Archive for February, 2010

Personal incomes, consumer spending up in December (AP)

Monday, February 1st, 2010 | Finance News

WASHINGTON – Personal incomes rose more than expected in December and consumer spending increased for the third straight month, helping the economy slowly recover from the worst recession in decades.

The Commerce Department said Monday that incomes rose by 0.4 percent, the sixth increase in a row. That's slightly better than analysts' expectations of 0.3 percent growth.

Income growth was spurred by a large, one-time social security payment. Wages and salaries rose by only 0.1 percent, or $9.1 billion, after increasing 0.4 percent, or $27 billion, in November.

Consumer spending, meanwhile, increased by 0.2 percent, less than analysts' forecasts of 0.3 percent. The department also revised November's figure to show a 0.7 percent increase in spending, higher than the initial estimate of 0.5 percent.

Consumer spending is closely watched because it accounts for about 70 percent of total economic activity. In last year's fourth quarter, consumer spending rose by 2 percent, down from a 2.8 percent increase in the July-September period.

That helped boost the nation's gross domestic product, the broadest measure of the economy's output, by 5.7 percent in the fourth quarter, the fastest growth in six years. The economy grew at a 2.2 perent rate in the third quarter after a record four straight quarters of decline.

Still, many economists are concerned growth will likely sputter to a 3 percent pace or below in the current quarter once temporary factors such as government stimulus and a slowdown in inventory reductions fades. Many economists expect the economy to grow at about a 2 percent pace this year.

That won't be fast enough to reduce the unemployment rate, which currently stands at 10 percent.

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European markets steady at start of busy week (AP)

Monday, February 1st, 2010 | Finance News

LONDON – European stock markets were steady Monday as investors approached a busy week of economic and corporate reports with caution.

In Europe, the FTSE 100 index of leading British shares was up 15.30 points, or 0.3 percent, at 5,203.82 while Germany's DAX rose 3.09 points, or 0.1 percent, to 5,611.88. The CAC-40 in France was 7.27 points, or 0.2 percent, lower at 3,732.19.

Wall Street was poised for a more solid opening later — Dow futures were up 48 points, or 0.5 percent, at 10,065 while the broader Standard & Poor's 500 futures rose 5.1 points, or 0.5 percent, to 1,075.50.

The expected gains on Wall Street will give investors some confidence ahead of a raft of potentially market-moving news — many of the world's major stock markets have fallen between 5 and 10 percent over the last couple of weeks as investors worried that equity valuations following a ten-month bull run were not justified by the economic fundamentals.

That was particularly evident last Friday, when the euphoria surrounding better than expected U.S. economic growth figures did not last long — investors looked on the data with caution, arguing that much of the annualized 5.7 percent increase in gross domestic product was due to companies restocking following the end of the recession. After advancing strongly in the wake of the figures, Wall Street ended lower.

"Question marks over the strength of the global recovery continue to weigh on investor sentiment and with a number of high profile economic and corporate announcements due in the coming days, expect further clarity here," said Ben Potter, research analyst at IG Markets.

On the economic front, investors around the world have a raft of economic data to assess, culminating in Friday's U.S. nonfarm payrolls report for January — three consecutive increases in weekly jobless claims data have soured the mood ahead of the report, which often sets the stock market tone for a week or two.

The key economic release Monday will be the monthly manufacturing survey from the Institute for Supply Management

Greece's debt crisis will also remain in the spotlight, particularly on Wednesday, when the European Commission is set to give its view on the Greek government's plan to bring borrowing under control over the coming few years.

On the following day, the European Central Bank president Jean-Claude Trichet will no doubt be pressed to give his opinion on Greece's debt problems in his monthly press conference after the bank's latest interest rate decision.

On Thursday, both the European Central Bank and the Bank of England are expected to keep their benchmark interest rates unchanged at the historic lows of 1 percent and 0.5 percent respectively. However, the Reserve Bank of Australia is expected to raise interest rates again by a quarter point to 4 percent on Tuesday, although all eyes will be on whether it indicates a pause.

Corporate earnings statements will likewise be watched closely, particularly in London where five of the biggest companies by market value will issue their latest trading updates, including pharmaceuticals company Glaxo SmithKline PLC and mobile phone operator Vodafone PLC.

However, oil companies could well end up garnering the most interest around the world — Britain's BP PLC, BG Group PLC and Anglo-Dutch Royal Dutch Shell are all poised to report their latest quarterly statements.

The U.S. ExxonMobil Corp. will kick off the oil companies' reporting season later today.

Other major European earnings statements will come from Swiss pharmaceuticals company Roche AG, Spain's Banco Santander and Deutsche Bank AG.

Earlier in Asia, Japan's Nikkei 225 stock average fluctuated before closing up 6.98, or 0.1 percent, at 10,205.02 while South Korea's Kospi rose 4.46, or 0.3 percent, to 1,606.89, helped by news the country's exports surged in January, posting their biggest gain in more two than decades, thanks to strengthening overseas demand and a weaker local currency.

Hong Kong's Hang Seng index rebounded from its early fall to finish higher by 0.6 percent to 20,243.75.

In China, news that manufacturing activity was still strong in January was taken as more evidence the government will maintain its efforts to keep a lid on growth and inflation. Shanghai's key index led Asia's slide, falling 47.93, or 1.6 percent, to 2,941.36. Markets in Australia, Singapore and Taiwan also lost ground.

Oil prices made tentative gains, with benchmark crude for March delivery up 28 cents to $73.17.

The dollar was up 0.6 percent at 90.30 yen while the euro rose 0.2 percent to $1.3892.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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