The Star Online: Business
The Star Online: Business |
- Moody's downgrades Japan's debt rating
- Oil price above US$85 on positive economic news
- US stocks up, Dow has its best gain in 2 weeks
| Moody's downgrades Japan's debt rating Posted: 23 Aug 2011 05:50 PM PDT TOKYO: Moody's Investors Service on Tuesday downgraded its rating on Japan's debt. The agency said it lowered the rating because of Japan's large budget deficits and growing government debt. Moody's cut Japan's government bond rating to Aa3 from Aa2. The new rating is three notches below Moody's top Aaa rating. It said the outlook for the rating is stable. The downgrade puts Moody's Japan rating in line with other major agencies. Both Standard & Poor's and Fitch rate Japan AA-, three notches below their top AAA ratings. In May, Moody's warned it could downgrade Japan after the world's No. 3 economy slipped back into recession in the first quarter due to tumbling output and exports following the March 11 earthquake and tsunami. Frequent administration changes have prevented Japan's government from adopting effective long-term economic and fiscal policies, Moody's said. The country's economic problems were compounded by the natural disaster and the subsequent nuclear crisis. "These developments further hamper the economy's ability to achieve a growth rate strong enough to steadily reduce the budget deficit," Moody's said. Moody's has maintained its AAA rating on the United States. Standard & Poor's earlier this month took the unprecedented step of downgrading the U.S., citing its large deficits and political gridlock. - AP For Another perspective from The Daily Yomiuri, a partner of Asia News Network, click here |
| Oil price above US$85 on positive economic news Posted: 23 Aug 2011 05:45 PM PDT NEW YORK: Oil rose above US$85 per barrel Tuesday on encouraging economic news from Asia and Europe. Prices climbed following reports of better-than-expected manufacturing activity in China and Europe. And stocks rose in the U.S. ahead of an expected announcement from the Federal Reserve on Friday about stimulating the nation's economy. The positive news was offset by reports of more unrest in Libya's capitol as the Gadhafi regime appeared near collapse. An end to the country's six-month rebellion would clear the way for oil exports to resume, but analysts cautioned that it will likely take more than a year for oil to begin flowing at levels that would affect prices. "Crude from Libya is going to be a story for 2012 or 2013. Not today," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. Fighting during the last six months has all but stopped activity in Libya's oil fields. The country previously supplied about 1.5 million barrels per day for world markets. That's roughly 2 percent of daily global oil demand. Benchmark West Texas Intermediate crude rose $1.02 to finish at $85.44 per barrel in New York. Brent crude, which is used to price oil produced abroad, increased 95 cents to $109.31 per barrel in London. In other energy trading, heating oil rose 3.18 cents to end at $2.9425 per gallon and gasoline futures added 4.15 cents to finish at $2.8766 per gallon. Natural gas rose 10.4 cents to end the day at $3.993 per 1,000 cubic feet. - AP |
| US stocks up, Dow has its best gain in 2 weeks Posted: 23 Aug 2011 05:43 PM PDT NEW YORK: Buyers returned to the stock market Tuesday after deciding the pounding stocks have taken the past month made them too cheap to resist. The Dow Jones industrial average jumped 322 points, its best day since Aug. 11, when it gained 423. The Dow dipped about 60 points shortly after an earthquake hit the East Coast at 1:51 p.m., but recovered within 20 minutes and soared even higher in the last two hours of trading. James Paulsen, chief investment strategist at Wells Capital Management, said the beating stocks have taken since late July suggested investors were preparing for a recession. They questioned that bleak outlook Tuesday after a survey of manufacturing in the Southeast from the Federal Reserve Bank of Richmond, Va. pointed to a slowdown, not a recession. "And when people are preparing for a recession, slow growth is good right now." The Dow, which tracks 30 huge U.S. companies including IBM Corp. and General Electric Co., closed with a gain of 3 percent at 11,176.76. Indexes that track smaller stocks did even better, a sign that investors were more willing to take on risk. The S&P 500 index rose 38.53 points, or 3.4 percent, to 1,162.35. The Nasdaq composite, which tracks mainly technology companies, rose 100.68 points, or 4.3 percent, to 2,446.06. The Russell 2000 index of smaller U.S. companies gained even more, 4.9 percent. When stocks plunged last Thursday, the reverse was true. The Dow fell 419 points but only 3.7 percent. The other three indexes fell more. The Russell 2000 lost the most, 5.9 percent. As of Monday the Standard & Poor's 500 index had lost 16 percent over four weeks as investors worried that the U.S. might enter another recession and as Europe's debt crisis flared up again. That meant the average company in the index was priced at just 11 times its expected earnings per share for 2011. "That's too low if you're not in a recession," Paulsen said. The historical average for the S&P's P/E ratio is 15. After Tuesday's gain, the S&P is down 14 percent since July 22 and 15 percent since it hit its high for year on April 29. The biggest Dow gainer was Exxon Mobil Corp., which rose 4.9 percent. Chevron Corp. rose 4.3 percent. Energy stocks got a push from a $1.02 increase in the price of oil, to $85.44 a barrel. Bank of America Corp. was the only Dow 30 stock to fall. It lost 1.9 percent Tuesday and is down 35 percent this month because investors have become increasingly worried about the bank's ability to raise capital and about its liabilities related to subprime mortgages. The latest disappointment came Monday with news that BofA will not sell all of its 10 percent stake in China Construction Bank. Investors had been hoping BofA would sell the stake to shore up its balance sheet. UBS rose 5 percent. The Swiss bank said it will cut 3,500 jobs worldwide in the hope of saving $2.5 billion by the end of next year. UBS's stock has dropped 20 percent this year. The Chicago Board of Options Exchange's volatility index, also known as the VIX, fell 15 percent to 36 as concerns about future turbulence eased. The index jumped as high as 48 Aug. 8 after trading below 20 for much of the year. There's still fear that the U.S. could slip into another recession. Investors will be watching Fed Chairman Ben Bernanke's speech at the Fed's annual retreat in Jackson Hole, Wyo., on Friday. The yield on the 10-year Treasury note rose to 2.15 percent from 2.10 percent late Monday. The yield fell below 2 percent last week, its lowest on record. The dollar fell against the euro and Japanese yen as investors moved money into riskier assets. Five stocks rose for every one that fell on the New York Stock Exchange. Trading volume was higher than average at 5.2 billion shares. - AP |
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