Worrisome U.S. economic data and lackluster earnings reports kept stocks range bound this week. While news that the U.S. Federal Reserve Board was in no hurry to tighten monetary policy gave stocks a boost midweek, investors remained wary of stock buying, given new evidence of the slow pace of global economic recovery.
Global economic news
Mixed U.S. economic data worry investors
In the United States a government report showed a larger-than-expected drop in jobless claims. The report bolstered optimism about the economy. However, other reports were less favorable. Manufacturing growth in the Philadelphia region unexpectedly declined in May to the slowest pace in seven months. New home construction fell 10.6% in April from March. Construction of homes and apartments dropped 10.6% in April to a seasonally adjusted annual rate of 523,000 compared with a month earlier, according to the U.S. Department of Commerce. From the same month a year ago, home starts are down 23.9%.
BOJ maintains monetary policy
The Bank of Japan voted to maintain its monetary policy — a ¥30 trillion credit program and a ¥10 trillion asset purchase fund and to keep its key overnight rate at zero to 0.1%. The BOJ kept the policy intact despite reports earlier in the week that showed Japan's economy contracted at a much-worse-than-expected 3.7% annualized rate in the January-March period. That decline tipped the country into a recession as the March 11 earthquake and tsunami caused declines in consumer spending, business investment, and private sector inventories.
BOE leaves rates unchanged
The Bank of England left interest rates unchanged this month with the majority of policymakers warning that tightening policy now could damp consumer spending and hurt the recovery. In the May 5 minutes of the bank's monetary policy committee meeting released Wednesday, members said an increase could adversely affect consumer confidence, which has been adversely affected by government spending cuts and accelerating inflation. Underlining the fragile nature of the recovery, U.K. unemployment claims have risen at the fastest pace since January 2010. Unemployment fell 36,000 to 2.46 million people in the quarter through March.
Global corporate news
Moody's downgrades debt of Australia's largest banks
Moody's Investors Services downgraded the debt ratings of Australia's largest lenders to "Aa2" from their previous rating of "Aa1," one notch below Moody's top rating. The downgrade comes as ratings firms worldwide step up reviews of the global banking system following the 2008 subprime mortgage crisis and subsequent backlash against the ratings industry.
LinkedIn's stocks soars after IPO
LinkedIn's stock soared to a high of $122.70 on its first day of trading. The professional networking company's IPO priced at $45 per share a day earlier.
Gap slashes year outlook
The Gap slashed its full-year earnings outlook and reported that its net income fell 23% to $233 million for the quarter ended April 30. The company attributed its results to faster-than-expected cost increases; the Gap said it is spending about 20% more than a year ago on each item it plans to sell.
TEPCO reports ¥1.27 trillion loss
Tokyo Electric Power (TEPCO) sustained a net loss of ¥1.27 trillion for the fiscal year ended in March after incurring massive costs to battle the Fukushima Daiichi nuclear accident. The company warned of a significant deterioration of its financial position and raised doubts about its ability to continue as a "going concern."
Liberty Media in bid to buy Barnes & Noble
Liberty Media proposed to buy Barnes & Noble for $1 billion. Barnes & Noble, the largest bookstore chain, put itself up for sale last summer but has struggled to find a buyer amid a deteriorating outlook for booksellers.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment