Following another week of intense uncertainty, markets breathed a sigh of relief after Italy and Greece showed progress in the formation of new governments. Stocks recouped losses, and bond yields eased from the record levels hit earlier in the week.
U.S. and global economic news
Italy and Greece take steps to change governments
Italy's senate approved a key budget bill, paving the way for Prime Minister Silvio Berlusconi to step down and for a new government, led by former European Union Competition Commissioner Mario Monti, to be formed. Greece, meanwhile, will swear in Lucas Papademos to lead a unity government. That decision ends days of wrangling among political parties over who will lead an interim government after a political crisis forced Prime Minister George Papandreou to step down.
Italy's bond yields retreat after hitting euro-era highs
Italy's 10-year bond yields, which soared to a euro-era high of 7.45% this week, fell after the budget bill's approval. The level above 7% is one that had previously driven Greece, Ireland, and Portugal to seek international bailouts. The bond panic was set off earlier in the week after LCH.Clearnet Group demanded increased deposits for trading Italy's securities. LCH is a clearinghouse that guarantees investors' trades are completed.
EU cuts 2012 growth forecast
The European Union cut its growth forecast for 2012 to 0.6%, sharply down from the 1.9% it made six months ago. The European Commission, which is the EU's executive arm, said it could not rule out the possibility of a deep and prolonged recession.
China's inflation slows
China's inflation slowed significantly in October, potentially opening the door for Beijing to loosen its reins on the economy. Housing prices showed further signs of decline. However, the slowing pace of inflation is also raising concerns about the nation's role as an engine of global growth.
BoE maintains bond purchase targets; keeps rates unchanged
The Bank of England maintained its target for asset purchases. The ceiling for so-called quantitative easing was held at £275 billion. The bank also kept its key interest rate at a record low of 0.5%
U.S. consumer confidence climbs more than expected
Confidence among U.S. consumers rose more than expected in early November, according to the Thomson Reuters/University of Michigan preliminary index of consumer confidence. That index climbed to its highest level since June. In other U.S. news, in September consumers stepped up their borrowing and the trade deficit unexpectedly narrowed on record exports. First-time applications for unemployment benefits fell 10,000 to a seven-month low, and wholesale inventories unexpectedly fell in September for the first time since 2009 as a gain in sales helped keep stockpiles in line with demand.
Bank Indonesia cuts rates
Bank Indonesia surprised markets by cutting its key reference rate by a half a percentage point to 6%, a record low. This is the largest cut for the bank since March 2009. South Korea and Malaysia both left rates unchanged this week.
U.S. and global corporate news
Crédit Agricole's profits fall 65%
Crédit Agricole, France's third-largest bank by market value, reported a 65% drop in third-quarter profits after it was hit by a heavier-than-expected write-down on its Greek government bonds and further losses at its troubled Emporiki Bank of Greece unit. Like BNP Paribas and Société Général, Crédit Agricole has reduced its exposure to government bonds in troubled eurozone countries in recent months.
Toyota's earnings slump 19%
Toyota Motor reported a 19% decline in quarterly profit as the strong yen and production cutbacks hit sales.
Yelp planning IPO
Yelp is set to launch plans for an IPO that could value the online consumer review company at between $1 billion and $2 billion.
Walt Disney's net jumps 30%
Walt Disney reported that its fourth-quarter profits jumped 30%. The profits, which beat estimates, got a boost from strength in Disney's parks and resorts and media network business segments.
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