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| President Barack Obama meets with a deaf/blind group from the Helen Keller National Center in the Oval Office June 26, 2009.
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Bloomberg reports European and Asian stocks rose, pushing the MSCI World Index toward its biggest quarterly advance since 1987, as commodity producers climbed with metals and oil. U.S. stock-index futures increased.
Europe’s Dow Jones Stoxx 600 Index increased 0.5% in early trading, extending its quarterly surge to 18% the steepest since 1999, while the MSCI Asia Pacific Index gained 1.4%. The Asian gauge has surged 29% since March 31, the best quarterly rally since the measure started in 1988.
The Stoxx index is now trading flat.
Futures on the Standard & Poor’s 500 Index added 0.2% following a 0.9% gain for the benchmark gauge of U.S. equities yesterday that extended the best quarterly rally since 1998.
The Wall Street Journal says securities firms still standing on Wall Street are about to close the most lucrative quarter since the credit crisis erupted.
And instead of relying on risk and leverage to drive profits, companies such as J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. are getting back to basics, with a strong performance from trading and underwriting.
Investor confidence in the debt markets fueled issuance of $1.5 trillion globally from the start of the second quarter through Monday, according to Dealogic. That was slightly lower than in the first quarter, but the latest results showed a rebound in high-yield issuance.
Equity offerings reached nearly $260 billion during the second quarter, which ends Tuesday. That is almost four times the amount recorded during the first quarter, and the highest since 2008's second quarter, Dealogic said.
UK consumer confidence rose to the highest level in 14 months in June as shoppers became more optimistic that the recession is past its worst, polling firm GfK NOP said.
An index of sentiment rose 2 points to minus 25, the strongest result since April 2008, company said today. The gauge of confidence about the economic outlook for the next year rose 8 points to minus 8.
- GfK NOP Consumer Confidence Index rose two points this month to -25, nine points higher than this time last year.
- Confidence in "general economy” over the next and during the last year has both experienced increases.
- Expectations for the "major purchases measure” have dropped four points to -26 this month.
Rachael Joy, in the Consumer Confidence team at GfK NOP, commented:"After a pause last month, Consumer Confidence once more returned to growth and is now up 14 points from its all time low of last year. Confidence, however, remains fragile, as uncertainty about the strength of any recovery and an increase in unemployment all mean that consumers continue wary. Indeed, there was an firm decline in those agreeing that now is a good time for making any major purchases.”
On Monday in New York, the Dow Jones Industrial Average gained 90.99 points, or 1.1%, to 8529.38.
The S&P 500 rose 0.9%; the Nasdaq Composite Index added 0.3%.
Japan's jobless rate rose to its highest level in nearly six years in May despite evidence of an improvement in business activity.
The unemployment rate increased to 5.2% in May from 5.0% in April, the Ministry of Internal Affairs and Communications said Tuesday - - the highest since September 2003, when it was also 5.2%.
About one-third of the workforce are "temps" with limited rights.
As in Germany, the rate is kept low by public subsidies.
The jobless data showed that 880,000 manufacturing jobs were lost in May, after a fall of 630,000 jobs in April and 420,000 fewer positions in March.
In Tokyo, the Nikkei 225 rose 1.79%.
China's CSI 300 fell .42%; Australia's S&P/ASX 200 gained 1.75% and India's BSE Sensex 30 dipped 1.44%.
Asia-Pacific benchmarks
Irish investment company Boundary Capital, which is listed on the Irish Stock Exchange, today reported a pre-tax loss of €54.7m for last year, compared with a loss of €2.7m a year earlier, due to a plunge in the value of its investments.
Boundary Capital said in 2008 it increased its debt facilities to €38.6m from the now State-owned Anglo Irish Bank, to finance current investments and is in discussions to rearrange and extend its debt facility with Anglo.
"The outcome of these discussions is uncertain and ongoing,"the company said.
Boundary said most of its investments were trading well in their respective sectors but were also being badly affected by the economic downturn.
Its investments in Arnotts, CJ Fallon and ODC accounted for almost €35m of the investment losses, while a revaluation of its stakes in quoted companies Veris and SiteServ led to a loss of just over €6m.
Results detail
The ISEQ is up 0.55% in Dublin.
Boundary has plunged 40%. INM is up 6%.
European Benchmarks
Irish Share Prices
Euribor Rates
AIB Daily Report
Bank of Ireland Daily Report
Currencies
The euro is trading at $1.4108 and at £0.8455.
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.
Commodities
Crude oil for August delivery is currently trading on the New York Mercantile Exchange (Nymex) at $72.43 per barrel up 94 cents from Monday's close. In London, Brent for August delivery is trading on the International Commodities Exchange at $71.96 down 3 cents.
Gold spot price
Gold is trading at $941.10 up $3.30 from Monday's spot price close in New York.
The FT reports today that Indians are set to begin trading on Tuesday on the country’s new gold bullion market in a move likely to mobilise the thousands of tonnes of the precious metal that people keep hidden under their beds as savings.
The National Spot Exchange, controlled by Financial Technologies, the Indian market company, will begin offering contracts for domestic gold bullion, ranging in size from 8g to 1kg.
“Though India has a huge household stock of around 20,000 to 25,000 tonnes of gold, there was no single market available where this could be sold,”said Anjani Sinha, managing director and chief executive of the National Spot Exchange.
The FT says Indians have saved in gold for millennia. The country is the world’s largest consumer of the metal, importing nearly 800 tonnes a year, or 20 per cent of global demand.
Davy chief economist Rossa White comments: Consumer expectations jump - -"The busy week of Irish data started positively. Consumer confidence surged to a 14-month high. Crucially, consumer expectations bounced from a record low to the highest point since April 2008. Household expectations (about income and wealth prospects) influence saving and, hence, the level of spending. Precautionary saving has spiked in the last 18 months — this may signal that the savings ratio is about to peak.
We reckon that the savings ratio has soared over the last two years. If quarterly data were available (even annual figures are well behind), the figures would probably show that savings as a percentage of disposable income hit 11% in Q2. Precautionary saving has no doubt made up an increasing share of overall savings out of annual income in the last year particularly, reflecting the spectre of mass unemployment. Hits to the stock of wealth have also led households to compensate.
Crucially, the expectations index led the improvement. That index was close to a record low in May only to jump in June (albeit that the reading of 39 is well below the long-run average of 87.5). Current conditions actually fell on the month. It means that the Irish readings are tallying more with US consumer confidence data where optimism about the future has led the revival. Note that the Irish stock market slid in line with consumer confidence from early 2007 on (although many other macro indicators would look similar on a graph with the ISEQ). These data point to the market recovering further ground in the months ahead."
Goodbody chief economist Dermot O’Leary comments: Irish consumers slowly coming out of the doldrums - - "With a whole range of headwinds still present one can forgive Irish consumers for feeling down in the dumps and thus unwilling to part with their cash. This was certainly the case in the first quarter of the year, when retail sales fell by 22% yoy, mainly due to a collapse in car sales. In this light, it is encouraging, if not slightly surprising, that consumer confidence in Ireland, as measured by the KBC/ESRI index, rose sharply in the month of June (to 53.4 from 45.5), and is now well above the low (39.6) reached in July of last year. The increase took the index to its highest level since April 2008. What could lie behind this improvement and is it sustainable?
The recently implemented higher taxes would not normally be considered a positive for consumer confidence and there have indeed been further job losses over recent months. However, the rate of job losses have slowed over the past few months and the rise in confidence may be partly attributed to the fact that consumers are recognising that while the decisions being made to restore order to the public finances are painful, they are very much necessary. It must be stated that confidence levels still remain at a low level historically, but the worst point for the economy, which was reached in the aftermath of the collapse of Lehman Brothers and the near implosion of the international financial system, is now probably passed. In this regard, this morning’s release of the Q1 National Accounts will reveal the extent of the collapse in GDP around that time. Fortunately, as revealed in the labour market data and now the confidence indicators, the first three months of the year were probably the worst of the worst for the Irish economy."
Goodbody analyst Anna Lalor comments: BIS issues its annual report - - "The Bank of International Settlements yesterday issued its annual report, where it gave its assessment of the financial crisis and what needs to be done to ensure a more stable and sustainable financial system over the medium and longer term. It points out that the balance sheets of many financial institutions have still not been repaired and that “further steps are needed to address this”, with a healthy financial system being a requirement for fiscal policies to be effective and for a return to stable long term growth. The BIS believes that it is “essential that authorities … repair the financial system” and “persevere until the job is done”.
It thinks that governments, given their knowledge of previous financial crises, may not have acted fast enough, with actions to date mainly focussed on providing guarantees and subsidised capital, while the larger issue, in its view, is to deal with problem assets on bank balance sheets, on which any delay threatens to prolong the crisis. The Irish Government, under EU Commission guidance, is in the process of taking such action in relation to development property loans using NAMA, while it is open to the IMF suggestion that the scope of the agency be left wide enough to deal with other assets that may become particularly burdensome on the banks as the credit cycle advances.
Although not popular with taxpayers, it acknowledges that key financial institutions are likely to require more government support in order to get to the required adjustments in the system, restore confidence and restart lending on a sustainable basis. It highlights that necessary deleveraging and shrinking of bank balance sheets will occur due to banks’ lower capital levels and demands for higher capital buffers.
These requirements imply “that investors’ expectations and financial firms’ targets for rates of return will need to be adjusted to less ambitious levels”, while the reduction of excess capacity in the sector is a prerequisite for the achievement of sustainable profitability levels. In addition, banks will need to be smaller, simpler and safer. In relation to the longer term stability of the system, the BIS comments on the need to encompass risks more accurately, particularly systemic risk (with a proposed systemic capital charge) and those related to more complex instruments, with enhanced regulatory requirements and a structure that reduces procyclicality (through a countercyclical capital charge) - all of which will lead to lower returns for banks for some time to come."
