News that Matters

Copper for delivery in three months at the LME on Monday rose to $8,082 a tonne, up 6.9 per cent in January so far after suffering a 22 per cent plunge over the course of 2011, reports the FT. Inventories of copper at LME-registered warehouses stood at 354,575 tonnes on Monday

China’s economy expanded 8.9 per cent in the fourth quarter of last year, extending a slowdown that began at the start of 2011 and is expected to continue into 2012, reports the FT. “In terms of the domestic and international situation,

A quarterly report released by the Bank of Japan on Monday revealed that the outlook for the economic conditions in seven of the country’s nine regions has dimmed, the WSJ reports. While the central bank doesn’t think the regions risk a downward trend,

Saudi Arabia is aiming to keep oil prices at about $100 a barrel, a third above its previous public target, the FT reports. Ali Naimi, the Saudi oil minister, on Monday for the first time said the world’s largest oil producer aimed to keep oil prices at the triple-digit level,

Morgan Stanley plans plans to cap cash payouts at $125,000, the WSJ says, citing people familiar with the matter. Some top executives will receive nothing now, deferring their 2011 payouts until the end of this year.


On Monday, S&P warned that the downgrades of sovereigns in Europe may well impact credit ratings in the Asia-Pacific region, the WSJ reports. While governments in the region may have recourse to strong balance sheets,

Italy’s prime minister has pleaded for Germany and other creditor countries to do more to help lower his country’s borrowing costs, warning there would be a “powerful backlash” among voters in the eurozone’s struggling periphery if they did not. In an interview just three days after his country’s debt was downgraded two notches by Standard &

Standard & Poor’s on Monday stripped the eurozone’s bail-out fund of its AAA credit rating, potentially constraining its ability to contain the region’s debt crisis and focusing attention on efforts to create a more robust successor,

Greece’s prime minister has promised to find a deal with investors and official creditors on a “voluntary” debt swap before a major March bond redemption, according to Reuters. Private creditors have bristled at a last-minute German proposal to cut coupons on the new restructured debt from five per cent to two or three per cent,

Iran’s Opec representative has told other members of the oil cartel that they will be “held as main culprits” if they raise production to offset US and EU sanctions against Tehran, the FT reports. Saudi Arabia’s oil minister had promised to keep oil flowing to its customers only the day before,
Asian stock markets powered higher Tuesday as China grew at a faster-than-expected clip in the fourth quarter, dousing fears of a hard landing for the world’s second-biggest economy, lifting the euro and regional currencies.  Japan’s Nikkei Stock Average rose 0.8%, Australia’s S&P/ASX 200 advanced 1.4%, Hong Kong’s Hang Seng Index rallied 1.9% and South Korea’s Kospi Composite climbed 1.5%. China’s Shanghai Composite was up 0.9%, rebounding after initially paring gains amid reduced expectations for aggressive policy easing from Beijing. Dow Jones Industrial Average futures built on morning gains and were recently up 81 points.

Singapore’s key nonoil exports unexpectedly rose for the second straight month in December, beating analysts’ expectations and perhaps signaling that the worst may be over for the trade-dependent island nation’s economy. December’s 9% year-to-year rise was larger than even the highest forecast in a Dow Jones Newswires poll of 11 analysts, which was for a 2.5% expansion, while the median forecast was for a 1.2% contraction. The rise was also above November’s 1.4% increase.

Moody’s Investors Service on Monday said that its stable outlook on France’s triple-A credit rating remains under pressure and that it will assess it during the first quarter. In comments coming after Standard & Poor’s Ratings Services Friday stripped the country of its top investment-grade ranking, Moody’s said that its opinion doesn’t constitute a ratings action and that it would “update the market during the first quarter of 2012? as part of an assessment of sovereign ratings in the European Union.

Federal prosecutors are stepping up their probe of Standard & Poor’s financial crisis-era ratings of troubled mortgage securities, according to former analysts questioned by prosecutors and another person familiar with the situation. The probe is focusing on whether the firm’s managers ignored its own standards when assessing the mortgage products in an effort to cater to banking clients eager to sell the securities, according to the former S&P analysts.

Iranian authorities sent police into the streets of the capital Monday to crack down on informal currency trading and support the rial, signaling Iranians’ heightened insecurity over their dwindling buying power and Tehran’s increasingly hard-handed efforts to stave off economic panic. The move follows last week’s steep Iranian Central Bank interest-rate increase, a bid to try to stem the growing demand for U.S. dollars in the country as the economy lurches amid fears over a new round of sanctions promised by the U.S. and Europe.
Brent crude futures rose on Tuesday to stand close to $112 on expectations of steady demand growth after the world’s second-largest oil consumer, China, posted an economic expansion that beat forecasts.Brent crude rose 59 cents to $111.93 a barrel by 0404 GMT, gaining for a second day. U.S. crude rose $1.26 a barrel to $99.97. There was no settlement price for the benchmark because of a holiday in the United States on Monday.
Bank of Korea Governor Kim Choong Soo said that South Korea’s interest rates are still below policy makers’ desired level and that discrepancy cannot be left for long.  “We still think our monetary policy is accommodative — by that what I mean is that in the market there still exists a little excess liquidity,” Kim, 64, said in an interview at his office in Seoul today. “Our basic policy direction is to normalize our interest rates compatible with our demand pressures and pressures for inflation.”

China’s 2011 home sales rose at the slowest pace in three years after the country extended measures and added home-purchase restrictions to control the risks of a property bubble. Housing transactionsclimbed 10 percent to 4.86 trillion yuan ($770 billion), according to the National Bureau of Statistics today. Transactions in December totaled 803.8 billion yuan. “The property industry visibly slowed down quickly in the fourth quarter,” said Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd., who expects the data to worsen in the next two quarters because “developers are already short of capital.”

Bank of Canada Governor Mark Carney will probably extend a record period of unchanged interest rates today to counter the economic risks posed by Europe’s sovereign- debt crisis. The Ottawa-based bank’s benchmark target for overnight loans between commercial banks will remain at 1 percent, where it’s been since September 2010, in a decision due at 9 a.m. New York time, according to all 26 economists surveyed by Bloomberg News. The pause is the longest since the central bank adopted the overnight target as its policy rate in 1994, and longer than the “conditional commitment” to hold it at 0.25 percent that lasted from April 2009 to June 2010. Carney has focused on Europe, the sluggish global recovery and Canadian households constrained by record debts in recent statements, leading economists to predict he may not raise rates until next year.

anks are competing to offer mortgages at rates as low as 2.99 percent as their funding costs drop on investor demand for the relative safety of Canadian bonds amid Europe’s fiscal crisis. That’s fueling real estate purchases, potentially inflating a housing bubble and adding to record household debt, which theInternational Monetary Fund says poses a risk to the nation’s economy. “It could increase the housing bubble,” said Sheryl King, head of Canadian economics at Bank of America Corp., who estimates the country’s housing prices are overvalued by about 10 percent. “The lower interest rates are, the more speculative demand you will have in the market.”
The French government, in its first test of the debt market since it was stripped of its triple-A rating by Standard & Poor’s, sold 8.59 billion euros ($10.9 billion) of Treasury bills on Monday, with borrowing costs declining from levels seen a week ago. France’s public debt agency said it sold 4.503 billion euros of 12-week bills at an average rate of 0.165%, down from 0.167% in a sale of 13-week bills last Monday. A sale of 2.192 billion euros of 25-week bills yielded 0.281% versus 0.286% last week, while a sale of 51-week bills produced a yield of 0.406%, down from 0.454%. S&P on Friday lowered France’s rating one notch to double-A plus and cut ratings for eight other euro-zone countries.
India’s inflation rate fell sharply in December to 7.5% from 9.1% in the previous month, partly due to an easing in the rate of food price rises. This is the first time inflation has fallen below 9% in almost two years. Despite the fall, analysts said the central bank was unlikely to cut interest rates, which currently stand at 8.5%, next week. India’s central bank has increased rates 13 times since March 2010 in an effort to hold down rising prices.

French PM Francois Fillon has defended his government’s economic policies following the decision by ratings agency Standard and Poor’s to downgrade the credit rating of France. He said the government would push ahead with reforms and debt reduction.  Standard and Poor’s said Europe’s austerity and budget discipline alone were not sufficient to fight the debt crisis and may become self-defeating.
The potential for losses from the banking system to wipe out all or much of the capital of central banks could see the end of independence for monetary authorities, according to UBS. The European Central Bank faces the most severe problems, warn UBS analysts, who said the ECB’s increasing exposure to struggling eurozone lenders risked putting it in a position whereby it might require its own capital boosted in future. In recent months, the ECB has significantly relaxed the collateral requirements on banks that borrow from it, leading to fears that new losses in the banking system could quickly eat into its capital base.
Britain’s economic growth slowed in the three months ending in December, the National Institute of Economic and Social Research said yesterday, boosting the case for the Bank of England to take further measures to support the economy. Gross domestic product grew by 0.1 per cent in the period, down from 0.3 per cent in the three months ending in November, the think-tank said in its monthly estimate. “This implies the economy expanded by 1 per cent in 2011, half the rate of growth experienced in 2010,” Niesr said.
AS FRANCE and other European nations grapple with the downgrade of their sovereign debt by Standard & Poor’s on Friday, a longer-term test looms over whether those nations will now turn towards improving Europe’s economic competitiveness. Most European countries have embraced the austerity prescribed by Chancellor Angela Merkel of Germany to resolve what markets have identified as the big problems: high debts and budget deficits. But in their zeal to mend balance sheets, European leaders have rarely been heard talking about how to take advantage of the crisis – as Germany has with past crises – to rebuild their economies by investing in new technologies or making their labour markets more flexible.
The number of people living in China’s cities for the first time exceeded those in the country’s rural areas at the end of 2011, the National Bureau of Statistics (NBS) said Tuesday. The number of urban dwellers increased by 21 million to hit 690.79 million at the end of 2011, accounting for 51.27 percent of the country’s total, the NBS said. Meanwhile, the rural population fell by 14.56 million to 656.56 million at the end of 2011, the NBS noted.

Investment in China’s property sector rose 27.9 percent in 2011 from a year earlier to 6.174 trillion yuan (972 billion U.S. dollars), said Ma Jiantang, chief of the National Bureau of Statistics (NBS), at a press conference Tuesday.

China’s retail sales rose 18.1 percent year on year in December 2011, accelerating from the 17.3 percent growth in November, the National Bureau of Statistics (NBS) said Tuesday. Retails sales in 2011 increased 17.1 percent year on year, slower than 18.4 percent growth in 2010, the NBS said.

Colombia aims to become the third largest economy in Latin America in 2014, announced Sergio Diaz-Granados, Minister of Commerce, Industry and Tourism, on Monday. “Our goal is to become the third biggest Latin American economy and to join the Organization for Economic Cooperation and Development (OECD),” he told a news conference in Madrid. According to reports reaching here, Sergio made the above-mentioned remarks when he was participating in the International Tourism Trade Fair(FITUR) held in the capital city of Spain. The minister also told reporters that Colombia’s economy was expected to grow 5.5 percent in 2011, and its growth in the third quarter was as fast as 7.7 percent.

Brazil’s economy resumed its growth in November 2011, ending the previous three-month contraction, the country’s central bank said Monday. IBC-Br, the central bank’s economic activity index, registered an expansion of 1.15 percent in November against October. The index is considered a preview of the official GDP figures, which will be released in March. Brazil’s economic growth halted in the third quarter last year, which, according to Finance Minister Guido Mantega, was only a temporary setback and the growth would pick up again by the end of the year.

Turkey’s Finance Minister Mehmet Simsek said recent figures showed that Turkey’s economic growth in 2011 is expected to be around 8 percent, the country’s semiofficial Anatolia news agency reported Monday. Speaking at a press conference held in the Finance Ministry on Monday, Mehmet Simsek said that Turkey showed a great performance in 2011 in regard to growth, employment and budget. In 2010, Turkey’s economy grew by 9 percent, said Simsek. However, Eurozone debt crisis negatively affected the world economy in the second half of 2011, despite a good economic performance in the first half. Unemployment rate in Turkey dropped 2.1 percentage points year on year to 9.1 percent on average during the September to November period in 2011, the country’s statistics authority TurkStat said earlier on Monday.
The India-European Union Free Trade Agreement (FTA) is likely to take some time, said the European Union’s High Representative for Foreign Affairs and Security Policy, Baroness Catherine Ashton, on Monday. Addressing the media after a preparatory meeting in Bangalore before the Indo-EU summit scheduled to be held in February, Ms. Ashton said although “significant progress” had been made, the “finer details” of the agreement would take some more time. She refused to elaborate on a timeframe in which the agreement would be ready. “It is important that the agreement be a sustainable one,” she added.

The after-shocks of the economic slowdown in the U.S. and the impact of the debt crisis in the eurozone continue to weigh on India’s overseas shipments that continued to grow at a slow pace of 6.7 per cent in December at $25 billion on year-to-year basis.  Notwithstanding the continued slide in exports, the government expressed the hope that it would be able to achieve the $300 billion target set for the current fiscal.
India plans to launch a $1 billion fund by June-July, with an initial capital of 5 billion rupees ($97.02 million), to invest in innovations that can generate services and products to uplift the poor, a top government official told reporters on Monday. “We need to provide money to those who have ideas but no seed capital,” Sam Pitroda, adviser to prime minister on public information, infrastructure and innovation, said on the sidelines of an industry event.
South Korea is facing tough external economic conditions in 2012 as the lingering eurozone debt problems, slowing global economic growth and rising tensions over Iran’s nuclear program will likely increase uncertainty, the nation’s finance minister said Tuesday. “In the process of getting over the global economic crisis, advanced countries, which suffer from worsening fiscal status, have been tightening their belts, putting a strain on the economic recovery,” Bahk Jae-wan told a meeting. “That will also likely slow down the growth of emerging countries which have helped prop up the global economic recovery. Things will get tougher than any other time this year in terms of external conditions.”
Russia’s credit rating outlook was lowered to stable from positive at Fitch Ratings as political uncertainty spurs capital flight and threatens plans to wean the economy off its dependence on energy exports. “Political uncertainty in Russia has risen and the global economic outlook has worsened since Fitch last affirmed the rating” at BBB, the second-lowest investment grade, in September, Charles Seville, director of Fitch’s sovereign group, said in the statement. “Recent events have highlighted the limitations and risks associated with Russia’s political model.” None of the three main ratings companies have upgraded Russia since the 2008-09 global financial crisis.
Iranian Oil Minister Rostam Qasemi has said that the global oil market is in a balanced situation and that members of the Organization of Petroleum Exporting Countries observe their production quotas, the Shana news agency reported.  OPEC members reached consensus on 30 million barrels per day oil production target during the 160th ministerial meeting in Vienna on 14th December, 2011.  All 12 OPEC members collectively produced 30.37 million barrels a day in November 2011, according to OPEC’s own monthly report. Excluding Iraq, the 11 nations previously subject to quotas pumped 27.69 million barrels a day, Bloomberg quoted OPEC data as saying.