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Car makers fight European gloom in Frankfurt

admin — Thu, 08 Sep 2011 17:57:08 +0000

By Helen Massy-Beresford and Christiaan Hetzner

LONDON/FRANKFURT | Fri Sep 9, 2011 9:26am EDT

LONDON/FRANKFURT (Reuters) – The global car industry descends on Frankfurt next week to show off the latest models it hopes will fend off an economic slowdown in some of its biggest markets, as government spending cuts chip away at consumer confidence in Europe.

Car makers are also facing slowing growth in China, now the world’s number one auto market, and a major driver of surging demand for luxury cars over the last two years.

Even if the United States avoids recession, competition will intensify there as Japanese auto makers battle to claw back ground lost when the March earthquake disrupted production.

Car registrations in some major European markets actually rose last month, but analysts are warning the numbers, which reflect cars bought up to two months ago, before the summer’s stock market slump, do not tell the whole story.

“Certainly from a stock market point of view, a lot has changed during that time,” said Barclays Capital analyst Michael Tyndall. “I take little comfort from good August numbers.”

“It’s been very aptly put that we have to be careful we don’t talk ourselves into a recession,” he said. “It’s quite easy from a consumer perspective to get yourself to a point where you don’t want to spend on anything — it’s all too uncertain,” he added.

Tyndall’s assessment of the vicious circle that could choke off demand is shared by luxury car maker BMW’s (BMWG.DE) chief financial officer Friedrich Eichiner, who told reporters on Friday: “We don’t want to bring about a crisis by talking about it, because we don’t see one at the moment.”

Eichiner said: “We believe we will have to cope with dampened growth in the future, but not necessarily with a new recession.”

However, with the macroeconomic situation changing quickly, gloomy forecasts could weigh on demand.

Tyndall said: “We’re looking at slower growth and in Europe we’re looking at some retracement in 2012 but not anything like the collapse we saw in 2008.”

But even if the car industry is expecting something far short of a crash, it will face up to the slowdown without the support from the government loans and generous scrappage schemes that saved the market last time round.

PricewaterhouseCoopers analysts see a “difficult” final quarter of 2011 in Europe that will drag the year as a whole into a 2.5 percent dip in the European car market to 13.4 million vehicles.

Josselin Chabert, an analyst at PwC’s Autofact’s unit said: “With the debt crisis, the lowering of economic forecasts and weak prospects for the job market, numerous European countries could experience a difficult next few months.”

European car makers may have scrambled to increase their presence in China and other new regions but they still rely on Europe for the bulk of their sales and tough austerity measures threaten consumer spending power.

The Frankfurt show, which opens to the media on Sept 13, is traditionally a chance for premium German car makers to show off their new models.

Those brands in particular have been riding high, as newly affluent Chinese buyers have snapped up their plush models, but the smaller cars they are set to unveil next week should help them win a bigger slice of stagnating demand in Europe, where tightening emissions legislation favors small vehicles.

“It’s a wide trend, especially for German car makers, shifting down-segment,” said IHS Global Insight analyst Tim Urquhart, adding that the move also helped attract younger drivers.

“They can expand into the smaller segments and there’s a whole new demographic that will be able to buy their vehicles.”

Mercedes-Benz (DAIGn.DE) will take the wraps off its new B-class for the first time in Frankfurt, while BMW (BMWG.DE) will show its new 1 series compact.

Europe’s largest car maker Volkswagen (VOWG_p.DE) will show its new small city car, the Up!, which it hopes will rival popular small models including Fiat’s (FIA.MI) 500 and form a key part of its bid to be the world’s largest car maker by 2018.

VW unit Audi will display an urban concept car powered by a lithium-ion battery and built around a carbon-fiber monocoque frame on its lavish 10 million euro stand which incorporates its own test track.

PwC said Germany itself remains a relative bright spot in Europe’s gloom and predicted growth this year of 9.7 percent in that market, the region’s biggest, after its economy held up better than some of its neighbors.

Whether this will last is an open question and dealerships are braced for tougher times ahead.

Ernst-Robert Nouvertne, owner of dealership Autohaus Nouvertnй am Wasserturm in Solingen said orders had cooled off quickly since May after a strong start to the year.

“But we expect new models and premieres at the Frankfurt auto show to play a key role in giving a boost to new orders.”

Juergen Karpinski, owner of Autoschmitt Frankfurt added: “New cars are in demand and waiting lists can be several months long. Nevertheless we expect an impact — that always happens when the economy softens and hurts purchasing power, it just comes with a delay.”

(Editing by Chris Wickham and Mike Nesbit)

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European Session News Summary

admin — Sat, 03 Jul 2010 11:26:11 +0000

UK PMI Manufacturing Slumps

PMI manufacturing in the U.K. came in line with expectations at 57.5 in June; yet, lower than May’s reading of 58.0.

European manufacturing expansion halts in June

European PMI manufacturing lingered at 55.6 in June, in line with both previous and estimated.

Spain credit rating might be cut by Moody’s Investors Service

Spain might lose its credit rating as Moody’s Investors Service is getting ready to cut their rating especially as the government is going to sell five-year notes worth 3.5 billion euros. Spain credit rating might drop from the current Aaa by two grades, while they will be reviewed for three-month.

Spain is dealing with a debt of 24.7 billion euros, as the government says it will reduce the deficit, as currently their debt is the third-biggest in the euro zone.

German PMI manufacturing beats estimates

German PMI manufacturing edged up to 58.4 in June, higher than both previous and estimated readings of 58.

Switzerland SVME-Purchasing Managers Index

Switzerland SVME-Purchasing Managers Index for the month of June was inline with expectations at 65.7 which is lower than the prior reading of 66.4

Germany retail sales decline

Germany retail sales for May fell to 0.4% from 1.0% standing inline with expectations, while on the year improved to -2.4% from the revised prior reading of -3.6% from -3.1%, which is worse than the projected -0.6%.

Published on Thu, Jul 1 2010, 13:03 GMT

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European Markets Snap 3-Day Loss- Euro Strengthens

admin — Fri, 30 Apr 2010 07:42:54 +0000

4/29/2010 05:30 am: EUR/$..1.3236 $/JPY..93.96 GBP/$..1.5220 $/CHF..1.0835 AUD/$..0.9264 $/CAD..1.0058

European Markets Snap 3-Day Loss- Euro Strengthens

Asia Pacific markets were mostly weaker across the board with Japan’s Nekkei 225 closed for holiday. US equities rebounded yesterday from the losses sustained on news of downgrades in sovereign credit ratings around Europe. Modest gains came on the heels of the Fed’s continued commitment to keeping rates exceptionally low for “an extended period.” The statement highlighted improvements in business and household spending, while also noting lags in employment and commercial real-estate. The news calmed nervous investors, after global equity bourses fell on fears regarding sovereign debt contagion. The dollar was softer early in European trade as risk appetite crept back into the markets on better than expected unemployment data from Germany, and strong business climate and confidence figures from the Eurozone. Commodity prices were stronger with gold sitting just under $1170 and crude oil rising to $83.81- off yesterday’s weekly low of $81.50.

The Greek Reality

The sovereign debt crisis in Greece has brought to light the deficiencies in the nation’s economy. With the cost of the proposed 3-year aid package estimated to be as much as 120 billion euros, questions arise as to how the country will cope with the unprecedented austerity measures needed to regain control of government spending. With no significant economic growth drivers, the nation’s deficit will continue to climb unless major social reforms are implemented. Although Greece has the support of the EU, there is uncertainty as to the resolve of the Greek people as protests continue to persist in response to recent cuts in deficit spending. As a part of the rescue plan, Greece will need to adopt even harsher austerity measures. The risk of contagion still remains very real after S&P lowered Spain’s rating only one day after downgrading both Portugal and Greece. With German Chancellor Angela Merkel now urging for a quick resolution to the debt crisis, it is likely there will be a package ready for Greece by sometime next week. The euro received a respite from the heavy sell off in recent days on renewed hopes that the IMF backed UE plan will be enacted in time for the May 19th deadline, when some 9 billion euros of Greek debt mature. Although profit taking could provide some support for the euro, the medium-long term outlook remains negative. The single currency held gains past the 1.32 figure with interim resistance seen at 1.3260, backed by 1.3280 and 1.33. Subsequent ceilings are eyed at 1.3340, followed by 1.3370 and the 1.34 handle. Support starts at the figure, with additional targets eyed at 1.3180, followed by 1.3130, 1.31, and 1.3020. Past the 1.30 figure, stronger demand rests at the long-term 100% Fibonacci extension taken from the Dec 18th 08′ and Nov 26th 09′ crests, at 1.2880.

Today at 8:30am in New York, the US reports on weekly jobless claims, with 445k initial claims expected. Continuing claims are also seen lower to 4.618 million from 4.646 million. At the same time, the Chicago fed national activity index is released, with the figure expected at -.20. European markets were firmer with US equity futures also pointing to a stronger open mid-day in London trade.

Published on Thu, Apr 29 2010, 22:21 GMT

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European stocks slip on doubts over Greek rescue (AP)

admin — Wed, 17 Mar 2010 18:09:26 +0000

concrete financial support, leaving it to potentially seek assistance from the International Monetary Fund.
Germany has said this week that Greece’s debt problems can be addressed only by the country’s austerity program. That suggests an EU summit next week, which had been expected to propose bilateral loans for Greece, will come up empty-handed.
and the euro.
Britain’s FTSE 100 benchmark index fell 0.2 percent to 5.632.89 while
slid 0.1 pecent to 6,016.75.
’s CAC-40 fell 0.3 percent to 3,945.32.
The 16-nation euro bought $1.3674 in morning European trading Thursday, down from $1.3753 the night before in New York.
Investor sentiment was hit by the political divisiveness over whether and how to help Greece with loans or guarantees.
austerity program and further efforts in the coming years.” She also said there should be mechanisms to allow for the expulsion from the eurozone of countries who repeatedly flout fiscal rules.
Greek Prime Minister George Papandreou said Thursday that his country would have to resort to help from the IMF, which would be a humiliation for the eurozone, if it does not receive aid from fellow
.
, which drives its trading partners, like Greece, to suffer deficits.
“The political rift angle may prove more enduring for the markets,” said Daragh Maher, analyst at Credit Agricole CIB.
as well, with Asian indexes mostly falling and
expected to slide on the open.
were down 0.1 percent at 10,656.00 while
futures were 0.1 percent lower at 1,159.60.
Stocks had mostly risen Wednesday, after the
would remain loose in coming months, providing markets with ample liquidity.
stock average closed down 102.95 points, or 1 percent, to 10,744.03. South Korea’s Kospi index lost 0.5 percent.
dropped 0.3 percent to 21,330.67 and Shanghai’s main index was off 0.1 percent. India’s market shed 0.1 percent.
The dollar was off at 89.96 yen from 90.34 yen.
fell toward $82 a barrel, paring two days of gains that were fueled by signs U.S. crude demand may be improving.
Benchmark crude for April delivery was down 62 cents to $82.31. The contract rose $1.23 overnight.
Overnight in the U.S., the Dow rose 47.69, or 0.5 percent, to 10,733.67. It is at its highest point since Oct. 1, 2008. The seven-day streak of gains is its longest since August.
rose 6.75, or 0.6 percent, to 1,166.21. That’s the highest close since Sept. 30, 2008.

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European markets start the week pessimistic with woes over the outcome of the EU finance ministers meeting amid new Moody’s warning for UK

admin — Tue, 16 Mar 2010 02:00:29 +0000

Mon, Mar 15 2010, 10:53 GMT
European markets start their journey this week with jitters and volatility as the euro area Finance Ministers prepare to head into the chambers to contemplate the Greek debt crisis, whether to bail or NOT TO BAIL! While neighboring UK does not feel any vibes of hope either as Moody’s issue a new S.O.S signal for UK and US credit rating…
Equities are trading red, the major European currencies, the euro and sterling are drained and the pessimism is conquering the air this week. The lack of major fundamentals has exuberated speculation and powered bears to drive the market lower trailing Asia into losses.
The data from Europe was not that major, yet was positive all in all though no room for the market to move on them especially as they are lagging figures. Employment in the fourth quarter was reported today with a slighter drop than the previous three months, as they contracted by 0.2% following 0.5% drop in the third quarter.
On the year, the employment index was down 2.0% easing the drop from 2.1% the previous quarter. Nonetheless, with the prevailing pessimism and the abysmal GDP figures reported, where the economy slowed the recovery to only 0.1% in the last three months of the year, the figures are not that appealing to the market.
The focus for the European content now is on swelling budget deficit and high debt, with the Finance Ministers getting ready for their two day meeting that start today at 16:00 GMT in Brussels. Markets are pessimistic that the EU will fail yet again on providing a bailout for Greece to aid their strive for shrinking the record budget shortfall.
Though the main pillar they are basing the rejection on is that its too early for aid and Greece is capable of ending the dilemma on its own merits; market are not taking it optimistically for they are assuming the worst for the nation and their failure to commit to the EU rules and their ambitious budget reconstruction plans, especially that they have around $20 billion of debt maturing in April and May.
Nonetheless, taking the dark and silent side behind European closed doors, their failure to agree on the bailout is the feeling that they are not getting enough guarantees from Greece, especially Germany’s vague and reluctant positioning as Merkel called for the aid to begin with is the most reluctant to voice backup for Greece, only because the euro area’s biggest economy fears they will burden the bulk of the price tag on that bailout.
On the other hand, they fear that support and bailout for Greece will ripple into Europe and other nations will be powered to ask for aid and nations then will have to obey. Therefore an unplanned one-time bailout might turn into a support system which is why they are articulating their decision very carefully.
This shadow sentiment of doubt haunts the market and speculators that are the biggest concern for Europe are surely seizing the opportunity and bringing the house down! European equities by 10:30 GMT where trading in the red with major indices covered with losses; the euro area’s gauge the STOXX 50 was down by almost 0.40% at 2886.18, while the aggregate European gauge the STOXX 600 was off by 0.45% at 257.27.
The EU Finance Ministers meeting was not the only cloud raining on the parade today, as further downside pressure was fueled from Asia on expectations for further Chinese monetary tightening, while the other half was Moody’s warning that the UK and the US are still not safe in their “AAA” areas!
Moody’s said that both nations are moving “substantially” closer to losing their “AAA” credit rating based on rising cost for servicing their debt. The managing director for Moody’s sovereign risk in London Pierre Cailleteau said in a telephone interview that both nations should ease their debt burden without a setback for growth by rapid withdrawal of fiscal stimulus.
According to Moody’s presented scenario, the US will spend around 7% of the revenue servicing its debt this year and around 11% in 2013; while UK will spending 6% this year and rise to 9% in 2013. The assumption is based on gradual economic recovery and monetary policy.
Woes over Greece, UK, the US, China and a recovery that is threatened to lose momentum all is haunting the market for now and eyes are pinned on Brussels to see if the euro area finance ministers manage to band the wounds.

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European stocks rally as Barclays profits surge (AFP)

admin — Tue, 16 Feb 2010 17:06:20 +0000

traded higher in the wake of bumper earnings from Barclays, which helped to offset lingering uncertainty over Greece's debt, traders said.
was up 0.81 percent at 5,209.26 points in late morning trade.
Frankfurt DAX 30 increased 0.80 percent to 5,555.23 points and in Paris the
added 0.51 percent to 3,627.56 nearing the half-way mark.
of top eurozone shares grew 0.50 percent in value to reach 2,697.15 points.
“has boosted the whole banking sector,” said Arifa Sheikh-Usmani, equity trader at British firm Spreadex.
British bank Barclays said on Tuesday that net profits had more than doubled to almost 9.4 billion pounds in 2009, largely thanks to the sale of its
(BGI) unit.
, which had bought some of failed US bank
.
“With or without the sale of BGI, the figures are extremely impressive,” said Richard Hunter, head of British equities at
.
“The performance of Barclays Capital was a core contributor to the profit numbers, whilst the impairment levels appear to be under control.”
of Barclays jumped 6.89 percent to 293.95 pence in London, helping to drag its peers higher. And German and French banks also profited from the results, with
up 2.84 percent to 45.4 euros and
gaining 3.03 percent to 40.41 euros.
Meanwhile investors were tracking developments in the Greek debt saga.
On Monday, Greece's fellow eurozone members gave Athens 30 days to slash its national spending to the bone.
Amid doubts that already stringent emergency action barely papers over the cracks, radical new cost-cutting and tax-raising measures are set to be imposed under newly-agreed
voting rules.
However trader Sheikh-Usmani said markets were still awaiting “concrete strategies” for Greece. “As long as that remains the case we may see more selling pressure on these small rallies,” she added.
's benchmark Nikkei-225 index closed up 0.21 percent on Tuesday, while across Asia trading was quiet with many markets shut for the Lunar New Year.
was due to reopen on Tuesday after shutting a day earlier owing to the Presidents' Day national holiday in the United States.

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European Manufacturing Maintains Progress in the New Year

admin — Tue, 02 Feb 2010 13:56:07 +0000

Mon, Feb 1 2010, 10:37 GMT
by ecPulse.com analysis team
The ongoing improvement witnessed in European economies in the last quarter of 2009; where the manufacturing sector continued its expansion at the beginning of the New Year, shown by the data released today.
In the euro area, PMI manufacturing final reading for the month of January rose to 52.4 from 51.6 in December. The reading was boosted by expansion in the largest economies in the euro region.
German manufacturing inclined to 53.7 in January from 52.7 in December; French manufacturing edged up to 55.4 from 54.7. In Italy, the reading pushed up to 51.7 from 50.8.
Although the readings came better than market estimates, the pace of incline is lower than the one seen in the last three months. Analysts are expecting recovery to be slow this year, where the real recovery is expected to take place in 2011.
In January’s bulletin; the governing council predicted the euro area to expand 0.8% in 2010 and 1.2% in 2011. ECB members project the 16-nation region to grow at a moderate pace this year, recognizing that the recovery process is likely to be patchy and that the outlook remains uncertain.
This week, PMI services will be released which may give a whole picture about the status of the largest sectors in the economy in the first month of 2010. If the advancement continued, this may induce the ECB to withdraw stimulus and hike interest rate faster than expected.
Trichet and his economic team left the interest rate unchanged at 1% in January and they will meet this week to set the interest rate for February. Expectations are referring to holding the borrowing cost at its low rate to give an impetus to growth, before unwinding stimulus measures in the second half of the current year.
In the U.K., the progress continued also as PMI manufacturing for January improved to 56.7 from 54.6 a month earlier. The British economy is completing its successful journey towards recovery, ahead of the release PMI services later on this week.
Britain emerged from recession in the fourth quarter as revealed by GDP advanced reading for the fourth quarter, which showed an expansion of 0.1% from the previous contraction of 0.2%. Economists, however, expected the economy to grow more in the fourth quarter after the impressive data recorded during this period.
BoE policy makers will also meet this week to set the interest rate and APF quantity for February after; holding both steady in January at 0.5% and 200 billion pounds.
Probably MPC members do not think to raise the APF program more than the current 200 billion pounds that will end on February 4th, after they left the recession and are showing strong recovery signs. Nevertheless, bank’s estimates of growth and inflation will be released this month, which will mainly detect the bank’s policy in the coming period.
The economy is expected to expand 2.2% in 2010 and 4.1% in 2011, according to policy makers’ projections announced in November. Perhaps the coming period needs wise interventions from the BoE, as King and his team has to tame theskyrocketing budget deficit and inflation as well as spurring growth that is still fragile.

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European Session News Summary

admin — Mon, 01 Feb 2010 11:38:12 +0000

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Europe Ahead: European inflation and unemployment will probably continue rising

admin — Sun, 31 Jan 2010 15:43:38 +0000

Fri, Jan 29 2010, 08:55 GMT
by ecPulse.com analysis team
As a consequence to the improvement witnessed since the third quarter, when the euro area left the recession by growing 0.4% from the previous contraction of 0.2%; theinflation rate shifted to positive areas in November, creeping up towards the bank’s 2% target.
Prices accelerated to 0.9% in December and are expected to continue its rally to 1.2% in January. According to the monthly bulletin for January; ECB members mentioned that “The current rates remain appropriate”, since “inflation is expected to remain moderate over the policy-relevant horizon.”
The euro zone will probably grow in the fourth quarter after impressive data released in the last three months in 2009. PMI manufacturing for December’s final reading rose to 51.6 from 51.2 in November; while PMI services climbed to 53.6 from 53.0 in November.
The economy showed remarkable advancement after the monetary measures adopted by the ECB to stop the economic deterioration. Trichet and his economic team lowered the cost of borrowing to 1%, and introduced 60 billion euros on purchasing bonds to revive growth. In addition, national European governments increased spending which gave another impetus to prices.
These measures boosted prices and removed deflationary pressures that were threatening the economy at the beginning of the crisis. However, there are some factors that may cause prices to ease in the coming period.
The rising unemployment, which jumped from 8.5% in January 2009 to 10.00%, the highest in more than 11 years, in December is perhaps the most challenging for the ECB. Jobless rate is predicted to incline to 10.1% in January, according to analyst forecasts.
Many European companies cut jobs to slash expenses to return to profitability. For instance, Siemens AG announced previously that it has slashed the number of workers from all its affiliates to 408,000 this year from roughlyabout420,000.
At 19.4%, Spain has the highest jobless rate in November across the 16 countries using the unified currency. Spain, which was once described as the catalyst of the euro area’s growth, was severely impacted by the recession that caused housing sector, which was responsible for the boom andshed of many employees.
However, the euro’s depreciation seen in December and January may help prices to edge up. The 16-nation currency dropped to more than five-month low against the dollar in January, after concerns regarding the swelling budget deficit in some European economies, more specifically Greece.
Moreover, analysts are expecting moderate recovery in the first half of the current year and volatility in the second half, after the ECB unwinds its stimulus measures. PMI manufacturing for January advanced reading inclined to 52.0 from 51.6 below estimates, while PMI services slipped to 52.3 from 53.6.
There might be sluggish recovery this year, since the ECB will probably hike interest rate and remove emergency measures in the second half of the year. Also, budget deficit problems in many European economies are raising concerns and are expected to cause recovery to slowdown as governments will be forced to cut spending to rein in budget deficit.
According to Fitch ratings announced on January 26; European governments may need to borrow 2.2 trillion euros from capital markets this year, in order to finance their deficits.
Greece was downgraded by S&P and Fitch and may be subject to further cuts if it could not adjust its deficit. The problem also is occurring in other economies such as Spain and Portugal; thus, the ECB has to take into consideration that recovery is still weak when exiting stimulus.

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European stocks edge higher before US growth data (AFP)

admin — Sat, 30 Jan 2010 17:32:43 +0000

and amid stubborn concerns about Greece's debt crisis, analysts said.
of leading shares added 0.59 percent to 5,176.20 points in late morning deals.
Frankfurt's DAX 30 won 0.76 percent to 5,582.29 points and in Paris the
gained 0.60 percent to 3,710.93.
of top eurozone shares increased by 0.68 percent to reach 2,755.96 points.
, the euro hit a fresh six-month dollar low as worries deepened about the state of European economies in light of Greece's debt woes, dealers said.
The euro sank to 1.3913 dollars — the lowest point since July 14. It later stood at 1.3965 dollars, down from 1.3966 in
late on Thursday.
“Some early bargain hunting has been the main theme … but investors are likely to remain a little cautious as we run up to the US GDP announcement,” said analyst Joshua Raymond at financial spread-betting firm City Index.
“It is the first release of the fourth quarter US GDP and so naturally it will maintain a big focus for investors.
“Considering the jitters that now exist after the last few weeks of heavy equity falls, investors will be looking for a positive figure this afternoon to reaffirm the recovery theme.”
In Asian trade on Friday, Tokyo stocks sank 2.08 percent as investors took their cue from an overnight slump on
and Toyota shares continued their slide.
.
's economic comments in his State of the Union address, where he called for more efforts to create jobs and also ordered caps on spending.
slumped 1.13 percent to finish at 10,120.46 points.
said it no longer viewed Britain's banking system “among the most stable and low-risk” in the world.
among the most stable and low-risk banking systems globally,” S&P had said in a report.
“This is due to our view of the country's weak economic environment, the reputational damage we believe has been experienced by the banking industry, and what we see as the high dependence on state-support programs of a significant proportion of the industry.”

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