Stocks reach new peak in world full of surprises

LONDON - World stocks breached record highs on Monday as better-than-expected company earnings and economic data from the United States stole the focus from rising geopolitical tension over North Korea's nuclear program.

The U.S. dollar dipped slightly but held on to most of Friday's gains - its biggest daily rise this year - made after data showed the United States created more jobs than forecast last month.

For those watching second quarter corporate results in recent weeks, there have been many such surprises. Of the nearly 1000 companies in the MSCI world index that have reported, 67 percent have beaten expectations, according to Reuters data.

These two factors helped nudge the flagship share index above a peak breached late last month, setting a new all-time high of 480.09 on Monday.

The Dow Jones, which recorded its eighth consecutive record high on Friday, was set to open up slightly on Monday.

"Global equities remain the preferred asset class for investors and this can be clearly seen in the new highs hit by world indices today," said Edward Park, investment director at Brooks Macdonald.

"Whilst the headline beat in non-farm payrolls was the primary positive for the market ... equity prices are supported by a strong earnings season and relatively low event risk over the next few months."

Aside from a slight weakening in the Korean won, there was little financial market reaction to the news over the weekend that the U.N. Security Council unanimously imposed new sanctions on North Korea aimed at pressuring Pyongyang to end its nuclear program.

South Korean President Moon Jae-in and his U.S. counterpart, Donald Trump, agreed in a telephone call on Monday to apply maximum pressure and sanctions on North Korea, while China expressed hope that North and South Korea could resume contact soon.

Yields on U.S. and German government bonds - seen as a safe haven in times of stress - held above one-month lows hit at the tail end of last week.

ASIAN GAINS

A strong rise in U.S. and Asian stocks propelled the world index to a new high, with the strength of the euro providing a bit of a headache for European markets.

Earlier in Asian trading, MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 percent while Japan's Nikkei added 0.5 percent.

Chinese blue chips were bolstered by data showing the country's foreign exchange reserves rose twice as much as expected in July.

A dramatic reduction in capital outflows - which are seen as one of China's biggest risks - has helped boost confidence in the world's second largest economy ahead of a key political leadership reshuffle in coming months.

The euro zone's main stock index edged lower, however, as the single currency headed back towards a 20-month high, a trend which appears to be denting profitability in certain sectors.

Of the MSCI Europe companies having reported, 61 percent have either met or beat expectations. But focusing on industrial firms – of which many depend on exports, and are sensitive to a stronger euro – the beat ratio is just 37 percent.

"The euro is likely to have an impact in the third quarter, with a 10 percent appreciation of the euro lowering earnings per share by around 5 percent," said Valentin Bissat, senior strategist at Mirabaud Asset Management.

DOLLAR DOUBTS

The upbeat U.S. jobs data offers policymakers some assurance that inflation will gradually rise to the central bank's 2 percent target, and likely clear the way for a plan to start shrinking its massive bond portfolio later this year.

But market pricing shows investors are still about evenly divided over whether the Fed will also opt to raise rates again in December.

For some analysts, Monday's pull back in the dollar backs some views in markets that Friday's rally may not have legs.

The dollar index, which tracks the greenback against a basket of six global peers, inched back 0.2 percent to 93.361. It rallied 0.76 percent on Friday, its biggest one-day gain this year.

The dollar slipped 0.2 percent against the euro to $1.1796 per euro, after surging 0.8 percent on Friday.

"The most logical view here is the moves on Friday were clearly just a sizeable covering of USD shorts, from what was one of the biggest net short positions held against the USD for many years," Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

For the dollar rally to gain momentum, the market needs to change its interest rate pricing, Weston added.

In commodities, oil prices slid back from nine-week highs hit on Aug. 4 as worries lingered over high production from OPEC and the United States.

Global benchmark Brent crude futures were down 60 cents, or 1.14 percent, at $51.82 a barrel. They traded as low as $51.56 a barrel earlier in the day.

Gold steadied as the dollar surrendered some of its gains, but remained under pressure. The precious metal was marginally lower at $1,257.41 an ounce, extending Friday's 0.8 percent loss.

(Reporting by John Geddie in London and Nichola Saminather in Singapore Additional reporting by Helen Reid in London; Editing by Richard Balmforth)

source: news.abs-cbn.com

Trump, China's Ma hold 'great' meeting on jobs

NEW YORK - President-elect Donald Trump and China's billionaire founder of e-commerce giant Alibaba held "great" talks in New York on Monday focused on creating US jobs and enabling trade with Asia.

The incoming Republican president, who will be sworn in as commander-in-chief in less than two weeks' time having never previously held elected office, has made job creation a key promise of his incoming administration.

His team said the meeting between the 70-year-old real estate tycoon and China' richest man was focused on how Alibaba can create one million US jobs by enabling one million US small businesses to sell goods into China and Asia.

"We had a great meeting," Trump told reporters afterward in accompanying Ma back down to the lobby of his Trump Tower headquarters.

He hailed the 52-year-old self-made Chinese billionaire as a "great, great entrepreneur, one of the best in the world."

"He loves this country and he loves China," Trump added. "Jack and I going to do some great things. Small business, right?" he added.

Ma, executive chairman of Alibaba, said it had been a "productive" meeting and that the focus would be on small business and American agricultural products.

"We discussed about helping American small business selling things through Alibaba platform to China and to Asia," he told reporters.

The Alibaba founder said the meeting focused on how to support one million small businesses, particularly in the Midwest, in selling products to China and Asia.

The meeting comes after Trump has taken a hard line with China, threatening to impose 45 percent import tariffs on Chinese goods and saying the world's second biggest economy has stiffed the US through currency manipulation and illegal subsidies.

That antagonism has raised fears among US businesses that their exports to China will be threatened, especially since Beijing has signaled it will retaliate.

Ma said he and Trump agreed that China-US relations "should be strengthened, should be more friendly and do better."

He said the door was "open" for discussing the relationship and trade issues, and praised Trump as "very smart" and "very open-minded" in listening.

Ma said he had conveyed his ideas on how to improve trade, and that the US president-elect had "concerns and he has solutions, that he wants to discuss with China and us."

Alibaba shares were up 1.11 percent on the New York Stock Exchange during trade on Monday.

Trump also met LVMH CEO Bernard Arnault on Monday. Arnault told reporters that his company was going to expand its production in the United States.

source: news.abs-cbn.com

Trump warns US firms outsourcing jobs abroad

INDIANAPOLIS - President-elect Donald Trump warned on Thursday that US companies would face "consequences" for outsourcing jobs abroad, as he touted his early success in persuading an air conditioner maker to keep about 1,000 jobs in the United States rather than move them to Mexico.

"Companies are not going to leave the United States anymore without consequences. Not going to happen," the Republican said on a visit to a Carrier Corp. plant in Indianapolis.

Trump, who takes office on Jan. 20, did not say what the consequences would be, but he frequently threatened during the election campaign that his administration would put a 35 percent import tariff on goods made by American manufacturers that moved jobs offshore.

It is unclear what steps would have to be taken by federal authorities before Trump could retaliate against individual companies shifting jobs abroad.

Trump also did not address whether Carrier's parent company, United Technologies, would face any consequences for continuing with plans to move 1,300 other Indiana jobs to Mexico.

Trump made keeping jobs in the United States one of the main issues of his campaign and frequently pilloried Carrier for planning to move production to Mexico as he appealed to blue-collar voters in the Midwest.

Apparently under pressure from Trump, Carrier announced this week it had agreed to keep more than 1,000 jobs at the plant and at its headquarters, while still planning to move more than 1,000 other US jobs to Mexico.

Trump said his negotiations with the maker of air conditioning units were a model for how he would approach other US businesses that are tempted to move jobs overseas to save money.

He pledged to create a healthy environment for business through lower taxes and fewer regulations.

"I just want to let all of the other companies know that we're going to do great things for business. There's no reason for them to leave anymore," Trump said.

If that approach did not work, there would be penalties, Trump warned.

TAX INCENTIVES

The deal marked a quick win for Trump, who has spent most of his time in New York since the Nov. 8 election building his team ahead of January's inauguration, when he will succeed Democratic President Barack Obama.

Media outlets reported on Thursday that retired Marine General James Mattis would be named defense secretary, but a Trump spokesman said no decision had been made.

Trump toured the plant in Indianapolis and shook hands with workers on an assembly line. Some workers yelled: "Thank you Mr. Trump" and "Thanks Donald" as he greeted them.

Carrier confirmed that Indiana agreed to give the company $7 million in tax incentives. A source briefed on the matter said the tax incentives were over 10 years and the company had agreed to invest $16 million in the state, where Trump's vice president-elect, Mike Pence, is governor.

Carrier still plans to move 600 jobs from the plant to Mexico, the Wall Street Journal said. Reuters reported earlier this week that Carrier also still intended to close a factory in Huntington, Indiana, that employs 700 people making controls for heating, cooling and refrigeration and move the jobs to Mexico by 2018.

SANDERS CRITICISM
US Senator Bernie Sanders, who lost the Democratic nominating race to Hillary Clinton, said the Carrier deal was incomplete and left the incoming Trump administration open to threats from companies.

"Trump has endangered the jobs of workers who were previously safe in the United States. Why? Because he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives," Sanders wrote in a Washington Post opinion piece on Thursday.

He noted that Trump had originally said he would save 2,100 jobs that Carrier planned to move to Mexico.

"Let's be clear: It is not good enough to save some of these jobs," Sanders said.

Despite Trump's deal, employers elsewhere in Indiana are laying off five times that many workers because of foreign competition.

Trump was due to hold a rally in Cincinnati later on Thursday and address supporters who helped him win the swing state of Ohio in his upset victory over Clinton.

The Indiana and Ohio stops are Trump's first public events since he won the presidency.

At the Cincinnati event, Trump and Pence will talk about what is ahead and the "positive change" Trump will bring to the country, spokesman Jason Miller said.

On Wednesday, Trump said he would nominate former Goldman Sachs banker Steven Mnuchin to lead the Treasury Department. Trump named Wilbur Ross, a billionaire known for his investments in distressed industries, as his nominee for commerce secretary.

The Cincinnati rally follows a car and knife attack this week by a Somali immigrant and Muslim student, Abdul Razak Ali Artan, at Ohio State University in Columbus that injured 11 people. The Islamic State militant group claimed responsibility.

In a Twitter message, Trump said: "ISIS is taking credit for the terrible stabbing attack at Ohio State University by a Somali refugee who should not have been in our country."

The Council on American-Islamic Relations accused Trump of seeking to exploit the "tragic situation in Ohio."

source: news.abs-cbn.com

Dollar rallies after US jobs, China IPOs top trade news

A forecast-busting surge in US jobs last month sent the dollar surging against emerging market currencies Monday while more weak trade data out of China compounded fears about the struggling Asian economic giant.

However, Shanghai was at an 11-week high on news China will restart initial public offerings this month, indicating authorities are becoming more confident in the market after a summer rout that wiped trillions off valuations.

And Japan's Nikkei rallied almost two percent -- adding to a three-day winning run that has seen it hit a two-month high -- as the yen retreated against the dollar.

The chances of the Federal Reserve hiking US interest rates shot up after Friday's employment report, fuelling worries of a flight of capital from Asia to the United States as well as a higher borrowing costs strangling investment.

The US Labor Department said the world's biggest economy created 271,000 net new jobs in October, almost twice as many as September, while the unemployment rate fell to a seven-and-a-half year low of 5.0 percent.

The figure easily outstripped expectations and tempered fears that a slowdown in the world economy, particularly in China, had spread to the United States.

Investors immediately jumped on the figures to bet on a Fed rate hike next month. Talk of the so-called lift-off by the US central bank had been tempered in recent months following a string of weak data from Washington and in light of China's ongoing malaise.

But Shane Oliver, Sydney-based strategist at AMP Capital Investor, said the latest report "supports the case for a December Fed rate hike".

Fed chief Janet Yellen earlier this year said she expected a rise before 2016, albeit incremental, as the US economy get back on track.

And Oliver told Bloomberg News: "The Fed is unlikely to do anything to threaten global growth and this in turn should help see the global economic recovery continue."

- China IPOs give lift -

The news sent the dollar surging in New York on Friday, hitting 123.16 yen against 121.66 earlier in the day in Asia, while the euro plunged to a six-month low $1.0707 from $1.0886.

On Monday in Asia it was at 123.42 yen while the single currency was up at $1.0747.

The weaker yen helped Japanese exporters, pushing the Nikkei index up more than two percent by lunch.

And against emerging currencies the greenback rallied on expectations dealers will shift their investment focus out of developing countries, with Indonesia's rupiah, Malaysia's ringgit and South Korea's won particularly hurt.

The won sank one percent, the rupiah lost 0.8 percent and the ringgit was 1.2 percent down.

"The strong dollar is central in this move today as the non-farm payrolls was very strong,” said Nizam Idris, head of currencies and fixed-income strategy at Macquarie Bank in Singapore. "China news was poor and that didn’t help."

China on Sunday reported imports fell almost a fifth in October from a year ago, underlining battered domestic demand in the planet's biggest trader in goods and a key driver of world growth. Exports also continued to fall as foreign demand languished.

But the disappointment was overshadowed by China's announcement late last week that it will resume new share listings, having suspending them in July in the face of a rout that sent mainland markets down more than 40 percent.

While dealers usually fear IPOs because they often drain funds away from the market, the announcement indicates leaders are confident a slew of support measures are having the desired effect.

But Robbert van Batenburg, director of market strategy at Societe Generale SA, said: "It's a bit of make-believe effort for China to give an impression that we are in a more normalised situation after what happened in August.

Shanghai's stock market was up 1.7 percent while Hong Kong was marginally higher. But Sydney, where several firms with links to China are listed, was 1.5 lower on the trade figures.

Key figures around 0250 GMT

Tokyo - Nikkei: UP 2.1 percent at 19,678.39 (break)

Shanghai - composite: UP 1.7 percent at 3,650.67

Sydney - S&P/ASX200: DOWN 1.5 percent at 5134.8

Won/USD: DOWN 0.9 percent at 1,152.61

Ringgit/USD: DOWN 1.0 percent at 4.3550

USD/yen: UP 0.3 percent at 123.42

source: www.abs-cbnnews.com