Australia's consumer sentiment rallied as Reserve Bank lowered interest rates first time in almost three years. Melbourne Institute index measuring consumer confidence climbed 6.3% to 103.4. Consumer confidence climbed third month in a row. In same time the number of approved home loans has increased by 2.2% from August, indicating market recovery.
British Industry Confederation claims UK's recovery will hesitate in 4th quarter and reach only a half the velocity previously predicted as Euro zone debt turmoil together with domestic inflation hurts investment outlook and UK export. According to business lobby in London, the economy will grow 0.9% in 2011 and 1.2% next year compared with former forecasts of 1.3% and 2.2%.
HSBC Holdings Plc., Europe's biggest bank in terms of market value, reported a drop in profit of 53% or $1 bn in the 3rd quarter from previous year. Bad debt provisions climbed from $3.15 bn to $3.89bn. According to HSBC representatives, global economy faces challenges that hurt emerging markets, hinder growth and thereby reduce bank's profit.
Australian dollar declined against the yen for a fourth straight day as tomorrow's employment article is expected to report an increase in unemployment. According to economists questioned by Bloomberg, country's unemployment rate is expected to rise from 5.2% in previous month to 5.3% in October. During Sydney trading session Aussie lost 0.6% reaching ВҐ80.32 at 5:17 p.m. The pair currently is trading at 79.40.
After shifting session, US securities ended higher on Tuesday as Silvio Berlusconi offered to resign after vote on austerity measures. S&P 500 Index added 1.2% reaching 1,275.92, Dow Jones Industrial Average gained 0.8% and climbed to 12,170.18, while Nasdaq Composite Index edged up 1.2% and closed at 2,727.49. Nevertheless, Stephen Wood, Russell Investments chief market strategist claims EU political environment to be rather uncertain.
Asian equities experienced growth as investors became aware of Berlusconi's forthcoming resignation and China reported drop in inflation rate. Japan's Nikkei Stock Average edged up 1.2%, Shanghai Composite gained 0.8%, and Hang Seng Index advanced 1.7%, Australia's S&P/ASX 200 index increased 1.2% while South Korea's Kospi rose 0.2%.
European security markets advanced rapidly on Wednesday as investors absorbed news of Italian PM's resignation after government approves cost reductions. In morning trade Stoxx Europe 600 index added 0.8% to 242.45, France's CAC-40 index edged up 0.9% reaching 3,171.14 while Germany's DAX 30 index jumped 1.2% climbing to 6,032.48 and U.K.'s FTSE 100 index increased 0.4% to 5,589. Italy's FTSE MIB index gained 0.6% to 15,751.
On Wednesday Berlusconi claimed to support early elections. He suggested Angelino Alfano, the leader of his People of Liberty party, as a potential premier candidate. Berlusconi has agreed to resign after government will approve budget cuts required by EU affiliates. Parliament is planning to vote on austerity measures in upcoming weeks.
Hong Kong parliament plans keep holding restrictions on the property market despite the fact that sales in housing market have lost 50% in September compared with corresponding month previous year. According to Donald Tsang, Chief Executive at Hong Kong, country's economy is experiencing soft landing and government will not abandon curbs until temperance in prices will be reached.
In September the rate of open vacancies has increased significantly attaining three years high demonstrating some firms are preparing for economy recovery. According to Labor Department statistics, new vacancies advanced by 225,000 reaching 3.35 million while hiring increased by 185,000 making up 4.25 million. Nevertheless, according to Fed chairman Ben S. Bernake, hiring still grows at insufficient pace to decrease unemployment.
In October CPI increased by 5.5% falling behind September rate of 6.1%. The inflation decelerated reaching 3 years low, providing government more space to support economy growth as manufacturing slows down. Economists surveyed by Bloomberg expect PM Wen Jiabao to ease monetary or fiscal policy in the same time avoiding cutting key lending rates as inflation remains above yearly objective of 4%.
Christine Largarde, Managing Director of International Monetary Fund has pointed out that the world economy is exposed to "lost decade" in case nations together will not tackle threats to financial system. According to her all regions are mutually dependent and cannot restore growth alone. Lagarde also claimed advanced economies should held responsibility for promoting economy development and rebuilding confidence.
The number of citizens who leave China to live and work abroad has been increasing rapidly. According to survey made by China Merchants Bank and Bain & Co, nearly 60% of rich Chinese had applied or thought of obtaining foreign residency. Zhang Monan, State Information Researcher claims that emigration of rich can negatively affect expansion of middle class and therefore government should reduce both tax
Chinese stock market has been deteriorating in last two days as railway companies and developers express their concern the parliament will not abandon property restrictions even under conditions of falling sales and decreasing rail investment. Shanghai Composite Index lost 0.2% or 5.96 points closing at 2,503.836 while CSI 300 Index lost 0.3% reaching 2,727.71.
US equities and Euro currency experienced increase, offsetting previous losses as Premier Silvio Berlusconi offered to quit. His resignation reinforced optimism a new PM will tackle the country's debt crisis. Standard & Poor's 500 Index jumped 1.2% and closed at 1,275.92 in New York trading session while Euro surged against 11 out of 16 major counter currencies and reached $1.3839.
According to Nigel Gault, IHS Global Insight economist, President Obama is inconsistent in his statements regarding recession timing. In some of his speeches he refers to US post-recession situation while in others Obama mentions current existing recession in present tense. Nigel Gault suggests such inconsistencies rise doubts in voters whether economy have recovered and does Obama deserve to be re-elected.
Premier Berlusconi proposed his resignation after Italian government approves requirements received from European counterparties said President Giorgio Napolitano. PM agreed to step down after he lost majority in routine budget vote getting 308 votes of 630.Parliament has to come up with final version of proposed budget cuts. The vote on austerity measures is expected to take place next week.
In China Minsheng Banking Corp. has received regulatory permission to sell $7.9 bn (50 bn yuan) of bonds to promote borrowing among small companies. The approval provided by China Banking Regulatory Commission is a part of Chinese government's plan to support small firms, create jobs and promote innovations. The permission of bond sale still has to be approved by People's Bank of China.
Commerzbank AG and BNP Paribas SA are getting rid of sovereign bonds by anticipating losses on sale. BNP Paribas took losses of €812 m from cutting holdings of Euro zone sovereign debt. Commerzbank AG has reduced its Spanish, Portuguese, Greek, Italian, and Irish bonds by 22%. By unloading sovereign bonds banks may undermine EU officials' efforts to reduce borrowing costs and worsen region's crisis.
In 3rd quarter the rent for office space in Asia-Pacific region have increased at double velocity compared to global trends, as China's economic growth boosted demand for business type property. Charges for top quality office space in Asia-Pacific area gained 10.5% on yearly basis. In contrast, global rate for rent added only 5.5%. Leading contributors to rent growth were Perth, Bangalore and Shanghai.
Drop in Australia's gold exports was more rapid than a fall in fuel imports in September. Therefore Australia's net export surplus declined more than was predicted by economists. Exports surpassed imports by A$2.56 bn or about A$0.5bn less than was predicted by economists surveyed by Bloomberg. Australian trade surplus may decrease even more as prices for iron ore deteriorate.
Poland will stick to key lending rate unchanged in order to protect destabilised zloty and avoid boosting inflation. Central bank's current interest rate is the highest in three years. Economists surveyed by Bloomberg suggest the Poland's central bank will leave repo rate unchanged at 4.5%. The decision is going to be revealed on Wednesday.
Top Banks may face bigger capital surcharges BNP Paribas SA, JPMorgan Chase & Co, Royal Bank of Scotland, HSBC Holdings Plc and Citigroup Inc. may face highest capital supplements of 2.5%. Bank of America Corp, Barclays Plc, and Deutsche Bank AG may encounter capital surcharge of 2%. The list of banks was developed by global supervisors in order to press banks whose bankruptcy could harm the worldwide
Lloyds Banking Group admits they may fail to accomplish their financial goals despite the lowered provisions for bad debt in 3rd quarter. Lloyd's pre-tax profit decreased from ВЈ820m pounds in 2nd quarter to ВЈ644m in 3rd creating a total of 21% decline in profits. As economists are not expecting repo rate increases from BoE, Lloyds may have to restrain its margins and postpone income objectives set for