Stock Market Update - Tuesday, November 16, 2010 - Caution Trend Change
Stock Market Update
Tuesday, November 16, 2010
Latest US Economic News Headlines:
USA EQUITY INDEXES: (NOV. 16, 4:05 PM EST)
Dow Jones 11,023.50 -178.47 (-1.59%)
S&P 500 1,178.34 -19.41 (-1.62%)
Nasdaq 2,469.84 -43.98 (-1.75%)
S&P 500 1,178.34 -19.41 (-1.62%)
Nasdaq 2,469.84 -43.98 (-1.75%)
Dow Jones CLOSING Averages: DJIA 11,023.50 DN 178.47
30 INDUS 11,023.50 DN 178.47 OR 1.59%
20 TRANSP 4,749.99 DN 70.47 OR 1.46%
15 UTILS 397.29 DN 4.57 OR 1.14%
65 STOCKS 3,832.53 DN 57.30 OR 1.47%
US COMMODITY PRICES: (NOV. 16, 4:05 PM EST)
Crude Oil 82.11 - 0.28%Natural Gas 3.82 -
Gasoline 2.15 -
Heating Oil 2.31 -
Gold 1341.65 - 1.38%
Silver 25.46 - 0.27%
Copper 3.71 - 5.35%
US DOLLAR FUTURES INDEX DXY: NOV. 16, 4:00PM EST: 79.23 Up 0.71 (0.91%)
US Stocks Drop
Dollar Grows
Stocks declined Tuesday. The indexes and commodities are broadly lower against the dollar's gain. The volatility index VIX climbed to 23 at mid-day.
U.S. stocks dropped in their biggest one-day drop in nearly a month . The Dow Jones Industrial Average earlier dipped below the 11000 level, and was recently down 190 points, or 1.7%, at 11012. The Dow hasn't closed below 11000 since Oct. 19, when the measure fell 2%.The Nasdaq Composite dropped 1.7% to 2472, while the Standard & Poor's 500-stock index fell 1.7% to 1177.
The potential for a new round of bailouts in the European Union fueled unease over the global economy. The Dow is trading down 163 pts to 11038, the S&P is off 8 pts to 1189, and the Nasdaq has dropped 15 pts to 2498.
Before the bell, U.S. stock index futures fell on Tuesday on continued concerns over a possible interest rate hike in China and sovereign debt woes in Europe. U.S. stocks were set to open sharply lower Tuesday, as investors digested mixed earnings reports from Home Depot and Walmart.
Concerns about the European economy also continue to underpin an already jittery market. Wall Street was poised for a sizable drop at the open -- Dow futures were down 65 points at 11,108 while the broader Standard & Poor's 500 futures fell 6.7 points to 1,189.10.
U.S. stocks dropped in their biggest one-day drop in nearly a month . The Dow Jones Industrial Average earlier dipped below the 11000 level, and was recently down 190 points, or 1.7%, at 11012. The Dow hasn't closed below 11000 since Oct. 19, when the measure fell 2%.The Nasdaq Composite dropped 1.7% to 2472, while the Standard & Poor's 500-stock index fell 1.7% to 1177.
The potential for a new round of bailouts in the European Union fueled unease over the global economy. The Dow is trading down 163 pts to 11038, the S&P is off 8 pts to 1189, and the Nasdaq has dropped 15 pts to 2498.
Before the bell, U.S. stock index futures fell on Tuesday on continued concerns over a possible interest rate hike in China and sovereign debt woes in Europe. U.S. stocks were set to open sharply lower Tuesday, as investors digested mixed earnings reports from Home Depot and Walmart.
Concerns about the European economy also continue to underpin an already jittery market. Wall Street was poised for a sizable drop at the open -- Dow futures were down 65 points at 11,108 while the broader Standard & Poor's 500 futures fell 6.7 points to 1,189.10.
The US Dollar cautiously moved back up to yesterday's close before the market open in the US. The euro briefly hit six-week lows against the dollar on Tuesday and Asian stocks slid as concerns Ireland may not repay its debt encouraged investors to take profits after a strong autumn rally.
PRODUCER COSTS UP
U.S. October Producer Prices Rise - Industrial Output Flat
U.S. producer prices rose in October on higher oil costs, but underlying wholesale prices posted the biggest decline since July 2006 as a weak economy kept pipeline inflation at bay.
For the 12 months ended in October, the producer price index rose by 4.3%, accelerating from a 4.0% annual increase in September on the back of higher energy prices.
Separately, industrial output was flat last month as a decline in utilities production on the back of mild weather outweighed gains in the manufacturing sector.
Stripping out more-volatile food and energy inflation factor, wholesale prices declined by 0.6% in October. Measures of non-food and energy inflation have continued to slow in recent months, especially those net of food and energy items that are closely watched by the Federal Reserve.
The National Association of Home Builders on Tuesday said its housing market index rose to 16 in November. That increase, however, was from a downwardly revised reading of 15 a month earlier. The NAHB originally estimated confidence in October at 16.
PRODUCER COSTS UP
U.S. October Producer Prices Rise - Industrial Output Flat
U.S. producer prices rose in October on higher oil costs, but underlying wholesale prices posted the biggest decline since July 2006 as a weak economy kept pipeline inflation at bay.
For the 12 months ended in October, the producer price index rose by 4.3%, accelerating from a 4.0% annual increase in September on the back of higher energy prices.
Separately, industrial output was flat last month as a decline in utilities production on the back of mild weather outweighed gains in the manufacturing sector.
Stripping out more-volatile food and energy inflation factor, wholesale prices declined by 0.6% in October. Measures of non-food and energy inflation have continued to slow in recent months, especially those net of food and energy items that are closely watched by the Federal Reserve.
HOME BUILDERS SEE DECLINE
US Home Builder Confidence Misses ExpectationsThe National Association of Home Builders on Tuesday said its housing market index rose to 16 in November. That increase, however, was from a downwardly revised reading of 15 a month earlier. The NAHB originally estimated confidence in October at 16.
The gauge measures builders' outlook for single-family home sales. The NAHB based its survey results on 420 builders. The numbers used in compiling the index are adjusted for seasonal variations. A number of 50 in the NAHB index would mean more builders view conditions as good than as poor.
The report showed current sales conditions held at 16. But sales expectations over the next six months rose to the highest since May, to 25 from 23. Traffic of prospective buyers crept higher, to 12 from 11.
U.S. PRODUCER PRICES UP 0.4%
SHORT OF EXPECTATIONSU.S. producer prices show a 0.4% rise for October, below expectations of a 0.9% increase, and underlying wholesale prices post the biggest decline since July 2006, indicating disinflation pressures remain in the economy.
EQUITIES:
Alcoa was among the worst performing stocks of the Dow's 30 components, falling 3.1%. Dick's Sporting Goods rose 13% after its profit fell 11% in the third quarter as a result of store-closing costs, but the sporting-goods retailer's earnings beat analysts' estimates on margins and higher same-store sales. The company also raised its annual profit target and outlook for its fourth-quarter earnings per share.
Teen-apparel retailer Abercrombie & Fitch fell 1.4% after its fiscal third-quarter profit rose 29%, topping Wall Street expectations, but its margins narrowed.
Chinese online-game developer Perfect World plunged 18% after its third-quarter profit dropped on weakness in its online game operations.
Citigroup cut its stock rating on the company to sell from buy, saying a margin rebound is unlikely in the near term thanks to higher research and development costs and spending.
General Motors to Boost IPO Price By 14%
GM increased the size of its convertible preferred stock offering by $1 billion on Tuesday, strengthening the automaker's balance sheet.
GM increased the size of its convertible preferred stock offering by $1 billion on Tuesday, strengthening the automaker's balance sheet.
BLACKSTONE BOOSTS DYNEGY TAKEOVER OFFER
Blackstone Group has increased its takeover offer for Dynegy by 11% just one day before Dynegy holders are due to vote on what was a $542 million buyout bid. Dynegy shares rise 7%. Home Depot Net up 21%
Home Depot Inc. said Tuesday a tight lid on expenses helped the largest U.S. home-improvement retailer's third-quarter net income rise 21% percent, despite a lackluster 1 percent revenue increase as home owners continue to hold back on bigger retail purchases.
Home Depot Inc. said Tuesday a tight lid on expenses helped the largest U.S. home-improvement retailer's third-quarter net income rise 21% percent, despite a lackluster 1 percent revenue increase as home owners continue to hold back on bigger retail purchases.
WAL-MART PROFITS RISE
Wal-Mart(WMT), the world's biggest retailer, raised its full-year earnings guidance to a range of $4.08 to $4.12 a share. Fiscal third-quarter earnings rose 9.3% as U.S. same-store sales fell for a sixth straight quarter. International operations again drove better results. Wal-Mart Stores Inc posted a higher quarterly profit and raised its full-year earnings forecast, but U.S. same-store sales declined as its shoppers remain under pressure.
October CPI, PPI Seen Up In October
Measures of wholesale and consumer inflation likely rose for October, according to economists surveyed by Briefing.com. The Producer Price Index, to be released Tuesday, and Consumer Price Index, out Wednesday, are expected to rise 0.7% and 0.3%, respectively. For September, the PPI grew 0.4% and the CPI ticked up 0.1%.
The government will report October industrial-production figures Tuesday.
CRUDE OIL:
U.S. Crude Oil: $82.57 per barrel
OIL FUTURES: Nymex Crude Settles Down $2.52 At $82.34/Bbl
Light, sweet crude for December delivery settled down $2.52, or 3%, at $82.34 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 29. Brent crude on the ICE futures exchange recently fell $2.15, or 2.5%, to $84.61 a barrel.
Oil prices have been restrained by above-average inventory levels recently, but the DOE reported a hefty decline in oil stocks in last week's report, signaling that stockpiles may have peaked.
Front-month December reformulated gasoline blend-stock, or RBOB, recently declined 5.10 cents, or 2.3%, at $2.1440 a gallon. December heating oil fell 5.59 cents, or 2.4%, at $2.3150 a gallon.
Light, sweet crude for December delivery settled down $2.52, or 3%, at $82.34 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 29. Brent crude on the ICE futures exchange recently fell $2.15, or 2.5%, to $84.61 a barrel.
Oil prices have been restrained by above-average inventory levels recently, but the DOE reported a hefty decline in oil stocks in last week's report, signaling that stockpiles may have peaked.
Front-month December reformulated gasoline blend-stock, or RBOB, recently declined 5.10 cents, or 2.3%, at $2.1440 a gallon. December heating oil fell 5.59 cents, or 2.4%, at $2.3150 a gallon.
NATURAL GAS:
Natural Gas: $3.79
US GAS: Futures Settle Down 0.7% At $3.818/MMBtu
PRECIOUS METALS:
Gold: $1,334
Silver:$ 25.21
Gold slipped Tuesday as the dollar broke above Tuesday's high and the exchange where it is traded planned to raise the margin required for buying and selling the metal.
A sharply strengthening dollar was also weighing on gold by making the dollar-denominated metal more expensive for buyers using other currencies. The ICE Futures U.S. Dollar Index was recently up 0.9%.
Margins to initiate trading on a benchmark 100-ounce gold futures contract will increase to $6,075 from $5,739 and margins to hold those contracts overnight will go to $4,500 from $4,251, effective after the close of business Tuesday.
Initial margins for platinum and palladium will rise to $4,950 from $4,125, and maintenance margins will increase to $4,500 from $3,750.
Last week, the exchange announced that traders will be required to put up $6,500 in margin to hold a benchmark 5,000-ounce silver contract overnight. The previous margin was $5,000. Initial margins went to $9,788 from $8,775. Gold and silver fell sharply on the news.
The most actively traded gold contract, for December delivery, was recently down $14.30, or 1%, at $1,354.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
U.S. TREASURYS/BONDS:
At 3:32 p.m. EST, the benchmark 10-year Treasury note was 31/32 higher to yield 2.847%. The 30-year bond was 2 16/32 higher to yield 4.263%.
3 Month 0.12% +0.01 (9.09%)
6 Month 0.17% 0.00 (0.00%)
2 Year 0.50% 0.00 (0.00%)
5 Year 1.46% -0.02 (-1.35%)
10 Year 2.83% -0.06 (-2.08%)
30 Year 4.27% -0.06 (-1.39%)
3 Month 0.12% +0.01 (9.09%)
6 Month 0.17% 0.00 (0.00%)
2 Year 0.50% 0.00 (0.00%)
5 Year 1.46% -0.02 (-1.35%)
10 Year 2.83% -0.06 (-2.08%)
30 Year 4.27% -0.06 (-1.39%)
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Canadian Market:
Canadian Stocks Fall
The US Dollar value rise Tuesday hammered commodities causing Toronto material and energy providers stocks to decline. At 11:45 a.m. EST (1645 GMT), the S&P/TSX Composite Index was down 231.81 points, or 1.82%, at 12503.60 and declines led advances 1198 to 270. Trading volume was 303.90 million shares. The S&P/TSX 60 Index was down 12.54 points, or 1.72%, to 717.70 points.
Toronto Indexes, Volume; 3 PM EST Composite Down 175.05
S&P/TSX Composite 12650.36 off 175.05 or 1.4%
S&P/TSX 60 Index 720.89 off 9.35 or 1.3%
Financials 176.57 off 1.66 or 0.9%
Materials 403.82 off 7.72 or 1.9%
Energy 290.58 off 6.37 or 2.1%
Industrials 105.62 off 0.93 or 0.9%
IT 29.82 off 0.26 or 0.9%
Volume Tuesday Monday
2-3 86.5M 46.1M
9:30-3 518.9M 343.4M
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South American Markets:
BRAZIL:
BRAZIL PRE-SOLD SOY CROP
Brazil's upcoming 2010-11 soy crop was 31% sold as of last Friday, local agricultural consultancy Celeres said in a weekly report.
Celeres said in the report issued Tuesday that Brazil saw sales rise from 29% the week before and 19% at the same time a year ago as soybean prices remain high.
Farmers in Brazil, which is the world's No. 2 soy producer after the U.S., did substantial trade last week for their new soy crop due to high international prices, Celeres said.
On Tuesday, Chicago Board of Trade soybean futures for January delivery settled down 63 cents, or 4.9%, at $12.23 a bushel.
Farmers in Mato Grosso, Brazil's No. 1 soy-producing state, sold 45% of their 2010-11 soy as of Friday, compared with 43% in the prior week and 25% a year ago, Celeres said.
In Parana, the country's No. 2 soy-producing state, farmers sold 27% of their beans as of Friday. This compares with 24% in the previous week and 11% a year ago, the report said.
Celeres said that 97% of the 2009-10 crop was sold as of Friday, compared with 96% in the previous week and 97% at the same time a year ago. Brazil finished harvesting the 2009-10 soy crop in May.
Brazil's farmers planted 61% of the 2010-11 soybeans as of Friday, compared with 45% in the prior week and 62% a year ago.
ARGENTINA:
Argentina Set To Export 5M Tons Of Corn
Argentina's Agriculture Ministry is poised to issue a decree authorizing the export of 5 million metric tons of new-crop corn, the first permits to be issued for the crop coming to market in March, a government source said Tuesday.
The decision followed a meeting with representatives from the farm sector, where an agreement was reached to release the initial tranche, the source said on conditions of anonymity.
Argentina tightly regulates corn and wheat exports, granting export permits only once domestic stocks have been covered. Argentina is No. 2 in the world in corn exports, No. 3 in soybean exports and is the leader in soymeal and soyoil exports.
According to the Agriculture Ministry, corn production is set to hit a record 26 million tons. That would be up sharply from the 22.5 million tons grown last year, according to the U.S. Department of Agriculture.
If that production is confirmed, Argentina will likely end up exporting 18.5 million tons of corn from the crop, according to the ministry.
During 2009, the top buyers of Argentine corn exports were Iran, Algeria, Colombia, Egypt and Peru. However, the government is currently in talks to open corn exports to China. China has traditionally been a big corn exporter, but drought problems last season and soaring demand saw China import this year. Argentina and China are currently working on an agreement on sanitary standards necessary before corn sales can be made.
Some analysts expect China to continue to be a corn importer in the coming years, opening up big market potential for Argentine sales to China, as well as major corn importers Japan and Korea, which have traditionally relied on China to satisfy their needs.
Wheat exports are expected to reach at least 5.5 million metric tons from the 2010-11 crop, the source said, confirming earlier estimates from the Agriculture Ministry.
Production of the crop, which has just begun to be harvested, is expected to reach at least 13 million tons. Yields are high after steady showers through much of the growing season and exports could reach as much as 7 million tons. Brazil traditionally buys the bulk of Argentina's wheat exports.
With crop conditions very good so far this season, total grain production is expected to top 103 million metric tons during the 2010-11 season, up sharply from the previous record of 93 million tons a year earlier, according to the Agriculture Ministry.
CHILE:
Chile Central Bank Raises Key Rate 25BPs To 3% As Expected
Chile Stocks End 1.3% Lower
The Ipsa ended sharply lower at 4891.11, while market volume grew to 146.9 billion Chilean pesos ($302.4 million), versus CLP64.3 billion the previous session.
The peso closed weaker versus the dollar as the euro retreated into negative territory against the dollar which made marked gains in world markets Tuesday. The peso ended at CLP485.70 to the dollar, versus Monday's close of CLP482.40, while trading in a range of CLP482.70 to CLP486.20.
Stock volume rose higher following the auction of 34 million shares of Chilean information technology firm Sonda (SONDA.SN), equivalent to a 4.4% stake in the company. After the auction, which raised CLP36.04 billion, Sonda ended 1.3% lower at CLP1,061.00.
Commodities-related companies in Chile were among the biggest decliners after copper futures in New York plunged 5%.
Among commodities-related companies, integrated steel and iron-ore producer Cap (CAP.SN) shed 2.0% to CLP24,806.00; pulp and paper producer CMPC (CMPC.SN) fell 2.5% to CLP26,399.00 and specialty chemical and fertilizer producer SQM's (SQM) more liquid B-series shares fell 1.3% to CLP23,989.00.
Retailers also fell hard, as they have been among the Ipsa's largest gainers and have fueled the market's record run this year.
Within that sector, retail holding giant Cencosud (CENCOSUD.SN) lost 2.3% to CLP3,428.70, department store Falabella (FALABELLA.SN) declined 1.4% to CLP4,761.60 and retailer La Polar (LAPOLAR.SN) fell 3.1% to CLP3,526.40.
PERU:
PERU'S SEPT. GDP JUMPS
Peru's 2010 GDP Forecasts Seen Higher On September Growth
As 2010 draws to a close, economic forecasts for Peru's growth are being raised, with some analysts predicting growth of 8.7%, following Monday's news that September's gross domestic product expanded by 10.41%.
On Tuesday, the Central Reserve Bank of Peru's general manager Renzo Rossini said that he expects the country's GDP to expand by 8.7% or more this year.
Separately, Finance Minister Ismael Benavides repeated his 2010 GDP growth forecast of about 8.5%, despite the fact that the finance ministry's most recent overall macroeconomic report holds the full year forecast at 6.8%.
Private-sector economists are also increasing their growth forecasts.
Deutsche Bank said Tuesday it was "revising upward" Peru's growth for this year to 8.6% from 8%. It said the increase was based on September's strong GDP growth as well as "recent economic performance."
On Monday Renan Quispe, head of the government's National Statistics Institute, statistics agency said that growth in September was again being driven mainly by construction and manufacturing. He described construction activity as "intense" at a press conference.
Such an increase, say some analysts, shows strong private sector investment, while others point to the number of public works projects that are under way in the lead up to next year's general elections.
Credit Suisse said Tuesday it was increasing its 2010 GDP growth forecast to 8% from 7.5%, based on the new data.
Scotiabank said GDP should expand by 7.8% in the fourth quarter, an increase from its previous forecast of 6.5% growth. It pointed to electricity production--a proxy for economic activity--as expanding 9.5% in October, greater than the 7.8% growth in September's electricity output.
The first nine months of the year Peru's GDP rose 8.72%, over the same period a year earlier, while the expectation for third quarter growth is about 9.66%. The exact quarterly figure should be released towards the end of November. Peru's economy rose by slightly less than 1.0% in 2009.
As 2010 draws to a close, economic forecasts for Peru's growth are being raised, with some analysts predicting growth of 8.7%, following Monday's news that September's gross domestic product expanded by 10.41%.
On Tuesday, the Central Reserve Bank of Peru's general manager Renzo Rossini said that he expects the country's GDP to expand by 8.7% or more this year.
Separately, Finance Minister Ismael Benavides repeated his 2010 GDP growth forecast of about 8.5%, despite the fact that the finance ministry's most recent overall macroeconomic report holds the full year forecast at 6.8%.
Private-sector economists are also increasing their growth forecasts.
Deutsche Bank said Tuesday it was "revising upward" Peru's growth for this year to 8.6% from 8%. It said the increase was based on September's strong GDP growth as well as "recent economic performance."
On Monday Renan Quispe, head of the government's National Statistics Institute, statistics agency said that growth in September was again being driven mainly by construction and manufacturing. He described construction activity as "intense" at a press conference.
Such an increase, say some analysts, shows strong private sector investment, while others point to the number of public works projects that are under way in the lead up to next year's general elections.
Credit Suisse said Tuesday it was increasing its 2010 GDP growth forecast to 8% from 7.5%, based on the new data.
Scotiabank said GDP should expand by 7.8% in the fourth quarter, an increase from its previous forecast of 6.5% growth. It pointed to electricity production--a proxy for economic activity--as expanding 9.5% in October, greater than the 7.8% growth in September's electricity output.
The first nine months of the year Peru's GDP rose 8.72%, over the same period a year earlier, while the expectation for third quarter growth is about 9.66%. The exact quarterly figure should be released towards the end of November. Peru's economy rose by slightly less than 1.0% in 2009.
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European Markets:
European stocks ended sharply lower Tuesday, with financial and mining shares getting particularly hard hit, after worries about the Chinese economy and uncertainty over whether Ireland will accept a bailout sparked a sell-off.
The Stoxx Europe 600 index dropped 2.3% to close at 265.98.
The Stoxx Europe 600 index dropped 2.3% to close at 265.98.
As the US Dollar climbed past yesterday's close mining stocks led the decline after fears of an interest-rate hike returned to haunt the Chinese market, weighing on commodity prices.
Ireland Discusses Bailout
Ireland Discusses Bailout
EU Struggles With Debt Crisis
The Irish Prime Minister, Brian Cowan, has addressed parliament. He told ministers his country was working with European partners to deal with the debt issue. He also reiterated that the Republic of Ireland had not asked for bail-out money and that the Irish economy was well funded until next year.
Mr Rehn earlier confirmed the Irish government, the European Commission, the European Central Bank and the IMF were meeting to discuss the country's "serious banking problems".
Irish Prime Minister Brian Cowen said Tuesday he is prepared to work with his European counterparts "to normalize market conditions," but reiterated that Ireland hasn't applied for external financial assistance.
The Governor of the Bank of England, Mervyn King, called the current discussions "very delicate".
Appearing before a committee in the UK House of Lords, Mr King confirmed that the Bank of England was feeding in comments to that process, but refused to say more publicly.
Earlier, the EU Council president, Herman Van Rompuy, warned that the European Union was in a "survival crisis" over eurozone debt problems, as the economic health of members such as the Republic of Ireland and Portugal come under fresh scrutiny.
Ireland was in talks over a financial rescue as European Union leaders battled to shield Portugal from the resurgent debt crisis and doubts surfaced over Greece’s economic health.
“We are in a survival crisis,” EU President Herman Van Rompuy said at the European Policy Centre in Brussels today. “If we don’t survive with the euro zone we will not survive with the European Union.”
Public clashes among EU officials over how to defuse Europe’s debt bomb marked a new stage in the crisis triggered by Greece’s near-default in May that forced the EU to set up a 750 billion-euro ($1 trillion) rescue fund to keep the euro intact. A European Central Bank official threatened an end to its economy-boosting measures.
Irish bonds fell, reversing a two-day rally, on concern that European finance ministers might fail to strike a deal at a meeting in Brussels that started at 5 p.m. today. The euro slid 0.3 percent to $1.3549.
“We are discussing with both the ECB and the IMF and of course the Irish,” EU Economic and Monetary Affairs Commissioner Olli Rehn said on his way into the meeting. “The real problems are in the banking sector,” not with the government, “but these are connected.”
Ireland is negotiating with the EU and International Monetary Fund about aid to shore up the state’s finances, furnish capital for the country’s banks and spare it from tapping the bond market for an extended period, the European official said on condition of anonymity. Spokesmen for the Irish central bank and Finance Ministry declined to comment.
Irish Yields Rise
The aid package may total about 80 billion euros, according to Barclays Capital.
The yield on Ireland’s 10-year bond rose 28 basis points to 8.44 percent. The extra yield over German bunds rose to 561 basis points from 540 basis points yesterday. The spread, a measure of the risk of investing in Ireland, peaked at 646 basis points on Nov. 11.
The Greek criticism drew a German rebuke today. “When I heard the comments by the Greek prime minister I thought, with all due respect, that Greece has enjoyed a lot of European and German solidarity,” German Finance Minister Wolfgang Schaeuble said before the Brussels meeting. “But solidarity is not a one- way street. That shouldn’t be forgotten in Greece.”
The German demands reflected a revolt by taxpayers in richer EU countries against underwriting fiscally unsound governments at a time of 10.1 percent euro-area unemployment. Finland insisted today that Ireland be forced to put up collateral for any aid.
Austrian Finance Minister Josef Proell said he is considering withholding the country’s share of the next part of Greece’s 110-billion euro rescue, saying the Athens government missed a revenue-raising target.
That disclosure triggered losses in Greek bonds, pushing the extra yield over 10-year German bonds up by 12 basis points to 898 basis points.
The Irish Prime Minister, Brian Cowan, has addressed parliament. He told ministers his country was working with European partners to deal with the debt issue. He also reiterated that the Republic of Ireland had not asked for bail-out money and that the Irish economy was well funded until next year.
Mr Rehn earlier confirmed the Irish government, the European Commission, the European Central Bank and the IMF were meeting to discuss the country's "serious banking problems".
Irish Prime Minister Brian Cowen said Tuesday he is prepared to work with his European counterparts "to normalize market conditions," but reiterated that Ireland hasn't applied for external financial assistance.
The Governor of the Bank of England, Mervyn King, called the current discussions "very delicate".
Appearing before a committee in the UK House of Lords, Mr King confirmed that the Bank of England was feeding in comments to that process, but refused to say more publicly.
Earlier, the EU Council president, Herman Van Rompuy, warned that the European Union was in a "survival crisis" over eurozone debt problems, as the economic health of members such as the Republic of Ireland and Portugal come under fresh scrutiny.
Ireland was in talks over a financial rescue as European Union leaders battled to shield Portugal from the resurgent debt crisis and doubts surfaced over Greece’s economic health.
“We are in a survival crisis,” EU President Herman Van Rompuy said at the European Policy Centre in Brussels today. “If we don’t survive with the euro zone we will not survive with the European Union.”
Public clashes among EU officials over how to defuse Europe’s debt bomb marked a new stage in the crisis triggered by Greece’s near-default in May that forced the EU to set up a 750 billion-euro ($1 trillion) rescue fund to keep the euro intact. A European Central Bank official threatened an end to its economy-boosting measures.
Irish bonds fell, reversing a two-day rally, on concern that European finance ministers might fail to strike a deal at a meeting in Brussels that started at 5 p.m. today. The euro slid 0.3 percent to $1.3549.
“We are discussing with both the ECB and the IMF and of course the Irish,” EU Economic and Monetary Affairs Commissioner Olli Rehn said on his way into the meeting. “The real problems are in the banking sector,” not with the government, “but these are connected.”
Ireland is negotiating with the EU and International Monetary Fund about aid to shore up the state’s finances, furnish capital for the country’s banks and spare it from tapping the bond market for an extended period, the European official said on condition of anonymity. Spokesmen for the Irish central bank and Finance Ministry declined to comment.
Irish Yields Rise
The aid package may total about 80 billion euros, according to Barclays Capital.
The yield on Ireland’s 10-year bond rose 28 basis points to 8.44 percent. The extra yield over German bunds rose to 561 basis points from 540 basis points yesterday. The spread, a measure of the risk of investing in Ireland, peaked at 646 basis points on Nov. 11.
The Greek criticism drew a German rebuke today. “When I heard the comments by the Greek prime minister I thought, with all due respect, that Greece has enjoyed a lot of European and German solidarity,” German Finance Minister Wolfgang Schaeuble said before the Brussels meeting. “But solidarity is not a one- way street. That shouldn’t be forgotten in Greece.”
The German demands reflected a revolt by taxpayers in richer EU countries against underwriting fiscally unsound governments at a time of 10.1 percent euro-area unemployment. Finland insisted today that Ireland be forced to put up collateral for any aid.
Austrian Finance Minister Josef Proell said he is considering withholding the country’s share of the next part of Greece’s 110-billion euro rescue, saying the Athens government missed a revenue-raising target.
That disclosure triggered losses in Greek bonds, pushing the extra yield over 10-year German bonds up by 12 basis points to 898 basis points.
Irish Debt Woes Weigh on Euro and Stocks
Uncertainty over whether Ireland, faced with record borrowing costs, needs to be bailed out by its euro zone partners to pay its debts also did little for the market mood.
As it is, Ireland's woes have raised borrowing costs for other fiscally strapped euro zone nations such as Spain and Portugal. Euro zone officials are set to meet later to try to find a way to end Ireland's debt crisis.
The euro fell as far as $1.3560 at one point, but clawed back by late trade after dovish remarks from a Federal Reserve official nudged the dollar lower.
As it is, Ireland's woes have raised borrowing costs for other fiscally strapped euro zone nations such as Spain and Portugal. Euro zone officials are set to meet later to try to find a way to end Ireland's debt crisis.
The euro fell as far as $1.3560 at one point, but clawed back by late trade after dovish remarks from a Federal Reserve official nudged the dollar lower.
GERMANY:
The DAX 30 index dropped 1.9% to 6,663.24.
FRANCE:
The CAC 40 fell 2.6% to 3,762.47
IRELAND:
Ireland's ISEQ index dropped Ending -1.7% At 2,652; AIB -3.4%, as euro-zone finance ministers met in Brussels amid growing speculation that a bailout for Ireland is in the works.
GREECE:
Greece is being pressed by its international lenders to come up with a further EUR4 billion in budget cuts next year, a senior government official said Tuesday.
Pressure for more painful spending cuts also comes amid new questions over Greece's eligibility for further aid from the European Union and the International Monetary Fund.
____________________________________________________________
Asian Pacific Markets:
Underscoring Asia's sturdy economic growth, the South Korean central bank raised interest rates on Tuesday and hinted there could be more hikes to come.
That Asia is tightening policy is a world away from the United States, where a Fed official said on Tuesday an exit from the present super-loose policy may be "years away."
Japan's Nikkei 225 stock average lost 0.3 percent to 9,797.10. Hong Kong's Hang Seng slid 1.4 percent to 23,693.02. Australia's S&P/ASX 200 gained 0.3 percent to 4,700.30.
That Asia is tightening policy is a world away from the United States, where a Fed official said on Tuesday an exit from the present super-loose policy may be "years away."
Japan's Nikkei 225 stock average lost 0.3 percent to 9,797.10. Hong Kong's Hang Seng slid 1.4 percent to 23,693.02. Australia's S&P/ASX 200 gained 0.3 percent to 4,700.30.
CHINA:
China's State Council is drafting measures aimed at curbing overly fast price rises, according to a government statement. The nation also announced new limits restricting the ability of foreigners to buy residential or commercial property on the mainland, the country's latest effort to ease inflationary pressures.
CHINA STOCKS DECLINE
China's stock market suffered another big drop Tuesday. Another sharp sell-off in Chinese stocks in late trade also unnerved some investors and led them to wonder if prices of riskier assets were turning lower for good.
The Shanghai Composite Index slid 4.3 percent at one point as investors, worried China may further tighten monetary policy, sold blue-chip bank and energy shares.
Energy, metal and agricultural products prices all plunge amid fears that China will take new actions to fight price increases, less than a month after raising interest key interest rates.
"The swings in China are radical in the last few days," said Jackson Wong, an investment manager at Tanrich Securities in Hong Kong. "People are still trying to figure out if this is the beginning of a downtrend."
The overall cautious tone kept the MSCI Asian stock index outside Japan down 0.1 percent, an insignificant move compared to its 16 percent jump since early September.
Energy, metal and agricultural products prices all plunge amid fears that China will take new actions to fight price increases, less than a month after raising interest key interest rates.
"The swings in China are radical in the last few days," said Jackson Wong, an investment manager at Tanrich Securities in Hong Kong. "People are still trying to figure out if this is the beginning of a downtrend."
The overall cautious tone kept the MSCI Asian stock index outside Japan down 0.1 percent, an insignificant move compared to its 16 percent jump since early September.
JAPAN:
Japan's Nikkei declined 0.3% percent.SOUTH KOREA:
The Bank of Korea raised its base rate by a quarter of a percentage point, to 2.5%, in an effort to stem inflationary pressures.
____________________________________________________________
WORLD FOREX CURRENCIES SNAPSHOT:
(TUESDAY, NOV 16, 2010 4:05 PM EST)
EUR/USD 1.3489 -0.0097 (-0.71%)
USD/JPY 83.2800 +0.1500 (0.18%)
GBP/USD 1.5877 -0.0179 (-1.12%)
CAD/USD 0.9790 -0.0111 (-1.13%)
USD/HKD 7.7570 +0.0046 (0.06%)
USD/CNY 6.6378 -0.0040 (-0.06%)
AUD/USD 0.9764 -0.0085 (-0.86%)
USD/JPY 83.2800 +0.1500 (0.18%)
GBP/USD 1.5877 -0.0179 (-1.12%)
CAD/USD 0.9790 -0.0111 (-1.13%)
USD/HKD 7.7570 +0.0046 (0.06%)
USD/CNY 6.6378 -0.0040 (-0.06%)
AUD/USD 0.9764 -0.0085 (-0.86%)
WORLD MARKETS SNAPSHOT:
(TUESDAY, NOV 16, 2010 4:05 PM EST)
Shanghai 2,894.54 -119.88 (-3.98%)Nikkei 225 9,797.10 -30.41 (-0.31%)
Hang Seng Index 23,693.02 -334.16 (-1.39%)
TSEC 8,312.21 +71.56 (0.87%)
FTSE 100 5,681.90 -138.51 (-2.38%)
DJ EURO STOXX 50 2,781.77 -66.68 (-2.34%)
CAC 40 3,762.47 -101.77 (-2.63%)
S&P TSX 12,602.23 -133.18 (-1.05%)
S&P/ASX 200 4,700.30 +12.30 (0.26%)
BSE Sensex 19,865.14 -444.55 (-2.19%)
____________________________________________________________
TUESDAY'S U.S. ECONOMIC CALENDAR:
7:45 a.m.
Nov 13 ICSC-Goldman Sachs Chain Store Sales Index - Week over Week (previous +1.3%), YoY (previous +3.4%)
8:30 a.m.
Oct PPI (expected +0.9%), PPI Core (previous +0.2%), PPI Core Crude Goods (previous +5.5%), PPI Core Intermediate Goods (previous +0.2%), PPI Crude Goods (previous -0.5%0, PPI Energy Goods (previous +0.5%), PPI Intermediate Goods (previous +0.5%), PPI Passenger Cars (previous +0.5%)
8:55 a.m.
Nov 13 Johnson Redbook Retail Sales Index MoM % Change (previous 0%), 12MonChgPct (previous +2.6%), 52WkChgPct (previous +2.6%)
9:00 a.m.
Sep Treasury International Capital Data Monthly Net TIC Flows (previous +38.9B), Net Foreign Acquisition of Long-Term Securities (previous +111.8B), Net Foreign Acquisition of US Agency Debt (previous +4.6B), Net Foreign Acquisition of US Corp Bonds (previous +10B), Net Foreign Acquisition of US Equities (previous +4.8B), Net Foreign Acquisition of US Tsy Bonds & Notes (previous +117.1B), Net Long-Term Securities Transactions (previous +128.7B)
9:15 a.m.
Oct Industrial Production (expected +0.3%), Capacity Utilization (previous -0.1), Current Capacity Utilization (expected 74.9%)
10:00 a.m.
Nov NAHB Housing Market Index (expected 17)
4:30 p.m.
Nov 13 API Statistical Bulletin Crude Stocks (Net Change) (previous -7.4M), Gasoline Stocks (Net Change) (previous -3.45M), Distillate Stocks (Net Change) (previous -4M), Refinery Runs (previous 84.3%)
5:00 p.m.
Nov 14 ABC News Consumer Confidence Index (previous -46)
N/A
Federal Reserve Bank of Atlanta President Dennis Lockhart speech
Conferences:
Among the significant conferences this week are the Sidoti & Co. New York II Emerging Growth Institutional Investor Forum on Monday and Tuesday in New York; REITWorld: NAREIT's Annual Convention for All Things REIT from Monday through Wednesday in New York; Lazard Capital Markets Annual Healthcare Conference on Tuesday and Wednesday in New York; Morgan Stanley Consumer & Retail Conference on Tuesday and Wednesday in New York; Bank of America Merrill Lynch Credit Conference on Wednesday and Thursday in New York; and Deutsche Bank Securities Media and Telecommunications Conference on Wednesday and Thursday in Miami.
____________________________________________________________
US STOCK MARKET SUMMARY, MONDAY, NOV. 15, 2010:
Stocks:
US stocks were mixed, with the The Dow gained 9 pts Monday to close at 11201, while the S&P dropped 1 pt to 1197 and the Nasdaq fell 4 pts to 2513, as a bigger-than-expected increase in retail sales for October helped some sectors.
Treasurys:
Treasurys tumbled amid continued backlash against the Federal Reserve's second bond-buying program, or quantitative-easing effort. Treasurys maturing in the next five to 10 years were the hardest hit, compounding losses chalked up on Friday. The 30-year bond's yield moved back to a level hit in May. Treasurys dropped as market participants continued to unwind trades they had put on in full force when expectations for QE2 first hit.
Forex:
The euro weakened against the dollar as concerns flared over the long-simmering crisis of sovereign debt in the euro-zone periphery. Investors speculated Ireland might soon request a European Union lifeline and worries over the situation spreading throughout the region again came to the forefront, analysts said. "As long as the sovereign debt situation in the peripheral European countries stays in focus, it is going to be difficult for the euro to maintain any type of strength," said Dan Cook, chief executive of IG Markets.
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posted by Benjamin Train @ 6:02 AM
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