News That Matters

By www.thetrader.se

Ft.com

The US looked set to avoid a potentially catastrophic default on its debt, the FT says, after the House of Representatives voted 269 to 161 to increase the debt ceiling on Monday night. The legislation is expected to easily pass a Senate vote on Tuesday. http://ftalphaville.ft.com/thecut/2011/08/02/640141/markets-unimpressed-as-debt-deal-passes-house/

The value of Twitter has jumped to $8bn, more than double the level accorded to the company as recently as late last year, according to the terms of a fresh $800m investment in the company. Twitter announced the on its corporate blog on Monday its latest round of investment had been led by DST http://ftalphaville.ft.com/thecut/2011/08/02/640066/new-investment-values-twitter-at-8bn/

The UK’s benchmark borrowing costs came within a whisker of their all-time lows on Monday as the rapid fall in gilt yields continued apace, reports the FT. UK 10-year bond yields hit 2.797 per centhttp://ftalphaville.ft.com/thecut/2011/08/02/640036/uk-borrowing-costs-b...

Bad economic news bombarded the Treasury on Monday as new IMF forecasts cast doubt on the chancellor’s deficit reduction plan, while near-term indicators suggested the recovery was losing the little momentum it had, http://ftalphaville.ft.com/thecut/2011/08/02/640011/imf-casts-doubt-on-uk-deficit-plan/

South Korea has prevented three conservative Japanese politicians from entering the country in an escalating diplomatic spat over disputed islands, reports the FT. Lee Myung-bak, South Korea’s presidenthttp://ftalphaville.ft.com/thecut/2011/08/01/639946/s-korea-denies-entry...

China has announced its first nationwide feed-in tariff for solar projects in a step that underscores the determination of the world’s biggest energy user to move toward renewable energy, reports the FT. Beijing has made renewable energy a keystone of its energy policy and aims to raise solar power capacity tenfold in the next five years. http://ftalphaville.ft.com/thecut/2011/08/01/639936/china-backing-for-solar-power/

HSBC is planning to hire up to 15,000 people in fast-growing markets in Asia and Latin America over the next three years even after confirmation of the bank’s plans to cull jobs elsewhere, reports the FT.http://ftalphaville.ft.com/thecut/2011/08/01/639926/hsbc-set-to-launch-h...

Standard & Poor’s is in the spotlight again. The question facing the credit rating agency is whether it will downgrade the triple A credit rating of the US, or whether a tentative debt deal struck in Washington involving up to $2,400bn in deficit cuts over the next decade will avert such a move. http://www.ft.com/intl/cms/s/0/8c31d8da-bc59-11e0-acb6-00144feabdc0.html#axzz1TkVnqGOp

Italian banks suffered another torrid day of trading as investors sold off a sector that has become a weather vane for concerns about the sovereign debt crisis in Europe. Shares in UniCredit, Italy’s largest bank by assets, were temporarily suspended on Monday for high intraday volatility. The stock closed down more than 4 per cent. Shares in Intesa Sanpaolo, Italy’s largest retail bank, and Banca Monte dei Paschi di Siena, Italy’s third-largest bank by assets, both fell 7.8 per cent http://www.ft.com/intl/cms/s/0/e943dbf4-bc5e-11e0-acb6-00144feabdc0.html#axzz1TkVnqGOp

Wsj.com

Asian shares fell Tuesday as fresh worries over the global growth outlook and persistent concerns of possible downgrades to the U.S. credit rating offset any lingering relief after U.S. Congressional leaders struck an 11th-hour deal to avert a default on U.S. government obligations. Japan’s Nikkei Stock Average fell 1.3%, Australia’s S&P/ASX 200 lost 1.0%, South Korea’s Kospi Composite fell 1.3% and New Zealand’s NZX-50 was 0.3% lower. Dow Jones Industrial Average futures were up 26 points in screen trade. http://online.wsj.com/article/SB10001424053111903341404576483034095632142.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Japan’s top government spokesman said early Tuesday the government is closely monitoring the recent decline of the U.S. dollar. “We are strongly concerned about the falling dollar and are keeping close watch” on the situation, Chief Cabinet Secretary Yukio Edano said at a press conference. He said he wouldn’t comment on the possibility of the authorities intervening in the market to weaken the yen. The dollar rose to ¥77.44 in early trading, from ¥77.21 late Monday in New York. http://online.wsj.com/article/SB10001424053111903520204576481112873662294.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

China pointed a finger at Pakistan, one of its closest foreign partners, as it blamed one of two deadly weekend attacks in the northwestern Xinjiang region on Muslim extremists trained across the Pakistani border.? Police also “executed on the spot” two more suspected attackers in the city of Kashgar, according to a local government statement, while paramilitary police with shotguns and automatic weapons patrolled the streets of the city of Kashgar to prevent further unrest as local authorities said 20 people were killed in all in the attacks by knife-wielding members of the Uighur ethnic minority on Saturday and Sunday in a second week of violence to rock Xinjiang.? http://online.wsj.com/article/SB10001424053111903341404576481312937363114.html?mod=WSJAsia_hpp_LEFTTopStories

The deal to raise the debt ceiling and reduce budget deficits would likely cause a mild drag on U.S. economic growth in the coming year, coming at a time when the recovery remains fragile. The agreement could raise confidence among investors, businesses and consumers, though, by eliminating uncertainty over whether Washington would act in time to prevent the government from defaulting on its financial obligations, and by moving toward deficit reduction. “The front-loaded drag is fairly minimal through the end of 2012,” said James O’Sullivan, an MF Global economist. “The indirect effects, if anything, should be positive.” http://online.wsj.com/article/SB10001424053111904292504576482540884234726.html?mod=WSJAsia_hpp_LEFTTopStories

Investors cut short a relief rally over the debt-ceiling deal, focusing instead on a U.S. economy with few options for jump-starting growth. The stock market rally, which began overnight in Asia, was doused within 30 minutes of the U.S. opening on Monday by a manufacturing report that suggested the U.S. economic recovery showed signs of stalling in July.http://online.wsj.com/article/SB1000142405311190429250457648263050327759...

Marketwatch.com

U.S. manufacturing activity barely grew in July, according to a key index released Monday in a demonstration of an economy struggling to expand. The Institute for Supply Management’s manufacturing gauge in July dropped 4.4 points to 50.9%, the worst reading since July 2009 and barely staying above the 50% no-change line. http://www.marketwatch.com/story/ism-manufacturing-gauge-falls-to-two-year-low-2011-08-01

Benchmark crude-oil futures ticked higher in electronic trading during Asian hours Tuesday, as the U.S. debt deal cleared its first and likely biggest legislative hurdle to stave off triggering a default. Crude for September delivery added 3 cents to $94.92 a barrel on the New York Mercantile Exchange during Asian trading hours. http://www.marketwatch.com/story/oil-edges-higher-in-electronic-trading-2011-08-01

Reuters.com

Gold edged higher on Tuesday, supported by a purchase of the precious metal by South Korea’s central bank, while investors watched the outcome of a vote on the U.S. debt deal. Spot gold inched up 0.1 percent to $1,619.94 by 0245 GMT, off an intraday low of $1,607.69 on Monday. U.S. gold was little changed at $1,623.1. http://www.reuters.com/article/2011/08/02/businesspro-us-markets-precious-idUSTRE7592IU20110802

South Korea’s central bank bought gold for the first time in more than a decade as global growth and debt uncertainties encourage monetary authorities around the world to diversify foreign reserves. A brittle global economic recovery and precarious debt conditions in the United States and Europe have boosted the safe-haven appeal of gold, lifting bullion to a series of record highs in July, as investors and central banks chased prices higher. The Bank of Korea said in a statement on Tuesday it bought 25 tons of gold over the past two months, raising its gold holding to 39.4 tons, or 0.4 percent of its total reserves. http://www.reuters.com/article/2011/08/02/us-korea-economy-reserves-idUSTRE77069420110802

Central Falls, Rhode Island, one of a handful of U.S. cities and counties facing fiscal collapse in the wake of the economic recession, filed for a rare Chapter 9 bankruptcy on Monday. The bankruptcy filing, a risky and potentially expensive move that could freeze the city out of the U.S. municipal bond market, marks a symbolic blow as state and local governments struggle to pull themselves out of the recession.http://www.reuters.com/article/2011/08/01/us-rhodeisland-centralfalls-id...

Google’s Android platform has taken almost 50 percent of the global smartphone market, dominating in the Asia-Pacific region, research firm Canalys said on Monday. Android, which Google acquired in 2005 and launched on phones in 2008, is used by almost all the major phone makers including HTC, LG, Motorola and Samsung. It was the number one platform in 35 of the 56 countries Canalys tracks, resulting in a market share of 48 percent, the research firm said. http://www.reuters.com/article/2011/08/01/us-smartphones-research-idUSTRE7704MS20110801

China’s central bank has halted offshore yuan borrowing by domestic companies, official media reported, a move seen as an attempt to clamp down on hot money flows at a time when the authorities are still tightening policy. The move is unlikely to slow the growth of the offshore yuan or “CNH” market in Hong Kong as Beijing still encourages the outward flow of yuan via trade settlements and foreign direct investment and has recently tweaked rules to encourage trade. http://www.reuters.com/article/2011/08/02/us-china-yuan-offshore-idUSTRE7710F620110802

Bloomberg.com

Australian home-building approvals unexpectedly declined in June for a third straight month and house prices fell, prompting the local currency to pare gains as traders reduced bets on an interest-rate increase this year. The number of permits granted to build or renovate houses and apartments slid 3.5 percent from May, when they dropped a revised 6.3 percent, the Bureau of Statistics said in Sydney today. A separate index measuring the weighted average of prices for established houses in eight major cities declined 0.1 percent last quarter to the lowest level since 2009. http://www.bloomberg.com/news/2011-08-02/australian-house-prices-decline-as-rise-in-borrowing-costs-weaken-demand.html

India needs to raise interest rates to tame inflation and spur economic growth, central bank Governor Duvvuri Subbarao said, a week after boosting borrowing costs for the 11th time since the start of 2010. “We need to raise rates to restrain inflation. That hurts growth,” Subbarao told students at Gitam University in the southern Indian city of Visakhapatnam yesterday. “So, people say are you not hurting growth in order to contain inflation? Our response is that, we need to restrain inflation in order to ensure that our medium-term growth is sustainable.” http://www.bloomberg.com/news/2011-08-01/india-needs-to-raise-rates-to-slow-inflation-subbarao-says.html

Manufacturing indexes from Asia to the U.S. to Europe fell in July as demand weakened and the global recovery from recession lost momentum. U.K., Russian and Australian manufacturing shrank last month, while the pace of factory growth slowed in Europe and China, according to surveys today. An index of U.S. manufacturing dropped more than economists forecast to a two- year low, even after the dollar’s 7 percent drop against the euro this year. http://www.bloomberg.com/news/2011-08-01/manufacturing-weakens-from-china-to-u-k-as-global-recovery-loses-momentum.html

Frustrated employees are voluntarily quitting their jobs at the highest level in almost three years as confidence they will find another stabilizes, even with unemployment at about 9 percent for more than two years. Almost 2 million Americans quit their jobs in May, a 35 percent rise from the lowest level in January 2010, according to the Department of Labor. An increase in employees switching jobs is a signal of increased confidence in the labor market and the overall economy, http://www.bloomberg.com/news/2011-08-02/confidence-in-obama-economy-rises-for-frustrated-workers-finding-new-jobs.html

Wage gains in New Zealand accelerated in the second quarter, adding to signs of inflation pressure that may require the central bank to raise interest rates this year from a record low. Pay for non-governmental workers excluding overtime increased 0.5 percent from the first quarter, when they gained 0.4 percent, Statistics New Zealand’s labor cost index released in Wellington today showed. The result matched the median forecast in a Bloomberg News survey of 10 analysts. http://www.bloomberg.com/news/2011-01-31/new-zealand-wages-increase-more-than-forecast-signaling-recession-averted.html

Cnbc.com

Analyst Meredith Whitney said she’s seeing signs of a double-dip as cities and towns continue to get squeezed by cuts in federal funding. This is certain to get worse as Congress and President Obama try to work out a deal on the debt ceiling, she said. “I never envisioned we would come to this point where Congress couldn’t agree on raising the debt ceiling or we’d be in this dire situation politically,” the head of Meredith Whitney Advisory Group told CNBC Monday. http://www.cnbc.com/id/43973763

Even as the U.S. grapples to bring its debt under control, Asia has another problem on its hand: surging currency reserves, mostly in dollar denominated assets. If the U.S. loses its Triple-A rating, and Treasury prices drop, these reserves could be badly hit. Asian central banks and policy makers have been aware of the problem for some time and have been trying to diversify their foreign reserves away from the dollar, but Thio says the diversification has been only at the margins http://www.cnbc.com/id/43981291

Nytimes.com

Star Alliance, a global network of airlines that caters to frequent international travelers, said Monday that Air India’s pending membership had been suspended. The move throws into disarray a crucial part of the Indian government’s turnaround plan for Air India, which has been struggling as customers have turned to more efficiently run private airlines. http://www.nytimes.com/2011/08/02/business/global/airline-alliance-puts-air-india-on-standby-indefinitely.html?_r=1&ref=global

BBC.co.uk

Chinese carmaker JAC Motors will build a factory in Brazil to boost its presence in Latin America’s biggest car market. Jianghuai Automobile, also known as JAC, plans to have the capacity to produce 100,000 vehicles annually. The company is the latest Asian carmaker to start production in Brazil, others include China’s Chery and South Korea’s Hyundai. http://www.bbc.co.uk/news/business-14367925

Telegraph.co.uk

David Cameron has welcomed President Barack Obama’s last-minute agreement to raise the United States borrowing limit. In a statement, a spokesman for the Prime Minister – who is in Italy on holiday –said the decision had helped to ensure “stability across the global economy”.  He said: “We welcome progress and it is a time of international economic uncertainty, whether in the United States or in the Eurozone or from commodity prices, so agreement will help stability across the global economy. http://www.telegraph.co.uk/news/worldnews/us-politics/8674935/US-debt-crisis-Barack-Obama-deal-will-stabilise-economy-says-Downing-Street.html

Fears of a double-dip downturn on both sides of the Atlantic have set off fresh mayhem in Southern European bond markets, dashing hopes that Europe’s summit deal in late July would contain the escalating crisis. Italy’s 10-year yields spiked through 6pc in wild trading and hit a record post-EMU spread over German Bunds, snuffing out a brief relief rally following Washington’s debt deal. Spain’s yields once again flirted with danger at 6.2pc. “The markets know that the EU’s bail-out find (EFSF) won’t be able to buy Italian and Spanish bonds on the secondary market for another three or four months because the deal has to be ratified by national parliaments,” said David Owen from Jefferies Fixed Income. http://www.telegraph.co.uk/finance/economics/8675928/Italy-in-eye-of-the-storm-as-cash-runs-low.html#disqus_thread

According to the closely-watched purchasing managers index (PMI), factory activity shrank for the first time in two years in July as domestic demand dropped sharply. The reading of 49.1, down from 51.4, was well beneath the consensus forecast of 51, where anything below 50 indicates contraction. http://www.telegraph.co.uk/finance/economics/8674751/UK-recovery-hopes-hit-by-weak-manufacturing.html

Spend by Chinese tourists in the UK jumped by 82pc in the year to the end of March 2011, with the average Chinese shopper spending £605 per trip, according to Global Blue, a company that allows shoppers to claim back VAT from stores. Analysts said the weak pound, the strength of the UK luxury goods retail scene and the rise of the Asian middle class had combined to see a surge in tourist spending here, despite most of the high street feeling the pinch. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8675915/UK-stores-boosted-by-Chinese-shoppers.html

Guardian.co.uk

Despite the eleventh-hour debt deal in Washington, the US is still almost certain to be turfed out of one of the world’s most exclusive clubs when it is stripped out of its prized triple A credit rating. Only 19 countries – several of them tax havens – have this status with credit rating agencies and can borrow more cheaply on the world’s financial markets. Markets will now start to wonder which of the remaining 18 countries will be next in the firing line. http://www.guardian.co.uk/business/2011/aug/01/credit-ratings-which-country-next

Theglobeandmail.com

Over the past few months, critics of the oil sands have taken a new tack. They are now arguing that oil sands crude, which contains more contaminants than traditional sources of crude, poses a risk to pipeline safety – and they’ve linked the recent spate of North American oil pipeline spills to what they say is the corrosive content of oil sands products. http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oil-sands-critics-target-a-new-concern-pipelines/article2116408/

Cs.com.cn

Fighting inflation will remain the top priority for China during the second half of the year, and the relations between maintaining stable growth, adjusting economic structure and managing inflationary expectations will be better handled, the People`s Bank of China (PBOC) said Monday. China would continue its prudent monetary policy during the second half, and make its macroeconomic regulation better targeted, more flexible and forward looking, the central bank said in a statement on its website. http://www.cs.com.cn/english/ei/201108/t20110802_2989967.html

Xinhuanet.com

South Korea’s foreign reserves rose to a new high of 311.03 billion U.S. dollars in July due to increased conversion value of non-dollar denominated assets, the central bank said Tuesday. Foreign reserves stood at 311.03 billion dollars as of the end of July, up 6.55 billion dollars from a month earlier, the Bank of Korea (BOK) said in a statement. The figure was a turnaround after contracting for two straight months in May and June, and marked the largest amount. The reserves exceeded the 300 billion dollars level for the first time in April. http://news.xinhuanet.com/english2010/business/2011-08/02/c_131024469.htm

Brazil registered a trade surplus of 16.1 billion U.S. dollars in the first seven months of this year, up 74.4 percent from the same period last year, the Industry, Development and Trade Ministry said Monday. The country’s exports were valued at 140.5 billion U.S. dollars in January-July, up 31.5 percent, contributing to the surplus significantly despite the unfavorable real-dollar exchange rate, which made Brazilian exports more expensive in the international market. Brazil’s imports amounted to 124.4 billion dollars, a 27.5 percent rise. http://news.xinhuanet.com/english2010/business/2011-08/02/c_131024146.htm

Japan’s monetary base rose 15.0 percent in July from a year earlier, rising for the 35th consecutive month from a 17.0 percent annual increase logged in the previous month, the Bank of Japan (BOJ) said in a report on Tuesday. The average daily balance of the monetary base stood at 113.73 trillion yen (1.47 trillion U.S. dollars) in the recording period, compared to an average balance of 113.47 trillion yen logged in the previous month, the central bank said. http://news.xinhuanet.com/english2010/business/2011-08/02/c_131024330.htm

Thehindu.com

Continuing with buoyant growth, India’s exports rose by 46.45 per cent to $29.21 billion during June 2011 amid growing concerns that the upward growth could be hit by the troubled economic situation in the U.S. and the European zone in the second-half. Merchandise exports aggregated $19.94 billion in June, 2010. In May, exports grew by 56.9 per cent year-on-year to $25.9 billion. Pushed by the spectacular rise in June, exports grew by a hefty 45.7 per cent to $79 billion in the first quarter of the current fiscal, according to the figures released by the Commerce Ministry on Monday. http://www.thehindu.com/business/Economy/article2313842.ece

Painting a grim economic scenario in the wake of an uncertain global outlook and high domestic inflation coupled with a subdued trend in investment and factory output, the Prime Minister’s Economic Advisory Council (PMEAC) on Monday scaled down its GDP (gross domestic product) growth projection for the current fiscal to 8.2 per cent from around 9 per cent estimated earlier.http://www.thehindu.com/business/Economy/article2313995.ece

India and Japan on Monday asserted that the Comprehensive Economic Partnership Agreement (CEPA), which came in to force from Monday, would give a big boost to bilateral trade, enabling it to touch the $25-billion mark by 2014. Immediately after the first meeting of the Joint Committee of India-Japan CEPA here, Japanese Ambassador Akitaka Saiki said business communities of the two countries should make the best use of this new economic arrangement. http://www.thehindu.com/business/Economy/article2313667.ece

The Finance Minister, Mr Pranab Mukherjee, has assured India Inc of a ‘second chapter’ of economic reforms, alongside concrete measures aimed at eliminating any ‘trust deficit’ between the Government and industry. “There was an assurance of action in a time-bound manner. On things like the Goods and Services Tax (GST) and the Direct Taxes Code (DTC), the Finance Minister himself expressed his readiness to act and the need for Government, politicians and industry to come together,” http://www.thehindubusinessline.com/industry-and-economy/government-and-policy/article2313996.ece?homepage=true

Economictimes.com

India has sought a commitment from each of the 27 member-nations of the European Union on the number of Indian professionals they would allow to migrate every year in sectors of its interest. Such a commitment would help India move faster in concluding the bilateral free trade agreement with the EU, a senior government official has told ET. http://economictimes.indiatimes.com/news/economy/policy/eu-nations-told-to-commit-visa-numbers/articleshow/9449175.cms

The Reserve Bank’s all-out monetary war against inflation is beginning to extract a heavy cost, with factories cutting production, car output declining and GDP growth estimates falling close to levels witnessed during the global financial crisis two years ago. Indian factory output expansion slipped to its lowest in 20 months, as measured by the HSBC Purchasing Managers Index (PMI). The seasonally adjusted index fell for the third month in a row in July to 53.6, down from 55.3 in June in the current 28-month period of expansion. http://economictimes.indiatimes.com/news/economy/indicators/post-rbi-monetary-policy-manufacturing-pmi-dips-to-20-month-low/articleshow/9449056.cms

Themoscowtimes.com

Politics have long skewed oil supply lines, but this year’s confluence of events has sent Siberian oil on its way to Peru in a hitherto unchartered trade route, and made it profitable for Belgian chocolatiers to run vans with Indian-processed Colombian oil. Markets are stretching to reallocate supplies in the wake of four major events this year: Libya’s civil war, rising Saudi output, the release of emergency oil stockpiles coordinated by the International Energy Agency and a payments dispute between India and Iran. “Geopolitical events have triggered crazy distortions of oil flows at a global level,” said Tony Nunan, a risk manager with Mitsubishi in Tokyo. “The IEA release caused a secondary tsunami of unintended crude flows.” http://www.themoscowtimes.com/business/article/oil-taking-ever-longer-route-from-well-to-gas-tank/441431.html#ixzz1TqXNt9cq

Khaalejtimes.com

The consumer spending on cosmetics and perfumes in the UAE is expected to hit Dh1.2 billion by 2014, which bodes well for the growth of the beauty products industry. The forecast, based on a report by Euromonitor International, a world leader in consumer market research, states that Dubai’s beauty products retail sector which has grown from Dh3 billion in 2005 to Dh5.5 billion in 2010, registered a 13 per cent per annum growth rate. http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/uaebusiness/2011/August/uaebusiness_August6.xml&section=uaebusiness