Global finance blog - news, jokes, life…

The purchase of a nine per cent stake in Ireland

The word of the day in financial markets: Anxious.

U.S. stocks first plunged Friday after a dismal report on economic growth added to traders’ fears about the consequences of a stalemate over raising the country’s borrowing limit. But by late morning after President Barack Obama said there were multiple paths to a compromise, the Dow remained the only index that was down slightly.

If Congress fails agree to raise the debt limit before Aug. 3, the U.S. won’t be able to pay all of its bills. The country might then default on its debt. Experts say that could be a disaster for financial markets and the broader economy.

The combination of bad economic news and growing worries about a debt deal were evident in nearly every measure of investor confidence.

_Bond yields fell as more investors sought safer investments.

_The U.S. dollar fell against the yen and Swiss franc, as traders considered them safer. The dollar remained up against some other currencies.

_Gold prices rose by nearly 1 percent.

_The cost to protect against a U.S. default within the next year reached a record high. The cost to insure Treasurys for one year jumped 54 percent this week.

Many analysts have said they believe the debt dispute will be resolved before the deadline. If that confidence fades, the market could plunge more sharply, said Jack Ablin, chief investment officer at Harris Private Bank.

“I think there’s a growing sense of resignation that we could go into technical default” and a downgrade of U.S. debt looks more likely, he said.

But there are other concerns for investors, too. The government said early Friday that economic growth slowed in the first half of the year to its weakest pace since the recession ended two years ago.

The news overshadowed strong earnings reports from drugmaker Merck & Co. Inc. and oil giant Chevron Corp.

In morning trading, the Standard & Poor’s 500 index is flat at 1,301. The Dow Jones industrial average dropped 34, or 0.3 percent, to 12,208. The Nasdaq composite index is up 5, or 0.2 percent, to 2,771.

Traders flocked to bonds, considered to be a safer investment, pushing the yield on the benchmark 10-year Treasury note to 2.85 percent from 2.95 percent on Thursday. As demand for bonds increases, the government is able to pay bondholders lower interest rates, causing yields to fall. Concerns that bond yields could spike on fears of a default have so far been unfounded.

Gold rose about $10, or just under 1 percent, to $1,627 per ounce. Gold prices tend to rise when investors are nervous about turbulence in other markets.

House Republicans are trying for the third straight day to pass a bill that would raise the borrowing limit while cutting federal spending by nearly $1 trillion.

President Barack Obama said again Friday that he will not sign such a bill. Democrats say any bill must include revenue increases from higher taxes as well as cuts.

A default by the U.S. could increase borrowing costs for the government and consumers. That could dig the nation into a deeper deficit hole and discourage people from borrowing to buy homes and cars.

Even if Congress does reach a deal, rating agencies might still downgrade U.S. debt, which would likely have the same effect on borrowing costs.

The debate over increasing the nation’s borrowing authority has cast a shadow of uncertainty over the financial markets all summer. Any remaining calm faded before the markets opened Friday, as news of weak economic growth pushed some investors to sell quickly.

The dollar fell 1.5 percent against the Swiss franc as traders’ confidence in the reserve currency eroded.

The market-wide selloff pushed shares of Merck down 2 percent, despite the company’s reporting strong earnings before the markets opened. The drugmaker said its second-quarter profit nearly tripled from a year ago. It announced plans to cut 11,830 jobs.

Shares of Chevron also lost a fraction of a percent despite strong second-quarter earnings. The company said its profit jumped 43 percent, beating analysts’ estimates, as higher oil and gasoline prices offset a decline in production.

Among the few gainers was travel website operator Expedia Inc. Shares surged 8 percent after the company said its second-quarter net income rose more than expected because bookings increased and prices for plane ticket and hotel rooms rose.

Source

ArcelorMittal, the world’s largest steel maker, remains optimistic about the second half of the year even though it posted an 11 percent decline in second quarter profits.

The company said Wednesday that its net profits in the three months to June 30 fell to $1.54 billion from $1.71 billion a year earlier. The decline was mostly due to last year’s profits being inflated by a $555 million one-off gain related to convertible bonds.

When stripping out the results of discontinued operations, net profit would have been down only 2.8 percent.

Sales jumped 25 percent to $25.13 billion from a year earlier and 13 percent from the previous quarter, thanks to higher average steel prices.

The world’s steel makers, which were hit hard during the global financial crisis as construction and car production plunged, continue to struggle with a slow recovery in demand in the U.S. and Europe. Cheaper imports from countries like China have also weighed on results in recent years.

However, Luxembourg-based Arcelor said it expected demand to continue to build up again, leading to higher steel shipments in the second half compared with a year earlier.

Chief Executive Lakshmi N. Mittal said his company had delivered a “strong performance” in the second quarter and that the seasonal drop-off in the third quarter is unlikely to be as pronounced as last year.

“Overall the group’s performance in the second half of 2011 should compare favorably with the second half of 2010,” Mittal added.

Investors reacted favorably to the statement, sending the company’s share price higher even as the wider markets continue to decline over concerns over the U.S. debt situation. ArcelorMittal shares in Amsterdam were trading 2 percent higher at euro22.64.

Arcelor’s positive outlook for the second half contrasts with a more pessimistic view from United States Steel Corp., which said Monday that it expected its third-quarter profit to fall, pointing to uneven economic recovery in the U.S. and Europe as well as the debt troubles in both regions.

Arcelor’s Chief Financial Officer Aditya Mittal told reporters on a conference call that the uncertainty over the fiscal situation in both the U.S. and Europe has not yet affected the company. In the U.S., Republicans and Democrats are locked in a fight over raising the country’s debt ceiling, while in Europe, investors continue to fear the debt crisis could engulf big economies like Italy and Spain.

However, Mittal added that bad developments in both regions were the main threat to expected higher shipments in the fourth quarter.

Apart from fluctuating demand for steel, the other big challenge for steel makers has been rising raw material prices. Arcelor has been working hard to mitigate that uncertainty, primarily by buying up its own iron ore and coal reserves.

In the second quarter, Arcelor’s own iron ore production rose 11 percent from the previous three months, while coal production increased 7 percent.

The company has also launched a joint $5 billion offer for Australia’s Macarthur Coal Ltd. together with U.S.-based Peabody Energy Corp. Macarthur makes pulverized coal, one of the key raw materials needed for making steel.

Aditya Mittal said the companies are currently conducting due diligence on Macarthur and would then decide whether to make their offer binding.

Source

Nissan announced an $8 billion expansion plan for China on Tuesday as part of a global strategy to focus on faster-growing emerging markets and reduce reliance on the United States.

Nissan’s plan with its local partner, Dongfeng Group, calls for opening new factories to meet surging demand and introducing 30 new models by 2015. They include a China-produced electric car to be sold under the low-priced Venucia brand that Nissan Motor Co. is creating for the Chinese market.

“China is key to our total growth,” said Nissan CEO Carlos Ghosn at a news conference.

Global automakers are looking to China, the biggest auto market by number of vehicles sold, to drive revenue amid weak demand elsewhere. Auto sales in China jumped 32 percent last year to 18 million vehicles, defying global economic malaise.

Nissan hopes to nearly double its annual sales in China to 2.3 million vehicles by 2015, up from 1.3 million last year, Ghosn said.

The Japanese automaker was a latecomer to the Chinese market but has succeeded with a wide range of offerings, from Infiniti luxury models to the cheaper Venucia brand, said Masataka Kunugimoto, auto analyst at Nomura Securities Co.

“Nissan has scored great success in China,” he said. “Its key strategy in recent years has focused on strengthening its lineup and presence in China.”

Ghosn said Nissan’s China expansion is part of an effort to expand in faster-growing markets. It includes new factories and other initiatives in Russia, Brazil, India and Southeast Asia.

“We used to be extremely dependent on one market _ it was the U.S. market,” said Ghosn, who also heads Nissan’s alliance partner Renault SA of France.

The global strategy is “moving Nissan from too much dependence on one region to depending on different pillars and different regions,” he said.

Nissan’s ambitions reflect a broader trend among global automakers, which are creating models for China or incorporating Chinese tastes into global designs. General Motors Co. also has launched its own low-cost China brand, Baojun.

Ghosn said Nissan wants to expand its China market share from 6.2 percent today to 10 percent by 2015. He said its market share has eroded because its factories cannot meet demand despite operating at full capacity.

“I’m afraid that even with the capacity we announced today, we might be short,” he said.

Ghosn said plans to produce an electric car in China were driven both by expected strong demand buttressed by government promises of subsidies to buyers and other support for clean vehicles and by explicit pressure from Beijing on automakers.

The government has told producers “new energy cars should be under a Chinese brand,” he said.

The first Venucia model is due to go on sale next year.

Nissan plans to export about 40,000 Chinese-made vehicles next year to South Asia, Latin America and other developing markets, Ghosn said. He said that should rise to 80,000 by 2015 but exports would be a small share of production because Nissan needs to meet strong domestic demand.

All development of Venucia-brand vehicles will be carried out in China, where Nissan has a design studio in Beijing and 3,500 employees in research and development. Ghosn said that staff should grow to 6,000 in five years.

Nissan’s plans call for building a new factory in the eastern city of Changhzhou in Jiangsu province.

Another factory for passenger vehicles is due to open next year in Guangzhou in southern China, where Nissan already has one factory. A factory for commercial vehicles is slated to open this year in Shiyan, a city southwest of Shanghai in Hubei province.

Nissan also plans to expand its sales network in China from 1,400 dealerships to 2,400 by 2015, Ghosn said.

Source

The chief villain in Britain’s phone hacking scandal, the News of the World tabloid, is history, shut by owner Rupert Murdoch. But was it the only shadowy practitioner in Britain’s cutthroat media market? Some celebrities think not.

Actor Jude Law is suing The Sun, another tabloid owned by Murdoch, for allegedly hacking into his voice mails. And actor Hugh Grant, now a vigorous campaigner against phone hacking, is pushing to learn who in the British media may have intercepted his phone messages.

Britons greet their scandals with cynicism about fallen figures, but they are not used to ones that sweep up major institutions all at once. Police, politicians and journalists were pulled into what Prime Minister David Cameron called a “firestorm,” and now people wonder how far this one will go. Even the number of possible hacking victims is uncertain, with the number said to run into the thousands.

The focus for now is on the News of the World and its management, as well as former executives who were arrested in a police investigation. But a key question that has yet to be addressed is to what extent other newspapers hacked the voice mails of celebrities and others in an attempt to garner gossip and other titbits deemed worthy of print.

The slow pace of investigative work, the challenge of untangling evidence in seized documents and confidentiality clauses in any settlements between newspapers and plaintiffs mean it could take months or years to uncover the full extent of wrongdoing, if it happens at all.

“I believe it to be widespread,” said Max Clifford, a celebrity publicist who got a hefty payout from the News of the World after his phone was hacked in an earlier scandal. “News of the World were definitely the leaders of the pack, but they weren’t isolated. They weren’t the only ones.”

The scandal erupted a few weeks ago with allegations that journalists at the News of the World hacked the phone of a 13-year-old murder victim while police were still searching for her and broadened to include claims reporters paid police for information. Arrests followed, top police officials quit, and Murdoch and his son, James, told a parliamentary committee that they were unaware of wrongdoing.

Murdoch’s camp has sought to deflect criticism by alleging that News of the World was unfairly tarnished, accusing newspapers that have printed critical reports of hypocrisy and suggesting that phone hacking was hardly confined to one media organization.

Daily Mail editor Paul Dacre told a parliamentary committee this month that some “questionable methods” could be justified to break a story that was in the public interest, but he said he had never considered phone hacking or “blagging,” or obtaining information through misrepresentation.

“Clearly, they are criminal charges,” he said.

Fresh information on hacking could emerge in January, when dozens of alleged victims, including former government ministers, bring a joint lawsuit against News International, which runs Murdoch’s British newspapers, to the High Court in London.

The case will focus on five lead claimants chosen to represent the different types of people who were allegedly targeted _ Hollywood actor Law, British lawmaker Chris Bryant, former soccer star Paul Gascoigne, interior designer Kelly Hoppen and soccer agent Sky Andrew.

Lawyer Tamsin Allen, who represents Bryant, said so far 32 claimants in all had joined the action, which will decide whether hacking took place and whether victims should receive compensation.

Law is already suing The Sun for allegedly hacking his telephone mails for stories about his private life. News International denies the claim, accusing the actor of “a deeply cynical and deliberately mischievous attempt” to drag The Sun into the scandal. The Sun is the first paper other than the News of the World to face a phone-hacking lawsuit.

Law’s spokeswoman, Sara Keene, on Friday declined to comment on any aspect of phone hacking.

On Wednesday, actor Grant was granted the right to see evidence that could reveal whether his voice mails were intercepted by journalists at the News of the World or other newspapers.

A judge at Britain’s High Court ordered police to disclose information to Grant and his former girlfriend, Jemima Khan, that was allegedly gathered by private investigator Glenn Mulcaire. Mulcaire, who was jailed for phone hacking in 2007, worked for the News of the World and may also have sold information to other newspapers.

The Guardian reported that their lawyer, David Sherborne, also asked for any information the police had on “passing of material about the claimants to other newspapers.”

Martin Moore, a founder of Hacked Off, a group that seeks full accountability in the phone-hacking scandal, said documents seized from Mulcaire, which are key to police and parliamentary inquiries, are difficult to decipher because they don’t spell out the identities of alleged phone hacking targets. A document might list a birthday instead of a name, for example, but it is not clear whose birthday it is.

“It’s terribly difficult to know what else they mean,” Moore said. “I can understand why that would be quite daunting for the police.”

Another former private investigator with links to News of the World is Jonathan Rees, who was charged with conspiring to murder a former business partner, though the charge was eventually dropped. Moore said documents seized from Rees deserve more scrutiny and, he said, “there may be other private investigators we don’t know about.”

CNN talk show host Piers Morgan has been drawn into the debate, denying claims he was involved in hacking when he was editor of the News of the World and a non-Murdoch tabloid, the Daily Mirror.

British lawmaker Louise Mensch, who was on the committee that questioned the Murdochs, said Morgan has been “very open about his personal use of phone hacking,” and had boasted about it in his memoir “The Insider.”

In fact, Morgan writes in the book of being suspicious that his own phone was hacked and says that after being warned by a friend, he changed his phone’s security code. Morgan challenged Mensch to repeat the claim outside Parliament, where parliamentary privilege protects members form being sued. She has declined.

Morgan told the AP that any suggestion that he was involved in phone hacking is “a falsehood and I suspect maliciously done.”

“I’m obviously very high-profile back in Britain. There’s lots of old friends in the newspaper game that would like nothing more than to drag my name into this and have tried very hard to do so,” he said.

Morgan edited the News of the World in 1994 and 1995. He later moved to the Mirror, but was forced to quit in 2004 after the newspaper ran pictures of British soldiers allegedly abusing Iraqis that turned out to have been faked.

The Guardian devoted considerable effort to investigating phone hacking, and The Independent and The Observer also pursued the story prior to the scandal that shook British public life. Clifford, the publicist whose voice mail was hacked, noted that some newspapers had avoided the matter even though it was hurting the reputation of their rivals at the News of the World.

“I think that pretty much speaks for itself,” Clifford said without elaborating. He said police should investigate other newspapers if necessary, even if it entails more embarrassing revelations of inappropriate ties between law enforcement and the media.

Source

Olin Corp., the Clayton-based ammunition and chemicals maker, reported second-quarter profit more than doubled to $42.1 million, or 52 cents a share, from $16.9 million, or 21 cents a share, in the same period last year.

Sales rose 30 percent to $529 payday advances.1 million, the company said in a statement on Thursday.

Source

The owner of The New York Times says it had a net loss in the second quarter because of a non-cash writedown for the declining value of some of its smaller newspapers.

The New York Times Co. said Thursday that it lost $120 million, or 81 cents per share. That’s down from earnings of $32 million, or 21 cents per share, a year earlier. Excluding special items, it earned 14 cents per share, better than the 10 cents that analysts polled by FactSet expected.

Revenue fell 2 percent to $577 million, close to analyst expectations of $581 million. Growth in digital revenue has yet to make up for declines in print. The Times’ website began charging for full access this quarter and had 224,000 digital subscribers as of June 26.

Source

Canada

Worries about Europe’s banking woes and debt problems in the U.S. dragged global stock markets lower on Monday.

Crude oil fell below $97 and the dollar strengthened against the euro while falling slightly against the Japanese yen.

The results of stress tests on European banks that were released after the close of trading Friday overshadowed the start of this week’s trading.

The results did little to reassure investor confidence in the continent’s shaky financial sector, revealing that eight of 90 European banks flunked tests aimed at revealing how they would fare in another recession. Another 16 barely passed.

Ahead of an emergency meeting of EU leaders later this week, investors are growing more worried that Europe’s debt crisis will spread to Italy and Spain.

Investors are also unsettled by the inability of U.S. politicians to work out a deal to avoid a debt default before a deadline that is just two weeks away.

“Looking ahead, sovereign debt worries in the U.S. and Europe and a pickup in second-quarter U.S. earnings data are going to compete for traders’ attention,” said Ben Potter, a research analyst at IG Markets in Melbourne, Australia. “The only real certainty in the coming days is that there is likely to be volatility as the market grapples with these major issues.”

Francis Lun, managing director of Lyncean Holdings in Hong Kong, said that market reaction is “quite negative” to the stress test results. “It really shows that it would be a long time before Europe can solve its problem,” he said.

In early European trading, the FTSE 100 index fell 0.8 percent to 5,793.73 and France’s CAC-40 dropped 1.3 percent to 3,678.26. Germany’s DAX slid 1.1 percent to 7,137.13.

U.S. stocks were poised to fall. Dow futures were down 0.6 percent to 12,380.00 while S&P 500 futures were down 0.6 percent to 1,306.30.

In Asia, South Korea’s Kospi slipped 0.7 percent to close at 2,130.48 and Australia’s S&P/ASX 200 shed less than 0.1 percent to 4,539.90. Hong Kong’s Hang Seng fell 0.3 percent to finish at 21,804.75.

Mainland Chinese shares edged lower amid concerns over inflation will remain high in the coming few months, analysts said.

The Shanghai Composite Index lost 0.1 percent to close at 2,816.69 and the Shenzhen Composite Index dropped less than 0.1 percent to end at 1,232.54.

“The market will keep on being unstable. There could be a rally this week, however, it cannot last long as there is not enough power to support it,” said Cai Dagui, an analyst in Ping’an Securities, based in Shenzhen.

Elsewhere, benchmarks in Taiwan, Singapore and New Zealand also fell. Markets in Japan were closed Monday for a national holiday.

In currencies, the euro fell to $1.4054 from $1.4136 late Friday. The dollar weakened to 79.02 yen from 79.11 yen.

Benchmark oil for August delivery was down 46 cents to $96.78 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose $1.55 to settle at $97.24 on Friday.

________

Researcher Fu Ting in Shanghai contributed to this report.

Source

U.S. stocks indexes inched higher Friday, trimming their losses for the week. The gains were held back by a budget deadlock in Washington and worries that Europe’s debt crisis could spread.

The stock market was headed for one of its worst weeks this year. Indexes have fallen four of the past five days after Italy appeared to be the next European country headed for a fiscal calamity.

Those concerns ebbed after Europe’s banking authority said only eight banks failed the latest round of tests designed to show how well they would stand up under severe financial strain. A total of 90 banks were subject to the tests.

The market opened higher after Google Inc., Mattel Inc. and Citigroup Inc. all reported strong quarterly earnings. Buyout offers for Clorox Co. and Petrohawk Energy Corp. also lifted stock prices.

The Standard & Poor’s 500 index rose 3 points, or 0.3 percent, to 1,312 in afternoon trading. The Dow Jones industrial average rose 14, or 0.1 percent, to 12,451. The Nasdaq composite index rose 18, or 0.7 percent, to 2,781.

In Washington, lawmakers and President Barack Obama made little visible progress in negotiations over raising the nation’s borrowing limit ahead of an Aug. 2 deadline. Credit rating agency Standard & Poor’s said Thursday there is a 50 percent chance it will downgrade the government’s credit rating within three months because of the impasse. A day earlier, Moody’s Investor Service said it is reviewing America’s bond rating for a possible downgrade.

Many analysts believe that a default by the U.S. is unlikely and would be corrected quickly. But concerns about Europe and a weak data on U.S. factory output continued to weigh on stocks, as they have since early this spring.

Those worries have kept traders’ expectations and stock prices relatively low, said Ryan Detrick, senior technical strategist Schaeffer’s Investment Research. If corporate earnings remain strong and Europe stabilizes, he said, stocks might rally in the second half of the year. That happened last year, after fears about Europe held the stock market back all summer.

“With all the talk about European debt and the U payday loan lenders.S. issues, the fact that earnings are coming in pretty strong is a good sign,” Detrick said. “Once those issues work their way through the system, long-term growth is going to come from earnings.”

The government said early Friday that U.S. factories produced fewer autos in June and overall factory output was flat. It was third straight weak month for manufacturers. Auto production declined in all three months because automakers were unable to obtain parts after the earthquake and tsunami disaster in Japan.

Major indices are down for the week following two weeks of gains. The S&P 500 is down 2.4 percent, the Dow 1.7 percent. Traders hoped to extend recent gains after an eight-week slump fed by Europe’s worsening debt troubles.

Mattel shares rose 2 percent after the company said its net income jumped 56 percent in the second quarter, helped by strong demand for Barbie and “Cars 2″ toys.

Google jumped 13 percent, the most in the S&P 500 index, after the company said its income increased 36 percent from the year-ago quarter and revenue hit an all-time high. Google reported after the markets closed Thursday.

Clorox Co. shares surged 8 percent after billionaire investor Carl Icahn offered to take the company private in a deal that values the household products company at $10.2 billion. He offered 12 percent more for shares than they were worth at Thursday’s close.

U.S. oil and gas producers rose after Australian natural-resource giant BHP Billiton Ltd. said it would buy Petrohawk Energy Corp. for $12.1 billion, feeding speculation about which company might be the next takeover target. BHP was attracted to the long-term value of Petrohawk’s U.S. natural gas reserves.

Petrohawk shares soared 63 percent, lifting other companies with natural gas holdings. Among the strongest gainers: Range Resources Corp. rose 10 percent, Cabot Oil & Gas Corp. rose 9 percent and Pioneer Natural Resources Co. and Southwestern Energy Co. rose 8 percent.

Source