The Star Online: Business
The Star Online: Business |
- Asian markets dip in morning trade
- US and global markets fall(update)
- Chinese automaker to produce cars in Brazil
| Asian markets dip in morning trade Posted: 02 Aug 2011 07:33 PM PDT KUALA LUMPUR: Concerns over the health of the US economy continued to dog markets in Asia despite a last-minute deal being struck by both houses of Congress over the deficit. US and European markets fell at the close on Tuesday despite the US Senate ratifying the deal, implying that investors were now focused on the slowing US growth as measured by lower consumption and manufacturing activities. Asian bourses opened Wednesday's trade in the red with Tokyo's Nikkei 225, Seoul's Kospi and Sydney's S&P/ASX 200 lower in the morning. The local bourse's FBM KLCI dropped 0.86% to 1,541.52 at 10am while Singapore's Straits Times Index shed 1.88% to 3,117.33. The Nikkei 225 tumbled 2.21% to 9,627.12 at the midday break, Hong Kong's Hang Seng Index dropped 2.10% to 21,951.69, Shanghai's A share index lost 0.16% to 2,675.04 and Seoul's Kospi Index slid 2.78% to 2,062.24. Stocks were broadly down at Bursa Malaysia, with 457 decliners versus 51 advancers while 155 other counters were traded unchanged. There were 203.94 million shares traded with a total turnover of RM234.57 million. Petroliam Nasional-related counters Petronas Gas and MISC were 20 sen and 15 sen lower respectively to RM13.24 and RM7.40. DiGi lost 22 sen to RM30, Hong Leong Financial was down 20 sen to RM13.02, Genting shed 18 sen to RM10.74 and Tradewinds was 17 sen lower at RM9.41. Nymex crude oil in electronic trade fell 48 cents to US$93.31 per barrel. Spot gold was down US$6 to US$1,653.40 per ounce while silver lost 11 cents to US$40.69. The ringgit was quoted at 2.980 to the US dollar and 4.225 to the euro. Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| US and global markets fall(update) Posted: 02 Aug 2011 05:51 PM PDT NEW YORK: The U.S. stock market fell sharply Tuesday because investors have grown increasingly worried about the economy. The Standard & Poor's 500 index lost 33 points, or 2.6 percent, and is now down 0.3 percent for the year. The Dow Jones industrial average fell 266 points, or 2.2 percent, and is now up just 2.5 percent for the year. A series of weak economic reports and poor earnings reports from several big companies spurred the market decline. The Commerce Department reported that consumers cut their spending in June for the first time in nearly two years. Analysts had predicted a slight increase. Incomes also rose by the smallest amount since September, reflecting a weak job market. The news came one day after a weak manufacturing report. And last Friday, the government said that in the first half of the year, the economy grew at its slowest pace since the recession ended in June 2009. "The market is starting to wonder where the growth is going to come from," said Nick Kalivas, a vice president of financial research at MF Global. "It hasn't hit the panic button yet, but that's where we're drifting." The S&P 500 closed down 32.89 points at 1,254.05. It has fallen seven straight days, losing 6.8 percent. That's the S&P's longest string of losses since the height of the financial crisis in October 2008. The Dow Jones industrial average closed down 265.87 at 11,866.62. The Dow has fallen eight straight days, also the longest streak since October 2008. It's down 858 points, or 6.7 percent. The Nasdaq composite fell 75.37, or 2.7 percent, to 2,669.24. And the Russell 2000, an index of smaller companies that many investors look to as a sign of market optimism about growth, fell 3.3 percent. It is now down 2.1 percent for the year. All 30 stocks in the Dow fell. General Electric Co., Pfizer Inc. and Home Depot Inc. led the index lower with losses of 4 percent or more. All but 13 of the 500 companies in the S&P index fell. Archer Daniels Midland Co. dropped 6 percent after the agricultural conglomerate said it missed Wall Street's profit forecasts. High-end retailer Coach Inc. lost nearly 7 percent after the company said margins declined, cutting into profits. The yield on the 10-year Treasury note fell to a low for the year of 2.62 percent from 2.75 percent Monday. Investors bought Treasury securities, which are considered safe, because of the economic worries. That drove prices up and yields, which move the opposite way, down. Gold, another asset investors buy when they're worried about the direction of the economy, gained 1.4 percent to $1,645 an ounce. Even with the current streak of losses, the S&P and Dow are near where they were at the end of June. But some investors say that there's a strong likelihood both indexes will decline further this year because the economy is not as strong as they thought it was in June. Last year when the economy slowed sharply, the Federal Reserve began a bond-buying stimulus program, known as quantitative easing. That was credited with helping the U.S. economy avoid another recession. Now, the Fed has indicated it does not have plans to implement another round of what is called monetary stimulus. And the new focus on deficit reduction in Washington makes it even less likely that Congress would approve what is called fiscal stimulus. "With this debt debate going on, there is not an expectation for more fiscal or monetary stimulus and that's a real concern," said Jim Peters, the head of Tactical Allocation Group, a money manager in Michigan with $1.5 billion under management. The S&P index fell through what's referred to as its 200-day moving average, a measure that technical traders look at to determine whether the market is moving up or down longer term. Many investors use the average as a sign of when to sell. "The market broke through some pretty critical support levels," said Richard Ross, the global technical strategist at Auerbach Grayson, and dampened market optimism. He said that investors will wait for the market to settle before they buy again. The S&P is now down 8 percent since reaching its high for the year of 1,363 on April 29. That puts it close to a 10 percent drop, which would signal a market correction. A drop of more than 20 percent would put an end to the bull market that started in March 2009. In 2008, the S&P had a much steeper decline. Over eight straight days of declines that ended on Oct. 8, the index lost 22.9 percent. It fell even further over the next six months. Since March 2009, the S&P is up 85 percent, not including dividends. The consumer spending pullback was the latest indication that the U.S. economy may be slowing. Many economists, including Federal Reserve Chairman Ben Bernanke, have said the U.S. economy would gain momentum in the second half of the year as gas prices fall and Japan's factories recover from the earthquake disaster in March. Slow U.S. manufacturing growth, a weak job market and concerns about spending cuts that are included in the debt deal have cast doubt on those predictions. President Barack Obama signed a compromise bill Tuesday to raise the country's borrowing limit, hours ahead of a midnight deadline after which the U.S. government wouldn't have enough money to pay all its bills. The passage of the bill averted the possibility of a default on U.S. debt. The bill also requires more than $2 trillion in spending cuts to be made over the next decade. Growth in China and India also has slowed recently after their central banks raised interest rates. American corporations have counted on increasing sales in Asia as a way to make up for slower revenue growth in the U.S. As a whole, companies in the S&P 500 index are expected to make nearly half their profits overseas in 2011. Four stocks fell for every one that rose on the New York Stock Exchange. Volume was higher than average at 5.3 billion shares. From London AP reported stocks fell further on Tuesday as worries over the state of the U.S. economy capped any relief to the news that U.S. lawmakers have finally agreed to a package of measures to raise the U.S. debt ceiling. A weak manufacturing survey from the Institute for Supply Management Monday raised fears that the world's largest economy is slowing rapidly. The survey provided evidence that the tortuous debt talks in Washington have hurt economic confidence. A raft of U.S. economic data this week, which culminates with Friday's closely-watched payrolls figures for July, will be monitored in that context. Indicators last week showed that the U.S. economic recovery has slowed down dramatically, with annualized growth of only 1.3 percent in the second quarter. The worry in the markets is that growth will slow even further in the second half, at a time when China and Europe appear to be stalling, too. Data showing that U.S. personal income rose by only 0.1 percent in June and that personal spending unexpectedly fell 0.2 percent did little to calm investor jitters. Worries about growth have more than offset any relief over a debt deal in Washington. The House of Representatives comprehensively passed a bill to increase the debt ceiling on Monday and the Senate is expected to follow suit later, just in time to prevent a damaging debt default, though possibly not to avert a credit rating downgrade. "Now that everyone is breathing easier as we await today's Senate vote on the debt deal, the focus has returned back to the economy and what is now cooking on the front-burner doesn't smell very appetizing," said Jennifer Lee, an analyst at BMO Capital Markets. In Europe, the FTSE 100 index of leading British shares closed down 1.0 percent at 5,718.39. Germany's DAX fell 2.3 percent to 6,796.75. The CAC-40 in France ended 1.8 percent lower at 3,522.79. In the currency markets, the dollar has generally been in demand since Monday's weak manufacturing survey. Even though the data stoked worries over the U.S. economy, the dollar often garners support through its status as a perceived safe haven. "A firmer U.S. currency is largely a reflection of an increase in global risk aversion rather than a positive reaction to resolution of the U.S. debt ceiling impasse," said Vassili Serebriakov, a currency strategist at Wells Fargo Bank. The euro is being hobbled by worries that Europe's debt crisis may spread, possibly to much bigger Spain and Italy, which have seen the yield on their ten-year bonds rise to their highest level since the euro was established in 1999. There are mounting worries that the small island nation of Cyprus may also be dragged into the debt crisis through its close connections with Greece and the damaging economic consequences of last month's blast at the country's main power plant. By late afternoon Tuesday London time, the euro was trading at $1.4222, up from earlier lows but still around a cent and a half below where it was when the ISM figures were released Monday. Meanwhile, the dollar has edged higher from near all-time lows against the yen amid mounting speculation that Japan's monetary authorities may intervene in the markets to stem the export-sapping appreciation of the currency. The dollar fell as low as 76.29 yen Monday, just shy of its record post-World War II low of 76.25 yen in the days following the March 11 earthquake and tsunami. The yen's strength in March prompted the world's leading central banks to join together to weaken the currency. The prospect of further intervention, whether unilateral or not, has helped the dollar push back up to 77.13 yen. Earlier in the session, it had traded higher at 77.38 yen. "Higher risk aversion is likewise boosting the yen, but we suspect that the threat of a policy response by the Japanese authorities will stand in the way of significant further upside in the Japanese currency," said Wells Fargo's Serebriakov. The yen's strength is another cause for concern for Japan's major exporters and the Nikkei 225 closed down 1.2 percent to 9,844.59. Elsewhere, China's Shanghai Composite Index lost 0.9 percent to 2,976.26. Hong Kong's Hang Seng shed 1.1 percent to 22,421.46. Worries over the global economy weighed on oil prices. Benchmark oil for August delivery was down 77 cents to $94.12 a barrel in electronic trading on the New York Mercantile Exchange. - AP
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| Chinese automaker to produce cars in Brazil Posted: 02 Aug 2011 05:44 PM PDT SAO PAULO: China's JAC Motors says it will start making cars in Latin America's biggest country in 2014. The automaker says it will build a $600 million plant with an annual production capacity of 100,000 units. JAC press officer Fabricio Migues says neither the location of the factory nor the models to be built have been defined. Migues says the new plant will be built and operated in a 50-50 partnership with SHC, the company that imports JAC's vehicles to Brazil. Last month, China's Chery Automobile Co. said that it will start making up to 60,000 units a year at its new $400 million plant being built near Sao Paulo. Chery said it hopes to be producing 150,000 vehicles a year by 2016, mainly destined for Mexico and South Africa. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
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