The euro slid for a third day versus the yen and Asian stocks headed for a seventh week of losses, the longest slump since 2004, on concern Europe’s crisis won’t be resolved as leaders meet today to discuss a rescue for Greece.
Europe’s shared currency fell 0.3 percent to 114.33 yen and weakened 0.2 percent to $1.4176 at 12:15 p.m. in Tokyo. The MSCI Asia Pacific retreated 0.2 percent, extending its weekly drop to 1.8 percent. Standard & Poor’s 500 Index futures climbed 0.1 percent. Oil erased gains of as much as 0.5 percent in New York, while wheat dropped for a fifth day.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will discuss a rescue package for Greece, where a default is “almost certain” and could help drive the U.S. economy into recession, said Alan Greenspan, former Federal Reserve chairman. A “hard haircut” for investors in Greek securities will risk contagion to other European countries, Jean-Claude Juncker, head of the euro-region finance ministers group said in an interview with newspaper Tagesspiegel.
“At the moment the policy seems to be to kick the can down the road and eventually markets might tire of it,” Geoff Lewis, Hong Kong-based head of investment services at JPMorgan Asset Management, said in a Bloomberg Television interview. “A lot of us expect that at some point there will be a default or reprofiling. A ‘soft’ default now to tackle the question firmly would be the right thing to do.”
Greek Crisis
The euro weakened against 11 of its 16 most-active peers and was headed for a second weekly decline. Prime Minister George Papandreou is due to announce changes to his cabinet at 9 a.m. in Athens after failing to garner opposition support for austerity measures that have spurred weeks of protests.
The prime minister needs to keep his party’s shrinking parliamentary majority in line to pass 78 billion euros ($110 billion) in austerity measures required for Greece to get a second bailout from the European Union.
“The problem you have is that it’s extremely unlikely the political system will work” in a way that solves Greece’s crisis, Greenspan, 85, said in an interview yesterday with Charlie Rose in New York. “The chances of Greece not defaulting are very small.”
Greece’s debt crisis has the potential to push the U.S. into another recession, said Greenspan, who ran the U.S. central bank from 1987 to 2006. The Thomson Reuters/University of Michigan index of U.S. consumer sentiment slipped to 74 from 74.3 in May, according to a Bloomberg News survey before today’s report, while separate data may show an improvement in leading indicators.
U.S. Economy
Americans filing for unemployment benefits totaled 414,000 last week, less than the median economist estimate of 420,000 in a Bloomberg survey, the Labor Department said yesterday. The Commerce Department said housing starts in the U.S. increased more than forecast in May, led by a jump in the West as other parts of the country languished.
Treasuries halted a two-day rally, with yields on 10-year notes little changed at 2.94 percent. The S&P 500 rose 0.2 percent yesterday, rebounding from a three-month low. Research In Motion Ltd. (RIMM) dropped as much as 17 percent in late trading after the maker of BlackBerry phones said quarterly revenue may drop for the first time in nine years. Capital One Financial Corp. (COF) may be active after it agreed to buy ING Groep NV’s U.S. online bank for $9 billion in cash and stock.
“We do expect these rough patches to continue but over time the market will trend upward” Peter Andersen, Boston-based senior portfolio manager at Congress Asset Management, said in a Bloomberg Television interview. “Earnings season is coming up and we’re starting to see companies pre-warn on the negative side, but on the other side, we’re seeing a good amount of merger and acquisition activity.”
Losing Streak
The MSCI Asia Pacific Index’s seventh straight weekly retreat will be its longest slump since August 2004. Declines yesterday drove the gauge’s valuation down to 14.2 times reported profits, the lowest level since March 30.
South Korea’s Kospi index lost 0.6 percent, Japan’s Topix index slipped 0.4 percent and Hong Kong’s Hang Seng Index slid 0.3 percent. Hynix Semiconductor Inc. (000660) dropped 6.5 percent in Seoul after Korea Investment & Securities Co. cut its share- price estimate. DeNA Co. jumped 4.8 percent in Tokyo after the operator of a social media online site lifted its net income forecast.
Yuan Gains
The yuan climbed 0.12 percent to 6.4669 per dollar. It touched 6.4634, the strongest level since China unified official and market exchange rates at the end of 1993, after the National Business Daily newspaper said there is speculation China will announce a “relatively important” currency policy on June 19, the anniversary of the scrapping of a two-year peg.
Oil for July delivery lost 0.1 percent to $94.90 a barrel on the New York Mercantile Exchange, after earlier climbing to $95.40. Futures have declined 4.4 percent this week, the most since the period ended May 6.
Wheat for September delivery dropped 1.4 percent to $6.985 a bushel, on course for an 11 percent weekly slump. Corn retreated 0.3 percent to $6.5075 a bushel. The grains declined amid on speculation an end to the tax subsidy on ethanol production in the U.S. may slow demand for corn, increasing supply of feeds for livestock and hogs.
source-http://www.bloomberg.com/news/2011-06-17/euro-weakens-before-eu-leaders-meet-on-greece-rescue-oil-metals-advance.html
steven
management trainee-fundamental analysis
DENIP consultants Pvt Ltd
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