S&P cuts Russia's ratings to 'CC' on debt default risk

S&P on Thursday lowered its long-term sovereign credit rating on Russia to "CC" from "CCC-", as the country reported difficulties meeting debt-service payments on the due date on its US dollar-denominated 2023 and 2043 Eurobonds.

"Although public statements by the Russian Ministry of Finance suggest to us that the government currently still attempts to transfer the payment to the bondholders, we think that debt service payments on Russia's Eurobonds due in the next few weeks may face similar technical difficulties," the ratings agency said.

-reuters-

Asia shares rest at highs, sterling licks wounds

SYDNEY -- Asian stocks took a breather at 18-month peaks on Wednesday having climbed for five straight sessions, while the British pound was licking its wounds as revived Brexit fears came back to bite it.

MSCI's broadest index of Asia-Pacific shares outside Japan was dead flat in thin early trade, just off its highest since June last year.

Japan's Nikkei dipped 0.1 percent and away from its 2019 top, while Korean shares edged up 0.1 percent to an 8-month peak. E-Mini futures for the S&P 500 were little changed.

Upbeat economic news had helped the S&P 500 reach a record for the fourth straight session, building on its 27 percent gain this year. The Dow ended Tuesday up 0.19 percent, while the S&P 500 gained 0.07 percent and the Nasdaq 0.11 percent.

US housing starts were surprisingly strong in November, and building permits rose to the highest level since May 2007. Manufacturing output picked up more than expected as a strike at General Motors Co ended.

A run of better data recently has helped calm fears of recession while the phase one Sino-US deal on trade seems to have lifted some of the uncertainty on the global outlook.

The sea change was clear in BofA Global Research's latest survey of fund managers with recession concerns diving 33 percentage points to a net 68 percent of investors saying a recession is now unlikely in 2020.

Global growth expectations jumped 22 percentage points, marking the biggest 2-month rise on record. As a result, funds' allocation to global equities climbed 10 percentage points to a net 31 percent overweight, the highest level in a year.

THEN AGAIN...

Yet it might be too soon to declare an all-clear on the political front with UK Prime Minister Boris Johnson upsetting markets by taking a hard line on Brexit talks.

Johnson will use the prospect of a Brexit cliff-edge at the end of 2020 to demand the EU give him a comprehensive free trade deal in less than 11 months.

The threat of a hard exit sent shivers through sterling, which slid 1.5 percent in its largest one-day fall this year.

The pound was last at $1.3110 having shed all the gains made on Thursday and Friday after it became clear that the Conservative Party was heading for a big win.

"We treat the risk of a hard Brexit as a 'tail risk' at this stage," said Joseph Capurso, a senior currency strategist at CBA. "A UK-EU trade deal by end 2020, while difficult, is still possible."

"In our view GBP/USD will remain supported at around $1.3000-$1.3100 and upside contained near $1.3500 over the next several months."

Sterling's slide gave the dollar index a lift to 97.184 against a basket of currencies, extending a bounce from last week's five-month low of 96.588.

The euro also surged on the pound and was steady on the dollar at $1.1150. The yen was little changed at 109.52 per dollar.

Spot gold was idling at $1,475.90 per ounce, after a couple of very quiet sessions.

Oil prices eased from three-month highs as data showed U.S. crude stocks rose unexpectedly in the most recent week.

US crude fell 37 cents to $60.57 a barrel, while Brent crude futures had yet to trade.

source: news.abs-cbn.com

S&P 500 reaches new high to clinch record bull run

NEW YORK -- The benchmark S&P 500 stock index clinched its longest bull-market run on Friday, closing above its previous January high, as Federal Reserve Chairman Jerome Powell affirmed the US central bank's current pace of rate hikes.

The S&P had last reached a new closing high on Jan. 26, then retreated more than 10 percent, a correction that lasted until Feb. 8. Friday's new closing high confirmed that the index's bull run remained intact.

Speaking at a research symposium in Jackson Hole, Wyoming, Powell said the Fed's gradual interest rate hikes were the best way to protect the economic recovery, maintain strong job growth and keep inflation under control. His comments did little to change market expectations of a rate hike in September and perhaps again in December.

Investors said they were reassured that Powell's comments stayed in line with previous commentary from the Fed regarding policy. Economic data also boosted sentiment.

New orders for key US-made capital goods increased more than expected in July and shipments growth held firm, the Commerce Department said.

"That's what the markets wanted to hear," said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. "The economic data and strong environment as a whole is the basis, and (Powell) didn't get in the way."

The Dow Jones Industrial Average rose 133.37 points, or 0.52 percent, to 25,790.35, the S&P 500 gained 17.71 points, or 0.62 percent, to 2,874.69 and the Nasdaq Composite added 67.52 points, or 0.86 percent, to 7,945.98.

For the week, the Dow added 0.47 percent, the S&P gained 0.87 percent, and the Nasdaq increased 1.66 percent.

The small-cap Russell 2000 index also advanced 0.5 percent to reach a new closing high.

A dip in the dollar after Powell's comments helped lift materials and energy stocks as the prices of oil and metals rose. The S&P 500 materials sector jumped 1.2 percent, the biggest percentage gain among the 11 major S&P sectors.

Netflix Inc shares rose 5.8 percent to add the most gains to the S&P 500 after SunTrust Robinson Humphrey upgraded its rating on the stock to "buy" and projected that third-quarter subscriber growth would match or beat Wall Street estimates.

Autodesk Inc shares leaped 15.3 percent, the greatest percentage gain among S&P 500 stocks, after the software maker's quarterly results beat estimates.

Shares of Gap Inc and Foot Locker Inc sank 8.6 percent and 9.2 percent, respectively, after the two retailers posted disappointing same-store sales.

Advancing issues outnumbered declining ones on the NYSE by a 2.50-to-1 ratio; on Nasdaq, a 1.76-to-1 ratio favored advancers.

The S&P 500 posted 36 new 52-week highs and four new lows; the Nasdaq Composite recorded 150 new highs and 31 new lows.

Volume on US exchanges was 5.43 billion shares, compared to the 6.28 billion average over the last 20 trading days.

source: news.abs-cbn.com

S&P 500 chalks up record high as fear gives way

The S&P 500 surged over 1 percent to a record high close on Monday as tropical storm Irma caused less damage than expected in Florida, and after North Korea did not test-fire missiles over the weekend, which some had feared.

All 11 major S&P 500 sectors rose, led by financial stocks, with insurers advancing as Irma, once ranked as one of the most powerful hurricane recorded in the Atlantic, lost power.

Irma caused severe flooding in many Florida cities and left more than 6 million homes and businesses without power, but damage appeared to be less than expected. That relieved investors, especially in the wake of Hurricane Harvey, whose devastation is estimated to dent third-quarter economic growth.

Geopolitical tensions eased after North Korea did not mark its founding day on Saturday with another launch of a long-range missile, which the United States and its allies had been bracing for.

"It is a risk back on situation, people are going back into the market," said Neil Massa, senior equity trader at Manulife Asset Management in Boston. "For now, it is a relief rally for things on both ends - geopolitical and weather wise."

The Dow Jones Industrial Average rose 1.19 percent to end at 22,057.37 points in its largest one-day gain since February.

The S&P 500 gained 1.08 percent to 2,488.11 and the Nasdaq Composite added 1.13 percent to 6,432.26.

The CBOE volatility index, a widely-followed measure of market anxiety, fell 1.36 points to 10.76.

The S&P 500 financial index jumped 1.74 percent, with JPMorgan up 2.18 percent and insurer Travelers up 2.34 percent.

With investors less worried about Irma's impact, insurers Universal Insurance Holdings and HCI Group surged more than 12 percent, while Heritage Insurance soared 21 percent.

So far in 2017, the S&P 500 has risen 10 percent. It is trading near 17.6 times expected earnings, compared to its 10-year average of 14.3, according to Thomson Reuters Datastream.

"Valuations don't bother me terribly," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. "I don't think we're at a level where valuations themselves are going to cause a correction."

Apple rose 1.81 percent a day ahead of the expected launch of a new iPhone, providing the biggest boost to the Nasdaq and S&P 500.

Tesla jumped 5.91 percent on news that China was studying when to ban the production and sale of cars using traditional fuels.

Teva jumped 19 percent after the generic drugmaker named a new chief executive.

Advancing issues outnumbered declining ones on the NYSE by a 3.73-to-1 ratio; on Nasdaq, a 2.56-to-1 ratio favored advancers.

About 6 billion shares changed hands in US exchanges, above the 5.8 billion daily average over the last 20 sessions.

source: news.abs-cbn.com

Dow, S&P 500 end week at records; dollar tumbles

NEW YORK - Wall Street stocks finished at fresh records Friday following solid bank earnings, while the dollar retreated after lackluster US data raised questions about additional Federal Reserve rate hikes.

The Dow and S&P 500 ended at fresh records in anticipation that teh positive bank results foreshadow a generally strong earnings period. The records, the third in a row for the Dow, capped a strong week for US stocks that some analysts attributed to commentary from Fed Chief Janet Yellen that was more dovish than expected.

Equity markets elsewhere were mixed, with London and Frankfurt down, Tokyo up and Paris flat.

JPMorgan Chase, Citigroup and Wells Fargo all reported higher earnings than expected by Wall Street analysts, showing the benefits of higher US interest rates, despite a drop in revenue from trading divisions.

However, share prices for all three banks fell, with JPMorgan losing 0.9 percent, Citigroup 0.4 percent and Wells Fargo 1.1 percent.

"The fact that the banks started off the earnings season with very good earnings will bode well," said Bill Lynch, director of investment at Hinsdale Associates.

"Most strategists expect the season to be a good one with earnings going up at least six percent, maybe as much as nine percent."

On foreign exchanges, the dollar struggled after disappointing US inflation and retail sales data for June, falling against the pound and the euro.

"The morning's data, particularly the cooler than expected CPI figures, seem to justify Fed Chair Janet Yellen's more cautious tone this week in her Congressional testimony," said Omer Esiner, analyst at Commonwealth Foreign Exchange.

"The lack of meaningful evidence of a strong rebound in the economy in the second half of this year could continue to keep the dollar pressured."

Oil prices rose for the fifth straight day amid signs of greater balance between supply and demand.

KEY FIGURES AROUND 2100 GMT

New York - DOW: UP 0.4 percent at 21,637.74 (close)
New York - S&P 500: UP 0.5 percent at 2,459.27 (close)
New York - Nasdaq: UP 0.6 percent at 6,312.47 (close)
London - FTSE 100: DOWN 0.5 percent at 7,378.39 (close)
Frankfurt - DAX 30: DOWN 0.1 percent at 12,631.72 (close)
Paris - CAC 40: FLAT at 5,235.31 (close)
Tokyo - Nikkei 225: UP 0.1 percent at 20,118.86 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 26,389.23 (close)
Shanghai - Composite: UP 0.1 percent at 3,222.42 (close)
Euro/dollar: UP at $1.1470 from $1.1400
Pound/dollar: UP at $1.3111 from $1.2942
Dollar/yen: UP at 112.50 yen from 112.34 yen
Oil - Brent North Sea: UP 49 cents at $48.91 per barrel
Oil - West Texas Intermediate: UP 46 cents at $46.54 per barrel

source: news.abs-cbn.com

S&P affirms US debt rating at second highest

WASHINGTON - The Standard & Poor's rating agency has affirmed the United States' long-term debt rating at AA+, but noted the world's largest economy faced uncertain fiscal policy.

The rating, one notch below the top grade, is justified by the "resilient" US economy, flexible monetary policy and America's unique position as the issuer of the global currency of reserve, S&P said in a statement.

The US lost its AAA rating in 2011, following battles among lawmakers in Washington over whether to lift caps on US sovereign borrowing, raising the likelihood of a US default.

S&P noted that another deadline for raising the debt ceiling loomed.

While Congress is expected to raise or suspend the debt limit albeit "potentially with heated discussion," S&P said the debate "weighs on the economy."

S&P noted the high level of US government debt, and said uncertainty about the future of economic policy constrains the US rating, even while it also affirmed a stable outlook.

source: news.abs-cbn.com

Wall Street ekes out positive finish

NEW YORK -- Wall Street slouched to a positive finish on Friday with all three major stock indices making last-minute moves into positive territory after spending most of the session in the red.

Though it finished essentially flat, the blue-chip Dow Jones Industrial Average also extended its streak of fresh all-time highs with an 11th consecutive record close.

The Dow gained less than a tenth of a percentage point to close at 20,821.76 but was up one percent for the week on the back of an extraordinary rally.

The S&P 500 and Nasdaq each added 0.2 percent, rising to 2,367.34 and 5,845.31, respectively. The Nasdaq was up 0.8 percent for the week and the S&P increased 0.7 percent.

A positive finish had been in doubt for much of the day, however, with most indices in the red.

"There's a little profit taking as we had an incredible run over the last week and a half or so," Jack Ablin of BMO Private Bank told AFP.

"Without further impetus from either the economy, policy or earnings, there's probably nothing for investors to grab onto today."

Leading the Dow's losers was financial behemoth Goldman Sachs, which saw its stock slapped with a "sell" rating from Germany's Berenberg investment bank, which cited the risk that earnings may disappoint in 2016 and of possible insider selling at the bank.

Shares in Goldman fell 1.5 percent but were still up nearly 40 percent since November's presidential elections.

Retailers had a better Friday, with Dow component Wal-Mart Stores adding 1.5 percent and Home Depot gaining 0.9 percent.

Oil shares took a minor tumble after crude prices receded in New York on fears of mounting production and inventories. Shares in super-majors Chevron and Exxon Mobil each fell 0.8 percent to give up gains recorded Thursday.

source: news.abs-cbn.com

Asia shares ease after run of gains, dollar, oil recover

SINGAPORE - Asian stock markets took a breather on Friday from their recent surge as investors took profits, while the dollar inched up after Thursday's slide and optimism over possible renewed supply cuts by OPEC lifted oil prices.

MSCI's broadest index of Asia-Pacific shares outside Japan pulled back 0.2 percent, on track to end the week up 1.2 percent, its fourth straight week of gains.

Until Thursday, the index surpassed its previous intraday high for seven consecutive sessions, and closed at 19-month highs in the past two.

A batch of positive economic data out of Asia this week, driven by improving exports and rising commodity prices, has bolstered shares, although concerns linger that any protectionist threats posed by US President Donald Trump could reverse the recovery.

Singapore revised its fourth-quarter gross domestic product growth sharply higher; Taiwan raised its 2017 economic growth target to a three-year high; Indonesian exports rose at the fastest pace in more than five years in January; Chinese inflation picked up by more than expected in January to near six-year highs; and Malaysia reported a widening in its current account surplus on Thursday

Japan's Nikkei slid 0.7 percent, set to close 0.9 percent lower for the week. Australian shares were down 0.2 percent, shrinking the week's gains to 1.4 percent.

Overnight, Wall Street put in a mixed performance, with the Dow Jones Industrial Average barely eking out its sixth straight record high, while the S&P 500 and Nasdaq snapped a seven-day winning streak as investors paused their buying to digest recent gains.

"A soft lead from US markets and slightly weaker base metals prices suggest that the local market will take a wait-and-see attitude in early trade this morning," Ric Spooner, chief market analyst at CMC Markets, wrote in a note.

The dollar edged up after posting its biggest one-day drop in more than two weeks on Thursday as uncertainty about the timing of the next Federal Reserve rate hike offset the impact of stronger economic data.

Manufacturing activity in the US Mid-Atlantic region surged to its highest in 33 years, housing data indicated a recovery in the sector was on track, and weekly jobless claims pointed to a labour market that continues to tighten.

But traders concluded that Fed Chair Janet Yellen's economic testimony before Congress on Wednesday didn't offer enough conviction that the central bank would raise rates at its next meeting in March.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, added 0.1 percent to 100.57, on track to end the week 0.2 percent lower. It tumbled 0.7 percent on Thursday.

The dollar gained almost 0.2 percent early on Friday to 113.39 yen, up by the same percentage for the week. It lost about 0.8 percent on Thursday.

The dollar's recovery pulled the euro lower, with the common currency edging back slightly to $1.06675 on Friday, after Thursday's 0.7 percent gain, set to end the week 0.2 percent higher.

The stronger dollar also weighed on gold, which slipped 0.1 percent to $1,237.50 an ounce. But the precious metal remains poised for a 0.3 percent rise for the week.

Oil prices built on Thursday's gains on positive sentiment over reports that the Organization of Petroleum Exporting Countries may consider extending its oil supply-reduction pact with non-members and may even apply deeper cuts if inventories don't fall to a targeted level.

For now, that optimism appears to be winning the tug of war with concerns over a rise in US production, but that worry is set to leave oil prices with a weekly loss.

US crude added 0.1 percent to $53.43 a barrel in early Asian trade, but is headed for a decline of 0.8 percent for the week.

source: news.abs-cbn.com

Moody's keep South Africa's credit rating unchanged

JOHANNESBURG - International credit rating firm Moody's has left South Africa's sovereign debt grading unchanged two notches above junk status, but warned Saturday of a possible future downgrade if reforms to support growth fail to materialize.

Moody's rates Africa's most developed economy as Baa2 -- meaning it is of investment grade for banks -- albeit with a negative outlook.

Instead of the much anticipated formal review of South Africa's credit rating, Moody's issued an updated credit opinion overnight, warning that the negative outlook remained because of political tensions and weak growth.

"The negative outlook on South Africa's Baa2 government bond rating reflects risks related to the implementation of structural reforms aimed at restoring confidence and encouraging investment," it said in a statement released early Saturday.

It added that the country's political scene continued to be "noisy" but that key institutions remained resilient.

One of the credit challenges for South Africa is "protracted political infighting that generates policy uncertainty and impedes structural reforms," it said.

On Friday, another international credit rating firm, Fitch, dropped its outlook for South Africa from stable to negative, citing the country's recent political turmoil under President Jacob Zuma.

Zuma has been engulfed by graft scandals and a power struggle with Finance Minister Pravin Gordhan, while economic growth has fallen to 0.5 percent and unemployment hit a 13-year high.

Moody's warned that South Africa's rating "would likely be downgraded in the absence of fundamental structural reforms supporting higher and sustainable medium term growth".

It also hinted that a rating upgrade was unlikely.

Standard & Poor's is expected to make its key announcement on South Africa's investment grading on December 2.

Like Fitch, S&P currently has South Africa rated at the lowest investment grade.

A junk rating by S&P could trigger a bond sell-off by foreign investors, as well as hiking Pretoria's borrowing costs.

source: news.abs-cbn.com