Weekly Review of Global Markets

Im Folgenden stellt Ihnen Barings Asset Management einen Rückblick auf die globalen Märkte in der vergangenen Woche zur Verfügung. Erfahren Sie mehr zur Warnung von Moody´s UK down zu graden, Japan´s Q1 GDP, die Bestrebungen der Weltbank in den Emerging Markets und weitere Themen hier: Barings | 14.06.2011 09:23 Uhr
Archiv-Beitrag: Dieser Artikel ist älter als ein Jahr.

* Moody´s warns of UK credit downgrade if government slows fiscal consolidation plans

* European Central Bond leaves Euroland monetary policy unchanged

* Beige Book sees disruption to US supply chains as temporary

* Japan´s Q1 GDP contraction revised to 3.5%

* World Bank urges emerging market economies to implement further monetary policy tightening to curb inflation

Sterling dips as Moody’s warns of UK credit downgrade

This week saw Sterling fall 0.5% against the Yen and dip 0.3% to $1.64 against the Dollar. The depreciation followed a warning from ratings agency Moody’s that the UK could lose its top-tier credit status if growth continued to slow and the government decided to slow down fiscal consolidation plans. For their part, the European Commission and the International Monetary Fund endorsed the UK government’s austerity measures and reform programme. A report by the Commission said that “The planned fiscal consolidation will, if implemented as planned, deliver large improvements in the structural balance,” reducing the UK’s budget deficit to less than 3% of GDP by the end of 2014.

The latest data from the British Retail Consortium (BRC) suggests that UK inflation is easing. Prices charged by retailers in May rose 2.3% from a year ago after rising 2.5% in April. Month-on-month prices rose 0.1% after increasing 0.3% in April. A separate BRC report showed that retail sales in May fell 0.3% compared with a year earlier. The report showed that sales in stores open for at least a year were down 2.1%. The BRC said that the fall in sales is a sign of the pressures facing consumers, including fragile confidence in the economy. The closely-watched purchasing managers’ services index was still positive in May but fell slightly to 53.8 from 54.2 in April.

The Office for National Statistics (ONS) said that the overall deficit on trade and goods and services slipped from £7.7bn in March to £7.4bn in April. However, the balance of trade in services slipped from £4.9bn to £4.6bn, leaving an overall trade deficit of £2.8bn, unchanged from the previous month. Separate ONS figures revealed that orders for construction work fell 23% in the first quarter compared with the last three months of 2010, the sharpest fall in almost 25 years. Elsewhere, KPMG and the Recruitment and Employment Confederation said that an index of hiring fell to a seven-month low in May. Against this backdrop, the Bank of England’s Monetary Policy Committee voted to leave Bank rate unchanged at 0.5% and maintain its level of gilts purchases at £200bn.

ECB leave rates at 1.25% and continues support for banks

This week the European Central Bank (ECB) Governing Council voted to leave the Refi rate unchanged at 1.25% and kept in place its exceptional support for banks in Greece, Portugal and Ireland, until at least the start of October. However, the ECB appears likely to increase rates in July with President Jean-Claude Trichet reiterating the need for “strong vigilance,” an expression used to indicate an imminent rate rise. Meanwhile, Greece’s governing socialist party approved a four-year austerity deal (which will be voted through the parliament), paving the way for the country’s second rescue package in 13 months by the European Union (EU) and International Monetary Fund. In the meantime, the German government wants Greece to offer all holders of its sovereign bonds a seven-year extension of maturities as a condition for German support of a new aid programme for the government.

Separately, Greece’s statistical agency revised downward its quarter-on-quarter growth estimate for the first three months of the year to 0.2%, from 0.8% estimated previously. Over the year, Greek GDP shrank 5.5% compared with the first quarter of 2010, a significant revision from the previous month’s flash estimate of 4.8%. Meanwhile, the European Commission concluded in a report on EU-member government budget and reform programmes that Spain has adopted overly optimistic economic growth assumptions and runs the risk of its public pension system destabilising government finances.

Elsewhere, Iceland revealed plans to raise up to US$1bn in its first bond issue since the country’s banking sector collapsed in 2008. (Iceland has suffered its deepest recession on record since its three biggest banks – Landsbanki, Kaupthing and Glitnir – collapsed in October 2008.) A successful issuance would highlight Iceland’s gradual recovery from the crisis and strengthen its public finances as an IMF US$2.1bn aid programme is due to end in August.

Report suggests US slowdown temporary

The Federal Reserve’s latest survey of businesses in its 12 regions, the “Beige Book”, showed that the Japanese tsunami in March caused “widespread” disruption to US supply chains. The survey, implies that growth will bounce back from a recent “soft patch” once supplies return to normal. A separate report showed that US wholesale inventories rose 0.8%, indicating that businesses were cautiously optimistic about demand. Sales rose 0.3% month-onmonth following a 2.9% surge the previous month. Meanwhile, US consumer credit increased for a seventh consecutive month in April, signalling a growth in confidence.

Less positive was the latest monthly non-farm payrolls’ data which revealed that the US added 54,000 jobs in May, much less than had been forecast. In spite of some disappointing recent economic reports, Federal Reserve Chairman Ben Bernanke signalled that the US central bank is not planning to loosen monetary policy, saying that the US economic recovery “appears to be proceeding at a moderate pace”.

Separately, credit rating agency Fitch warned Congress and the White House that failure to reach an agreement to raise the country’s borrowing limit would threaten the nation’s triple-A credit rating. The note follows similar warnings from other ratings agencies, including Moody’s.

Japan’s Q1 GDP contraction revised

This week Japan’s Cabinet Office revised the nation’s first quarter GDP contraction to an annualised 3.5%, up from an initial estimate of -3.7%. According to the revised figures, capital investment dropped 1.3% in the first quarter compared with the previous estimate of a 0.9% decline. Consumer spending fell 0.6% in the quarter from the previous three months, unchanged from the initial estimate, The GDP deflator, a measure of price trends, fell 1.9% between January and March from a year earlier.

The government-affiliated Economic Planning Association forecasts that Japan’s economy may shrink by 2.97% in the second quarter, on an annualised basis, before returning to growth in the final six months of the year. Separately, Japanese exports in the first 20 days of May dropped 9.3% compared with the same period a year earlier while imports increased by 13.4%. The figures suggest that output has yet to return to pre-earthquake levels.

Emerging market news

A World Bank report released this week said that China’s growth will slow to 9.3% in 2011 from 10.3% in 2010, and total 8.7% in 2012. The report also predicts that India’s output will grow 8% this year and 8.4% in 2012. The World Bank cited a rise in commodity prices and strong capital inflows as major contributors to rising inflation which in developing countries was close to 7% in April from a year earlier, more than 3% higher than in July 2009. The report urged policymakers in emerging economies to “…make fuller use of all the tools at their disposal to keep inflation under control.”

The latest inflation reports in emerging nations have been mixed. An index measuring India’s wholesale prices of agricultural products rose 9.01% in the week ended May 28 from a year earlier, up from 8.06% the previous week. By contrast, South Korea reported a fall in its inflation index to 4.2% for April, from 4.7% a month earlier (against the Bank of Korea’s inflation target of 4%). China’s index fell to 5.3% from 5.4% over the same period. Indonesia’s CPI fell to 5.98% in May from 6.16% the previous month. (Indonesia central bank kept its benchmark interest rate unchanged for a fourth consecutive month in June at 6.75%).

In Turkey, consumer prices rose 2.42% between April and May, bringing the annual rate of inflation from April’s historic low of 4.13% to 7.17%. In Brazil monthly inflation slowed to 0.47% in May from 0.77% in April. For its part, Brazil’s central bank refrained from signaling an end to interest rate increases as it raised the benchmark rate - the Selic rate - by 0.25% to 12.25%, the fourth hike this year. Output in Latin America’s largest economy expanded 1.3% in the first quarter from the previous three-month period and 4.2% from a year earlier. Output in the fourth quarter of 2010 was revised up 0.1% to 0.8%. Elsewhere, Poland’s central bank raised the seven-day rate by 0.25% to 4.5%. Some emerging economies are decelerating from rapid expansion in 2010, in part because of monetary policy tightening. For instance, South Korea’s GDP between January and March stood at 4.2% year-on-year, cooling from the 6.2% average over 2010.

Company news

This week two luxury goods groups announced plans for initial public offerings (IPO). Prada said that it will list its shares in Hong Kong where it hopes to raise as much as €2.1bn (US$3.1bn) in an offering that could value the company at up to €10.5bn (US$15.3bn). The company will list 20% of its shares on the stock exchange, including a 3-4% capital increase. The company said that it intends to use the funds to repay bank debt and roll out dozens of new stores with a focus on Asia. Prada is 95% owned by the Prada and Bertelli families and 5% owned by Italian bank Intesa Sanpaolo which had said it will retain a small stake.

Meanwhile, luxury goods group Salvatore Ferragamo received regulatory approval for an IPO in Milan. The maker of fine leather shoes said that it plans to fund expansion in emerging markets. The company is yet to disclose details of its proposed offering.

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