Reuters | Thu Sep 9, 2010 | 9:11pm IST
Stocks and the euro rose on Thursday after stronger-than-expected U.S. data on labor conditions and trade activity, raising hopes the tepid economic recovery would accelerate. The yen edged near to a 15-year high against the dollar as investors bet Japanese authorities are not yet ready to curb the currency’s strength. Crude prices rose and bonds fell. New claims for unemployment insurance fell more than expected last week to their lowest level in two months and the U.S. trade deficit narrowed more than forecast in July as exports shot to their highest level since August 2008, painting a rosier picture for economic growth.
"The news flow has been positive over the last few days compared to what was through most of August," said John Toohey, vice president of equity investments at USAA in San Antonio, Texas. "You put that together with the fact sentiment among investors had turned more bearish than it has been since early 2009, you are ripe for a rally." Fears of a double-dip recession have kept investors at bay and the stock market in a tight trading range for several months. The Dow Jones industrial average added 61.91 points, or 0.60 percent, to 10,448.92. The Standard & Poor’s 500 Index rose 9.49 points, or 0.86 percent, to 1,108.36. The Nasdaq Composite Index gained 17.27 points, or 0.77 percent, to 2,246.14. Japan’s Finance Minister Yoshihiko Noda said the ministry was conducting simulations on forex intervention, though the Japanese currency hardly budged as the perception remains that Tokyo is unlikely to intervene until the U.S. currency falls near 80 yen. Noda’s comments were also undermined as Bank of Japan Governor Masaaki Shirakawa said he did not talk about currencies and monetary policy at a government meeting.
Reuters | Aug 28, 2010 | 4:09am IST
U.S. Federal Reserve Chairman Ben Bernanke said on Friday the economic recovery has weakened more than expected and the Fed stands ready to act if needed to spur slowing growth. Bernanke downplayed concerns that the economy might slip back into recession, predicting a modest expansion in the second half of this year, with the pace picking up in 2011. Otherwise, he said the Fed has sufficient ammunition left and could support growth by purchasing more government debt or by promising to keep rates exceptionally low for a longer period than currently priced in by financial markets. Bernanke’s comments, in an address to an annual conference of global central bankers hosted by the Fed in Jackson Hole, Wyoming, came as the government reported the economic growth rate in the second quarter was weaker than it had originally estimated. Bernanke made clear that the U.S. central bank has not decided what would prompt additional easing. "The overall tone was one of watch and wait," Goldman Sachs economist Jan Hatzius wrote in a note to clients, "despite ongoing signs that U.S. economic activity has not only dropped below its potential growth rate but has a significant probability of weakening further."
While Bernanke focused on near-term issues in the U.S. economy, the head of the European Central Bank, Jean-Claude Trichet, also speaking at the Jackson Hole conference, addressed long-term global challenges. He urged governments and central banks to ensure that the transition from very high debt levels incurred in response to the global financial crisis and its economic fallout takes place in an orderly fashion and without compromising economic growth. "The primary macroeconomic challenge for the next 10 years is to ensure that they do not turn into another ‘lost decade,’" Trichet told the conference. In Japan, which has experienced decades-long stagnant growth, the Bank of Japan is examining holding an emergency meeting early next week to ease monetary policy as the strong yen threatens the country’s fragile economic recovery, a source familiar with the matter said. An emergency meeting may be held as early as Tuesday.
BBC News | Wednesday, 17 March 2010 | 12:00 GMT
The European Union has criticised the UK and other European nations for having “optimistic” growth assumptions and bloated deficits. The UK must tackle “uncertainty” in plans to cut its deficit, the EU said. EU rules say government deficits must be below 3% of GDP, but the UK’s deficit is expected to hit £178bn – or 12.6% of GDP – this year. Germany, France, Spain and Italy were also warned they were over-reliant on economic recovery to meet debt targets. Brussels was commenting on plans by some of the biggest EU countries to bring down public spending.
‘Absence of detail’
As was reported earlier in the week, the report warned that the UK was not on course to cut its deficit in line with EU rules by a deadline of 2015. “The absence of detailed departmental spending limits is a source of uncertainty,” the European Commission said. In the run-up to next week’s Budget, UK chancellor Alistair Darling has defended the government’s approach to the deficit, arguing that cutting it too quickly by reducing government spending would risk harming the UK’s emergence from recession. Continue reading