Friday, September 11, 2009

NEW YORK: The euro rose versus the dollar on Thursday, hitting a new high for 2009 after a report showed a drop in the number of new US jobless claims last week. Analysts said the improvement in the weekly labor data supports investors recent demand for riskier investments in stocks, commodities and other currencies. The US dollar tends to benefit from higher risk aversion in global markets as it is perceived as a safe-haven asset and sells off when appetite for risk increases. The jobless claims data looks like a pretty healthy improvement from the previous week. We saw a healthy decline in both the initial claims number and the continued claims component of the report, said Omer Esiner, a senior market analyst at Travelex Global Business Payments in Washington. What we re seeing this morning is a little bit of an improvement in risk appetite. As a result, the US dollar is falling once again pretty much across the board, Esiner said.

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Monday, September 07, 2009

ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani on Sunday said the United States should channelise disbursement of its financial assistance to Pakistan through the existing mechanism of the government of Pakistan. He underlined the fact that disbursement through NGOs involves out of proportion administrative expenses, sometimes to the extant of 35 - 40% and hence, actual amount spent on the welfare of the public gets drastically reduced. The Prime Minister was talking to the US Deputy Secretary of State for Resources and Management, Jacob J. Lew who accompanied by the Acting Administrator of USAID, Alouso L. Fulgham called on him here at the PM House on Sunday evening. Prime Minister Gilani suggested that the US Deputy Secretary of State should have detailed meetings with the Minister and the Secretary of Finance to work out mutually agreed modalities on the procedure of financial assistance. He pointed out that the Benazir Income Support Programme, Higher Education Commission, the existing basic education and the basic health units in Pakistan should be considered for the US assistance for education, health and poverty alleviation sectors.

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Thursday, September 03, 2009

NEW YORK: The yen and dollar both rose on Tuesday as fears of further US bank failures overshadowed unexpectedly strong manufacturing data, boosting the two currencies' safe-haven appeal. On Wall Street, US stock indexes were all down around 2 percent at the close as investors fretted that chatter from hedge funds on a bank failure could prove accurate.

The decline came despite upbeat economic news from the United States and euro zone as well as a stabilisation in Chinese shares after a rout on Monday. The hedge fund talk "is a huge driver" of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. "When you have data like we had but the Dow drops, people are running for that safe haven." In late afternoon trading in New York the dollar index, which tracks a basket of six major currencies, was up 0.7 percent at 78.747, rebounding from a session low of 77.944, according to Reuters data.

The dollar was down 0.1 percent against the yen at 92.89 yen, above Monday's seven-week low of 92.53, according to Reuters data. But the yen was up 1 percent against the Canadian dollar, 0.7 percent against the Swiss franc, 0.9 percent against the euro and 0.8 percent against the pound. The euro was down 0.8 percent against the dollar at $1.4212, well below a session high of $1.4377.

The US manufacturing sector expanded in August for the first time in more than a year and a half. The Institute for Supply Management's index of national factory activity rose to 52.9 from 48.9 in July. Separate data showed pending sales of previously owned US homes raced to a two-year high in July, further evidence the housing market was on a steady recovery path.

"Clearly, the US data is surprising to the upside," said Jack Iles, senior portfolio manager who helps manage $2.5 billion assets at MFC Global Investment Management in Boston. But despite a batch of upbeat US economic numbers, major currencies remained in ranges as investors continued to debate about the outlook for the global economy, analysts said.

(Reuters)

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Saturday August 22, 2009

Washington has expressed disappointment at Islamabad's un-preparedness to deal with the current energy crisis, saying Pakistan's response to address her energy problems so far has been sporadic, seeking silver bullet in gas imports from Iran and Turkmenistan pipelines and turning to expensive oil-fired rental power plants for the short-term, and requesting Saudi Arabia for free oil.

This was revealed in a sensitive but unclassified documents, presented by the visiting US President's Special Representative to Pakistan and Afghanistan Richard Holbrooke and submitted to President Asif Ali Zardari at a meeting in the Presidency a couple of days ago. The US believes that Pakistan suffers from an overall shortfall in production. Pakistan's electricity supply shortages result from distorted pricing, weak management, conflicting responsibilities and the absence of a comprehensive plan. This has been true for over 25 years as Islamabad ignored repeated international warnings.

Non-payment by customers and non-payment of government subsidies to producers and generators have resulted in a large stock of outstanding private and public debt (guaranteed by the government) totalling 4.6 billion dollars or two to three percent of the gross domestic product (GDP), which also prevents producers from purchasing sufficient fuel to operate at maximum rates, the document further discloses. Washington is of the considered opinion that if the government of Pakistan lives up to commitments per the Stand By Arrangement with the International Monetary Fund (IMF), a gradual tariff increase will be passed on to consumers and the government will begin immediately to pay subsidies to the sector.

These actions will improve the cash flow and show results with fewer blackouts rather soon. But it will be politically costly to Zardari in its initial stages. According to the document, the US government has instructed the USAID to develop a viable business plan for the electricity sector as soon as possible for the short-term assistance defined as within one-six month timeframe. The documents further states that a bilateral energy dialogue should be convened to discuss needed policy reforms with the Pakistan government's leadership. The dialogue would be an opportunity to roll out overall US approach on needed policy reforms and the US ideas on international support. "We could also present available technologies and gather the US business community to discuss opportunities and challenges in the Pakistan energy sector. For this, there is no need of additional funding," the paper admitted. Washington is also of the view that the IMF programme puts pressure on Pakistanis to rationalise finances in the energy sector.

Any alternative would continue to bust the budget. Programme eliminates, over time, both overt and hidden subsidies and transfers "circular" debt (resulting from the government policies) out of sector and on to government books. "We must ensure that the government of Pakistan follows through with the commitments to pay subsidies to the sector and that the money is used to boost power generation. "Active US Exim Bank, USTDA and OPIC may support the US companies, which are actively pursuing energy projects in Pakistan which include Virginia-based 'AES' plans in imported coal plant; "4Gas," an affiliate of the Carlyle Group, plans a facility to import liquefied natural gas for integration in the national grid; Oklahoma-based "Walters Co", plans a series of thermal plants nation-wide; and "Global Edison' plans, a gas-fired plant. "The US can announce a special energy finance initiative after seeking the appropriate buy-in from OPIC, USTDA and Exim. For this project, 10 million dollars will be needed as new funding, which could be taken from the FY10," said the paper.

Regarding allocation of funds for rural electrification in Fata and NWFP, the US emphasis is on microhydro and renewable energy to provide off grid, community-based hydro (similar to off grid programme in southern and eastern Afghanistan currently being funded at 100 million dollars). The project will require 25 million dollars, which will possibly be taken from the existing FY10 or pipeline funding to assist with transmission losses by improving the current generation/distribution companies. The USAID began its project to help improve consumer efficiency in April. It is currently developing the partnership and capacity for implementing its programmes. Additional funding could accelerate the process and help to identify any particular transmission bottlenecks. The cost of this project will also be 10 million dollars (or more) in additional funding.

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NEW YORK: US stocks racked up strong gains on Wednesday, sparked by results from bellwether Intel Corp that lifted hopes for a rebound in technology spending and improved corporate profitability.

The broad S&P 500 has gained 6.1 percent so far this week, its best three days since the rally began in March, as companies, including Intel and Goldman Sachs Group, posted much better-than-expected results.

The current earnings season is key as investors look for evidence to support optimism for an economic recovery.

In a sign that consumers might be faring better than feared, US credit card companies said defaults and delinquencies were lower in June than expected. American Express forecast better business in the second half of the year, pushing its stock up 11.3 percent to $27.22. For details, see

Optimism was further reinforced by manufacturing data that suggested the recession is abating, as well as minutes from the Federal Reserve's most recent policy-setting meeting that showed officials judged that the US economy's contraction was slowing.

But Intel set the tone with earnings that handily beat forecasts on better-than-expected consumer demand for personal computers. It also gave a strong outlook and shares of the world's largest chip maker shot up 7.3 percent to $18.05.

"Intel is the guts of the whole technology industry, so when they're talking about consumers getting more active on the PC front, that augers well for a lot of different things," said David Katz, chief investment officer at Matrix Asset Advisors in New York.

The Dow Jones industrial average rose 256.72 points, or 3.07 percent, to 8,616.21. The Standard & Poor's 500 Index gained 26.84 points, or 2.96 percent, to 932.68, its best gain in nearly two months and putting it solidly back into the black for the year. The Nasdaq Composite Index jumped 63.17 points, or 3.51 percent, to 1,862.90.

Along with technology shares, the financial sector led the way higher, with the S&P financial index climbing 4.1 percent. Hopes that banks will report better-than-anticipated quarterly results fuelled Monday's rally. JPMorgan, which releases its scorecard on Thursday, gained 4.5 percent to $36.26.

Intel's results lifted rival Advanced Micro Devices shares, pushing AMD up 8.7 percent to $3.86 on the New York Stock Exchange, while the PHLX semiconductor index jumped 4.4 percent.

Tech will likely continue to be in the spotlight on Thursday with results expected from bellwethers International Business Machines and Google. IBM gave the Dow its biggest boost. IBM's stock climbed 3.9 percent to $107.22 on the NYSE, while Google's shares gained 3.2 percent to $438.17 on Nasdaq.

On the economic front, separate reports showed both industrial output and New York factory activity declined at a slower pace, while consumer prices edged up moderately. The New York Federal Reserve Bank's Empire State business index registered its strongest level since April 2008.

Minutes from last month's FOMC meeting showed central bank policy-makers thought economic growth would resume in the second half of the year, although the economy remained vulnerable.


(Reuters)

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Wednesday July 15, 2009

NEW YORK: US stocks managed modest gains on Tuesday as better-than-expected corporate profits overshadowed concerns about weak consumer demand.

Analysts said the bulk of the day's news, including a surge in profit from Goldman Sachs, was already accounted for on Monday, when major stock indexes rose by more than 2 percent in anticipation of strong bank results.

But the cross-currents inherent in the midst of conflicting signals emerging from the earnings season kept the markets range-bound.

Gains were tempered by lacklustre retail sales data and comments from Dell that second quarter margins would be lower as demand has shifted toward cheaper computers, such as netbooks.

This was offset by encouraging comments from railroad company CSX Corp's chief executive and results from Johnson & Johnson that surpassed expectations.

"The sellers had a chance to run with it, but again we found sideline cash ready to come in," said Scott Marcouiller, senior equity market strategist at Wells Fargo Advisors in St. Louis.

"The bottom line is we think we're still going to be in this trading range for a little while longer."

The Dow Jones industrial average added 27.81 points, or 0.33 percent, to 8,359.49. The Standard & Poor's 500 Index gained 4.79 points, or 0.53 percent, to 905.84. The Nasdaq Composite Index rose 6.52 points, or 0.36 percent, to 1,799.73.

Data showed June retail sales increased 0.6 percent, which was more than forecast, but a big part of that gain was due to rising gasoline prices. Excluding autos and gas sales, retail sales registered a fourth consecutive monthly decline. A rebound in sales is considered vital for the US economy to bounce back from recession, as consumer spending accounts for roughly two-thirds of the country's economic activity.

Goldman Sachs Group's surge in quarterly profit handily beat expectations, but its stock gained just 0.2 percent to $149.66 after Monday's jump of 5 percent.

Johnson & Johnson's profit also surpassed forecasts and the Dow component rose 0.9 percent to $58.23.

The current earnings season is under particular scrutiny as investors look for signs of economic improvement.

Indeed, comments from the chief executive of CSX that the worst of the recession seems to be over helped bolster stocks.

CSX, which reported better-than-expected results after Monday's closing bell, saw its shares climb 7 percent to $34.80 on the New York Stock Exchange. The Dow Jones Transportation Average gained 1.3 percent.

But personal computer maker Dell limited gains after its lower margin forecast, pushing its stock down 8.1 percent to $11.97 on Nasdaq.


(Reuters)

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Saturday July 11, 2009

NEW YORK: Oil closed below the psychological barrier of 60 dollars a barrel in New York Friday as the market focused on weak demand and risks of deflation amid a steep global downturn. New York's main contract, light sweet crude for delivery in August settled at 59.89 dollars a barrel, shedding 52 cents from its Thursday close. In intraday trade the futures contract sank to 58.72 dollars, the lowest level since May 18 and nearly 15 dollars below last week's peaks. In London, Brent North Sea crude for August delivery dropped 58 cents to close at 60.52 dollars a barrel. The plunge in oil prices came almost exactly one year after the two contracts struck all-time highs above 147 dollars on July 11, 2008. Analysts said the bears were set to dominate the market for an extended period as the global economy grapples with the worst recession in decades, with no clear sign of recovery in view despite unprecedented efforts by governments to jumpstart growth. "Sixty is not so nifty today as slowing demand fears now possess the energy complex," said Phil Flynn of PFG Best Research. "The oil market reflects the darkening outlook for economic growth." Mike Fitzpatrick of MF Global said that market participants "sharpened their focus on the still struggling global economy" where hopes for a swift recovery were diminishing rapidly. "There have been few, if any, signs of sustainable economic growth," he said. "What can be quantified, though, are growing joblessness and rising savings rate, which suggests that consumers, who have led past recoveries, are still in a state of shock." The International Energy Agency, in a report Friday, forecast demand would be effectively unchanged this year before rebounding by 1.7 percent in 2010. The IEA report highlighted "the uncertainty swirling around the oil market for 2009, 2010 and beyond." Flynn said that deflation fears had again trumped inflation fears in the market. "Unless there is a major change in the economic outlook or some immediate stimulus, the bears will again rule" into the end of this year, he added. Possible regulatory changes in the United States also were weighing on the market, analysts said. Barclays Capital analysts said in a client note that the market was under pressure from "a significant increase in both regulatory risk and in the price volatility related to what in the worst case could prove to be an extended period of regulatory uncertainty." (AFP)

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Friday July 10, 2009

LONDON: The dollar and yen both fell on Thursday as investors recovered their appetite for risk and other major currencies recouped some of their losses the day before. Sterling got a boost from a decision by the Bank of England to keep its main interest rate unchanged and hold steady its asset purchase facility despite market expectations that the programme would be expanded. In late London trade, the European single currency rose to 1.4034 dollars from 1.3885 dollars in New York late on Wednesday. The dollar fell to 92.77 yen from 92.86 yen late Wednesday. Mounting uncertainty about prospects for a global economic recovery has in recent days supported the yen, which is seen as a safe haven during times of market turmoil, dealers said. "The huge out performance of the yen during the last week is a clear and screaming sign of risk aversion," said Societe Generale analyst Patrick Bennett. Investor sentiment soured after Group of Eight leaders meeting Wednesday in the Italian town of L'Aquila warned that the World economy was still in danger. In a communique, the G8 nations said there remained "significant risks" for economic and financial stability. During the meeting, China's state councillor Dai Bingguo Thu told leaders that the international currency regime should become more diversified, a Chinese official told reporters. This added to pressure against the dollar, which is the world's biggest reserve currency. Any diversification would reduce demand for the US unit. In other news of interest to the foreign exchange market, leaders are to pledge to abstain from competitive currency devaluations in a joint statement to Thursday. Investors also absorbed news that new claims for US unemployment benefits fell 8.4 percent last week to a six-month low, suggesting some improvement in the troubled job market. The Labour Department said that initial claims for unemployment insurance benefits fell to a seasonally adjusted 565,000 in the week ended July 4. In Britain, the Bank of England surprisingly decided against pumping billions of extra pounds into money markets to boost lending on Thursday, as it kept its key interest rate at a record-low 0.5 percent. While the rate decision was widely expected, many economists believed the BoE's Monetary Policy Committee would announce plans to create an extra 25 billion pounds (28.9 billion euros, 40.4 billion dollars) under its quantitative easing (QE) scheme. "The Bank's decision not to inject further money into its quantitative easing programme has caught the market off guard and the relief has helped return short-term confidence in sterling," said Mark O'Sullivan at Currencies Direct. Under QE a process which amounts to creating new money the British central bank buys government bonds from commercial banks in the hope that the institutions will lend once again to businesses and individuals. In London trade Thursday, the euro was changing hands at 1.4034 dollars against 1.3885 dollars late on Wednesday, 129.50 yen (128.96), 0.8608 pounds (0.8642) and 1.5127 Swiss francs (1.5132). The dollar stood at 92.77 yen (92.86) and 1.0835 Swiss francs (1.0895). The pound was at 1.6217 dollars (1.6063). On the London Bullion Market, the price of gold fell to 911.75 dollars an ounce from 918 dollars an ounce late on Wednesday. (AFP)

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Wednesday July 08, 2009

NEW YORK: US stocks fell to their lowest level in 10 weeks on Tuesday as talk of a second government stimulus plan heightened fears that the economy is not yet on the path to recovery and that the corporate earnings season starting this week will be weak. A member of the Obama administration's economic advisory panel said the United States should plan to possibly provide a second round of stimulus funds to prop up the economy. The comments come as investors question earlier optimism for a quick recovery, which had driven stocks as much as 40 percent higher since early March. "It's clear that over the last three plus weeks that investors are becoming concerned that the recovery in the economy will not come as soon as expected and will not be as strong as expected," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York. "When there's talk about another stimulus plan that adds fuel to that fire, it intensifies the concerns about the timing and strength of the recovery." Cyclical stocks in the materials, energy, and industrial sectors, which had ridden a recent upswing in raw material prices on recovery hopes, led the market down as commodity prices eased. Copper, a barometer of global economic strength, fell nearly 2 percent. Caterpillar Inc, a maker of heavy machinery for construction and mining companies, shed 4.5 percent to $30.29. The Dow Jones industrial average dropped 161.27 points, or 1.94 percent, to 8,163.60. The Standard & Poor's 500 Index fell 17.69 points, or 1.97 percent, to 881.03. The Nasdaq Composite Index lost 41.23 points, or 2.31 percent, to 1,746.17. The S&P 500 closed at its lowest level since May 1 while the Dow industrials closed at their lowest level since April 28. An initial snapshot of the second-quarter performance of natural resource companies will come on Wednesday when Alcoa Inc kicks off quarterly earnings season. The aluminium producer, a Dow component, is expected to post a third consecutive quarterly loss. S&P 500 corporate earnings are expected by analysts to have declined about 36 percent from a year ago, according to data compiled by Thomson Reuters. That would be roughly the same as the decline seen in the first quarter. Doubts about the strength of an economic recovery and subsequent demand for oil have sent crude prices tumbling in the last week. New York crude fell 1.8 percent on Tuesday and is down about 14 percent from the intraday peak hit on June 30. Its slide has pressured energy stocks. Oil services company Schlumberger Ltd fell 4.4 percent to $49.20 while blue chip Exxon Mobil Corp lost 2.3 percent to $66.56. The S&P energy sector index lost 2.5 percent. Non-cyclical areas of the market, which have been stronger in recent weeks as investors sought out companies better positioned to weather a weak economy, initially withstood the sell-off on Tuesday. But by the end of the day even the defensive sectors fell victim to selling. Health care, a classic defensive sector, traded in positive territory for most of the day but by the close the S&P healthcare index fell 0.3 percent -- still outperforming the wider market. Drug maker Pfizer Inc, one of the few Dow stocks to finish in positive territory, edged up 0.1 percent to $14.59. A rally in the broad S&P 500 index that had boosted it about 40 percent from 12-year lows hit in early March has wilted in the last month as investors sought stronger evidence that economic conditions were improving. Trading was below average on the New York Stock Exchange, with about 1.11 billion shares changing hands, under last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.04 billion shares traded, below last year's daily average of 2.28 billion. Declining stocks outnumbered advancing ones on the NYSE by 4 to 1 while decliners beat advancers on the Nasdaq by about 10 to 3. (Reuters)

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Wednesday July 08, 2009

TOKYO: The dollar was mixed in Asian trade Wednesday as fresh uncertainty over prospects for a US economic recovery and the outcome of a Group of Eight summit hung over the market. The dollar dropped to 94.56 yen in Tokyo morning trade from 94.81 in New York late Tuesday. The euro fell to 1.3885 dollars from 1.3926 and to 131.24 yen from 132.06. Traders were cautious ahead of the G8 summit that was due to start later Wednesday in Italy amid fresh jitters about the economic outlook. Japanese core machinery orders, a closely watched barometer of business investment, fell to their lowest level on record in May, data showed. Doubts over a US recovery resurfaced after a top White House economic advisor suggested that Washington may need a second stimulus package, NAB Capital strategist Spiros Papadopoulos wrote in a note. "The question is whether the US economy has reached a level of stabilisation yet, but the recent unemployment numbers tell me it hasn't," Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said in Singapore. US unemployment surged to a new 26-year high of 9.5 percent in June, government data showed last week. Traders were turning their attention to the G8 summit in Italy where leaders were expected to discuss efforts to tackle the global economic crisis. China had said last week that it wanted a broader global monetary system, sparking speculation that G8 leaders might discuss the dollar's status as an international reserve currency, potentially weighing on the greenback. "China fears its massive holdings of US debt ... are increasingly at risk alongside a falling dollar," said Papadopoulos. "But a quick glance at the agenda makes it pretty clear there will be little time for serious debate on the creation of a new global reserve currency," he added. Chinese President Hu Jintao cut short his trip to Italy to return to China because of unrest in the northwest Xinjiang region, leaving State Councillor Dai Bingguo to take part in the summit on his behalf. (AFP)

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Saturday July 04, 2009

LONDON: The dollar climbed against the euro Friday after eurozone retail figures slipped back into a rut and as fresh worries about the health of the US economy supported the ‘safe-haven’ greenback. In late afternoon trading here, the European single currency weakened to 1.3987 dollars from 1.3997 dollars in New York late on Thursday. Against the Japanese currency, the dollar also edged up to 96.00 yen from 95.94 yen on Thursday while the euro rose to 134.44 yen from 134.30 previously. Trading activity was limited however because US currency markets were closed for a public holiday ahead of the July 4 Independence Day celebrations. "The June US jobs report provoked disappointment and a subsequent sell-off in risk assets," said Mitul Kotecha, an analyst with French bank Calyon. referring to weaker-than-expected unemployment data released on Thursday. Investors bought the dollar after US job losses surged to 467,000 in June, lifting the unemployment rate to a 26-year high of 9.5 percent. The greenback is seen as a relatively safe bet in times of turmoil. The disappointing data suggest "unemployment will continue to rise, creating a mood of distrust over the green shoots of recovery," said Daisuke Uno, a market strategist at Sumitomo Mitsui Banking Corp. The jobs report, seen as one of the best indicators of economic momentum, was worse than market forecasts for 365,000 job losses in June. The previous month, the number of layoffs had fallen to 322,000. Adding to the disappointing economic outlook, official EU data showed retailers in the 16 nations using the euro saw their sales fall in May, renewing a slump that was broken in April by a short-lived improvement. The volume of retail sales in the eurozone dipped 0.4 percent in May over one month and 3.3 percent over one year, the Eurostat data agency said. The result wiped out a minor improvement booked in April when retail sales finally rose after months of steady decline, edging up 0.1 percent over one month and reducing the fall over one year to 2.5 percent. The retail report balanced out more optimistic figures from Europe last week that showed business and consumer confidence in the 16-member eurozone jumped to a six-month high in May while German unemployment declined. On Thursday, the European Central Bank kept its main interest rate steady at a record low of 1.0 percent as ECB chief Jean-Claude Trichet downplayed the threat of deflation in the eurozone in the face of a fall in prices. In trading here on Friday, the euro was changing hands at 1.3987 dollars against 1.3997 dollars late on Thursday, 134.44 yen (134.30), 0.8573 pounds (0.8538) and 1.5208 Swiss francs (1.5182). The dollar stood at 96.00 yen (95.94) and 1.0860 Swiss francs (1.0844). The pound was at 1.6336 dollars (1.6390). On the London Bullion Market, the price of gold rose to 932.50 dollars an ounce at the fixing from 929.50 dollars an ounce late on Thursday. (AFP)

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Friday July 03, 2009

NEW YORK: Dollar borrowing costs between banks fell again on Thursday, hitting the latest in a series of all-time lows, but dismal US jobs data raised doubts over when the easy money would lift the economy. This took the shine off news that closely-watched London interbank offered rates for bank-to-bank lending fell to another record low. It also reminded analysts this had been achieved mainly by massive and continued Fed support.

"I do think overall it's a positive to have Libor coming down from the abnormally-distressed levels that we've seen over the last year, but I'm a little cautious because it is also a medicated market," said Jeff Given, a portfolio manager for fixed income with John Hancock Funds in Boston. Three-month dollar Libor fell to 0.5775 percent, a record low, from 0.5875 percent.

Driving the decline has been the Fed's zero-rate monetary policy and its myriad programs and facilities designed to pump money into a financial system that suffered its worst crisis since the Great Depression of the 1930s. A key gauge of risk aversion also reflected the continued normalisation of financial conditions. The TED spread remained pegged at levels that prevailed just before the start of the financial crisis nearly two years ago.


(Reuters)

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Friday July 03, 2009

NEW YORK: The US dollar dropped to its lowest in more than three weeks against the euro on Wednesday, pressured by news China has asked to debate proposals for a new global reserve currency at next week's Group of Eight summit. Gains in global stocks as well as improved manufacturing activity data in Europe and China have also hurt demand for the dollar as a safe haven.

But it was the report on China, citing sources that fuelled a steep round of dollar selling, adding to the currency's earlier losses in Asia and London. "This remains an Achilles' heel for the dollar and will be a problem going into the G8 meeting," said Richard Franulovich, senior currency strategist at Westpac in New York.

"I think this is making a mountain out of a molehill and I think China is playing games. The fear mow is that there could be a sharper G8 statement next week on this issue." In late afternoon trading, the euro was up 0.8 percent on the day at $1.4147. It earlier traded as high as $1.4201 in the wake of the China news, its highest since June 5, according to Reuters data.

The ICE Futures' dollar index, a measure of the greenback's value against a basket of six major currencies, fell 0.6 percent to 79.649. Other analysts were also skeptical about the China news. "We are struck by the gap between China's declaratory policy - what they say - and their operational policy - what they do," said Marc Chandler, head of global currency strategy at Brown Brothers Harriman in New York.

What China says sounds like they want to end the dollar's role as the top reserve currency, Chandler said, but the world's third-largest economy has not backed its rhetoric as it continues to accumulate dollars and Treasuries. China remains the biggest holder of US Treasuries with about $763.5 billion in holdings as of April, the latest data available from the US Treasury Department. It has roughly $2 trillion in currency reserves and some estimates from analysts suggested China holds about 65 percent to 75 percent of these in dollars.

Earlier in the session, positive data on manufacturing in Europe and China boosted economic optimism around the world. That helped US stocks and commodity currencies, such as the Canadian and Australian dollars.

That said, a round of mixed US data including readings on the labour, manufacturing and housing sectors, contributed to a bias toward dollar weakness as safe-haven support wanes, analysts said. But they warned that trading would remain volatile ahead of a key US employment report on Thursday. Economists expect the US economy to have shed another 363,000 jobs in June after losing 345,000 in May. The dollar rose 0.3 percent to 96.61 yen while the euro gained 1.1 percent to 136.71 yen.


(Reuters)

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Friday July 03, 2009

WASHINGTON: US employers cut far more jobs than expected last month and the unemployment rate hit a nearly 26-year high of 9.5 percent, underscoring the likelihood of a long and slow recovery from recession. The loss of 467,000 jobs reported by the Labour Department on Thursday was 100,000 more than Wall Street economists had expected and was spread widely across economic sectors.

-- Payrolls fall by surprisingly large 467,000 in June

-- Jobless rate hits 9.5 percent, highest since August 1983

-- Jobless benefit claims fall by 16,000 in latest week

-- May factory orders rise more than expected

The economy has lost 6.5 million nonfarm jobs since the recession began in December 2007 and the unemployment rate has nearly doubled in that time. "It looks like the economy was still losing substantial momentum as the second quarter came to a close. This report is weak across the board," said William Sullivan, chief economist at the JVB Financial Group in Boca Raton, Florida.

The Dow Jones industrial average fell 2.0 percent as investors worried that the data darkened the recovery outlook. A later report of a stronger-than-expected increase in US factory orders for May failed to restore confidence.

Prices for US Treasury debt, normally seen as a safe bet during hard times, rose and the dollar fell against the Japanese yen, considered a haven for investors. Also on Thursday, data showed unemployment in the 16-nation euro zone rose to a 10-year high of 9.5 percent in May.

America's June jobless rate of 9.5 percent was up from 9.4 percent in May and was the highest since a matching rate in August 1983. Analysts had expected it to rise to 9.6 percent. Monthly job losses peaked in January at 741,000 and had decreased each month since then until June, an indication that the pace of the economy's deterioration had been slowing.

The unemployment rate has continued to rise. Since the recession started in December 2007, US payroll employment has dropped by a total of 6.5 million. The Labour Department revised figures for April and May to show a net 8,000 fewer jobs were lost in those months than previously reported. The May job losses were revised downward to 322,000, while April losses were revised upward to 519,000.

"The only saving grace is that the decline in payrolls may not be as large as we saw at the start of the year," JVB's Sullivan said. A separate report, however, offered some hope that pressure on the labour market was starting to fade.

The Labour Department said first-time claims for state unemployment insurance benefits fell to 614,000 in the week ended June 27 from an upwardly revised 630,000 the prior week. In another hopeful sign, the number of people still on jobless aid rolls after claiming an initial week of aid fell to just over 6.70 million in the week to June 20 from an upwardly revised 6.76 million a week earlier, only the third week this year that "continued claims" had dropped.

Separately, the Commerce Department reported that orders for US manufactured goods in May rose 1.2 percent, their largest increase in nearly a year, beating analysts' median forecast for a 0.8 percent rise.

Non-defence capital goods excluding aircraft, considered a measure of manufacturing activity, rose 4.7 percent in May following a 3.5 percent fall in April. While June's job losses were spread across all sectors, the steepest decline was in services, which fell 244,000 after a 107,000 drop in May. Professional and business services lost 118,000 jobs, while government employment fell 52,000. Manufacturing was one of the few areas to show a smaller drop in June, down 136,000 after a 156,000 fall in May.

(Reuters)

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Thursday July 02, 2009

NEW YORK: The dollar advanced against a basket of major currencies on Tuesday after a report showing an unexpected drop in US consumer confidence for June prompted investors to seek shelter in the greenback. The weak consumer confidence report drove Wall Street stocks lower, revived the dollar after an early sell-off and dampened hopes of an imminent global economic recovery.

"The market is getting comfortable with the 'green shoots' theory so investors need a high hurdle for them to buy currencies other than the dollar," said David Watt, senior currency strategist at RBC Capital Markets in Toronto. "We're still seeing stress and strains in the market. We're going into the earnings season now that the second quarter has ended and people are cautious."

The ICE Futures' dollar index, however, ended the second quarter on a weak note, down 6.2 percent - its first quarterly drop since the first three months of 2008. On the month, the dollar index rose 1.2 percent. Analysts also said the simultaneous end to the month, quarter and first half of the year led to increased volatility in foreign exchange trading, exacerbating intraday moves in currencies.

But these month-end and quarter-end flows have supported the dollar, analysts said, as investors sought to rebalance portfolios. In late afternoon trading in New York, the euro last changed hands down 0.4 percent at $1.4024 after trading as high as $1.4152 earlier, according to Reuters data. Still, the euro was up 5.9 percent in the second quarter, its best quarterly performance since March 2008.

The dollar index, which measures the value of the greenback against a basket of currencies, traded up 0.5 percent on the day at 80.202. The dollar also rose 0.24 percent against the yen 96.36 yen. It fell 2.7 percent in the second quarter, but was up 1.2 percent in June.

Dollar buying ensued after a report showed the Conference Board's US consumer confidence index fell in June to 49.3 from a downwardly revised 54.8 in May. Economists polled by Reuters had forecast a reading of 55.0. The confidence index followed a report showing a smaller-than-expected decline in US home prices in April and a Chicago purchasing managers' report on business activity in the US Midwest.

Investors have sold US dollars recently as stock markets and oil prices rose on an upbeat view for prospects of a global economic rebound, hurting demand for the greenback as a safe haven. The MSCI global stocks index, which fell 0.7 percent on Tuesday, posted its best quarterly gain since its launch in 1988 at 21.2 percent.

Oil, meanwhile, hit an eight-month high of $73.38 a barrel earlier, but dropped more than 2 percent as the dollar strengthened. The expectation of global economic improvement gained support from the CBOE Volatility Index, Wall Street's fear gauge, which on Tuesday fell to its lowest level since September 12, just before Lehman Brothers collapsed.

That pushed currency volumes lower, too, with the one-month implied vols in euro/dollar falling to 12.6 on Tuesday from about 23.2 at the start of the year. Some analysts say the drop in currency volatility could trigger a downturn in the dollar. Others, on the other hand, are not buying the decline in vols and current market uncertainty should ensure that volatility remains elevated.

"If there is any certainty ahead on the policy front, it is elevated uncertainty and it will make for higher volatility ... in asset prices and FX," said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut. "The longer-term direction is another story - though the consensus view of weak US Treasuries and dollar is compelling - the only difference for me from mainstream is that I would throw lower stocks in as well.

(Reuters)

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Thursday July 02, 2009

NEW YORK: US stocks rose on Wednesday, the start of the third quarter, as reassuring manufacturing data from China, Europe and the United States reinforced hopes that the world's economy is on the road to recovery.

A day after the benchmark S&P 500 wrapped up its best quarter in a decade, investors plowed new money into stocks, boosting growth-sensitive sectors like energy, industrials, technology, materials and consumer discretionaries.

But with the release of the all-important June non-farm payrolls data just a day away, some caution prevailed, causing indexes to finish sharply off their highs.

A weaker US dollar underpinned stocks of multinational companies such as Coca-Cola, up 2.5 percent at $49.18, as investors bet the U.S currency's decline might boost overseas earnings. Coca-Cola is one of the best-known defensive stocks, which are shares of companies deemed better able to withstand an uncertain economy.

General Mills Inc, the maker of Cheerios cereal, also gave investors more reason to be optimistic about the economy after the food company forecast a stronger-than-expected annual profit, sending its stock up 3.9 percent to $58.18.

"There are clearly signs that we are emerging from the recession," said Maury Fertig, chief investment officer of Relative Value Partners in Northbrook, Illinois. "We think the economy has bottomed out and we'll see some positive GDP this quarter."

Even so, volume was light because of the absence of most market players in a holiday-shortened week. US financial markets will be closed on Friday for the US Independence Day holiday.

The Dow Jones industrial average rose 57.06 points, or 0.68 percent, to 8,504.06. The Standard & Poor's 500 Index gained 4.01 points, or 0.44 percent, to 923.33. The Nasdaq Composite Index shot up 10.68 points, or 0.58 percent, to 1,845.72.

Earlier in the session, indexes had risen more than 1 percent, but pared gains heading toward the close as apprehension about Thursday's non-farm payrolls data crept into the market.

The initial estimate, according to a Reuters poll of economists, called for payroll losses of 355,000 non-farm jobs last month. But an updated poll this week of 76 economists raised the figure to 363,000 jobs. The department said in May that 345,000 positions were eliminated by employers.

The unemployment rate is expected to have crept up to 9.6 percent -- its highest since June 1983 -- from 9.4 percent in May.

The jobs data is due at 1230 GMT on Thursday.

Kraft Foods Inc, another major US food company, jumped 5 percent to $26.61, following the outlook of General Mills. Kraft topped the Dow's list of major advancers.

Chip makers ranked among the Nasdaq's biggest boosters, with Intel Corp up 3 percent at $17.04.

In the latest readings on the global economy, surveys from Europe showed manufacturing was shrinking less than initially thought and in China's case, growing modestly.

Other data on Wednesday showed the US manufacturing sector contracted in June but at a slower pace than in May. The Institute for Supply Management said its index of national factory activity edged up to 44.8 to in June from 42.8 in May.

Additionally, global outplacement consultancy Challenger, Gray & Christmas data showed planned layoffs at US firms fell to a 15-month low in June. That news eclipsed the ADP Employer Services payroll survey showing that private employers cut 473,000 jobs in June.

Prospects for a better world economy lifted commodity prices, boosting stocks in natural resource companies, including miners, with Newmont Mining Corp up 3.2 percent at $42.18.

Shares of Chevron Corp rose 0.4 percent to $66.52, while Exxon Mobil added almost 1 percent to $70.56. Both stocks were off their best levels, however, after crude oil futures reversed an initial climb that sent them above $71 a barrel earlier on Wednesday.

US front-month crude slipped 58 cents to settle at $69.31 a barrel, after rising as high as $71.85 earlier.


(Reuters)

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Wednesday July 01, 2009

NEW YORK: US stocks fell on Tuesday as an unexpected drop in consumer confidence cooled recent optimism about an economic recovery, but Wall Street still closed out its best quarter in a decade.

The drop in the Conference Board's measure of consumer confidence in June suggested that the 18-month-long recession had yet to loosen its grip on the US economy.

Gloom among consumers is a major obstacle as their spending is a major driver of corporate profits and accounts for roughly two-thirds of US economic activity.

Tuesday's standout decliners included industrials, energy and material stocks, some of the very same sectors that helped underpin the market's push to recover from the 12-year lows of early March as investors bet on economic stabilization.

"Consumer confidence is the excuse du jour for the latest market move," said Tom Alexander, head of Alexander Trading, in Savannah, Georgia.

"For the market to go much higher, you are going to have to see some real hard evidence of some of these things that are being anticipated by the market, start to come to fruition. Pick one. Are the bank balance sheets really cleaned up? Nobody knows. The market has gone up on a lot of faith here."

The Dow Jones industrial average slipped 82.38 points, or 0.97 percent, to 8,447.00. The Standard & Poor's 500 Index dropped 7.91 points, or 0.85 percent, to 919.32. The Nasdaq Composite Index shed 9.02 points, or 0.49 percent, to 1,835.04.

Even so, the S&P 500 posted its best quarterly performance since the fourth quarter of 1998. For the month of June, the Dow shed 0.6 percent, while the S&P 500 inched up 0.02 percent, and the Nasdaq climbed 3.4 percent.

Since its 12-year closing low on March 9, the S&P 500 is up 35.9 percent.

Among industrial stocks, shares of Caterpillar Inc, a maker of bulldozers and excavators, slumped 4.9 percent to $33.04, while on the technology front, International Business Machines Corp tumbled 1.3 percent to $104.42.

On Nasdaq, chip maker Qualcomm, off 1.9 percent at $45.20, was the worst drag.

Sliding oil prices gave investors a reason to sell some energy shares, with Exxon Mobil down almost 1 percent at $69.91.

Crude oil futures fell $1.60, or 2.2 percent, to settle at $69.89 a barrel.

Shares of US oil refiners such as Sunoco Inc and Tesoro Corp dropped after Goldman Sachs cut them to "sell" from "neutral."

Sunoco dipped 0.4 percent to $23.20, while Tesoro declined 1.2 percent to $12.73.

On the final day of the second quarter, money managers set out to burnish their portfolios by selling losing stocks and scooping up winners in a move that helped the market end sharply off its lows.

Volume was on the lighter side due to a holiday- shortened week. US markets will be shut for the US Independence Day holiday on Friday.

Tuesday's other economic news were separate reports that showed US single-family home prices fell in April but the pace of decline moderated, and business activity in the Midwest contracted again in June, but at a less severe rate than expected.

(Reuters)

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Tuesday June 30, 2009

KARACHI: Slight improvement was seen on the interbank market on Monday as the rupee gained five paisa against dollar for buying and selling at 81.40 and 81.45, experts said. In the first Asian trading day dollar regained some ground after falling broadly late last week on a renewed call by China for a super-sovereign reserve currency, placing higher-risk currencies such as the Australian dollar under pressure.

But activity was subdued ahead of significant data this week, including US employment numbers on Thursday, which investors are awaiting to see if a months-long rally in riskier assets such as commodity-linked currencies and shares is sustainable.

Open Market Rates: The rupee showed no change against dollar for buying at 81.50 and selling at 81.60, they said. The rupee, however, gained 80 paisa versus euro for buying at Rs 112.70 and rose by 30 paisa for selling at Rs 113.70, they said.

Buying Rs 81.40
Selling Rs.81.45

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

Open Buying Rs.81.50
Open Selling Rs.81.60


(BRecorder)

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Tuesday June 30, 2009

CHICAGO: Moody's Investors Service said on Monday it changed the outlook for the US port industry to negative from stable, citing economic trends, including the recession and weak consumer confidence. "The breadth and depth of the economic downturn may result in fundamental shifts in trade patterns, and negatively affect the competitive position of some ports," said Baye Larsen, a Moody's analyst, in a statement.

"While many ports entered the recession with strong financial metrics, these will likely diminish depending on the length and depth of the downturn." The outlook reflects the rating agency's expectations over the next 12 to 18 months. Moody's rates 53 ports with about $6.5 billion of outstanding debt, ranging from Ba3 to Aa2. Moody's said that the slowing activity at ports is allowing for capital projects aimed at improving capacity and operating efficiencies.

(Reuters)

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Tuesday June 30, 2009

NEW YORK: US stocks rose on Monday as higher oil prices lifted shares of energy companies and fund managers snapped up this quarter's winners to burnish their portfolios.

Energy shares were a strong performer in the quarter, and a 3.4 percent jump in the price of oil lifted them even further on Monday. Exxon Mobil Corp was the Dow's top driver, rising 2.2 percent to $70.58.

Fund managers are building up their portfolios before the quarter ends on Tuesday in a ritual known as "window dressing" by selling some of the quarter's losers and scooping up the winners. This move bolstered stocks as well.

"This has been a heck of a run," said Marc Pado, US market strategist at Cantor Fitzgerald & Co, in San Francisco. "A lot of people didn't believe and left a lot at the table. Having the right positions (and) not showing a great deal of cash, that is really the main driving force here -- the so-called window dressing.

"You can show you own the names that everyone knows did well," he said.

Financials, the day's top advancer, also led quarterly gains, followed by technology.

The S&P 500 is up 16.2 percent so far for the quarter, putting it on track for its best quarter since the fourth quarter of 1998, when the index jumped nearly 21 percent.

The Dow Jones industrial average gained 90.99 points, or 1.08 percent, to end at 8,529.38. The Standard & Poor's 500 Index was up 8.33 points, or 0.91 percent, at 927.23. The Nasdaq Composite Index was up 5.84 points, or 0.32 percent, at 1,844.06.

Shares of home builders also helped underpin the market after Credit Suisse raised its rating on KB Home, citing stronger orders and more attractive valuation. KB Home was up 5.1 percent at $14.11. The Dow Jones US Home Construction Index advanced 1.5 percent.

Wall Street's eyes and ears also were on the news coverage of Bernie Madoff, who was sentenced to 150 years in prison on Monday for running what prosecutors called a $65 billion Ponzi scheme. When Madoff's fraud was revealed last December, its scope was so brazen and so massive that it shocked investors and made everyone question their broker.

Signs of life in overseas markets helped to build optimism about the prospects for an economic recovery.

Shanghai stocks reached a one-year closing high for the fourth straight session as signs of a Chinese economic recovery and ample liquidity boosted the market, bolstering investor sentiment.

Crude oil futures jumped $2.33 to settle at $71.49 per barrel after Nigerian militants said they attacked the country's oil facilities, which set off some concerns about supply.

An S&P energy index was up 1.3 percent, while Occidental Petroleum jumped 2.9 percent to $66.13.

On the Nasdaq, Microsoft Corp advanced 2.2 percent to $23.86 after Deutsche Bank raised its price target on the stock to $30 from $22.


(Reuters)

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