On Tuesday US stocks advanced as several US economic indicators including retail sales beat the forecasts and offset concerns about euro-region debt crisis. Dow Jones industrial average gained 0.1% or 17 points reaching 12,096. S&P 500 added 0.5% or 6 points and closed at 1,258, while Nasdaq advanced 1.1% or 29 points to 2,686. On Tuesday morning stocks opened lower on Europe news, however, erased losses
Edward J. DeMarco, Federal Housing Finance Agency's acting director is planning to reduce compensations and bonuses at Fannie Mae and Freddie Mac – state owned housing-finance firms. DeMarco, who also is a chief regulator for both banks, plots gradual reductions in executives' salaries especially when they leave the company. In 2009 two CEOs of Freddie Mac and Fannie Mae received $17 m in their two year award packages.
Lucas Papademos, the new Greek PM today faces confidence vote on 3-month mandate to secure financing needed to save Greece from default and keep it in Euro. Papademos is expected to implement budget provisions and guarantee a bailout package consisting of €130 bn. According to, Evangelos Venizelos, upcoming vote is the last chance for Greece to overcome crisis.
Lloyd C. Blankfein, CEO of Goldman Sachs Group Inc. claims that economic recovery will come as a surprise and retrieval will be faster than expected. Nevertheless, Blankfein admitted he does not know when the recovery will begin. In October Goldman Sachs, the 5th biggest US bank reported loss second quarter in a row, however, Blankfein suggests no radical operation changes are needed.
Mario Monti, prospective Italian PM said he is self-assured that Italy can tackle current crisis. On Wednesday Monti will meet President Giorgio Napolitano to present the new government. According to Monti, talks with political parties, employers and unions were productive and useful. All parties engaged in agreement, made their contribution to positive outcome.
Bank of Japan (BOJ) has reduced its economic evaluation as worldwide slowdown hurts exports increasing Japan's vulnerability to Eurozone's debt crisis. Masaaki Shirakawa BOJ's Governor announced that central bank has decided to leave repo rate unchanged at 0.1% as well as to stick to asset purchase fund of ВҐ20 trillion ($260 bn). Fixed-rate lending package remained also untouched to stimulate commercial banks to increase lending.
On Wednesday Asian equities experienced a drop and were trading with small volumes. Hang Seng Index fell 1.9%, Shanghai Composite traded down 1.7%, while Nikkei Stock Average lost 0.6%. South Korea's Kospi declined 0.6% and Australia's S&P/ASX 200 gave up 0.4%. Ben Collett Louis Capital Markets' manager suggests, currently Asian long-term investors are risk averse pushing trading volumes down.
Canadian national currency depreciated against its US peer on anxiety that debt turmoil in Europe is strengthening. Canada's dollar dropped for two consecutive days almost reaching 2-months low as yields for French and Spanish bonds surged. On Tuesday currency fell 0.6% attaining $0.9790 per Canadian dollar in Toronto morning trading session.
China has spent on R&D even more than Japan this year ranking 2nd biggest spender after US. China plans to invest in R&D 2.2% of GDP in R&D by 2015. The number of applications for protecting IPR has also increased indicating substantial growth of innovation in the country.
According to data released, UK inflation in October eased more than expected reaching 5% or 0.1% percentage point below forecast. Mervyn King, Governor of Bank of England said that inflation is likely to keep slowing down in upcoming months, however, its pace and extent is hard to predict. King pointed out that Bank of England purchases bonds for a second month in a row to
In October retail sales in US increased by 0.5% or 0.2 percentage points more than predicted. The main contribution to growth came from demand for motor vehicles and iPhones. In electronics industry purchases experienced most rapid growth since 2009. According to Millan Mulraine, TD Securities senior strategist in New York, an increase in retail sales is indicating that consumers do not expect economy to fall
On Tuesday Italian 10-year domestic bonds dropped sharply, pushing yields above 7% level. According to FactSet Research, the yield hit 7.01% or 43 basis points up compared to Monday. Borrowing rate of 7% is perceived as psychologically important as it indicated the point, where Greece and Portugal were locked out of money markets. Italy's 10-year borrowing cost surged above 7% also last week on political
On Monday US equities slipped as Italian borrowing costs surged, pressing euro down and rising investors' concerns about further expansion of Eurozone debt crisis. S&P 500 Index lost 1% or 12.06 points reaching 1,251.79, Dow Jones Industrial Average decreased 0.6% or 74.7 points to 12,078.98 while Nasdaq Composite dropped 0.8% or 21.53 points to 2,657.22.
Spanish 10-year national bond yield peaked back breaking 6% first time in 3 months, reaching 6.07%. Premium required by investors to provide financing for Spain exceeds price demanded from Germany by 4.25 percentage points. According to Nick Stamenkovic, RIA Capital in Edinburgh, economist, it seems, investors are changing their direction towards Spain.
US Supreme Court decided to consider the legality of President Obama's health care law. The judges will assess whether Congress surpassed its rights by forcing people either to purchase insurance even in case they are ready to pay for health services themselves or to pay penalty. The court is likely to have major impact on presidential campaign as the verdict will be announced in June,
Moody's Investors Service is considering downgrading Credit Suisse Group AG's credit rating as the bank reported loss and revenue at the wealth management dropped. Moody's set Credit Suisse's Aa1 and Aa2 ratings on assessment for a reduction. On November 1 Credit Suisse announced it will reduce nearly 1500 jobs and review its securities after reporting quarterly loss.
On Tuesday representatives of IMF warned China that its banking system is exposed to serious risk. IMF named uncertain national banks' asset quality, credit boom accompanied by rising property prices and lending outside prescribed banking sector as the main threats to Chinese financial intermediaries. According to IMF, Chinese banking system is likely to be seriously affected if several risks create difficulties simultaneously.
Interim PM of Greece insisted on Greece staying in the Eurozone as it is the only option to struggle with crisis. He also stressed the necessity of activating bailout package as soon as possible. Making decisions and implementing policies in line with these decisions is of paramount importance for government, added Papademos.
Bank of America plans to sell 10.4bn of China Construction Bank shares for about $6.6bn in cash. Bank of America is under pressure because of global crisis and bad loans. The bank has to increase its capital base in compliance with new global regulation Basel III that obliges banks to have higher capital to asset ratio.
Asian stocks experienced a sharp decline as Italian and Spanish borrowing costs surged; rising concerns among investors that debt crisis might strengthen. Japan's Nikkei Stock Average lost 0.6%, Hang Seng Index trader 1.1% lower while China's Shanghai Composite fell 0.1%. Australia's S&P/ASX 200 slipped 0.4% whereas South Korea's Kospi decreased 0.6%.
Mario Monti expressed his intention to be in charge of PM of Italy until elections in 2013 . It will be difficult for Italy to overcome financial problems, but the country is strong enough to survive, he said. Despite sound promises and start of formation of new administration, investors' confidence remains low and Italy's 10-year bonds still yield more than 6%.
Mario Monti, prospective Italian PM met political resistance on creating a government as Italian borrowing costs surged and markets returned to downward trend, indicating concern on whether he will be able to tackle debt turmoil. Yesterday Monti strained to make parties agree on taking part in his new government. Monti pointed out that without their support he will not be able to end debt crisis.
Japan's GDP grew first time after March's earthquake; the indicator was up by 1.5% in Q3. However, analysts fear the growth is not sustainable because of strong yen and global fiscal problems. Moreover, floods in Thailand impacted Japanese supply chain thus affecting the recovery after slowdown. Exports are also likely to fall thus hindering Japan's recovery, said Yamamoto.
Chancellor Angela Merkel claimed it is essential to comprise political coalition in Europe to ensure bondholders that euro-region officials are sober about tackling debt turmoil. Merkel emphasized that all 17 euro zone countries should stick to common currency, though serious changes in current policy should be implemented. Chancellor also suggested in order to regain bondholders' confidence, EU and euro region should grow simultaneously.