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German exports up, US jobs data seen positive
Source: Agencies |
May 8, 2009, Friday
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Online Edition
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A REBOUND in exports in Germany, Europe's biggest economy, provided another sign on Friday the global recession may be easing ahead of the release of key US jobs data.
Data showing German exports rose in March for the first time in six months gave fresh encouragement to optimists pushing stock markets higher after results of stress tests on US banks revealed no nasty surprises.
"The German patient is on the road to recovery though he's still sickly. However, slowly but surely, we're seeing a bit of stabilisation with the hard data," said UniCredit economist Andreas Rees.
But countering the good export news were first-quarter losses posted by Britain's Royal Bank of Scotland and Germany's Commerzbank, the latest big European banks to say this week that bad debts were ratcheting up.
Part-nationalised RBS reported a small loss for the first quarter after bad debts quadrupled and it took another 2.1 billion pound writedown on the value of risky assets, while Commerzbank posted a bigger-than-expected net loss.
And in an illustration of the damage inflicted on global trade by the downturn, Toyota Motor Corp, the world's largest car maker, posted a US$6.9 billion loss for the final quarter and forecast increasing losses this financial year.
Investors took heart after US regulators ordered top banks on Thursday to raise nearly US$75 billion in capital -- less than some analysts had estimated -- to bolster their ability to withstand further shocks to the financial system.
"The fears of nationalisation or of failure have more or less disappeared, and now what we're getting is details of how banks are going to fill in their capital deficiencies," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.
EYES ON NON-FARM PAYROLLS
European stock markets climbed on relief over the US stress tests after Japan's Nikkei index hit a six-month closing high and Hong Kong shares rose 1 percent to a seven-month peak.
"This (stress test results) could be seen by many as the last hurdle for the markets to continue their stellar bull run," said Chris Hossain, senior sales manager at ODL Securities Ltd.
Equities and other riskier assets have rallied in recent weeks as data suggests the dramatic slump in the world economy, which gathered pace after the collapse of Lehman Brothers in September, is finally slowing and a turnaround may be in sight.
The US monthly non-farm payrolls report, due at 1230 GMT on Friday, could be a key in helping set a near-term course for global markets, with economists forecasting the pace of lay-offs has eased.
Economists forecast 590,000 US jobs were lost last month, which would be down from 663,000 in March, but they also expect the unemployment rate to have gained to 8.9 percent from 8.5 percent in the previous month.
Conditions for companies, however, remain tough.
In Japan, the central bank warned that the country's corporate financing environment remained severe, and some of its policy board members saw room for more steps if conditions worsened. Toyota, facing a plunge in global demand that forced rival Chrysler into bankruptcy, forecast an operating loss of 850 billion yen (US$8.57 billion) for the year to next March.
In Australia, a big exporter of commodities, the central bank slashed its forecasts for growth this year, as many of its trading partners remain mired in recession.
The International Monetary Fund said recent economic data from China, the engine of world growth in recent years, showed encouraging signs of a rebound but that it was too early to tell whether it was sustainable.
STRESS TESTS
The worst global recession in decades was triggered by a crisis in the financial industry, with several of the biggest US banks and insurers having to be rescued with government money after booking huge losses tied to a housing market bust.
The unprecedented stress tests found that 10 banks needed additional capital -- a total of US$74.6 billion -- to withstand heavier losses that are likely if the recession worsened.
Bank of America Inc had the largest need at US$33.9 billion, Citigroup needed US$5.5 billion, Wells Fargo US$13.7 billion and GMAC US$11.5 billion.
Washington, which has spent hundreds of billions bailing out the banks like Citigroup and BofA, hopes the banks can fill the capital holes with private capital, although Federal Reserve Chairman Ben Bernanke said the government would help if needed.
Data showing German exports rose in March for the first time in six months gave fresh encouragement to optimists pushing stock markets higher after results of stress tests on US banks revealed no nasty surprises.
"The German patient is on the road to recovery though he's still sickly. However, slowly but surely, we're seeing a bit of stabilisation with the hard data," said UniCredit economist Andreas Rees.
But countering the good export news were first-quarter losses posted by Britain's Royal Bank of Scotland and Germany's Commerzbank, the latest big European banks to say this week that bad debts were ratcheting up.
Part-nationalised RBS reported a small loss for the first quarter after bad debts quadrupled and it took another 2.1 billion pound writedown on the value of risky assets, while Commerzbank posted a bigger-than-expected net loss.
And in an illustration of the damage inflicted on global trade by the downturn, Toyota Motor Corp, the world's largest car maker, posted a US$6.9 billion loss for the final quarter and forecast increasing losses this financial year.
Investors took heart after US regulators ordered top banks on Thursday to raise nearly US$75 billion in capital -- less than some analysts had estimated -- to bolster their ability to withstand further shocks to the financial system.
"The fears of nationalisation or of failure have more or less disappeared, and now what we're getting is details of how banks are going to fill in their capital deficiencies," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.
EYES ON NON-FARM PAYROLLS
European stock markets climbed on relief over the US stress tests after Japan's Nikkei index hit a six-month closing high and Hong Kong shares rose 1 percent to a seven-month peak.
"This (stress test results) could be seen by many as the last hurdle for the markets to continue their stellar bull run," said Chris Hossain, senior sales manager at ODL Securities Ltd.
Equities and other riskier assets have rallied in recent weeks as data suggests the dramatic slump in the world economy, which gathered pace after the collapse of Lehman Brothers in September, is finally slowing and a turnaround may be in sight.
The US monthly non-farm payrolls report, due at 1230 GMT on Friday, could be a key in helping set a near-term course for global markets, with economists forecasting the pace of lay-offs has eased.
Economists forecast 590,000 US jobs were lost last month, which would be down from 663,000 in March, but they also expect the unemployment rate to have gained to 8.9 percent from 8.5 percent in the previous month.
Conditions for companies, however, remain tough.
In Japan, the central bank warned that the country's corporate financing environment remained severe, and some of its policy board members saw room for more steps if conditions worsened. Toyota, facing a plunge in global demand that forced rival Chrysler into bankruptcy, forecast an operating loss of 850 billion yen (US$8.57 billion) for the year to next March.
In Australia, a big exporter of commodities, the central bank slashed its forecasts for growth this year, as many of its trading partners remain mired in recession.
The International Monetary Fund said recent economic data from China, the engine of world growth in recent years, showed encouraging signs of a rebound but that it was too early to tell whether it was sustainable.
STRESS TESTS
The worst global recession in decades was triggered by a crisis in the financial industry, with several of the biggest US banks and insurers having to be rescued with government money after booking huge losses tied to a housing market bust.
The unprecedented stress tests found that 10 banks needed additional capital -- a total of US$74.6 billion -- to withstand heavier losses that are likely if the recession worsened.
Bank of America Inc had the largest need at US$33.9 billion, Citigroup needed US$5.5 billion, Wells Fargo US$13.7 billion and GMAC US$11.5 billion.
Washington, which has spent hundreds of billions bailing out the banks like Citigroup and BofA, hopes the banks can fill the capital holes with private capital, although Federal Reserve Chairman Ben Bernanke said the government would help if needed.
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