Yen, Dollar Advance on CIT Bankruptcy Concern, Jakarta Blasts

July 17 The yen and the dollar rose as speculation CIT Group Inc. will file for bankruptcy and blasts in Indonesia spurred demand for the currencies as a refuge.
The yen climbed more than 1 percent against the South African rand and the Swedish krona after New-York based CIT, the lender facing insolvency because it failed to obtain guarantees for its bonds, said it’s trying to secure financing. Indonesia’s rupiah fell the most in more than three weeks against the dollar after explosions tore through two hotels in Jakarta.
“In the short term, the Indonesian and CIT concerns will cause some knee-jerk risk aversion,” said Derek Halpenny, European head of global currency research at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “It’s an obvious first reaction.”
The yen strengthened to 131.99 per euro as of 9:07 a.m. in London, from 132.89 yesterday in New York, and appreciated to 93.70 per dollar, from 93.93. The U.S. currency rose to .4086 per euro, from .4148. The Indonesian rupiah weakened 0.5 percent to 10,175 per dollar, after dropping as much as 1 percent, the most since June 23.
Japan’s new top currency official said today the government would consider stepping into the foreign-exchange market only if abrupt yen moves hurt the economy.
“We’ll make judgments based on whether excessive movements in the currency market will adversely affect the economy,” Rintaro Tamaki, vice finance minister for international affairs, said in a group interview in Tokyo today.
The yen appreciated against all 16 most-actively traded currencies in the past month, while it’s weaker against the same group this year.
CIT Funds
Futures on the Standard & Poor’s 500 Index declined 0.2 percent, signaling U.S. stocks may open lower today. The Dollar Index, which the ICE uses to track the currency against those of six major U.S. trading partners such as the euro and the yen, rose 0.4 percent to 79.528.
CIT may need as much as billion to avoid bankruptcy, CreditSights Inc. analysts said yesterday. CIT executives are seeking billion to billion in financing from the private sector, the Wall Street Journal reported, citing unidentified people familiar with the situation.
The yen gained for a second day against the euro and the British pound as bombs tore through the Ritz Carlton and the JW Marriott hotels in the Jakarta, killing at least nine people and injuring 42 others, police said.
Jakarta Explosions
The blasts in the two hotels were caused by “high explosives,” said Crisnanda, a spokesman for the police. A New Zealander was among those killed, the government in Wellington said.
“The explosions in Indonesia added to the buying of the yen on risk aversion,” said Takao Yahata, senior manager of foreign exchange and financial-products trading in Tokyo at Mitsubishi UFJ Trust and Banking Corp., a unit of Japan’s largest publicly traded lender by assets.
The yen also gained against the dollar on speculation Japanese exporters bought the currency to convert their foreign- exchange earnings before the three-day holiday. Monday is a national holiday in Japan.
“Yen buying by Japanese investors, including exporters, picked up as the yen fell back toward 94 per dollar and beyond,” said Kosei Fujita, a foreign currency dealer in Tokyo at SBI Liquidity Markets Co., a unit of SBI Holdings Inc.
Japanese companies forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey on corporate sentiment and business plans released on July 1.
Dollar Index
The Dollar Index also rose for the first time in three days after U.S. Treasury Secretary Timothy Geithner repeated that the Obama administration is committed to a “strong” dollar and curbing record budget deficits to achieve that objective.
Geithner said the dollar’s role in international finance places “special responsibilities” on the U.S. to sustain confidence in its financial system, according to an Internet chat with Les Echos newspaper yesterday.
“This was similar to well-timed comments by top U.S. officials to hold up confidence whenever U.S. stocks looked fragile,” Philip Wee, senior currency economist in Singapore at DBS Group Holdings Ltd., wrote in a research note today. “If so, U.S. officials may find further dollar weakness from here a threat to their efforts to dig the economy out of recession.”
The dollar and the yen still headed for their biggest weekly loss in two months against the euro as stocks advanced worldwide, reducing demand for the U.S. and Japanese currencies as a haven from the global recession.
Emerging Markets
“The currencies of emerging markets and resource-rich nations fare well against the dollar and the yen when stocks are on the rising trend, reflecting optimism about the economy,” said Yuji Kameoka, a strategist in Tokyo at Daiwa Institute of Research Ltd., a unit of Japan’s second-largest brokerage group. “The recent retreat in optimism and the re-emergence of risk- aversion may be a blip.”
The Nikkei 225 Stock Average rose 0.6 percent and the MSCI World Index climbed 0.3 percent, having gained 6.7 percent this week, the most since March.
The Canadian dollar appreciated the most of the 16 major currencies against the yen this week, climbing 5.4 percent to 83.80 yen. The Australian dollar advanced 4.1 percent over the past five days to 75 yen.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/yen-dollar-advance-on-cit-bankruptcy.html

U.S. Stocks Advance on Caterpillar Earnings, Bernanke Remarks

U.S. stocks rose, extending the Dow Jones Industrial Average’s longest rally in two years, as Caterpillar Inc.’s earnings tripled analyst estimates and Federal Reserve Chairman Ben S. Bernanke said there are signs the economy is stabilizing.
Caterpillar, the biggest maker of bulldozers, jumped 7.7 percent to lead the Dow to a seventh straight gain. Merck & Co. added 6.1 percent as job cuts helped it post better-than- estimated earnings. Banks slid, limiting the market’s advance, after CIT Group Inc. said it may need to file for bankruptcy if a plan to repurchase debt fails and Regions Financial Corp. and Zions Bancorporation posted quarterly losses on bad loans.
The Standard & Poor’s 500 Index added 0.4 percent to 954.58 at 4:05 p.m. in New York, maintaining its highest level in more than eight months. The Dow Jones Industrial Average rallied 67.79 points, or 0.8 percent, to 8,915.94 to extend its gain since July 10 to 9.4 percent. The MSCI World Index increased 0.9 percent to the highest level since Nov. 4.
“Beating expectations shows they are in slightly better shape than most investors thought,” said Eric Thorne, who helps oversee .5 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pa. “The fact that numbers are slightly above estimates is a sign to us that we are in the beginning stages of an economic recovery.”
Earnings Top Estimates
Per-share earnings beat analysts’ projections by an average of 14 percent for the 70 companies in the S&P 500 that reported quarterly results since July 8, according to data compiled by Bloomberg. Analysts forecast profits fell an average 33 percent in the second quarter and will decrease 20 percent from July through September, according to Bloomberg data.
The S&P 500 rallied 1.1 percent yesterday as a gauge of future economic growth topped projections. The benchmark for U.S. equities advanced 7 percent last week as companies from Goldman Sachs Group Inc. to Intel Corp. reported results that topped estimates.
Treasuries climbed the most in almost two weeks today, sending the 10-year note yield down 13 basis points to 3.48 percent, as Bernanke said “limited inflation pressures” will allow policy makers to keep interest rates near zero for an “extended period.” Bernanke, in his semi-annual testimony before the House Financial Services Committee, also said the economy is showing “tentative signs of stabilization.”
Caterpillar Rallies
Caterpillar, the world’s largest maker of bulldozers and excavators, rallied 7.7 percent to .46 after government stimulus programs and improved credit markets helped stabilize demand for the world’s largest maker of bulldozers and excavators. Profit excluding some costs was 72 cents a share, surpassing the 22-cent average estimate of 20 analysts surveyed by Bloomberg. The company also raised its full-year forecast. Merck rose 6.1 percent to .65 after the drugmaker that is buying rival Schering-Plough Corp. said second-quarter earnings were 83 cents a share, surpassing the 77-cent average estimate of analysts.
Exxon Mobil Corp., the largest U.S. oil company, added 2.2 percent to .47 as oil futures erased an earlier loss and gained 1.2 percent to .72 a barrel in New York. Chevron Corp., the second-largest U.S. oil producer, added 61 cents .25.
International Paper Co. gained 6.4 percent to .55, the highest price since Oct. 29, after the largest U.S. maker of cardboard shipping boxes was raised to “buy” from “hold” at Deutsche Bank AG, which said containerboard pricing was stable in June.
New York Times Co. advanced 5.6 percent to .42 after the Boston Globe’s largest union approved a contract for million in annual cuts in a decision that may reduce losses at the newspaper and help its owner negotiate a sale.
Credit Suisse Says to Buy
Credit Suisse Group AG today advised investors to buy equities and trim their holdings of government bonds, reversing a recommendation from June. The bank raised its estimate for the S&P 500 by 14 percent to 1,050 by the end of the year, citing improving economic indicators and earnings. Goldman Sachs yesterday boosted its year-end estimate for the measure to 1,060, implying a 15 percent surge between June 30 and Dec. 31. That would be the steepest second-half rally since 1982.
The S&P 500 has rallied 41 percent from a 12-year low on March 9 amid speculation the economy and companies are recovering from the worst recession in more than half a century and the longest slump in quarterly earnings on record.
More Gains Predicted
U.S. stocks will likely continue to advance, according to John Murphy, chief technical analyst at StockCharts.com. The S&P 500 rose to a new high for the year today on an intraday basis, touching 956.53. Since the index exceeded 956, it’s likely to advance to about 1,000, for a gain of 50 percent from the 12- year intraday low of 666.79 on March 6, Murphy said.
Indications that the S&P 500’s run is likely to continue include the performance of the cumulative advance-decline line for securities listed on the New York Stock Exchange, Murphy said. The index, which tallies the number of daily gains for individual securities minus the number of declines since its August 1996 inception, rose 4.2 percent to a 10-month high of 39,961 yesterday.
“Most people missed the lows and continue to treat this as a rally in a bear market,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages 2 billion. “Hey folks, every bull market that I’ve seen began being called a short-term rally in a bear market.”
CIT Slumps
CIT, the 101-year-old commercial lender, fell 22 percent to 98 cents after saying its “existing liquidity” isn’t enough to repay billion of floating-rate notes maturing on Aug. 17. The lender, which announced a billion rescue financing from its bondholders yesterday, has asked holders of the August notes to swap their claims for 82.5 cents on the dollar.
A gauge of financial shares was the largest drag on the S&P 500 among 10 industry groups as Regions dropped 15 percent to .42, Zions declined 13 percent to .68 and Comerica Inc. lost 10 percent .51.
Lexmark International Inc. had the second-biggest drop in the S&P 500 after CIT, losing 20 percent to .08, after the second-largest U.S. printer maker said third-quarter profit may be as low as 40 cents a share, below the 52-cent average of analyst estimates compiled by news.
Lockheed Martin Corp., the world’s largest defense company, lost 8.5 percent to .13 after the company posted its largest profit drop in more than five years and the U.S. Senate voted to end funds for its F-22 jet.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/us-stocks-advance-on-caterpillar.html

U.S. Stocks Advance for Third Week as Earnings Beat Estimates

U.S. stocks rose for a third week, completing the Dow Jones Industrial Average’s best month since 2002, as companies from Motorola Inc. to MasterCard Inc. topped analysts’ profit estimates.
Amgen Inc., the world’s largest biotechnology company, and Dow Chemical Co., the largest U.S. chemical maker, gained after earnings beat projections. General Electric Co. surged 11 percent on speculation new banking rules will allow it to keep its finance unit. Yahoo! Inc. slumped after terms of an Internet-search accord with Microsoft Corp. were less favorable than analysts predicted.
“What’s been driving the market is the idea that maybe this recession isn’t going to be as severe or prolonged as we thought,” said Samuel Stewart, president of Wasatch Funds, which manages billion in Salt Lake City. “The market is now behaving as though the credit crisis was a blip on the radar.”
The S&P 500 rose 0.8 percent to 987.48, the highest since Nov. 4, capping its fifth straight monthly advance. The main benchmark for American equity has rebounded 46 percent from a 12-year low on March 9. The Dow Jones Industrial Average rose 78.37 points, or 0.9 percent, to 9,171.61, extending its monthly advance to 8.6 percent, the biggest since October 2002. The Russell 2000 Index of small companies added 1.5 percent to 556.71.
Earnings Top Estimates
About three-quarters of the 148 companies in the S&P 500 that released second-quarter results this week topped estimates, according to data compiled by Bloomberg. Companies slated to report next week include Kraft Foods Inc., Procter & Gamble Co. and Cisco Systems Inc.
Companies in the S&P 500 are still headed for a record eighth consecutive decline in quarterly profits. Per-share earnings have tumbled 32 percent for the 352 companies in the S&P 500 that have reported results since June 17. Analyst estimates compiled by call for a 31 percent drop in the second quarter and a 22 percent third-quarter decline. While earnings are falling, results have topped projections by an average 10 percent.
“There is a broader sense that the decline is over,” said Stephen Lieber, chief investment officer of Alpine Mutual Funds in Purchase, New York, which manages billion. “Corporate earnings in the last week have been singular in importance.”
Motorola climbed 8.8 percent to .16. The biggest U.S. mobile-phone maker posted a narrower second-quarter loss than analysts projected, helped by job cuts and a recovery in handset shipments.
MasterCard Climbs
MasterCard rose 4.6 percent to 4.03. The world’s second- biggest payment-card network reported earnings excluding some items of .68 a share, 11 percent higher than the average analyst estimate. MasterCard raised fees, slashed expenses and processed more transactions during the quarter.
Amgen added 2.3 percent to .31. The world’s largest biotechnology company raised its full-year earnings forecast after second-quarter profit excluding some items beat the average analyst estimate by 11 percent. Amgen cut research costs and increased sales of its arthritis drug Enbrel.
Dow Chemical advanced 4.9 percent to .17. The largest U.S. chemical maker posted an unexpected second-quarter profit as demand for its products stabilized. The average analyst estimate was for a loss.
GE Gains
General Electric, the world’s biggest non-bank financial company, advanced 11 percent to .40. U.S. Representative Barney Frank said manufacturers that already own finance businesses should be allowed under revised banking rules to retain them without being subject to Federal Reserve oversight of their manufacturing operations. Frank heads the U.S. House Financial Services Committee.
Financial stocks in the S&P 500 climbed 4.4 percent, the steepest among 10 industries. Old National Bancorp, an Indiana- based financial-service company, reported second-quarter profit excluding some items that was more than four times the average analyst estimate, sparking a rally in regional banks.
Marshall & Ilsley Corp., Wisconsin’s largest lender, led gains, surging 26 percent to .04. Old National climbed 15 percent to .30 and Zions Bancorp., the Utah lender that operates in 10 Western states, rose 21 percent to .58.
Yahoo fell 18 percent to .32. The owner of the second- most popular U.S. Internet search engine will use Microsoft’s search engine on its Web sites and sell ads that appear next to search results. The agreement with Microsoft, the world’s largest software maker, didn’t include an upfront payment for Yahoo, which some analysts had estimated could be as much as billion.
Recession Saps Demand
Exxon Mobil Corp. led energy companies to the second- biggest decline among the S&P 500’s 10 main industry groups. The world’s largest energy company fell 2.6 percent to .39 after reporting its lowest profit in more than five years as the recession sapped fuel demand.
Masco Corp. rose 26 percent to .93 for the biggest gain in the S&P 500. The insulation installer forecast a loss this year of as little as 5 cents a share, compared with the average analyst loss estimate of 26 cents.
Akamai Technologies Inc. fell 22 percent to .44 for the biggest drop in the S&P 500. The provider of software that makes Web sites load faster reported profit excluding some items of 40 cents a share in the second quarter, missing the average analyst estimate by 1.5 percent.
Reports next week will probably show employers cut jobs at a slower pace in July and the factory slump eased, according to economists’ forecasts, suggesting the recession is ending.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/08/us-stocks-advance-for-third-week-as.html