ANZ announces major banking takeover

MELBOURNE, Australia - Australian banking giant ANZ announced Monday a Aus$4.9 billion (US$3.3 billion) deal to swallow regional lender Suncorp Bank -- one of the biggest takeovers in the sector for more than a decade.

The takeover of the Queensland-based lender would push ANZ up one spot to make it the nation's third-largest mortgage provider.

But critics warned the deal -- reportedly the largest in Australian banking since 2008 -- would cut competition and concentrate the power of Australia's big four banks, if regulators allow it to go ahead.

ANZ chief executive Shayne Elliott described it as a "cornerstone investment" and a show of confidence in Queensland.

"We know there will rightly be questions from government and regulators about the competition aspects of this transaction," Elliott said in a statement.

"As the smallest of the major banks, we believe a stronger ANZ will be able to compete more effectively in Queensland offering better outcomes for customers," he added.

Rival Queensland lender Heritage Bank's chief executive Peter Lock warned that the takeover of Suncorp Bank would "simply increase the power of the major banks in Australia".

ANZ said it planned to raise Aus$3.5 billion to pay for the deal by offering extra stock to existing shareholders. The balance would be financed with existing capital.

The bank said trading in its shares in Australia and New Zealand had been suspended until Thursday to give institutional investors time to act on its offer.

The takeover, which is subject to approval by the Australian federal treasurer and competition regulators, was expected to be wrapped up in the second half of 2023, it said.

Agence France-Presse

Dollar upended by rates reversal, stocks calm for now

SYDNEY - The dollar languished at its lows for the year on Thursday as a drumbeat of hawkish comments from major central banks signalled the era of easy money might be coming to an end for more than just the United States.

Support for the dollar eroded as investors realized the US Federal Reserve might not be the only game in town when it came to higher interest rates.

In Britain, Bank of England Governor Mark Carney surprised many by conceding a hike was likely to be needed as the economy came closer to running at full capacity.

The Bank of Canada went further, with two top policymakers suggesting they might tighten as early as July.

That followed comments earlier in the week from European Central Bank President Mario Draghi that stimulus might need to be toned down so it does not become more accommodative as the economy recovers.

ECB sources tried to hose down the talk but could not stop the euro hitting a one-year high against the US dollar. Early Thursday, the single currency was taking in the view at $1.1381 having climbed almost three percent in as many sessions.

The Canadian dollar scored its biggest gain in three months to reach C$1.3037 per dollar, while sterling rebounded to $1.2941.

Against a basket of major currencies, the dollar sank to its lowest since early November at 96.005 as volatility returned with a vengeance.

"Central banks will be very cautious in their approach," said Martin Whetton, a senior rates strategist at ANZ.

"But once they start tightening in concert, and their bloated balance sheets start unwinding, it is fair to say that bonds, equities, house prices and other asset markets will face stiffer headwinds than they have for a long time."

The squall had already driven German short-term yields to their highest in a year, while yields on US 10-year Treasuries were up 10 basis points so far this week at 2.22 percent.

Yet the prospect of higher interest rates bolstered banking stocks and helped the S&P 500 score its biggest one-day percentage gain in about two months on Wednesday.

The Dow rose 0.68 percent, while the S&P 500 gained 0.88 percent and the Nasdaq 1.43 percent.

Financials gained further after hours as the Fed approved plans from the 34 largest U.S. banks to use extra capital for stock buy backs and dividends.

Asia followed on Thursday with Japan's Nikkei adding 0.5 percent and Australia 0.6 percent. MSCI's broadest index of Asia-Pacific shares outside Japan edged ahead by 0.4 percent.

The weaker US dollar helped nudge gold up to $1,249.20 an ounce.

Oil recouped a little of its recent steep losses after a weekly decrease in US production offset a surprise build in crude inventories in the world's top oil consumer.

On Thursday, US crude firmed 7 cents to $44.81 per barrel and Brent added 6 cents to $47.38.

source: news.abs-cbn.com

Asia stocks tread water as China manufacturing in focus

HONG KONG - Asian stocks were steady in a cautious start on Wednesday after a weak session on Wall Street, while the sterling stumbled as a new poll found British Prime Minister Theresa May's Conservative Party risks falling short of an overall majority in next month's national election.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat. Early trade in Australia and Japan was mixed.

China's stock markets are in focus as they reopen after a long weekend with the official survey on manufacturing likely to set the tone for markets there and possibly the rest of the region. The PMI survey, due at 0100 GMT (9 a.m. in Manila), is expected to show factory activity in China expanded at its slowest pace in eight months in May, according to a Reuters poll.

Analysts at ANZ expect the PMI report to influence base metals trading as well.

On Tuesday, US stocks inched lower, with the S&P 500 retreating slightly from a record, as weakness in the energy and financial sectors offset gains in technology shares.

In currency markets, the pound fell to $1.2791, near a one-month low of $1.2775 touched on Friday. The pound also slipped to 0.8738 pound per euro, near Friday's eight-week low of 0.8750.

New constituency-by-constituency modelling by YouGov showed the Conservative Party might lose 20 of the 330 seats it holds while the opposition Labour Party could gain nearly 30 seats, The Times said.

The dollar fell to two-week lows against the safe-haven yen as investors turned cautious amid political worries in Europe as well as weaker stock and commodity markets after a long US holiday weekend.

The dollar fell to near two-week low of 110.665 yen and last traded at 110.85 yen.

In commodities, oil prices remained soft, as concerns lingered about whether the extension of output cuts by OPEC and other producing countries will be enough to support prices.

US crude futures slipped about 0.1 percent to $49.61 a barrel. Global benchmark Brent was flat at $51.84 per barrel.

Gold edged lower to $1,262 an ounce.

source: news.abs-cbn.com

Asian stocks set for cautious start on weak US cues

HONG KONG - Asian stocks may slip for a second consecutive day on Thursday as a weak Wall Street and declining commodity prices, especially for oil, prompted investors to trim their exposure to risky assets.

With the outcome of the French presidential elections due at the weekend, markets are set to trade in well worn trading ranges, barring any major data surprises in Asia.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.5 percent in early trades after declining nearly 1 percent on Wednesday.

"Markets may continue to trade on a cautious tone with the French elections coming up this weekend," ANZ strategists wrote in a daily note.

Centrist Emmanuel Macron clung on to his status as favorite to win France's presidential election in a four-way race that is too close to call, as the camp of far-right challenger Marine Le Pen ramped up its eurosceptic rhetoric in a row with Brussels.

Weak results from index heavyweight IBM pulled the S&P 500 and Dow lower with falls in energy sector stocks also weighing on the broader market.

Bonds also came in for some profit taking after a recent rally, with yields on benchmark 10-year US Treasury notes firming to 2.21 percent from a five-month low of 2.165 percent hit on Tuesday.

A run of disappointing US economic data and doubts how far the Trump administration will progress with tax cuts have quelled expectations of faster inflation and boosted fixed-income debt.

The dollar failed to capitalize on higher US yields with the greenback hugging the 200-day moving average of around 108.85 against the Japanese yen as traders preferred to trade on market technicals rather than take fresh bets.

Oil languished near a two-week low after a surprising build in US gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut.

US crude futures edged 0.42 percent higher to $50.65 a barrel, after posting a near 4 percent drop overnight, the biggest one-day decline since March 8.

Elsewhere, gold was trading at $1279.48 per ounce, below Monday's peak of $1,295.42.

source: news.abs-cbn.com

China seen to post solid 1Q growth as debt risks loom

BEIJING - China is expected to report on Monday that its economy grew 6.8 percent in the first quarter, well above Beijing's full-year target, buoyed by surging government infrastructure spending and a gravity-defying property market that is showing signs of overheating.

A strong reading could help wobbly global financial markets but add to worries that China's government is still relying too heavily on old growth engines like stimulus and not doing enough to tackle risks from an explosive build-up in debt.

Though policymakers have pledged repeatedly to push reforms to head off financial risks and asset bubbles, the government is seeking to keep the world's second-largest economy on an even keel ahead of a major leadership transition later this year.

Beijing has set a slightly more modest growth target of around 6.5 percent for this year, theoretically offering more wiggle room for reforms after the economy grew 6.7 percent in 2016 - the weakest pace in 26 years.

Most economists polled by Reuters expect the economy expanded 6.8 percent in the first quarter from a year earlier, the same pace as in the fourth quarter of 2016. On a quarter-on-quarter basis, it likely grew 1.6 percent in January-March from the previous three-month period.

Economists at ANZ reckon growth may even clock in at 6.9 percent in the quarter, pointing to strong property and infrastructure investment.

"The announcement in early April of the construction of the Xiongan new economic zone, which requires massive infrastructure spending, suggests Chinese authorities are likely to rely more on investment to stabilize growth in the next few years," ANZ said in a note.

China's long-ailing industrial sector has been posting its best profits in years, thanks to higher prices for steel and other building materials, giving "smokestack" industries more cash flow to pay off debt and invest in more efficient plants.

China's export outlook also brightened considerably on Thursday as it reported forecast-beating trade growth and as US President Donald Trump softened his anti-China rhetoric in an abrupt policy shift, though the risk of US protectionist trade action is by no means off the table.

Still, many analysts expect economic growth to cool later this year as the impact of earlier stimulus measures starts to fade and as local authorities resort to ever-tougher measures in a bid to get soaring home prices under control.

ACCUMULATED PROPERTY CURBS

Most analysts don't see a price crash, but believe the accumulated weight of property curbs will eventually translate into weaker sales, construction and investment.

China imported the most iron ore on record in the first quarter, but iron ore and steel futures prices are nosediving on fears that its steel production is outweighing demand.

Beijing also is continuing to rely heavily on new credit to generate growth as productivity slows, despite worries about debt risks.

China's banks extended the third highest loans on record in the first quarter, though March lending was less than expected.

At the same time, China's central bank has shifted to a tightening bias, and is using more targeted measures to contain risks in the financial system, after years of ultra-loose settings.

MORE RATE INCREASES?

The People's Bank of China (PBOC) has raised short-term interest rates several times already this year, while boosting its regulatory oversight.

Analysts predict further modest rate increases this year, but do not expect a full-blown policy rate hike as authorities fear tapping the brakes too hard would stunt economic growth.

The Organisation for Economic Co-operation and Development (OECD) says China's total private and public debt has exceeded 250 percent of GDP, up from 150 percent before the global financial crisis.

"While the authorities obviously recognize the risks, credit has continued to expand at a pace that looks unsustainable," analysts at Barclays said.

"Although this does not necessarily equate to the risk of an imminent crisis, the apparent plan to 'kick the can down the road', at least past the Party Congress, means that problems left to fester may become more difficult to resolve."

source: news.abs-cbn.com

Asian stocks ease ahead of central bank announcements

HONG KONG - Asian equities opened slightly lower, as investors stayed cautious awaiting the outcome of several central bank meetings later on Wednesday.

With the outcome of policy meetings at the US Federal Reserve, the Bank of England and the Bank of Japan coupled with a Dutch election vote all due within the next 36 hours, there is no shortage of event risks in financial markets.

The MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent after posting its second-biggest daily gain this year in the previous session.

"Some of these events will obviously be more important than others in determining near-term currency market direction, but prepare for a few market ruffles," ANZ strategists said in a daily note. "Local data today is unlikely to move markets."

Japan's benchmark Nikkei average opened down 0.52 percent while the broader Topix edged 0.41 percent lower. Stocks in South Korea and Australia fell.

Equities have had a good start to the week thanks to positive news out of the region's two economic powerhouses, China and India.

Strong data out of China this week have sparked a fresh rally in Hong Kong stocks, while Indian shares climbed to a record high on Tuesday as investors saw Prime Minister Narendra Modi's landslide victory in the northern state of Uttar Pradesh as endorsing his economic reform agenda.

Despite the fresh optimism in equities, currency markets were far more circumspect with the US dollar edging higher against major rivals ahead of a much anticipated US Federal Reserve rate hike.

Market attention will be squarely focused on Fed Chair Janet Yellen's comments to gauge the future path of interest rates. On Wednesday, the US central bank is almost universally expected to raise its benchmark interest rates, a move that just a few weeks ago was viewed by the markets as unlikely.

The dollar index was 0.3 percent higher at 101.70, extending a 0.7 percent rise in the past two sessions after a bout of profit taking at the end of last week.

Markets are also awaiting a meeting of the Group of 20 finance ministers and central bankers in the German town of Baden-Baden starting on Friday, their first meeting since Donald Trump won the US presidential election.

In commodities, US oil prices jumped in early trading after industry data showed a surprise drawdown in US crude stockpiles. West Texas Intermediate crude was up 1.5 percent at $48.45 a barrel.

Brent futures had yet to be traded yet after settling down 43 cents at $50.92 on Tuesday, the lowest finish since November, after industry body OPEC reported a rise in global crude stocks.

Gold rose 0.1 percent to $1199.71 before the Fed decision.

source: news.abs-cbn.com

Asian stocks seen weak on US cues

HONG KONG - Asian stocks look set to edge lower for a second day on Monday as weak cues from US share markets and declining European government bond yields on political worries push investors to take profits after a recent rally.

Markets are holding in recent broad trading ranges, and interest is turning to US President Donald Trump's policy speech to a joint session of Congress on Tuesday night where he is expected to provide clues on his plans to cut taxes.

"With the market getting impatient with Trump's proposed stimulus spending program, the rising political uncertainty around the globe is getting the bulk of the market's attention," ANZ strategists wrote in a morning note.

MSCI's broadest index of Asia-Pacific shares outside Japan eased slightly in early trade, with early Asian stock markets treading water. The index fell 0.7 percent on Friday, but is still up more than 11 percent since end-December.

US stocks clawed their way to a higher close on Friday, with major indices spending much of the trading session in negative territory.

In currencies, the dollar scored some early gains against the Japanese yen with the pair rising to 112.21 as a decline in European bond yields burnished the relative appeal of US debt among Japanese investors.

Sovereign bond yields fell on Friday on a renewed flight to safety bid thanks to weak stock markets and a looming election in France that poses a key political risk for markets.

Investors fear far-right National Front leader Marine Le Pen might win the presidential election this year and lead France out of the euro zone. Polls show Le Pen losing to either centrist Emmanuel Macron or right-wing Francois Fillon, but few people are willing to count her out.

Ten-year German bond yields have dropped nearly 30 basis points so far this month, far outpacing a 13 basis point decline in yields of comparable US debt.

Brent crude edged higher to $56.04 per barrel while US West Texas Intermediate was broadly flat at $54 a barrel.

source: news.abs-cbn.com

Asia shares track Wall Street higher, dollar becalmed

SYDNEY - Asian shares edged ahead on Monday as Wall Street gathered momentum into a busy week of earnings with more than 100 major companies due to report, while the dollar was again hobbled by a lack of progress on US fiscal stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.3 percent, with Australia ahead by 0.5 percent.

Japan's Nikkei rose 0.7 percent in the wake of a firmer finish on Wall Street. Japanese Prime Minister Shinzo Abe meets US President Donald Trump on Feb. 10 and 11, with trade and currencies likely to be on the agenda.

Dealers were still absorbing Friday's surprise move by China's central bank to raise short-term interest rates.

While the increases were modest, they suggested Beijing was intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fueled stimulus.

It was the first move in the repo rate since October 2015.

"This change is ground-breaking and suggests that the central bank will change onshore rates more frequently," wrote analysts at ANZ in a note. "The bottom line is to prevent a cash crunch amidst deleveraging and deflating financial bubbles in certain sectors."

On Wall Street, banks had ended Friday strongly as President Donald Trump moved to roll back regulations intended to prevent a repeat of the global financial crisis.

JP Morgan Chase shares closed up 3.1 percent and helped push the S&P bank index up 2.6 percent. The Dow rose 0.94 percent, while the S&P 500 gained 0.73 percent and the Nasdaq 0.54 percent.

Friday's payrolls data also showed US jobs jumped more than expected in January as construction firms and retailers ramped up hiring, but wages growth still slowed.

"All in all a very mixed payroll report, with the breakdown tending to validate the latest Fed message of a gradual tightening and no need to rush into a hike at the next meeting," said Deutsche Bank's global head of forex Alan Ruskin.

"This data plays to the idea that there may be an extended gestation period both for easier US fiscal policy and tighter monetary policy."

Fed fund futures show only a slim chance of a hike in March and a Reuters poll of primary dealers found none expected a move before the second quarter.

That cautious outlook kept the dollar was marginally softer at 112.55 yen having lost 2.3 percent last week in its worst weekly performance since late July.

The euro was a fraction firmer at $1.0782 while the dollar dipped against a basket of currencies to 95.720.

In the commodities market, spot gold was 0.1 percent higher around $1,221.00 an ounce.

Oil prices edged up after the United States imposed sanctions on some Iranian individuals and entities, days after the White House rebuked Tehran for a ballistic missile test.

US crude futures added 7 cents to $53.90, while Brent gained 8 cents to $56.89 a barrel having rallied 2 percent last week.

source: news.abs-cbn.com

When will oil prices stop falling?

SINGAPORE - Oil prices will continue to drop as high production meets weak demand and a strong U.S. dollar pressures crude, and markets will only pick up once major manufacturing economies particularly in Asia feel the benefit of cheaper energy.

Oil prices LCOc1 CLc1 have halved since last June to near 6-year lows as economic growth stutters, and analysts say that a building supply glut means prices are set to fall further before any rebound. O/R

On the supply side, downward pressure on oil has come from a boom in U.S. shale oil output and, more recently, by the Organization of the Petroleum Exporting Countries' (OPEC) decision not to cut output in support of prices, and instead try to defend market share against North American shale by offering discounts.

"The risks to oil prices remain skewed to the downside in the near term," ANZ Bank said on Wednesday.

"(US) shale producers won't start feeling the pinch for another six months. In addition, there is the prospect of further supply increases from highly stressed OPEC members such as Libya, Nigeria and Venezuela, which could place further downward pressure on prices," the bank added.

There's also more oil in the system as slowing economies are using less and as energy efficiency improves.

In Asia, Japan is battling recession, while in China, the commodity boom driver in recent years, demand is slowing as the world's second-biggest economy shifts from energy-intensive construction to consumer-fuelled growth.

Citi this week predicted China's crude oil imports would grow more slowly this year, adding that "anyone hoping for China to drive a rebound in oil prices is likely to be disappointed."

Adding to the slack in Asia is that Europe has yet to recover from its post-credit crunch crisis in 2008-09.

Another drag on oil comes from the dollar. With the U.S. Federal Reserve expected to raise interest rates this year for the first time since 2006, supported by healthy growth, the dollar is likely to keep strengthening, putting more pressure on oil markets as European and Asian currencies fall.

BOON FOR CONSUMERS

While the immediate outlook for oil remains weak, analysts say cheaper fuel costs for households and businesses should at some point support demand, especially in manufacturing-led economies.

"The collapse in oil prices looks set to wipe out the Gulf's external surpluses next year, leaving China and the euro-zone as the world's major surplus economies," Capital Economics said in December.

Citi noted that lower oil prices could save China more than 1 percent of GDP on imports, helping boost consumption.

In Japan, cheaper fuel costs will not only benefit large industry, but also help reduce an enormous deficit, triggered in part by soaring fuel imports following the shutdown of its nuclear power plants after the 2011 Fukushima reactor meltdown. (Full Story)

For India, Asia's No.3 economy, lower oil imports will also be a boon. "Growth prospects have improved ... as lower oil prices will allow households and businesses to increase spending and the central bank to loosen monetary policy," research firm PIRA Energy said.

Analysts say oil prices will bottom out and start to rise again - part of the so-called commodity supercycle - once some producers scale back production to adjust to falling prices and major manufacturing centres begin to feel the economic benefits of cheaper energy and again start using more.

source: www.abs-cbnnews.com