World stocks buoyed by Fed stimulus hopes - The Guardian World stocks buoyed by Fed stimulus hopes - The Guardian

Thursday, June 21, 2012

World stocks buoyed by Fed stimulus hopes - The Guardian

World stocks buoyed by Fed stimulus hopes - The Guardian


AP Business Writer= PARIS (AP) — World stock markets mostly rose Wednesday ahead of the U.S. Federal Reserve's decision to extend Operation Twist, its program intended to lower long-term interest rates in a bid to boost growth and employment.

Britain's FTSE100 index close 0.6 percent higher at 5,622.29. Germany's DAX was up 0.4 percent at 6,392.13 and France's CAC 40 rose 0.3 percent at 3,126.52.

On Wall Street stocks hardly moved after the Federal Reserve wrapped up its closely watched two-day meeting. The Dow Jones industrial average was up 0.05 percent at 12,848.8 while the S&P 500 was also up, 0.03 percent, at 1,358.42.

"The market's risk-averse sentiment is easing, and investors have quite high hopes for central bankers to help," said Kwong Man Bun, chief operating officer at KGI Securities in Hong Kong. "Investors are now taking a breather before looking at the problem of Spain."

Concerns over Spain, Greece and the euro limited any optimism over potential stimulus from the Fed.

The Greek presidency said Antonis Samaras would be sworn in as prime minister after three parties agreed to form a coalition government, ending nearly seven weeks of political uncertainty which threatened to plunge Europe deeper into a financial crisis with global repercussions.

In the longer term, however, concerns remain over how well the government will be able to govern and push through new austerity reforms after some half of the Greek electorate voted for parties rejecting those measures.

Meanwhile, borrowing rates in Spain remained dangerously high despite a small drop on Wednesday. If they do not drop in coming weeks or months, Madrid could be forced into asking for an international bailout to be able to finance itself.

Italian Premier Mario Monti has come out in favor of using the eurozone's €440 billion ($555 billion) bailout fund to buy the sovereign debt of countries like Spain and Italy, which are implementing debt reduction measures but still suffering from high borrowing costs. Such a move would have the impact of lowering the borrowing rates.

Monti told a briefing at the close of the Group of 20 summit in Los Cabos, Mexico that using European Financial Stability Facility funds "was one of the topics of conversation" among leaders. Monti said the idea would be discussed further when he meets with the leaders of Germany, France and Spain in Rome on Friday, according to press agency LaPresse.

The leaders plan to come up with proposals for an EU summit the following week.

Spanish Finance Minister Cristobal Montoro denied that the country needs a full-fledged bailout of its public finances "because it does not need to be rescued."

Spain has requested bailout money for its banks hurting from a property boom that went bust. Audits are due Thursday that will help Spain determine how much it needs from a €100 billion ($126 billion) lifeline to be set up by the 17-nation eurozone.

Earlier, Japan's Nikkei 225 index closed up 1.1 percent to 8,752.30. Hong Kong's Hang Seng added 0.5 percent to 19,518.85 and South Korea's Kospi gained 0.7 percent to 1,904.12.

Australia's S&P/ASX 200 added 0.2 percent to 4,132.40. Benchmarks in Singapore, Taiwan and Indonesia also ended higher. Mainland China's Shanghai Composite Index fell. Benchmarks in Thailand and New Zealand were also lower.

Benchmark oil for July delivery was up 5 cents to $83.93 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose by 76 cents to end the day at $84.03 per barrel in New York on Tuesday.

In currencies, the euro rose 0.2 percent to $1.2706.

Asian Stocks Fall on China Manufacturing, U.S. Growth Cut - Bloomberg

Asian stocks outside Japan fell, with the regional benchmark index retreating from a one-month high, as a survey showed China’s manufacturing may shrink for an eighth month and after the Federal Reserve cut its U.S. growth estimate and expanded its Operation Twist program.

Samsung Electronics Co. (005930), the world’s biggest mobile-phone maker by sales that counts China and the U.S. as its biggest markets, dropped 1.6 percent in Seoul. BHP Billiton Ltd., the world’s largest mining company and Australia’s No. 1 oil producer, declined 1.2 percent in Sydney as crude and copper futures fell. Renesas Electronics Corp. gained 4.3 percent in Tokyo on a report that KKR & Co. and Silver Lake are in talks to invest in the chipmaker.

The MSCI Asia Pacific Index slipped 0.4 percent to 116.27 as of 1:05 p.m. in Tokyo, with almost five shares falling for every four that rose. A measure that excludes Japanese equities dropped 1.1 percent. More than $5 trillion has been erased from global equities since March amid slowing economic growth in the U.S. and China, and a spreading European debt crisis that pushed Spain’s borrowing costs to a record.

“The Fed extending Operation Twist reflects their concern economic growth in the U.S. is slowing,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “Even though markets are cheap, we’re not back to a risk-on mode. Risks in Europe are not over by a long way. Rising bond yields in Spain and Italy make it very challenging for policy makers in Europe.”

China Manufacturing

China’s Shanghai Composite Index dropped 1.6 percent, the most among Asia’s benchmark indexes. The nation’s manufacturing may shrink for an eighth month in June, matching the streak during the global financial crisis in a signal the government’s stimulus has yet to reverse the economy’s slowdown, a survey by HSBC Holdings Plc and Markit Economics showed.

Australia’s S&P/ASX 200 Index (AS51) slid 0.8 percent. Hong Kong’s Hang Seng Index lost 0.9 percent and South Korea’s Kospi slipped 0.9 percent.

The Fed decided to expand its so-called Operation Twist program at the end of a two-day meeting yesterday, replacing short-term bonds with longer-term debt by $267 billion through the end of 2012, and pledged to make “broader financial conditions more accommodative.”

Japan’s Nikkei 225 Stock Average (NKY) advanced 1.1 percent, bucking declines across the region, as the Fed’s decision to lengthen the maturity of its assets, as opposed to buying more, was seen curtailing the yen’s advance, boosting the outlook for exporters. Stocks also gained as the country’s upper house confirmed two new members for the Bank of Japan’s board who signaled support for monetary stimulus.

Sentiment Slump

Futures on the Standard & Poor’s 500 Index fell 0.4 percent today. The gauge retreated 0.2 percent yesterday after the central bank cut its growth estimates after a slowdown in hiring last month.

“Markets had been hoping for a little bit more from the Fed,” said Stan Shamu, a market strategist at IG Markets in Melbourne, a provider of trading services in stocks, bonds and commodities. “Sentiment has really slumped after the lower growth forecast.”

Energy and raw-material producers led losses among the 10 industry groups in the MSCI Asia Pacific Index (MXAP) as crude and copper futures fell.

The Asian benchmark index lost 9.5 percent through yesterday from this year’s highest level in February amid signs global economic growth was slowing as Europe struggled to contain its debt crisis. This left the gauge trading at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.

To contact the reporter on this story: Jonathan Burgos in Singapore at

To contact the editor responsible for this story: Nick Gentle at

June 21 (Bloomberg) -- Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney, talks about Federal Reserve monetary policy and the outlook for global financial markets. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia."(Source: Bloomberg)

Reality check: Microsoft's calculated 're-Surfacing' of the PC business - CNET News
So explain to me again why Microsoft doesn't deserve the benefit of the doubt for picking a fight with its hardware partners?

In the 24 hours since Monday's Surface announcement, there's been no shortage of commentary attesting to Microsoft's disloyal treatment of its longtime OEMs by going head-to-head with them in the tablet computer business.

But loyalty cuts both ways, and you don't need to rewind Michael Corleone's quote about separating business from the personal to understand that Microsoft's "partners" left it little choice in the matter. No doubt this was a cold move but the blunt truth is that most of the OEMs now silently fuming about having to compete against their key operating system supplier have turned out consistently crappy devices, effectively leaving Apple to mop up the tablet market.

The obvious counterargument -- and fact -- is that they simply couldn't build it with anything Microsoft did before Windows RT, which isn't out yet. Intel also shares fault as much as Microsoft for holding onto technologies which weren't particularly friendly to the size and power constraints of mobile devices (such as keeping x86 over ARM.) Also, without Windows RT or Win 8, Microsoft and its OEMs had no shot at competing against Apple, or even Android. So the OEMs ought to be salivating at the opportunity to challenge Apple in this fast-growing market. Given its big R&D effort leading up to Monday's Surface announcement, Microsoft aspires to emulate Apple's success.

The question which now begs an answer: Is this more of a reference design, or does Microsoft intend to market the bejeezus out of Surface? Or something between the two? We won't know the answer yet for several months since Microsoft did not reveal either a ship date or final price. But there's an historical precedent to consider.

Intomobile's Stefan Constantinescu offers a welcome reminder that Google's introduction of the Nexus One served as a catalyst that forced Android licensees to pull on their thinking caps and come up with snazzier hardware designs.

How many of the hundreds of millions of Android devices out on the market are Nexus devices? Very few. How many of the next hundreds of millions of Windows PCs that will be sold over next year or two be Surface tablets? Very few. The Nexus wasn't made to compete with partners, it was to inspire partners to push the boundaries of what's possible. Surface does the same thing.

The difference, of course, being that, unlike Microsoft, Google does not charge licensees for software (hat tip to Gartner's Michael Gartenberg). Still, Constantinescu's point is well taken.

Another historical footnote to consider: When it comes to the tech industry, channel conflict is as American as apple pie. In the 1980s, computer manufacturers often sold PCs direct to the public even while selling them through authorized third-party dealerships. The worst offender was none other than IBM, which went so far as to open up a national network of IBM-only computer stores, even as it distributed its PCs through the likes of now-defunct retailers like ComputerLand and Businessland.

The dealers grumbled, but they still found ways to prosper. As fate had it, IBM was first to call it quits, selling the computer store business to Nynex after only a few years. With the notable exception of Compaq, few companies could claim to be pure -- they all were driven to cash in on the PC craze while the getting was good. Even Apple, which sold direct to the education market right from the get-go. In 1997, it began selling online and four years later opened its first company-owned stores.

It's an inexact comparison in that what Microsoft is doing is slightly different. But for the first time, Microsoft is competing against its OEMs -- and that's why you won't find any of its longtime hardware partners slapping high-fives upon hearing about the news. For now, Microsoft is making life harder on its partners whose computers run the Windows operating system. Will it inevitably lead to a crisis down the road? Doubtful. My guess is they'll get over it soon enough. Besides, if this works to get the OEMs' competitive juices flowing again, nobody's going to remember this episode as more than a minor dust-up.

Update: FWIW, Acer's Stan Shih is being quoted saying that Microsoft's only planning a temporary stay in the tablet business and that Monday's announcement was part a bigger strategy to "encourage" device makers to bring out Windows 8 tablets.

Global stocks end near where they began as Fed "Twists" again -

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John Canally, investment strategist and economist at LPL Financial, said "there were a lot of guys out there with the finger on the 'sell' button unless they saw balance-sheet expansion."

The Dow Jones industrial average dipped 12.94 points, or 0.10 percent, to 12,824.39 at the close. The Standard & Poor's 500 Index edged down 2.29 points, or 0.17 percent, to 1,355.69. But the Nasdaq Composite Index inched up 0.69 of a point, or 0.02 percent, to 2,930.45.

The MSCI index of global stocks edged up 0.2 percent, while the euro rose 0.1 percent to $1.27 (0.808 pence), helped partly by reports that Greek conservatives had succeeded in forming a coalition government.

Bond prices also swung from gains to losses throughout the day, with the 30-year Treasury bond ending up 8/32 to yield 2.72 percent. But the benchmark 10-year U.S. Treasury note slipped 6/32 to yield 1.65 percent.

U.S. crude oil for July delivery expired at Wednesday's close, settling at $81.75 per barrel - down $2.28, or 2.71 percent for the day.

"Crude futures have been following the stock markets, which have been strong in anticipation of the Fed move," said Mark Anderle, trader for TAC Energy in Dallas. "Now that the Fed's done it, we're going through the 'buy the rumour, sell the news' phase."


Whatever disappointment markets felt after the Fed was tempered by signs that Europe's leaders were making progress on a long-term plan to resolve the continent's debt crisis. That helped push the FTSE Eurofirst 300 index of top European shares up 0.5 percent.

German government bond yields also retreated from record lows after European leaders said they were aiming to hammer out a plan next week to integrate the region's banking sectors.

The United States and other nations have long urged Europe to embrace common banking supervision and deposit insurance to break the cycle of indebted governments having to take on more debt to bail out troubled banks.

A proposal to use the euro zone's new rescue fund to buy sovereign debt and reduce governments' borrowing costs helped ease selling pressure on other European bond markets.

Spain's 10-year government bond yield, a gauge of the compensation investors demand to lend to the government, fell 27 basis points to 6.77 percent. The equivalent Italian yield fell 15 basis points to 5.77 percent.

Spot gold fell $11.26, or 0.70 percent, to $1,606.20. Gold hit its 2012 high around $1,790 in February when the Fed said it would keep interest rates near zero through 2014.

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