|US and Europe|
·US equities finally broke their multi-day winning streak as strong corporate earnings results from the technology sector were overshadowed by a volley of weak economic data. Interestingly enough, the decline was tempered by hopes that such signs of a slowing economy would prompt the Federal Reserve to continue its accommodative monetary policy stance. The Dow Jones Industrial Average index gave up 42.47 points to 15,233.22 while the S&P500 index waned 8.31 points to 1,650.47.
·Last April, US housing starts fell to a five-month low, slumping 15% to an annualized rate of 853,000. This was lower than the market estimate of 970,000, and much lower than the revised 1.02 million pace in March. Meanwhile, building permits soared to a five-year high, increasing 14.3% to a 1.02 million annualized rate in April. The figure exceeded the market estimate of 941,000. Though there appears to have been a pause in the housing sector recently, building permits exceeding housing starts indicates that construction will make a come-back as record-low mortgage rates and the improving jobs market attracts more home buyers.
·The number of Americans applying for jobless benefits last week jumped 32,000 to 360,000, the highest in five weeks, data from the US labor Department showed. Analysts had only forecasted a rise to 330,000. Moreover, the Labor Department upwardly revised the previous week’s figure to 328,000 from an initially released 323,000.The increase in unemployment claims raised concerns that a slowdown in economic growth may have triggered an uptick in firings. The less volatile four-week moving average of claims also rose to 339,250 from 338,000 during the previous week.
·Inflation in the US fell for a second month in April amid declining fuel costs. The consumer-price index dropped 0.4% marking the biggest decline since December of 2008, following the 0.2% decrease last March. Analysts had expected inflation to drop by only 0.3%. Meanwhile, core prices, which do not include food and energy costs, rose by 0.1%, also less than projected.
·US Treasury prices rallied following the release of disappointing economic data, which implied that the world’s biggest economy could be slowing down. The 10-year bond yield lost 5 basis points to 1.8809%.
·European equities lost ground as the latest economic data releases from the US dragged on investor sentiment. The FTSEurofirst300 index crept lower 0.21 of a point to 1,245.45.
·The euro slid lower against the US dollar following weak data releases from the region earlier during the week. The shared currency pared 0.05 cents to close at US$1.2882.
·Asian markets were mostly up Thursday as equity indices tracked gains from the US. Top gainers included China's Shanghai SE Comp Index (+1.21%), Taiwan's TWSE (+0.86%), and South Korea's KOSPI (+0.79%). Japan (-0.39%), on the other hand, skidded as a stronger yen pushed investors to lock-in gains. Similarly, Australia (-0.50%) suffered losses traced from weaker commodity prices and a depreciating Australian dollar. The MSCI All Country Asia Pacific Index shed 0.13 points, or -0.09%, to 143.04.
·Reports from Japan showed the 1Q2013 GDP accelerated to 3.5% quarter-on-quarter. The strong number was attributed to robust consumption (+3.7%) and net exports (+16.1%) even as imports (+4.0%) grew at a weak pace. Conversely, business investment contracted for the fifth consecutive quarter (-2.6%). Analysts believed capital expenditures is likely to reverse starting 2Q2013 as exports grow and rising asset prices drive consumption. Moreover, they expect public investment (+3.4%) to improve in the same quarter due to fiscal stimulus related spending.
·The local equities market lost ground yesterday as investors booked profits following the stock market’s recent run-up to record levels. San Miguel Corporation (SMC) slipped by 5.45% after the stock was removed from the MSCI Philippines Index, while Metro Pacific Investments Corporation (MPI) gained 2.34% after it was added to the same index, effective May 31, 2013. The PSEi lost 81.26 points or -1.10% to close at 7,310.94. All sectoral indices declined led by mining and oil (-3.33%), industrials (-1.37%) and financials (-1.27%). Market breadth was negative with 137 declines overwhelming 44 advances with 34 stocks unchanged. Value turnover reached Php11.47 billion. Foreign investors were net buyers at Php0.18 billion.
·The Bangko Sentral ng Pilipinas (BSP) reported a net loss of Php95.38 billion last year, almost three times higher than the Php33.69 billion recorded in 2011. The central bank’s income reached Php65.73 billion last year, or 44.64% lower than Php118.74 billion in 2011 with interest from international reserves declining by 10% to Php40.92 billion from Php45.62 billion. Meanwhile, miscellaneous income was the biggest drag to the bank’s revenues, totaling just Php24.81 billion or down by 66.06% from Php73.11 billion in 2011, due to lower trading gains of gold in foreign financial institutions.
·First Gen Corp. (FGEN) grew its net income by 11% to US$55.8 million in the first quarter from US$50.3 million registered in the same period last year. The firm attributed the increase to the higher income booked by the1,500 megawatt (MW) First Gas plants, higher sales volume and trading gains from EDC geothermal plants, and savings from interest expense. Of the total revenues, First Gas plants accounted for US$324.3 million or the lion’s share at 65.6 % of the total consolidated revenues, while EDC’s geothermal revenues accounted for $146 million, representing 29.5%.
·Prices of government securities ended yesterday barely changed as investors remained on the sidelines ahead of the 5-year FXTN auction next week. Yields climbed by an average of 1.6 basis points led by the belly of curve, which rose 3.3 basis points.
·The Philippines peso was little changed against the US dollar yesterday amid the lack of market-moving news. The local currency pared 2.5 centavos to close at 41.225.