The Star Online: Business
The Star Online: Business |
- S'pore GDP up 0.9% in Q2
- US stocks soar, global stocks continue rally (update)
- Germany calls for EU balanced budgets
| Posted: 09 Aug 2011 07:03 PM PDT SINGAPORE: The Singapore economy grew 0.9% on a year-on-year basis in the second quarter of 2011 compared with a 9.3% growth recorded in the preceding quarter. On a seasonally-adjusted quarter-on-quarter annualised basis, the economy contracted by 6.5%, a contrast from 27.2% growth recorded in the preceding quarter. In a statement today, the Ministry of Trade and Industry also revised 2011's growth forecast to between 5% and 6%, from its earlier forecast of between 5% and 7%. On a year-on-year basis, the manufacturing sector contracted 5.9% in the second quarter of 2011, while on a sequential basis, the sector contracted by an annualised rate of 23.7%. This was largely due to a decline in biomedical manufacturing output, as some companies switched to producing a different value mix of active pharmaceutical ingredients. Electronics output also declined, as global demand for semiconductor chips eased. The construction sector grew by 1.5%, on a year-on-year basis, sustained by increases in public sector construction activities. On a sequential basis, the sector expanded by an annualised rate of 13.4%. The wholesale & retail trade sector experienced flat growth on a year-on-year basis, and an annualised sequential decline of 8.4%. This largely reflected the slowdown in global trade flows during the quarter. The transport & storage sector grew by 4.1%, on account of buoyant air travel demand. The business services sector registered a weak growth of 2.2% on a year-on-year basis, mainly due to a moderation in the real estate services segment. Touching on the outlook for 2011, the ministry expressed concern that a double-dip recession had emerged in the United States and that the recent downgrade of US sovereign debts rating has led to financial market volatility and increased uncertainties. The ministry, however, cautioned that Singapore's economic growth could be lower-than-expected should these situations worsen. - BERNAMA Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| US stocks soar, global stocks continue rally (update) Posted: 09 Aug 2011 06:49 PM PDT NEW YORK: The Fed spoke - and financial markets rallied. The Dow Jones industrial average surged more than 429 points, its tenth-highest point gain in history and the biggest since March 2009. It was just one day after the Dow had its worst point decline since 2008. The Federal Reserve pledged to keep its key interest rate at its record low of nearly zero through the middle of 2013. The central bank also said that it has discussed "the range of policy tools" it can use to spur the economy. Bob Doll, chief equity strategist at BlackRock, said the Fed's decision to hold interest rates at a very low rate for two years is "unprecedented" and called it a kind of "backdoor quantitative easing." In June, the central bank finished a second round of buying Treasury securities, also known as quantitative easing, in hopes of boosting the economy. "Markets are going to do what they would have done if the Fed went out and bought securities," Doll said. He said he expects investors will return to stocks after the broad sell-off of the least few weeks. He expects stocks to continue to rally because a slow-growing U.S. economy won't harm corporate profits. As a whole, the companies in the Standard & Poor's 500 index reap more than half their revenue overseas. What's more, companies have already cut costs significantly, have hoarded cash and squeezed more production out of workers. Even as the U.S. economy has slowed, the S&P 500 as a whole was expected to earn record profits this year. "Corporate America has demonstrated that it can generate good growth and profits despite a weaker U.S. economy," Doll said. The Dow rose 429.92 points, or 4 percent, to 11,239.77. On Monday, the Dow plunged 634.76 points in the first trading day after Standard & Poor's downgraded the U.S. one notch from its top AAA credit rating to AA+. The S&P 500 rose 53.07, or 4.7 percent, to 1,172.53. The Nasdaq composite index rose 124.83, or 5.3 percent, to 2,482.52. At first, markets reacted much differently to the Fed's statement. Stocks fell as much as 205 points after the Fed's 2:15 p.m. EDT statement. Gold surged more than $50 per ounce to $1,774. The yield on the 10-year Treasury note briefly touched a record low of 2.03 percent, after closing Monday at 2.34 percent. An hour later with less than 45 minutes until the market closed, stocks rallied, gold retreated off its high and the yield on the 10-year Treasury note quickly headed higher. It was at 2.26 percent late Tuesday. A bond's yield drops when its price rises. Howard Silverblatt, senior index analyst at S&P, called it the "Big Ben turnaround," referring to Fed chair Ben Bernanke. The industries that did best on Tuesday were the ones that fell the most on Monday. Financial stocks in the S&P 500 rose 8.2 percent after falling 10 percent Monday. Materials companies, which rely on a stronger global economy for their profits, rose 5.9 percent. Only seven of the 500 stocks in the index had declines. All 30 stocks in the Dow rose. Bank of America Corp., which was down more than 20 percent Monday, rose 16.7 percent, the most of any stock in the Dow. Aluminum maker Alcoa Inc. was up 8 percent. Technology company MEMC Electronic Materials Inc. led the S&P 500 higher, gaining 19.1 percent. Boosting the stock market isn't one of the Fed's jobs, but that hasn't stopped investors from parsing every word of the statements made by the Fed and Bernanke. The Fed's mandate is to keep prices stable and promote low unemployment, not boost stocks. But a stock dive after Fed comments has happened before. On June 3, the stock market suffered a late-day dive when Bernanke spoke at a conference. Investors said they were looking for a hint of new plans to spur economic growth. When that didn't come, all three major indexes sank. After Bernanke outlined the plan for a second round of quantitative easing in August 2010, the S&P 500 index gained 28 percent over eight months. Investors pointed to that rebound as evidence that quantitative easing worked - and so did Bernanke. This sentiment led some people to believe that if stocks fall too far, the Fed would come to the rescue. The Fed said in its statement Tuesday that it expects "a somewhat slower pace of recovery over coming quarters." It had said as recently as six weeks ago that temporary factors, such as the high price of gasoline this spring and Japan's March earthquake and tsunami, would end and the economy would grow at a faster pace in the second half of the year. But on Tuesday, the Fed said those factors were only part of the reason that the economy grew at its slowest pace in the first half of 2011 since the recession ended in June 2009. It now expects slower growth over the next two years. Economists now believe there is a greater chance of a U.S. recession because the economy grew much more slowly in the first half of 2011 than previously thought. The manufacturing and services industries barely grew in July. The unemployment rate remains above 9 percent, despite the 154,000 jobs added in the private sector in July. Economies across the globe are also struggling. Worries are growing that Spain or Italy could become the next European country to be unable to repay its debt. High inflation in less-developed countries, which have been the world's main economic engine through the recovery, is another concern. China's inflation rose to a 37-month high in July. Those economic concerns have pulled attention from stronger corporate earnings this spring. Dish Network Corp. reported Tuesday that its second-quarter net income rose 30 percent to $334.8 million on stronger revenue. Among the 441 companies in the S&P 500 index that have already reported their second-quarter earnings, profits are up 12 percent from a year ago. The housing market, though, remains weak. Homebuilder Beazer Homes USA Inc. said its loss widened last quarter after it closed on fewer homes. Consolidated trading volume was heavy Tuesday, at 9.2 billion shares. Nearly 12 stocks rose for every one that fell on the New York Stock Exchange. On Tuesday the FTSE 100 index of leading British shares closed up 0.3 percent at 5,085. France's CAC-40 rose 0.8 percent to 3,153. Germany's DAX though continued to underperform its peers, trading 0.3 percent lower at 5,899. On Wednesday global stocks continued to rally, with Asian-Pacific markets rising sharply. Markets in Australia and New Zealand were among the first to open Wednesday and continued Tuesday's rebound. Japanese stocks were also higher. Australia's benchmark S&P/ASX200 index rose 3 percent in early trading to 4,214 points, while New Zealand's benchmark NZX50 was up almost 4 percent by midmorning. In Japan, the Nikkei 225 was up 1.4 percent to 9,073.37 in early trading. - AP Fed pledges low rates into 2013 WASHINGTON: The Federal Reserve guaranteed super-low interest rates for two more years Tuesday - an unprecedented step to arrest the alarming decline of the stock market and the economy. Wall Street roared its approval and finished a wild day with a 429-point gain. The rally was remarkably fast - the Dow Jones industrial average was still down for the day with less than an hour of trading to go - and enough to erase two-thirds of its decline the day before. The Fed set its target for interest rates near zero in 2008 as a response to the financial crisis that fall. Since then, it had said only that rates would stay low for an "extended period." On Tuesday, it guaranteed them until mid-2013. But it was also a sign that the Fed expects the economy to stay weak for two more years, longer than the Fed had previously indicated. It has already been more than two years since the end of the Great Recession. The central bank left open the possibility of a third round of bond purchases designed to hold interest rates down and push stock prices up. The second round, announced last year, led to an extended rally for the stock market. In an unusually volatile day of trading, the Dow finished up 429.92 points, or about 4 percent. It closed at 11,239.77. The Standard & Poor's 500 index finished up 4.7 percent, and the Nasdaq finished up 5.3 percent. The yield on the 10-year Treasury bond briefly hit a record low, 2.03 percent. Investors have bought government bonds, driving the yields down, even after S&P stripped the United States of its top-of-the-line credit rating last week. Low interest rates for two more years could make the stock market a better bet because bonds will return less money. That appeared to be at least part of the reason stocks rallied so much after investors had a chance to digest the Fed's statement. Some analysts also attributed the late-day rally to wording in the Fed's statement suggesting it might take further steps to stimulate the economy in the future. The stock rally came after two and a half weeks of almost uninterrupted declines. Those were fueled first by uncertainty about the federal debt ceiling, then by concerns that the U.S. economy is headed for a new recession and about out-of-control European debt. When it came late Friday, the downgrade only added anxiety. On Monday, the first day of trading after it was announced, the Dow fell 634 points. Even counting Tuesday's gains, the Dow is down 11.6 percent since July 21 - almost 1,500 points. The Fed's announcement of a two-year timeframe for any rate increase underscored a stark reality: A sluggish economy and painfully high unemployment have become chronic. "The tone of the Fed's statement is very downbeat. They are very nervous about the economy," said Mark Zandi, chief economist at Moody's Analytics. "This is unprecedented for the Fed to indicate they are ready to keep rates low for two more years." Not everyone was as impressed as investors on Wall Street appeared to be. University of Oregon economist Timothy Duy called the move "weak medicine" and said he wanted to see the Fed commit to buying more Treasury bonds. The Fed did hold out the promise of further help down the road but did not spell out what else it might do. The central bank's decision was approved on a 7-3 vote with three Fed regional bank presidents who have been worried about inflation objecting. It was the first time since November 1992 that as many as three Fed members have dissented from a policy statement. Dean Maki, chief U.S. economist at Barclays Capital, said the dissent suggests that Fed Chairman Ben Bernanke would have trouble building consensus for another round of bond purchases. The Fed used significantly more downbeat language to describe current economic conditions. It said so far this year the economy has grown "considerably slower" than the Fed had expected and consumer spending "has flattened out." It also said that temporary factors, such as high energy prices and the Japan crisis, only accounted for "some of the recent weakness" in economic activity. The more explicit time frame on the Fed's key interest rate is aimed at calming nervous investors. It offered them a clearer picture of how long they will be able to obtain ultra-cheap credit. Bernanke didn't speak publicly after Tuesday's Fed meeting. He is expected to speak later this month at the Fed's annual retreat in Jackson Hole, Wyo., Bernanke will likely address the weakening economy, the S&P downgrade and the market turmoil. - AP For Federal Reserve click here
For US share market summary and charts click here For latest Bursa Malaysia indices, charts and other information click here For Japan's Tokyo Stock Exchange news click here Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| Germany calls for EU balanced budgets Posted: 09 Aug 2011 06:13 PM PDT BERLIN: Germany urged all members of the 17-nation eurozone on Tuesday to amend their constitutions as quickly as possible to require a balanced budget in a bid to avoid a repeat of the bloc's sovereign debt crisis. The European Union should also set up a new institution to monitor the member states' competitiveness, keeping budgets and fiscal policies in check, German Vice Chancellor Philipp Roesler said. Roesler, who also serves as the economy minister, says the new body, dubbed stability council, must have the power to act if member states fail to meet certain criteria, ensuring "that their competitiveness will again be reached." He did not elaborate on the new body's possible powers. Germany will propose the changes at the next meeting of EU economic and finance ministers, he said. Roesler vowed to swiftly and fully implement the decisions of the recent EU summit, including the changes to the bloc's European Fund for Southeast Europe overall bailout fund. Funded by the European Union and business donors, it provides long-term funding for micro and small businesses, as well as housing and rural finance. However, Roesler said those "short-term measures that won't be sufficient" to fix the underlying problem, instead requiring "a new European stability pact." "We need this new culture of stability in the context of the European Union," he said. The European Union is in the process of overhauling its so-called Stability and Growth Pact, which was meant to ensure that all members kept their debts below 60 percent of economic output and their deficits below 3 percent. That pact was flaunted by many countries, including Germany, in the years before the crisis. While Germany initially pushed for stricter and more automatic sanctions on countries breaking the rules, it has since backed a loosening of new proposals from the European Commission, triggering harsh criticism from countries such as the Netherlands and the European Central Bank. The new proposals, known as the six-pack, are currently stuck at the EU level, where member states, including Germany, are resisting attempts from the European Parliament to toughen the sanction regime. Chantal Hughes, a spokeswoman for the European Commission, said it has taken note of Roesler's "personal and interesting views." The commission, which is based in Belgium, usually oversees the economic performance of EU states and has consistently backed stricter enforcement of debt and deficit limits. "The underlying objectives are exactly those of the six pack - so ... the quickest way to advance all this is to conclude the six pack," Hughes added. Germany itself has adopted a constitutional amendment, the so-called "debt brake," which requires the country to run a budget surplus before interest payment within a few years. Italy - after coming under pressure amid rising yields on its sovereign bonds - said Friday it would seek to amend its constitution to require the government to balance its budget. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| You are subscribed to email updates from The Star Online: Business To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
0 ulasan:
Catat Ulasan