July 14 (Bloomberg) -- Japanese bonds will beat Treasuries this year for the first time in a decade as the economy shrinks at twice the pace of the U.S., the largest traders in the securities said.
The yield on Japan’s 10-year bond will end 2009 at 1.30 percent, little changed from the three-month low of 1.27 percent set last week, based on the median estimate in a Bloomberg News survey of the 23 primary dealers that bid at government debt sales. Japan’s economy will shrink 5.9 percent this year, versus 2.5 percent in the U.S., a separate survey of banks and securities companies shows.
Traders said the market for Japanese government bonds, so- called JGBs, with 846.5 trillion yen ($9.1 trillion) outstanding, will gain as deflation spreads and loan demand wanes. Banks in the nation such as Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., the two largest by assets, own a record 111.9 trillion yen of the securities, the most since Bank of Japan figures started in 1993.
“Buy now,” said Kenro Kawano, a fixed-income strategist at Credit Suisse Group AG in Tokyo, the most bullish of the primary dealers, with a yield forecast of 1 percent. “Deflation pressure will increase. Banks are accumulating JGBs, and the pace is increasing.”
Ten-year government debt will return 0.7 percent through year-end if the survey proves right, according to data compiled by Bloomberg. The yield on the 1.4 percent security due June 2019 rose one basis point to 1.31 percent today. The price fell 0.089 yen to 100.790 yen. A basis point is 0.01 percentage point.
Treasury Yields
Treasury 10-year yields will rise to 3.76 percent by year- end from 3.35 percent today, for a 1.7 percent loss, based on another Bloomberg survey, with the most recent forecasts given the heaviest weightings.
Treasuries and Japanese government bonds have both rallied in the past month as stock declines around the world increased demand for the relative safety of government debt. Ten-year yields in both markets set their highs for this year on June 11. The rate has dropped about 65 basis points in the U.S. since then, versus 25 basis points in Japan, leading companies from New York-based BlackRock Inc. to Franklin Templeton Investments in San Mateo, California, to turn more bullish on their outlook for Treasuries.
The MSCI World Index of stocks fell 7 percent from this year’s high, also made on June 11, as expectations for an economic recovery this year have faded.
Outperforming Treasuries
Japanese 10-year bonds are outperforming Treasuries in 2009, though they pay annual interest of 1.4 percent, versus 3.125 percent for the U.S. securities.
Japan’s government bonds are little changed this year, while Treasuries have lost 3.4 percent, according to indexes compiled by Merrill Lynch & Co. American securities had their worst first half in at least three decades as President Barack Obama increased the marketable debt to a record $6.61 trillion.
The last time JGBs beat Treasuries was in 1999, when they returned 5.12 percent, compared with a loss of 2.38 percent for American bonds, as quickening economic growth caused the U.S. Federal Reserve to raise interest rates. Japan and the U.S. are the biggest bond markets among 35 nations ranked by the Bank for International Settlements in Basel, Switzerland.
Japanese banks are using deposits to purchase bonds as demand for loans slows. Outstanding loans have fallen for three straight months, the longest decline since 2005, according to the central bank.
‘Huge Risk’
“There is a huge risk not holding bonds,” said Tomoya Masanao, an executive vice president in Tokyo at Pacific Investment Management Co. “The growth rate won’t rise much and prices will remain low.”
Pimco increased its bet on Japanese debt “slightly” since the fiscal year started April 1, he said. The company, based in Newport Beach, California, runs the world’s biggest bond fund, the $161 billion Total Return Fund.
The Ministry of Finance plans to increase bond sales to a record 130.2 trillion yen in the current fiscal year to allow Prime Minister Taro Aso to pay for 25 trillion yen in spending he has announced.
Government debt will increase to almost double the size of the nation’s gross domestic product next year, according to the Paris-based Organization for Economic Cooperation and Development.
170 Percent of GDP
Borrowing already amounts to 170 percent of GDP, the most among the Group of Seven industrialized nations, according to Bloomberg data. U.S. debt is equal to 55.9 percent of its economy, the figures show.
Aso, from the Liberal Democratic Party, plans to hold national elections on Aug. 30, legislator Shuzen Tanigawa said yesterday. The premier faces a challenge from the Democratic Party of Japan.
“The LDP or DPJ, regardless the outcome of the forthcoming general election, are likely to hammer out fresh stimulus measures to boost the public support,” said Akitsugu Bandou, senior economist at Okasan Securities Co. in Tokyo. “We have to brace for more debt sales.” Ten-year yields may climb to 1.5 percent by the end of December, he said.
At the start of the year, primary dealers projected yields would increase to 1.7 percent by Dec. 31.
Since then, Bank of Japan Governor Masaaki Shirakawa increased the amount of bonds the central bank buys to 1.8 trillion yen a month from 1.4 trillion to combat the nation’s worst postwar economic recession.
Record Contraction
Shirakawa cut the target for overnight loans between banks to 0.1 percent from 0.3 percent in December. The economy contracted at a record 14.2 percent annual pace in the three months ended March 31.
Consumer prices fell at an unprecedented rate in May, sending the inflation index measuring costs excluding fresh food down 1.1 percent from a year earlier. Deflation, or a general drop in prices, enhances the value of a bond’s fixed payments.
“The Japanese economy may fall into a double-dip recession, and deflationary pressure will strengthen,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. Ueno forecasts 10-year yields will drop to 1.1 percent by Dec. 31.
Treasuries fell this year on speculation investors from outside the U.S., who own more than half of the nation’s debt, will demand higher yields to keep buying. Japan doesn’t face that challenge because about 92 percent of the bonds are held within the country, based on data from the Ministry of Finance.
Deflation to Spread
Yields indicate deflation will spread. The difference between rates on five-year notes and inflation-linked debt, which reflects the outlook among traders for consumer prices over the term of the securities, was negative 1.6 percentage points. By contrast, the figure is positive in the U.S., the U.K., Germany and Italy.
“Investors globally should prefer yen bonds,” said Daisuke Uno, chief bond and currency strategist at Sumitomo Mitsui Banking Corp. in Tokyo, a unit of Japan’s third-largest banking group. “Yen bonds are considered to be safer than U.S. Treasuries” after the first half, he said. Japanese 10-year yields will fall to 1.125 percent by year-end, he said.
Monday, July 13, 2009
Australia, N.Z. Dollars Gain on Equities, Central Bank Comments
July 14 (Bloomberg) -- The Australian and New Zealand dollars gained for a second day as equity futures signaled stocks in Australia and Japan may open higher, raising speculation investors will buy higher-yielding assets.
New Zealand’s dollar was the best-performer among the 16 most-traded currencies versus the dollar and yen as central bank governor Alan Bollard said today the nation’s economy may recover ahead of most of its trading partners. The Standard & Poor’s 500 Index gained the most in six weeks yesterday as analyst Meredith Whitney recommended buying shares of Goldman Sachs Group Inc. and said U.S. banks may advance 15 percent.
“The Aussie may test 78.80 cents on the topside on equities,” said Jim Vrondas, manager of corporate business at online foreign-exchange dealer OzForex Ltd. in Sydney.
Australia’s currency rose 0.2 percent to 78.43 U.S. cents as of 8:41 a.m. in Sydney from 78.32 cents in New York yesterday. The so-called Aussie rose 0.3 percent to 73.03 yen.
New Zealand’s dollar gained 0.3 percent to 63.44 U.S. cents from 63.23 in New York. It traded at 59.10 yen from 58.78.
“Early signs of a global recovery have now emerged,” RBNZ Governor Bollard said in notes for a speech delivered today in Napier. “New Zealand looks likely to start recovering ahead of the pack.”
New Zealand’s dollar was the best-performer among the 16 most-traded currencies versus the dollar and yen as central bank governor Alan Bollard said today the nation’s economy may recover ahead of most of its trading partners. The Standard & Poor’s 500 Index gained the most in six weeks yesterday as analyst Meredith Whitney recommended buying shares of Goldman Sachs Group Inc. and said U.S. banks may advance 15 percent.
“The Aussie may test 78.80 cents on the topside on equities,” said Jim Vrondas, manager of corporate business at online foreign-exchange dealer OzForex Ltd. in Sydney.
Australia’s currency rose 0.2 percent to 78.43 U.S. cents as of 8:41 a.m. in Sydney from 78.32 cents in New York yesterday. The so-called Aussie rose 0.3 percent to 73.03 yen.
New Zealand’s dollar gained 0.3 percent to 63.44 U.S. cents from 63.23 in New York. It traded at 59.10 yen from 58.78.
“Early signs of a global recovery have now emerged,” RBNZ Governor Bollard said in notes for a speech delivered today in Napier. “New Zealand looks likely to start recovering ahead of the pack.”
Australian June Business Sentiment Rises on Rate Cuts
July 14 (Bloomberg) -- Australian business sentiment turned positive in June for the first time since December 2007, increasing central bank Governor Glenn Stevens’ scope to keep borrowing costs unchanged at a half-century low this year.
The sentiment index rose 6 points to 4, after holding below zero for the previous 17 months, according to a National Australia Bank Ltd. survey of more than 400 companies questioned between June 24 and 30, and released in Sydney today. A figure above zero shows optimists outnumber pessimists.
Rising business confidence adds to signs Australia’s economy may skirt the global recession, helped by government spending and Stevens’ decision to slash borrowing costs to 3 percent. The jobless rate rose less than forecast in June, consumer confidence jumped to the highest level since December 2007 and home-loan approvals rose for an eighth month.
Much of the improvement in sentiment can “be put down to the prospect that ‘Armageddon’ had been avoided,” said Alan Oster, chief economist at National Australia Bank in Melbourne. “Business conditions appear to have rebounded to a level roughly similar to that reported prior to the collapse of Lehman Brothers Holdings Inc. in September.”
The Australian dollar rose to 78.20 U.S. cents at 11:33 a.m. in Sydney from 78.15 cents just before the report was released. The two-year government bond yield climbed 2 basis points to 3.75 percent. A basis point is 0.01 percentage point.
Cash Handouts
Governor Stevens left the overnight cash rate target unchanged on July 7 for a third straight month after slashing the rate by 4.25 percentage points between September and April to spur consumer demand.
The government has also distributed more than A$12 billion ($9.4 billion) to households this year, boosting at retailers such as David Jones Ltd., and allocated A$22 billion to upgrade roads, railways, ports, hospitals and schools.
Sydney-based David Jones, Australia’s second-largest department store chain, said last month that earnings after tax will rise by between 20 percent and 30 percent in the six months ending July 25.
Gross domestic product unexpectedly expanded 0.4 percent in the first quarter from the previous three months as consumer spending and exports helped Australia avoid a recession, a report showed last month.
Rates Outlook
“With an economy holding up better than expected, we now see the Reserve Bank on hold,” National Australia’s Oster said. “Rate increases are clearly a story for the second half of 2010.”
Governor Stevens will increase the benchmark lending rate to around 3.75 percent by the end of next year, before pushing the rate to between 5 percent and 5.5 percent by late 2011, Oster added.
National Australia’s business conditions gauge, a measure of hiring, sales and profits, jumped to minus 2 points from minus 14.
“While the survey clearly points to much better-than- expected outcomes, the real question is whether this improvement can be sustained into the second half of 2009,” Oster said.
“It’s hard to see the pace of consumer spending being maintained in the face of less cash handouts, rising unemployment and the damage done to household balance sheets.”
GDP will shrink 0.5 percent this year, before expanding 1 percent in 2010, Oster predicts.
The sentiment index rose 6 points to 4, after holding below zero for the previous 17 months, according to a National Australia Bank Ltd. survey of more than 400 companies questioned between June 24 and 30, and released in Sydney today. A figure above zero shows optimists outnumber pessimists.
Rising business confidence adds to signs Australia’s economy may skirt the global recession, helped by government spending and Stevens’ decision to slash borrowing costs to 3 percent. The jobless rate rose less than forecast in June, consumer confidence jumped to the highest level since December 2007 and home-loan approvals rose for an eighth month.
Much of the improvement in sentiment can “be put down to the prospect that ‘Armageddon’ had been avoided,” said Alan Oster, chief economist at National Australia Bank in Melbourne. “Business conditions appear to have rebounded to a level roughly similar to that reported prior to the collapse of Lehman Brothers Holdings Inc. in September.”
The Australian dollar rose to 78.20 U.S. cents at 11:33 a.m. in Sydney from 78.15 cents just before the report was released. The two-year government bond yield climbed 2 basis points to 3.75 percent. A basis point is 0.01 percentage point.
Cash Handouts
Governor Stevens left the overnight cash rate target unchanged on July 7 for a third straight month after slashing the rate by 4.25 percentage points between September and April to spur consumer demand.
The government has also distributed more than A$12 billion ($9.4 billion) to households this year, boosting at retailers such as David Jones Ltd., and allocated A$22 billion to upgrade roads, railways, ports, hospitals and schools.
Sydney-based David Jones, Australia’s second-largest department store chain, said last month that earnings after tax will rise by between 20 percent and 30 percent in the six months ending July 25.
Gross domestic product unexpectedly expanded 0.4 percent in the first quarter from the previous three months as consumer spending and exports helped Australia avoid a recession, a report showed last month.
Rates Outlook
“With an economy holding up better than expected, we now see the Reserve Bank on hold,” National Australia’s Oster said. “Rate increases are clearly a story for the second half of 2010.”
Governor Stevens will increase the benchmark lending rate to around 3.75 percent by the end of next year, before pushing the rate to between 5 percent and 5.5 percent by late 2011, Oster added.
National Australia’s business conditions gauge, a measure of hiring, sales and profits, jumped to minus 2 points from minus 14.
“While the survey clearly points to much better-than- expected outcomes, the real question is whether this improvement can be sustained into the second half of 2009,” Oster said.
“It’s hard to see the pace of consumer spending being maintained in the face of less cash handouts, rising unemployment and the damage done to household balance sheets.”
GDP will shrink 0.5 percent this year, before expanding 1 percent in 2010, Oster predicts.
Sunday, July 12, 2009
Singapore Probably Exited Recession on Output Gains
July 13 (Bloomberg) -- Singapore’s economy probably expanded for the first time in five quarters as a rebound in manufacturing helped the Southeast Asian nation emerge from its worst recession since independence in 1965.
Gross domestic product rose an annualized 13.4 percent last quarter from the previous three months, after shrinking 14.6 percent between January and March, according to the median estimate of 12 economists surveyed by Bloomberg News. The trade ministry will release the data at 8 a.m. tomorrow.
Singapore and other economies in the region are forecast to report better second-quarter figures as about $2 trillion in stimulus worldwide helps stabilize overseas sales for companies including Japan’s Nissan Motor Co. and South Korea’s Samsung Electronics Co. The International Monetary Fund last week increased its forecast for emerging Asia’s growth in 2009.
“Much healthier manufacturing-sector numbers in the second quarter are the key drivers” of Singapore’s performance, said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. We “will also likely see financial services boosting the services sector, with the rally in the stock markets in April, May and June.”
Singapore’s industrial output climbed in the first two months last quarter, while the decline in the island’s exports narrowed in May amid gains in drug shipments. Manufacturing, which slid 26.1 percent in the three months ended March, accounts for about a quarter of the economy.
India, South Korea
Other Asian nations have also reported an improvement in manufacturing. In May, India’s industrial production increased at the fastest pace in eight months, while Malaysia’s posted the smallest decline in six months. South Korea’s output rose more than estimated while China’s accelerated the same month.
Singapore’s $161 billion economy declined 5.4 percent in the three months ended June from a year earlier, compared with a 10.1 percent drop in the first quarter, according to the Bloomberg survey.
The Straits Times Index rose 37.2 percent last quarter, the biggest gain since at least 1999. The volume of stocks traded increased more than 50 percent in that period. The index was 0.3 percent lower as of 9:40 a.m. local time. The Singapore dollar was little changed at S$1.4615 against the U.S. currency.
The government forecasts the economy will shrink between 6 percent and 9 percent this year, the deepest contraction since its independence 44 years ago. Economists at Citigroup Inc., Goldman Sachs and DBS Group Holdings Ltd. are among those that have increased their Singapore economic estimates in recent weeks as manufacturing and export figures showed improvement.
Signs of recovery were also evident in other parts of the economy, Citigroup’s Kit Wei Zheng said.
“Re-stocking driven rebounds in technology, continued growth in construction spending, financial services and a revival in the private housing market contributed to the recovery in the broader economy,” he said.
Gross domestic product rose an annualized 13.4 percent last quarter from the previous three months, after shrinking 14.6 percent between January and March, according to the median estimate of 12 economists surveyed by Bloomberg News. The trade ministry will release the data at 8 a.m. tomorrow.
Singapore and other economies in the region are forecast to report better second-quarter figures as about $2 trillion in stimulus worldwide helps stabilize overseas sales for companies including Japan’s Nissan Motor Co. and South Korea’s Samsung Electronics Co. The International Monetary Fund last week increased its forecast for emerging Asia’s growth in 2009.
“Much healthier manufacturing-sector numbers in the second quarter are the key drivers” of Singapore’s performance, said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. We “will also likely see financial services boosting the services sector, with the rally in the stock markets in April, May and June.”
Singapore’s industrial output climbed in the first two months last quarter, while the decline in the island’s exports narrowed in May amid gains in drug shipments. Manufacturing, which slid 26.1 percent in the three months ended March, accounts for about a quarter of the economy.
India, South Korea
Other Asian nations have also reported an improvement in manufacturing. In May, India’s industrial production increased at the fastest pace in eight months, while Malaysia’s posted the smallest decline in six months. South Korea’s output rose more than estimated while China’s accelerated the same month.
Singapore’s $161 billion economy declined 5.4 percent in the three months ended June from a year earlier, compared with a 10.1 percent drop in the first quarter, according to the Bloomberg survey.
The Straits Times Index rose 37.2 percent last quarter, the biggest gain since at least 1999. The volume of stocks traded increased more than 50 percent in that period. The index was 0.3 percent lower as of 9:40 a.m. local time. The Singapore dollar was little changed at S$1.4615 against the U.S. currency.
The government forecasts the economy will shrink between 6 percent and 9 percent this year, the deepest contraction since its independence 44 years ago. Economists at Citigroup Inc., Goldman Sachs and DBS Group Holdings Ltd. are among those that have increased their Singapore economic estimates in recent weeks as manufacturing and export figures showed improvement.
Signs of recovery were also evident in other parts of the economy, Citigroup’s Kit Wei Zheng said.
“Re-stocking driven rebounds in technology, continued growth in construction spending, financial services and a revival in the private housing market contributed to the recovery in the broader economy,” he said.
New Zealand Retail Sales Gain 0.8%, Spurring Recovery
July 13 (Bloomberg) -- New Zealand’s retail sales rose for the third time in four months in May, adding to signs that record-low interest rates and income-tax cuts may help the economy emerge from a recession later this year.
Sales gained 0.8 percent from April when they increased 0.5 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. Core retail sales, which exclude car yards, fuel outlets and workshops, surged 1.6 percent, the biggest monthly gain since February 2007.
Higher retail and property sales add to evidence the economy may emerge from the worst recession in three decades by the end of this year. Reserve Bank Governor Alan Bollard kept the benchmark interest rate unchanged last month for the first time in a year, saying household spending may rebound.
“There were some tentative sign of housing-related spending picking up, although this is from a low base and the pickup in housing demand has been relatively modest to date,” said Jane Turner, an economist at ASB Bank Ltd. in Auckland. The report “suggests that underlying consumer demand remains reasonably subdued,” she said.
The increase in sales was four times the 0.2 percent median estimate in a Bloomberg News survey of 10 economists. New Zealand’s dollar bought 62.85 U.S. cents at 11:20 a.m. in Wellington from 62.74 cents just before the report was released.
Interest Rates
Bollard has cut the benchmark interest rate by 5.75 points to a record-low 2.5 percent since July last year. Finance Minister Bill English reduced income taxes on April 1 to help kick-start an economy that shrank for a fifth straight quarter in the three months ended March 31.
The economy may start growing in the fourth quarter of this year, Bollard said on June 11.
Buoying spending, annual immigration growth accelerated to the highest in more than two years in May. Consumers’ pessimism about their future wealth has fallen to the lowest level since February last year, according to a Roy Morgan Research poll taken in the two weeks ended July 5.
House prices were unchanged in June from a year earlier -- the first time in 15 months values hadn’t declined, the Real Estate Institute said last week. House sales rose 40 percent from a year earlier.
Retail sales increased in 14 of the 24 store categories measured in today’s report, led by a 2.2 percent gain in supermarket and grocery sales, which make up one-fifth of all retailing.
Monthly Sales
The monthly sales series isn’t adjusted to exclude price movements and sales. Grocery food prices rose 1 percent in May, according to government figures.
Clothing store sales surged 13 percent as plummeting temperatures and above-average rainfall boosted sales of winter clothes, the statistics bureau said. Appliance sales also gained.
“The cold snap sent shoppers indoors to the mall and boosted clothing sales,” said ASB’s Turner.
Pumpkin Patch Ltd., the nation’s second-largest retailer by market capitalization, last month said trading at its children’s clothing stores, was “reasonably robust.”
Vehicle dealer sales fell for the first time in three months, dropping 1.9 percent. Purchases from fuel outlets declined 2.7 percent.
The core retail trend series, which excludes irregular movements as well as seasonality, rose 0.2 percent from April.
Sales gained 0.8 percent from April when they increased 0.5 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. Core retail sales, which exclude car yards, fuel outlets and workshops, surged 1.6 percent, the biggest monthly gain since February 2007.
Higher retail and property sales add to evidence the economy may emerge from the worst recession in three decades by the end of this year. Reserve Bank Governor Alan Bollard kept the benchmark interest rate unchanged last month for the first time in a year, saying household spending may rebound.
“There were some tentative sign of housing-related spending picking up, although this is from a low base and the pickup in housing demand has been relatively modest to date,” said Jane Turner, an economist at ASB Bank Ltd. in Auckland. The report “suggests that underlying consumer demand remains reasonably subdued,” she said.
The increase in sales was four times the 0.2 percent median estimate in a Bloomberg News survey of 10 economists. New Zealand’s dollar bought 62.85 U.S. cents at 11:20 a.m. in Wellington from 62.74 cents just before the report was released.
Interest Rates
Bollard has cut the benchmark interest rate by 5.75 points to a record-low 2.5 percent since July last year. Finance Minister Bill English reduced income taxes on April 1 to help kick-start an economy that shrank for a fifth straight quarter in the three months ended March 31.
The economy may start growing in the fourth quarter of this year, Bollard said on June 11.
Buoying spending, annual immigration growth accelerated to the highest in more than two years in May. Consumers’ pessimism about their future wealth has fallen to the lowest level since February last year, according to a Roy Morgan Research poll taken in the two weeks ended July 5.
House prices were unchanged in June from a year earlier -- the first time in 15 months values hadn’t declined, the Real Estate Institute said last week. House sales rose 40 percent from a year earlier.
Retail sales increased in 14 of the 24 store categories measured in today’s report, led by a 2.2 percent gain in supermarket and grocery sales, which make up one-fifth of all retailing.
Monthly Sales
The monthly sales series isn’t adjusted to exclude price movements and sales. Grocery food prices rose 1 percent in May, according to government figures.
Clothing store sales surged 13 percent as plummeting temperatures and above-average rainfall boosted sales of winter clothes, the statistics bureau said. Appliance sales also gained.
“The cold snap sent shoppers indoors to the mall and boosted clothing sales,” said ASB’s Turner.
Pumpkin Patch Ltd., the nation’s second-largest retailer by market capitalization, last month said trading at its children’s clothing stores, was “reasonably robust.”
Vehicle dealer sales fell for the first time in three months, dropping 1.9 percent. Purchases from fuel outlets declined 2.7 percent.
The core retail trend series, which excludes irregular movements as well as seasonality, rose 0.2 percent from April.
Most Asian Stocks Fall on Economic Growth Concern; Kirin Surges
July 13 (Bloomberg) -- Most Asian stocks fell, led by technology and mining companies, after an index of U.S. consumer sentiment sank more than economists expected and commodity prices declined. Consumer-related shares advanced.
Samsung Electronics Co., Asia’s biggest maker of computer- memory chips and flat screens, lost 1.2 percent in Seoul. Rio Tinto Group, the world’s third-largest mining company, dropped 1.7 percent after oil and metals prices declined on July 10. Kirin Holdings Co., Japan’s biggest beverage maker, surged 9.8 percent after the Nikkei newspaper said the company may merge with Suntory Holdings Ltd.
The MSCI Asia Pacific Index fell 0.1 percent to 100.58 as of 9:45 a.m. in Tokyo, with three stocks declining for every two that advanced. The gauge lost 4.2 percent in the two weeks through July 10.
“Uncertainty reigns over the market and people are gradually switching to the view that the economic recovery will be harder than expected,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co.
Japan’s Nikkei 225 Stock Average gained 0.4 percent, while South Korea’s Kospi Index sank 0.8 percent. Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index were little changed.
Futures on the U.S. Standard & Poor’s 500 Index gained 0.3 percent. The measure dropped 0.4 percent on July 10 after the Reuters/University of Michigan preliminary index of consumer sentiment slid to 64.6 in July from the prior month. Economists had estimated the gauge would fall to 70.
“It’s going to be a while before we’re confident we’re going to have a strong, sustainable recovery in place,” U.S. Treasury Secretary Timothy Geithner said, according to a transcript of an interview with “CNN’s Fareed Zakaria GPS” show.
Samsung Electronics Co., Asia’s biggest maker of computer- memory chips and flat screens, lost 1.2 percent in Seoul. Rio Tinto Group, the world’s third-largest mining company, dropped 1.7 percent after oil and metals prices declined on July 10. Kirin Holdings Co., Japan’s biggest beverage maker, surged 9.8 percent after the Nikkei newspaper said the company may merge with Suntory Holdings Ltd.
The MSCI Asia Pacific Index fell 0.1 percent to 100.58 as of 9:45 a.m. in Tokyo, with three stocks declining for every two that advanced. The gauge lost 4.2 percent in the two weeks through July 10.
“Uncertainty reigns over the market and people are gradually switching to the view that the economic recovery will be harder than expected,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co.
Japan’s Nikkei 225 Stock Average gained 0.4 percent, while South Korea’s Kospi Index sank 0.8 percent. Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index were little changed.
Futures on the U.S. Standard & Poor’s 500 Index gained 0.3 percent. The measure dropped 0.4 percent on July 10 after the Reuters/University of Michigan preliminary index of consumer sentiment slid to 64.6 in July from the prior month. Economists had estimated the gauge would fall to 70.
“It’s going to be a while before we’re confident we’re going to have a strong, sustainable recovery in place,” U.S. Treasury Secretary Timothy Geithner said, according to a transcript of an interview with “CNN’s Fareed Zakaria GPS” show.
Berkshire, CapitalSource, Schwab: U.S. Equity Market Preview
July 12 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading tomorrow. Stock symbols are in parentheses, and prices are as of 5:30 p.m. in New York on July 10, unless otherwise specified.
Berkshire Hathaway Inc. (BRK/A US): Warren Buffett’s conglomerate may rise as the recovering U.S. economy boosts the value of its more-than-$50 billion equity portfolio and other investments, Barron’s reported, without citing anyone. Berkshire Hathaway Class A stock fell $475, or 0.5 percent, to $85,125.
BRF Brasil Foods SA (PDA:US): The company formerly known as Perdigao SA, which is taking over Sadia SA, may rise as 36 percent as growth in Brazilian consumption boosts sales, Barron’s reported, citing Renato Prado, an equity analyst at Fator Corretora in Sao Paolo. BRF Brasil’s American depositary receipts, which each represent two ordinary shares, fell 76 cents, or 1.9 percent, to $38.69 on July 10.
CapitalSource Inc. (CSE:US) fell 10 percent to $4.06. The loan provider to small and mid-sized businesses said it plans a public offering of about 17.5 million shares of its common stock.
Charles Schwab Corp. (SCHW:US): The largest independent brokerage by client assets may be undervalued as the company cuts fees and offers new products to attract investors, Barron’s reported. Schwab fell 14 cents to $16.47.
Hoku Scientific Inc. (HOKU:US): The maker of fuel-cell and solar-power components said it retained Deutsche Bank Securities Inc. as its financial adviser to seek a possible sale.
RSC Holdings Inc. (RRR:US): The second-largest construction-equipment rental company in North America may rise to $15 within the next year amid a construction slump as petrochemicals, food processing and other industries spend more on equipment, Barron’s reported, citing Vance Edelson, an analyst at Morgan Stanley in New York. RSC gained 28 cents to $6 on July 10.
State Street Corp. (STT:US): The largest money manager for institutions paid $60 million to repurchase warrants held by the U.S., the U.S. Treasury said in a report on emergency aid to financial institutions.
Berkshire Hathaway Inc. (BRK/A US): Warren Buffett’s conglomerate may rise as the recovering U.S. economy boosts the value of its more-than-$50 billion equity portfolio and other investments, Barron’s reported, without citing anyone. Berkshire Hathaway Class A stock fell $475, or 0.5 percent, to $85,125.
BRF Brasil Foods SA (PDA:US): The company formerly known as Perdigao SA, which is taking over Sadia SA, may rise as 36 percent as growth in Brazilian consumption boosts sales, Barron’s reported, citing Renato Prado, an equity analyst at Fator Corretora in Sao Paolo. BRF Brasil’s American depositary receipts, which each represent two ordinary shares, fell 76 cents, or 1.9 percent, to $38.69 on July 10.
CapitalSource Inc. (CSE:US) fell 10 percent to $4.06. The loan provider to small and mid-sized businesses said it plans a public offering of about 17.5 million shares of its common stock.
Charles Schwab Corp. (SCHW:US): The largest independent brokerage by client assets may be undervalued as the company cuts fees and offers new products to attract investors, Barron’s reported. Schwab fell 14 cents to $16.47.
Hoku Scientific Inc. (HOKU:US): The maker of fuel-cell and solar-power components said it retained Deutsche Bank Securities Inc. as its financial adviser to seek a possible sale.
RSC Holdings Inc. (RRR:US): The second-largest construction-equipment rental company in North America may rise to $15 within the next year amid a construction slump as petrochemicals, food processing and other industries spend more on equipment, Barron’s reported, citing Vance Edelson, an analyst at Morgan Stanley in New York. RSC gained 28 cents to $6 on July 10.
State Street Corp. (STT:US): The largest money manager for institutions paid $60 million to repurchase warrants held by the U.S., the U.S. Treasury said in a report on emergency aid to financial institutions.
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