US consumer sentiment increased to 64.2 in November as compared to 60.9 in October according to report of the University of Michigan and Thomson Reuters. Consumer sentiment is higher than expected 63. Consumers were inspired by higher stock prices and decrease in unemployment rate explain analysts. Economists are sure that it is a positive direction of higher customer spending.
Italy's austerity bill is going to be approved by chamber of deputies in the next two days meaning that Silvio Berlusconi has to resign following his announcement. Austerity measures are aimed at preventing bailout from Italy, the third largest economy in Europe. On Tuesday Italy issued more than 5bn euros debt for one year at 6.087% rate.
US trade deficit decreased by 4% achieving $43.1 billion in September from $44.9 billion in August according to Commerce Department. The drop in trade gap is much larger than predicted $45.6. At the same time imports have been stagnating for four months. Exports rose by 1.4% to $180.4 billion while imports increase only by 0.2 % to $223.5 billion.
The dollar index DXY fell by 0.88%. It was traded at 77.218 on Friday compared to 77.660 Thursday in North American trading. Lower dollar value contributes positively to commodity trade as the price for them is lower for other currency holders.
Situation in Europe started to stabilize as political tensions in Italy and Greece became lower. The prospects of oil demand are positive and crude oil price for December delivery increased by 0.8% approaching to $98.46 a barrel as traded on the New York Mercantile Exchange.
Economic problems in Europe and US led to frequent fluctuations in stock market. Although gold-mining shares are gradually rising as they are considered to be more stable. Shares of Newmont Mining Corp. and Barrick Gold Corp. went up by 9%. NYSE Arca Gold Bugs Index increased by 11%. Gold prices were up by 8% as compared to the end of Q3.
Italian bonds' yield decreased and the government almost accepted austerity measures to rescue country's economy. Economic situation gets better and European shares started to rise. STOXX Europe 600 index increased by 1.3% to 238.31. FTSE MIB index also went up by 2.4%.
US Senate has approved so far the only piece of Obama's jobs bill proposing to increase employer tax credit for hiring long-unemployed veterans. The proposal provides tax allowances of $5,600 for employing veterans who are jobless more than 6 months and tax credit of $9,600 for employing disabled troupers. According to Mitch McConnell, a leader of Senate Minority, veteran job bill currently is best possible contribution
Yields on 10-year Italian bonds achieved 7.28%; rate considered as unsustainable. Concerns about Italy's debt crisis grew impacting the global economy. Asian stock market indexes fell-Japan's Nikkei index dropped by 2.9% while Hong Kong's Hang Seng index decreased by 5.3%. European market proved to be more resilient-Germany's DAX index increased by 0.22%, and the French CAC 40 index went up by 0.4%.
Spanish growth rate is only 0.2% in Q3. Domestic spending is falling although demand for Spanish export increased. The unemployment rate hits the record being 22%. It will lead to substantial decrease in income tax revenues and increase in due payments for unemployed. Analysts claim the probability Spain will not meet its debt obligations is high.
Gold analysts and traders express most bullish sentiment since 2004, and investors continue accumulating gold rapidly. Therefore, gold surpassed $1,800 per ounce for the first time in three months. According to Commodity Futures Trading Commission, hedge funds keep holding bet on upward sloping prices since September. Almost all experts surveyed by Bloomberg, expect gold's surge to continue next week.
Preiously world was focused on the developments in Italy and Greece. However, Spain also suffered an essential growth in the cost of borrowings, 10-year bonds yields rose to 5.9% as compared to October's 5%. Financial markets are concerned that the country will not be able to pay its debt because of hardly sustainable economic situation.
New PM of Greece, Lucas Papademos was named on Thursday. He announced that Greece has to survive in Eurozone's turmoil. Greece has been bailed out two times already and still is experiencing financial difficulties. PM claimed that ratification of the 130bn-euro budget provided to Greece to rescue the country from crisis is of paramount importance to overcome economic downturn in Greece.
Italy's cost of borrowings reached more than 7% that is considered to be unsustainable. In effect analysts essentially decreased Eurozone's growth forecast for next year from 1.8% to 0.5%. Growth has slowed down and the probability of new recession is still high, European Commissioner added.
In view of financial difficulties in the Eurozone Standard & Poor's announced decrease of the France's AAA credit rating on Thursday. The announcement was made when the difference between French and German cost of borrowing reached the highest level. German bonds were 1.79% and French bonds were 3.36%. However, today S&P claimed that France still has triple A credit rating. The reason for error is
Spanish economy has stopped growing in 3rd quarter, as GDP remained unchanged compared with 2nd quarter. On yearly basis economy added 0.8%. Stoppage of economy amid unemployment above 25% creates doubts, if Spain will be able to meet its budget deficit targets. As yield on Spain's 10-year bonds is 5.9%,Ben May, Capital Economics economist, warns that Spain may get into recession.
A set of growth-facilitating measures were approved by Italian Senate today, including privatization of public real estate, changes in taxation and potential reforms in order to ease bureaucracy. PM Berlusconi has promised to step down as soon as the document package is passed through the lower house, where the budget bill is scheduled for scrutinizing on Saturday.Senate approved significant 2012 budget amendments in a
According to People's Bank of China, a domestic lending in October increased by 17.5 bn yuan compared to 2010, reaching 586.8 billion yuan ($92.7bn). New loans have surged rapidly from 470 bn yuan in previous month. PBOC told that M2 (money supply covering all deposits and currency in circulation) has increased 12.9% on yearly basis, attaining 81.7 trillion yuan.
On Friday regulators of Chinese foreign exchange told that it had permitted trading of put and call currency options to support investors and traders who want to hedge against currency fluctuations. State Administration of Foreign Exchange said the options will stimulate hedging flexibility and decrease transaction costs for China's firms. Trading of currency options will be allowed starting from December 1.
Today Italian government will vote on austerity measures to regain investor confidence and prepare for the new government supposed to be headed by Mario Monti, a former EU Competition Commissioner. According to Gianfanco Fini, speaker of the parliament, Berlusconi is expected to resign immediately after the vote. Fini points out that unity government can be formed only if Berlusconi supports Monti's technocrat government.
Obama administration on Thursday said it has delayed the verdict on controversial Keystone pipeline as public and Nebraska lawmakers required an alteration in route of pipeline. Review of pipeline project is expected to take place until 2013. While protesters express their satisfaction with Obama's decision, John Boehner, parliament speaker criticized suspension saying that about 20,000 new jobs have been given up favouring political campaign.
Anibal Cavaco Silva, Portuguese President, suggests European Central Bank must act as a last resort lender and stop the expansion of crisis by unlimited and transparent buying of Italian and other national bonds. According, to Silva the ECB bond acquisitions in secondary market will end both speculation and distrust in Spanish, Irish, Portuguese or Italian bonds.
According to Chinese research made in 2008, South China Sea may contain 213 bn barrels of crude oil or 80% Saudi Arabia oil resources. China claims unquestionable sovereignty regarding most of the South China Sea including areas that Exxon Mobil and Gazprom are examining. Disagreements have raised tension between China and its neighbours and threat maritime security.
On Friday Asian markets gained as export oriented companies and retailers receive positive news from euro region. Hong Kong's Hang Seng Index increased 1.1%, South Korea's Kospi surged 2.4%, while Japan's Nikkei Stock Average added 0.5%. Australia's S&P/ASX 200 index rose 0.8% and China's Shanghai Composite improved by 0.6%.