US banking crisis dogs markets

LONDON - Stock markets sank further in Asia and faltered in Europe on Tuesday, with banks sliding again on contagion fear after the collapse of two regional US lenders.

The dollar firmed before key US inflation data, having tumbled Monday on concern the Federal Reserve could be forced to cut rates to halt markets turmoil.

The sudden failure of Silicon Valley Bank (SVB) on Friday, followed by Signature Bank two days later, sparked heavy market losses worldwide on fears of a domino effect that could heighten recession risks.

Asian equities tanked Tuesday after Wall Street suffered another punishing selloff, particularly for midsized banks First Republic, KeyCorp and Zions Bancorp.

Oil prices tumbled further with traders concerned about the demand outlook caused by a possible recession.

Europe's markets flickered between losses and gains as the morning progressed, with gloomy news from banking giant Credit Suisse grabbing traders' attention.

SOME SENSE OF CALM

"There was a sense some calm had been restored to markets after a bruising few sessions," said AJ Bell investment director Russ Mould.

"While the immediate fallout from the SVB collapse may have been contained for now, the edginess around the banking sector is not helped by the latest revelations from Credit Suisse as it identified material weaknesses in reporting controls."

Shares in the scandal-hit Swiss bank dived another five percent in Zurich, having struck a record low the previous day.

Credit Suisse acknowledged Tuesday that it had uncovered "material weaknesses" in its internal controls over financial reporting for 2021 and 2022.

The lender revealed the news in its annual report, which was delayed following queries from US regulators regarding its books.

"Credit Suisse is always in the emergency room when it comes to any market crisis, and today's news really intensifies the worries," noted IG analyst Chris Beauchamp.

"It's a bank that can never seem to get its house in order."

REVERBERATIONS

The rest of Europe's banking sector continued to languish in the red.

Shares in French lender Credit Agricole dived 1.2 percent and rival Societe Generale lost 1.1 percent.

Germany's Commerzbank dropped 0.4 percent and Deutsche Bank shed 0.6 percent. 

In London, HSBC fell 1.3 percent one day after it bought SVB's UK division for a nominal £1 ($1.2).

"Bank shares globally continued to feel the reverberations from the fallout from the Silicon Valley Bank issue, with general sentiment weakening as a result," said Richard Hunter, head of markets at Interactive Investor.

The fast-moving crisis has forced US authorities to immediately pledge support for other lenders and depositors.

Bloomberg News reported that about $465 billion had been wiped off the market value of global financial stocks in just three days.

The collapse of SVB, which specialised in venture-capital financing mainly in the tech sector, was largely the result of the Fed's sharp interest rate hikes aimed at quelling inflation, which hit securities hard.

Key figures around 1015 GMT 

London - FTSE 100: DOWN 0.3 percent at 7,522.66 points

Frankfurt - DAX: UP 0.5 percent at 15,027.77

Paris - CAC 40: UP 0.1 percent at 7,015.07

Zurich - SMI: DOWN 0.2 percent at 10,613.29 

EURO STOXX 50: UP 0.2 percent at 4,104.90

Tokyo - Nikkei 225: DOWN 2.2 percent at 27,222.04 (close)

Hong Kong - Hang Seng Index: DOWN 2.3 percent at 19,247.96 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,245.31 (close)

New York - Dow: DOWN 0.3 percent at 31,819.14 (close)

Dollar/yen: UP at 134.15 yen from 133.22 yen on Monday

Euro/dollar: DOWN at $1.0712 from $1.0731

Pound/dollar: DOWN at $1.2156 from $1.2181

Euro/pound: UP at 88.12 pence from 88.08 pence

West Texas Intermediate: DOWN 2.6 percent at $72.86 per barrel

Brent North Sea crude: DOWN 2.3 percent at $78.88 per barrel

Agence France-Presse

Biden vows to hold those responsible for bank failures 'fully accountable'

WASHINGTON — President Joe Biden on Sunday vowed to hold "fully accountable" the people responsible for the failure of Silicon Valley Bank and a second financial institution, Signature Bank, as he sought to reassure Americans their deposits are safe.

"I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again," Biden said in a statement.

"The American people and American businesses can have confidence that their bank deposits will be there when they need them," the president added, in remarks he also posted on Twitter.

Agence France-Presse

Most Fed officials say slower rate hike pace appropriate 'soon'

WASHINGTON –– A majority of US Federal Reserve policymakers found that a slower pace of interest rate hikes would "likely soon be appropriate," the central bank said Wednesday.

The Fed has embarked on an aggressive path to cool demand and bring down prices as inflation in the world's biggest economy surged to the highest level in decades, raising the benchmark borrowing rate 6 times this year.

With inflation hovering around 7.7 percent, the latest policy meeting in early November produced a fourth consecutive three-quarter point interest rate hike, a major rise.

This brings the rate to a range between 3.75 and 4 percent, the highest since January 2008.

But "a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate," according to minutes of the November meeting released Wednesday.

"A slower pace in these circumstances would better allow the committee to assess progress toward its goals of maximum employment and price stability," the minutes said.

Participants of the meeting noted that it would take time for the full effects of policy to be realized, and a few found that easing the pace of interest rate hikes could lower risks of instability in the financial system.

In a sign of diverging opinions, some cautioned the impact of rate hikes could "exceed what was required" to bring down inflation.

FEW SIGNS OF ABATING

But policymakers agreed at the meeting earlier this month that inflation was "unacceptably high" and well above the longer-run goal of 2 percent.

Annual consumer inflation came in at 7.7 percent in October, down from a blistering high 9.1 percent in June but still underscoring a heightened cost of living.

With surging consumer prices showing "little sign thus far of abating," some officials found that policy might have to be tightened more than anticipated.

They maintained that a period of slower growth would help reduce inflationary pressures.

Despite signs of slowing activity as the Fed's rate hikes trickled through the economy, officials saw that the labor market remained tight, with elevated wage growth.

New home sales posted a surprise increase last month as well, while demand for big-ticket American-made goods picked up more than expected, data released on Wednesday showed.

"Policy makers appear set to slow the pace of rate hikes," said economist Ryan Sweet of Oxford Economics.

But he noted that the Fed's path toward a soft landing is increasingly narrow, adding that the Fed's staff economists see "the odds of a US recession in the next year as basically a coin flip."

A growing number of voices, including some Fed officials, have advocated for smaller steps in the coming months.

Last week, Federal Reserve Governor Christopher Waller said signs of easing inflation pressures and a slowing US economy could allow the central bank to dial back its pace of rate hikes.

Fed Vice Chair Lael Brainard also said last week that it would likely be "appropriate soon" for the Fed to slow the pace of rate increases, adding that it would take time for tightening so far to flow through to the economy.

Agence France-Presse 

Dollar slips, lacking momentum ahead of central bank meetings

LONDON - The dollar slipped on Tuesday but struggled to gain momentum, with most major currency pairs little changed as investors waited for major central bank meetings this week and next to indicate the direction of currency markets.

The Bank of Canada meets on Wednesday, then the Bank of Japan and European Central Bank meetings are on Thursday. Next week the Reserve Bank of Australia meets on Tuesday, the US Federal Reserve on Wednesday, and the Bank of England and Norges Bank on Thursday.

In equity markets there were signs of improved risk appetite due to strong earnings, with European stocks opening higher following a rally in the Asian session.

But the dollar index held steady, down 0.1 percent at 93.724 at 1132 GMT.

Simon Harvey, a currency analyst at Monex Europe, said that a flattening of the US yield curve also contributed to the dollar's downward move, by improving risk appetite.

The greenback rose 0.2 percent against the Japanese yen, with the pair at 113.930, holding below the four-year high of 114.695 reached last week.

The Bank of Japan is set to maintain its massive stimulus program and slash this year's inflation forecast in a sign it has no intention to follow other central banks that are preparing exits from crisis-mode policies.

The Canadian dollar was steady ahead of Wednesday's meeting, at which the central bank is expected to raise its inflation forecast and to largely end stimulus from its pandemic-era bond buying program, starting a tentative countdown to the first interest rate hike since October 2018.

The Australian dollar, seen as a liquid proxy for risk appetite, was up 0.3 percent at $0.75155. Last week, it rose above the key $0.75 level for the first time since July.

"If the rally on the commodity market continues, AUD is likely to remain supported for now," wrote Commerzbank strategist You-Na Park-Heger in a client note.

The New Zealand dollar was up 0.4 percent at $0.71895.

The euro was up 0.1% at $1.162. Expectations that the European Central Bank will take a dovish stance when it meets on Thursday have weakened the euro in recent sessions.

"We believe that there is a good chance that the ECB will push back against current market pricing for ECB rate hikes," wrote MUFG currency analyst Lee Hardman in a note to clients.

"The ECB's continued reluctance to raise rates should continue to weigh on the euro as other G10 central banks embark on hiking cycles."

ING strategists noted that, so far in 2021, energy-exporting currencies whose central banks are preparing to tighten - such as the Canadian dollar or Norwegian crown - have outperformed.

"The worst performers in the G10 space are the JPY and the EUR, both net energy importers, suffering the negative income shock from higher energy prices and with some of the most dovish central banks in the world," they wrote in a note to clients.

"Low energy inventories for both gas and crude and no signs that supply frictions are going to be eased anytime soon suggests this story should continue to play out."

China's offshore yuan was a touch stronger against the dollar, with the pair changing hands at 6.3771.

A call between China's Vice Premier Liu He and US Treasury Secretary Janet Yellen was seen as positive for Sino-US relations.

Bitcoin was down around 0.6 percent at $62,742.65 at 1138 GMT, having fallen below the all-time high of $67,016.50 it reached last week.

(Reporting by Elizabeth Howcroft; editing by John Stonestreet and Angus MacSwan)

-reuters-

Asian markets mostly up as vaccine, data add to recovery hopes

HONG KONG – Asian markets mostly edged up Wednesday but gains were tempered as investors took a breather following a recent run-up, though another round of healthy data provided cause for continued optimism for the global recovery.

President Joe Biden gave cause to cheer by saying all adults in the United States would be eligible for a vaccine by April 19, almost two weeks earlier than previously pledged, reinforcing hope that the world’s top economy will get back on its feet more quickly.

That came as California’s governor said he aims to fully reopen the most populous US state by the middle of June if the current pace of inoculations continues.

In a further sign the United States was bouncing back, officials said job openings had surged to a two-year high in February, well above the level expected by most analysts.

That followed last week’s forecast-busting employment report and data showing a strong pick-up in the manufacturing and key services sector.

The string of healthy data — along with Biden’s $1.9 trillion stimulus and $2.25 trillion infrastructure proposal — have helped world markets climb to record or multi-month highs.

Recent concerns that the recovery and expected spending splurge will fan inflation and force central banks to lift interest rates have eased for now, with benchmark 10-year US Treasury yields dipping.

The International Monetary Fund backed up the view of a strong rebound by hiking its 2021 growth forecast for the second time in three months, predicting a 6.0 percent expansion, from its 5.5 percent prior estimate.

Toshiba set to surge

“Early signs show the recovery is accelerating, suggesting a faster return to ‘normal’ than many had dared to hope a few months ago,” said JP Morgan Asset Management’s David Kelly.

“While this is very good news in general, it brings with it challenges for investors in making sure their portfolios are positioned for the very different financial landscape of a post-pandemic world.”

Wall Street was unable to maintain the momentum Tuesday, however, and all three main indexes retreated slightly.

But observers were confident the gains will continue.

“Central banks are continuing to keep interest rates so low so people are looking for some place to put their money where they can get a return,” Sarah Hunt of Alpine Woods Capital Investors told Bloomberg TV.

“I think that’s also why you have stocks priced somewhat for perfection.”

In early trade, Hong Kong dipped as it reopened after an extended holiday weekend, while Shanghai and Tokyo also dropped.

Analysts said buying was dampened by the Chinese central bank’s move to slow loan growth owing to concerns about the development of bubbles.

Elsewhere in Asia, Sydney, Singapore, Seoul, Taipei, Manila, Jakarta and Wellington were in positive territory.

Shares in Japanese giant Toshiba were set to soar Wednesday after it confirmed it had received a buyout offer from a British private equity firm that a report said could be worth $20 billion.

The Nikkei newspaper said CVC Capital Partners was considering a 30 percent premium over the industrial group’s current share price. A flood of buy offers that outweighed sell orders meant the stock could not be traded in early business.

Toshiba said it would “request detailed information and carefully discuss” the offer.

Key figures around 0245 GMT

Tokyo – Nikkei 225: FLAT at 29,685.77 (break)  

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 28,790.62

Shanghai – Composite: DOWN 0.6 percent at 3,460.87

Euro/dollar: DOWN at $1.1869 from $1.1876 at 2100 GMT

Pound/dollar: DOWN at $1.3821 from $1.3823

Euro/pound: DOWN at 85.87 pence from 85.89 pence

Dollar/yen: UP at 109.80 yen from 109.73 yen

West Texas Intermediate: DOWN 0.2 percent at $59.24 per barrel

Brent North Sea crude: DOWN 0.1 percent at $62.65 per barrel

New York – Dow: DOWN 0.3 percent at 33,430.24 (close)

London – FTSE 100: UP 1.3 percent at 6,823.55 (close)

Agence France-Presse 

Asian markets mostly higher on hopes for coronavirus vaccine

Shares were mostly higher in Asia on Wednesday as investors were encouraged by news that an experimental COVID-19 vaccine under development by Moderna and the U.S. National Institutes of Health revved up people’s immune systems just as desired.

Tokyo’s Nikkei 225 advanced 1.6% to 22,945.50, while the Kospi in South Korea added 0.9% to 2,201.96. In Australia, the S&P/ASX 200 added 1.7% to 6,039.50. Hong Kong’s Hang Seng was nearly unchanged at 25,476.31, while the Shanghai Composite Index slipped 0.5% to 3,397.63. Shares were mixed in Southeast Asia and rose in Taiwan.

The Bank of Japan kept its ultra-easy monetary stance unchanged as it wrapped up a policy meeting. It forecast that the economy would improve later in the year, assuming there is no major “second wave” of outbreaks of the new coronavirus.

But the central back acknowledged very high uncertainties over the outlook for the world’s third largest economy. The bank’s growth forecast for the year was downgraded to minus 5.7%- minus 4.5% from the earlier forecast of minus 5%-minus 3%.

The report also raised the issue of financial stability, noting that the “vulnerability of the financial system could increase,” said Marcel Thieliant of Capital Economics.

Investors are awaiting April-June economic growth data for China, which is due later in the week.

The focus for now was on news that scientists soon will begin a 30,000-person study to see if the experimental vaccine developed by Moderna and the NIH is strong enough to protect against the coronavirus.

News about the vaccine came after the end of trading for U.S. markets, where after another day of unsettled trading the S&P 500 rose 1.3% to 3,197.52. The Dow Jones Industrial Average added 2.1% to 26,642.59, lifted by gains for UnitedHealth Group and Caterpillar, among others.

Upbeat earnings news is helpful, “But the cherry on top has to be the positive virus vaccine update as optimism on the vaccine is more than a show stopper. Its the ultimate recession stopper,” Stephen Innes of AxiCorp said in a commentary.

“The positive coverage on a potential Covid-19 vaccine represents a rotating carousel of positive news that is overwhelming rising virus cases in the U.S.,” he said.

On Wall Street, big tech-oriented stocks lagged behind, holding the Nasdaq composite to a more modest gain of 0.9% to 10,488.58.

The earnings reporting season has kicked off with three of the nation’s biggest banks painting a mixed picture of how badly the coronavirus pandemic is ripping through their businesses.

Like the broader market, financial stocks drifted between gains and losses for much of the day before turning higher in the afternoon. JPMorgan Chase, Wells Fargo and Citigroup said they collectively set aside nearly $27 billion during the second quarter to cover loans potentially going bad due to the recession.

The yield on the 10-year Treasury held at 0.63% after rallying back from a morning dip on Tuesday to 0.60%. It tends to move with investors’ expectations of the economy and inflation.

Benchmark U.S. crude oil rose 10 cents to $40.39 per barrel in electronic trading on the New York Mercantile Exchange. It gained 19 cents to settle at $40.29 per barrel on Tuesday. Brent oil, the international standard, picked up 13 cents to $43.03 per barrel. It rose 18 cents to $42.90 a barrel in London.

In currency dealings, the dollar bought 107.27 Japanese yen, up from 107.23 yen late Tuesday. The euro also was almost unchanged, rising to $1.1406 from $1.1401.

Associated Press

Asian shares mostly higher with all eyes on Trump-Kim summit

TOKYO — Asian shares were mostly higher Tuesday as market players tried to digest the summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore.

KEEPING SCORE: Japan’s benchmark Nikkei 225 was up 0.3 percent to finish at 22,878.35. Australia’s S&P/ASX 200 was up 0.2 percent at 6,054.40. South Korea’s Kospi fell 0.5 percent to 2,468.88 after fluctuating earlier in the day. Hong Kong’s Hang Seng’s rose 0.4 percent to 31,181.78, while the Shanghai Composite index added 0.9 percent to 3,079.36.

WALL STREET: The Dow Jones industrial average rose 5.78 points, or less than 0.1 percent, to 25,322.31. The Standard & Poor’s 500 index rose 2.97 points, or 0.1 percent, to 2,782.00 and the Nasdaq composite rose 14.41 points, or 0.2 percent, to 7,659.93.



SUMMIT WATCH: Trump and Kim concluded their summit by signing a joint document in which they committed to working “toward complete denuclearization of the Korean Peninsula” and to joining together “to build a lasting and stable peace regime” on the Korean Peninsula. The broad promises largely reiterated past agreements and included a commitment to “establish new U.S.-DPRK relations” but not an agreement to end the technical state of war.

CENTRAL BANKS: The Federal Reserve will start a two-day meeting on interest rates on Tuesday, wrapping up on Wednesday. Investors expect the nation’s central bank to raise interest rates from their current level of 1.75 percent to 2 percent, but most attention will be on how many rate hikes Fed officials are considering doing later this year. On Friday, the Bank of Japan is due to give its latest policy update.

ANALYST’S TAKE: “Deal or no deal? Just don’t ask what comprises a ‘deal’ and we are fine. At the risk of sounding a tad frivolous, that appears to be the truth of the matter,” said Vishnu Varathan of Mizuho Bank in Singapore of the Trump-Kim summit.

ENERGY: Benchmark U.S. crude rose 33 cents to $66.43 a barrel. It was up 36 cents to $66.10 per barrel Monday in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 26 cents to $76.72 per barrel in London.

CURRENCIES: The dollar rose to 110.36 yen from 109.48 yen late Monday in Asia. The euro fell to $1.1766 from $1.1799.

source: business.inquirer.net

Global stocks uninspired as focus turns towards US jobs data

LONDON — Global stock markets traded in fairly narrow ranges Thursday as the attention in markets shifted towards upcoming U.S. jobs data following the publication of the minutes to the Federal Reserve’s last board meeting.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was steady around its all-time closing high at 7,188, while Germany’s DAX fell 0.2 percent to 11,564. The CAC-40 in France was 0.2 percent lower at 4,891. U.S. stocks were poised for modest losses at the open with Dow futures and the broader S&P 500 futures down 0.2 percent.

FED MINUTES: U.S. central bank officials think they may need to accelerate interest rate hikes if a faster-growing economy leads to lower than expected unemployment. For now they believe they can stick to gradual increases, according to minutes of the Fed’s December meeting. Officials also discussed the impact of Donald Trump’s proposed economic stimulus program and attributed surging stock prices, rising bond rates and the stronger dollar following the election to investor enthusiasm over the president elect’s plans.

JUST THE PRECURSOR: The minutes were just a taster for the likely big economic event of the week — Friday’s publication of the nonfarm payrolls report for December. Though the upcoming moves by the incoming Trump administration are likely to have an impact on Fed rate hike predictions, the backdrop is likely to remain that the U.S. economy is growing strongly with unemployment falling steadily. Later Thursday, traders will have the monthly non-manufacturing survey from the Institute for Supply Management to digest.

ANALYST TAKE: “Given the uncertainties that lie ahead though, I expect it will be another volatile year in which expectations for interest rates will change on a regular basis,” said Craig Erlam, senior market analyst at OANDA.

UPBEAT ASIA: Solid figures out of China and Hong Kong raised investor optimism about the outlook for their economies. Caixin’s monthly purchasing managers index, or PMI, for the services industry posted its biggest rise in activity for 17 months in December. The Nikkei composite PMI for Hong Kong, meanwhile, showed that activity expanded for the first time since February 2015.

ASIA’S DAY: Japan’s benchmark Nikkei 225 index fell 0.4 percent to close at 19,520.69 a day after hitting its highest level in 13 months as the yen’s strength hurt shares of some exporters. South Korea’s Kospi edged 0.2 percent lower to 2,041.95 but Hong Kong’s Hang Seng rose 1.5 percent to 22,456.69. The Shanghai Composite index in mainland China added 0.2 percent to 3,165.41. Australia’s S&P/ASX 200 climbed 0.3 percent to 5,753.30.

CURRENCIES: The euro clawed back some further ground against the dollar, trading 0.2 percent higher at $1.0508, while the dollar slid 0.7 percent at 116.37.

ENERGY: Benchmark U.S. crude was up 36 cents at $53.62 a barrel while Brent rose 41 cents to $56.87 a barrel in London. TVJ

source: business.inquirer.net

Eurozone inflation back to positive; Brexit worries weigh

BRUSSELS, Belgium—Eurozone inflation left negative territory in June, statistics showed Thursday, but economic uncertainty from Brexit sparked concerns that damaging deflation could return to Europe.

The rise in consumer prices is welcome news after months of an unprecedented stimulus program by the European Central Bank to jumpstart sluggish growth and low prices in the eurozone.

Consumer prices in June rose a slight 0.1 percent after slipping 0.1 percent in May, the EU’s Eurostat statistics agency said. This was higher than the zero percent forecast by analysts surveyed by data provider Factset.

“Amid the heightened uncertainties triggered by the Brexit vote, some cheery news for the ECB as the eurozone exited deflation in June,” said Howard Archer, chief economist at IHS Global Insight.

Energy prices again drove consumer prices lower, dropping by 6.5 percent, but this was far less than the negative 8.5 percent a month earlier.

Faced with low prices, the European Central Bank has embarked on a series of unprecedented stimulus programs in a desperate battle to kick-start sluggish growth and inflation in the eurozone.

Slow eurozone growth has seen inflation slide in and out of negative territory, threatening a dangerous downward spiral of falling prices and wages. The ECB aims to get inflation back to two percent or just below, a level it deems healthy for growth.

But analysts warned that knock-on effects from the shock decision by voters in Britain to leave the EU could reverse any progress made towards boosting inflation and growth.

At an EU summit on Tuesday, ECB head Mario Draghi warned leaders that the fallout from Brexit could cost the eurozone up to 0.5 percent in GDP growth over the next three years.

“Uncertainty over the effects of Brexit could add to downward pressure on wage growth and increase firms’ reluctance to raise their prices in the coming months,” said Jennifer McKeown, senior European economist at Capital Economics.

The Frankfurt-based central bank this month took the controversial step of buying corporate bonds, its latest weapon in the fight against deflation that also includes negative interest rates for banks.

Critics in powerful Germany however charge that the ECB is overstepping its mandate by lavishing billions on corporate giants and say it could be distorting markets and creating bubbles.

The ECB has already made unprecedented amounts of ultra-cheap loans available to banks on condition they pass it on as credit for businesses and households.

The ECB has also embarked on a major asset purchase program known as quantitative easing, or QE.

source: business.inquirer.net

Global stocks slide on looming Brexit risk

NEW YORK, United States — World stock markets extended losses Monday as fears heightened that Britain could vote to leave the European Union in next week’s referendum.

Tokyo’s main stocks index dived 3.5 percent to a two-month low point by Monday’s close, as worries over Britain’s EU membership vote on June 23 sparked a rally in the safe-haven yen currency, which in turn hammered shares in Japanese exporters.

Craig Erlam, senior market analyst at Oanda trading group, said “risk aversion” continued to drive markets ahead of “a number of key risk events”.

“The UK referendum next week is right at the top of this list given the destabilization effects that a vote to leave the EU could have on global markets,” he said in a note to investors.

US stocks joined the global retreat, falling for a third straight day and pushing the S&P down 0.8 percent. But shares in professional networking company LinkedIn shot up 46.6 percent on news of its $26.2 billion takeover by Microsoft.

Shares of US travel-oriented equities were especially weak, with American Airlines, Delta Air Lines and United Continental all losing at least 3.5 percent in the aftermath of Sunday’s deadly attack by a lone gunman at a gay nightclub in Orlando, Florida.

London’s FTSE 100 index lost 1.2 percent. In the eurozone, Frankfurt’s DAX 30 index and the CAC 40 in Paris were both about 1.8 percent lower. Banking stocks weighed in Milan, where the main index slid 2.9 percent to its lowest level since February.

In foreign exchange, the British pound hit two-month lows against both the euro and dollar.

The pound’s latest tumble against the dollar “could be the tip of the iceberg” if Britons opt to quit the EU, said Alex Holmes, of Capital Economics.

The European single currency meanwhile sank as low as 119 yen, the lowest level since February 2013.

Central banks on tap

Markets also are on edge as the US, Japanese and British central banks meet this week.

Few expect any move on interest rates from the US Federal Reserve and Bank of England, but observers are divided over whether the Bank of Japan will announce more stimulus.

“Chances of the Fed raising interest rates this month are nil at this point, with a July raise looking less and less likely,” Mark Vickery, of Zacks Investment Research, said in a note to clients.

For Oanda’s Erlam, the Brexit risk is also playing a role in the Fed’s timing.

“The Fed will meet this week and while the (May) jobs report may have given them a reason to put off raising interest rates again, the closing of the gap ahead of the UK referendum is likely the real reason behind the delay,” he said.

Hong Kong’s main stocks index tumbled 2.5 percent and Shanghai dived 3.2 percent, while Seoul sank 1.9 percent and Singapore 1.6 percent.

source: business.inquirer.net

World stocks rise again on stimulus hopes, yuan’s gain

HONG KONG — World stock markets were mostly higher Tuesday as a strengthening yuan and hopes for more central bank stimulus gave investors relief from the mauling that markets have suffered so far this year.

KEEPING SCORE: European stocks were higher in early trading. France’s CAC 40 climbed 0.4 percent to 4,131.18 and Britain’s FTSE 100 added 0.2 percent to 5,831.64. Germany’s DAX dipped 0.3 percent to 9,181.45. U.S. benchmarks were poised to open sharply higher after a long weekend. Dow futures rallied 1.5 percent to 16,148.00 and broader S&P 500 futures jumped 1.5 percent to 1,886.40.

STIMULUS HOPES: Investor sentiment remained positive that central banks would continue to ease monetary policy thanks to comments from the head of the European Central Bank. With the ECB set to discuss policy measures on March 10, Mario Draghi told the European Parliament on Monday that the bank has a range of instruments it can deploy if it decides more stimulus is needed. Earlier, a disappointing report on Japanese economic growth also raised hopes for more policy easing.

RENMINBI RELIEF: China’s strengthening currency also helped boost sentiment. The yuan hovered near its strongest level so far this year a day after the central bank guided the currency, also known as the renminbi, sharply higher. Previous weakness in the yuan triggered worries the Chinese economy was in worse shape than thought. Meanwhile, new yuan loans jumped 71 percent in January, the official Xinhua news agency reported Tuesday, suggesting solid demand in the world’s No. 2 economy.

ANALYST’S TAKE: “Since the start of January everything went south and we really needed some positive news,” said Jackson Wong, associate director at Huarong International Securities. “Factors that were affecting the markets negatively have turned positive now: the yen is weaker, the renminbi is stronger, global markets like the U.S. are stabilizing. All the negative catalysts from January are turning better.”

ASIA’S DAY: Japan’s Nikkei 225 added 0.2 percent to close at 16,054.43 after soaring 7.2 percent the day before, which was its biggest daily gain since September. South Korea’s Kospi rose 1.4 percent to 1,888.30 and Hong Kong’s Hang Seng advanced 1.1 percent to 19,122.08. The Shanghai Composite Index in mainland China surged 3.3 percent to 2,836.57 and Australia’s S&P/ASX 200 was up 1.4 percent to 4,910.00. Benchmarks in Taiwan and most of Southeast Asia also rose.

ENERGY: Benchmark U.S. crude rose $1.28, or 4.4 percent, to $30.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.23 to settle at $29.44 a barrel on Friday. Brent crude, a benchmark for international oils, added $1.38 to $34.77 a barrel in London.

CURRENCIES: The dollar eased to 114.06 yen from 114.54 yen in Monday’s trading. The euro edged up to $1.1174 from $1.1168. TVJ

source: business.inquirer.net

Global stocks hammered as oil prices push further below $30

NEW YORK, United States—Stock markets around the world fell heavily Friday as investors reacted to new 12-year lows for oil prices and a big drop in Chinese equities.

A 3.6 percent drop in the Shanghai index pushed the Chinese market into an official bear market—defined as a 20 percent fall from a recent high—and sparked a wave of selling that extended from Frankfurt to Moscow to New York.

“Pervasive gloom,” read the title of a Barclays note.

Barclays slashed its forecast for oil prices due to a “worsening” macro outlook and predicted further European Central Bank stimulus in light of deflationary worries. On the positive side, the “pessimism about US growth is overdone in light of solid labor market momentum,” Barclays added.

“The markets are trapped in a vicious circle,” said Alexandre Baradez, an analyst at IG France.

“The session started off poorly with China, which set things off, leading to oil prices falling, then European markets and Wall Street dropping.”

Frankfurt fell 2.4 percent, Paris 2.3 percent and London 1.9 percent. The Dow in the US ended 2.4 percent lower after dropping more than 3.0 percent earlier in the session.

The leading Moscow index dropped 5.8 percent, while Brazil’s Ibovespa index lost 2.4 percent.

Global recession?

The widespread market losses over the start of 2016 has sparked talk of the potential for a global recession.

David Levy, portfolio manager at Kenjol Capital Management, said such a downturn would likely be less severe than in 2008 because fewer assets are overvalued.

“Even if we are in a global recession, I don’t think the damage will be nearly as significant as a 2008-type event,” Levy said.

“But certainly the evidence is giving us a higher probability of recession in 2016 and certainly the market is speaking that it believes that is a possibility.”

US oil benchmark West Texas Intermediate finished at $29.13 a barrel, taking the losses since the beginning of the year to more than 21 percent.

Industrial metals, including copper, also fell, but safe-haven gold gained.

“Investors are shifting funds into areas of perceived safety including gold and government bonds in hopes of protecting themselves,” said Jasper Lawler at CMC Markets UK.

Automakers skid lower
European auto stocks tumbled again, with Renault shedding an additional 3.4 percent after unions reported Thursday that anti-fraud investigators had raided several of the company’s sites.

Renault ended 10.3 percent lower on Thursday on the news, which raised fears of a Volkswagen-type scandal.

Shares in Peugeot, France’s biggest automaker ahead of Renault, fell 2.6 percent in Paris while Renault alliance partner Nissan’s stock closed 1.9 percent lower in Tokyo.

Daimler shares lost 1.9 percent, BMW 2.6 percent and Volkswagen 3.5 percent.

In the US, investors hammered banking shares after Citigroup set aside $250 million in reserves for its energy portfolio and warned of a deeper hit if oil prices fall further.

Citigroup tumbled 6.4 percent, while Wells Fargo, which also reported a higher hit from oil, lost 3.6 percent.

Petroleum and technology were two other weak sectors, while Disney tumbled 5.3 percent following a downgrade by Barclays due to worries about sports network ESPN’s prospects.

Key figures around 2200 GMT

New York – Dow: DOWN 2.4 percent at 15,988.08 (close)

New York – S&P 500: DOWN 2.2 percent at 1,880.29 (close)

New York – Nasdaq Composite: DOWN 3.1 percent at 4,488.42 (close)

London – FTSE 100: DOWN 1.9 percent at 5,804.10 points (close)

Frankfurt – DAX 30: DOWN 2.5 percent at 9, (close)

Paris – CAC 40: DOWN 2.4 percent at 4,210.16 (close)

EURO STOXX 50: DOWN 2.4 percent at 2,952.48 (close)

Tokyo – Nikkei 225: DOWN 0.5 percent at 17,147.11 (close)

Shanghai – Composite: DOWN 3.6 percent at 2,900.97 (close)

Euro/dollar: UP at $1.0916 from $1.0865 Thursday

Dollar/yen: DOWN at 116.96 yen from 118.06 yen

source: business.inquirer.net

Q&A: What is a market ‘correction’ and why does it matter?

A dismal start for the stock market this year has pushed the Standard & Poor’s 500 index into what is known as a “correction,” or decline of 10 percent or more from a recent peak. Here are some common questions asked about corrections and what they mean to investors:

WHAT IS A STOCK MARKET CORRECTION?

A “correction” is a Wall Street term for when an index like the S&P 500 or the Nasdaq — or an individual stock — falls 10 percent from its most-recent high. The S&P 500, the index that investors pay most attention to, fell 48 points Wednesday to 1,890, which is 10.4 percent below its recent high of 2,109 set on November 3. A correction is not the same as a bear market, which is defined as when a stock index or individual stock falls 20 percent from its most-recent peak.

IS THE ENTIRE STOCK MARKET IN A CORRECTION?

Almost. The Nasdaq, a technology-dominated index that far outperformed the other two major indexes in 2015, is lagging the other indexes this year and fell into a correction on Monday. On Wednesday it fell 159 points to 4,526, and it is now down 12.2 percent from its recent peak on December 2. The Dow Jones industrial average, comprised of just 30 stocks, is not quite there. It fell 364 points on Wednesday to 16,151, 9.9 percent below its November 3 peak.

___

WHEN WAS THE LAST TIME WE HAD A CORRECTION?

The U.S. stock market entered into its last correction in August. That correction, much like this one, was sparked by financial turmoil in China.

Chinese stock markets have been extremely volatile in recent months, rising to record highs and then plummeting on worries about policy changes, slowing economic growth and a weaker currency. While U.S. investors are not exposed to those stock markets directly, China has been the engine of global economic growth since the financial crisis and weakness there concerns investors everywhere.

Those concerns have had an outsized effect on prices of oil and other commodities because China is such a big consumer, and energy companies have led markets lower in recent weeks.

___

ARE CORRECTIONS A NORMAL THING FOR THE MARKET?

Stock market corrections have historically happened every 18 months. The August correction was the first in nearly 4 years, an unusually long gap. Even the most bullish of market strategists say a correction is ultimately healthy for a market because it removes some of the froth and speculation, and allows investors to buy stocks at more reasonable prices.

source: business.inquirer.net

Bitcoin’s ‘blockchain’ tech may transform banking

New York, United States—The technology that drives the shadowy cryptocurrency bitcoin is drawing interest from the established banking industry, which sees a potential to revolutionize the sector.

Although bitcoin and related virtual currencies are limited to a small set of transactions and are often associated with the underground economy, the so-called blockchain technology is gaining currency in the financial world.

A blockchain is essentially a shared, encrypted “ledger” that cannot be manipulated, offering promise for secure transactions that allow anyone to get an accurate accounting of money, property or other assets.

“The blockchain, which is the technology behind the encryption and e-certification, that is a technology which might very well be very useful,” said Jamie Dimon, chairman and chief executive of JPMorgan Chase at a conference earlier this year.

Leah Gerstner, a vice president for public affairs at American Express, said the financial group made its first investment in a digital currency company called Abra “as a way to get a better understanding of blockchain technology and explore its potential.”

Gerstner told AFP that “we believe blockchain technology is playing an important role.”

The use of blockchain began in 2009 with the introduction of bitcoin and other virtual currencies that are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.

The blockchain offers potential to the traditional finance sector due to its ease of transaction with verification from any point on the platform.

“You can imagine a number of potential use cases for this technology in financial services across both business-to-consumer and business-to-business transactions—from international money transfers to stored value,” Gerstner said.

The Linux Foundation recently announced a new collaborative “Open Ledger” project to advance blockchain technology, teaming with tech firms such as IBM and Intel, stock exchanges and major banks including Wells Fargo and Mitsubishi UFJ.

“Distributed ledgers are poised to transform a wide range of industries” including banking and shipping, among others, said Jim Zemlin, executive director at The Linux Foundation.

Transparency, lower costs
Blockchain technology could lower the cost for many kinds of consumer cash transfers that now are handled by companies like Western Union and MoneyGram.

The banking industry could save $15 billion to $20 billion in transaction costs for international payments by using the technology, according to Banco Santander, which is working on its own virtual currency.

A consortium of global banks including Morgan Stanley, HSBC, UBS, Credit Suisse, Barclays, Societe Generale and Commerzbank are working with the finance tech startup R3 to use blockchain technology for a wide range of applications.

Others moving forward include Bank of America, Citigroup and Goldman Sachs, which is working on its own virtual currency that could cut out intermediaries for settlements between financial institutions.

The technology could help facilitate instantaneous, secure financial transfers which now sometimes can take days when moving internationally, according to blockchain backers.

“This would change the way settlements of securities are traditionally carried out,” said Prableen Bajpai, founding director of the India-based research firm FinFix.

The use of a cryptographic currency such as the one being developed by Goldman Sachs “facilitates rapid, secure and confirmed transactions via network, thereby eliminating the need for a third party,” Bajpai said.

“The results are extremely timely and efficient settlements.”

Another advantage is that transactions could be made without revealing identities and other information—which could be important for institutions trying to keep personal data secure from hackers.

But a number of issues need to be resolved before virtual currencies and blockchain technology become mainstream.

The anonymity of the transactions is something that concerns regulators seeking to crack down on money laundering, and financing of criminal or terrorist activity.

New York state, for example, is pressing to require the identification of those engaging in financial transactions.

Nonetheless, many see blockchain technology as the wave of the future.

“Ultimately, blockchain could become a way for those around the world who don’t have a bank account to make purchases on the Internet. And that could affect the banks, as well as credit card companies like American Express, MasterCard, and Visa,” says Ed Yardeni at Yardeni Research.

“Blockchain still needs to show that it can grow to the size of Visa’s or MasterCard’s networks. But there are certainly many smart folks throwing a lot of money at the technology, which may one day prove disruptive.”

source: business.inquirer.net

Asian stocks mixed as shock of Paris attacks fades

BEIJING — Asian stocks were mixed Wednesday as the shock of the Paris terror attacks faded and an uptick in U.S. inflation added support for a possible interest rate hike.

KEEPING SCORE: Tokyo’s Nikkei 225 gained 0.8 percent to 19,785.73 points and the Shanghai Composite Index shed 0.3 percent to 3,593.89. Hong Kong’s Hang Seng was unchanged at 22,264.42. Sydney’s S&P ASX/200 shed 0.2 percent to 5,107.30 and Seoul’s Kospi advanced 0.2 percent to 1,966.63. Jakarta and New Zealand also gained while Taiwan and Singapore retreated. On Tuesday, Wall Street ended little changed, with the Dow Jones industrial average up 0.04 percent and the Standard & Poor’s 500 index down 0.1 percent. The Nasdaq composite gained 0.03 percent.

TERRORISM JITTERS: Investors restored calm in European markets following the attacks in Paris that left 129 people dead and more than 350 injured. Travel and tourism stocks suffered but markets were unexpectedly resilient. Germany’s DAX rose 2.4 percent, helped by a report showing German business optimism rose in November due to strong domestic demand. The data didn’t fully reflect the Paris attacks, though the survey’s authors say it does not appear to have had a significant impact. France’s CAC 40 jumped 2.8 percent. Britain’s FTSE 100 rose 2 percent.

US INFLATION: The consumer price index rose 0.2 percent in October after falling the prior two months. That could increase the likelihood the Federal Reserve will begin raising interest rates from historic lows as early as next month. That would be “a psychological boost that the economy is self-sustaining enough that the Fed could get off the zero interest rate policy,” said David Chalupnik, head of equities at Nuveen Asset Management.

ANALYST’S TAKE: “Markets are fading risk-aversion moves despite still elevated terror-related tensions,” said Mizuho Bank in a report. U.S. inflation data “suggests that price pressures are rising towards the Fed’s 2% inflation goal, supporting calls for the Fed to hike rates next month.”

WALL STREET: Investors weighed mixed results from retailers ahead of the start of the Christmas shopping season amid worries sales will be weak. Urban Outfitters fell 3.8 percent after the retailer’s latest quarterly sales fell short of expectations. Wal-Mart Stores rose 3.5 percent after the company reported improved customer traffic and an increase in a key sales figure for the third quarter, even as a stronger dollar pressured its performance overseas. Energy stocks were among the biggest decliners due to a fall in oil prices.

ENERGY: Benchmark U.S. crude gained 32 cents to $40.98 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $1.07 on Tuesday to close at $40.67. Brent crude, used to price international oils, rose 40 cents to $43.97 per barrel in London. It fell 99 cents the previous session to $43.57.

CURRENCY: The dollar gained to 123.4150 yen from Tuesday’s 123.4090. The euro edged down to $1.0636 from $1.0645. TVJ

source: business.inquirer.net

Asian stock markets higher, Japan gains on stimulus hopes

SEOUL, South Korea — Asian stock markets bounced higher Wednesday, led by gains in Japan where investors were buoyed by expectations for more economic stimulus.

KEEPING SCORE: Japan’s Nikkei 225 surged 2.5 percent to 17,346.48 after sliding 4.1 percent on Tuesday amid a global market sell-off. Hong Kong’s Hang Seng index added 1.5 percent to 20,858.26 and China’s Shanghai Composite Index was 0.8 percent higher at 3,061.86. Australia’s S&P/ASX 200 gained 1.9 percent to 5,013.00. South Korea’s stock market finished 1 percent higher at 1,962.81.

JAPAN HOPE: Tokyo stocks gained amid expectations for more monetary and fiscal stimulus following weakness in recent economic data. Domestic demand is tepid in the world’s third-biggest economy and China’s slowdown has also crimped Japanese exports. The quarterly Tankan business confidence survey due Thursday will show how businesses are feeling about the future, possibly providing a trigger for action from policymakers.

ANALYST’S QUOTE: “Japan will be inclined to boost both fiscal and monetary stimulus soon” if the risks of a slowdown in China do not fade in a few months, Mizuho Bank said in a daily note. “The real question is not if more stimulus may be expected, but rather, how much stimulus will be rolled out, and when.”

US WATCH: Investors are waiting for jobs data and the top U.S. central banker’s remarks for clues about when the Federal Reserve will raise interest rates. Policymakers have said they will likely raise interest rates before the end of the year. On Thursday, U.S. payroll processor ADP reports how many jobs private employers added in September and Federal Reserve Chair Janet Yellen gives opening remarks to a community banking conference.

WALL STREET: Wall Street eked out small gains on Tuesday, helped by a rebound in health care stocks. The S&P 500 rose 0.1 percent to 1,884.09. The Dow Jones industrial average climbed 0.6 percent to 16,049.13 The Nasdaq composite dropped 0.6 percent to 4,517.32.

ENERGY: Benchmark crude fell 29 cents at $44.94 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 80 cents to close at $45.23 a barrel on Tuesday on expectations that the Energy Department will report a slowdown in U.S. crude production when it releases its monthly petroleum supply report. Brent Crude, a benchmark for international oils, dropped 14 cents to $48.72 a barrel in London.

CURRENCIES: The euro weakened to $1.1228 from $1.1252 in the previous global trading session. The dollar rose to 119.96 yen from 119.86 yen. TVJ

source: business.inquirer.net

Beijing admits stock bubbles, says rout’s almost over

BEIJING, China — China’s central bank governor and its market regulator have admitted that there were “bubbles” on the country’s stock exchanges, after a spectacular rally was followed by a painful bust, but said the turbulence was coming to an end.

The benchmark Shanghai Composite Index rose by more than 150 percent in the year to June 12, fueled by debt rather than fundamentals and encouraged by authorities.

It has since plummeted nearly 40 percent since then, with official interventions to the tune of hundreds of billions of dollars failing to arrest the declines.

People’s Bank of China (PBoC) Governor Zhou Xiaochuan pointed to the March-June period in particular, when the Shanghai index leaped 70 percent.

“Bubbles continued to build up until mid-June,” he told a G20 meeting of finance ministers and central bank governors in Ankara at the weekend, according to a statement on the PBoC website.

“Since mid-June, three rounds of corrections took place in China’s stock market,” he went on. “The first two did not have international impact, while the third one in late August (had) some global influence.”

Chinese bourses are largely separated from the rest of the world’s financial system by limits on investment from overseas. But news last week of a contraction in an official gauge of Chinese factory activity sent domestic and world markets into a tailspin on worries the economy was headed for a “hard landing”.

“The correction in the stock market has now come close to an end,” Zhou said in the statement, refraining from using the word “burst” and adding the Chinese economy was not “much affected” by the rout.

The market regulator, the China Securities Regulatory Commission (CSRC), echoed his comments in a statement on Sunday.

“Gains on the stock market had been too rapid and large, forming stock market bubbles, therefore subsequent plunges and adjustments were inevitable,” it said.

“At present, market risks and bubbles have been released to some extent,” it added.

Analysts estimate the Chinese government has spent hundreds of billions of dollars to prop up stock prices, including funding state-backed China Securities Finance Corp. (CSF) to buy shares.

But investors worry the government will reduce its intervention, given the huge cost for little effect, and the market’s limited impact on the real economy.

The CSRC sought to reassure traders, saying: “When fierce and abnormal volatilities take place in the stock market and may trigger systemic risks, the government will absolutely not sit back.

“We will take decisive and multiple measures to stabilize the market in a timely manner,” it said, adding the CSF will “continue to play a stabilizing role”.

“Market transactions are basically normal and the liquidity is ample,” it added.

The state-owned China Securities Journal reported last week that securities firms were transferring more funds to the CSF to help stabilize the market, with the additional amount estimated at more than 30 billion yuan ($4.7 billion).

The benchmark Shanghai stock index edged up 0.16 percent to 3,165.33 in mid-morning Monday, on the first day of trade after an extended holiday weekend. CB

source: business.inquirer.net

Chinese central bank governor says currency is stable

BEIJING — China’s central bank governor says its currency has stabilized, in an apparent effort to dispel fears of more big declines following a surprise devaluation that rattled global markets.

The yuan’s exchange rate against the dollar “tends to be stable,” Zhou Xiaochuan said at a meeting of finance officials of the Group of 20 major economies in Turkey on Friday, according to a central bank statement.

Beijing said the Aug. 11 devaluation was part of efforts aimed at making the yuan’s state-set exchange rate more market-oriented. But coming without warning amid a collapse in Chinese share prices, it caused anxiety in financial markets.

Zhou’s comments appeared to be aimed at quelling fears Beijing might allow the currency, also known as the renminbi, to fall further to help its struggling exporters by giving them a price advantage. The devaluation had spurred warnings of a possible “currency war” if other governments responded by lowering their own exchange rates.

“At present, the exchange rate of the RMB against the dollar tends to be stable, and most of the correction of the stock market has taken place, so the financial market is expected to be more stable,” the statement read.

Zhou said Beijing was committed to carrying out economic reforms despite recent turbulence in its financial markets.

Also at the G-20 meeting, Finance Minister Lou Jiwei tried to defuse concern about the slowdown in Chinese economic activity, saying Beijing is “not especially concerned” about short-term fluctuations and will stick to its reform plans.

The ruling Communist Party is in the midst of a marathon effort to encourage domestic consumption and reduce reliance on trade and investment to drive growth. It has promised to give market forces a bigger role in the state-dominated economy.

Concerns have mounted, however, that growth is slowing too abruptly after July exports and auto sales contracted and August factory activity weakened.

Lou said the Chinese government expects economic growth of “about 7 percent” this year, according to the central bank statement.

“China is in line with plans and will stick unswervingly to ‘reform and opening up,'” he said.

source: business.inquirer.net

US stocks surge for 2nd straight day; S&P 500 up 2.43%

NEW YORK—US stocks posted big gains for the second straight session Thursday as strong American economic data extended a global rally that began with a surge in beaten-down Chinese equities.

The Dow Jones Industrial Average rose 369.26 points (2.27 percent) to 16,654.77.

The broad-based S&P 500 jumped 47.15 (2.43 percent) to 1,987.66, while the tech-rich Nasdaq Composite Index advanced 115.17 (2.45 percent) to 4,812.71.

The Commerce Department reported that the US economy grew at an annual rate of 3.7 percent in the second quarter, much higher than the 2.3 percent initially estimated.

The US growth report added to positive momentum from a 5.34 percent rise in the Shanghai stock exchange, ending the worst five-day rout for almost two decades, and solid gains in European bourses.

Stocks were positive all day, but lost most of their gains during a bumpy mid-afternoon stretch before regaining their footing.

“We have returned to a period where volatility has grown,” said David Levy, portfolio manager at Kenjol Capital Management. “We’ve seen very intense swings.”

Some investors were growing more confident after the US market held two straight days of gains.

“We went through a rocky week or two,” said David Kotok, chief investment officer at Cumberland Advisors. “I think we’re heading higher.”

All 30 members of the Dow rose, with specially large gains in Chevron (+6.2 percent), General Electric (+4.2 percent) and Nike (+3.6 percent).

Other petroleum-linked stocks surged after oil prices climbed more than 10 percent, rebounding from deep falls. Drilling company Nabors Industries jumped 12.2 percent, EOG Resources gained 6.8 percent and ConocoPhillips added 5.7 percent.

Technology stocks enjoyed big gains, including Netflix (+6.8 percent), Tesla Motors (+8.1 percent) and Apple and Facebook (both +2.9 percent).

Metals and oil producer Freeport-McMoRan powered 28.7 percent higher as it announced deep cuts to its capital budget in light of weak commodity prices. Freeport now expects to spend $4 billion in 2016, down 29 percent from its estimate a month ago.

PVH, which owns the Tommy Hilfiger and Calvin Klein apparel brands, rose 6 percent as it lifted its full-year profit forecast to $6.90-$7.00 per share, five cents above the prior range.

Bond prices were mixed. The yield on the 10-year US Treasury rose to 2.19 percent from 2.18 percent Wednesday, while the 30-year dropped to 2.93 percent from 2.94 percent. Bond prices and yields move inversely.

source: business.inquirer.net

US stocks surge ahead of Fed meeting

NEW YORK–US stocks plowed higher Monday as the dollar retreated and the market looked ahead to a Federal Reserve policy decision in the next two days.

The Dow Jones Industrial Average bolted up 228.11 points (1.29 percent) to 17,977.42.

The broad-based S&P 500 jumped 27.79 (1.35 percent) to 2,081.19, while the tech-rich Nasdaq Composite Index gained 57.75 (1.19 percent) to 4,929.51.

The dollar’s recent gains have raised worries about the drag on US multinationals, but on Monday the euro rose slightly against the greenback, to $1.0590 from $1.0489 Friday.

Chris Low, chief economist at FTN Financial, said data showing tepid growth of just 0.1 percent in US industrial production in February likely lifted confidence the Fed would take a cautious approach to raising near-zero interest rates, probably deciding to hike them later rather than sooner.

The Fed’s two-day monetary policy meeting begins Tuesday.

Valeant Pharmaceuticals International rose 2.5 percent after lifting its offer for Salix Pharmaceuticals from $158 per share to $173 per share, pushing out rival bidder Endo International. Salix gained 2.0 percent, while Endo rose 2.7 percent.

Biotech company Amgen jumped 5.7 percent as it released promising clinical research for its Repatha medication for lowering cholesterol. Other pharma companies also rose, including Celgene (+2.6 percent) and Gilead Sciences (+1.7 percent).

Dow component Procter & Gamble jumped 2.1 percent on a report that it is considering the sale or initial public offering of some beauty brands.

Dow component DuPont dropped 4.3 percent following a downgrade by Bank of America Merrill Lynch.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.08 percent from 2.12 percent Friday, while the 30-year slid to 2.65 percent from 2.70 percent. Bond prices and yields move inversely.

source: business.inquirer.net