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US trade defi cit widens from $39.4bn to $40.4bn in March

admin — Thu, 13 May 2010 02:21:51 +0000

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US equities gained and treasury yields gained, but currency and commodity markets wee mixed. The modest lift in optimism seems to have been inspired by Spain’s announcement of spending cuts worth €15bn, with Portugal expected to follow with their own new targets in the next few days. Also comforting was Portugal’s ability to issue €1bn bonds. The CRB commodities index rose 0.7%, although oil fell 1.2% (inventories reported higher), and copper struggled (-1.0%). Gold made a fresh record high of $1249. US 3mth Libor continued its rise, up 0.7bp to 0.43%. US 10yr treasuries followed equities’ lead and are 4bp higher in yield. The 10yr auction was solid, the yield on market and bids of 3 times the offered amount.

The US dollar index dipped in late Asian trading, but recovered fully in Europe/NY. EUR did the opposite, rising to 1.2740 in Asia, but falling back to 1.2620 in NY. GBP underperformed the majors, after a dovish BoE infl ation report, falling from 1.5050 to 1.4830. USD/JPY ground higher from 92.80 to 93.30.

AUD is little changed from its 0.8910 Sydney close, having tested 0.8980 during Europe.

NZD tested 0.7200 but fell back to 0.7110. AUD/NZD is slightly higher at 1.2535.

US trade defi cit widens from $39.4bn to $40.4bn in March. A 3.2% surge in exports (despite another fall in the lumpy civilian aircraft component) was more than offset by a broad-based 3.1% imports gain, which included a sharp jump in civilian aircraft and oil volumes (but not prices).

Euroland GDP grew 0.2% in Q1, refl ecting a similar sized gain in Germany, but softer 0.1% growth in France and a solid 0.5% bounce in Italy. Back revisions to national data were not incorporated in the fl ash Euroland estimate, so Q4 remains at 0.0% for now, but that may be revised higher when more GDP detail is published on 4/6. Other data included a 1.3% rise in Euroland industrial production in March, the tenth straight monthly gain after the collapse in output in late 2008/early 2009.

Estonia admission to euro approved. This will take place in January 2011, making Estonia the 17th country to adopt the euro (apparently it’s too late for them to back out now!).

Bank of England infl ation report. The BoE still sees infl ation above target for a while, but below 2% by 2012 which is most relevant when setting monetary policy. The Governor said he had seen the broad fi scal plans of the new coalition which included more aggressive budget cuts than committed to by the previous government. These were not included in the Bank’s projections but he welcomed them as they reduced the downside risk that would fl ow from adverse market reaction to lack of progress on the fi scal front.

UK labour market still fragile. Although benefi t claimant count unemployment fell 27k in April, the more respected but less timely household survey found a 53k increase in unemployment in Q1, and a 76k fall in jobs in the quarter.

Canadian trade surplus C$0.3bn in March. This narrower surplus refl ected a modest export fall and a 2% rise in imports. Other data included a 0.3% rise in March new house prices, the ninth in a row.

Outlook

AUD/USD and NZD/USD outlook next 24 hours: Australia’s employment report today poses risks for the AUD, which looks soggy and should remain below 0.9050. The NZD also looks weak in the short term, capped by 0.7200, and more likely to move towards 0.7050.

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Published on Thu, May 13 2010, 04:43 GMT

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Trade Gap Widens in the U.K. on Rapid Rise in Imports

admin — Wed, 12 May 2010 13:21:18 +0000

After the economic recession affected the British economy severely since its start in 2008 causing company’s overseas sales to tumble, thereby resulting in a huge trade deficit, the trade gap widened in March despite recovery in global demand as the rebound in exports was offset by the rise in imports.

In February the trade gap narrowed to 6179 million pounds, the least since June 2006, from the revised 8066 million pounds thanks to exports that climbed the most in seven years boosted by sales of chemicals where the manufacturing sector resumed its expansion.

However, the pace of progress continued in March as today’s data showed that trade deficit widened to 7.5 billion pounds from the revised 6.3 billion pounds. The depreciation in pound enhanced demand for British products but the rise in imports was stronger. Imports climbed 5.2%, the highest in 18 months, to 29 billion pounds led by cars and intermediate goods while exports surged 1% to 21.4 billion pounds only in March.

Moreover, Non-EU trade deficit also increased to 4103 million pounds compared with the revised to 3406 million pounds, while total trade deficit widened to 3.4 billion pounds from the revised 3.4 billion pounds. Probably U.K.’s trade was affected by the fiscal crisis in the euro zone which is considered the largest trading partner to Britain.

As of 08:45 GMT, the pound plummeted versus the dollar to 1.4780 from the day’ low at 1.4822.

Policy makers at the BoE revealed previously that the economy in the coming period is going to depend on exports taking advantage of the pound’s slid against major currencies. The sterling fell more than 7% against the green currency from the beginning of the year till the end of March.

The economy grew 0.4% in the fourth quarter last year followed by 0.2% growth in the first quarter which reflects the improvement witnessed by the economy. Manufacturing and services resumed their expansion in March as a result of recovery in global demand.

Today, British companies continued to release better than expected profits; BT Group posted a rise in operating profit to 1.53 billion pounds from 1.32 billion pounds a year ago and it expects amelioration in revenue and operating profit during the coming three years.

BoE left both key interest rate and APF quantity unchanged in May and probably will keep them steady till the end of the current year. Meanwhile, the main focus of the new government led by Cameron is lowering the huge deficit that reached 12% last year. Cameron is looking forward to reducing the deficit within 50 days by 6 billion pounds. At the same time these cuts should not affect recovery that is gathering momentum. Thus, the coming period is predicted to be challenging to officials; the inflation report released yesterday stated that there are growth risks surrounding the economy.

Published on Thu, May 13 2010, 09:18 GMT

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eBay shares plunge in Frankfurt trade

admin — Wed, 21 Apr 2010 19:48:01 +0000

FRANKFURT (Reuters) – Shares in internet auctioneer eBay (EBAY.O) plunged in Frankfurt floor trade on Thursday, after the company forecast results for the remainder of 2010 below Wall Street expectations.

Asian Markets

By 0712 GMT, Frankfurt-listed shares in eBay (EBAY.F) were down 8.1 percent.

“The forecast for eBay fell short of analysts’ expectations,” a Frankfurt-based trader said.

Qualcomm (QCOM.O), the world’s biggest maker of cellphone chips, also fell 8.6 percent in Frankfurt (QCOM.F), after forecasting lower-than-expected revenue late on Wednesday.

(Reporting by Christoph Steitz)

Asian Markets

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FTSE gains in midday trade (AFP)

admin — Wed, 31 Mar 2010 09:26:24 +0000

LONDON (AFP) – Shares in London rose in late morning trade on Wednesday, the last day of the first quarter, as traders eyed the Easter holiday weekend and upcoming US jobs data.

The FTSE 100, which had slipped at the open, gained 0.24 percent to 5,685.97 points.

Trade has been somewhat subdued before the upcoming Easter break, although investors are awaiting Friday's release of crucial US unemployment data.

“The markets are taking a pause for breath as we have a shortened week,” said ODL Securities analyst Owen Ireland.

“Traders may be sitting on the sidelines until we see the release of non farms on Friday.”

Wall Street edged higher in quiet trade Tuesday as investors digested housing and consumer confidence data and worried about the struggle to recover from the worst global recession in decades.

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Nakheel seen offering sukuk to trade creditors

admin — Sat, 27 Mar 2010 20:16:31 +0000

(Reuters) – Nakheel trade creditors will be offered a large-scale Islamic bond, or sukuk, as part of a debt restructuring plan, a source close to parent firm Dubai World said on Sunday, potentially boosting the region’s sukuk market.
The Dubai government pleasantly surprised the market on Thursday when it offered to pay off Nakheel’s NAKHD.UL upcoming Islamic bonds as part of a wider deal with Dubai World creditors, and offer trade creditors repayment through cash and a publicly tradable security.
That saved the real estate heavyweight from becoming the third high-profile sukuk borrower to formally default in the region, providing relief that could translate into more liquidity down the road.
“A large sukuk issuance will be a positive for the industry, but with Nakheel it’s more an issue of putting this behind us,” said a Gulf-based banker, declining to be identified.
“It’s important to see a big sukuk, but for the Islamic finance industry from a psychological point of view avoiding another default is even more important.”
Nakheel didn’t elaborate on the form of security that would be offered, but is expected to make a separate statement regarding the deal soon.
The source close to Dubai World told Reuters that a sukuk was planned as it could reach a universe of investors from both conventional and Islamic financial institutions.
The size of the bond will depend on the total amount owed to creditors but it is too early to estimate given the difficulty the company and creditors are having in valuing Nakheel’s assets, he said.
Discussions between Nakheel and its creditors will likely continue into April and possibly May, making it unlikely to see an issuance before June, the source said.
Trade creditors comprise Nakheel’s suppliers of goods and services who were not paid immediately, but agreed to the company paying its bills according to various grace periods.
A spokesman for Dubai World DBWLD.UL declined to comment.
“The sukuk is proposed at this time, but other security structures are being considered as we want to ensure that the instrument is as liquid as possible for trade creditors,” a spokeswoman for the Dubai government said on Friday.
The Nakheel restructuring plan fell under Dubai World’s larger proposal to creditors to pay off about $26 billion in debt. Dubai World rocked global markets last November when it said it was unable to meet is obligations.
A $10 billion bailout in December from oil-rich neighbor Abu Dhabi prevented Nakheel from defaulting on a $4.1 billion sukuk.
While it was widely expected that Abu Dhabi would step in once again, the government of Dubai was Nakheel’s savior last week, ahead of its May 13 sukuk payment of $980 million. Under the terms of the restructuring proposal, Nakheel will now be wholly owned by the Dubai government.
A Nakheel default would have served as another black eye for the Islamic finance industry, which experts said was already unfairly blamed for Dubai World’s credit woes.

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Rare China trade deficit not seen signaling new trend

admin — Tue, 23 Mar 2010 01:50:07 +0000

(Reuters) – China will probably run a trade deficit of more than $8 billion in March, state media said on Tuesday, citing Premier Wen Jiabao.
It would be China’s first monthly deficit since April 2004, but is expected to be a one-time blip rather than the start of a new trend for the world’s largest goods-exporting nation.
Nevertheless, many in the market think that Beijing will want to see several consecutive months of strong export growth before allowing the yuan to rise, so a deficit in March could put appreciation on hold for a while longer.
“To be honest, I was happy when I learnt of the situation (of the expected deficit),” Wen told a gathering of foreign business executives in Beijing, according to the China Daily.
“China is by no means seeking a trade surplus. On the contrary, we have left no stone unturned in expanding imports to achieve a trade balance,” he said.
China’s trade surplus has narrowed over the past four months as imports, stoked by surging domestic demand, have grown faster than exports, which have been weighed down by a sluggish global recovery.
But Wensheng Peng and Jian Chang, economists with Barclays Capital in Hong Kong, said that China exhibited a seasonal pattern of smaller trade surpluses in the first quarter of the year.
“It is too early to conclude that China’s trade balance will turn into a deficit on a sustained basis,” they wrote in a note to clients. “Indeed, in our view, that development is unlikely.”
They forecast that China’s trade surplus in 2010 would still reach $186 billion, down a touch from last year’s $196 billion.
The market was little affected by Wen’s talk of a deficit. China’s main stock index
dipped 0.7 percent, while the yuan forwards market remained broadly steady, pricing in 2.3 percent appreciation over the next 12 months.
Speaking to the same audience of foreign executives, Wen said that China did not want “trade and currency wars.
Many members of the U.S. Congress have urged stronger steps from President Barack Obama to press Beijing to let the yuan appreciate. China has in effect re-pegged its currency to the dollar since mid-2008 to cushion its exporters from the global financial crisis.

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China denies yuan behind U.S. trade gap

admin — Mon, 15 Mar 2010 10:39:51 +0000

China denies yuan behind U.S. trade gap
(Reuters) – China on Tuesday shunned mounting U.S. demands for a stronger yuan, saying again that its currency is not the cause of its big trade surplus and vowing to keep the currency stable to shore up exports.
Beijing and Washington appear to be locked in a dialogue of the deaf in the run-up to a U.S. Treasury Department report due on April 15 that will determine whether China is manipulating its exchange rate for trade advantage.
“If the exchange rate issue is politicized, then in coping with the global financial crisis this will be of no help in coordination between the parties involved,” Chinese Commerce Ministry spokesman Yao Jian told a regular news conference.
Yao rejected the argument that China’s hefty trade surplus with the United States was due to the yuan, also called the renminbi, which some U.S. economists judge to be 25 percent or more undervalued.
“The trade surplus is not caused by the renminbi exchange rate. The trade surplus is an outcome and phenomenon of globalization. It will exist for a time,” he said.
Yao’s comments echoed recent ones by Premier Wen Jiabao and other Chinese officials, who have stressed that whatever adjustments may come to the nation’s exchange rate, Beijing does not want to be seen as bowing to foreign pressure.
With the U.S. Treasury decision looming, China faces a tricky test in deciding when to make any currency moves.
Yao was speaking a day after 130 U.S. lawmakers demanded that President Barack Obama get tough with China over its currency practices, which they say undercuts the competitiveness of U.S. manufacturers.
“The impact of China’s currency manipulation on the U.S. economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors,” the legislators said in a letter.
Premier Wen on Sunday dismissed U.S. complaints about China’s exchange rate, calling them counterproductive and saying he did not believe the yuan was undervalued.
If the Treasury does rule that China is manipulating its exchange rate, the U.S. government would be required in principle to start “expedited negotiations” on the issue.
“Adjustment in the renminbi exchange rate will be determined based on national economic conditions, and not because of external market pressures,” Sun Lijian, an economist at Fudan University in Shanghai, told the China Economic Times on Tuesday.
Yao asked rhetorically whether China, which has a trade deficit with Japan, South Korea and some developing countries, should copy the United States and pass a law to deal with those countries.
“So we hope that in surmounting the crisis and reviving its economy, the United States should be a promoter of free trade, not an obstacle to it,” he said.
The United States’ annual trade gap with China fell to $226.8 billion in 2009, down from a record $268.0 billion in 2008. But with the Obama administration keen to lift exports and employment, the deficit remains a point of friction between the two powers, which have also recently been at odds over human rights, Tibet and U.S. arms sales to Taiwan.
Wen on Sunday recommitted China to pushing ahead with reform of the yuan’s exchange rate mechanism, leaving the door open to reintroducing exchange rate flexibility if it suits Beijing.
China has kept the yuan pegged around 6.83 per dollar since July 2008 to help its exporters, and Yao, the Commerce Ministry spokesman, said stability would remain the watchword in 2010.
“We have no reason at all to view the future market with unfettered optimism,” he said of the outlook for exports.
“So we will keep our economic and trade policies, including exchange rate policies and export tax rebates, stable this year,” he added.

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FTSE flat in late-morning trade (AFP)

admin — Thu, 25 Feb 2010 17:52:10 +0000

LONDON (AFP) –
The FTSE 100 was flat in late morning trade, tracking earlier losses in Asia and overnight on
, amid fresh doubts about the pace of global economic recovery, dealers said.
The benchmark index gained 0.07 percent to 5,319.04 points. It had gained 0.15 percent in opening trade.
.
Bernanke is expected to shed light on last week's decision by the central bank to hike interest charged on short-term emergency loans to banks.
.
Greece's debt woes also continued to weigh on the markets as the government struggles with a crisis that has shaken the eurozone.

us.rd.yahoo.com

FTSE rises 0.18% in late morning trade (AFP)

admin — Thu, 04 Feb 2010 01:45:28 +0000

LONDON (AFP) –
Shares in London rose slightly in late morning trade on Wednesday, rising 0.18 percent to 5,292.36.
continued on the front foot with indices rallying in early trade, led by the miners and banking stocks,” said Joshua Raymond, analyst at financial spread-betting firm City Index.
“With the US markets continuing to rally into the close last night and Asia markets climbing early this morning, this positivity has largely continued into the European session.”
of leading shares had closed higher on Tuesday on the back of a strong showing by mining stocks.
The index had ended 0.68 percent higher at 5,283.31 points.

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Trade ministers downbeat on WTO prospects

admin — Sat, 30 Jan 2010 00:10:43 +0000

DAVOS, Switzerland (Reuters) – Trade ministers were skeptical on Saturday about the prospects of concluding stalled global trade liberalization talks this year, with some blaming the United States for foot-dragging.
Ministers from about 20 major economies held informal talks on the sidelines of the annual World Economic Forum meeting in the Swiss ski resort of Davos, but Washington only sent a deputy ambassador and no political representative.
“We would like to see the (Doha) round completed as soon as possible, but for that everybody will have to be there,” European Union Trade Commissioner Benita Ferrero-Waldner said.
Brazilian Foreign Minister Celso Amorim told reporters: “We cannot expect more than that because of course one of the main partners is not represented at a ministerial level.
“We have come to a point when it is the question of political will,” he said on arrival for the meeting.
Leaders of the G20 grouping of major economies, including President Barack Obama, agreed in Pittsburgh last September on the goal of wrapping up the Doha round of World Trade Organization negotiations in 2010.
But there has been scant progress since then and many participants say domestic politics and the impact of the financial crisis and high unemployment in the United States and Europe have made chances of an early trade deal more remote.
“All the indications are that it’s an incredibly controversial matter in the U.S. Congress and I don’t think they have yet defined a sustainable approach to conclude the round,” South African Trade Minister Rob Davies told Reuters on Friday.
Davies cited mid-term U.S. congressional elections and Brazil’s presidential poll as among the political obstacles.
The long-running 153-nation talks collapsed in 2008 over a dispute between the United States, India and China on protection for farmers in developing countries. Other unresolved issues include cotton subsidies, trade in services and in environmental goods and services.
“If I’m one of those who lives to be a 100, I hope we are not still trying to conclude the Doha trade round then,” Australian Trade Minister Simon Crean joked.
WTO Director-General Pascal Lamy told reporters he was encouraged that there had been no retreat into protectionism so far in the global recession, but the political momentum to make the final trade-offs needed in the Doha Development Round, launched in 2001, had still not materialized.
The Obama administration has said big emerging economies such as China, India and Brazil must open their markets more to make a global trade deal worthwhile for U.S. business.
Swiss President Doris Leuthard chaired Saturday’s annual session, for which Switzerland had prepared a list of outstanding issues to be resolved, including her own country’s interests in protecting farmers and food and wine appellations.
But participants said the Swiss checklist was too detailed for ministers to engage on, and they would focus on the domestic politics of trade liberalization, and on the impact of climate change negotiations on trade.
Senior officials are due to conduct a stocktaking exercise in late March to see if an outline WTO deal is possible this year, and participants said no one would want to put negotiating cards on the table at this stage.
New Zealand’s Trade Minister Tim Groser, who is also conservation minister, and Brazil’s Amorim were to brief ministers on last month’s Copenhagen climate negotiations and their implications for trade.
“Clearly it’s very unlikely we’ll get a breakthrough at this meeting, but I hope we can create some understanding so at the minimum we keep the show on the road,” Groser told reporters.
“We’re stuck in the mud.”
, writing by Paul Taylor, editing by Hans Peters)

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