[Dow Jones] China will raise the reserve requirement ratio for banks by 50 basis points, central bank says in statement late Friday; move to take effect Feb. 25. The hike comes just one month after previous increase in the ratio, which limits amount banks can lend; after increase, major banks will have to keep 16.5% of their deposits on reserve. While further tightening has been expected, the hike comes sooner than many analysts had forecast. Timing of move, falling on Friday evening immediately before Lunar New Year holiday, is likely intended to limit negative market reaction.
China's hike in reserve requirements Friday may well undo any good work the EU might have achieved with its pledge about Greece Thursday. As CMC Markets warns: "The PBOC move risks eroding any stabilization emerging in global equities of the EU's pledge to support Greece." Add to this the rise in the US/German bond yield differential to a new 2 1/2 year high and the case for a USD rally gets even stronger. "This bolsters our case that improving US yield differentials will further boost the USD into end of quarter," CMC adds.
EUR/USD has breached last week's 8 month low of 1.3585, the downtrend has resumed and the next target is 1.3420 says Barclay's Capital. Topside, only a close above 1.3775 will alleviate this negative outlook says the bank. EUR/USD now at 1.3555.
The European Union's official statistics agency Eurostat Friday said the euro zone's combined gross domestic product rose by 0.1% from the third quarter, but was down 2.1% from the final three months of 2008. In the third quarter, GDP rose by 0.4%.
Where to Park Your Money in Year of Golden Tiger
By: Sara Grosse Assistant Producer, CNBC Asia
They say a leopard never changes his spots, but can a tiger change his stripes?
The year of the golden Tiger seems to point in that direction.According to the Chinese zodiac, it is a year traditionally associated with massive changes and volatility. But what does that mean for investors? Combining the traditional Chinese practice of predicting fortunes through dates, or feng shui, along with current market trends, CLSA recently launched its annual Feng Shui Index report to see what 2010 holds for equities, commodities and property.
http://www.cnbc.com/id/35324843/
Emerging-Market Stock Funds Post Outflows on Greece
(Bloomberg) -- Investors pulled the most money from emerging-market equity funds in 19 months as Greece’s debt crisis escalated and the Federal Reserve laid the groundwork for exiting its record credit expansion.Outflows from emerging-market equity funds reached $2.9 billion in the week to Feb. 10, the highest since the period ended July 9, 2008, according to Cambridge, Massachusetts-based research firm EPFR Global in an e-mailed release.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abqKFblks5MUTreasuries Head for
Philippines Stock Index Is on Lower ‘Trend’: Technical Analysis
(Bloomberg) -- The Philippine Stock Exchange Index will extend declines and stay below its 50-day moving average as charts show “resistance” to a rebound, according to Abacus Securities Corp. The gauge is on a declining “trend” as the moving average is “still pointing downwards,” Abacus analyst Lawrence Gonzaga said in an interview. The index on Jan. 22 fell below its 50-day moving average for the first time since March last year, at 3,050. The measure may not surpass 3,000, near a 61.8 percent retracement of the drop from this year’s intraday high on Jan. 15 to the low on Feb. 9, he said, citing a Fibonacci number.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMy7gc_ahmdQ
Copper May Drop to $5,810, Commerzbank Says: Technical Analysis
(Bloomberg) -- Copper prices on the London Metal Exchange, up about 7 percent this week, may drop to the lowest level since October as gains are “corrective only,” Commerzbank AG said, citing trading patterns. The metal may fall to as low as the $5,810 a metric ton reached Oct. 2, after declining to less than the 200-day moving average of $6,068, London-based Karen Jones wrote in a research note yesterday. The contract traded today at $6,770.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=as08fZsBgiyc
Japanese Bonds Head for Weekly Gain on View Rates to Stay Low
(Bloomberg) -- Japan’s 10-year bonds headed for a weekly gain on speculation chronic deflation will encourage the Bank of Japan to keep its benchmark interest rate near zero when policy makers meet next week. Benchmarkyields were near the lowest level in two weeks before a report on Feb. 15 that economists said will show prices dropped at a faster pace in the final quarter of 2009 even as economic growth quickened. Bond futures dropped today as stocks advanced for second day after European Union leaders pledged to aid Greece.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0vY57G3Ejxs
Treasuries Head for Weekly Loss Before Retail Sales, Confidence
(Bloomberg) -- Treasuries headed for their first weekly loss this year before government and private reports that economists said will show retail sales and consumer confidence are rising. Ten-year yields were near the highest level in a month after European efforts to end Greece’s budget crisis reduced demand when the U.S. sold a record-tying $81 billion of three-, 10- and 30-year debt this week. Asian stocks advanced for a fourth day as the Standard & Poor’s 500 Index was poised to snap a monthlong decline.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ayp2ejij1Whw
China Will Delay Raising Interest Rates, Citic Securities Says
(Bloomberg) -- China’s central bank will hold off raising borrowing costs after consumer prices grew less than estimated in January, according to Citic Securities Co. Speculation about further tightening in the short term will ease, analysts led by Yu Jun wrote in a report today. China’s stock market is likely to fluctuate in the first half of 2010 as the withdrawal of stimulus policies weighs on liquidity and sentiment, according to the report. Citic had expected a rate increase as early as this month.
Australia Rate Pause May Be Short-lived as Jobs Surge
(Bloomberg) -- The biggest Australian jobs boom in five years may make it harder for central bank Governor Glenn Stevens to extend a pause in recent interest-rate gains.
Investors doubled bets the Reserve Bank of Australia will raise the overnight cash rate target by a quarter percentage point to 4 percent next month after a report yesterday showed employers added 52,700 workers in December, more than three times the 15,000 median estimate of 21 economists surveyed by Bloomberg News.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azkHycr7lf9I
Keep Your Money on the Sidelines: MF Global Strategist
By: JeeYeon Park CNBC News Associate
Stocks reversed their losses and traded higher on Thursday, as the dollar gained against the euro amid Europe debt worries. Where are the markets headed from this point? Tommy Williams, president of Williams Financial Advisors, and John Brady, senior vice president at MF Global, shared their outlooks.
http://www.cnbc.com/id/35351871
6 Picks to Buy on Dips: Strategists
By: JeeYeon Park CNBC News Associate
Stocks wavered on Thursday as the market shrugged off an encouraging jobless report and news of a bailout for Greece. How should investors be positioned? Maury Fertig, chief investment officer at Relative Value Partners, and Ryan Detrick, chief technical strategist at Schaeffer’s Investment Research, discussed their market outlooks.
http://www.cnbc.com/id/35348158
China Economy Will Slow, Hurt Commodities, Faber Says
(Bloomberg) -- China’s economy will slow down “meaningfully” and may even be at risk of a “crash” because of the nation’s excess capacity and as loan growth slows, investor Marc Faber said.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.yJy6cz_.8Y
U.S. Economy to Strengthen, Reducing Unemployment, Survey Says
U.S. Economy to Strengthen, Reducing Unemployment, Survey Says
(Bloomberg) -- U.S. unemployment peaked in October and will retreat through 2011 as the economy strengthens, according to economists surveyed by Bloomberg News. The world’s largest economy will grow 3 percent this year and next, more than anticipated a month ago, according to the median estimate of 62 economists polled this month. The jobless rate, which reached a 26-year high of 10.1 percent in October, will end the year at 9.5 percent.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTvFFsF7c7_E
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