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News : International Last Updated: Mar 19, 2011 - 5:36 AM


Markets News Friday: G-7 countries intervene to push down Japanese yen; UK consumer confidence dips
By Finfacts Team
Mar 18, 2011 - 9:56 AM

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Taoiseach Enda Kenny presents a bowl of shamrock to President Obama, at a White House reception, St. Patrick's Day, March 17, 2011.

The Yen: The Group of Seven finance ministers and central bank governors on Friday intervened in the foreign exchange market for the first time since 2000.

In a statement, the G-7 countries said that at the request of the Japanese authorities, the authorities of the US, the UK, Canada, and the European Central Bank would join with Japan in concerted intervention in currency markets.

The yen was weaker at ¥81.36 per dollar recently, from as high ¥76.80 earlier in the Asian day.

Yen falls following G-7 agreement to intervene in currency markets; Davy economist, Conall Mac Coille, commented  - - "The G-7 has agreed to intervene in foreign exchange markets to lower the value of the yen. There was an immediate response from markets with the yen falling in value against the dollar by 3%. With the yen currently trading just under 81.75 against the dollar, it has returned to levels similar to those that preceded the earthquake last week. However, central bank intervention in foreign exchange markets has had mixed success in the past, and the expectation remains that there will be significant repatriation flows as Japanese households and companies sell foreign assets to pay for reconstruction work. So it is not clear that the intervention will ultimately be successful in holding down the yen.

The news that the UN Security Council has approved a resolution supporting a no fly zone in Libya and the possibility of military action to protect civilians has sent oil prices back to recent peaks. As the prospect of the resolution being passed became apparent yesterday , oil prices rose from a low of $109.53 per barrel yesterday to back above $116 per barrel in early trading this morning. Higher oil prices are clearly bad news for CPI inflation and the outlook for policy rates. This morning's release of German output price data indicated that the annual rate of inflation was 6.4%, in line with expectations, but largely driven by the increase in oil prices.

On a reasonably quiet day for macroeconomic data releases, the market may also focus on the outlook for the UK consumer. The Nationwide measure of consumer confidence released early this morning indicated that confidence fell to a record low of 38 in February, down from 47 the previous month. That consumer confidence in the UK is now worse than during the depths of the financial crisis reflects a combination of factors hitting real incomes such as higher tax rates and the current high rate of CPI inflation combined with the prospect of the coming fiscal adjustment, a weak housing market and expectations for the Bank of England to raise interest rates in the near future. Clearly, the outlook for consumer spending in the UK is pretty bleak, so we do not believe that a rate rise in May from the Bank of England's Monetary Policy Committee is the done deal that the market is currently pricing in."

White House St. Patrick's Day Reception, March 17, 2011

Economic View 1; US data underlines upbeat tone of the Federal Reserve; Goodbody economist, Juliet Tennent, comments  -- "Attention in Europe yesterday may have been on the successful auction of €4bn in 10 year and 30 year bonds by Spain, but what is probably more relevant is further evidence from the US that the economy is on the “firmer footing” described by the Fed in the minutes of its rate setting meeting earlier in the week.

The Philly Fed Index for March, which measures manufacturing output, confounded expectations of a fall to increase for the sixth month in a row, rising to 43.4, its highest level since 1984. In line with global inflationary trends, February CPI rose to 2.1% yoy, although the core remained subdued at 1.1% yoy.

Weekly jobless numbers were also better than expected. If the recent run of good economic data out of the US continues the Fed, in line with its counterparts in the Bank of England and the ECB, is likely to begin contemplating its exit strategy from the very accommodative monetary policy that it has exercised for more than two years. While last week’s tragic events in Japan are likely to delay any change in policy from the ECB, the Bank of England or the Fed, it is clear that a return to normalisation of monetary policy is not far away."

Economic View 2; UK consumer confidence collapses; Juliet Tennent added - - "Highlighting the headwinds facing the consumer in the UK and in line with the GfK survey, February Nationwide Consumer Confidence fell to 38, its lowest level since 2004 when the survey began. With all segments of the survey falling, the outlook for the UK consumer is uncertain. Once again the dilemma facing the Bank of England, who is contemplating interest rate increases in the face of stubbornly high inflation, is displayed by the weakness in the underlying economy."

Yen intervention by the G7 will work Friday, David Bloom, the Global Head Foreign Exchange Strategy at HSBC said. "The fundamental backdrop for the yen is not bearish," he added:

Poland: CRH (Reduce, Closing Price €15.30); Polish cement industry set for a good 2-3 year period; Goodbody analyst, Robert Eason, comments  - - "According to the media in Poland cement producers are expecting sales to increase by 5-8% this year to 16.5m tonnes. This is underpinned by robust infrastructure spend. The industry has already had a strong start to the year, with volumes up over 100% yoy in Jan-Feb and +20% on a two year basis. The longer-term fundamentals of the industry are also strong and the industry could reach 20m tonnes in the next 2-3 years, which translates into annualised growth of 9-14%.This is positive for CRH who is the number one building materials provider in Poland, a country that is one of the company’s biggest exposures in Europe at over 10% of group profits."

Elan: Update on PML cases; Davy's Jack Gorman comments  -- "In the latest safety update on Tysabri released last night, seven new PML cases were confirmed in February – bringing the total to 102. There have now been 55 cases in Europe, 42 cases in the US and five in the rest of the world. Twenty-one (21%) of the patients with PML have died.

Analysis: Overall incidence of PML in patients exposed to Tysabri has thus risen to 1.23 per 1,000 from 1.16 per 1,000. The presence, or absence, of the known risk factors can have a material impact on each individual patient's risk of developing PML. These are prior immunosuppressant use, duration of treatment and JC-virus status.

Observing the data by treatment epoch, the new cases are in patients with 13-36 infusions. For 1-12 months, the rate remains at 0.01, indicating little or no PML (note that all data are per 1,000 patients exposed). For 13-24 months, the rate is 0.44 compared to 0.41 previously. For 25-36 months, the incidence rate continues to be highest at 1.68, up from 1.64. The 37-48 month incidence actually fell in the month to 1.03 from 1.06.

The data also outline, to 95% statistical confidence levels, what the estimated upper and lower bounds may reach for each of the treatment epochs. The longer duration cohorts have hovered close to 2.0 for the last year; the highest remains the cohort with 25-36 infusions at 2.18.

Davy View: After a spike in cases during January (ten), the number of new reported PML cases has declined – although it remains ahead of average case levels of four to five per month. Monthly data should be interpreted with caution as no detail is provided on whether patients had some or all of the risk factors identified with PML development.

The focus for Elan/BIIB continues to be to clarify these risk factors. The JC-virus assay is critical to this. To this end, it is encouraging that in 25 natalizumab-treated patients who developed PML and in whom serum samples were available 6.5-187 months prior to the onset of PML, all 25 patients had anti-JCV antibodies detected."

Discussing today's bullish signs for the U.S. economic recovery and how the tragedy in Japan will impact global trade, with with Frederick Smith, FedEx chairman/CEO:

Tipperary Candle Company Lands First US Order with New York’s Iconic St. Patrick’s Cathedral: It may seem that Taoiseach Enda Kenny has performed a miracle with Enterprise Ireland's help as it wishes to convey.

St Killian’s helps New York Cathedral move to cleaner, safer, more environmentally friendly smokeless candle system

St. Killian’s Candle Company, a Tipperary-based provider of religious candles, yesterday debuted its new smokeless candle in the US on St Patrick’s Day. The first US order for the green-friendly product was placed by New York’s venerable St. Patrick’s Cathedral.

The institution selected St. Killian’s products as a cleaner, safer and more cost-effective alternative to the older-generation candles currently used by churches across the US. The order was secured with assistance from Enterprise Ireland’s New York office.

The order was celebrated after St Patrick’s Day Mass at St. Patrick’s Cathedral. Attendees included Taoiseach Enda Kenny and the Minister for Trade and Foreign Affairs, Eamon Gilmore along with executives from St. Killian’s Candle Company and the Most Rev. Archbishop Dolan of St. Patrick’s Cathedral.

The mass must have been on Wednesday as the Taoiseach was in Washington DC on Thursday.

“It is fitting for us to mark our US debut on St. Patrick’s Day with an order from St. Patrick’s Cathedral,” said St. Killians’ CEO, Michael Barrett.
“We’re honored to count St. Patrick’s Cathedral as our first US customer. They have stringent performance, environmental, aesthetic and safety standards for their candles. We’re glad that our products meet their requirements.”

US Markets

In New York Thursday, the Dow Jones rose 161 points or 1.39% to 11,775.

The S&P 500 rose 1.34% and the Nasdaq added 0.73%.

Asia Markets

The MSCI Asia Pacific Index of shares was little changed Friday.

Japan's Nikkei 225 rose 2.7%; China's Shanghai Composite added 0.33%; Australia's S&P/ASX 200 Index rose 1.56% and the Bombay Stock Exchange's Sensex index fell 0.92% in Mumbai.

Asia benchmarks

Finfacts Reports

Corporation Tax: Ireland, France and ceramic flowerpots
President Obama to boost Irish spirits with May visit to Ireland
US Economy: For first time ever United States facing high levels of long-term unemployment
Demand for new cars slightly increased in the EU in February
US real estate investment performance in 2010 delivered third strongest annual returns over the last decade
Plans announced for 282 new jobs at planned pharmaceutical research centre in Tralee
Economic growth will be subdued this year and next in UK; OECD says fiscal consolidation and structural reform should continue
Central Bank of Ireland publishes macro economic scenarios for 2011 Irish bank stress tests - - the Prudential Capital Assessment Review
European Commission proposes common system for calculating corporate tax in the EU
Eurozone hourly labour costs rose by 1.6% in 2010
Eurozone annual inflation rises to 2.4% in February; EU stable at 2.8%

In Europe, the Dow Jones Stoxx 600 is up 0.61% in early trading Friday.

The ISEQ has risen 0.39% in Dublin.

CRH is up 0.85%; Elan has risen 2.53% and Aer Lingus has added 3.61.

European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies 

The euro is trading at $1.4050 and at £0.8748.

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

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 Thursday this week, the BDI fell 5 points or 0.32% to 1,533.

The Financial Times reported earlier in January, that Australia’s flooding and fears of ship oversupply has pushed down a gauge of the cost of hiring ships to carry coal, iron ore and other dry bulk by nearly half since October to the lowest level since the aftermath of the financial crisis. The Baltic Dry index, the widely watched measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak reached on October 27, 2010.

Crude oil for April 2011 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $103.08 per barrel, up $1.66 from Thursday's close. In London, Brent for April delivery is trading on the International Commodities Exchange at $116.18. 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 almost $13.

The FT said in early February that a surge in oil inventories in Cushing, Oklahoma, where WTI is delivered into America’s pipeline system, has depressed the value of the benchmark against other yardsticks. The International Energy Agency said on Thursday that with “few relief valves” to cut the stock overhang in Cushing, the price dislocation “may persist for months [or years] to come”.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,411.90, up $7.90 from Thursday's close.

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