31 July 2012: Asia cautiously optimistic, Eurozone exports improve

MarketsAsia wary on stocks ahead of Central Bank meetings: Asian stocks inched higher but the mood remained cautious ahead of monetary policy meetings by the ECB and US’ Fed Reserve.
•    Stocks: FTSE All World climbed 0.3%, as FTSE Eurofirst finished 1.6% higher; Higher Beta markets in Asia also capitalised, and FTSE Asia Pacific gained 1.4% but Tokyo’s Nikkei slipped 0.5%; S&P 500 is up 3.5% over the last 3 sessions; FTSE 100 finished 1.2% higher at 5693
•    Currencies: Euro is up to $1.2278; Sterling against dollar was unchanged at $1.5716
•    Debt: The German Bunds have gained 1bp to sit at 1.38% while US 10-years gained 2bp to 1.52%; Spanish bond-yields dropped further to 6.52%
•    Commodities: Brent Crude is down 0.5% to $105.93/barrel; Copper fell 0.1% to sit at $3.42/pound; Gold is down at $1622/ounce

Global Economy

•    Labour reforms boost Eurozone exports: According to a recent study, labour reforms in several eurozone countries is helping it build up a healthy trade balance slowly. Since 2008, the countries with more flexible labour policies have been able to improve the quality of their home produced goods to compete internationally. Unit labour costs are also starting to decline in the region, which is a positive sign.

Companies

•    Private Equity assets hit record: Value of assets managed globally by private equity firms have hit a record $3 trillion. The results will provide a boost to the industry, which has been largely struggling lately. Earlier this year, Blackstone raised $16 billion, despite the financial turmoil.

•    HSBC’s performance hit: Regulatory and miss-selling charges have hit HSBC’s performance. HSBC has been forced to take mis-selling charges on insurance and interest-rate hedging products. These amounted to about $1.3 billion. The bank has then had to take a hit of about $700 million for its US arm, which was linked to money laundering.

29 July 2012: Week in review

Markets– Stocks rally as Eurozone fears ease: Positive comments regarding the single currency Eurozone provided impetus for stocks to end the week in a bullish mood. After the week started on a negative note on the back of disappointing data, comments from ECB chief, Mario Draghi stating that a mandate allows ECB to prohibit excessive borrowing costs eased some fears. Also, UK’s AAA rating added to ease worries further.
•    Stocks: FTSE All World jumped 1.9%, as FTSE Eurofirst finished 1% higher on Friday after leaping 2.4% on Thursday; Higher Beta markets in Asia also capitalised, and FTSE Asia Pacific gained 2.1% and Tokyo’s Nikkei gained 1.46%; S&P 500 closed with a gain of 2%; FTSE 100 finished almost 1% higher at 5627
•    Currencies: Euro rallied to touch $1.2389; Sterling against dollar was unchanged at $1.5746
•    Debt: The German Bunds have gained 4bp to sit at 1.37% while US 10-years gained 12bp to 1.53%; Spanish bond-yields finally dropped under 7%
•    Commodities: Brent Crude is up 1.27% to $106.47/barrel; Copper recovered 1% to sit at $3.43/pound; Gold almost flat at $1613/ounce

Global Economy

•    US economy slows down: Results during the week revealed that the US economic growth slowed down to 1.5%, which is being described as a ‘worrying loss of momentum’. The drop in growth will now struggle to reduce unemployment. Domestic consumption, which is the largest component of the GDP grew a feeble 1.5%

•    S&P rates UK as AAA: Post rating UK a AAA credit, S&P affirmed it, despite dismal economic figures from the UK this week. S&P argued that the economy would be able to recover later in the year, and that also UK benefits from a central bank which is able to buy  government debt, unlike most eurozone members.

Companies

•    Debt crisis punishes eurozone industrials: Most industrial players such as Saint Gobain, Renault, and Lafarge have reported dip in earnings for the first half of the year. These companies are suffering as customers cut capital spending, causing the companies to look for ways to cut costs.

•    Barclays embroiled in second controversy: Barclays has revealed both, a new probe by regulators into a controversial capital raising in the middle east, and also a £450 million charge for mis-selling of hedging products.

25 July 2012: Equity futures slide, German private sector under pressure

Markets– Stocks futures slide, Commodities rally ended: Global equities are set to slide further, partially owing to poor results from Apple, who lost 5.1% on its share.
•    Stocks: FTSE All World fell 1%, as FTSE Eurofirst slipped 0.5%; In Asia, FTSE Asia Pacific stemmed its losses to 0.1% but Tokyo’s Nikkei fell 1.20%; S&P 500 closed with a loss of 1%; FTSE 100 lost 0.63% to 5499
•    Currencies: Euro touched a fresh low at $1.2051; Sterling against dollar was unchanged at $1.5618
•    Debt: The German Bunds have gained 6bp to sit at 1.23% while US 10-years lose 5bp owing to demand for safe havens at 1.38%; Spanish bond-yields shot up again to 7.62%
•    Commodities: Brent Crude is down 0.4% to $103.71/barrel; Copper lost 0.6% to sit at $3.36/pound; Gold advances 0.1% to $1582/ounce

Global Economy

•    German private sector tension mounts: The likelihood that Europe has slipped into recession again has increased as effects are being felt in some of the stronger eurozone economies too. During July, the contraction in private sector in Germany was the quickest in 3 years. Germany’s robust GDP had allowed all of eurozone to grow in Q1, but Q2 results might not be that promising.

Companies

•    Apple misses targets, stock loses 5%: Ahead of the new iPhone, Apple has failed to meet analyst expectations, as its figures show a slowdown. The stock slid over 5% in after hours trading. Apple’s revenue was about $35 billion compared to analyst estimates of $37.2 billion.

•    Tough market conditions squeeze Macquaire: The Australian IB, Macquarie, is set to register a back to back annual loss on its cash equities. Macquarie lost A$194 million in year to date June 2012.

20 July 2012: Stock rally ended, Spain’s yields shoot up again

Markets– Stocks see sellers, Commodities mixed: A 3-day stock rally was ended as growth concerns spurred investors to sell growth-focussed assets. Spanish bond yields also shot up again, as economic concerns persist globally.
•    Stocks: FTSE All World fell 1.2%, as FTSE Eurofirst slipped 1%; In Asia too, mood is  bearish as FTSE Asia Pacific lost 0.5% and Tokyo’s Nikkei fell 1.43%%; S&P 500 closed with a loss of 1%; FTSE 100 added 1% to 5685
•    Currencies: Euro is lower 0.9% at $1.2163; Sterling against dollar was unchanged at $1.5618
•    Debt: The German Bunds have lost 6bp to sit at 1.16% while US 10-years lose 5bp owing to demand for safe havens at 1.46%; Spanish bond-yields shot up 27bp to 7.28%
•    Commodities: Brent Crude is down 1.2%% to $106.53/barrel; Copper crashed 2.5% to sit at $3.45/pound; Gold advances 0.1% to $1582/ounce

Global Economy

•    Concerns persist in Spain: Despite Spain’s banks being provided with monetary easing of upto €100bn, concerns exist about Spain’s ability to recover at all. The government also said that the economy is expected to contract 0.5%, and unemployment will stay at current levels, of 1 in 4 people unemployed. The bond yields shot up a staggering 27bp to 7.28%.

Companies

•    BofA executive charged: An ex-employee of Bank of America has been charged as a part of a long running investigation into bid-rigging in the municipal bond market. Phillip Murray is being alleged to have colluded with a broker and other co-conspirators in an attempt to defraud the issuers by manipulating the bidding process.

 

19 July 2012: Stocks firm up, Mizuho to pay CDO charges

Markets– Stocks firmer, Commodities mixed: Strong housing data from US, as well as higher than expected earnings has given some impetus to the stocks, as risk appetite slowly builds.
•    Stocks: FTSE All World is up 0.6%, as FTSE Eurofirst adds 1%; In Asia mood is mildly bearish as FTSE Asia Pacific lost 0.5% but Tokyo’s Nikkei adeed 0.95%; S&P 500 closed with a gain of 0.7%; FTSE 100 added 1% to 5685
•    Currencies: Euro is lower 0.1% at $1.2280; Sterling against dollar is up to $1.5658
•    Debt: The German Bunds have lost 3bp to sit at 1.21% while US 10-years lose 2bp owing to demand for safe havens at 1.49%
•    Commodities: Brent Crude is up 0.6% to $105.88/barrel; Copper is up 0.6% to sit at $3.47/pound; Gold falls to $1570/ounce

Global Economy
•    Greek leaders identify 2/3rds of spending cuts: Leaders of the coalition party in Greece gave the go-ahead to measures worth about €8bn out of the €11bn, but warned about the country’s rising poverty, and the 5-year recession. These cuts include cuts of government’s operating costs, ceiling on pensions, and wages and benefits in the public sector. Athens needs to implement these measures and achieve a budget deficit target of 6.7% (of national output) before it can seek any concessions from international lenders on its loans.

Companies

•    Rate probe turns to four major banks: 4 major European banks are being probed for rigging interest rates with Barclays traders. The names include HSBC, Deutsche, Societe Generale and Credit Agricole. Barclays has recently paid $290 million in settlements after being charged with rigging the LIBOR (read here about different interest rates).

•    Mizuho to pay CDS damages: Mizuho securities will be required to pay $127 million in compensation of charges that they misled investors by packaging CDO’s with a phoney security which allowed them to obtain a higher credit rating on their structured product.

14 July 2012: Section from India

Section from India

Economic: 

  • India’s growth projection lowered: India’s estimated growth has been lowered to 6.5% for the current fiscal by the Asian Development Bank. The previous figure was 7%. India’s demand for products/manufacturing is clouded both domestically and internationally. This combined with high inflation has created a negative outlook for the second half of the year.
  • Southeast is the safe haven as India and China stumble: Southeast Asia, which had a crippling financial crisis almost 12 years ago, is now looking a safe haven as it proves resilient to the global financial crisis. This region of 600 million people that boasts a rapidly growing middle class has a record high foreign investment. The trend has reversed as investors are now looking towards India and China has high-beta investments, while they look towards Indonesia, Thailand, Philippines as safe investments.

Markets:

  • Infosys triggers IT crash, Sensex loses 257 points: Benchmark indices have posted their biggest fall since June as poor results from Infy dragged down most IT stocks. Infosys plunged 8.15%, as it expects revenues to grow only 5% compared to earlier estimates of 8-10%. Sensex fell 1.47%, while NIFTY closed 1.34% lower.
  • Diesel prices may rise after presidential poll:  Following the presidential poll, the Govt. plans to raise Diesel, cooking gas and kerosene prices. Petrol prices are expected to be stable for the time-being. The reason being cited is ‘to boost the economy by raising fuel prices’.

Companies:

  • FMCG companies to focus on volumes: Weak monsoon this year might affect crop yields, but FMCG companies like Dabur and Parle are readying their contingency plans by focussing on stemming loss of sale volume. This will be done through several measures- delaying price hikes, shifting focus to smaller sized packs. This will be combined with improving procurement efficiency, and considering cost-effective rural expansion.
  • JSPL raises Rs. 3500 Cr.: Jindal Steel and Power has raised Rs. 3500 crore from a consortium of lenders for a steel project which is to be set up in Odisha. This loan is to be used for a 2-million tonne coal-to-gas direct reduced iron plant. This is the first of a kind project all over the world. This capital raising comes on the back of Jindal Steel preparing to terminate a $2.1 billion investment contract with the Bolivian Government.