A top euro zone share index was set for its biggest weekly fall this year on Friday.]]> |||
London - A top euro zone share index was set for its biggest weekly fall this year on Friday, with focus on a crucial vote in Greece over its debt negotiations at the weekend.
The euro zone Euro STOXX 50 was on track for its worst week since December, down 4.2 percent since last Friday's close, and flat on the day at 3,463.57.
The FTSEurofirst 300 was also steady at 1,527.32 points by 08h01 GMT, down 3 percent for the week and set for its biggest weekly fall since late April.
The market has been hit by concern over mounting tensions between Greece and its international creditors since the government in Athens announced a surprise referendum over its bailout programme.
Set to take place on Sunday, the two campaigns are finely balanced, with the Yes campaign in favour of the bailout taking a slight lead in the latest poll.
“The renewed focus on Greece and the uncertainty about the implications of an exit have once again become a dominant driver in the market,” Peter Oppenheimer, Chief Global Strategist at Goldman Sachs, said in a note.
“The worst-case downside in the equity market in Europe on a 'No' vote is a move to around 3150 on SX5E (around 10 percent).”
Italian blue chips outperformed, up 0.2 percent after PMI survey data beat expectations. French, German and euro zone PMI readings also confirmed private sector growth.
Banks were in the spotlight, with Royal Bank of Scotland down 1.5 percent, a top faller after news that the state-backed British bank may need to pay $13 billion to settle claims it misled investors in mortgage-backed securities, according to documents filed in a US court.
Fifteen of the world's largest banks are under investigation on suspicion of rigging the Brazilian currency, antitrust watchdog Cade said on Thursday, the first such probe in one of the busiest foreign exchange markets globally.
“Obviously there are number of other investigations still ongoing... but certainly it won't be a positive addition to sentiment on the sector,” Richard Hunter, head of equities at Hargreaves Lansdown, said.
Fiat Chrysler Automobiles NV dropped 1 percent after a senior executive with the automaker said it has fallen short on the execution of auto safety recalls. A US regulator said Fiat Chrysler could face action on its performance as soon as this month.
Euro zone business activity expanded at its fastest pace in four years in June.]]> |||
London - Euro zone business activity expanded at its fastest pace in four years last month as the European Central Bank's stimulus package more than offset fears Greece could crash out of the currency union, surveys showed.
Speculation that Athens would miss a 1.6 billion-euro repayment to the International Monetary Fund on Tuesday heightened expectations that Greece would have to abandon the euro, keeping manufacturing activity in check last month.
But the service industry shrugged off those fears and ramped up activity at the fastest rate since mid-2011, suggesting low inflation and the ECB's trillion-euro bond-buying programme was boosting spending among consumers and businesses.
The final composite PMI for June, which combines manufacturing and services activity and is seen as a good guide to growth, came in at 54.2, just above a preliminary reading of 54.1 and well ahead of May's 53.6.
That was its highest reading since May 2011. The index has now been above the 50 mark that separates growth from contraction for two years.
“Despite the escalation of the Greek crisis in the second half of the month, the final PMI for June came in slightly above the 'flash' estimate, suggesting the turmoil has so far had little discernible impact on the real economy,” said Chris Williamson, Markit's chief economist.
However, as they have since early 2012, companies cut prices to drum up trade. The composite output price index was 49.4, below the May and flash readings of 49.5.
Price discounting helped drive up the PMI covering the service industry, which makes up the bulk of the euro zone economy. It rose to 54.4 from May's 53.8, matching the preliminary estimate.
To meet the demand, services took on staff at the second fastest rate since mid-2011. The employment sub-index was 52.2, below the previous month's 52.6.
Markit said the data pointed to second-quarter economic growth of 0.4 percent, in line with a Reuters poll taken last month.
Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.
Britain’s top share index headed for its worst weekly drop in a month on Friday.]]> |||
London - Britain's top share index headed for its worst weekly drop in a month on Friday, with miners slipping on a slowdown in China and banks falling after Brazil said it was probing some global lenders' currency market activity.
The UK banking index fell 0.8 percent on news that Barclays, HSBC, Royal Bank of Scotland and Standard Chartered, were among those under investigation on suspicion of rigging the Brazilian currency.
Royal Bank of Scotland fell 1.3 percent, also hit by news the bank may need to pay $13 billion to settle claims it misled investors in mortgage-backed securities, according to documents filed in a US court.
The UK mining index fell 0.8 percent after a survey showing services sector activity in China, the world's top metals consumer, slowed to its lowest in five months in June. Rio Tinto, BHP Billiton and Anglo American all dropped by 0.8 to 1.2 percent.
A further sharp sell-off in Chinese stocks also weighed on sentiment. The rout has wiped trillions of dollars of market capitalisation from Shanghai- and Shenzhen-listed shares.
“The markets are looking at the bigger picture and focusing on what's happening in Greece and China. The Chinese slowdown and stock market wobbles there are making their presence felt,” said Peter Dixon, equity strategist at Commerzbank.
“Investors don't want to be 'long' going into the weekend and would wait for the Greek referendum results for a clearer market direction.”
The blue-chip FTSE 100 index was down 0.2 percent at 6,620.50 points by 08h25 GMT. It has fallen nearly 2 percent so far this week and stayed on course to record its worst weekly percentage fall since early June on concerns about Greece's debt situation.
Angry and uncertain Greek voters prepared for the referendum that could decide their country's future in Europe. The International Monetary Fund delivered a stark warning on Thursday of the huge financial hole facing the country.
An opinion poll published on Friday pointed to a slight lead for supporters of Greece's bailout terms, on 44.8 percent, against 43.4 percent for the “No” vote that the leftwing government backs.
It also showed 74 percent wanted to remain in the euro zone against 15 percent who wanted a “national currency”.
The Hang Seng index fell 0.8 percent, while the China Enterprises Index lost 1.4 percent.]]> |||
Hong Kong - Hong Kong stocks fell on Friday, with sentiment soured by slumping shares in China and the Greek debt crisis.
The Hang Seng index fell 0.8 percent to 26,064.11, while the China Enterprises Index lost 1.4 percent to 12,608.98.
Chinese stocks plunged again on Friday, taking a three-week tumble to nearly 30 percent and wiping out most of this year's gains.
The rout, which has worsened despite a slew of market-friendly measures from the government, raises the prospects of a stock market crash that threatens China's economic recovery and financial stability.
Chinese stocks tumbled again on Friday, taking the week's losses to more than 10 percent.]]> |||
Shanghai - Chinese stocks tumbled again on Friday, taking the week's losses to more than 10 percent, as the securities regulator said it was investigating suspected market manipulation amid increasingly desperate attempts by Beijing to head off a full-blown crash.
After a slump of nearly 30 percent in Chinese stocks since mid-June, the China Securities Regulatory Commission (CSRC) has set up a team to look at “clues of illegal manipulation across markets”.
A flurry of policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, have failed to arrest the sell-off.
“The government must rescue the market, not with empty words, but with real silver and gold,” said Fu Xuejun, strategist at Huarong Securities Company, adding that a market crash would hurt banks, consumption, companies and even trigger social instability. “It's a disaster. If it's not, what is it?”
The CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 5.4 percent to close at 3,885.92, while the Shanghai Composite Index shed 5.8 percent to 3,686.92 points.
For the week, the CSI300 lost 10.4 percent and the SSEC fell 12.1 percent.
The Shanghai benchmark fell below 4 000 points on Thursday for the first time since April - a key support level that analysts had expected Beijing to defend.
The rout in China's highly leveraged stock market has become a major worry for global investors, who fear a meltdown could destabilise the world's second-largest economy at a time when growth is already slowing.
Chinese stocks had more than doubled between November and mid-June, fuelled in large part by retail investors using borrowed money to bet on shares.
“This is happening against an (economic) growth backdrop that continues to look soft, as illustrated by the flat manufacturing survey this week,” noted analysts at Barclays.
“With growth data still soft, China remains a key uncertainty for the global outlook.”
The China Daily newspaper said on Friday that the CSRC was probing investors who used stock index futures to “short” the market - or bet on prices falling.
Sources with direct knowledge later told Reuters that the China Financial Futures Exchange (CFFEX) had suspended 19 accounts from short-selling for a month.
Much of the selling of Chinese stocks has been driven by “margin calls”, when a brokerage that has extended credit to an investor to buy stocks demands more cash or collateral because prices have fallen.
If those margin calls continue, it also could affect other markets as investors need to raise cash.
“Some funds have closed their copper positions to send funds back to China, in order to meet their margin payments on stock indexes,” said one metals broker in Hong Kong.
Herald van der Linde, Asia equity strategist at HSBC, said there were signs that some of the money being pulled out of stocks was going into other assets, with a pick-up in physical property transactions.
“It could go to Hong Kong, it could go to property, it could go to cash,” he said. “But if they have to repay debt, it's basically deleveraging, as well.”
Beijing has been struggling since the weekend to find a policy formula that would restore confidence in its stock markets.
So far, rapid-fire steps including easing monetary policy, encouraging more pension funds to invest in stocks and cutting transaction costs have failed to stem the slump.
The CSRC has relaxed rules on using borrowed money to speculate on stock markets, letting brokerages set their own tolerance level on margin calls and allowing the rollover of margin lending contracts.
On Friday, the regulator also said it would step up its monitoring of markets to protect investors against the mis-selling of investment products.
China is due to release second-quarter gross domestic product data on July 15, and many economists expect growth to dip below 7 percent, which would be the weakest performance since the global financial crisis.
Gold headed for a second weekly decline on Friday amid speculation the US Federal Reserve will raise interest rates.]]> |||
Singapore - Gold headed for a second weekly decline as speculation the Federal Reserve will raise interest rates amid a strengthening US economy outweighed demand for a haven spurred by Greece’s debt crisis.
Bullion for immediate delivery was at $1,167.81 an ounce at 2.26pm in Singapore from $1,166.26 on Thursday, when the metal fell to $1,157.18, the lowest since March 18, according to Bloomberg generic pricing. Prices are set for a 0.7 percent drop this week, extending last week’s 2.1 percent decline.
Investors’ focus shifted to when the Federal Reserve will raise interest rates before Greece’s weekend referendum on austerity measures that may help to determine whether the country remains in the euro zone. A Labor Department report on Thursday showed US companies added 223 000 jobs in June while wages stagnated and the size of the labour force receded.
“Despite the slightly soft tone evident in” the data, the labour market momentum remains robust, Australia & New Zealand Banking Group Ltd said in a note on Friday. “September remains on the cards for the Fed to commence its hiking cycle.”
Central bank officials, who will meet this month, want to see continued improvement in the jobs market and have confidence inflation will pick up before they raise the benchmark federal funds rate, which they have held near zero since December 2008. They have two more jobs reports before the September meeting.
Futures for August delivery added 0.3 percent to $1,166.50 on the Comex after three days of losses. Metal of 99.99 percent purity lost as much as 0.5 percent to 231.50 yuan a gram ($1,160.18) on the Shanghai Gold Exchange before trading little changed at 232.78 yuan.
Silver for immediate delivery fell 0.2 percent to $15.6648 an ounce after advancing 0.7 percent on Thursday, when it snapped five days of declines.
Platinum was at $1,083.38 an ounce from $1,084.25, little changed for the week. Palladium headed for a 2 percent gain this week, the first such increase in about two months, and traded at $692.75 an ounce from $694.05.
Output and new orders in SA’s private sector declined at their sharpest rates in nearly a year, a survey revealed on Friday.]]> |||
Johannesburg - Output and new orders in South Africa's private sector declined at their sharpest rates in nearly a year as the economy weakened and demand subsided, a survey showed on Friday.
South Africa's Standard Bank Purchasing Managers' Index (PMI) fell to 49.2 in June from 50.1 in May, its lowest reading in 11 months.
Companies surveyed signalled they were cautious about their stock policies as activity contracted for the first time since January. New export orders continued to decrease, albeit at a slower rate than May' s 10-month record.
“The growth outlook for South Africa remains lacklustre as a combination of declining order intakes and falling purchasing activity suggests that the sector is likely to remain stuck in reverse gear,” said Oliver Kolodseike, an economist at Markit.
“Exchange rate factors, rising fuel prices and increasing staff costs meanwhile continued to exert upward pressure on overall input costs,” Kolodseike said.
South Africa’s rand was under pressure on Friday after a survey showed consumer sentiment had plunged.]]> |||
Johannesburg - South Africa's rand was a touch softer against the dollar on Friday, with investors' jitters over Greece's debt crisis adding to concerns about the struggling local economy.
A local survey showed consumer sentiment plunged to a 14 year-low in the second quarter, adding to concerns Africa's most advanced economy might not even manage 2 percent growth this year.
The pressure on the rand currency was partly offset by disappointing US employment data which limited dollar gains.
By 07h02 GMT the rand was at 12.2875 to the dollar, down 0.31 percent from Thursday's close.
Government bonds were little-changed from previous levels, with the yield on debt due in 2026 at 8.26 percent.
The rand has fallen more than 6 percent against the dollar this year as investors expecting rates to increase in the U.S. bail out of higher-yielding but riskier emerging markets.
Fears of contagion after Greece defaulted on its repayment to the IMF has further increased the appeal of so-called “safe haven” assets.
A mixed US jobs report put the dollar under pressure on Friday, while the euro held its ground ahead of Greece’s referendum.]]> |||
Tokyo - The dollar was under pressure on Friday following a mixed US jobs report that has investors questioning the likelihood of a September interest rate hike, while the euro was little changed ahead of this weekend's Greek bailout referendum.
In Tokyo, the greenback bought 123.13 yen, marginally up from 123.07 yen in New York but down from 123.54 yen earlier on Thursday in Asia.
The euro held up at $1.1091 and 136.56 yen from $1.1086 and 136.43 yen.
On Thursday, the US Labour Department said the world's top economy added a solid 223 000 jobs in June but hourly earnings were flat compared with May. It also cut the estimates for job growth in April and May.
A strong reading would have lifted expectations that the Federal Reserve will hike interest rates soon.
“This data doesn't indicate the market is just going to pile into the dollar... It just leads to more consolidation at current levels,” Lennon Sweeting, a dealer at USForex, told Bloomberg News.
But Ernie Cecilia, chief investment officer at US-based Bryn Mawr Trust, said the employment figures will do little to change the odds of a Fed rate rise this year, which is a plus for the dollar.
“The Fed is going to raise rates in the second half of this year and I do think the dollar will stay relatively strong,” he said.
Greeks go to the polls on Sunday to decide whether or not to accept its creditors' bailout proposals, a vote European leaders have warned is effectively a referendum on whether or not to stay in the eurozone.
Prime Minister Alexis Tsipras broke off debt reform talks last week and called the plebiscite - leading it to default on a loan repayment Tuesday.
“Knee-jerk market reaction to a 'yes' should be both risk and euro positive,” Ray Attrill, National Australia Bank's global co-head of forex strategy, said in a commentary.
“In the event of a 'no' markets will - rightly in our view - jump to the conclusion that a Greek exit from the eurozone shifts from possible to probable, and that a severing of the lifeline from the (European Central Bank) to the Greek banking system will be the mechanism that sets this process off.”
The dollar was mostly weaker against other Asia-Pacific currencies.
It eased to 13,306 Indonesian rupiah from 13,352 rupiah on Thursday, to Sg$1.3499 from Sg$1.3516, to 45.11 Philippine pesos from 45.19 pesos, and to 1,120.83 Korean won from 1,123.18 won.
The greenback also fell to Tw$30.88 from Tw$30.91 and to 63.37 Indian rupees from 63.60 rupees while it was unchanged at 33.78 Thai baht.
The Australian dollar weakened to 75.84 US cents from 76.47 cents after the country reported weaker-than-expected retail sales data, while the Chinese yuan slipped to 19.82 yen from 19.87 yen.
Oil prices eased in Asia on Friday ahead of a weekend referendum in Greece that could determine its future in the eurozone.]]> |||
Tokyo - Oil prices eased in Asia on Friday ahead of a weekend bailout reform referendum in Greece that could determine its future in the eurozone.
West Texas Intermediate for August delivery was down 21 cents at $56.72, while Brent North Sea crude was three cents lower at $62.04.
Greek voters will be asked to vote either “Yes” to a bailout package offered by creditors in exchange for tougher austerity measures, or “No” in support of the leftist government's bid to gain better terms.
Greek Prime Minister Alexis Tsipras called the poll on Saturday after breaking off debt reform talks with its creditors - leading it to default on a loan repayment on Tuesday.
European leaders have warned that vote is effectively now an in-out vote on Greece's future in the eurozone.
“Negotiations (between Greece and lenders) appear to have grounded to a standstill with everyone awaiting the results of Sunday's vote,” said analyst Nicholas Teo of CMC Markets in Singapore.
“With either outcome, global markets continue to remain on tenterhooks as any near-term resolution of the situation there remains a distant prospect.”
The International Monetary Fund said on Thursday that Greece needs 50 billion euros ($55 billion) over the next three years, while it has also slashed 2015 economic growth forecast to zero.