The Star Online: Business |
- FBM KLCI, Asian markets down in early trade
- US consumer confidence rises in July
- Ford, Chrysler take 2Q hit to position for growth
FBM KLCI, Asian markets down in early trade Posted: 26 Jul 2011 07:19 PM PDT KUALA LUMPUR: The FBM KLCI opened marginally lower in Wednesday's early trade, slipping 0.78 points or 0.05% to 1,560.99 a 9.40am as investors remained cautious, in light of the fact that a deal to avoid an impending US default had yet to be reached. Among the losers on the local bourse was Press Metal Bhd which slipped 6 sen to RM2.18 and Tasek Corp Bhd which shed 8 sen to RM7.80. Regional markets were down. Tokyo's Nikkei 225 fell 0.57% to 10,040.40 and Hong Kong's Hang Seng Index was flat at 22,571.18. Shanghai's A index was down 0.77% to 2,682.20 while Taiwan's Taiex Index shed 0.02% to 8,792.79. Seoul's Kospi Index dipped 0.29% to 2,162.46, with Singapore's Straits Times Index fell 0.43% to 3,172.81. Nymex crude oil lost 26 cents to US$99.33 per barrel. Spot gold rose US$4.15 to US$1,623.45 per ounce. The ringgit was quoted at 2.94 to the US dollar. Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
US consumer confidence rises in July Posted: 26 Jul 2011 06:11 PM PDT NEW YORK (AP) - Two years into the recovery, Americans' confidence in the economy continues its rollercoaster ride. As their short-term outlook on jobs and income eased somewhat amid a mix of optimistic and bad economic news, U.S. consumers' confidence rose slightly to 59.5 in July, according to a survey released Tuesday by a private research group. That's up from a revised 57.6 in June, which marked a seven-month low in the measure, but still well below the reading of 90 that signals a healthy economy on the Conference Board's Consumer Confidence Index. It hasn't approached that level since the recession began in December 2007. Brian Reardon, a 29-year-old insurance consultant from New York, says there's a reason consumers aren't confident. He's been cutting back on spending because all the recent unemployment and housing data has been mixed, making him uneasy about the economy. "One day its good news," he says, "and the next day you hear some company is downsizing." Economists carefully monitor consumer confidence because consumer spending accounts for 70 percent of economic activity. But consumer confidence has changed like the wind during the economic recovery, fluctuating up and down as consumers react to the stock markets, corporate news and world events. And while confidence had rebounded by now during the last recession, which ended in 2001, it remains shaky two years into the current recovery. Earlier in the year on the index, which measures how Americans feel about business conditions, the job market and the next six months, Americans were more optimistic that the economy was on track for a recovery. But consumer confidence has fallen since reaching a three-year high in February of 72. A shift of less than five points is generally discarded by economists as insignificant. "Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated," said Lynn Franco, director of The Conference Board Consumer Research Center. Even the data of different consumer confidence surveys don't agree on just how concerned Americans' are. Last week, for instance, a Thomson Reuters/University of Michigan survey that also tracks consumer confidence showed the measure fell in July to its lowest level in more than two years. Paul Dales, senior U.S. economist with Capital Economics., said the increase in Consumer Confidence Index this month is "a bit bizarre given that all the other measures of confidence have recently fallen." "Nonetheless, it remains at a level consistent with only modest consumption growth," Dales said. The Consumer Confidence Index reading is "a reflection that Americans are coping with their circumstances and hoping it doesn't get any worse," said C. Britt Beemer, chairman of America's Research Group. The weak job market, for one, has weighed on consumers. The economy added only 18,000 net jobs in June, which was the second straight month of scant hiring. The unemployment rate rose to 9.2 percent, the highest this year. That's far below the average job gains of 215,000 per month in the February-April period. "The employment outlook doesn't look good and household net worth has not surpassed its previous peak and it won't anytime soon," said Chris G. Christopher, Jr., senior principal economist IHS Global Insight. Besides job woes, there's a choppy housing market. A report out Tuesday showed home prices in major U.S. cities rose for the second straight month in May, propped up by an annual flurry of spring buyers. But after adjusting for such seasonal factors, prices fell in a majority of markets. The Standard & Poor's/Case-Shiller home-price index showed that prices rose in 16 of the 20 cities tracked. Still, 19 of the 20 cities have seen year-over-year price declines. Meanwhile, gas prices remain high, at $3.69 per gallon (3.8 liters), according to AAA, Wright Express and the Oil Price Information Service. That's about 14 cents more for a gallon of gas over the July Fourth weekend and nearly $1 more than a year ago. And household budgets are being stretched by high food prices. Clothing prices are expected to go up this fall as retailers face higher labor costs in China and soaring prices of raw materials like cotton. The Conference Board survey, conducted by The Nielsen Co., is based on a random survey mailed to approximately 3,000 households from July 1 through July 14. Survey numbers are updated after the month ends. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
Ford, Chrysler take 2Q hit to position for growth Posted: 26 Jul 2011 06:10 PM PDT DEARBORN, Michigan (AP) - Ford's ambitious plans to grow in Asia took a toll on its second-quarter profit, with higher costs to design and sell cars offsetting rising sales. The company's net income fell 8 percent to $2.4 billion for the April-June period. Ford blamed higher prices for steel and other commodities, but also said that after years of restructuring, the company is strong enough to spend heavily on future growth. Ford spent $400 million more on engineering and advertising new vehicles than it did a year earlier. "That's the new thing for Ford, that we are investing in the future," Ford Chief Financial Officer Lewis Booth said. Rival Chrysler Group also took a hit, reporting a loss of $370 million in the quarter. Like Ford, Chrysler said the loss was a sign of a healthier balance sheet. Without a $551 million accounting charge for refinancing bailout debts to the U.S. and Canadian governments, Chrysler would have earned $181 million. Ford's worldwide sales were up 7 percent. Revenue rose 13 percent to $35.5 billion. But the company warned last month that its profit could slip, citing investments in future products. Investment in Asia is the next step in President and CEO Alan Mulally's plan to move beyond the company's near collapse in 2006, when it took out $23 billion in loans to restructure. Since then, it has cut costs and sunk billions into improving Ford cars, resulting in nine straight quarterly profits. Now, the company aims to expand its business in Asia, where it's dwarfed by General Motors Co. Ford plans to roll out 15 cars in India and China over the next four years, and as a result, it's spending hundreds of millions more on product development than it did a year ago. In Asia, Ford reported a pretax profit of just $1 million, down $112 million from the same time last year. The company also took a hit because some of its hottest cars are smaller and less profitable than its older models, like the $8,000 Figo in India. It hopes to make up for that by selling more cars. An investment now could mean a windfall for Ford later. GM sells three times more cars in China than Ford does in all of Asia, and GM booked a $600 million profit in its international operations - which includes Asia - in the first quarter. Ford currently controls less than 3 percent of the market in both India and China, but wants to increase its sales by 50 percent by mid-decade. Ford also said it is spending more on production to meet post-recession demand in the U.S., where people are expected to buy nearly 2 million more cars this year than they did last year. Ford projects that annual U.S. sales will be in the lower end of its 13 million to 13.5 million forecast. The company lowered its forecast for European sales, which were weakened by the debt crisis in the latest quarter. Ford now expects sales no higher than 15.3 million vehicles, down from 15.5 million. One reason sales softened in the U.S. was a lack of discounts. Both Ford and Chrysler were able to command higher prices for their cars and trucks last quarter, partly because of tight supplies of Japanese cars following an earthquake in that nation. Chrysler's average selling price rose nearly 5 percent from a year earlier to $29,964 while Ford's rose 1 percent to $31,179, according to Edmunds.com automotive website. Both spent less on rebates and other deals. While Chrysler was focused on paying off its government loans, Ford paid $2.6 billion of its own debt during the quarter. The company now has $14 billion in debt, a legacy of its 2006 restructuring. Ford hopes its steady reduction in debt will convince ratings agencies to return the company to investment-grade status, which would make it cheaper to borrow money. Ford may not have to wait long. Standard and Poor's Ratings Service said the company's "financial performance is tracking levels consistent with a higher rating," although it said it is waiting to act until Ford completes contract talks with the United Auto Workers union. Ford and the UAW are expected to kick off negotiations on a new four-year contract this Friday. GM is scheduled to release its second-quarter earnings Aug. 4. Ford shares fell 30 cents, or 2 percent, to $12.89 in afternoon trading. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
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