The U.S. indexes fell on Tuesday after a sharp drop in consumer confidence and new concerns about fiscal problems in the euro area in anticipation of settlement by European banks to the ECB. U.S. consumer confidence registered a significant decrease in June to 52.9 from 62.5 in consensus. Rising house prices in the U.S. in April in turn could not help the market to rise. Index S & P / Case-Shiller rose by 0.8 percent. Strong negative market sentiment likely affected liquidity shortage in Europe. Banks could suffer a shortage of 100 billion euros after the banking system is expected in Europe to back the ECB’s 442 billion euros on Thursday, which were distributed during the crisis. Enterprise-level industrial companies registered significantly cheaper. Shares of Boeing Co. lost 4.8 percent while construction equipment manufacturer Caterpillar Inc. decreased by 4.4%. Alcoa lost 3.9 percent to $ 10.60 per share due to fears that demand for aluminum in China can be decreased. Freeport-McMoRan Copper & Gold Inc. reported a decline of securities from 4.9 percent to $ 61.52. JPMorgan fell 3.5 percent to $ 37.20. The second-largest U.S. bank with Bank of America Corp. and Wells Fargo & Co., may lose 1.38 billion dollars annually from the proposal of the U.S. Congress to limit commissions on credit cards that banks draw.
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The stock market indexes in Asia and Pacific region rose for first time since April 30, after the European Union (EU), International Monetary Fund (IMF) and European Central Bank (ECB) agreed an unprecedented plan to rescue and recovery of the euro area calm the financial markets. Shares of banks and financial companies reacted positively to the news and rose, along with those of mining companies, which benefited from higher commodity prices. The reason for that a coordinated intervention by the EU, IMF and the ECB in support of the euro, which fell to 14-month low against the dollar on May 6. The regional index MSCI Asia Pacific, which brings together the securities markets in ten Asian countries plus Australia and New Zealand, jumped 1.5 percent to 120.2 points. The increase is greatest for the last two weeks and the first since April 30. Last week, Asian markets reported strongest decline in its February 2009. Most increase the Indonesian stock index Jakarta Composite, which jumped 3 percent to 2821 points, followed by the Australian S & P / ASX 200, which rose 2.7 percent to 4599 points. Jakarta Composite reached its lowest point in the last six weeks on Friday, slipped 2.6 percent to end the session. The exchange in Tokyo the Nikkei 225 rose 1.6 percent to 10 530.7 points, having lost more than 6 percent of its value during the previous two trading session. Bank of Japan expected left its key interest rate unchanged at a level of 0.1 percent today after Friday decided to fueling an extraordinary two trillion. yen in the banking system because of the turmoil in financial markets.
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Meetings of the European Central Bank and the Bank of England closed without surprise to the market. Both institutions have left the main interest of exchange systems that control. The level of interest announced ECB remained 1% of the BOE 0.5%. The Bank of England said that at this stage will increase the quantity facilities program, which currently has about 200 billion pounds. Meanwhile, ECB President Jean-Claude Trichet, announced long-awaited extension of the measures taken in connection with the financial crisis. These are the reduction in requirements to guarantee banks’ so-called repurchase agreements, which were adopted in 2008, they will remain in force after 2010 These reports allow eurozone banks to borrow from the ECB in provide replacement of Frankfurt-based institution government securities held by member countries of the eurozone. Depressed criteria allow countries with a credit rating BBB-to participate in such a scheme, as pre-crisis level was A. It is important for European banks that have Greek debt as they can continue to deposit them at the ECB in carrying out of repos.
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Average interest rates on most loans to households and companies fell again in February, but these deposits are largely unchanged, indicating the European Central Bank in its regular monthly review. Data continue to show that the situation on credit conditions gradually improve, which is accompanied by a decrease in interest rates, but done against the backdrop of continuing low demand for loans, particularly by businesses. The ECB notes that households and companies in the euro area continue to reduce its debt in February, citing a monetary aggregate M3, published last week. From there, it appears that the level of lending to the private sector decreased by 0.4 percent from a year earlier. European Central Bank, in February order interest rates on housing loans have decreased on average by 0.04 percentage points to 2.67% for loans with floating-rate and 4.34 percent for loans with fixed interest. Average interest rates on consumer loans also fell. The cost of loans with a duration of between one and five years fell by 17 basis points to 6.25 percent. Loan rates for corporate borrowers showed a similar trend, but not identical. Interest for small loans with maturities up to one year remained unchanged at a level of 3.26 percent in February, a short-term rates for loans above EUR 1 million fell by eight basis points to 1.93 percent. Interest on loans with maturity of more than five years have declined an average of five basis points to 3.60 percent.
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Finance ministers of 16 countries of the euro area’s economic growth expected area of the single European currency in 2010 to be “fragile” but positive, about 1%. In 2009, the eurozone has experienced the worst recession in its history, as the gross domestic product (GDP) fell by 4 per cent. In the fourth quarter of last year growth was only 0.1 percent, reports agency Reuters. Expectations of ministers who had the extraordinary meeting is to inflation in the eurozone rose by an average of around 1.3 percent this year. What will hamper the development is the labor market situation, unemployment will continue to rise until 2011, warn experts. Many companies that have low utilization, you will be able to maintain jobs. One of the most important reasons for the refund will be renewed confidence in financial markets, which currently is still quite fragile. Most major central banks kept interest rates at around zero, and this increased demand and purchase of assets with higher interest. Eurozone inflation rose to an average of around 1.3 percent in 2010.
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In the second half of 2009 75% of SMEs in the EU have received the full amount or part of those seeking bank loans. However, institutions have refused credit to 18 percent of the companies. Reported that the European Central Bank (ECB) in a study published today for access to European business and finances. The study was carried out in the period between 19 November-December 18, 2009, and there are 5 320 companies participated in the euro area. Nearly half of these firms stated that their needs in bank lending does not change the past six months. However, about 25 percent said they had a greater need for loans, but for only 10% of the companies needs bank loans were lower. While 42% of businessmen believe that the ability to take a bank loan in the second half of 2009 have deteriorated. For comparison, in the first half 43 percent of businesses gave a bad evaluation of access to funds from banking institutions. Only 10% see improvement of the system. Their number remains unchanged from the first half. 75% of the businessmen said that they received the loan for which they applied. In the first half of 2009 a total of 77 percent of companies participating in the quiz, said they have received funds or demand of them. 18% of the companies, however, is denied a loan. In the first half of last year’s loan from a banking institution was denied to 12% of the companies.
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The European Central Bank not surprise anyone leave the level of the interest rate on main refinancing operations to a record low of 1%. We recall that it is not altered by May 2009. The study on Bloomberg shows that the bank will probably raise the level of the indicator only in the last quarter of this year and is expected to change not exceed 0.5 percentage points. Efforts of the ECB President Jean-Claude Trichet met resistance from the growing unemployment in the euro area, as well as concerns about the fiscal stability of Greece. After the ECB gradually tightened the conditions for granting loans to banks in Germany’s economy began to feel the signs of stagnation, the agency said. From there cited expectations of vehicle manufacturer Renault, which according to the European market for new cars will shrink by 10% this year. Moreover, the data for November showed that retail sales in the euro area in November with the most reduction of 13 months now. Trichet said after the meeting, the data suggest that the enhanced economic activity is expected moderate economic growth for the Eurozone in 2010.
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The Correlation between Germany and U.S. government Annuities, which was established during the credit crisis of 2007, began to decline after U.S. economic growth has outpaced that of Europe. Since early December, the yield on 10-year U.S. government Annuities has risen twice as fast (up 3.83%) than in Germany GS (bonds) with the same maturity, which reached 3.39 percent, according to data from Bloomberg. This means that the decrease in the price of American securities was nearly twice greater than that of bonds. Correlation between the two instruments (based on last 44 days) decreased to 0.54 on 8 January of 0.76 to 19 November, according to the indexes calculated by Bank of America Merrill Lynch. Companies such as Pacific Investment Management Co. (Pimco), FAF Advisors Inc. and Fischer Francis Trees & Watts, who manage more than 1,1 trillion. dollars selling U.S. debt to buy Germany bonds to make a profit from their different movements. According to strategists in 2010 U.S. government Annuities may indicate a loss for the second consecutive year, is expected after the Federal Reserve (U.S. central bank) to raise interest rates along with the acceleration of economic growth, according to a survey of Bloomberg. Growth in the eurozone will be restricted, as governments reduce incentives and rising unemployment (now about 10 percent across the EU), considered the leading institutes in Germany, France and Italy. According to Bill Gross, one of the managers at Pimco, the yield on U.S. government annuities will increase because of fiscal problems in the United States. This contrasts with Germany where the constitutional amendment made it mandatory to achieve a balanced budget by 2016.
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Today’s session brought increases in most stock indexes of the Old Continent, having good data on the labor market and sales of new homes rose in the U.S. economic optimism of investors. Pan-European index Dow Jones Stoxx 600, which monitors the securities markets in 18 European countries, added 0.5 percent to end the session at a level of 248.09 points. Stock measure has increased by 57 percent since the beginning of March. The revised data today showed that Britain remains in recession. Gross domestic product declined by 0.3 percent in the third quarter, however, was less than originally announced, a decline of 0.4 percent. The British FTSE 100 index ended the session with an increase of 0.8 percent to 5364.8 points. This helped most extractive and energy companies due to appreciation of the metals and oil, as well as those in the health sector. National benchmarks rose in 13 of all 18 stock exchanges, which are represented in the Dow Jones Stoxx 600. The main index of the Frankfurt DAX added 0.6 percent to 5803 points, despite disappointing news that consumer confidence index in Germany GFK institute fell unexpectedly for the third month in November. Bundesbank predicted today that Germany banks may write off the assets for another 90 billion euros because of problem loans and investments in securities. This will reduce their profits even after the economy starts to recover.
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