KEY DEVELOPMENTS – INTERNATIONAL
May 21
(Bloomberg) -- Chinese Premier Wen Jiabao’s pledge to focus more on bolstering
growth spurred speculation the government will step up efforts to combat a
slowdown in the world’s second-largest economy. Wen called for “putting
stabilizing growth in a more important position” and didn’t mention concern
about inflation in remarks published by the official Xinhua News Agency.
May 22 (Bloomberg) -- A leading index for China
rose at the same pace in April as the prior month, offering investors some
comfort that the world’s second-biggest economy may avoid a deeper slowdown.
The gauge increased 0.8 percent from March to 232.4, the New York-based
Conference Board said in an e-mailed statement, citing a preliminary reading.
That compares with a 0.8 percent gain in March and 1 percent in February.
May 22 (Bloomberg) -- Japan’s sovereign-credit
rating was lowered by Fitch Ratings because of the nation’s “leisurely” efforts
to tackle the world’s biggest public debt burden. The long-term, local currency
grade fell by one step to A+ with a negative outlook, Fitch said in a
statement. The downgrade adds pressure on Prime Minister Yoshihiko Noda to
reduce deficits without damaging the economy’s recovery from last year’s
earthquake and tsunami.
May 23 (Bloomberg) -- Japan reported
lower-than-estimated exports and a wider trade deficit for April, underscoring
risks to the economy’s recovery after Fitch Ratings cut the nation’s debt
rating. Outbound shipments rose 7.9 percent from a year earlier, less than the
11.8 percent median forecast in a Bloomberg News survey of 27 analysts. The
deficit of 520.3 billion yen ($6.5 billion) exceeded a 84.5 billion yen
shortfall in March, the finance ministry said in Tokyo.
May 24 (Bloomberg) -- China’s manufacturing may
shrink for a seventh month in May, a private survey showed, reinforcing the
need for stimulus as Premier Wen Jiabao accelerates a shift in policy to
support growth. The 48.7 preliminary reading for a purchasing managers’ index
released by HSBC Holdings Plc and Markit Economics compares with a final 49.3
for April. If confirmed on June 1, it would mark the longest run of below-50
readings since the global financial crisis.
May 25 (Bloomberg) -- Japan’s consumer prices
rose 0.2 percent in April from a year earlier, the third monthly increase,
showing the Bank of Japan remains distant from a 1 percent inflation target
after years of falling prices. The median estimate in a Bloomberg News survey
of 29 economists was for a 0.1 percent gain in prices excluding fresh food
after inflation rose 0.2 percent in March. The statistics bureau released the
number in Tokyo.
May 21 (Bloomberg) -- European construction
output rebounded in March, led by surging production in Germany and France, the
euro area’s two largest economies. Construction in the 17-nation region
increased 12.4 percent from February, when it declined a revised 10.4 percent,
the European Union’s statistics office in Luxembourg said. From a year earlier,
output slipped 3.8 percent.
May 22 (Bloomberg) -- U.K. inflation slowed more
than economists forecast in April, cooling to a level that relieves Bank of
England Governor Mervyn King from the task of writing a letter to the government.
Consumer prices rose 3 percent from a year earlier, down from 3.5 percent in
March, the Office for National Statistics said in London. The median forecast
of 30 economists in a Bloomberg News survey was 3.1 percent. The rate is within
the government’s limits for the first time since February 2010.
May 22 (Bloomberg) -- The Organization for
Economic Cooperation and Development said Europe’s debt crisis risks spiraling
and seriously damaging the world economy. “The risk is increasing of a vicious
circle, involving high and rising sovereign indebtedness, weak banking systems,
excessive fiscal consolidation and lower growth,” OECD Chief Economist Pier
Carlo Padoan wrote in the organization’s semi-annual report on the global
economy. Such a downside scenario “may materialize and spill over outside the
euro area with very serious consequences for the global economy,” he said.
May 23 (Bloomberg) -- U.K. retail sales fell the
most in more than two years in April as record rainfall reduced demand for
clothing and fuel sales plunged. Sales including auto fuel declined 2.3 percent
from March, when warm weather helped lift sales by an upwardly revised 2
percent, the Office for National Statistics said today. The median forecast of 24
economists in a Bloomberg survey was for a 0.8 percent decline. Sales excluding
fuel dropped 1 percent, the most for almost a year.
May 23 (Bloomberg) -- Italian consumer
confidence plunged to the lowest in more than 15 years in May as Prime Minister
Mario Monti’s austerity drive deepens the recession in Europe’s fourth-biggest
economy. The confidence index fell to 86.5, the lowest since the data series
began in 1996, from a revised 88.8 in April, national statistics office Istat
said. Economists forecast a reading of 89.5, according to the median of 12
estimates in a Bloomberg News survey.
May 24 (Bloomberg) -- The U.K. economy shrank
more than initially estimated in the first quarter after construction was
revised to show a deeper slump, which may bolster the case for the Bank of
England to restart bond purchases. Gross domestic product fell 0.3 percent,
compared with a 0.2 percent decline estimated last month, the Office for
National Statistics said in London. Construction output fell 4.8 percent, the
most in three years and more than the 3 percent initially estimated, while
services and production were unrevised. Net trade and inventories subtracted
from GDP.
May 24 (Bloomberg) -- German business confidence
fell more than economists forecast in May as speculation that Greece might
leave the euro area clouded the economic outlook. The Munich-based Ifo
institute said business climate index, based on a survey of 7,000 executives,
dropped to 106.9 from 109.9 in April. Economists forecast a decline to 109.4,
according to the median of 37 estimates in a Bloomberg News survey.
European services and manufacturing output
contracted more than economists forecast in May, suggesting the euro-area
economy will struggle to gather strength after stalling in the first quarter. A
composite index based on a survey of purchasing managers in both industries in
the 17-nation euro area dropped to 45.9 from 46.7 in April, London-based Markit
Economics said in an initial estimate. Economists had forecast a decline to
46.6, the median of 14 estimates in a Bloomberg News survey showed.
May 25 (Bloomberg) -- German consumer confidence
will hold steady in June as an economic rebound offsets concerns about the
sovereign debt crisis, GfK SE said. The market research company in Nuremberg
forecast that its consumer-sentiment index, based on a survey of about 2,000
people, will hold at 5.7 next month. Economists predicted the indicator would
stay at May’s initial reading of 5.6, the median of 26 estimates in a Bloomberg
News survey shows.
May 25 (Bloomberg) -- French consumer confidence
unexpectedly climbed for a third month as the election of President Francois
Hollande buoyed households that expect less austerity. Sentiment rose to 90
from a revised 89 in April, national statistics office Insee said in an
e-mailed statement. Economists expected a reading of 88, according to the
median of 17 estimates gathered by Bloomberg News.
May 22 (Bloomberg) -- Sales of existing U.S.
homes rose in April, driven by broad-based gains in demand that signal the
market is stabilizing. Purchases, tabulated when a contract closes, increased
3.4 percent to a 4.62 million annual rate, figures from the National
Association of Realtors showed. The median price jumped by the most in six
years.
May 23 (Bloomberg) -- Demand for new U.S. homes
rose more than forecast in April, indicating residential real estate may
contribute to economic growth for the first time in seven years. Purchases rose
to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the
Commerce Department reported. The median estimate in a Bloomberg News survey of
72 economists was 335,000. Data yesterday showed April sales of previously
owned homes rose in every region.
May 24 (Bloomberg) -- The number of Americans
filing first- time claims for unemployment insurance payments was little
changed last week, adding to evidence the labor market recovery may have
paused. Applications for jobless benefits decreased by 2,000 to 370,000 in the
week ended May 19 from a revised 372,000 the prior week, Labor Department
figures showed. The initial claims matched the median estimate in a Bloomberg
News survey of economists. The number of people on unemployment benefit rolls
and those receiving extended payments dropped.
May 24 (Bloomberg) -- Manufacturing in the U.S.
expanded in May at the slowest pace in three months, indicating the industry
that’s spurred the expansion is cooling. An index based on a survey of
purchasing managers at factories fell to 53.9 during the month from 56 in
April, London-based Markit Economics said in its preliminary estimate. A
reading above 50 in the purchasing managers’ measure indicates expansion. Production,
orders and factory employment expanded at slower rates in May.
KEY DEVELOPMENTS – Domestic
May 24 (Bloomberg) -- India’s purchases of
rupees to support the currency are stripping the financial system of cash,
forcing lenders to borrow from the central bank at the fastest pace on record
and adding pressure for monetary stimulus. Financial institutions borrowed 1.3
trillion rupees ($24 billion) on average per day this year, the most since the
Reserve Bank of India started lending through repurchase auctions in 2000.
Foreign-exchange reserves have dropped $29 billion from a record in September
as the central bank bought rupees to stem the 18 percent slide in the currency
over the period.
May 24 (Bloomberg) -- RBI is continuously
monitoring rupee situation; has taken steps to encourage inflows and curb
speculation, Governor Duvvuri Subbarao said in Mussoorie in the northern state
of Uttarakhand. He said India needs structural changes to rein in current
account deficit. RBI won’t rule out possibility of selling dollars directly to
oil refiners. Subbarao said the monetary policy rates will depend on
inflation-growth dynamics.
Source: L&T Mutual Fund
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
