Tag Archive | "global growth"

Stocks Fell as China’s Interest Rates Rise

On Wednesday, world stocks slumped from this week’s 29-month high after interest rates rose in China. This prompted investors to book profits while general optimism over worldwide growth sent 10-year U.S. bond yields to nine-month highs.

For the second time in over six weeks, China increased its interest rates on Tuesday raising the battle against inflation.

It is believed that aggressive monetary tightening in the second biggest economy in the world could possibly put a halt on global growth and mull over equities and commodities. However, investors remained convinced that the proactive yet gradual step of China will not disrupt the global recovery.

The rate increase gave investors an excuse to strengthen their positions after the benchmark world index improved nearly 4 percent since the beginning of the year.

Investors are also being vigilant before Ben Bernanket, the Federal Reserve chairman, testifies on the economy afterward. By that time, he might give signs on the future expectations for interest rates in United States.

According to Adam Myers, the senior currency strategist at Credit Agricole CIB, China is turning its focus towards inflation rather than growth. This means growth is still likely to continue.

THE MSCI world equity index decreased 0.3 percent, hitting its 29-month peak on Tuesday. The Thomson Reuters global stock index fell 0.2 percent while FTS Eurofirst 300 index was steady on that day. Emerging stocks dropped to almost one percent while Shanghai shares fell 0.9 percent.

U.S crude oil increased 0.7 percent to $87.56 per barrel while London crude prices soared above $100 because of tighter North Sea supplies.

The bund future dropped 24 ticks while yields on 10-year U.S treasuries rose as high as 3.77 percent. The figures were their highest since late April.

The dollar lowered against several major currencies while the euro increased 0.1 percent to $1.3645.

Bernanke said last week that the U.S. economy still needs assistance from the Fed, a stand many traders anticipate him to repeat when he talks on Wednesday.

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UPS Forecasts High Profits in 2011

United Parcel Service reported a quarterly profit that beat the estimates of analysts, increasing their shares by more than 4 percent. The largest package delivery company in the world predicts record-high profits in 2011.

Analysts said that there were several factors that are driving the company’s performance. These include price increases last year and early this year, the increasing volume as the economy recovers, and the use of technology that has improved productivity.

UPS manages goods equal to 6 percent of the gross domestic product (GDP) in United States and 2 percent of the GDP in the entire world in its planes and trucks. Its shipment trends provide a concrete picture of consumer demand, the company said.

According to Chief Financial Officer Kurt Kuehn in an interview, UPS is walking out of recession stronger and nimbler than ever. Their company is a little more optimistic on the U.S. economy, but global growth will be more patterned.

UPS calls for moderate global growth in 2011. It said they controlled costs as compensations and benefit expenses increased less than volume.

Sterne Agee foresees UPS shares increasing to $100 on the following 12 months. It cited the company’s capability to recapture costs by elevating prices and internal controls.

The shares of the company were up 4.3 percent or $3.08 at $74.74 in the afternoon trading. Its shares last attained $75 in December 2007, a UPS spokesman informed.

BB&T analyst Kevin Sterling said UPS already thinks they can exceed peak earnings in less than two years from the start of the recession.

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