Stocks, oil rebound on economic data

Updated 06 February 2013
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Stocks, oil rebound on economic data

NEW YORK: Global equity markets and oil prices bounced back yesterday after data showed the vast US services sector extended a three-year expansion last month, while business activity in the euro zone showed signs of recovery.
Major US and European stock indexes rallied, with Wall Street gaining about 0.8 percent, after a sharp sell-off the previous session on renewed worries about the euro zone crisis.
A measure of world equity markets also was higher, though only slightly as emerging market shares declined.
US and European stocks advanced, fueled by strong fourth-quarter earnings and signs of improving economic growth, which suggested the longer-term trend for equities remains higher.
"Yesterday's spotlight on Southern Europe was just an excuse to book profits and catch our breath. The trend is still positive, and clients are slowly coming back to equities," said Patrice Peroise, a trader at Kepler Capital Markets.
The Institute for Supply Management said its US services sector index eased slightly, to 55.2 last month from 55.7 in December. The reading was in line with economists' forecasts, according to a Reuters survey.
Yesterday's data bolstered the view that the world economy was improving, a sentiment that has lifted stock markets around the globe and pushed the benchmark US S&P 500 to five-year highs.
In the biggest leveraged buyout since the financial crisis, Michael Dell reached a deal to take computer maker Dell Inc private for $ 24.4 billion. The move will allow the billionaire chief executive to try to revive the fortunes of his company without Wall Street scrutiny.
Corporate results also helped the rally. With 56 percent of S&P 500 companies reporting, 68.7 percent posted earnings that beat expectations, or better than the 65 percent rate over the
past four quarters or the 62 percent pace since 1994.
The Dow Jones Industrial Average was up 105.14 points, or 0.76 percent, at 13,985.22. The Standard & Poor's 500 Index was up 12.68 points, or 0.85 percent, at 1,508.39.
The Nasdaq Composite Index was up 30.72 points, or 0.98 percent, at 3,161.88.
MSCI's all-country world equity index rose 0.2 percent to 354.77, while the FTSEurofirst 300 index
of top European shares closed up a provisional 0.3 percent at 1154.47.
US Treasuries prices fell, spurred by Markit's Eurozone Composite PMI, which rose to a 10-month high of 48.6 from 47.2 in December — better than the preliminary reading of 48.2. The data is based on business activity across thousands of companies and is considered a good gauge of growth.
The benchmark 10-year US Treasury note was down 14/32 in price to yield 2.0052 percent.
Brent crude oil rose $1.32 a barrel to $116.92, while US crude futures gained 63 cents to $ 96.80.
"We do not envisage prices receding for any great length of time," said Carsten Fritsch, an analyst at Commerzbank. "The supply-side risks still prevailing, shrinking OPEC supplies and the brightening global economic outlook all suggest that such a retreat is unlikely."
The euro rose against the dollar and yen, returning to its months-long trend of appreciation, as better-than-expected euro zone data affirmed expectations that the European Central Bank
will keep policy steady when it meets this week.
The euro, which had taken the brunt of the selling and fallen from a high of over $1.37 at the end of last week to under $ 1.35 on Monday, rose 0.39 percent to trade at $ 1.3566.


Iran sanctions shadow falls on smaller German banks

Updated 27 May 2018
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Iran sanctions shadow falls on smaller German banks

  • Some German companies plan to press on with Iran dealings
  • German exports to Iran rose 15.5 percent last year

Germany’s biggest lenders have shied away from business with Iran after past penalties for breaching US sanctions, but smaller banks have leapt on opportunities afforded by the nuclear deal rejected by Donald Trump.

There are just months to go until a November deadline issued by Washington after the US president abandoned a hard-fought agreement that loosened business restrictions on the Islamic Republic in exchange for Tehran giving up its pursuit of nuclear weapons.

But some firms plan to press on in their dealings with Iran despite the looming threat of penalties.

“We will continue to serve our clients,” for now, said Patrizia Melfi, a director at the “international competence center” (KCI) founded by six cooperative savings banks in the small town of Tuttlingen in southwest Germany.

The center, which supports companies operating in sensitive markets like Iran or Sudan, has seen demand “rising sharply in the last few years, from firms listed on the Dax (Germany’s index of blue-chip firms), from all over Germany and from Switzerland,” she added.

German exports to Iran have grown since the nuclear deal was signed in 2015, adding 15.5 percent last year to reach almost €2.6 billion ($3.0 billion) after 22-percent growth in 2016.

Such figures remain vanishingly small compared with Germany’s €111.5 billion in exports to the US — its top customer.

Nevertheless, the KCI will “wait and see what the sanctions look like” before turning away from Iran, Melfi said.

Already, firms dealing with Tehran must take great care not to fall foul of US restrictions.

Transactions are carried out in euros, and the KCI does not deal with businesses that have American citizens or green card resident holders on their boards.

What’s more, products sold to Iran cannot contain more than 10 percent of parts manufactured in the US.

One of the most important inputs for the business is “courage among our managers” given the high risks involved, Melfi said.

Germany’s two biggest banks, Deutsche Bank and Commerzbank, avoid Iran completely after being slapped with harsh fines in 2015 over their dealings there, with Deutsche alone paying $258 million in penalties.

DZ Bank, which operates as a central bank for more than 1,000 local co-op lenders, is withdrawing completely from payment services there, a spokesman told AFP.
That left KCI to seek out the German branch of Iranian state-owned bank Melli in Hamburg.

Even that linkage could break if Iran’s biggest business bank appears on a US list of barred businesses as it has before.

Meanwhile, among Germany’s roughly 390 Sparkasse savings banks, business with the regime is mostly limited to producing documents linked to export contracts.
“We will be looking even more closely at those” in the future, a person familiar with the trade told AFP.

Elsewhere in the German economy, the European-Iranian Trade Bank (EIH) founded in 1971 is another conduit to Tehran.

Also based in Hamburg, it for now remains “fully available to you with our products and services,” the bank assures clients on its website, although “business policy decisions by European banks may result in short term or medium term restrictions on payments.”

Neither does the Bundesbank (German central bank) believe that much has so far changed for business with Iran.

“Only the European Union’s sanctions regime will be decisive,” if and when it is changed, the institution told AFP.

Any payment involving an Iranian party would have to be approved by the Bundesbank if things return to their pre-January 2016 state.

German banking lobby group Kreditwirtschaft has called on Berlin and other EU nations to clarify their stance — and to make sure banks and their clients are “effectively protected against possible American sanctions.”

KCI’s Melfi said time is running out for EU governments to act.

“Many firms just want to stop anything with Iran, since they can’t calculate the risk of staying,” she noted.

On Friday for the first time since the Iran nuclear deal came into force in 2015, China, Russia, France, Britain and Germany gathered in Vienna — at Iran’s request — without the US, to discuss how to save the agreement.

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