Oil rose above $106 a barrel today after saboteurs blew up a major pipeline in Iraq, cutting exports from the south of the country, and also because of strength in heating oil futures.
The attack on the pipeline in southern Iraq came on the third day of an Iraqi military operation against fighters loyal to Shia cleric Moqtada al-Sadr in the oil port of Basra.
“Today’s action was driven up by the explosion and catching fire of a pipeline in Iraq,” said Nauman Barakat, oil trader and and senior vice-president at Macquarie Futures USA. US crude was up $1.05 to $106.95 a barrel by 1630 GMT, having earlier risen as high as $107.70. London Brent crude added 56 cents to $104.55.
Crude was also pulled up by heating oil, which rose almost 2 per cent. Traders said a force majeure declaration by South Korean refiner S-Oil for April loadings of oil products had in part prompted the gain.
In Iraq, officials said efforts were under way to get shipments back to normal. It is the first time since 2004 that the southern supply route has been disrupted.
“This morning saboteurs blew up the pipeline transporting crude from Zubair 1 by placing bombs beneath it. The pipeline was severely damaged,” a Southern Oil Company official said. “Crude exports will be greatly affected because this is one of two main pipelines transporting crude to the southern terminals.”
Friday, March 28, 2008
Buzz on lower mobile bill
Local and domestic long distance mobile call tariffs may drop further, thanks to telecom regulator Trai’s decision to do away with a fee that private telecom operators pay to state-run BSNL.
Mobile companies plan to pass on the benefits of the move to subscribers. However, they are unwilling to specify the quantum of discount they intend to pass on.
Trai said access deficit charge (ADC) levied on domestic calls would be scrapped from April, while that on international calls would be initially halved to 50 paise per minute before phasing it out from October this year.
“The rule is outdated and it’s good it’s being phased out,” said Mahesh Uppal, a telecom analyst.
ADC is a type of tax paid by private telecom operators to the government for failing to keep their commitment to roll out telecom services in rural areas. The money is used by companies such as the state- run BSNL to connect villages.
“We need to nevertheless fund BSNL through the USO fund (set up specifically to create rural telecom network),” Uppal added.
At present, mobile service providers pay 0.75 per cent of their gross revenue for domestic calls as ADC, and Re 1 per minute on all international incoming calls.
Bharti Airtel welcomed the regulator's move and said it would pass on the benefits to its customers. The firm said it would announce the details within a week, after consulting the telecom regulator.
A Vodafone Essar spokesperson said, “We welcome the move. We are committed to passing on the benefit to our customers in an equitable manner and will announce it shortly.”
According to industry analysts, growing revenues, a rising subscriber base, emergence of wireless phone connections and a mobile penetration of nearly three times compared with fixed lines — ADC is levied on fixed-line calls too — has reduced the relevance of the subsidy.
BSNL, however, wanted the levy to stay as any change would affect its expansion plans in remote areas.
Trai has decided to recommend to the government to provide BSNL Rs 2,000 crore annually from the universal service obligation fund for a period of three years to compensate the loss of ADC revenue.
BSNL was getting Rs 5,000 crore annually through ADC till about two years ago from private players.
Following Trai’s announcement, telecom stocks soared today.
The Bharti stock rose 2.68 per cent to close at Rs 824.65, while Reliance Communications gained 2.27 per cent to end at Rs 538.05.
The Idea Cellular scrip also rose 2.13 per cent to finish at Rs 103.25.
Mobile companies plan to pass on the benefits of the move to subscribers. However, they are unwilling to specify the quantum of discount they intend to pass on.
Trai said access deficit charge (ADC) levied on domestic calls would be scrapped from April, while that on international calls would be initially halved to 50 paise per minute before phasing it out from October this year.
“The rule is outdated and it’s good it’s being phased out,” said Mahesh Uppal, a telecom analyst.
ADC is a type of tax paid by private telecom operators to the government for failing to keep their commitment to roll out telecom services in rural areas. The money is used by companies such as the state- run BSNL to connect villages.
“We need to nevertheless fund BSNL through the USO fund (set up specifically to create rural telecom network),” Uppal added.
At present, mobile service providers pay 0.75 per cent of their gross revenue for domestic calls as ADC, and Re 1 per minute on all international incoming calls.
Bharti Airtel welcomed the regulator's move and said it would pass on the benefits to its customers. The firm said it would announce the details within a week, after consulting the telecom regulator.
A Vodafone Essar spokesperson said, “We welcome the move. We are committed to passing on the benefit to our customers in an equitable manner and will announce it shortly.”
According to industry analysts, growing revenues, a rising subscriber base, emergence of wireless phone connections and a mobile penetration of nearly three times compared with fixed lines — ADC is levied on fixed-line calls too — has reduced the relevance of the subsidy.
BSNL, however, wanted the levy to stay as any change would affect its expansion plans in remote areas.
Trai has decided to recommend to the government to provide BSNL Rs 2,000 crore annually from the universal service obligation fund for a period of three years to compensate the loss of ADC revenue.
BSNL was getting Rs 5,000 crore annually through ADC till about two years ago from private players.
Following Trai’s announcement, telecom stocks soared today.
The Bharti stock rose 2.68 per cent to close at Rs 824.65, while Reliance Communications gained 2.27 per cent to end at Rs 538.05.
The Idea Cellular scrip also rose 2.13 per cent to finish at Rs 103.25.
Vietnam, India curb rice exports as prices double
Major rice exporters Vietnam and India on Friday said they will curb overseas sales more in an effort to combat food inflation, threatening to heighten the world's anxiety over staple food supplies.
Hanoi confirmed it will cut rice exports by 22 percent this year from last. India raised the minimum sale price for rice exports by more than 50 percent, effectively ending overseas sales of all but the highest quality grades.
These are the latest measures by governments from Manila to Cairo to ensure sufficient supplies for their expanding populations at a time when global stockpiles have halved and prices have doubled to multi-year highs.
While consumer nations like the Phillippines fret over food security, big producers are aiming to tame inflation by keeping more supplies at home to drive down domestic prices.
In Vietnam, consumer prices rose by nearly 20 percent in March, the highest in more than 12 years, while India's wholesale price inflation has surged to a near-14 month high, posing a major policy challenge at a time when economic growth is slowing.
Vietnam, the world's second-biggest exporter, will limit rice shipments to 3.5 million tonnes, down from 4.5 million last year, in order to stabilise prices, a government statement quoted Prime Minister Nguyen Tan Dung as saying, after Hanoi imposed a limit for the first 10-month shipment last week.
"Vietnam will save 1 million tonnes of rice for northern provinces and will see prices easing following this cut," said a rice trader at a foreign firm in Ho Chi Minh City, Vietnam's largest grain trading market.
SUPPLY CONCERNS MOUNT
India, which could overtake Vietnam this year, has raised the minimum export price for non-basmati rice to $1,000 per tonne from $650 to protect domestic supplies. It also scrapped tax incentives for exporters of non-Basmati rice to try and tame price pressures in Asia's third-largest economy.
"The government's move is aimed at a complete halt of non-basmati rice exports," said Prem Garg, managing director of Lal Mahal Group, a leading rice exporter.
Trade officials believe India will be able to export 5.5 million tonnes of rice in the year to March 31, 2008, up from 3.8 million tonnes in the previous year, but added the new restrictions could cut sales in coming months.
"The government is concerned about domestic supplies," said Vijay Sethia, president of the All India Rice Exporters' Association. "There is no shortage of rice in India, but any scarcity in global markets will lead to higher exports."
Nearly half the planet's 6.6 billion people depend on rice to survive but rising populations and economic growth mean that the world is already eating more of the grain than is harvested.
World rice inventories now stand at about 72 million tonnes, their lowest since the mid-1970s and enough to cover about 17 percent of global annual consumption, data from the U.S. Department of Agriculture show. Just eight years ago stockpiles were equal to 35 percent of demand.
Vietnam exported 859,000 tonnes of rice in the first three months of this year, up 5.3 percent from a year earlier, government figures show.
The price for cargoes of Thai medium-grade 15 percent broken rice, a benchmark for a market that does not have an active global futures contract, more than doubled to $735 a tonne free-on board Bangkok on Thursday, from $360 at the end of 2007.
Vietnam rice prices are up 26 percent so far this year.
Egypt said earlier this week it will ban rice exports from April 1 to October to hold down local prices. The Philippines aims to import up to 2.2 million tonnes this year in what could be the biggest overseas purchase in a decade.
Hanoi confirmed it will cut rice exports by 22 percent this year from last. India raised the minimum sale price for rice exports by more than 50 percent, effectively ending overseas sales of all but the highest quality grades.
These are the latest measures by governments from Manila to Cairo to ensure sufficient supplies for their expanding populations at a time when global stockpiles have halved and prices have doubled to multi-year highs.
While consumer nations like the Phillippines fret over food security, big producers are aiming to tame inflation by keeping more supplies at home to drive down domestic prices.
In Vietnam, consumer prices rose by nearly 20 percent in March, the highest in more than 12 years, while India's wholesale price inflation has surged to a near-14 month high, posing a major policy challenge at a time when economic growth is slowing.
Vietnam, the world's second-biggest exporter, will limit rice shipments to 3.5 million tonnes, down from 4.5 million last year, in order to stabilise prices, a government statement quoted Prime Minister Nguyen Tan Dung as saying, after Hanoi imposed a limit for the first 10-month shipment last week.
"Vietnam will save 1 million tonnes of rice for northern provinces and will see prices easing following this cut," said a rice trader at a foreign firm in Ho Chi Minh City, Vietnam's largest grain trading market.
SUPPLY CONCERNS MOUNT
India, which could overtake Vietnam this year, has raised the minimum export price for non-basmati rice to $1,000 per tonne from $650 to protect domestic supplies. It also scrapped tax incentives for exporters of non-Basmati rice to try and tame price pressures in Asia's third-largest economy.
"The government's move is aimed at a complete halt of non-basmati rice exports," said Prem Garg, managing director of Lal Mahal Group, a leading rice exporter.
Trade officials believe India will be able to export 5.5 million tonnes of rice in the year to March 31, 2008, up from 3.8 million tonnes in the previous year, but added the new restrictions could cut sales in coming months.
"The government is concerned about domestic supplies," said Vijay Sethia, president of the All India Rice Exporters' Association. "There is no shortage of rice in India, but any scarcity in global markets will lead to higher exports."
Nearly half the planet's 6.6 billion people depend on rice to survive but rising populations and economic growth mean that the world is already eating more of the grain than is harvested.
World rice inventories now stand at about 72 million tonnes, their lowest since the mid-1970s and enough to cover about 17 percent of global annual consumption, data from the U.S. Department of Agriculture show. Just eight years ago stockpiles were equal to 35 percent of demand.
Vietnam exported 859,000 tonnes of rice in the first three months of this year, up 5.3 percent from a year earlier, government figures show.
The price for cargoes of Thai medium-grade 15 percent broken rice, a benchmark for a market that does not have an active global futures contract, more than doubled to $735 a tonne free-on board Bangkok on Thursday, from $360 at the end of 2007.
Vietnam rice prices are up 26 percent so far this year.
Egypt said earlier this week it will ban rice exports from April 1 to October to hold down local prices. The Philippines aims to import up to 2.2 million tonnes this year in what could be the biggest overseas purchase in a decade.
Inflation leaps to 6.68 pct
Inflation raced past 6 percent in mid-March to its highest in nearly 14 months, raising market expectations that the central bank may have to respond and sending the rupee to its highest in a month against the dollar.
Indian federal bond yields hit a three-month high of 7.89 percent after Friday's price data, up from Thursday's close of 7.78 percent, and traders said the risk the central bank would have to act was growing.
The widely watched wholesale price index rose 6.68 percent in the 12 months to March 15, sharply higher than the previous week's 5.92 percent and well above a market forecast of 5.96 percent, government data showed.
It was the highest since a reading of 6.69 percent on January 27, 2007, and the fourth consecutive week above 5 percent, below which the Reserve Bank of India (RBI) wants to keep inflation in the fiscal year ending March.
"Inflation number now looks 'ugly'," said Shubhada Rao, chief economist at Yes Bank in Mumbai.
"Clearly, this headline number may prompt monetary measures as well. At first instance, we expect RBI to allow rupee appreciation for now. Some liquidity impounding measures are also likely."
The partially convertible rupee initially showed little response to the data but then began to climb, breaking through 40.00 per dollar for the first time in a month and gaining to 39.8500. It closed at 40.0950/1050 on Thursday.
Wholesale inflation has shown a rising trend since early December 2007, driven largely by higher food prices, posing a major policy headache against the backdrop of slowing growth in the broader economy and general elections due by May 2009.
A modest rise in retail fuel prices in mid-February has also contributed to higher inflation, but the latest data caught many off guard.
"This is surprisingly high and carries ominous implications for the magnitude of the problem that is likely to dominate policy making for much of 2008," said Saumitra Chaudhuri, economic adviser at domestic rating agency ICRA.
"At the moment, I expect rates to be steady, but if this high trend continues one doesn't know what will happen."
SLOWING GROWTH
The central bank has kept its main lending rate unchanged at 7.75 percent for a year, after raising it five times between June 2006 and March 2007 to stem price pressures in a fast-growing economy.
The RBI's next policy review is scheduled for April 29 and it has also used its cash reserve ratio, the proportion of cash banks have to keep with it on deposit, as a monetary tool to soak up inflation-fuelling excess cash in the past.
Prospects for some policy easing surfaced briefly after the statistics office estimated India's economy to expand 8.7 percent in the fiscal year ending March, slower than an 18-year high of 9.6 percent in the previous year.
A Reuters poll on Friday forecast India's economic growth to slow to 8.1 percent in 2008/09 as moderating consumer demand and higher inflation kicks in.
Factory output in January rose by a lacklustre 5.3 percent from a year earlier, slowing sharply from the previous month and well below double-digit levels seen early in 2007 as tight policy and a stronger rupee hurt demand.
Finance Minister Palaniappan Chidambaram has said he was ready to take more fiscal steps to moderate inflation and analysts said easing prospects were dwindling.
"My sense is that inflation will move up further and perhaps reach 7 percent by June-end," said Abheek Barua, chief economist at HDFC Bank, adding that inflation was largely being fuelled by supply-side problems, a solution for which lay outside monetary policy.
Indian federal bond yields hit a three-month high of 7.89 percent after Friday's price data, up from Thursday's close of 7.78 percent, and traders said the risk the central bank would have to act was growing.
The widely watched wholesale price index rose 6.68 percent in the 12 months to March 15, sharply higher than the previous week's 5.92 percent and well above a market forecast of 5.96 percent, government data showed.
It was the highest since a reading of 6.69 percent on January 27, 2007, and the fourth consecutive week above 5 percent, below which the Reserve Bank of India (RBI) wants to keep inflation in the fiscal year ending March.
"Inflation number now looks 'ugly'," said Shubhada Rao, chief economist at Yes Bank in Mumbai.
"Clearly, this headline number may prompt monetary measures as well. At first instance, we expect RBI to allow rupee appreciation for now. Some liquidity impounding measures are also likely."
The partially convertible rupee initially showed little response to the data but then began to climb, breaking through 40.00 per dollar for the first time in a month and gaining to 39.8500. It closed at 40.0950/1050 on Thursday.
Wholesale inflation has shown a rising trend since early December 2007, driven largely by higher food prices, posing a major policy headache against the backdrop of slowing growth in the broader economy and general elections due by May 2009.
A modest rise in retail fuel prices in mid-February has also contributed to higher inflation, but the latest data caught many off guard.
"This is surprisingly high and carries ominous implications for the magnitude of the problem that is likely to dominate policy making for much of 2008," said Saumitra Chaudhuri, economic adviser at domestic rating agency ICRA.
"At the moment, I expect rates to be steady, but if this high trend continues one doesn't know what will happen."
SLOWING GROWTH
The central bank has kept its main lending rate unchanged at 7.75 percent for a year, after raising it five times between June 2006 and March 2007 to stem price pressures in a fast-growing economy.
The RBI's next policy review is scheduled for April 29 and it has also used its cash reserve ratio, the proportion of cash banks have to keep with it on deposit, as a monetary tool to soak up inflation-fuelling excess cash in the past.
Prospects for some policy easing surfaced briefly after the statistics office estimated India's economy to expand 8.7 percent in the fiscal year ending March, slower than an 18-year high of 9.6 percent in the previous year.
A Reuters poll on Friday forecast India's economic growth to slow to 8.1 percent in 2008/09 as moderating consumer demand and higher inflation kicks in.
Factory output in January rose by a lacklustre 5.3 percent from a year earlier, slowing sharply from the previous month and well below double-digit levels seen early in 2007 as tight policy and a stronger rupee hurt demand.
Finance Minister Palaniappan Chidambaram has said he was ready to take more fiscal steps to moderate inflation and analysts said easing prospects were dwindling.
"My sense is that inflation will move up further and perhaps reach 7 percent by June-end," said Abheek Barua, chief economist at HDFC Bank, adding that inflation was largely being fuelled by supply-side problems, a solution for which lay outside monetary policy.
Banking shares hit by CRR hike fears
Banking shares were hit on Friday by the sudden spurt in inflation rate, which gave rise to fears of the Reserve Bank of India raising the cash reserve ratio. Inflation rate, based on wholesale price index, shot up to 6.68 per cent for the week ended Mar 15, from 5.92 per cent in the previous week. HDFC Bank April was down 2 per cent, with open interest up 67,800 shares or 2.9 per cent. ICICI Bank near month contract slipped 1.6 per cent. The contract added 6.7 lakh or 10.5 per cent in open interest. Kotak Bank April shed 2 per cent while it added 2.24 lakh shares or 17 per cent in open interest. IDBI April soared on short covering. The contract shed 5.1 lakh shares or 3.1 per cent in open interest while price was up 3.3 per cent. Union Bank of India April contract price was up 2.5 per cent while it shed 1.42 lakh shares or 2.8 per cent in open interest. Canara Bank April gained 1.8 per cent while open interest shed 48,800 shares or 3.4 per cent. NSE Bank Nifty Index lost 0.42 per cent to 6939.90 and was the worst performing sector.
You may have to pay just 40% margin to borrow shares
In an attempt to boost the securities lending and borrowing mechanism, stock exchanges are considering a proposal where market participants may not have to pay the whole margin upfront. Internationally, players have to deposit cash (or some equivalent) equal to, or slightly higher than the amount of shares borrowed. A stock exchange official said, to begin with, this may be restricted to roughly around 40% of the worth of securities. Recently, capital market regulator Sebi had asked stock exchanges and depositories to put in place a screen-based system for implementation of the stock lending and borrowing mechanism by April 21. However, most players are awaiting further clarity or details on the scheme. One of the most-awaited clause is the amount of cash (or equivalent called as margin) that participants have to pay upfront. If this is fixed at 40%, it would mean that for a crore of stocks borrowed from the exchange window, only Rs 40 lakh will have to be kept with the exchange (or more accurately its clearing house) as the deposit. Once these borrowed stocks are returned within seven days, the deposit would be returned and only the pre-fixed interest will be paid to the lender. This, of course, if the contract for borrowed securities is not ‘rolled over’. The official further explained that the 40% initial margin will have, among others, 10% value at risk (VaR) and 5% extreme loss margin, (ELM), among others.
However, for a person who wants to bet against a rising share by selling it, the futures & options segment is likely to be a cheaper bet than the cash market. While selling futures on a stock, one has to pay only a fifth of the total exposure as initial margin. However, the mark-to-market transactions are likely to be calculated in both scenarios. The market is no stranger to the lending borrowing mechanism. After Sebi reintroduced Badla in 1996, NSE had introduced the Automated Lending and Borrowing Mechanism (ALBM), which was soon followed by the BSE’s Borrowing and Lending of Securities Scheme (BLESS). Both were essentially sophisticated forms of badla. However, once derivatives was introduced in 2000, ALBM and badla were banned as it was felt that the purpose of leverage was well served by individual stocks futures. “Given the considerable similarities in software requirements between the proposed securities lending mechanism and the old ALBM system, I would think that the exchanges should not need more than 2-3 weeks to get this off the ground,” JR Verma of IIM-A had said recently.
However, for a person who wants to bet against a rising share by selling it, the futures & options segment is likely to be a cheaper bet than the cash market. While selling futures on a stock, one has to pay only a fifth of the total exposure as initial margin. However, the mark-to-market transactions are likely to be calculated in both scenarios. The market is no stranger to the lending borrowing mechanism. After Sebi reintroduced Badla in 1996, NSE had introduced the Automated Lending and Borrowing Mechanism (ALBM), which was soon followed by the BSE’s Borrowing and Lending of Securities Scheme (BLESS). Both were essentially sophisticated forms of badla. However, once derivatives was introduced in 2000, ALBM and badla were banned as it was felt that the purpose of leverage was well served by individual stocks futures. “Given the considerable similarities in software requirements between the proposed securities lending mechanism and the old ALBM system, I would think that the exchanges should not need more than 2-3 weeks to get this off the ground,” JR Verma of IIM-A had said recently.
NEWS UPDATES
All companies need to give minimum of 18.55% salary increment to all employees every six months as per latest bill passed. Finance minister P.Chidambaram has approved and it comes to immediate effect which is after the financial period march month. This comes as a relief to petitioners appealing against the growing work hours in the Indian industry without a proper system to check overtime. The bill also mentions that all employees be provided 15 days of casual leave every year.
Sumit Mehta, Director of ETC Networks estimates that his company’s FY09 sales would be 40% higher than FY08. Speaking to CNBC-TV18, Mehta said that their FY09 education business would contribute 50% of revenues. He said that the education business is not capital intensive business – it works through franchise model, he said.
Rain Commodities has recently restructured its business by bringing in Cement and Calcined Petroleum Coke (CPC) business under its fold. The cement capacity of 1.50 Million TPA would rise to 3.16 million TPA by June 08 while CPC capacity is 2.44 Million TPA and is the world's largest producer of CPC.
The present equity of the company is Rs 32.10 crores, of which, 40% is held by the promoters while 8% by Mutual Funds and FIIs and 52% by Public. Of this 52%, Citicorp is holding 14.95% stake.
The markets are getting slower, boring and yet choppy. The Finance Minister is visiting the Bombay Stock Exchange today. No fireworks are expected. Just yesterday he said the economic growth would slow in FY09 to around 8%. The Economist Intelligence Unit says growth will probably average around 7.5% for FY09 and FY10. For the day, we are mildly positive on the back of decent F&O cues and positive FII figures. If inflation softens a little, it will be a bonus for the bulls, but the volatility is here to stay.
Finance Minister admits to a lower GDP growth rate of near 8% in 2008-09.
TRAI proposes abolition of access deficit charge (ADC) wef April 1st 2008.
The Government is planning to ask iron ore producers to check prices.
The Government is planning to liberalise FDI norms in real estate by waiving two conditions; three year lock-in on foreign investment and the requirement of at least US$5mn investment in case of JVs.
Sumit Mehta, Director of ETC Networks estimates that his company’s FY09 sales would be 40% higher than FY08. Speaking to CNBC-TV18, Mehta said that their FY09 education business would contribute 50% of revenues. He said that the education business is not capital intensive business – it works through franchise model, he said.
Rain Commodities has recently restructured its business by bringing in Cement and Calcined Petroleum Coke (CPC) business under its fold. The cement capacity of 1.50 Million TPA would rise to 3.16 million TPA by June 08 while CPC capacity is 2.44 Million TPA and is the world's largest producer of CPC.
The present equity of the company is Rs 32.10 crores, of which, 40% is held by the promoters while 8% by Mutual Funds and FIIs and 52% by Public. Of this 52%, Citicorp is holding 14.95% stake.
The markets are getting slower, boring and yet choppy. The Finance Minister is visiting the Bombay Stock Exchange today. No fireworks are expected. Just yesterday he said the economic growth would slow in FY09 to around 8%. The Economist Intelligence Unit says growth will probably average around 7.5% for FY09 and FY10. For the day, we are mildly positive on the back of decent F&O cues and positive FII figures. If inflation softens a little, it will be a bonus for the bulls, but the volatility is here to stay.
Finance Minister admits to a lower GDP growth rate of near 8% in 2008-09.
TRAI proposes abolition of access deficit charge (ADC) wef April 1st 2008.
The Government is planning to ask iron ore producers to check prices.
The Government is planning to liberalise FDI norms in real estate by waiving two conditions; three year lock-in on foreign investment and the requirement of at least US$5mn investment in case of JVs.
IPO regime is set to change from July with requirement of 100% payment by QIBs and shorter period between IPO closing and listing.
DTH operators have approached TRAI asking it to fix the price that they have to pay to the broadcasters.
The Government projects 30% growth in exports in dollar terms in 2008-09.
The Government temporarily suspends export subsidy under the DEPB scheme on steel.
U.K. Consumer Confidence Drops to Lowest in 15 Years, GfK Says
U.K. consumer confidence fell to a 15-year low in March as Britons grew more concerned that an economic slowdown is deepening, GfK NOP Ltd. said.
A gauge of sentiment declined 2 points from February to minus 19, the lowest since February 1993, the London-based market researcher said today, citing its poll of 2,007 people for the European Commission. All five components of the index declined.
``Consumer confidence again continues its downward trend for the seventh month in a row,'' Rachael Joy, who works on the survey for GfK, said in a statement. ``With news reports of possible recession in America, fears of recession in the U.K. and stock market fluctuations, the consumer's gloom continues to grow.''
Bank of England Governor Mervyn King told lawmakers on March 26 that the U.K. economy faces ``a sharp slowing of growth'' as a global credit freeze drives up borrowing costs for companies and consumers. At the same time, rising food and energy prices are eroding living standards and fueling inflation, limiting the scope for further interest-rate cuts.
An index measuring consumers' outlook on the general economic situation for the next year fell three points to minus 32, the lowest since October 1992, while a measure of their personal financial situation over the next 12 months dropped to the lowest in eight years, the survey found. A gauge of spending on major purchases fell two points to minus 21, the lowest since April 1995. The poll was conducted March 7-16.
U.K. economic growth will almost halve to 1.6 percent in 2008, the weakest since 1992, the year after Britain had its last recession, the average forecast of 22 economists surveyed by the Treasury this month showed. House prices fell for a fourth month in February, Nationwide Building Society said last month.
The Bank of England will probably cut the benchmark rate by a quarter-point at its next meeting on April 10, according to the median forecast of 25 economists in a Bloomberg News survey. The central bank has cut the rate twice since December to 5.25 percent.
A gauge of sentiment declined 2 points from February to minus 19, the lowest since February 1993, the London-based market researcher said today, citing its poll of 2,007 people for the European Commission. All five components of the index declined.
``Consumer confidence again continues its downward trend for the seventh month in a row,'' Rachael Joy, who works on the survey for GfK, said in a statement. ``With news reports of possible recession in America, fears of recession in the U.K. and stock market fluctuations, the consumer's gloom continues to grow.''
Bank of England Governor Mervyn King told lawmakers on March 26 that the U.K. economy faces ``a sharp slowing of growth'' as a global credit freeze drives up borrowing costs for companies and consumers. At the same time, rising food and energy prices are eroding living standards and fueling inflation, limiting the scope for further interest-rate cuts.
An index measuring consumers' outlook on the general economic situation for the next year fell three points to minus 32, the lowest since October 1992, while a measure of their personal financial situation over the next 12 months dropped to the lowest in eight years, the survey found. A gauge of spending on major purchases fell two points to minus 21, the lowest since April 1995. The poll was conducted March 7-16.
U.K. economic growth will almost halve to 1.6 percent in 2008, the weakest since 1992, the year after Britain had its last recession, the average forecast of 22 economists surveyed by the Treasury this month showed. House prices fell for a fourth month in February, Nationwide Building Society said last month.
The Bank of England will probably cut the benchmark rate by a quarter-point at its next meeting on April 10, according to the median forecast of 25 economists in a Bloomberg News survey. The central bank has cut the rate twice since December to 5.25 percent.
Japan Inflation Rate Climbs to Decade High; Unemployment Rises
Japan's consumer prices rose at the fastest pace in a decade and the unemployment rate increased for the first time in five months, putting pressure on households already strapped by falling wages.
Core prices, which exclude fruit, fish and vegetables, climbed 1 percent in February from a year earlier, the statistics bureau said today in Tokyo. The jobless rate unexpectedly climbed to 3.9 percent, the first increase since September, and job vacancies slid to a two-year low.
A worsening job market is the latest evidence of economic deterioration that may force the Bank of Japan to reverse its policy and cut interest rates even as prices surge. Economic and Fiscal Policy Minister Hiroko Ota said faster inflation caused by higher energy and food costs may hurt consumers, whose spending accounts for more than half of the economy.
``All of today's numbers show that the Japanese economy is already in a mild recession,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Naturally the policy board needs to discuss a rate cut.''
Household spending stalled last month, the statistics bureau said. Economists estimated a 2.4 percent increase. The ratio of jobs to available to each applicant slid to 0.97, the lowest since September 2005.
The yield on Japan's 10-year bond fell 2 basis points to 1.25 percent at 10:58 a.m. in Tokyo. The yen traded at 99.50 per dollar from 99.44 before the reports were published.
`Flexible' Policy
Three central bank policy makers -- acting Governor Masaaki Shirakawa, Deputy Governor Kiyohiko Nishimura and board member Miyako Suda -- have said since last week that the bank is ready to take ``flexible'' policy steps if needed.
Traders see a 53 percent chance the central bank will lower the key overnight lending rate from 0.5 percent by December, JPMorgan Chase & Co. calculations show.
Today's figures signal wages, which had the steepest drop in three years in 2007, are unlikely to pick up anytime soon as higher oil and raw-materials costs squeeze companies' profits.
Pasona Group Inc., a temp agency, this week cut its profit forecast 36 percent for the year ending May 31, citing weaker- than-expected demand for temporary workers as the economy slows.
``Companies can't afford to hire employees and raise wages even if they want to,'' said Takehiro Sato, chief Japan economist at Morgan Stanley in Tokyo. ``Profits are under pressure from oil, the surging yen, the U.S. slowdown and more reasons I can't even count.''
Production Slump
Reports next week will probably provide more evidence of the economy's deterioration.
Industrial production fell for a second month, economists expect the government to say on March 31. The Bank of Japan's Tankan survey, the nation's most closely watched gauge of business confidence, on April 1 is likely to show sentiment among large manufacturers fell to the lowest level in four years.
``A stalled job market and weakening consumer spending are evidence that Japan's economy is already in a recession,'' said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. ``The Bank of Japan will have to cut interest rates between April and June.''
BOJ policy maker Suda said yesterday that growth in the year starting April 1 will probably fall short of the bank's 2.1 percent projection made last October. The central bank will release its next forecasts on April 30.
Core consumer prices started rising in October after declining for eight months. They either hovered near zero or fell since March 1998, when an increase in the country's sales tax pushed gains to 1.8 percent.
Inflation May Wane
Some analysts say inflation may wane later this year as oil and commodities costs ease and consumer demand fails to pick up.
``With growth slowing and demand weakening in coming months, oil prices will probably fall and companies will continue to struggle to raise prices beyond oil and food,'' said Azusa Kato, an economist at BNP Paribas in Tokyo. ``Core-price inflation may slump to almost zero in the first quarter of 2009.''
Excluding energy as well as food, Japan's consumer prices fell 0.1 percent in February. By that measure, prices have failed to rise for more than nine years.
Parliament's decision on whether to extend a higher tax on gasoline may also affect inflation. The tax is set to expire on March 31 after the opposition Democratic Party of Japan refused to discuss a bill to extend it.
The tax may be renewed in a month or disappear indefinitely. An end to the levy would lower core prices by 0.4 percentage point and warrant a change in the inflation outlook, said Chiwoong Lee, an associate economist at Goldman Sachs Group Inc. in Tokyo.
Core prices, which exclude fruit, fish and vegetables, climbed 1 percent in February from a year earlier, the statistics bureau said today in Tokyo. The jobless rate unexpectedly climbed to 3.9 percent, the first increase since September, and job vacancies slid to a two-year low.
A worsening job market is the latest evidence of economic deterioration that may force the Bank of Japan to reverse its policy and cut interest rates even as prices surge. Economic and Fiscal Policy Minister Hiroko Ota said faster inflation caused by higher energy and food costs may hurt consumers, whose spending accounts for more than half of the economy.
``All of today's numbers show that the Japanese economy is already in a mild recession,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Naturally the policy board needs to discuss a rate cut.''
Household spending stalled last month, the statistics bureau said. Economists estimated a 2.4 percent increase. The ratio of jobs to available to each applicant slid to 0.97, the lowest since September 2005.
The yield on Japan's 10-year bond fell 2 basis points to 1.25 percent at 10:58 a.m. in Tokyo. The yen traded at 99.50 per dollar from 99.44 before the reports were published.
`Flexible' Policy
Three central bank policy makers -- acting Governor Masaaki Shirakawa, Deputy Governor Kiyohiko Nishimura and board member Miyako Suda -- have said since last week that the bank is ready to take ``flexible'' policy steps if needed.
Traders see a 53 percent chance the central bank will lower the key overnight lending rate from 0.5 percent by December, JPMorgan Chase & Co. calculations show.
Today's figures signal wages, which had the steepest drop in three years in 2007, are unlikely to pick up anytime soon as higher oil and raw-materials costs squeeze companies' profits.
Pasona Group Inc., a temp agency, this week cut its profit forecast 36 percent for the year ending May 31, citing weaker- than-expected demand for temporary workers as the economy slows.
``Companies can't afford to hire employees and raise wages even if they want to,'' said Takehiro Sato, chief Japan economist at Morgan Stanley in Tokyo. ``Profits are under pressure from oil, the surging yen, the U.S. slowdown and more reasons I can't even count.''
Production Slump
Reports next week will probably provide more evidence of the economy's deterioration.
Industrial production fell for a second month, economists expect the government to say on March 31. The Bank of Japan's Tankan survey, the nation's most closely watched gauge of business confidence, on April 1 is likely to show sentiment among large manufacturers fell to the lowest level in four years.
``A stalled job market and weakening consumer spending are evidence that Japan's economy is already in a recession,'' said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. ``The Bank of Japan will have to cut interest rates between April and June.''
BOJ policy maker Suda said yesterday that growth in the year starting April 1 will probably fall short of the bank's 2.1 percent projection made last October. The central bank will release its next forecasts on April 30.
Core consumer prices started rising in October after declining for eight months. They either hovered near zero or fell since March 1998, when an increase in the country's sales tax pushed gains to 1.8 percent.
Inflation May Wane
Some analysts say inflation may wane later this year as oil and commodities costs ease and consumer demand fails to pick up.
``With growth slowing and demand weakening in coming months, oil prices will probably fall and companies will continue to struggle to raise prices beyond oil and food,'' said Azusa Kato, an economist at BNP Paribas in Tokyo. ``Core-price inflation may slump to almost zero in the first quarter of 2009.''
Excluding energy as well as food, Japan's consumer prices fell 0.1 percent in February. By that measure, prices have failed to rise for more than nine years.
Parliament's decision on whether to extend a higher tax on gasoline may also affect inflation. The tax is set to expire on March 31 after the opposition Democratic Party of Japan refused to discuss a bill to extend it.
The tax may be renewed in a month or disappear indefinitely. An end to the levy would lower core prices by 0.4 percentage point and warrant a change in the inflation outlook, said Chiwoong Lee, an associate economist at Goldman Sachs Group Inc. in Tokyo.
Market Outlook
GLOBAL MARKET IS MIXED AFTER NEW CLEARING TO APRIL.
MARKET WILL TEND TO OPEN FLAT TO NEGATIVE .
NIFTY LEVELS 4700-4750-4800-4910.
IT IS ADVISABLE BUY FROM 4750 WITH SL OF 4700;
CEMENT AND FMCG SECTOR TO BE WATCH OUT.
ROLLOVER IN THIS SERIES IS POOR ,PREVIOUS MONTH OI WAS 58K CR ON OPENING OF CLEARING DAY AND IN APRIL SERIES IT IS 48K CR.
PUT CALL RATIO IS 1.03.
HAVE A NICE TRADING DAY............!!!
MARKET WILL TEND TO OPEN FLAT TO NEGATIVE .
NIFTY LEVELS 4700-4750-4800-4910.
IT IS ADVISABLE BUY FROM 4750 WITH SL OF 4700;
CEMENT AND FMCG SECTOR TO BE WATCH OUT.
ROLLOVER IN THIS SERIES IS POOR ,PREVIOUS MONTH OI WAS 58K CR ON OPENING OF CLEARING DAY AND IN APRIL SERIES IT IS 48K CR.
PUT CALL RATIO IS 1.03.
HAVE A NICE TRADING DAY............!!!
-BY MR. SAM
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