overall economic slowdown in US. However, overall October's FDI into China went up by 8.75% to USD 8.33 billion. Investments from the EU increased by 1.05%.