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Markets Lower as Fiscal Worries Continue

September 27, 2013 by

Wall Street was lower on Friday as investors worried that politicians in Washington might not agree on a budget needed to avoid a shutdown of the government.

In afternoon trading the Standard Poor’s 500-share index fell 0.4 percent. The Dow Jones industrial average was off 0.5 percent and the Nasdaq composite 0.1 percent.

The government will reach its borrowing limit, or debt ceiling, on Tuesday. If Congress doesn’t raise that limit, the government won’t be able to pay all its bills and some 800,000 of the 2.1 million federal employees will not go to work.

The White House and Republican lawmakers still disagree sharply on spending cuts and other key budget issues. The Senate plans to vote Friday on measure to prevent an immediate shutdown next week, but a lasting solution still seems far off.

“Tension will increase on the U.S. fiscal front as we approach the deadline of potential government shutdown and will likely act as a drag on sentiment,” said Gary Yau, analyst at Crédit Agricole CIB.

Britain’s FTSE 100 index dropped 0.8 percent to close at 6,512.66 points while Germany’s DAX ended flat at 8,661.51. France’s CAC 40 also closed unchanged, at 4,186.77.

In economic data, American families spent 0.3 percent more in August than the month before, a reflection of wage gains. Figures this week on unemployment benefits had been upbeat, suggesting the Federal Reserve may begin to “taper” its monetary stimulus in coming months.

In Asia, Hong Kong’s Hang Seng Index rose 0.3 percent to close at 23,207.04 while in mainland China, the Shanghai Composite Index advanced 0.2 percent to 2,160.03.

Markets in China were subdued ahead of the introduction on Sunday of a pilot free-trade zone in Shanghai.

China’s leaders have already loosened restrictions on foreign investment in the 11.2-square-mile zone. Further details are expected when the zone is inaugurated. Analysts say authorities are likely to relax taxes, trade quotas and administrative red tape in the zone.

A weeklong holiday in China that starts Tuesday and follows another three-day holiday just last week also kept some investors on the sidelines.

Japan’s Nikkei 225 dipped 0.3 percent to 14,760.07 after the country’s consumer price inflation rose at the fastest rate in five years in August.

South Korea’s Kospi climbed 0.2 percent while Australia’s S.P./ASX 200 rose 0.2 percent. Benchmarks in New Zealand, Taiwan and Singapore also advanced but India’s dropped.

In currencies, the euro strengthened 0.4 percent to $1.3543 while the dollar slipped 0.7 percent against the Japanese yen, to 98.31 yen. The British pound rose 0.6 percent to $1.6134 after the governor of the Bank of England said he saw no reason to have more monetary stimulus as the economy is improving.

In energy markets, benchmark oil for November delivery rose 53 cents to $103.57 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 37 cents to settle at $103.03 on Thursday.

Article source: http://www.nytimes.com/2013/09/28/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Chinese Firm Hit With Restrictions After Trading Problems

August 19, 2013 by

Reuters calculations show the surge created and then wiped out roughly $100 billion worth of share value on the CSI300 Index, which tracks the largest listed firms in China, in the course of a single day.

The malfunction in Everbright’s internal propriety trading system comes at a time when China is trying to revive investor confidence in its sagging stock markets. This does not bode well for corporates looking to raise funds through share sales.

Many Chinese firms are under increasing funding pressure as economic growth indicators in China show signs of stuttering. But Beijing is uncomfortable with loading up the banking system with more risky loans – or with pushing such firms into the country’s so-called shadow banking system where non-bank lenders price credit at far higher levels.

The China Securities Regulatory Commission (CSRC) said it would launch a formal investigation into Everbright. While there was no indication that the systems glitch involved other brokerages, the state media is saying the trading fluke is symptomatic of broader market ills.

The official China Securities Journal said on Monday that the malfunction has exposed major flaws in how Chinese stock exchanges are run, alleging that there are defects in bourses’ warning mechanisms.

The glitch on Friday caused Everbright’s system to send out a spate of buy orders that lifted the Shanghai Composite Index and the CSI300 Index by 5.6 percent and 4.4 percent, respectively. The indexes later fell back into negative territory for the day.

The Shanghai Composite was down 0.2 percent as of 0400 GMT (12:00 a.m. EDT) on Monday, while the CSI300 was 0.28 percent lower.

“It is unclear how strong the impact of the Everbright Securities trading error will be on wider market sentiment,” said an analyst at Cinda Securities Co Ltd, who spoke anonymously as he is not authorized to talk to the press.

“From today’s stock performance, we can see that there hasn’t been a large fall in share prices in the market. If it is a one-off accident, then it won’t have an impact. But if the results from the investigation result in new stricter regulatory measures, then this may have more of an impact.”

He also said it was unclear whether the development would impact plans to restart initial public offerings (IPOs) later this year, or the proposed launch of a government futures trading market, once said to be scheduled for August.

Since late last year, China has halted all IPO approvals as it rewrites listing rules to improve transparency as part of efforts to boost the sagging market. But regulators have come under pressure from companies to allow new listings to resume, having already given way and permitted a few select firms to conduct secondary issuances.

The decision has not been welcomed by Chinese investors, who have long advocated for a freeze on both IPOs and reissuances, arguing that they only serve to dilute valuations and further diminish confidence.

TRADING RESTRICTIONS

Everbright Securities said on Friday it placed unintended buy orders totaling 23.4 billion yuan ($3.83 billion), of which 7.27 billion yuan was actually traded.

Because of a T+1 system in China’s stock market, the brokerage could not sell shares it bought on the same day, which forced it to build huge short positions in the index futures market, totaling 7,130 lots, the brokerage had said.

The China Financial Futures Exchange (CFFEX) on Sunday imposed restrictions on Everbright Securities, limiting its ability to establish fresh stock index futures.

Many persons claiming to be Everbright clients have complained online that while Everbright’s trading mistake would come at their expense, the profits booked off the short hedging would not be redistributed fairly.

Everbright said on Monday that any profits yielded from the massive index short positions it erected on Friday to offset the impact of its accidental purchases would be dealt with legally.

Article source: http://www.nytimes.com/reuters/2013/08/19/business/19reuters-china-everbright.html?partner=rss&emc=rss

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World Stocks Down on Mixed US, Japan Economic News

December 28, 2011 by Leave a Comment

BANGKOK (AP) — World stocks markets fell Wednesday, with trading thinned by year-end holidays and mixed economic news out of the U.S. and Japan.

Benchmark oil hovered above $101 per barrel while the dollar fell against the euro and the yen.

European stocks dropped in early trading. Britain’s FTSE 100 fell 0.2 percent to 5,501.25. Germany’s DAX was 0.9 percent lower at 5,839.98 and France’s CAC-40 lost 0.4 percent to 3,092.01. Wall Street also appeared headed for a lower opening. Dow Jones industrial futures rose 0.2 percent to 12,199 while SP 500 futures dipped 0.3 percent to 1,256.60.

Earlier in Asia, trading was subdued, as it typically is between the Christmas holiday and New Year’s.

Japan’s Nikkei 225 index fell 0.2 percent to close at 8,423.62. Hong Kong’s Hang Seng Index fell 0.6 percent to 18,518.67, while South Korea’s Kospi lost 0.9 percent to 1,825.12. Australia’s SP ASX 200 lost 1.3 percent to 4,088.80. Benchmarks in Singapore, Taiwan and Indonesia were also lower.

Japan’s industrial output dropped a seasonally adjusted 2.6 percent last month — the first decline in two months. But the negative news was mitigated by expectations of rebounding manufacturing and production this month and next, which helped to mute stock market losses.

The Shanghai Composite Index reversed course after early losses, rising 0.2 percent to 2,170.01. But the smaller Shenzhen Composite Index sank 0.5 percent at 849.76.

Some investors were “dumping shares” because Beijing has failed to take steps they expected to stimulate slowing economic growth, said Peter Lai, investment manager for DBS Vickers in Hong Kong.

“Some investors believed there would be a reduction in interest rates or the bank reserve ratio. But this hasn’t happened,” Lai said.

Tokyo Electric Power plunged 11.8 percent, a day after Japanese Industry Minister Yukio Edano suggested that the embattled utility be put under temporary state control and warned the company against resorting to electricity bill hikes.

TEPCO operates the Fukushima Dai-ichi nuclear power plant, which was heavily damaged in the March earthquake and tsunami, and owes massive compensation payments to people and companies harmed by a nuclear disaster at the plant.

Hong Kong-listed property shares also slumped. China Overseas Land Investment slid 3 percent. China Resources Land lost 2.7 percent.

China Mengniu Dairy, the country’s biggest dairy company, plummeted 24 percent in Hong Kong after acknowledging that a cancer-causing toxin had been found in milk produced by the company. Mengniu apologized and said no tainted milk had made it to the market. The government blamed the problem on bad feed given to cows.

Retail shares also slid on growing anxiety over the global economy in 2012. Hong Kong-listed jewelry retailer Chow Sang Sang shed 4 percent. Australian department store chain David Jones fell 2.1 percent and Woolworth’s lost 0.9 percent.

On Wall Street on Tuesday, the Dow Jones lost less than 0.1 percent to close at 12,291.35. The SP 500 was up marginally to 1,265.43. The Nasdaq composite rose 0.3 percent to 2,625.20.

U.S. consumer confidence surged to an eight-month high, but home prices fell in 19 of the 20 cities tracked by the Standard Poor’s/Case-Shiller index. That report dampened investors’ enthusiasm about a jump in consumer confidence to the highest level since April.

Benchmark crude oil rose 2 cents to $101.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.66 to finish at $101.34 per barrel on the Nymex on Tuesday.

In currency trading, the euro fell to $1.3075 from $1.3069 late Tuesday in New York. The euro has been weak because of worries about Europe’s government debt crisis. It is still trading just above an 11-month low of $1.2943 reached on Dec. 14.

The dollar fell to 77.73 yen from 77.85 yen.

___

AP Business Writer Joe McDonald contributed from Beijing.

Article source: http://www.nytimes.com/aponline/2011/12/27/business/AP-World-Markets.html?partner=rss&emc=rss

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Asia Stocks Fall as Europe Debt Crisis Festers

November 30, 2011 by Leave a Comment

BANGKOK (AP) — World stocks fell Wednesday after a meeting of Europe’s finance ministers failed to stem fears that the euro currency union is hurtling toward a breakup. Banking stocks slumped after some of the world’s top financial institutions were slapped with a credit rating downgrade.

European shares headed south in early trading. Britain’s FTSE 100 fell 0.8 percent to 5,296.40. Germany’s DAX shed 0.7 percent to 5,760.28 and France’s CAC-40 lost 0.6 percent to 3,007.73. Wall Street was also headed for a lower opening. Dow Jones industrial futures fell 0.6 percent to 11,501 and SP 500 futures were 0.6 percent lower at 1,189.40.

Sluggish trading began earlier in the day in Asia, where Japan’s Nikkei 225 index dropped 0.5 percent to close at 8,434.61. South Korea’s Kospi dropped 0.5 percent to 1,847.51. Hong Kong’s Hang Seng dipped 1.5 percent to 17,989.35. Australia’s SP/ASX 200 swung back and forth until settling 0.4 percent higher at 4,119.80.

Mainland Chinese shares plummeted, with the benchmark Shanghai Composite Index falling 3.3 percent to 2,333.41. The Shenzhen Composite Index dropped 4 percent to 994.02.

Sentiment was dented after a meeting in Brussels of finance ministers from the 17 countries that use the euro ended without an announcement on plans to contain the debt crisis that is threatening to shatter the currency union.

The ministers sent debt-riddled Greece euro8 billion ($10.7 billion) to stem an immediate cash crisis, but they kicked more difficult issues — such as whether countries should cede some control over their finances to a central European authority — to the leaders of the European Union who meet next week.

In the latest sign of trouble, Italy was forced to pay a high interest rate on an auction of three-year debt Tuesday. The 7.89 percent rate was nearly three percentage points higher than last month, an enormous increase.

If Italy were to default on its debt of euro1.9 trillion ($2.5 trillion), the fallout could spell ruin for the euro common currency and send shock waves through the global economy. Such a prospect has left little appetite for risky assets.

Analysts at Credit Agricole CIB said in a report that “until concrete and detailed plans for a solution to the crisis are announced, the downward trend” in stocks will continue.

Ratings downgrades for many of the world’s largest banks also drove investors to the sidelines, analysts said. Standard Poor’s on Tuesday lowered its credit ratings for 37 financial companies, including Bank of America Corp., Citigroup Inc. and HSBC Holdings PLC.

Hong Kong-listed Industrial Commercial Bank of China, the world’s largest bank by market value, fell 2.3 percent. Japan’s Mizuho Financial Group lost 1 percent and Hong Kong shares of British bank HSBC Holdings fell 2.6 percent.

Insurance companies also fell. Hong Kong-listed China Life Insurance Co., the country’s biggest life insurer, lost 3.5 percent. Ping An Insurance fell 5.3 percent. Japan’s Tokio Marine Holdings shed 0.9 percent.

Among mainland Chinese shares, securities, nonferrous metals, media, cement and auto companies weakened. More than 20 companies plunged 10 percent.

“It was panic selling,” said Liu Kan, an analyst at Guoyuan Securities, based in Shanghai.

Investors were worried over an increase in sales of non-tradable shares in December as lockup periods expire and the possible launch soon of international shares in Shanghai. Officials of the Shanghai Stock Exchange denied rumors of an imminent launch of an international board in Shanghai, where only Chinese companies’ shares are now traded.

Shanghai-listed Founder Securities Co. lost 8.1 percent while China Merchants Securities Co. lost 4.5 percent, its lowest close in two years.

On Wall Street on Tuesday, a jump in U.S. consumer confidence sent stocks modestly higher. The Dow Jones industrial average rose 0.3 percent to close at 11,555.63. The Standard Poor’s 500 index rose 0.2 percent to 1,195.19. The Nasdaq composite, which consists mostly of technology stocks, fell 0.5 percent to 2,515.51.

The Conference Board, a private research firm, said its Consumer Confidence Index climbed 15 points in November to 56.0 — an improvement, but still well below the level of 90 that indicates an economy on solid footing.

Benchmark crude for January delivery was down 66 cents to $99.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to settle at $99.79 on Tuesday.

In currency trading, the euro slipped to $1.3269 from $1.3331 late Tuesday in New York. The dollar was nearly unchanged at 77.92 yen from 77.93 yen.

___

AP researcher Fu Ting contributed from Shanghai.

Article source: http://www.nytimes.com/aponline/2011/11/29/business/AP-World-Markets.html?partner=rss&emc=rss

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Global Stocks Post Steep Declines

September 5, 2011 by Leave a Comment

Investors continue to fret about the euro zone’s ability to respond to its debt crisis, after talks between Greece and its foreign creditors were put on hold last week and the head of the European Central Bank, Jean-Claude Trichet, warned Italy to stick to its austerity program.

In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 3.8 percent, while the FTSE 100 index in London dropped 2.4 percent.

Bank shares led the declines. Royal Bank of Scotland gave up more than 10 percent, while Deutsche Bank, BNP Paribas and Société Générale all fell more than 7 percent.

In addition to growing expectations that many financial institutions will need to raise capital — as the head of the International Monetary Fund, Christine Lagarde, suggested last month — banks have also been hit by a lawsuit filed by the U.S. authorities against 17 financial institutions that sold the mortgage giants Fannie Mae and Freddie Mac nearly $200 billion in mortgage-backed securities that later soured.

In Asia, the Hang Seng index in Hong Kong fell almost 3 percent, while the Shanghai composite index dropped almost 2 percent. The Nikkei 225 stock average fell 1.9 percent in Tokyo, while in Sydney the SP/ASX 200 index fell 2.4 percent.

U.S. equity index futures declined, though Wall Street was closed Monday for the Labor Day holiday in the United States. On Friday, the Dow Jones industrial average slid 2.2 percent after an employment report showed the United States economy added no jobs at all in August, renewing worries that the country might be heading for a recession.

The U.S. jobs data suggest that economic growth “will temporarily stall in late 2011, with at least a 40 percent risk of recession,” Holger Schmieding, chief economist at Berenberg Bank in London, wrote in a research note. He predicted the Federal Reserve would announce new measures to speed recovery when its policy board meets Sept. 20-21.

In Tokyo, exporters like Sony, Panasonic and Sharp, which derive a large part of their earnings from sales in the United States and Europe, fell more than 3 percent.

“Financial markets continue to be stressed about the lack of growth drivers in the global economy,” analysts at DBS said in a research report on Monday.

“Against this background, members at the G-7 meeting on Sept. 9-10 will have a challenging task to restore confidence in the ability of the advanced economies to support growth and jobs, as well as to restore financial stability,” the DBS analysts wrote. “Hence, risk appetite is likely to be low in markets as long as the advanced economies are seen on the defensive on the growth front.”

Gold was trading at $1,890 an ounce, up 0.9 percent, having risen sharply Friday. U.S. crude oil futures for October delivery fell 1.9 percent to $84.79 a barrel.

The dollar was mixed against other major currencies. The euro declined to $1.4118 from $1.4205 late Friday in New York, while the British pound fell to $1.6133 from $1.6218. The dollar also gained against its Japanese counterpart, ticking up to 76.85 yen from 76.81 yen. But the U.S. currency slipped to 0.7857 Swiss franc from 0.7884 franc.

Bettina Wassener reported from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=84a7968541d8582b310262677432ae20

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Asian Markets Rebound After Turmoil

August 15, 2011 by Leave a Comment

In Japan, second-quarter gross domestic product data showing that the economy there had contracted less severely than expected also helped lift sentiment.

The statistics, released by the Cabinet Office early Monday, showed that the Japanese economy, which was battered by a massive earthquake and tsunami in March, had contracted 0.3 percent from the previous quarter, indicating that economic activity had rallied more quickly than expected after the disaster.

The Nikkei 225 index was 1.2 percent higher by early afternoon in Tokyo.

However, investors in Japan are likely to keep a wary eye on the yen, whose ascent against other currencies is weighing on exporters.

On Monday, one U.S. dollar bought about 76.8 yen.

Elsewhere in Asia, the benchmark index in Australia rose 2.2 percent, and Hong Kong and Taiwan managed gains of 2.2 percent and 1.9 percent, respectively, by early afternoon.

In mainland China, the Shanghai composite index edged up 0.2 percent, and in Singapore, the Straits Times index climbed 0.6 percent.

The gains in Asia followed modest rises in the Dow Jones industrial average and the Standard Poor’s 500 index on Friday. They closed 1.1 percent and 0.5 percent higher, respectively, after a dizzying, rollercoaster performance as investors struggled to assess the impact of the U.S. ratings downgrade.

The overall global markets, however, are expected to remain jittery, with much uncertainty about the debt crisis in Europe and the health of the U.S. economy.

Futures on the S. P. 500 were 0.5 percent higher by early afternoon in Asia.

“Decent data on Thursday and Friday last week brought a semblance of stability to markets,” analysts at DBS in Singapore wrote in a research note on Monday, referring to U.S. retail sales and jobless figures that were both relatively upbeat.

“Housing, inflation and industrial production will have the do the trick this week,” the DBS analysts commented. “It won’t be easy.”

Article source: http://www.nytimes.com/2011/08/16/business/global/asian-markets-rebound-after-turmoil.html?partner=rss&emc=rss

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Economic Reports Offset Earnings on Wall Street

April 15, 2011 by Leave a Comment

The Federal Reserve said Friday that factories increased production for the ninth consecutive month. Separately, the Labor Department said inflation rose just 0.1 percent last month excluding food and gas prices. That was far better than the 0.2 percent increase economists were expecting.

Bond prices rose as inflation concerns eased. The yield on the 10-year Treasury note fell to 3.41 percent from 3.51 percent late Thursday. Bond yields fall when their prices rise.

At the close, the Dow Jones industrial average was 56.68 points or 0.46 percent higher at 12,341.83, while the Standard Poor’s 500-stock index gained 5.16 points, or 0.39 percent, to 1,319.68. The technology heavy Nasdaq was up 4.43, or 0.16 percent, to 2,764.65.

Google dragged down the Nasdaq index after the company that missed analysts’ estimates, in part because it is in the midst of a hiring spree. Its shares fell nearly 7.9 percent.

And the Bank of America Corporation announced that its earnings and revenue fell in the first quarter compared with a year ago. The bank also announced a settlement that could reduce its liability for its part in issuing shoddy mortgages. Its shares were down 1.2 percent.

In Europe, the FTSE 100 in London was 0.54 percent higher, while the DAX in Germany rose 0.44 percent. The CAC-40 in Paris added 0.1 percent. Earlier in Asia, Hong Kong’s Hang Seng Index fell less than 0.1 percent to close at 24,008.07.

Despite the inflation figures, China’s Shanghai Composite Index staged a late rally to finish 0.3 percent higher at 3,050.53.

Japan’s Nikkei 225 stock average fell 0.7 percent to end at 9,591.52.

Benchmark oil for May delivery rose $1.83, to $109.94 a barrel in New York trading.

While inflation was relatively mild in the United States in March, other figures released Friday reinforced expectations that the European Central Bank and the People’s Bank of China will soon be raising interest rates to counter rising inflation.

In China, figures showed consumer prices rose 5.4 percent in the year to March, up from February’s 4.9 percent. The increase was largely driven by surging food costs and represents a setback for the government, which has lifted interest rates four times since October to cool prices.

Analysts expect the People’s Bank to enact further measures in the days to come in response to those figures.

They also think that the European bank will raise rates again in June after figures showed inflation in the 17-country euro zone revised up to 2.7 percent in the year to March from the preliminary estimate of 2.6 percent, largely because of rising fuel costs.

Investors also kept a watched on the sovereign debt situation in Europe.

Portugal avoided default on Friday as it scraped together 4.2 billion euros ($6.1 billion) for a bond redemption, but further depleted its meager cash reserves as it desperately awaits a bailout.

Lisbon is eight weeks away from possible bankruptcy. Officials admit they will not have enough money to settle a 7 billion euro debt falling due in mid-June and have asked for financial help amid a cash crunch that is threatening the provision of basic services.

The ailing country is weathering unsustainable costs on loans to finance its economy, with its 10-year bond yield reaching 8.9 percent Friday as markets shied away from investing their money in a country viewed as a risky bet.

Portugal’s European partners and the International Monetary Fund last week agreed to provide aid which could amount to 80 billion euros ($115 billion).

But negotiations on the terms of the loan, especially what interest rates Portugal will be obliged to pay on it, will probably take weeks.

There are also mounting concerns that Greece will be forced to restructure, though the prime minister, George Papandreou, insisted that Athens did not intend to do so. The country’s woes, he said, “will be addressed in depth. Not by restructuring the debt but when we restructure the country.”

Another credit rating downgrade of Ireland by Moody’s also stoked concerns that Europe’s debt crisis still has a way to play out.

Article source: http://feeds.nytimes.com/click.phdo?i=db332f9ddffc8b0c01b9e7d35977e76e

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