Markets gain as global economic outlook improves



Reuters

Published — Friday 23 November 2012

Last update 23 November 2012 2:55 am

| نسخة PDF Print News | A A

LONDON: World share markets extended a week-long rally yesterday as manufacturing surveys in China and the US boosted confidence in global growth and euro zone data at least did not worsen the already weak outlook for that region.
The euro hit a seven-month high against the dollar on optimism that a funding deal for debt-crippled Greece will ultimately be agreed — and despite data indicating the region’s economy is on course for its deepest recession since early 2009.
“The driving factors behind euro/dollar are that the global macroeconomic backdrop seems to be improving and people are pricing out the tail risk on Greece,” said Arne Lohmann Rasmussen, head of currency research at Danske Bank.
The euro rose 0.4 percent to $1.2880, its highest since Nov. 2.
The view there will be a deal to help Athens was bolstered on Wednesday when German Chancellor Angela Merkel said after the failure of the latest talks, that an agreement was possible when euro zone ministers meet again on Monday.
The hopes for a Greek deal, combined with the better economic data and a growing view that a solution can be found to the US fiscal crisis, lifted the MSCI world equity index 0.4 percent to 326 points, putting it on track for its best week since mid-September.
Europe’s FTSE Eurofirst 300 index rose 0.4 percent to a two-week high of 1,101.70 points, with London’s FTSE 100, Paris’s CAC-40 and Frankfurt’s DAX between 0.3 and 0.7 percent higher.
However, trading was subdued, with US markets closed for the Thanksgiving holiday.
Confidence in the global economic outlook got its biggest boost from the HSBC flash Manufacturing Purchasing Managers Index (PMI) for China, which pointed to an expansion in activity after seven consecutive quarters of slowdown.
The Chinese data followed a report on Wednesday showing US manufacturing grew in November at its quickest pace in five months, indicating strong economic growth in the fourth quarter.
“There are questions over whether the Chinese economy is really that bad or if the US will take a long time to recover, but we are getting signs that the situation is not as bad as assumed,” said Peter Braendle, head of European equities at Zurich-based Swisscanto Asset Management.
PMI data on the manufacturing and services sectors in Europe’s two biggest economies, Germany and France, added to the better tone, revealing that conditions had not worsened in November, though both economies are still contracting.
However, the PMI numbers for the wider euro zone remain extremely weak, pointing to the recession-hit region shrinking by about 0.5 percent in the current quarter — its sharpest contraction since the first quarter of 2009.
“The weak PMI outturn for November is a major disappointment in light of the increases in the German and French PMI surveys, and suggest the recession on the euro zone’s periphery is gathering further pace,” said ING economist Martin van Vliet.
In the fixed-income markets, the improving tone enabled Spain to sell 3.88 billion euros ($ 4.97 billion) of new government bonds on Thursday, even though it has already raised enough funds for this year’s needs.
The average yield on the three-year bonds in the auction was 3.617 percent, compared with 3.66 percent at a sale earlier in November and a 2012 average of 3.79 percent.
Ten-year Spanish yields were 6 basis points lower on the day at 5.67 percent, having traded above 6 percent at the start of the week.
“It’s a clear reflection that sentiment in Spain has improved markedly,” RIA Capital Markets bond strategist Nick Stamenkovic said, adding that the market was expecting Madrid to ask for an international bailout early next year.
Expectations Greece will soon get more cash set Greek yields on course for their 10th consecutive daily fall. The February 2023 bond yield dropped to 16.16 percent, its lowest since it was issued during a debt restructuring in March.
Commodity prices had some support from the improving outlook for world demand, but the prospect of only modest global growth in 2013 kept the gains in check.
Three-month copper on the London Metal Exchange rose 0.6 percent to $ 7,735.25 a ton, and spot gold inched up to $ 1,730.30 an ounce.
Oil prices were more mixed as the cease-fire between Israel and Hamas eased concerns over the impact the unrest might have had on supply from the region, offsetting support from the prospect of more Chinese oil demand.
Brent slipped 7 cents to $ 110.90 a barrel, while US crude was up 2 cents at $ 87.40.

What's happening around Saudi Arabia

JOUF: A citizen in Jouf has become at 94 the oldest person to register for the Dec. 12 municipal council elections.The man, who was not named, arrived at the Zaloum election center accompanied by his 62-year-old son, an online publication reported on...
JEDDAH: The spike in cases of the Middle East Respiratory Syndrome (MERS) coronavirus is worrying because of the upcoming annual pilgrimage, according to a top doctor.Hanan Balkhi, head of the Health Ministry’s national scientific committee of infect...
RIYADH: Senior Indian police and intelligence officials interrogated two Saudis after they were detained following their suspicious movement in Trichy, a southern city in India’s Tamil Nadu state. Officials detained the duo — Rasheed and Abdul Rahma...
MADINAH: Defective air conditioning units at Prince Mohammed bin Abdulaziz International Airport (PMIA) have left passengers sweltering amid the excessive afternoon heat. The travelers had to resort to using pieces of paper as fans to cool themselves...
RIYADH: The participation of Saudi women in the upcoming municipal council elections is set to ensure they take their rightful place in boosting social and economic development in the country.Many women have already begun registering as voters, and w...
JEDDAH: Only 7,034 Saudis have so far registered in Riyadh and the Eastern Province for the Dec. 12 municipal council elections, a local publication reported Wednesday.The elections, held for the third time in the Kingdom, are expected to attract a r...
JEDDAH: A total of 66,000 Nigerians will perform Haj this year, according to the National Haj Commission of Nigeria (NAHCON).The first group of 300 pilgrims arrived Sunday, sources at the Nigerian embassy said. “The first flight that took off from th...
RIYADH: The Passports Department has announced that there will be heavy fines for people transporting Haj pilgrims without licenses.There would be fines of up to SR100,000, a two-year-prison sentence and deportation for anyone found harboring or prov...
RIYADH: The Public Education Evaluation Commission (PEEC) head said on Wednesday that private schools will undergo performance evaluation in the next two to three weeks by local specialists who have just finished their training under the organization...
JEDDAH: Saudi Arabia has announced that the country’s citizens are safe in Lebanon, but has joined Kuwait and Bahrain in issuing advisories warning its citizens not to travel there.Saudi Ambassador to Lebanon Ali Asiri said Tuesday that the embassy h...
RIYADH: Assistant Director General for Information and Communications Technology (ICT) at the Ministry of Health (MoH) Mansour Al-Suaidan has been selected by the Kent, Leonard, Adam and Scott (KLAS) as the only Arab advisory board member.“Mansour Al...
JEDDAH: The local Pakistani Journalists Forum (PJF), in cooperation with the Consulate General of Pakistan, celebrated the country’s 69th Independence Day, where children thrilled the audience with patriotic songs.Pakistan Consul General Aftab A. Kho...
JEDDAH: The Specialized Criminal Court in Riyadh has sentenced an Algerian expatriate to 18 months in jail for overstaying his Umrah visa. The court also found evidence that he tried cross the Saudi border to fight in Syria, a local publication repor...
JEDDAH: An official at the Ministry of Labor confirmed that ministry will launch an e-recruitment service via the Musaned website next week. The service will allow employers to apply for visas without the need to visit labor offices.Ahmad Al-Ghamdi,...
RIYADH: A new Saudi program on television called “Security of the Kingdom” will go on air on Tabah Channel starting on the first week of September, according to Dr. Mohsin Shaikh Al-Hassan, the program’s host.“The program is important and timely beca...

Stay Connected

Facebook