April 24, 2024

You are here: Home / Archives for debt crisis

Factory Production Is Fueling Increased Growth in U.S.

January 19, 2012 by Leave a Comment

WASHINGTON (AP) — Factory production in the United States has surged 15 percent above its lows of two and a half years ago and is helping drive the economy’s recovery.

A jump in manufacturing output last month coincided with other data suggesting that the economy began 2012 with renewed vigor, and another report shows that wholesale prices are tame.

There appear to be signs “that manufacturing in the U.S. is gaining global market share,” said John Ryding of RDQ Economics, “and this could be an important dynamic supporting growth in 2012.”

Manufacturing rose 0.9 percent from November to December, the Federal Reserve said Wednesday. It was the biggest monthly gain since December 2010.

Overall output at the nation’s factories, mines and utilities increased 0.4 percent. Warm weather reduced demand for energy produced by utilities.

Over the last year, factory output has risen 3.7 percent. Factories benefited in particular in the second half of 2011 from several trends. People bought more cars. Businesses spent more on industrial machinery and computers before a tax incentive expired. And companies restocked their supplies after cutting them last summer.

The growth has also fueled more hiring. Factories added 23,000 jobs in December, the most since July. That helped reduce the unemployment rate to 8.5 percent, the lowest level in nearly three years.

Still, Europe’s debt crisis has begun to dampen demand for American exports. That trend, should it continue, could slow manufacturing and threaten growth this year.

December’s gains suggest the industry “is still resistant to the apparent slowdown in growth elsewhere, particularly in Europe,” said Paul Ashworth, chief United States economist with Capital Economics.

Businesses are starting to see some relief from high prices for energy and food, and that should benefit consumers later this year.

The Producer Price Index declined 0.1 percent in December, the Labor Department said Wednesday. The index measures price changes before they reach consumers.

Core wholesale prices, which exclude costs for food and energy, rose more sharply in December — 0.3 percent. But economists played down the increase. They cited temporary factors that had pushed auto prices down in October and November.

Over all, wholesale prices are trending lower. They increased 4.8 percent in December compared with the same month a year ago, reflecting in part the effect of higher oil and other commodity prices. Even so, it is the slowest annual increase since January and down from 7.1 percent in July.

Falling prices for oil and agricultural commodities have lowered the cost of food and gas.

Gas prices have turned upward in recent months, but economists do not expect that to worsen inflation this year because prices will most likely be lower than last winter and spring, when political turmoil in North Africa and the Middle East sent prices up.

Lower wholesale costs mean manufacturers and retailers face less pressure to raise prices for consumers to maintain profits. That could keep consumer price inflation in check.

Lower inflation also gives the Federal Reserve leeway to keep short-term interest rates low and take other steps, if necessary, to bolster the economy.

Article source: http://feeds.nytimes.com/click.phdo?i=b499efd1e042169ed24d2cb8f7895547

Filed Under: Economy News Tagged With: , ,

World Bank Predicts Slower Growth and Urges Precautions

January 18, 2012 by Leave a Comment

In a report released Tuesday, the Washington-based bank lowered its growth forecasts for high-income and low-income countries, saying it expected the world economy to expand an aggregate 2.5 percent in 2012, down from about 2.7 percent in 2011. In its previous estimate, in June, it forecast growth of 3.6 percent in 2012.

The bank also warned of the continued threat of a global financial shock “similar in magnitude to the Lehman crisis,” because of the possibility that a major European economy could be shut out of the global debt markets. In that case, the bank estimated the damage to the world’s economic growth would rival the recession of 2008 and 2009.

“The largest economy in the world is weakening,” Justin Yifu Lin, the bank’s chief economist, said in an interview, referring to the European Union. “The message for developing countries is to start preparing now.”

The report was issued as forecasters warned of slower growth in the United States. Estimates of the nation’s annual pace of growth reached as high as 4 percent in the final months of 2011. But economists contend the strength came in part from temporary measures, including wholesalers restocking their inventories and consumers saving less and spending more over the holidays.

Economists say they expect many headwinds in early 2012: rising oil prices as the United States and European countries confront Iran; the risk of a tax cut for American wage earners expiring; a strong dollar rendering American exports less competitive; and continued repercussions from the sovereign debt crisis in Europe.

In the report, the biannual Global Economic Prospects, the bank predicted that high-income countries, including the United States, France, Japan and Germany, would grow 1.4 percent in 2012. It forecast a mild contraction of 0.3 percent in the 17 countries that use the euro. Developing countries will grow 5.4 percent, down from a forecast of 6.2 percent in June, the bank said.

The reason for the global slowdown is twofold, said Andrew Burns, head of global macroeconomics at the World Bank and the main author of the report. First, developing countries like Turkey, India, Russia and Brazil were “overheating” in the rebound after the recession and have tightened monetary policy to help curb inflation, he said. Second, he added, the euro zone crisis has frightened investors, and austerity budgets adopted in countries, including Italy and Greece, have weighed on growth.

Mr. Burns said those trends created a “dangerous dynamic,” with the slowdown in emerging economies sapping growth from advanced economies, and the downturn in advanced economies worsening prospects for emerging markets. “The events are feeding off of one another,” he said.

A worst case in Europe could lead to significant hardship for emerging economies, the report said. Commodity prices could fall as much as 24 percent, hurting government revenue in export-dependent nations. Global trade volumes could fall by more than 7 percent. Countries in Central Asia and Eastern Europe would be hit hardest, the bank said.

But even if catastrophe does not occur, growth looks weaker, the bank said. For instance, the World Bank estimates world trade will expand only 4.7 percent in 2012, down from 12.4 percent in 2010.

Last summer, the World Bank noted significant “contagion from Europe to developing countries,” Mr. Burns said. Risk-averse investors slashed financing to emerging markets, with gross capital flows falling to $170 billion in the second half of 2011 from about $309 billion in the same period in 2010. In addition, borrowing costs began to rise in developing countries.

The bank said developing economies should prepare for declining investment from abroad, less-robust exports, and reduced remittances. Governments should rigorously stress test their financial institutions, plan major infrastructure projects to help support demand and ensure the viability of their social safety nets, the report said.

Mr. Lin said advanced economies should consider more immediate fiscal stimulus to support growth, locally and globally. “They need to carry out structural reforms in the long-term,” he said. “But in the short term, they need an intervention to provide a short-term boost to demand.”

He warned that emerging markets have less room for fiscal and monetary stimulus than they did in 2008 and 2009, even though they have more capacity than many developed countries. Many high-income countries, including the United States, are already struggling with heavy debt loads, limiting the possibility of fiscal stimulus. And central banks have already overextended their balance sheets and pushed interest rates close to zero, limiting monetary stimulus, Mr. Burns said in an interview.

The International Monetary Fund, the World Bank’s sister organization, echoed its warnings about the dangers slowing trade and uncertainty about Europe pose to emerging markets.

In a speech Monday, David Lipton, the fund’s first deputy managing director, said there was reason for optimism, given the lessons learned in the 2008 crisis. But, he warned: “Europe could be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs. And in today’s interconnected global economy, no country and no region would be immune from that catastrophe.”

The fund is expected to update its World Economic Outlook on Jan. 24. It said it would cut its growth forecast from predictions it issued last September.

World Bank officials emphasized the importance of confidence, given uncertainty about Europe and worries about slowing growth. Mr. Burns said investor sentiment “could have an enormous impact cumulatively.”

Article source: http://feeds.nytimes.com/click.phdo?i=03edb72c48cdd211d1033157208e7071

Filed Under: Business News Tagged With: , ,

Wall Street Stocks Higher on Fresh Labor Data

January 13, 2012 by Leave a Comment

A drop in oil prices and strong bond auctions in Europe drove stocks to a slightly higher close Thursday. The Standard Poor’s 500-stock index rose for the fourth straight day.

Materials and industrial companies led the gains. Caterpillar and Alcoa rose the most in the Dow. Stocks drove higher in the last hour and a half of trading after oil prices dropped below $100 a barrel for the first time this year. Oil fell on rumors that Europe would delay an embargo on Iranian oil. Crude oil futures for March delivery settled down $1.78 to $99.31 on the New York Mercantile Exchange.

Also pushing stocks were strong bond auctions in Italy and Spain. European markets ended mostly higher after Italy and Spain held highly successful bond auctions, easing worries about Europe’s debt crisis. Italy’s benchmark stock index rose 2.1 percent.

In Italy’s first bond auction of the new year, the country was able to sell one-year bonds at a rate of just 2.735 percent, less than half the 5.95 percent rate it had to pay last month. That’s a signal that investors are becoming more confident in Italy’s ability to pay its debts.

Spain was able to raise double the amount of money it had sought to raise in its own bond sale as demand for its debt was strong. Both auctions were seen as important tests of investor sentiment.

Investors have been worried that Italy and Spain, the third- and fourth-largest countries in the euro area, might be dragged into the region’s debt crisis. Greece, Ireland and Portugal have been forced to get relief from their lenders after their borrowing costs spiked to levels the countries could no longer afford.

The euro rose nearly a penny against the dollar, to $1.28, as worries eased about Europe’s financial woes. The currency, which is shared by 17 European Union countries, fell to a 16-month low against the dollar the day before. An auction of 30-year United States Treasury bonds drew meager interest from investors as cash flowed back into European debt.

The Dow Jones industrial average gained 21.57 points, or 0.2 percent, to end at 12,471.02. It was down most of the day, losing 64 points in the first hour of trading, following a rise in unemployment claims and a weak report on December retail sales.

The S. P. 500 finished up 3.02 points, or 0.2 percent, at 1,295.50. The Nasdaq composite rose 13.94 points, 0.5 percent, to 2,724.70.

The Treasury’s 10-year note fell 6/32, to 100 21/32. The yield rose to 1.93 percent, from 1.91 percent late Wednesday.

It was the latest day of quiet trading in the stock market. There have been six consecutive days with moves of less than 1 percent in the S. P. 500.

Ralph Fogel, investment strategist and partner at Fogel Neale Partners in New York, said the moderate moves were an encouraging sign after the steep rises and sudden declines that were typical of last summer. “This is a much healthier market than we’ve seen,” he said.

Unemployment benefits spiked last week to the highest level in six weeks, mostly because companies let go of thousands of holiday hires, the government reported. Retail sales barely rose in December and were lower than analysts were expecting.

Despite the mixed news on the economy, investors are starting to focus on the corporate earnings season, which got under way this week after Alcoa, the aluminum maker, predicted stronger demand for its products and surprised the market with higher revenue than analysts expected.

“There’s a fair amount of pessimism out there but I also think that investors are slowly becoming immune to the bad news,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “As long as the stuff you can sink your teeth into, like corporate profit, is improving, I think it bodes well for the markets this year.”

Chevron fell 2.6 percent after the world’s second-largest publicly traded oil company said its income would be “significantly” below its fourth-quarter results in the prior quarter because of narrower margins on refining and selling fuels.

The business software company CA Inc. jumped 4.2 percent after the hedge fund Taconic Capital disclosed in a regulatory filing that it has taken a 5.1 percent stake. It also said it was pressing CA to return more cash to shareholders and increase its profit margins.

Article source: http://www.nytimes.com/2012/01/13/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

France and Germany Warn Greece on Bailout

January 10, 2012 by Leave a Comment

The leaders of the European Union’s two largest countries met in the German capital to discuss their next steps in combating the sovereign-debt crisis that has destabilized the Continent and threatened the common currency. Even as Mrs. Merkel and Mr. Sarkozy promised quick action to stem the crisis, investors signaled the depth of their continuing concern over the instability that has spread from Greece to the very heart of the euro zone, by purchasing German debt at a negative interest rate for the first time ever.

Mr. Sarkozy, speaking at a news conference after the two leaders met at the chancellery building here, acknowledged the uncertainty in the markets, saying, “The situation is very tense, very tense.”

There are increasing signs that Greece will fail to make the structural changes to its economy that its leaders have promised. Greece’s prime minister, Lucas Papademos, warned last week that without deeper spending cuts a disorderly default was a possibility, and could result in Greece leaving the euro.

Mr. Sarkozy said that “our Greek friends must live up to their commitments,” while Mrs. Merkel said that if those commitments were not met by the Greek government, “it will not be possible to pay out the next tranche” of the bailout money.

The holidays may have created a lull in the action, but the new year promised to be just as hectic as the old for European leaders and Mrs. Merkel in particular. The head of the International Monetary Fund, Christine Lagarde, will arrive Tuesday evening for talks with the German chancellor. Italy’s prime minister, Mario Monti, is scheduled to come to Berlin on Wednesday.

Mrs. Merkel and Mr. Sarkozy are scheduled to travel to Rome on Jan. 20 for negotiations with the Italian government ahead of the next European Union summit in Brussels on Jan. 30.

“Everyone would like a grand design rather than a series of small steps going forward, some going backwards,” said André Sapir, an economist and senior fellow at Bruegel, a research group based in Brussels. “Sometimes there doesn’t seem to be a design at all, and that has been unnerving investors being asked to refinance debt both private and public.”

A drumbeat of bad economic news lately has led many economists to predict the imminent return to recession for many of the countries that use the euro. At the same time, European countries and financial institutions need to raise about $2.4 trillion in 2012.

Asked whether she feared that more European nations might be downgraded by ratings agencies, further spooking markets, Mrs. Merkel replied coolly, “Fear does not motivate my political actions.”

The gap between the countries with sound finances, and those like Italy and Spain that are forced to pay high rates, has widened to a chasm of five percentage points or more. Germany on Monday joined the likes of the Netherlands and Switzerland as perceived safe havens where buyers of short-term debt are willing to lose money in return for shelter from upheaval and the possibility of even greater losses.

Mrs. Merkel called the plan to stabilize the euro “an ambitious but attainable goal.” She hit several familiar themes, emphasizing that there were no quick solutions to the euro crisis and that Greece was an exception when it came to debt write-downs, often known as a “haircut,” for private investors.

“Our intention is that no country must withdraw from the euro area,” Mrs. Merkel said.

She and Mr. Sarkozy both voiced their determination to press ahead with a tax on financial transactions opposed by Britain, but they appeared to diverge on the timing. Mr. Sarkozy, facing a strong left-wing challenge in his bid for re-election in May, suggested France might go it alone and challenge other countries to follow suit.

The French prime minister, François Fillon, said Monday in Paris that France might present a bill on such a tax in February, hoping that other countries do the same. “Someone has to be the first to jump in the water,” Mr. Fillon said.

Mrs. Merkel expressed support for Mr. Sarkozy’s goal of moving quickly on the financial-transaction tax, saying that European Union finance ministers should make a formal proposal by March. Although an agreement between the 27 members of the union was preferable, one among the 17 members that use the euro was acceptable.

“If Sarkozy loses the election, which is entirely possible, the Socialists would certainly be a more difficult partner for Merkel,” said Frank Decker, a political scientist at the Institute for Political Sciences and Sociology at the University of Bonn. “As a result, she looks for ways that she can strengthen his position.”

Steven Erlanger in Paris contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=58253de4ac43a988288aaf94256d21fb

Filed Under: Business News Tagged With: , ,

Good Year for Autos, but a Test Waits in ’12

January 5, 2012 by Leave a Comment

But the road ahead for General Motors, Ford and Chrysler will be crowded with tougher competition from foreign automakers, as the relatively healthy American car market becomes an even bigger draw.

Japan’s car companies are looking to rebound from natural disasters in Asia, and the debt crisis in Europe has automakers there looking to North America for more market share. Already, Nissan and Volkswagen have posted big sales gains in the United States for last year.

Even with increased demand, the Detroit companies will be hard-pressed to maintain their combined 47 percent share of the market, up from 45 percent in 2010, analysts said.

“It is not going to be an easy task,” said Jesse Toprak, vice president for industry analysis at the research Web site TrueCar.com. “They did benefit from the misery of others in 2011.”

Auto sales in the United States surged in December for the seventh consecutive month, as the industry continued its methodical comeback from the depths of recession.

Sales rose 8.7 percent in December, and increased 10 percent for all of 2011 compared with the previous year.

With about 12.8 million vehicles sold, it was the industry’s best year since 2008 — although still well short of the 16 million annual sales level enjoyed before the recession.

The biggest beneficiaries of the increased demand were G.M., Ford and Chrysler. All three companies reported increases in market share in the same year for the first time in two decades, according to the automotive-research Web site Edmunds.com, which began tracking share numbers in 1991.

Because of their restructurings — and in the case of G.M. and Chrysler government bailouts — Detroit was solidly profitable, a fact that President Obama has sought to use to his political benefit as he seeks re-election this year.

The continued comeback of new-vehicle sales underscored that the United States remained the most profitable car market in the world.

“It’s not the cash cow it once was, but it’s still a mature and profitable market, as opposed to more volatile emerging markets, or stagnant ones in Europe,” said Rebecca Lindland, an analyst with the consulting firm IHS Automotive.

Analysts said consumers were spending more freely on new vehicles because their current cars were aging and financing options were more readily available.

Mr. Toprak estimated that leasing accounted for 25 percent of sales in 2011, more than double the level of two years earlier.

The Detroit automakers all reported increases during December. Chrysler, which had lagged the market a year ago, said its sales jumped 37.1 percent from the year-earlier period on the strength of new Jeeps and sedans. Sales at G.M. climbed 4.6 percent during the month, and Ford reported a 10.1 percent increase.

Among the foreign manufacturers, Volkswagen said its monthly sales increased 31.4 percent, Hyundai posted a 13.3 percent improvement and Nissan reported a 7.7 percent gain. Toyota said its sales were flat in December, while Honda reported an 18.8 percent drop.

The research firm J. D. Power Associates said December was the first month in which sales to individual consumers — a figure that excludes bulk deliveries to businesses and government buyers — topped one million since the August 2009 spike during the federal cash-for-clunkers trade-in program.

“The industry has managed through another series of external shocks and is in a healthier position as the year closes,” said John Humphrey, senior vice president for global automotive operations at J. D. Power.

Sales are expected to climb further this year. Edmunds.com is forecasting 2012 sales of 13.6 million, while TrueCar.com expects 13.8 million.

With the European economy floundering, most global automakers are putting more resources than ever into products for American consumers. Leading the way is Volkswagen, which introduced several revamped models last year and has big plans for more growth.

“We expect V.W. to be very aggressive in the U.S. market,” said Mr. Toprak. “Toyota and Honda will also likely gain back some of the share they have lost, but not all of it.”

Toyota and Honda lost sales last year because of supply constraints from the earthquake and tsunami in Japan as well as floods in Thailand. Their historic dominance in the small and midsize car segments also eroded because of the presence of more competitive models from the Detroit car companies.

Both Toyota and Honda vow, however, that their inventory problems are now behind them, and that a blitz of new products will lure shoppers back to their showrooms.

“I think we are extremely well positioned to show customers once again what we have to offer,” said Jim Lentz, head of Toyota’s sales operations in the United States.

A resurgence by foreign automakers will put pressure on the Detroit companies to hold on to their 2011 gains.

“We are forecasting for the Big Three all to lose some market share in the coming year,” said Ms. Lindland. “That’s not to say, however, that they won’t be profitable because they have restructured so dramatically.”

The American companies are hardly resting on their laurels, and will unveil a number of important new products next week at media previews of the annual auto show in Detroit.

G.M. is expected to show a new small Cadillac sedan and a little crossover vehicle from its Buick division. Chrysler plans to introduce the new Dodge Dart compact car, while Ford will take the wraps off a redesigned version of its midsize Fusion sedan.

There will also be plenty of foreign models competing for attention at the Detroit show.

“The selection of vehicles that consumers have to choose from is the best in the history of the U.S. industry,” said Mr. Toprak. “But it makes it that much harder for any one company to stand out.”

Nick Bunkley contributed reporting

Article source: http://feeds.nytimes.com/click.phdo?i=a96187b9dcc6b460d79b863974809eca

Filed Under: Business News Tagged With: , ,

World Stocks Mixed Ahead of Key Meetings in Greece

January 4, 2012 by Leave a Comment

LONDON (AP) — Stock markets retreated slightly Wednesday after a surprisingly buoyant start to the new year triggered by a run of encouraging U.S. economic data.

The U.S. economy, the world’s largest, is likely to remain the focal point this week up through Friday’s key jobs report for December, though ongoing worries over Europe’s debt crisis will likely keep a lid on the enthusiasm.

So far this week, investors have been able to focus on the outlook for the U.S. economy, helping stocks to post sizable gains. Germany’s DAX is up around 5 percent already, while the Dow Jones index in the U.S. closed Tuesday at its highest point in five months.

Unsurprisingly there’s been a bit of a retreat following these sizable gains.

In Europe, the DAX was down 0.5 percent Wednesday at 6,135 while the CAC-40 in France was down 0.6 percent at 3,225. The FTSE 100 index of leading British shares was unchanged at 5,701. The euro was also down slightly after solid gains Tuesday — down 0.3 percent at $1.3015, still markedly up from last week’s 15-month low of $1.2857.

Wall Street was poised for a subdued opening — Dow futures were down 0.1 percent at 12,323 while the broader Standard Poor’s 500 futures fell 0.1 percent to 1,271.

Bar any surprising developments in Europe’s debt crisis, the focus is likely to continue to center on the U.S. and a raft of economic data that culminates Friday with the closely watched U.S. non-farm payroll figures for December.

A strong U.S. manufacturing survey, which showed the sector growing at its fastest rate in six months, fueled hopes that the figures, which often set market tone for a week or two, will be strong.

The consensus in the markets is that the U.S. economy generated another 150,000 or so jobs during the month — a solid, if unspectacular, jobs creation.

“Markets have put to one side concerns about Europe so far this week,” said Michael Hewson, markets analyst at CMC Markets.

Germany successfully auctioned euro4.06 billion ($5.28 billion) in 10-year bonds despite concerns over the debt crisis that’s afflicting the 17-nation eurozone. Demand for the bonds outstripped supply as investors placed bids for euro5.14 billion of the debt securities. The average interest yield was a low 1.93 percent, down from 1.98 percent in November.

Greece remains a key point of concern as it tries to negotiate a second massive financial bailout that involves private creditors being asked to forgive 50 percent of their Greek holdings. Many in the markets think that’s not enough.

Greek Prime Minister Lucas Papademos was holding talks Wednesday with labor unions and trade federations ahead of a crucial visit by international debt inspectors. The meetings come a day after government spokesman Pantelis Kapsis warned that Greece could have to leave the eurozone if it fails to finalize the details of its second euro130 billion ($169 billion) bailout. He also said even more austerity measures may be needed.

Earlier, Asian stocks ended the day with gains, following a strong session on Wall Street.

Japan’s Nikkei 225 showed renewed life as it posted a 1.2 percent gain to 8,560.11. The battered benchmark lost nearly 20 percent of its value in 2011 — a year marred by a tsunami and nuclear plant disaster, made all the more difficult by record-high levels for the yen.

Hong Kong’s Hang Seng Index and South Korea’s Kospi slipped after strong gains a day earlier. The Hang Seng fell 0.8 percent to 18,727.31, while the Kospi was down 0.5 percent at 1,866.22.

Oil prices gave up some of Tuesday’s gains when they surged through the $100-a-barrel mark as equities advanced and tensions over the Persian Gulf between the U.S. and Iran escalated. Benchmark crude for February delivery fell 27 cents to $102.69 per barrel in electronic trading on the New York Mercantile Exchange.

____

Pamela Sampson in Bangkok contributed to this report.

Article source: http://www.nytimes.com/aponline/2012/01/03/business/AP-World-Markets.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

World Markets Turn Higher

January 3, 2012 by Leave a Comment

European stocks rallied on Monday, after manufacturing in Germany and China beat forecasts. French bonds fell before debt sales this week and the euro weakened.

The Stoxx Europe 600 index closed up 1.1 percent and the DAX index in Germany surged 3 percent. The Bovespa index in Brazil increased 1.9 percent. The markets in the United States, Britain and several other countries were closed Monday in observance of the New Year’s holiday.

The price of French 10-year bonds fell for a fourth day, pushing yields higher to 3.24 percent. France plans to sell 16.9 billion euros ($21.9 billion) of debt this week. France’s CAC-40 index climbed 2 percent and benchmark indexes in Portugal and Italy increased at least 1.8 percent. The euro weakened against 13 of 16 major peers.

Gold touched the highest level in a week on reports that Iran had produced its first nuclear fuel rod, spurring investors to buy the precious metal as a haven. Spot prices gained as much as 3.2 percent to $1,613.40 an ounce in London, before trimming its gain to 0.2 percent and trading at $1,566.27.

Germany’s purchasing managers index climbed to 48.4 last month, according to Markit Economics. A manufacturing gauge for China increased to 50.3, the Beijing-based logistics federation said Sunday.

“On the first day of the year, a lot of investors, having cleaned their portfolios, have liquidity to invest,” said Arnaud Scarpaci, a fund manager at Agilis Gestion in Paris. “Germany can be seen as a safe haven because it has stronger growth than other countries. People are investing in industries with a lot of visibility, such as utilities.”

Equities and commodities last week capped their worst annual returns since the financial crisis in 2008 amid concern that Europe’s government debt crisis would weigh on global growth. The Stoxx 600 lost 11 percent in 2011, while the MSCI Asia-Pacific index slid 17 percent.

The Standard Poor’s 500-stock index closed virtually unchanged, ending 2011 at 1,257.60, compared with its 2010 close of 1,257.64.

The direction of the S. P. 500 in January has correctly foreshadowed whether stocks end the year higher or lower in 60 of the last 83 years, or about 72 percent of the time, according to an e-mail on Sunday from Howard Silverblatt, senior index analyst at S. P.

German bonds declined for the first time in five days, pushing 10-year yields up to 1.91 percent. The country will auction 5 billion euros of bonds due in 2022 on Wednesday.

Mexican stocks advanced, sending the benchmark Bolsa index up 0.7 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=c068e9ba09cc03ab015695cef1bfbfcf

Filed Under: Business News Tagged With: , ,

Asian Markets Rise on Eurozone Factory Data

January 3, 2012 by Leave a Comment

BANGKOK (AP) — World stock markets rose Tuesday, as market confidence grew after the release of manufacturing data that showed improvement in Europe.

Benchmark oil rose above $100 per barrel while the dollar fell against the euro and the yen.

Britain’s FTSE 100 opened after a three-day holiday, gaining 1 percent at 5,625.17.

Germany’s DAX rose 0.8 percent to 6,125.05 while France’s CAC-40 fell 0.7 percent to 3,199.95. Wall Street appeared headed for a mixed day of trading, with Dow Jones industrial futures up less than 0.1 percent to 12,158 and SP 500 futures flat at 1,252.50.

Asian stocks rose as post-holiday trade began to acquire momentum. Hong Kong’s Hang Seng Index, on its first trading session of 2012, jumped 2.4 percent to close at 18,877.41. South Korea’s Kospi index rose 2.7 percent to 1,875.41 and Australia’s SP ASX 200 gained 1.1 percent at 4,101.20. Benchmarks in India, Singapore, Taiwan, Malaysia and Indonesia also rose.

Benchmarks in Japan, mainland China and Thailand remained closed for the extended New Year’s holiday.

Steadily improving economic news in the U.S. and continued growth in China are providing traders with reasons for optimism in 2012, despite a debt crisis in Europe that shows few signs of abating.

“Nobody expects much from Europe, but you can expect better things from the U.S. and China. So, I think the market will rise in 2012 mainly because we started in a very low base,” said Francis Lun, managing director at Lyncean Holdings in Hong Kong.

Oil-related stocks posted solid gains as the price of crude hovered above $100 per barrel. Hong Kong-listed PetroChina Co., China’s largest oil and gas producer, jumped 4.5 percent. China Petroleum Chemical Co., Asia’s biggest oil refiner, gained 5.5 percent.

Other commodity shares headed upward. Australia’s Fortescue Metals Group added 3.3 percent. Newcrest Mining rose 3.7 percent and BHP Billiton, the world’s largest mining company, rose 1.1 percent. Rival Rio Tinto added 1.8 percent.

Korean industrial shares posted solid gains. Hyundai Heavy Industries, the country’s leading shipbuilder, jumped 5.8 percent. Steel giant POSCO rose 3.1 percent. Hyundai Motor soared 4.2 percent.

On Monday, German and French stocks rose in light volumes as a reading of manufacturing activity in Europe improved in December from November.

But the purchasing managers index levels still show a fifth straight month of contraction — an indication of recession in the eurozone, analysts said.

“It seems unlikely that equity gains will be sustained over the rest of this week, with risk aversion set to remain elevated against the background of ongoing Eurozone debt and global growth concerns,” Credit Agricole CIB said in a research note.

Many of the world’s leading indexes are starting 2012 after a down year. Britain’s FTSE was off 5.6 percent by year end, Japan’s Nikkei fell 17 percent to its lowest close since 1982, and the Standard Poor’s 500 showed zero gain.

Data releases later in the week such as eurozone inflation on Wednesday and German factory orders and U.S. non-farm payrolls on Friday will give traders more grist.

Benchmark crude for February delivery rose $1.76 to $100.59 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 82 cents to settle at $98.83 in New York on Friday.

In currencies, the euro rose to $1.2994 from $1.2946 late Friday in New York. The dollar fell to 76.80 yen from 77.78 yen.

Article source: http://www.nytimes.com/aponline/2012/01/02/business/AP-World-Markets.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Stocks & Bonds: American Stock Markets End 2011 Where They Started

December 31, 2011 by Leave a Comment

The Standard Poor’s 500-stock index, the main gauge of broad market performance, closed on Friday at 1,257.60, finishing the year nearly dead even with its 2010 close of 1,257.64, which is technically down 0.003 percent. The Dow Jones industrial average of 30 blue-chip American stocks fared better, closing the year with a 5.5 percent gain at 12,217.56.

Market strategists predict the S. P. will stay in a range of 1,100 to 1,500 by the end of 2012, depending on how investors balance economic growth, fiscal policy, corporate earnings and the European debt crisis, as well as the potential for change after the November election.

Yet, looking back at 2011, it was a flat finale that told little of the volatility preceding it, when political turmoil, financial upheaval and even natural disasters left almost no corner of the markets untouched.

On 35 trading days in the year, the broader market closed with a gain or loss of 2 percent or more — the most number of days of that magnitude since the financial crisis of 2008-9 and making 2011 among the most volatile on record for stocks.

“It has been such a difficult year,” said Rick Bensignor, the chief market strategist for Merlin Securities. “Things changed on a dime.”

Oil prices shot up to $114 a barrel before plunging to $76 and rising again to $100 in reaction to revolutions in the Middle East and North Africa. Investors piled into the perceived haven of United States Treasury bonds even after the nation’s credit rating suffered its first-ever downgrade. The earthquake and tsunami in Japan exacted a devastating human and economic toll.

And the debt crisis in Europe upended governments, stirred fears of sovereign defaults and imposed severe financing strains on banks. Possibilities that were once remote became questions for debate in 2011: Will the euro zone break up? Is this a replay of the 2008 financial crisis?

Sentiment was also hobbled by a deadlock in Washington over fiscal policy and by the potential for slowing growth in emerging markets.

“Investors are scared to death,” said Philip J. Orlando, a chief market strategist for Federated Investors. “You have a massive flight to safety.”

Despite the bruising it took in 2011, Wall Street managed to score one of the better global performances. Major European and Asian indexes lost anywhere from 6 percent (Britain) to 26 percent (Italy) for 2011.

Looking ahead, some analysts see the United States faring even better in 2012. Binky Chadha, the chief strategist for Deutsche Bank, who forecast that the S. P. 500 would end closer to 1,500 in 2012, wrote in a market commentary that “very healthy” corporate fundamentals and cheap valuations would help equities eventually win out over the euro crisis and American fiscal issues.

Some analysts said investors would most likely be better braced to handle policy changes in the nations that use the euro.

“Investor reaction should continue to get better,” said Jack A. Ablin, chief investment officer of Harris Private Bank. “For as lousy as Europe’s news is, it has got to be the slowest moving train wreck in the history of the financial world. It’s the stuff that comes over the transom that kills us.”

Among the best 2011 performers in the S. P. 500 were utilities, up 14.8 percent; health care, up 10.2 percent; and consumer staples, 10.5 percent. The financial sector fared the worst, finishing down 18.4 percent.

Macroeconomics ganged up on market sentiment this year to such an extent that investors backed off stocks even as American companies set records for profits, mostly via cost-cutting.

In the third quarter, for example, earnings per share for companies in the S. P. 500 were $25.29, their highest ever for a quarter, according to statistics compiled by Standard Poor’s. But in an “enormous disconnect,” said Howard Silverblatt, senior index analyst for S. P., the index was still down 14 percent in that period.

“The fundamental underpinnings of investing didn’t matter” in 2011, Mr. Ablin said. “All it took was one headline and just like a tidal wave, it was lapping across the market.”

Article source: http://feeds.nytimes.com/click.phdo?i=b91dbd1c7951a4a78d86c52c63940db1

Filed Under: Economy News Tagged With: , ,

Asia Stocks Lower on Concern About U.S., Europe

December 27, 2011 by Leave a Comment

BEIJING (AP) — Global stock markets were mixed Tuesday amid worries about weak Christmas sales in the United States and Europe and a warning by Japan’s central bank about possible risks from the European debt crisis.

Tokyo lost 0.5 percent to 8,440.56 while China’s benchmark Shanghai index dropped nearly 1.1 percent to 2,166.21. Seoul, Taipei, Singapore and Jakarta declined. Hong Kong and Sydney were closed.

In Europe, France’s CAC 40 opened up 0.3 percent at 3,111.37 while Germany’s DAX also gained 0.3 percent to 5,897.57.

Pessimistic Asian investors expect upcoming indicators including Chinese manufacturing and Christmas retail sales in key Western markets to be lackluster, said Peng Yunliang, a market strategist for Shanghai Securities.

“The markets expect these data will be no good,” Peng said. “Some people think sales data from Christmas in the United States and Europe will not be as good as last year.”

China’s government reported Tuesday that profit growth slowed at its major industrial companies. Total profit in the January-November period rose 24.4 percent over a year earlier, down 0.9 percent from the growth rate for the first 10 months of the year.

Tokyo’s Nikkei 225 declined after the Bank of Japan released notes that showed a Finance Ministry representative warning at a November meeting the world’s third-largest economy faces “significant downside risks” due to Europe’s debt problems.

Wall Street and European stock markets were closed Monday because Christmas fell on a Sunday this year.

Elsewhere in Asia, Seoul’s Kospi shed 0.8 percent to 1,842.02 while Taiwan’s Taiex lost 0.1 percent to 7,085.03. Singapore’s benchmark was off 0.1 percent at 2,673.18. Bangkok and Kuala Lumpur also declined.

Chinese losses were led by media, information technology, food and travel-related companies.

Dairy shares fell after China’s biggest milk producer said Monday it destroyed a batch found to be contaminated with a potentially cancer-causing toxin. Zhejiang Beingmate Scientific Industrial Trade Co., an infant formula producer, lost 6.8 percent while Bright Dairy Food Co. shed 4.1 percent.

Asian investors are closely watching Europe, whose debt crisis already has hurt demand for exports from China and other major producers.

In the last pre-holiday U.S. trading day on Friday, the Dow Jones industrial average added 1 percent while the Nasdaq composite index gained 0.7 percent. The Standard Poor’s 500 index rose 0.9 percent.

Benchmark crude for February delivery was down 14 cents at $99.54 a barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the euro was up 0.1 percent at $1.3065 while the dollar held steady at 77.91 yen.

Article source: http://www.nytimes.com/aponline/2011/12/26/business/AP-World-Markets.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,
« Previous Page
Next Page »