According to officials involved in negotiations, EU efforts to accelerate the creation of permanent bailout fund have stumbled as Germany and France cannot agree about conditions to make bondholders accept losses. FMs did not succeed to link divisions of European Stability Mechanism, lowering the probability to activate €500 bn firewall in July 2012.
In 3rd quarter home prices declined in about 75% of US cities as hampering economy discourage customers. According to report of National Association of Realtors, median price for family house sunk in 111 out of 115 metropolitan areas. Biggest drops were observed in Alabama, Pennsylvania and Phoenix where prices lost 18%. Conference Board survey claims Americans become more sceptic towards property purchases amid economic slowdown.
European Commission lowered its euro zone growth prediction for year 2012 at around 50% of previous expectations. If earlier European Commission predicted 1.6% growth this year and 1.8% next year, then current forecasts claim growth to be around 1.5% in 2011 and 0.5% next year. Olli Rehn, EU commissioner of EU economic and monetary affairs warned that Europe is exposed to risk of new
The euro appreciated against its major peers as ECB purchased Italy's bonds before auction Shared currency gained 0.4% against US dollar reaching $1.3599 in London morning trading session. 10-year yield on Italian bonds decreased 0.15%, while Stoxx Europe 600 Index surged 0.6%. Standard & Poor's 500 Index futures climbed 1.2%. US stock futures and crude advanced.
Italy's parliament is speeding up to approve austerity measures to reduce national debt and fulfill the requirements of EU counterparties. Government is going to vote on a set of measures containing increase in pension age and sales of assets. According to Angelino Alfano, People of Liberty's secretary, the parliament is to vote tomorrow and Berlusconi will step down immediately.
Today Greece President Karolos Papoulias has scheduled meeting with George Papandreou and Antonis Samaras, as lingered arguing over new premier is threatening to assure bailout funding for protecting Greek economy. Despite the fact that Papandreou claims talks to be productive, there has been no official announcement who will lead the new unity government.
In October the number of workers in Australia has been increasing for second month. Australia employers added 10100 jobs which is in line with predictions depicted in Bloomberg survey. The unemployment level was 5.2% or 0.1 percentage point lower than expected. According to Brian Redican, Macquarie Group senior economist, Australian economy is experiencing relative stability during last months.
In October China's exports advanced at the mildest pace in two years as Eurozone debt turmoil harmed region's demand putting pressure on Chinese government to stimulate growth. Overseas shipments increased by 15.9% compared to previous year and trade surplus reached $17 bn lower than all Bloomberg survey estimates. According to Ken Peng BNP Paribas SA economist in Beijing, a further decline in growth rate is expected.
US equities plummeted on Wednesday pushing Standard & Poor's 500 Index in three-month low on concern European officials will not be able to save Eurozone as Italian bond yields reached a record. S&P 500 lost 3.7% to 1,229.10 in New York trading session, meaning that about 11 of its stocks dropped for each one that advanced on U.S. markets. Dow Jones Industrial Average slid 3.2%
Euro plunged most from August 2010 against the US dollar after Italian borrowing yields surged above 7%, the point at which Ireland, Greece and Portugal required international bailouts. Euro lost 2.1% reaching $1.3542 closing New York trading session with a hugest fall since previous year's August. In the same time shared currency gave up 2% against yen closing at ВҐ105.38
On Wednesday the investors discarded Italian national bonds threating Italy to be locked out of money markets and rising concerns on euro survival as European leaders are still unprepared to tackle debt turmoil. 10-year bond rate spiked to 7.40% and currently is trading at around 7.27% So far 7% yield was seen as critical point for Ireland Portugal and Greece pushing them to ask aid
On Wednesday investors drove Italian 10-year borrowing rate nearby euro-era record above 7% as Berlusconi's promise to quit did not persuade them that Italy will be able to cut its debt burden. Italy's debt worth $2.6 trillion beats of that of Spain, Greece Ireland and Portugal combined. However, unlike those countries, Italy is the 8th major economy possessing 3rd biggest bond market.
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.