Greece was branded with the world’s lowest credit rating by Standard & Poor’s which said the nation is “increasingly likely” to face a debt restructuring and the first sovereign default in the euro area’s history. The move to CCC from B reflects “our view that there is a significantly higher likelihood of one or more defaults,” S&P said in a statement yesterday. Greece’s finance ministry said that S&P’s decision ignores the intense consultations to resolve the crisis taking place between officials at the EC, ECB and IMF.
CHINA’s inflation accelerated in May to a 34-month high of 5.5%, supporting the case for a tightening in monetary policy as soon as this month even as there are signs that economic growth is slowing down. Bringing inflation under control is a top priority for China’s leaders, who see little chance of the current slowdown from 2010 growth of more than 10% turning into a hard landing.
Christine Lagarde strengthened her lead in the race for the International Monetary Fund’s top job after the institution discarded the candidacy of Bank of Israel Governor Stanley Fischer because he exceeds the age limit. Agustin Carstens described his chance of winning as “slim”, admitting that Lagarde’s early front-runner status would be very hard to overcome.
US STOCKS drifted sideways on Monday, in what is likely a temporary pause in a sell-off brought on by growing fears of another economic downturn. The benchmark S&P 500 rose for only the second time in the past nine sessions and investors remained noncommittal about whether stocks have become cheap enough after six weeks of selling to pour some money back into equities again.
OVERNIGHT, more than three shares gained for every one that declined on MSCI’s Asia Pacific index, helping it rebound from its lowest level in almost three weeks. The index’s advance today will be it’s biggest since May 31.
EUROPEAN stocks were seen steadying on Tuesday following Chinese macroeconomic data that fuelled gains in Asian equities, while a number of investors see attractive valuations after a six-week retreat. While the FTSE, DAX and CAC-40 may all open higher, some analysts see the later two opening down.
THE YEN and the dollar fell against most of their major counterparts after reports showed China’s retail sales and industrial production increased, sapping demand for so-called safe-haven currencies.
OIL traded near the lowest in almost a month on speculation fuel demand may falter as the US economy slows and China acts to cool its fastest inflation in almost three years. China processed 6% more oil in May from a year earlier. Gasoline output climbed 3.6% and diesel production rose 8.2%. China uses more oil than any nation except the US.
GOLD rebounded on Tuesday after posting its biggest one-day loss in a month in the previous session on growing worries about another economic downturn, but a weaker US dollar could offer some support. Spot silver gained as much as 1% to $35.14 an ounce. Immediate-delivery palladium strengthened 0.9%, while platinum added 0.5% to $1,807 an ounce.