Appetite Set To Freeze

Asian shares tumbled on Friday and were set for their worst weekly showing since September, amid political turmoil in Greece and signs of growing instability in Spanish banks, with investors adding the latest weak U.S. data to the list of risk factors. Assets across the board, from commodities such as oil and gold to riskier currencies such as the euro and the Australian dollar were all heading for their weekly losses. Financial stocks were hammered after the head of Australia and New Zealand Banking Group (ANZ.AX) said volatile conditions in global markets have caused the wholesale funding market for Australian banks to freeze again, a worrying echo of the global financial crisis. European shares were also set to fall, with financial spreadbetters predicting that major European markets ...

Risk Appetite Set To Freeze The severe arctic winds have reminded much of Europe that winter still has some bite and, in a similar vein, risk appetite is likely to peak as a more sobering reality returns. A key issue is that governments will look to take advantage of any improvement in conditions to row back on reforms and austerity as they face an increasingly hostile electorate. Key banking-sector reforms are also likely to be delayed with underlying issues left unresolved and business confidence is liable to dip again as seasonal components become much less favourable. The dollar should be able to resist heavy selling even if a Greek solution can be found. Yet again, the Greek situation will have an important impact as the latest deadline for a deal approaches. Following daily ...

Oil prices rose more than 3 percent on Tuesday as tension between Iran and the United States and Europe kept fears of potential supply disruptions in focus, while strong Chinese and U.S. data fueled optimism about the global economy at the start of 2012 trading. Iran threatened to act if the U.S. Navy moves an aircraft carrier into the Gulf, the most aggressive statement yet from Tehran after weeks of saber-rattling as new U.S. and European Union financial sanctions take a toll on the OPEC member's economy. "The supportive economic data and the geopolitical concerns are furthering the crude oil rally," said John Kilduff, partner at hedge fund Again Capital LLC in New York. "The temperature is going up every day now on the Iran situation -- new sanctions, new missile launches, and saber ...

Major currencies closed the session in New York yesterday with losses against the U.S. dollar, where after the European Central Bank offered more than expected liquidity to the euro-area banks, the sentiment deteriorated on speculation the debt crisis is worsening and the financial sector is hurt significantly from the two-year crisis. However, today the sentiment is mixed as investors are still assessing the European Central Bank move, where the ECB when offered unlimited liquidity to banks attempted to prevent an interbank lending freeze from hurting the banking industry and in a way or another this move is good and will buy Europe some more time to finalize the plan to fight the debt crisis, which in result supported markets to correct the losses seen in the past session. The euro ...

After a poor start to the fourth quarter, investors' mood may be just starting to stabilize after moves by European policymakers to help fragile banks and avert a financial meltdown. But it may take a lot grander plan to truly kick start a risk rally. The coming week -- packed again with heavy political and economic events -- may provide a key insight into what kind of initiatives policymakers are planning to implement to stave off recession and contain the effect of a possible Greek default. The start of the third-quarter U.S. earnings season -- with Alcoa <(AA.N), JP Morgan (JPM.N) and Google GOOOG.O due to report -- also offers a health check-up on the corporate sector in an economy under threat of another recession. World stocks, measured by MSCI .MIWD00000PUS, rebounded 8 percent ...

Weekly Economic and Financial Commentary U.S. Review Mostly Better News But Sluggishness Still Reigns * This week's economic reports mostly came in ahead of expectations or roughly in line with them, which further alleviated fears of double-dip recession. * Retail sales rose solidly in August, with overall sales rising 0.4 percent and our preferred core measure of retail sales climbing 0.6 percent. * Weekly first-time unemployment claims declined for the third week in a row but remain relatively high at 450,000. Emergency claims also declined again. Sluggishness Still Reigns This week's economic reports show consumer spending held up better than expected during August and inventories also built up at a much faster rate. Reports on manufacturing activity were mixed, however, ...

EU Getting Ahead of the Curve Market Movers ahead * In Euroland, market focus will be on the ECOFIN meeting on Tuesday. Portugal and Spain are expected to present additional fiscal consolidation measures to be implemented in 2010 and 2011. * In the US, the main event next week will be the minutes from the Fed meeting. * It is possible that the Bank of Japan (BoJ) will announce further non-conventional easing in connection with its monetary meeting on 20-21 May. * We cannot completely rule out the possibility that China may resume the appreciation of CNY next week. However, in light of the recent volatility in the financial markets it is now more likely that China will move in June ahead of the G20 meeting. Global Update * On Sunday night, ECOFIN agreed on a ...

Risk appetite has suffered further setbacks in the past day on fears of China is clamping down on lending, Barack Obama’s proposals to freeze US spending, and this morning’s downgrade of Japan’s outlook to ‘negative’ by S&P ratings agency. Despite the latter development, JPY is higher on the day as the arguments for broader risk aversion are overpowering the logic that Japan’s economy may struggle over the medium term. Overnight, the BoJ kept interest rates on hold at the ultra-low level of 0.10% and Governor Shirakawa affirmed the stance that monetary policy would be kept very easy despite forecasting that deflation would be milder than previously anticipated. Nevertheless, Finance Minister Kan was later quoted as saying he felt the BoJ could be doing more to fight deflation, and if the ...

The Dollar declined slightly against most rivals in today's early trading, as concerns over Dubai's debt repayment problems eased, boosting demand for higher yielding currencies and commodities. Economic News USD - Dollar Declines as Concerns over Dubai Ease The Dollar declined slightly against higher yielding currencies in today's early trading as concerns over credit losses in Dubai eased and better than expected economic data signaled the global economy is on the way to recovery, boosting demand for riskier assets. The Dollar weakened to $1.5013 per EUR from $1.5005 yesterday in New York. The greenback lost 1.9% in November overall. The Dollar was at Y86.45 from Y86.75 yesterday. Investors also appeared hesitant ahead of this week's U.S. and Euro-Zone economic data as well as ...