ITALIAN politicians stepped up pressure for closer fiscal union across the Eurozone over the weekend, as a report emerged that German ministers were considering caving in on demands for Eurobonds. Speaking ahead of a Franco-German summit this week, Italian economy minister Giulio Tremonti said, “We would not have arrived where we are if we had had the Eurobond.” Bonds would spread the burden of debt from troubled member states across the whole of the 17 nation single currency area.
SOFTENING demand for exports and weakness in the financial sector threaten a deeper slow down for Hong Kong after a surprise contraction in the territory’s economy in the second quarter. Waning global demand and supply-chain disruptions following the March earthquake and tsunami in Japan led to 11.1% drop in exports from the first quarter, a dramatic reversal from a 14.4% rise in the previous quarter.
ASIAN stocks rose following the longest series of weekly losses since June after U.S. retail sales increased by the most in four months and Japan’s second-quarter GDP beat economist estimates. The MSCI index rose 1.2% as of lunchtime in Tokyo today, with three stocks advancing for each one that declined. Hong Kong’s Hang Seng index rose 1.9%, while Australia’s S&P/ASX 200 index gained 1.8%. Markets in India and South Korea are shut for public holidays.
THE FTSE 100 is seen rising today; building on strength from the previous session when a ban on short selling gave markets some relief, following pre-weekend strength on Wall Street and gains overnight in Asia. Last week was a roller coaster week for the FTSE, which saw it swing through a range of more than 500 points as investors grappled with growing uncertainty over the global economy and policymakers’ attempts to restore some sort of calm.
THE YEN and Swiss franc weakened against most of their major counterparts amid speculation policy makers in Japan and Switzerland will take further action to stem gains in their currencies. The yen dropped against the euro after Japanese Finance Minister Yoshihiko Noda indicated he is ready to intervene in the markets again.
OIL fluctuated in New York, after declining for three weeks, as concern that the global economy is slowing countered a less-than-expected contraction in Japan, the world’s third biggest crude consumer. Futures were little changed after falling as much as 0.6% and then climbing 0.3%. Crude for September delivery was up 1% on the New York Mercantile Exchange. Prices have fallen 14% in the past three weeks and 7% this year.
GOLD declined for a third day, set for the worst run in seven weeks, as concern eased that the global economy is stalling, boosting global equities and cutting demand for haven investments. Spot bullion lost 0.2% at 12:39pm in Singapore, after shedding as much as 1.1%. Gold which reached a record high on August the 11th is still 23% higher this year on debt woes in Europe and the U.S.