MOODY’s Investors Service have cut Japan’s credit rating by one step to Aa3 with a stable outlook, saying “weak” prospects for growth will make it difficult for the government to rein in the world’s largest public debt burden. Japan’s public debt is projected to reach 219% of gross domestic product next year even before accounting for borrowing to fund reconstruction after the March 11 earthquake, according to the Organization for Economic Cooperation and Development.
GREECE could end up using its own land as collateral for its bailout package as part of plans under discussion between Eurozone governments. As Finland threatened to quit the bailout programme if its request for collateral was turned down, ministers considered asking Greece to put up non-cash reserves such as gold, industrial assets and even real estate.
BRITAIN’S manufacturing sector has held up surprisingly well this month, the CBI claimed in its survey for August. “Manufacturing order books are holding up, and expectations for output growth are above their historical average, although they are less strong than earlier this year,” they said yesterday.
MARKETS:
German stocks rose for the first time in six days yesterday, rebounding from an 18-month low, amid speculation that Federal Reserve Chairman Ben Bernanke will take steps to bolster the US recovery. US stocks also rallied, driving the S&P’s 500 Index up from the cheapest valuations since 2009, as weaker-than-estimated economic data reinforced optimism the Fed will act to spur growth. The index fell 18% from an almost three-year high on April 29th through August 8th amid concern Europe’s debt crisis and the US credit rating downgrade would hurt the economy.
ASIAN shares halted their biggest gain in five months and US stock futures declined amid weaker earnings and before data that may show the global economy is faltering.
European shares are set to rise today, extending a rally into a third day, as speculation grew that the US Federal Reserve will announce another round of quantitative easing on Friday.
CURRENCIES:
JAPAN unveiled a $100 billion effort to help companies cope with a surging yen, signalling that officials may be resigned to the currency remaining high. The government will release currency reserves to the Japan Bank for International Cooperation for funding to aid exporters and spur purchases overseas, officials announced today.
ENERGY:
Oil traded near the highest close in four-days in New York as a decline in US crude supply countered concern slowing economic growth will reduce demand. Futures swing between gains and losses after an industry report showed US stockpiles fell last week and before official data today that may show inventories climbed.
COMMODITIES:
GOLD hit a new all-time high above $1,900 an ounce, as investor concern that worsening sovereign-debt crises are exacerbating a global economic slowdown increased demand for a store of value. Cash silver climbed 0.4% to $42.085 an ounce, following a 4.2% drop yesterday. WHEAT declined for the first time in three days on concern that the global economic recovery may be faltering, damping demand for commodities and as increasing shipments from Russia intensified competition among exporters.
