Yoshihiko Noda, Japan's finance minister is set to become Japan's sixth prime minister in five years, after beating industry minister Banri Kaieda in a runoff Monday in the Democratic Party of Japan's leadership election.
The ruling Democratic Party of Japan's election was held after Naoto Kan, the party chief for 14 months and prime minister, announced his resignation last Friday amid criticism of his leadership in the aftermath of the March 11 devastating earthquake and tsunami that triggered the ongoing nuclear crisis at the Fukushima Daiichi power plant.
In the initial round, Kaieda, 62, supported by Ichiro Ozawa, the controversial party founder and his allies, won 143 votes, the biggest number among the 398 DPJ lawmakers, followed by Noda, 54, with 102 votes.
In a run-off after the elimination of three other candidates Noda and Kaieda immediately faced each other in the runoff, which Noda won by 215 votes to 177.
The winner will serve out Kan's term as head of the DPJ until September next year (giving rise to more instability) and will be named as Japan's new prime minister as early as Tuesday in the Diet, the lower House of Representatives.
Economic View: Some welcome news on the
banking system; Dermot O’Leary,
chief economist at Goodbody, comments - - "A rare piece of good news emerged
from the half-year results of Anglo Irish Bank on Friday. The bank has cost the
Irish state €29.3bn to date, while government estimates suggested that this bill
could have risen to €34bn. Comments from Chief Executive Mike Aynsley now
suggest that the bank (now renamed Irish Bank Resolution Corporation after its
merger with Irish Nationwide) may be able to return up to €4bn in capital to the
State when it is finally wound down. Media reports this morning also suggest
that the wind-up period for the institution may be much shorter than previously
estimated, with a time period of 3-4 years mooted, although the results
themselves pencilled in a 2020 date for the final closure.
Qatar Puts Up Cash for Greek Bank Merger: CNBC's Guy Johnson reports from Greece on the proposed merger between the country's second and third largest banks, Alpha Bank and Eurobank:
US personal spending to bounce back in July: Conall Mac Coille, chief economist at Davy, comments -- "The second release of UK GDP growth released on Friday (August 26th) reinforced the view that the UK economy slowed sharply in the second quarter. Overall GDP growth was unrevised but manufacturing sector output growth was revised down by 0.2 percentage points to -0.5% on the quarter. The contraction of the sector in Q2 brought to an end six consecutive quarters of expansion in manufacturing, averaging around 1.0% per quarter. With revisions to manufacturing sector output offset by upward revisions to utilities, the view that weak UK GDP growth in Q2 was due to temporary factors such as warm weather depressing electricity demand has now been undermined.
US GDP growth in Q2 was revised down from an annualised rate of 1.3% to 1.0%. The expansion of GDP was primarily driven by investment which rose by 2.1% on the quarter. However, the US economy has been reliant on robust consumer spending in recent quarters, so the slowdown in consumption to just 0.1% suggests that Q3 GDP is likely to remain weak.
Today, markets are likely to focus on the monthly US personal spending data for July. Personal spending fell by 0.2% in June, the first contraction since June 2010, and is expected to bounce back to growth of 0.5% in July. Recent equity price falls are likely to depress consumer spending further as households see the nominal value of their wealth decline. And consumer confidence fell back around the time of the protracted negotiations to raise the US debt ceiling. So, if markets do not see a bounce back in July, sentiment towards the US consumer is likely deteriorate, ahead of the headwinds likely to buffet spending in August."
The MSCI Asia Pacific Index gained 1.5% Monday in reaction to the speech (see Box below) by Ben Bernanke, Fed chairman, on Friday in which he hinted that the central bank may take new measures to aid the US economy.
Japan's Nikkei 225 climbed 0.61%; China's Shanghai Composite index dipped 1.37%; Australia's S&P/ASX 200 rose 1.51% and the Bombay Stock Exchange's Sensex index climbed 2.83% in Mumbai.
In Europe, the Dow Jones Stoxx 600 is up 0.78% in early trading Monday.
The ISEQ has risen 1.01% in Dublin.
CRH is up 2.90% and Ryanair has climbed 2.65%.
The euro is trading at $1.4536 and at £0.8861.
For live currency updates, check the right-hand column of the Finfacts home page.
The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.
The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.
The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.
On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.
On Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the 35-session losing streak.
On Friday last week, the BDI fell 41 points or 2.56% to 1,541.
Crude oil for September 2011 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $85.80 up 43 cents from Friday's close. In London, Brent for September delivery is trading on the International Commodities Exchange at $111.27. The North Sea benchmark accounts for two-thirds of the global market.
The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $25.
The US Energy department recently said that growing volumes of Canadian crude oil imported into the United States contributed to record-high storage levels at Cushing, Oklahoma of over 41m barrels at the end of March 2011 (86% of working capacity at Cushing), and a price discount for WTI compared with similar-quality world crudes such as Brent. A discount for WTI is expected to persist until transportation bottlenecks impacting the movement of mid-continent crude oil to the Gulf coast are relieved. Consequently, the projected US refiner average acquisition cost of crude oil, which was about $2.70 per barrel below WTI in 2010, is $1.60 per barrel above WTI in 2011 and $1.10 per barrel above WTI in 2012.
The spot price of an oz of gold is trading in New York at $1,822.30 per oz, down $6.80 from Friday's close in New York.
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