|Shinzo Abe, Japan's prime minister (r), with the other G-7 leaders at a summit in Brussels, June 05, 2014 |
Japan's economy grew an annualised 6.7% in the
first quarter of 2014 in real terms, upgraded from preliminary data due mainly
to an upward revision to corporate capital investment, the government said
The January-March expansion in GDP, the total value of goods and services
produced at home, corresponded to a 1.6% increase from the previous quarter, the
Cabinet Office said.
The government said in the initial report released May 15 that the world's third
largest economy grew an annualized 5.9% in the quarter.
Conall Mac Coille, chief economist at
Davy commented today: "One year ago, the IMF
recommended that UK Chancellor George Osborne should relax the pace of his
fiscal consolidation strategy, warning in May 2013 of the UK’s weak growth
prospects with risks remaining tilted to the downside. Suffice to say, the 3.1%
UK GDP growth in the year to Q1 2014 has shown that the IMF’s predictions were
too pessimistic. So this year’s IMF UK Article IV report, released on Friday,
struck a very different tone, with few recommendations on fiscal or monetary
policy. However, the IMF did warn that action is warranted to address the risks
from the UK housing market. Specifically, the IMF recommended that limits on
high loan-to-income mortgage lending should be implemented early and gradually.
Indeed, Chancellor George Osborne said on Friday that the Bank of England should
use the macro-prudential tools at its disposable if the housing market posed
risks to financial stability. So investors will now look to Bank of England’s
June 17th Financial Policy Committee to see what action may be taken to cool the
UK housing market.
Recent data points have provided a mixed picture of the UK housing market. The
Halifax indicated a rise of 3.9% in house prices on the month in May, up 11% on
the year. In contrast, mortgage approvals fell to 62,900 in April, down from the
75,800 peak in January. This could indicate that new rules from the Mortgage
Market Review (MMR), requiring banks to do stricter affordability tests and
implemented in April, are now cooling activity."
Economic View: S&P restores Ireland’s rating to A-;
Juliet Tennent of
Goodbody comments - - "After the market close on Friday, S&P raised the Irish
sovereign one notch from BBB+ to A- and maintained the outlook as positive. The upgrade was driven by improved
prospects for Ireland’s domestic economy which saw the agency revise its average real GDP
growth prospects for 2014 to 2016 to 2.7% from 2%, with Ireland's ability to attract
foreign investment expected to bolster growth. Echoing Moody’s recent upgrade, S&P also
noted the positive credit impact of the faster than expected redemption of NAMA bonds,
which removes a significant contingent liability from the sovereign.
In maintaining its positive outlook, S&P stated that, (1) additional data
confirming that the economic recovery is “well-entrenched”, (2) a narrowing of fiscal deficits to
well below 3% of GDP and (3) additional measures by the major banks to address asset quality,
could result in a further upgrade.
The move by S&P is in line with our expectations and confirms that the rehabilitation of Ireland’s credit worthiness remains underway. While the market
has moved well ahead of the ratings agencies, the continued positive ratings
cycle should continue to support a tightening of spreads relative to German bunds.
Banks: S&P upgrade implications for the banking system:
and Colm Foley of Goodbody comment - - "On Friday evening, S&P raised its long
term sovereign credit rating on Ireland from BBB+ to A-, with the outlook remaining on positive. The upgrade reflected the
brightening economic prospects, detailed in the economics piece above. However, S&P indicated that
the better macro backdrop should underpin improvements in the financial system as well. S&P
noted the return to the debt markets for the Irish banks during 2013, but regarded
this return to external funding as still tenuous.
S&P regards NPLs as still very high across the system (35% of loans) and
whilst some lenders are reporting declining stocks of NPL’s, S&P regards that this process
will be slow. The highest NPLs are in commercial real estate, though S&P notes that these NPLs
are well provisioned. However, the main concern for S&P is in the mortgage books where
all distressed loans are estimated at c.26.5% by S&P. The agency acknowledges that
the banks, prompted by the authorities have developed their loan work-out capabilities and
will soon be better placed to address the asset quality of their mortgage books through
foreclosure, rescheduling or other remediation. Elsewhere, S&P assesses contingent
liabilities from the financial sector as limited given the thoroughness of the restructuring of the
system in the last five years.
In its outlook section, S&P expects the banks to take additional resolute
steps to address asset quality, including continued provisioning and loan write-offs. Our
forecasts incorporate additional loan losses above trend levels at the banks in
2014 and 2015 prior to normalising. Nevertheless, the improving ratings profile
should also help lower funding in due course for the financial system."
In New York Monday, the Dow
rose 28 points or 0.27% to 16,953.
The S&P 500 added 0.14% and
the Nasdaq advanced by 0.27%
US benchmark updates
The MSCI Asia Pacific
Index gained 0.2% in Hong Kong Monday after rising 1.2% last week.
Japan's Nikkei 225 rose
0.31%; China's Shanghai Composite slid 0.03%; South Korea's KOSPI fell 0.27% and
Australia's S&P/ASX 200 rose 0.50%; and in Mumbai, the Bombay Stock Exchange
the S&P BSE India Sensex Index climbed 0.72%.
In Europe, the
Dow Jones Stoxx Europe 600 is up 0.21% in mid afternoon trading Monday.
In Dublin, the
ISEQ is up 0.25%.
Lingus is down 2:40% and CRH is up 0.31%.
Irish Share Prices
AIB Daily Report
Bank of Ireland Daily Report
The euro is
trading at $1.3589 and at £0.8095.
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.
Baltic Dry Index,
a measure of shipping costs for dry commodities,
hit an all-time high of 11,771 on May 21, 2008.
From that time it reversed and on the 5th of December, 2008 it hit a low of 663
- - close to a 1986 low.
July 15, 2010, the index fell for the 35th straight session, by 9 points, or
3.11%, to 1,619 points,
On Friday in
London the BDI closed up 12 points or 1.23% to 989. The index is down 56.57%
year to date and up 21.80% in 12 month period.
rose by 220% in 2013 to 2,237.
Global rebalancing — the
tanker scrapyard index?
Crude oil for June 2014 delivery is trading on the
Chicago York Mercantile Exchange (CME/Nymex)
at $103.88 up $1.22 from Friday's close. In London, Brent for June 2014
delivery is trading on the
International Commodities Exchange at $109.87.
The North Sea benchmark accounts for two-thirds of the global market.
Finfacts, July, 15, 2013: US
West Texas Intermediate oil benchmark jumps in July
- - margin between WTI and Brent falls.
The spot price of an oz of gold is trading on the
CME in Chicago at $1,253.50 up $1.40 from Friday's closing - -
the gold price fell 28% in
2013, the biggest annual plunge since 1981.
Gold had hit a
record high of $1,921.15 a troy ounce on Sept 06, 2011.
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