Financial Clipping

Nikkei Rebounds After Two-Day Rout

2011-03-16T20:11:00.004+07:00

TOKYO (Reuters) - Japan's Nikkei average has rebounded after the worst two-day selloff since the 1987 crash, with some investors scooping up shares even as many fretted that a further deterioration in nuclear crisis could undermine the market.

The Nikkei climbed nearly 6 per cent to 9093.72 points after having plunged 10.6 per cent on Tuesday, but was still down about 11 per cent from Friday's close.

Gains were mostly driven by hedge funds covering short positions taken in futures during the previous day's plunge, as well as some light buying by some household investors after the two-day plunge of more than 16 per cent, traders said.
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"The rebound is pretty strong as investors realised they may have panicked a bit too much yesterday," said Fujio Ando, senior managing director at Chibagin Asset Management.

Overall Japanese investors were still skittish after the sharp slide and reluctant to step in, fearing more bad news on the stricken nuclear reactor north of Tokyo could send shares into another tailspin.

"The market doesn't care about any fundamentals today. All eyes are on the nuclear plant and the Nikkei will move according to the news about the plant," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "The market is still extremely volatile."

JGB futures slid a half a point and 20-year yields jumped to a one-year high as bond dealers fretted that a long-term bond auction later in the day may have trouble finding buyers.

Japanese insurers were selling bonds on Tuesday to cover losses in their stock portfolios.

The yen dropped across the board, with the US dollar pushing up to 81.00 yen but still not far from a record low of 79.75 hit against the Japanese currency in 1995.

Market players were also still keeping an eye out for Japanese companies and insurers selling their hefty foreign asset holdings and repatriating funds to cover costs from the nuclear crisis, quake and tsunami, a factor that could drive the yen higher.

So far traders have not seen much fund repatriation, and some cited Japanese life insurers buying the higher-yielding Australian dollar. The Australian dollar jumped nearly 1 per cent against the yen.

The Bank of Japan was seen checking rates on currencies with banks in Tokyo, traders said, a warning it could intervene against any further yen strength that would deal another blow to the economy.

"It kind of makes you feel that they are ready to intervene if the dollar falls below 80 yen," said a trader at a Japanese bank.

Japan's finance minister told a meeting with a ruling party lawmaker that he was watching the currency market closely.

The situation at the Fukushima Daiichi nuclear plant 240 km north of Tokyo was still tense. A fire broke out on Wednesday at the plant and sent low levels of radiation wafting into Tokyo, prompting some people to flee the capital.

Some traders say Japanese banks have sold foreign assets to load up on cash in case of big customer withdrawals, while others said the efforts by the Bank of Japan to supply cheap funds reduces the need for repatriation.

Most traders felt it would take Japanese insurers weeks to assess their cash needs before deciding to sell any foreign assets.

Hedge funds were cited as aggressive sellers of Nikkei futures on Tuesday as the market panicked over reports of leaking radiation from the stricken Fukushima nuclear reactor and higher radiation readings near Tokyo, traders said.

Domestic fund managers have largely stuck to the sidelines, suggesting that they man need to sell into any rebound, traders said. Other fund managers struck a brave face about the crisis and prospects for Japan's biggest companies.

"Many Japanese companies are between 50 and 100 years old and they have been through many shocks and crises, but in their DNA they have ability to pick up the pieces and rebuild. They are competitive in the true meaning of this word. That's why our stance is to invest in such firms, despite of what has happened," said Tetsuro Ii, CEO of Commons Asset Management.

"We want to buy, but we need to have more information about the level of damage at different companies, so we will be gathering this information and invest very carefully," Ii said.

The two-day selloff wiped $626 billion in market capitalisation of the Tokyo Stock Exchange's first section of
major shares.

While investors felt the market had tumbled too far unless the crisis takes a much more serious turn for the worse, few were willing to step in just yet.

The Nikkei's 14-day relative strength index, a common technical indicator of whether a market is overbought or oversold, struck a very oversold level of 17 on Tuesday before rising to 27.4 on Wednesday. A reading below 30 suggests a market is oversold.

Laurence Balanco, a technical analyst at CLSA, said that the Nikkei's RSI had only fallen below 17 on eight occasions since 1970, and the market's average return after one week of doing so was 6.22 per cent.

Bonds lost more ground. Ten-year JGB futures were down 0.68 point to 139.60, while the 20-year yield climbed 5 basis points to 2.130 percent and struck a one-year high of 2.150 per cent.

Japan's Ministry of Finance will sell 1.1 trillion yen ($13.4 billion) of 20-year bonds later in the day.

Worries that Japan will have to issue more debt to pay for the cost of reconstruction have hit long-term Japanese bond yields and the spreads of Japanese sovereign credit default swaps.

Japan Nuclear Crisis Sparks Selling From Equities To Commodities

2011-03-15T17:56:00.003+07:00

On Tuesday March 15, 2011, 3:19 am EDT | By Jungyoun Park and David Chance

SEOUL (Reuters) - Shares and other risky assets from the Australian dollar to commodities such as copper and oil slumped on Tuesday while safe-haven assets like U.S. Treasuries rallied as Japan's nuclear crisis worsened.

Rising radiation levels at an earthquake-hit nuclear plant in northeastern Japan triggered a huge selloff in Japanese shares and panic hoarding of food and other supplies in Tokyo.

At one stage, Nikkei futures were down 16 percent before paring losses to 10 percent, while the benchmark Tokyo stock index ended down almost 11 percent, its biggest one-day percentage loss since October 2008.

The Nikkei has lost around 17 percent of its value since a massive earthquake and tsunami struck the country on Friday, leading to explosions at several nuclear plants and forcing thousands of factories to shut.

"The downside is completely open-ended at the moment as headlines come through," said Roland Randall, a strategist at TD Securities in Singapore, adding that markets would react negatively until the nuclear threat is contained.

Stocks in the rest of Asia as measured by MSCI fell nearly 3 percent as the nuclear crisis worsened and the MSCI world index slid 1.2 percent.

European stock markets were expected to slide in early trade, while U.S. stock index futures fell 0.8 percent, pointing to more losses on Wall Street later in the day.

Australian shares fell 2.1 percent, with shares of uranium miners extending losses as some countries indicated they were rethinking plans for nuclear power in the wake of the Japan disaster.

"It is like pricing an unknown risk. The comments from Japan pushed the market off the edge," Shane Oliver, head of investment strategy at AMP Capital in Sydney said.

South Korea fell 2.4 percent, led by nuclear power plant designer KEPCO Engineering & Construction, which plunged 15 percent.

SAFE HAVEN RALLY FOR DOLLAR AND TREASURIES, AUSSIE PLUNGES

The dollar soared to just above 82.00 yen on trading platform EBS from near 81.40 before settling back to near 81.65 yen, little changed on the day and not far from a record low of 79.75 struck in 1995.

U.S. Treasuries rallied on the global flight to safe assets as risk aversion overpowered concerns that Japanese insurers would sell Treasuries to fund payouts at home, which would also boost the yen.

Yields on 10-year U.S. Treasuries fell further to 3.24 percent from 3.37 percent earlier in the day, although they were off the day's lows.

The U.S. Federal Reserve's policy-making Federal Open Markets Committee meets on Tuesday and although the Fed is seen exiting its stimulus earlier than Japan, few are expecting policy to change during this meeting.

Asian currencies took a battering, led by the Australian dollar which is often used as a proxy for global risk and dumped during times of stress.

The Australian dollar was the worst performing currency on Tuesday, falling more than 1.5 percent to a session low around $0.9925, a level last seen in January. It last traded at around $0.9949, with resistance seen at $1.0046 and support at $0.9884.

The New Zealand dollar was also under pressure, shedding more than one percent on the day to a six-month low of $0.7295, while the Thai baht was also hit.

Asian cash and credit default spreads gapped sharply higher, with South Korea, typically a volatile market that is prone to risk-aversion, seeing the biggest rise in spreads.

Korean spreads rose 16 basis points (bps) to 116bps/118bps, Thailand, the Philippines and Indonesia all gapped 12bps.

MARKET TURMOIL SPREADS TO OIL AND METALS

Commodity prices also slumped on reports of mounting radiation levels in parts of Japan and fears that prevailing winds could sweep radioactive material into Tokyo and other heavily populated areas.

Brent crude for April fell as much as 1.9 percent to 1.9 pct to $111.49 before recovering to $119.49.

Even gold, a traditional safe-haven investment, was hit. Spot gold almost one percent to $1,415.26 an ounce by 0615 GMT, after rising as much as 1 percent on Monday.

Three-month copper on the London Metal Exchange reversed early gains to edge down 1.3 percent at $9,080 a tonne.

"People are going for risk aversion, so investors are liquidating assets and positions including in crude oil and gold," said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.

BANK OF JAPAN SEEKS TO EASE PAIN

Euroyen futures edged higher and short-dated swap contracts dipped on Tuesday following the Bank of Japan's offered to pump 5 trillion yen ($61 billion) into the banking system after injecting a record 15 trillion yen in same-day market operations on Monday and eased monetary policy further by expanding its asset buying programme.

Ten-year Japanese government bond futures close on half a point to 140.28, on the way to testing the high for the year, helped by safety bids and following a rout in the stock market.

(Additional reporting by Chikafumi Hodo and Antoni Slodkowski in TOKYO, Vikram S Subhedar in HONG KONG, Clare Jim in TAIPEI, Cecile Lefort in SYDNEY; Editing by Richard Borsuk & Kim Coghill)

Nikkei Slides 11 Percent On Radiation Fears

2011-03-15T17:46:00.004+07:00

Japan's Nikkei plunges 11 percent on radiation fears, sending global markets into a tailspin

LONDON (AP) -- Japan's stock market nose-dived nearly 11 percent, leading world markets sharply lower on Tuesday, as an escalating nuclear crisis threatened to compound the devastation from last week's earthquake and tsunami.

Investors took fright on the news that a radiation leak was detected at a crippled power plant and residents were warned to stay indoors. The benchmark Nikkei 225 stock average sank a staggering 10.6 percent -- more than 1,000 points -- to close at 8,605.15 after hitting a midday low of 8,227.63 points, more than 14 percent down.

Following on from Monday's 6 percent decline, the first trading day since the devastating earthquake and tsunami struck the northeastern coast, the Nikkei has now suffered its worst two-day trading losses for 40 years.

The chill was felt across all markets, with the yen boosted by Japanese investors repatriating funds as a precautionary measure against risk and to pay for reconstruction. Oil prices took another hit on fears over the impact on global consumption.

In early European trading, stocks took a battering, with German stocks the worst performing -- Germany has relatively big economic ties with Japan. The country's main DAX index was down 5.1 percent at 6,517, with many of the country's industrial giants like BMW AG, Volkswagen AG and Daimler AG trading down by even more.

France's CAC-40 slid 4.1 percent to 3,719, with leading nuclear reactor manufacturer Areva down more than 9 percent. Britain's FTSE 100 index fell 3 percent to 5,601.

The heavy selling is poised to continue at the Wall Street open, even though the Federal Reserve is expected later to sound cautiously optimistic about the U.S. recovery. Dow futures were down 250 points, or 2.1 percent, at 11,676 while the broader Standard & Poor's 500 futures slid 32.30 points, or 2.5 percent, to 1,258.10.

"Financial markets have been rattled by the growing risk posed by potential radiation leaks at the stricken nuclear power plants in Japan," said Lee Hardman, an analyst at The Bank of Tokyo-Mitsubishi UFJ.

Investors felt the biggest shock waves when Japan's prime minister announced that radioactive material had leaked from the Fukushima Dai-ichi nuclear plant in Fukushima province and that more leaks were possible. People living within 19 miles (30 kilometers) of the complex were told to stay indoors.

The stock sell-off in Tokyo hit nearly every business sector, with electric companies under intense pressure again. The Tokyo Electric Power Co., which operates the crippled nuclear plant, crashed 24.7 percent. Toshiba Corp., a maker of nuclear power plants, wilted 19.5 percent.

Other companies with nuclear power-related businesses faced a second day of free-falling losses. Mitsubishi Heavy Industries tumbled 10.9 percent, Kobe Steel Ltd. dived 12.1 percent, and Hitachi Ltd. shed 12.6 percent. Cosmo Oil, whose refinery caught fire after the quake, slid by 9 percent.

Car makers declined partly because quake-stricken northeastern Japan is a major center for auto production, complete with a myriad of parts suppliers and a network of roads and ports for efficient distribution.

Toyota Motor Corp. said it would suspend manufacturing at its domestic plants through Wednesday -- a production loss of 40,000 cars. Other manufacturers like Sony Corp. and Honda Motor Co. were also forced to halt production. Damage to roads and distribution systems made it all but impossible to move products.

Toyota, the world's largest automaker, fell 7.4 percent. Honda lost 3.9 percent and Nissan Motor Corp. dropped 3.3 percent. Mitsubishi Motors Corp. lost 9.3 percent and truck-maker Isuzu Motors Ltd. plunged 9.2 percent.

other Asian markets could not withstand the tide of negative sentiment. South Korea's Kospi lost 2.4 percent to 1,923.92 and Australia's S&P/ASX 200 fell 2.1 percent to 4,528.70. Hong Kong's Hang Seng index dropped 2.9 percent to 22,678.25.

In mainland China, the Shanghai Composite Index fell 1.4 percent to 2896.26, and the Shenzhen Composite Index of China's second, smaller exchange lost 1.3 percent to 1,293.61.

Oil prices dropped sharply despite ongoing tensions in the Middle East, with the regime of longtime Libyan leader Moammar Gadhafi recapturing lost ground from rebels and Saudi Arabian troops entering Bahrain to help out the embattled rulers.

By mid morning London time, a barrel of crude as traded on the New York Mercantile Exchange was down $1.92 at $99.27 while the equivalent Brent rate in London was $2.02 lower at $111.65.

In currency markets, the yen was a big gainer, partly through its capacity as a safe haven asset. A major natural disaster like an earthquake can also bolster the yen because investors expect the Japanese public and insurance companies to buy back their home currency in order to fund reconstruction, increasing demand for the yen.

By mid-morning London time, the dollar was 0.3 percent lower on the day at 81.46 yen, while the euro was down 1 percent at 113.17 yen. The euro was 0.8 percent lower at $1.3866 as the European currency loses its shine in times of risk aversion.

The appreciating yen is an additional worry for Japanese policymakers as it has the potential to price already-vulnerable exporters out of the international marketplace. Though the Bank of Japan has pumped in colossal amounts of money into the money markets over the past couple of days to support liquidity, analysts said it may be tempted to buy up dollars to rein in the export-sapping rise in the currency.

"The last thing Japan needs now is a strong yen which would hamper the exports it needs to try and rebuild what is already a highly indebted public sector economy," said Michael Hewson, market analyst at CMC Markets.

Pamela Sampson in Bangkok contributed to this report.

Nikkei Plunges On 1st Trading Day After Quake

2011-03-14T20:06:00.002+07:00

Japan's Nikkei plunges on first trading day after quake; European stocks supported by EU deal

LONDON (AP) -- The Tokyo stock market plunged Monday, its first business day after an earthquake and tsunami of epic proportions laid waste to cities along Japan's northeast coast, killing thousands and potentially causing tens of billions of dollars in damage.

Developments elsewhere were more muted -- an indication that investors think the costs facing Japan may not spill over significantly. In Europe, sentiment was partly supported by the weekend agreement of a broad package of measures to ease the government debt crisis that has already forced Greece and Ireland into seeking bailouts.

However, most attention was centered on Japan, and how the world's third-largest economy is dealing with the catastrophic events of last Friday. Financially, the situation is made even more difficult by the fact that Japan's debt stands at around 200 percent of its national income and its economic recovery came to a grinding halt in the last three months of 2010.

The Bank of Japan was quick off the mark Monday, injecting a record 15 trillion yen ($183.8 billion) into money markets to try to defend the already fragile economy. By flooding the banking system with cash, the central bank hopes banks will continue lending money and meet the likely surge in demand for post-earthquake funds.

"It was certainly an emotion charged-day on Asian equities with breaking news circulating seemingly every few minutes ranging from record liquidity injections from the BoJ to further catastrophes at other nuclear reactors," said Chris Weston, a trader at IG Markets. "The end result was panic and indiscriminate selling."

In one of the most dizzying days for Japan's stock market since the 2008 financial crisis, the benchmark Nikkei 225 dived 633.94 points, or 6.2 percent, to close at 9,620.49 -- wiping out this year's gains and hitting its lowest level in four months.

Worries about the economic impact of Friday's disaster, including massive power shortages that could disrupt factories, triggered a broad sell-off that hit all sectors.

Tokyo Electric Power Co. nose-dived more than 23 percent as it struggled with malfunctioning nuclear reactors and a power shortage that led the company to warn it may need to ration electricity. And companies with nuclear power-related businesses registered staggering losses, including Hitachi Ltd., down 16.2 percent, and Toshiba Corp., down 16.3 percent.

Car makers declined, too, partly because quake-stricken northeastern Japan is a major center for auto production, complete with a myriad of parts suppliers and a network of roads and ports for efficient distribution. Major vehicle manufactures have halted production around the country. Toyota Motor Corp., the world's largest automaker, fell 7.9 percent, Honda lost 6.5 percent, and Nissan dropped 9.5 percent. Mitsubishi Motors Corp. lost 11.8 percent and Isuzu Motors Ltd. plummeted 9.2 percent.

Insurance companies -- many of which will likely face heavy claims for lost property and infrastructure -- also suffered sharp drops, including Tokio Marine Holdings Inc., down 12.4 percent. Cosmo Oil, whose refinery has been on fire since the 8.9-magnitude quake, slid by a withering 21.6 percent.

While Japanese shares sunk, the yen struck a new four-month high against the dollar thanks to its status as a safe haven for investors to park their cash. However, the Bank of Japan's announcement took the shine off during a day of volatile trading.

By mid-morning London time, the dollar was 0.6 percent higher on the day at 81.98 yen. Earlier the dollar had tumbled to a four-month low of 80.60 yen, not far above its post World War 2 low of 79.75 yen.

"The initial positive yen reaction likely reflects both a pick up in safe haven demand for the yen as broader market risk sentiment has deteriorated, and investors anticipating a pick up in quake-related yen supportive capital inflows," said Lee Hardman, currency economist at The Bank of Tokyo-Mitsubishi UFJ.

Meanwhile, the euro was 0.2 percent firmer at $1.3966, its fortunes bolstered somewhat by a surprisingly broad European package of measures to deal with the government debt crisis that has over the past year threatened the existence of the euro currency.

In an early Saturday announcement, eurozone leaders increased the size of the bailout fund -- the so-called European Financial Stability Facility -- and lowered the interest rates on the loans bailed-out Greece has taken out. They also revealed that the bailout fund can buy bonds directly from governments in exceptional circumstances but only if those countries agree to further austerity measures.

The deal helped support European stock markets despite the worries over Japan.

Stock indexes in Greece, Portugal and Spain rallied sharply. The FTSE 100 index of leading British shares was more or less unchanged at 5,827 while France's CAC-40 fell 0.2 percent to 3,922. German shares underperformed their peers partly because Germany is the country has the deepest coffers in Europe and will have to pay the lion's share of the revamped bailout facility. The DAX index was down 0.6 percent at 6,940.

Wall Street was poised for a modest retreat at the open -- Dow futures were down 43 points at 11,960 while the broader Standard & Poor's 500 futures fell 4.6 points to 1,296.90.

Elsewhere in Asia, China's main stock market, the Shanghai Composite Index, rose 0.1 percent at 2,937.63 and the Shenzhen Composite Index of China's smaller, second exchange gained 0.9 percent to 1,310.99.

Hong Kong's Hang Seng gained 0.4 percent to 23,345.88 and South Korea's Kospi gained 0.8 percent to 1,971.23.

Meanwhile, oil prices fell amid the uncertainty generated by the Japanese quake despite ongoing worries about how the crisis in Libya will pan out. Benchmark crude for April delivery was down $1.99 at $98.18 a barrel in electronic trading on the New York Mercantile Exchange.

Sampson contributed from Bangkok.

Stocks Tumble On Turmoil In Libya

2011-02-23T18:04:00.002+07:00

Reuters February 22, 2011 – 12:21 pm

The Toronto Stock Exchange joined other equity markets in a global decline on Tuesday as turmoil continued in Libya and the Middle East.

The benchmark S&P/TSX composite index was down 159.43 points, or 1.13%, to 13,963.68 as the close approached, with all 10 of its sub-indexes in negative territory.
The price of West Texas Intermediate crude oil rose $7.37 US to $93.57 US a barrel for the March contract, which expired on Tuesday, while the April contract rose $5.71 US to $95.42.

The April contract for Brent crude gained 32 cents US to $106.06.
Gold rose $12.50 US to $1,401.10 US an ounce, its highest close since Jan. 3. The Canadian dollar was down 49 basis points to 101.93 cents US in late-afternoon trading.

Fears of shortages as turmoil moves across oil-producing nations drove up the price of crude, while other investors fled risky assets and sought the safe haven of gold.
“As far as the general theme is concerned, the unrest in the Middle East is spreading and markets worldwide are pretty nervous,” Levente Mady, market strategist at Union Securities in Vancouver, told Reuters.

U.S. markets were also showing significant losses at the closing bell on Tuesday. The Dow Jones industrial average was down 178.76 points, or 1.44%, to 12,212.49, and the Nasdaq was off 77.53 points, or 2.74%, to 2,756.42.

Markets overseas were lower across the board. In Asia, Tokyo’s Nikkei slipped 1.78% and the Hang Seng in Hong Kong dropped 2.11%. In Europe, London’s FTSE fell 0.30%, the CAC in Paris lost 1.15% and Frankfurt’s DAX was just below flat, down 0.05%.

U.S. Stocks Rise After Mubarak's Resignation, Gain in Consumer Confidence

2011-02-12T19:23:00.004+07:00

By Nikolaj Gammeltoft and Jennifer A. Johnson (Bloomberg) - Feb 12, 2011 12:01 PM

U.S. stocks rose for a second week, sending benchmark indexes to 32-month highs, as takeovers, a rebound in retail sales and Egyptian President Hosni Mubarak’s resignation bolstered investors’ optimism.

American Express Co. advanced 6.7 percent to lead gains in the Dow Jones Industrial Average. Walt Disney Co. surged 6.6 percent as the world’s biggest theme-park operator posted higher-than-estimated quarterly profit. Standard & Poor’s 500 Index consumer companies reliant on Americans’ discretionary spending climbed 3.5 percent as confidence rose. NYSE Euronext soared 17 percent after saying it was in talks to be purchased by Germany’s Deutsche Boerse AG.

The S&P 500 rose 1.4 percent to 1,329.15. The Dow added 181.11 points, or 1.5 percent, to 12,273.26. Both have advanced to the highest levels since June 2008. “While the economy is doing well and CEOs are becoming more optimistic, the highlight of the week for us was the geopolitical events in Egypt, which couldn’t have worked out much better,” said Philip Orlando, New York-based chief equity market strategist at Federated Investors Inc., which manages $358.2 billion. “M&A continues to be a positive for the market.”

The S&P 500 has advanced 5.7 percent this year as better- than-forecast economic data and company earnings boosted confidence in the economic recovery, while the Federal Reserve continued its program of buying $600 billion in Treasuries. There have been 2,707 takeovers announced globally this year, totaling $226.2 billion, a 21 percent increase from the $186.9 billion in the same period in 2010, according to data compiled by Bloomberg.

Elevated Unemployment
Fed Chairman Ben S. Bernanke said this week the economic recovery has strengthened while unemployment will remain high “for some time.” His comments back speculation the central bank is waiting for further proof of a durable pickup in the job market as it presses ahead with its quantitative easing plan.

Initial claims for unemployment insurance fell to the lowest since July 2008. First-time applications for jobless benefits dropped by 36,000 to 383,000, less than the 410,000 projected by economists in a Bloomberg survey.

Stocks erased their losses yesterday as Mubarak said he would step down as president of Egypt and handed power to the military, bowing to the demands of protesters that have occupied central Cairo for the past three weeks demanding an end to his 30-year rule. The Market Vectors Egypt Index ETF, an exchange- traded fund that holds Egyptian shares, rallied following the announcement and posted a weekly gain of 4.2 percent.

Reaction to Egypt
“The noise coming out of Egypt as of this moment anyway has not disrupted global trade production, the U.S. economy or credit markets to unseat what’s been a fairly decent market for risk assets,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has about $90 billion in client assets.

U.S. retail sales increased 2.2 percent in the week ended Feb. 5 after four straight declines, the International Council of Shopping Centers said. The numbers are based on the ICSC- Goldman Sachs Weekly Chain Store Sales Index. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for the month climbed to 75.1 from 74.2 in January, the highest level in eight months as decreasing unemployment lifted Americans’ spirits.

American Express, the biggest credit-card issuer by purchases, gained 6.7 percent to $46.75. An index of companies that rely on consumer discretionary spending rallied 3.5 percent, the biggest gain among 10 industries in the S&P 500. Retailers climbed 3.4 percent, collectively, for the fifth- biggest advance when the S&P 500 is divided into 24 groups.
Theme Parks, ESPN

Walt Disney gained 6.6 percent, second-most in the Dow, to $43.41. The company said first-quarter profit rose 54 percent, beating estimates, after an increase in attendance at its theme parks and advertising sales growth at the ESPN sports channel. Sales rose 10 percent to $10.7 billion, also topping estimates.

More than 73 percent of the 348 companies in the S&P 500 that reported results since Jan. 10 have topped analysts’ per- share profit predictions, according to data compiled by Bloomberg. Confidence among U.S. small companies rose in January to the highest level in three years, as the outlook for sales and profits improved, a survey from the National Federation of Independent Business found.

McDonald’s Corp. added 2.8 percent to $76.14. The biggest restaurant chain reported a 5.3 percent rise in comparable-store sales that topped analysts’ estimates as European sales gained the most in a year. Analysts projected sales would rise 4.5 percent, according to the median of five estimates.
Healthy Food

Whole Foods Market Inc. soared 13 percent to $59.67. The largest U.S. natural-goods grocer raised its annual forecasts, buoyed by freer-spending consumers prepared to pay for healthy food. Whole Foods projected as much as $1.80 a share in 2011 earnings, compared with a previous estimate of up to $1.71.

Deutsche Boerse said it’s in advanced talks to buy NYSE Euronext in an all-stock transaction that would create the world’s biggest exchange operator, accelerating a week of takeovers that began with London Stock Exchange Group Plc’s acquisition of TMX Group Inc. Shares of NYSE Euronext, operator of the New York Stock Exchange, surged 17 percent to $38.31.

“The political reactions will be interesting to follow,” said Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York. “It will be interesting to see what regulatory hurdles a merger will have to clear in Europe, and which members of the U.S. Congress will look at this as losing a slice of something that is uniquely American and react accordingly.”
Possible Sale

Big Lots Inc. posted the second-biggest gain in the S&P 500, jumping 22 percent to $41.57. The discount retailer is working with Goldman Sachs Group Inc. to explore a possible sale after receiving interest from buyout firms Thomas H. Lee Partners LP and Bain Capital LLC, according to people with knowledge of the situation.

JDS Uniphase Corp. rose the most in the stock index, surging 24 percent to $28.16. The computer-networking company had its share-price estimate increased to $30 from $25 by Stifel Nicolaus, which said the company’s sales and profit margin will expand in coming quarters.

Cisco Systems Inc. tumbled 15 percent, the most for a week since November, to $18.70. The company’s gross margin, the percentage of profit left after subtracting production costs, slid to 62.4 percent in the period that ended Jan. 29. That missed the 63.3 percent average estimate of analysts surveyed by Bloomberg. Cisco forecast profit excluding some items this quarter of 35 cents to 38 cents a share, less than the 40-cent average analyst projection.

World Markets Sink As Protests Escalate In Egypt

2011-01-30T14:02:00.003+07:00

By DAVID K. RANDALL and MATTHEW CRAFT, AP Business Writers David K. Randall And Matthew Craft, Ap Business Writers – Fri Jan 28, 6:17 pm ET

NEW YORK – Escalating protests in Egypt jarred world financial markets on Friday. Stocks fell while the dollar, Treasurys and gold rose as investors sought to reduce their exposure to risk.

The Egyptian government's response to widespread street protests unnerved investors. The military was deployed in an effort to quell the protests and the headquarters of the ruling party was on fire. Thousands of people defied a curfew, and Internet and cell phone service has been cut off.

Earlier, riot police fired tear gas, rubber bullets and used water cannons to disperse crowds that had gathered in the largest challenge to Egyptian president Hosni Mubarak's thirty-year rule. The fall of the Tunisian government two weeks ago has raised concerns that other authoritarian governments in the Middle East could also be toppled.

"The safety trade is back," said Jeffrey Frankel, president of broker Stuart Frankel & Co. "Gold is up. Oil is up. Anything related to overseas is getting hit."

Prices of Treasury bonds, considered one of the safest assets, rose sharply. The yield on the benchmark 10-year Treasury note fell to 3.33 percent from 3.38 percent late Thursday. Bond yields fall when their prices rise.

The dollar rose 0.5 percent against an index of six other currencies as investors sought safety. Gold rose 1.7 percent to settle at $1,340.70 and crude oil rose 4.3 percent to $89.34 a barrel.

The Egyptian stock market isn't open on Fridays. The market's main index fell 10.5 percent Thursday.

The MSCI World Market index, the broadest measure of the world's stock markets, slumped 1.4 percent.

"Traders are watching this flare-up in the Middle East and using it as a reason to take profits," said Doug Godine, managing director at Signal Hill, an investment bank.

Of the 30 large company stocks that make up the Dow Jones industrial average, 28 fell. The two exceptions, Procter & Gamble and DuPont, were flat.

The Dow fell 166.13 points, or 1.4 percent, to close at 11,823.70. That's the worst one-day drop since Nov. 16.

The Dow lost 0.4 percent for the week after eight straight weeks of gains.

The Standard & Poor's 500 index fell 23.20, or 1.8 percent, to 1,276.34. All 10 company groups within the S&P index fell. The S&P fell 0.5 percent for the week.

The Nasdaq composite fell 68.39, or 2.5 percent, to 2,686.89. The index was not updated nearly an hour after the market opened due to technical problems. The Nasdaq lost 0.1 percent for the week.

Five stocks fell for every one that rose on the New York Stock Exchange. Consolidated volume was high at 5.6 billion shares.

Disappointing earnings reports also rattled investors, said Brian Wenzinger, a portfolio manager at Aronson Johnson Ortiz in Philadelphia. "Some companies like Apple are doing well, but the bulk are not being too optimistic," Wenzinger said.

Ford Motor Co sank 13 percent after its earnings fell short of Wall Street's projections. Amazon.com Inc. fell 7 percent after reporting that higher costs cut down its profit margins. Microsoft Corp. lost 4 percent after it said that the profitability of its Windows division was falling.

A lower than expected report on the U.S. economy helped lead to a market sell-off as well. The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 3.2 percent between October and December. That was below the 3.5 percent that analysts had forecast.

Sara Lee Corp. fell 2.7 percent after announcing a plan to split into two companies. One, a food and retail business, will keep the Sara Lee name and also operate the Jimmy Dean and Hillshire Farms businesses. The other, which has yet to be named, will hold the current company's beverages and baked goods lines. The company had considered selling the whole business but was unable to get a satisfactory price for it.

JCI Rebounds Back to 3,500 Level

2011-01-12T18:14:00.001+07:00

The Jakarta Post, Jakarta | Wed, 01/12/2011 3:47 PM

The nation’s benchmark stock index rebounds back to the 3,500 psychological level, gaining 2.21 percent, or 76.45 points, at midday break.

The Jakarta Composite Index (JCI) was closed at 3,531.58 at the stock exchange’s noon break following a four-day slump since last Thursday that caused the index to suffer almost 9.5 percent in losses.

Foreign investors sold more than Rp 4.5 trillion worth of stocks over the four-day slump, mainly blue chips. During Wednesday’s trading, however, investors began to buy blue chip shares on Thursday’s trading as the prices lowered through the four-day downfall, with Bank Central Asia (BCA), the second biggest firm by market capitalization, gaining 2.63 percent, or 150 points, to Rp 5,850 apiece.

Telecommunication giant Telekomunikasi Indonesia, the state’s crown-jewel in the stock market as well as the third largest firm by market value, was also traded higher at midday break at Rp 7,450 per share, up 3.47 percent or 250 points. (est)

Stock Index Suffers Steepest Drop Since Oct. 2008

2011-01-12T18:12:00.002+07:00

The Jakarta Post, Jakarta | Mon, 01/10/2011 4:50 PM

The country's benchmark stock index, the Jakarta Composite Index (JCI), went into freefall at midday, suffering the steepest drop in more than two years since October 2008.

JCI plummeted 4.19 percent, or 146 points, at the bourse's noon break, sliding back to the 3,400 level at 3,485 amid widespread inflation worries.

Indonesia's inflation neared 7 percent in 2010, with food prices increasing by almost 18 percent mainly due to climate anomalies that hampered the harvest season in the country, where domestic consumption accounts for more than 60 percent of the economy.

Despite the high inflation, the central bank has kept its benchmark interest rate at a record low 6.5 percent for 18 consecutive months.

Analysts have expressed concern that if the rate is not increased, inflation could hamper economic growth, which the government expects to reach 6.4 percent this year.

Blue-chip stocks suffered the most in Monday's trading, with Astra Internasional, the biggest firm by market capitalization on the nation's stock exchange, slipping nearly 6 percent to Rp 46,250 a share. (est)

Investors to Show Bigger Appetite For Risk in 2011

2011-01-03T19:18:00.001+07:00

Reuters, London, January 02, 2011

Financial markets enter 2011 with many investors persuaded that the world economy is on the mend and that riskier assets such as stocks are set to do well.

Data from Reuters asset allocation polls and State Street’s investor confidence index suggest investors are positioned for more stock gains and a continued move away from supposedly safer assets such as government bonds and low-yielding cash.

The polls, for example, showed equity holdings among leading investors at a 10-month high in December, while State Street’s index for the month was bullish for the first time since March.

But the waning days of 2010 suggest investors will almost immediately have to face three major risks to their rather bullish mood.

In no particular order, those are: China’s trade, America’s economy and the fate of billions of dollars pumped into benchmark government bonds.

Of the three, the pace of recovery in the US economy will be most clearly on display, with monthly US jobs data due to be released on Jan. 7.

It may take on extra importance this month as much of the change in investors’ appetite for risk has come about as signs have increased that the US slowdown in mid-2010 was only temporary.

US equities, for example, have recovered to the extent that the over-the-counter Nasdaq index has actually outperformed much-touted emerging market stocks, as measured by MSCI. But some data was disappointing in the past week, notably consumer sentiment and housing, which, with jobs, go to the heart of future confidence and spending.

US equities have been the big winners since Federal Reserve Chairman Ben Bernanke in August said it would buy more assets to boost liquidity in the economy.

The S&P 500 index, for example, is up around 20 percent since his Jackson Hole speech on Aug. 27. So any sign that the US economy is not recovering as thought could cause an early reversal.

A not-unrelated worry is the Treasury market, which has been hit by a combination of rising prices for riskier assets, the impact of tax cuts on the already large US deficit and a general feeling that bonds may be overbought.

The past few weeks have seen a few days of large sell-offs, including one after dismal demand at an auction for five-year paper.

“Short- to medium-term maturities generally offer poor value,” Tristan Hanson, a strategist at wealth manager Ashburton, told clients recently.

He added, however, that longer-term 30-year paper was a good backstop against any renewal of concern about global growth.

An orderly sell-off of bonds would not unduly worry investors and would fit with their scenario of rising “risk” assets.

Were Treasuries and other benchmark bonds such as Bunds to sell off too sharply, however, significantly higher yields would unsettle investors and have the reverse impact on liquidity than that sought after by the Fed and various other authorities.

Reuters latest polls on expected bond yields found a median projection of 3.4 percent for US Treasuries around a year from now. The yield has already revisited those levels this week.

The third risk that investors may face in the coming week is China’s decision to cut its export quotas for rare earth minerals by 35 percent for the first half of 2011 versus a year ago.

Rare earth minerals are used in a range of products from MP3 players and computer hard drives to hybrid cars, wind turbines and coffee makers. They are also not as scarce as their name implies, but China has cornered about 97 percent of the market by producing them far cheaper than anyone else.

The issue of most concern for investors is not so much whether the prices rise, but the potential for China’s action to trigger a major trade dispute.

3 Investments That Could Rally in 2011

2011-01-02T22:17:00.001+07:00

By Jonas Elmerraji, Contributor to TheStreet , On Tuesday December 28, 2010, 7:26 am EST

BALTIMORE (Stockpickr) -- 2010 is nearly behind us -- and what a year it's been. While the broad market's double-digit run-up has been nothing to scoff at, it's paled in comparison with the massive rallies that have taken place across specific industries and other asset classes.

Defense contractors are up nearly twice as much as the broad market this year; small-caps have rallied even more than that; and precious metal funds are up more than four times as much as the S&P in 2010.

But focused investing in those plays is easy when you have the benefit of hindsight. Instead, today we'll look at investments to focus on for 2011. With a new year just a few trading days away, a handful of industries stand out as attractive investments for 2011.

Here's a look at why you should be paying attention to these three investments in the coming year -- and how you can put these plays to work for your own portfolio.

1. Precious Metals
I mentioned earlier that precious metals funds are up more than four times as much as the market in 2010, and while that's an impressive bit of outperformance, there's little reason to believe that the trend is ending anytime soon. While equities took center stage earlier in the year, it was only during the second half of 2010 that hard commodities like precious metals really shined (no pun intended).

That's thanks in large part to another flight to quality that took hold as volatility ticked up around the beginning of the summer. But the commodity buying didn't let up when volatility (as measured by the VIX S&P 500 Volatility Index) tapered off just a couple months later. That's an attractive setup for contrarian investors right now, because it means that metals have supported their higher prices despite increased equity buying.

The easiest way to get exposure to metals is through ETFs like the SPDR Gold Trust or the iShares Silver Trust, each of which has a share price that corresponds to physical holdings of their respective metal, not just financial instruments that mirror gold or silver's movement.

For fundamentals-based investors, silver looks especially attractive right now. Significant amounts of silver are used in industrial processes, much of which can never be recovered. As a result, the amount of silver supply destroyed often outpaces production each year -- and despite that fact, silver sits at historically low discounts to gold (which doesn't have the same level of industrial demand).

Another viable option is in miners of the metals. Miners have prices that typically move in concert with the metal they mine, but they have the added speculative angle of potentially discovering large properties. That's an added factor that's made plays like Yamana Gold and Barrick especially attractive to investors seeking a higher risk/reward tradeoff for their portfolios. If you're new to mining plays, sticking with mature companies that own proven producing mines is a smart way to go for 2011.

2. Retailers
Consumer spending has been a major theme for Main Street investors ever since 2008. After all, discretionary consumer dollars are a major engine for economic growth. And now, with consumer spending on the upswing, U.S. retailers look to be the biggest beneficiaries.

Most attractive are the mid- to high-end aspirational brands that took the hardest hits in 2008. While these aren't value plays -- most of these stocks have fully rebounded from their lows -- they do offer substantial growth prospects as shoppers become all the more willing to part with their cash. And with holiday-season sales still a few months from being reported to Wall Street, now could be the ideal time to pile up on these plays for 2011.

Among these stocks, Abercrombie & Fitch could sport one of the most springy prices. While ANF showed shareholders some horrific top-line declines in the midst of the credit crunch, the apparel company still boasts robust margins (the result of industry-high sale prices) and has been the subject of increasing analyst attention each quarter -- two factors that should spur buying.

Coach is another retail fashion stock that boasts high margins and exposure to a hard-to-crack niche. Unlike ANF, though, and much to many analysts' surprise, Coach actually fared relatively well during the recession. The company's bets on international growth are especially attractive right now as burgeoning numbers of middle-class consumers in emerging markets take to their malls to pick up attainable status symbols.

Investors looking for more stability should turn to Gap for a similarly positioned, if much less volatile play.

3. Tech Stocks
Investors in innovative technologies have always been well rewarded -- even in tentative economic conditions. But the tech sectorhasn't been able to shake the image of risk that's stuck with it since the dot-com bubble burst. A decade later, successful technology stocks are continuing to perform well, but they're investments that need to be predicated on more than just a good idea.

An easily monetized business model and the ability to raise capital in the market will continue to be two key attributes to look out for 2011's tech investors. While these stocks won't come cheap, expect upside in this sector at the hands of revenue growth.

Large-cap, mature tech firms such as Apple and Google should continue to be perennial performers. With "Wall Street Darling" status, massive scale, and significant cachet with the public, these two companies are well positioned for success. Of the two, Google could be an especially interesting investment case for 2011 thanks to the relative sluggishness of shares in 2010; the company currently trades for a historically low price-to-earnings ratio, and a smaller premium to book value than its tech sector peers.

That said, Google will need to slow the pace of acquisitions that aren't accretive to revenues if it wants to continue to look attractive.

-- Written by Jonas Elmerraji in Baltimore.

Asian Currencies Complete Biggest Annual Gain Since 2006 on Capital Flows

2011-01-02T10:16:00.003+07:00

Bloomberg, Patricia Lui - Jan 1, 2011 9:12 AM GMT+0700

Asian currencies completed their biggest gain since 2006 as the region’s world-leading economic growth and widening interest-rate premiums attracted capital from overseas.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies excluding the yen, climbed 5.2 percent in 2010 as funds based abroad poured a total of $63.4 billion into shares in India, Indonesia, the Philippines, South Korea, Taiwan and Thailand. The International Monetary Fund forecasts Asia’s developing economies will expand 9.4 percent in 2010 versus 2.7 percent in advanced countries.

“The combination of strong growth and rising interest rates are attracting capital inflows into the region,” said David Cohen, an economist at Action Economics Ltd. in Singapore. “Asian currencies have very strong fundamentals and as China continues its appreciation of the yuan next year, the others will follow.”

Malaysia’s ringgit led gains in Asia last year, advancing 11.8 percent to 3.0635 per dollar in Kuala Lumpur, its best year since 1973, according to data compiled by Bloomberg. The nation’s central bank raised interest rates three times to 2.75 percent to stem inflation amid an influx of overseas capital.

The MSCI Asia-Pacific Index of regional stocks rallied 14.3 percent last year, beating the 12.8 percent advance in the Standard & Poor’s 500 share index.

Singapore Growth
Thailand’s baht climbed 11 percent last year, the second- best performance in Asia excluding the yen. The finance ministry this week raised its forecast for 2010 economic growth to 7.8 percent from 7.5 percent, citing an increase in exports.

The currency strengthened 0.6 percent yesterday to 29.98 per dollar in Bangkok, according to data compiled by Bloomberg. Elsewhere, Singapore’s dollar rose 9.3 percent last year to S$1.2823, the Philippine peso appreciated 5.7 percent to 43.62 and Taiwan’s dollar gained 5.2 percent in 2010 to NT$30.368.

Singapore’s dollar had its best annual performance since 1994 after the central bank last year unexpectedly sought a stronger currency to curb inflation. It reached S$1.2817 on Nov. 4, its highest level since at least 1981 when Bloomberg began compiling the data.

A report on Jan. 3 may show the economy expanded 13.2 percent in the fourth quarter of 2010 from a year earlier, according to the median estimate of economists surveyed by Bloomberg News.

Capital Controls
Taiwan’s central bank on Dec. 30 unveiled additional measures to counter capital inflows as it raised borrowing costs for the third time last year. It lifted the reserve requirement on some local-currency deposits by foreigners to as much as 90 percent. Policy makers raised the policy rate to 1.625 percent from 1.5 percent, compared with near zero rates in the U.S. and 1 percent in the euro area.

Taiwan’s dollar fell 0.5 percent yesterday, after being 2.4 percent higher a minute before trading ended, on suspected intervention by the central bank, according to traders who declined to be identified.

“They will continue to intervene and adopt capital controls to manage the inflows,” Cohen of Action Economics said. “But most people expect Asian currencies to be stronger next year.”

Indonesia’s rupiah gained 4.6 percent to 8,978 and the Indian rupee appreciated 4.1 percent to 44.71.

Stable Growth
“Stable economic growth and foreign investors’ need for quality investments helped the rupiah to gain,” said Wiwig Santoso, head of treasury and markets at PT Bank DBS Indonesia in Jakarta.

Purchases of Indian stocks by foreigners for 2010 reached a record $29.3 billion on Dec. 6, according to the Securities & Exchange Board of India. The economy expanded 8.9 percent in the three months ended Sept. 30, government data show.

“Inflows will sustain in 2011 because India’s growth story is intact,” said Roy Paul, Mumbai-based deputy general manager at Federal Bank Ltd. “There’s a sharp chance the rupee will appreciate further.”

China’s yuan strengthened beyond 6.6 per dollar for the first time in 17 years bringing gains for 2010 to 3.6 percent on speculation China will seek appreciation to tame inflation. The currency climbed 0.6 percent from a week ago to 6.5897.

Gains will likely happen in the first quarter because of Hu Jintao’s state visit to Washington this month, said Craig Chan, an Asia foreign-exchange strategist at Nomura Singapore Ltd. on Dec. 16. The House of Representatives passed legislation in September letting U.S. companies petition for duties on Chinese imports to compensate for the effect of a weak yuan.

IDX Closes 2010 Atop Asia Pacific

2010-12-31T18:56:00.005+07:00

The Jakarta Post, Jakarta | Fri, 12/31/2010 10:24 AM

The Indonesia Stock Exchange (IDX) looked more like a wedding than a bourse on Thursday, as musicians and dancers mingled with traders and captains of industry on the last trading day of 2010.

Executives and stock market officials alike gathered on the trading floor to celebrate the IDX as the Asia Pacific region’s best-performing stock market in 2010.

As Deputy Finance Minister Anny Ratnawati rang the bell signaling the end of trading, the benchmark Jakarta Composite Index (JCI) stood at 3,703.51. The band played the reggae anthem Welcome to My Paradise to a standing ovation delivered by smiling market players.

And they might well smile: the JCI rose 44 percent in 2010. Indonesian companies raised more than
Rp 100 trillion (US$11.1 billion) on the IDX this year through a multitude of initial public offerings (IPOs) and rights and bonds issuances.

The IDX’s performance helped firms collect funds for expansion, as the market has “overcome the crisis and regained confidence”, as a scrolling sign on the exchange’s trading floor said.

The bourse’s gain was the highest in the Asia-Pacific region and even rivaled major global indexes, IDX president director Ito Warsito said.

Singapore’s Straits Times rose about 10 percent and Malaysia’s KLCI gained about 20 percent in 2010.

“We lost the Asean Football Federation Cup, but we won on the Asian stock market” joked Capital Markets and Financial Institutions Supervisory Agency (Bapepam-LK) chief Fuad Rahmany.

Major global indexes showed modest performances in comparison, with the United States’ Dow Jones and London’s Financial Times both up about 10 percent for the year while Tokyo’s Nikkei was down 3 percent.

Anny said a 21 percent bump might be just around the corner for the IDX in 2011. “It could reach 4,500 in the count of months.” Analysts expect the IDX will close between 4,300 and 4,500 in 2011.

The exchange’s market capitalization and transaction values also showed stellar performance, Anny told more than a hundred executives and analysts on the trading floor.

The IDX’s market capitalization reached Rp 3,247 trillion as of Dec. 30, up 60.82 percent from Rp 2,534.36 trillion on 2009’s final trading day. Twenty-two IPOs helped boost the IDX’s market capitalization.

An expected 25 IPOs in 2011 would increase market capitalization at least 20 to 25 percent to about Rp 4,000 trillion, according to the IDX.

“It’s good that firms can collect funds from the stock market. They will use it for business expansion and therefore support the nation’s economic growth,” Anny said.

With strong lending growth and higher commodity prices, banks and commodity firms showed significant gains this year.

Shares in state-owned Bank Rakyat Indonesia (BBRI) climbed 37 percent, Bank Mandiri shares (BMRI) were up 38 percent and Bank Central Asia shares (BBCA) up 32 percent in 2010.

Shares of Indo Tambangraya (ITMG) climbed nearly 60 percent, Adaro Energy shares (ADRO) gained 47 percent and Tambang Batubara Bukit Asam shares (PTBA) were up 33 percent.

“The government is very pleased with the stock market’s performance this year and therefore appreciates all the nation’s market players,” Anny said. (est)