Month: November 2014

Fed rate hike victims: Not who you think

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China, Hong Kong, and Malaysia should be on investors` worry list amid expectations for a US rate hike in 2015, HSBC warned.

Current account surpluses in all three countries shrank rapidly between 2008 and 2013 compared with Asian peers, Frederic Neumann, HSBC`s senior economist, said in a report on Friday.

“A shrinking surplus can signal emerging vulnerabilities, just as a narrowing deficit may leave a country more resilient. In short: don`t just look at the current account balance, but at its direction, too,” he said.

Emerging markets suffered a bout of volatility in 2013 when the Federal Reserve first broached the idea of tapering its stimulus program. India and Indonesia were particularly hit hard, with their stock markets and currencies sprawling, because of their wide current account deficits.

Another indicator of weakness

Whether changes in a country`s current account balance are due to a shift in savings or investments is a tell-tale sign of economic vulnerability, HSBC`s Neumann said.

“If a country`s saving rate falls, especially relative to investment, this can often signal rising inefficiency possibly reflecting capital misallocation, and therefore heightened financial vulnerability despite excess saving,” he said.

Again, China, Hong Kong, and Malaysia show up on the more worrying side, with declines in their national saving rate between 2008 and 2013, despite running overall surpluses.

Recent data focus

Not all agree, however. As long as a country`s surplus is intact when the rate hikes occur, its markets will be fine, Tim Condon, head of research at ING Financial Markets, said, noting investors gauge susceptibility to jittery markets by recent data, not long-term trends.

China`s surplus widened this year, which should protect its markets from a Fed rate hike, he said. Beijing`s third-quarter current surplus balance rose to $81.5 billion, compared with a revised surplus of $73.4 billion in the previous quarter and $7.2 billion in the first three months of the year.

Regarding Hong Kong, Condon said market players don`t really see the city as balance of payments crisis candidate.

2013 victims

India and Indonesia, two of the biggest victims of 2013`s emerging markets taper tantrum, paint contrasting pictures for the year ahead.

India`s external balance improved during the 2008-2013 period, while savings have increased relative to investment, suggesting the country is less vulnerable to a U.S. rate hike than before, HSBC noted.

On the other hand, Indonesia`s current account balance deteriorated in recent years and it joins China, Hong Kong, and Malaysia in the camp of investments outstripping savings. Still, HSBC believes the country in a unique position since it sorely lacks capital spending.

“Indonesia still remains vulnerable to taper tantrums. Their current account deficit is narrowing so they`re much better prepared than 2013 but it would be optimistic to think that contagion next year will spare Indonesia,” ING`s Condon said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Three key events in Asia this week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As the month of November draws to a close and markets await the seasonal “Santa rally”, investors will likely be looking out for these in the week ahead:

1. Will Japan data deluge allay economic concerns?

Investors will get a sense of how Japan`s economy fared at the start of the fourth quarter when a flurry of data including inflation, household spending, jobs numbers, retail sales and industrial output for the month of October are released on Friday.

This followed shocking data last week which showed third quarter gross domestic product shrinking an annualized 1.6 percent, putting the economy in technical recession. The dismal report card prompted Prime Minister Shinzo Abe to delay a second sales tax hike and call a snap election.

Consumer inflation is expected to slow in October, according to Moody`s Analytics, further raising doubts over the Bank of Japan`s ability to achieve its 2 percent inflation goal by next year. Nationwide core consumer prices, including the sales hike impact, could rise 2.9 percent, a tick lower than 3 percent in September.

Industrial production may fall 0.2 percent in October from the year-ago period, after rising annual rate of 2.7 percent in September, the fastest pace since the beginning of the year. Household spending could decline for a seventh straight month, but the expected fall of 2 percent on-year will be an improvement from September`s 5.6 percent tumble.

“The bulk of data will provide insight into Japan`s fourth quarter. Unfortunately it is likely to show that the post‐tsunami boost to residential construction has faded, and that a lack of wage growth and concerns about another sales tax hike are deterring consumer spending,” analysts from Moody`s Analytics wrote in a note.

Meanwhile, investors will also be watching the release of the Bank of Japan`s (BOJ) minutes from its October 31 meeting on Tuesday. The central bank surprised markets that day by expanding its already massive stimulus program, pledging to increase monetary base annually by 80 trillion yen, more than 65-75 trillion yen previously.

2. Could rest of Asia steal the limelight?

Several Asian economies will be on  this week, including India, the Philippines, Taiwan and Singapore.GDP-watch

India`s growth data due out on Friday will show Asia`s third largest economy expanding by 5.3 percent in the second quarter, according to estimates from Moody`s Analytics, a touch slower than 5.7 percent in the January-March period.

Meanwhile, a Reuters poll forecast Singapore`s economy to expand an annualized 2.5 percent in the third quarter, compared to 2.4 percent in the April-June period, when growth figures are released Tuesday. Quarter-on quarter growth is expected to rise 1.3 percent, a slight improvement from 1.2 percent last quarter.

“GDP results in India should show that the post‐election improvement in business sentiment is starting to lift investment,” Moody`s said. “Final third quarter GDP estimates for Singapore should show mildly below‐trend growth, partly due to lackluster electronics production.”

3. OPEC meeting: Will there be an output cut?

As a recent slide in oil prices show no signs of slowing, traders will be closely watching the meeting of Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Thursday, though analysts think a decision to reduce oil production will be unlikely.

“There`s a 55 percent chance of a `no cut.` There seems to be an indecision within the OPEC and going through the US and European results, I think the oil management team is also adopting this `wait and see` approach,” Scott Darling, regional head of oil and gas research at JP Morgan, told CNBC.

Global oil prices have plunged since peaking in June. From around $115 a barrel, Brent crude has lost around a third of its price and was trading near four-year lows on Friday at USD 79. Weak demand, a strong dollar and booming US oil production were the three main reasons behind the slump, according to the International Energy Agency (IEA).

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China rate cut no magic bullet for economy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China`s interest rate cut was a welcome surprise for markets, spurring a global stock rally on Friday, but economists caution that the move is no magic fix for the slowing economy.

“It lowers the downside risks to the economy but probably doesn`t change the baseline forecast for slower growth in 2015 than in 2014,” Bill Adams, senior international economist at PNC told CNBC on Monday.

After resisting calls for broad-based monetary easing, the People`s Bank of China (PBoC) cut interest rates late Friday, reducing the 12-month benchmark lending rate by 0.40 percentage points to 5.6 percent and the 12-month benchmark deposit rate by 0.25 percentage points to 2.75 percent.

The move was accompanied by a slight liberalization of the rates banks pay to borrowers, allowing banks to pay depositors 1.2 times the benchmark level, up from 1.1 times previously.

The central bank`s first rate cut since 2012 is a sign policymakers are becoming increasingly concerned about slowing growth momentum and an admission that targeted easing has not been enough, say economists.

However, they are skeptical about whether the rate cut will indeed spur faster credit growth in the mainland.

“I wonder how much banks are actually going to respond in lending more because interest rate cut is asymmetric, and so why would they necessarily go out and lend more on the back of this,” said Frederic Neumann, co-head of Asian economic research at HSBC.

Adams agreed the move would do little accelerate credit growth, which is currently low by historical standards. Credit growth slowed sharply in October, with local-currency bank loans increasing by 548 billion yuan (USD 89 billion) from the previous month, the third-lowest monthly rise since 2012.

Call for more liquidity

The effectiveness of the latest monetary easing will depend on whether the central bank complements the rate cut with a liquidity injections, said Ting Lu, chief China economist at Bank of America Merill Lynch.

“Cutting benchmark lending rates will help those borrowers of medium-to-long-term loans lower [their] debt burden. However, to make it a more real boost for the economy, the PBoC will have to inject more liquidity,” he wrote in a note.

“So the PBoC needs to supplement rate cuts with liquidity injection actions such as RRR (reserve requirement ratio) cuts,” he added.

Ting expects the central bank to follow through with a RRR cut in December.

Start of an easing cycle?

And the central bank is unlikely to stop there. Many economists believe Friday`s move is the beginning of an easing cycle.

“We have long argued that such cuts were unavoidable and that lowering the interest rate will help reduce the debt burden, support business sentiment, and sustain private demand. We now look for another two symmetric cuts in the benchmark interest rates by 25 basis points each in H1 2015,” said Jian Chang, chief China economist at Barclays.

Further stimulus may not just come in the form of monetary policy easing, say analysts, noting that fiscal measures are also on the cards.

“The cuts themselves are unlikely to have a major impact on the Chinese economy, but the intent signaled will,” said Evan Lucas, strategist at IG.

“The lowering of interest rate signals that growth is still a major driver of policy in China (as it always has been), meaning all leavers are in play. Watch for increased funding allocations in support of growth in the next 12 months,” he said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Goldman is overweight China, India for next year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asia share markets are headed for a slightly better year after 2014`s low returns, but bigger gains will come from seeking reform beneficiaries in China and India, Goldman Sachs said.

“2014 has been another year with an unexciting headline return,” with the MSCI Asia Pacific ex-Japan index (MXAPJ) up only around 3 percent after a selloff in September wiped out earlier gains, Goldman said in a report Monday. But after the recent “concentrated” outflows, overall positioning in the region appears light, it said.

In addition, many Asia ex-Japan active funds are up only around an average 2.4 percent so far this year, underperforming the MXAPJ, it said.

“Performance pressure so far and a desire to amplify returns could drive broader re-risking from active funds,” Goldman said.

But even so, Goldman only expects the MXAPJ will rise to 520 by the end of 2015, compared with around 477 currently, for a single-digit return, amid conservative earnings growth forecasts and expectations valuations are already full.

Reform players

Goldman sees “pockets of opportunity” to boost returns in the region, such as reform plays.

“We expect the reform momentum to gather pace next year and if implemented effectively, improve investor confidence in growth and corporate profitability,” it said, with India, China and Indonesia among the beneficiaries.

“The key areas of focus for reform next year are likely to be state-owned enterprises, fiscal reforms, anti-pollution (in China), public sector undertakings [government-owned corporations], power and banking reforms (in India), and infrastructure spending (in Indonesia).”

China

Goldman rates China shares at Overweight, expecting a “solid” 14 percent by the end of 2015 and a 12,300 target on the HSCEI index, with the central bank`s decision Friday to cut interest rates likely to help sentiment near-term. The HSCEI is currently trading around 10,757.

But it cautions that the market may get a slow start in the first quarter, with Beijing`s anti-corruption campaign likely to pick up during the Lunar New Year holiday period. It prefers reform beneficiaries, “new” sectors and select A-shares.

India

In India, it expects the reforms started by the new administration will gather pace, adding the economy may benefit the most in the region from lower oil prices flowing through to its current account, fiscal deficit and inflation.

Overall, Goldman rates India at overweight, with a 9500 target for the Nifty index, which is currently trading around 8477. It also expects the country`s internet sector could show “outsized” gains over the next few years amid rising internet and smartphone penetration, while logistics and packaging plays could also benefit from e-commerce.

Indonesia

In addition, Goldman upgraded Indonesia to overweight from market weight, noting the market has traded in line with the region over the past three quarters.

“There has recently been progress on macro adjustments in Indonesia amid an improving political backdrop,” Goldman said. It expects catalysts from leadership changes in the opposition Golkar party and further fiscal reforms after the key move to raise fuel prices.

Active funds are also largely neutral in their positioning in the archipelago`s market after 2013`s “taper tantrum” led to sharp outflows.

Goldman set a Jakarta Composite Index target of 5800, compared with the current level at 5152, for around 15 percent upside.

“Consistently high profitability in a subdued growth environment helps support valuations. Indonesia is the only market in the region with still over 20 percent return on equity,” it said. “Markets and sectors with high profitability and consistent earnings growth may price better in an environment of subdued economic growth, even if some of them may have relatively higher valuations.”

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asia shares to get a bit more love next year: Goldman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asia share markets are headed for a slightly better year after 2014’s low returns, but bigger gains will come from seeking reform beneficiaries in China and India, Goldman Sachs said.

“2014 has been another year with an unexciting headline return,” with the MSCI Asia Pacific ex-Japan index (MXAPJ) up only around 3 percent after a selloff in September wiped out earlier gains, Goldman said in a report Monday. But after the recent “concentrated” outflows, overall positioning in the region appears light, it said.

Read More: What matters for markets next year: Goldman Sachs

In addition, many Asia ex-Japan active funds are up only around an average 2.4 percent so far this year, underperforming the MXAPJ, it said.

“Performance pressure so far and a desire to amplify returns could drive broader re-risking from active funds,” Goldman said.

But even so, Goldman only expects the MXAPJ will rise to 520 by the end of 2015, compared with around 477 currently, for a single-digit return, amid conservative earnings growth forecasts and expectations valuations are already full.

Reform players

Goldman sees “pockets of opportunity” to boost returns in the region, such as reform plays.

Read More: Are low oil prices here to stay?

“We expect the reform momentum to gather pace next year and if implemented effectively, improve investor confidence in growth and corporate profitability,” it said, with India, China and Indonesia among the beneficiaries.

“The key areas of focus for reform next year are likely to be state-owned enterprises, fiscal reforms, anti-pollution (in China), public sector undertakings [government-owned corporations], power and banking reforms (in India), and infrastructure spending (in Indonesia).”

China

Goldman rates China shares at Overweight, expecting a “solid” 14 percent by the end of 2015 and a 12,300 target on the HSCEI index, with the central bank’s decision Friday to cut interest rates likely to help sentiment near-term. The HSCEI is currently trading around 10,757.

Read More: Can Asia’s pricey consumer plays keep rising?

But it cautions that the market may get a slow start in the first quarter, with Beijing’s anti-corruption campaign likely to pick up during the Lunar New Year holiday period. It prefers reform beneficiaries, “new” sectors and select A-shares.

India

In India, it expects the reforms started by the new administration will gather pace, adding the economy may benefit the most in the region from lower oil prices flowing through to its current account, fiscal deficit and inflation.

Overall, Goldman rates India at overweight, with a 9500 target for the Nifty index, which is currently trading around 8477. It also expects the country’s internet sector could show “outsized” gains over the next few years amid rising internet and smartphone penetration, while logistics and packaging plays could also benefit from e-commerce.

Indonesia

In addition, Goldman upgraded Indonesia to overweight from market weight, noting the market has traded in line with the region over the past three quarters.

Read More: Cheaper EMs may not be a bargain

“There has recently been progress on macro adjustments in Indonesia amid an improving political backdrop,” Goldman said. It expects catalysts from leadership changes in the opposition Golkar party and further fiscal reforms after the key move to raise fuel prices.
Active funds are also largely neutral in their positioning in the archipelago’s market after 2013’s “taper tantrum” led to sharp outflows.

Read More: Why China’s ghost towns are good news

Goldman set a Jakarta Composite Index target of 5800, compared with the current level at 5152, for around 15 percent upside.

“Consistently high profitability in a subdued growth environment helps support valuations. Indonesia is the only market in the region with still over 20 percent return on equity,” it said. “Markets and sectors with high profitability and consistent earnings growth may price better in an environment of subdued economic growth, even if some of them may have relatively higher valuations.”

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global business confidence plunges to post-crisis low

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Worldwide business confidence slumped to a five-year low, with company hiring and investment intentions at or near their weakest levels in the post-global financial crisis era, according to a new survey.

“Clouds are gathering over the global economic outlook, presenting the darkest picture seen since the global financial crisis,” said Chris Williamson, chief economist at Markit.
The number of companies expecting their business activity to be higher in a years’ time exceeded those expecting a decline by just 28 percent. This was below the net balance of 39 percent recorded in the summer, the Markit Global Business Outlook Survey showed.

Read More : IMF warns global economy at risk, calls for bold action

The tri-annual survey, published on Monday, looked at expectations for the year ahead across 6,100 manufacturing and services companies worldwide.

Optimism in manufacturing fell to its lowest since mid-2013 but remained ahead of that seen in services, where confidence about the outlook slumped to the lowest in the survey’s five-year history.

Hiring, investment to slow

Global hiring intentions slid to within a whisker of the all-time low seen in June of last year, deteriorating in the US, Japan, the UK, euro zone, Russia and Brazil.

“UK firms were the most upbeat about employment plans among major economies, while French firms were the most downbeat, France being the only country where a net drop in employment is indicated for the year ahead,” Markit said in the report.

Read More: Obama touts new China visa deal as way to create US jobs

Investment intentions also collapsed to a new post-crisis low across major economies.
China and India bucked the trend, however, with capital expenditure plans in the two countries improving.

Laundry list of concerns

The survey highlighted a growing list of concerns among companies about the outlook for the year ahead including a worsening global economic climate, the prospect of higher interest rates in countries such as the UK and US and geopolitical risk emanating from crises in Ukraine and the Middle East.

“Of greatest concern is the slide in business optimism and expansion plans in the U.S. to the weakest seen over the past five years. U.S. growth therefore looks likely to have peaked over the summer months, with a slowing trend signaled for coming months,” Williamson said.

“There’s also little sign of the euro zone’s malaise ending any time soon, as companies have become even less optimistic about the outlook,” he said.

Read More: Risk of triple-dip recession in euro zone: S&P

Business sentiment in Japan wasn’t encouraging either.

“Optimism in Japan continued to lag behind that of the US, UK and even the euro zone, dropping to a two-year low to suggest companies have become increasingly disillusioned with the potential for ‘Abenomics’ to boost growth,” Williamson said, referring to Prime Minister Shinzo Abe’s three-pronged plan to lift the economy out of stagnation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Three key events in Asia this week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As the month of November draws to a close and markets await the seasonal “Santa rally”, investors will likely be looking out for these in the week ahead:

1. Will Japan data deluge allay economic concerns?

Investors will get a sense of how Japan’s economy fared at the start of the fourth quarter when a flurry of data including inflation, household spending, jobs numbers, retail sales and industrial output for the month of October are released on Friday.

This followed shocking data last week which showed third quarter gross domestic product shrinking an annualized 1.6 percent, putting the economy in technical recession. The dismal report card prompted Prime Minister Shinzo Abe to delay a second sales tax hike and call a snap election.

Consumer inflation is expected to slow in October, according to Moody’s Analytics, further raising doubts over the Bank of Japan’s ability to achieve its 2 percent inflation goal by next year. Nationwide core consumer prices, including the sales hike impact, could rise 2.9 percent, a tick lower than 3 percent in September.

Read More: Abe dissolves parliament, sets stage for election

Industrial production may fall 0.2 percent in October from the year-ago period, after rising annual rate of 2.7 percent in September, the fastest pace since the beginning of the year. Household spending could decline for a seventh straight month, but the expected fall of 2 percent on-year will be an improvement from September’s 5.6 percent tumble.

“The bulk of data will provide insight into Japan’s fourth quarter. Unfortunately it is likely to show that the post‐tsunami boost to residential construction has faded, and that a lack of wage growth and concerns about another sales tax hike are deterring consumer spending,” analysts from Moody’s Analytics wrote in a note.

Meanwhile, investors will also be watching the release of the Bank of Japan’s (BOJ) minutes from its October 31 meeting on Tuesday. The central bank surprised markets that day by expanding its already massive stimulus program, pledging to increase monetary base annually by 80 trillion yen, more than 65-75 trillion yen previously.

2. Could rest of Asia steal the limelight?

Several Asian economies will be on GDP-watch this week, including India, the Philippines, Taiwan and Singapore.

India’s growth data due out on Friday will show Asia’s third largest economy expanding by 5.3 percent in the second quarter, according to estimates from Moody’s Analytics, a touch slower than 5.7 percent in the January-March period.

Meanwhile, a Reuters poll forecast Singapore’s economy to expand an annualized 2.5 percent in the third quarter, compared to 2.4 percent in the April-June period, when growth figures are released Tuesday. Quarter-on quarter growth is expected to rise 1.3 percent, a slight improvement from 1.2 percent last quarter.

“GDP results in India should show that the post‐election improvement in business sentiment is starting to lift investment,” Moody’s said. “Final third quarter GDP estimates for Singapore should show mildly below‐trend growth, partly due to lackluster electronics production.”

Read More: The big, immediate threat for a foreign oil giant

3. OPEC meeting: Will there be an output cut?

As a recent slide in oil prices show no signs of slowing, traders will be closely watching the meeting of Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Thursday, though analysts think a decision to reduce oil production will be unlikely.

“There’s a 55 percent chance of a ‘no cut.’ There seems to be an indecision within the OPEC and going through the US and European results, I think the oil management team is also adopting this ‘wait and see’ approach,” Scott Darling, regional head of oil & gas research at JP Morgan, told CNBC.

Global oil prices have plunged since peaking in June. From around USD 115 a barrel, Brent crude has lost around a third of its price and was trading near four-year lows on Friday at USD 79. Weak demand, a strong dollar and booming US oil production were the three main reasons behind the slump, according to the International Energy Agency (IEA). 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stocks close up for the fifth week; Dow, S&P at records

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US stocks ended the week at highs as markets rallied on overseas central banks’ stimulus efforts and an encouraging domestic outlook.

Early on Friday, China’s central bank made its first interest rate cut in more than two years and the European Central Bank took action to stimulate the economy.

“The reason that Europe and China are doing this is not positive,” said JJ Kinahan, chief strategist at TD Ameritrade, although he noted that weakness abroad has likely made high-yielding US equities and bonds more attractive. “The close today will be interesting if people want to get out of their positions (to limit risk next week).”

The Dow Jones Industrial Average closed at a record for the 28th time this year but failed to regain the intraday record it set in the morning of a more than 170-point gain, with most blue chips trading higher. Caterpillar led gains with a rise of more than 4 percent after Stifel initiated coverage with a “buy” rating and a price target of USD 122.

The S&P also lost some of its early gains in its 45th record close for the year, with the materials sector continuing to lead sector advancers, up more than 1 percent.

“Materials are globally exposed companies and trade with a direct correlation to global activity,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The Nasdaq lost most of its morning gains but recovered slightly in the close.

“I can’t point to anything newsworthy,” Peter Boockvar, chief market analyst at The Lindsey Group, said of the slight afternoon selloff. “I think the market going into today was overbought.”

In an surprise move after the close of the Shanghai exchange for the week, the People’s Bank of China cut its benchmark interest rates on Friday for the first time in more than two years to lower borrowing costs and lift a cooling economy back on track. The one-year benchmark lending rate has been trimmed by 40 basis points to 5.6 percent.

One-year benchmark deposit rates would be lowered by 25 basis points, the PBOC announced, adding that the reductions would be effective on November 22.

Read MoreCheap credit in Europe, China: Too little, too late?

Major European national stock indices closed sharply higher after European Central Bank President Mario Draghi reiterated dovish statements in a speech at a European banking conference in Frankfurt on Friday. Later in the day, the ECB also announced that it has begun buying asset-backed securities.

“I don’t think it’s really important to rationalize which is more important,” Art Hogan, chief market strategist at Wunderlich Securities, said in reference to the two central banks’ moves. “One impacts the market now, one later.”

The Euro fell more than 1 percent against the US dollar to below USD 1.24.

“If this is a lesson to be learned, when inflation isn’t a problem and the economy is a problem, central banks will stimulate,” said Nick Raich, CEO of The Earnings Scout. “The one thing market bears have underestimated is central banks’ willingness and readiness to accommodate.”

He noted that worsening economic conditions were behind the central banks’ action, although he said China’s slowdown has abated.

Stimulus by central banks overseas would not necessarily translate into Fed action in the United States, analysts said.

“We’re going towards diverging monetary policy, we’re tightening,” Hogan said, although he noted the Fed showed some concern that global slowdown would affect the US economy.

On Thursday, the Euro zone November flash composite purchasing manager’s index (PMI) from Markit came in at 51.4, below estimates and October’s final reading of 52.1. China’s flash PMI from HSBC fell to 50.0, the breakeven level that separates expansion from contraction.

In the United States preliminary PMI data from Markit also posted a slowdown, with a fall to 54.7 from October’s final reading of 55.9. Analysts had expected a rise.

Meanwhile, speculation is growing that the Organization of Petroleum Exporting Countries may cut oil production when it meets next Thursday. That talk has helped drive oil futures up from record lows and is likely to keep the market volatile on Friday and next week.

“One of the untold stories here is the OPEC move,” Hogan said, noting that stimulus abroad would likely boost demand for energy and commodities.

Read MoreDivided views on OPEC creates volatility

Crude oil futures for January delivery gained settled up 66 cents at USD 76.51 a barrel on the New York Mercantile Exchange, with gold futures for December settling up USD 6.80 at USD 1,197.70.

The Dow Jones Industrial Average closed up 91.06 points, or 0.51 percent, at 17,810.06, with Caterpillar leading gains and Microsoft the greatest of six blue-chip decliners.

The S&P 500 closed up 10.75 points, or 0.52 percent, at 2,063.50, with materials leading gains as all sectors rose.

The Nasdaq closed up 11.10 points, or 0.24 percent, at 4,712.97.

Two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 994.8 million and a composite volume of 3.8 billion in the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded just above 13.

The US 10-year Treasury note yield edged lower to 2.31 percent and the US dollar lost its gains against major world currencies to trade flat.

Read MoreWilbur Ross: Still selling assets but not as fast

US stocks closed at highs on Thursday after encouraging domestic data alleviated concerns over continued signs of slowing growth abroad.

Even before the Chinese move, US markets were buoyed by strong economic data from Thursday. The Philadelphia Federal Reserve Index (a survey of general business conditions) came in at 40.8 for November, more than double the expected 18.3 and the highest since December 1993. In addition, existing home sales hit 5.26 million and leading indicators gained 0.9 percent, both beating expectations for October.

After Thursday’s raft of economic data, the market could take something of a breather on Friday, with just the Kansas City Federal Reserve manufacturing index in the US showing further growth in regional economic activity.

: Midday movers: Intel, Toyota, Petrobras & more

Athletic retailer Foot Locker posted better-than-expected quarterly results ahead of the open. The retailer reported fiscal third-quarter earnings of 83 cents a share on sales of USD 1.73 billion, as same-store sales jumped 6.9 percent.

Sotheby’s CEO William Ruprecht will step down “by mutual agreement” with the auction house’s board, although he will remain in the job until a successor is found. The move comes a few months after activist investor Dan Loeb and others joined the Sotheby’s board.

President Barack Obama is under renewed scrutiny after announcing Thursday night an executive action on immigration. Obama said he would temporarily defer deportation for almost 5 million undocumented workers if they submit to registration and a background check. Republican politicians decried the plans as unconstitutional and ill-advised.

Read MoreGOP reacts furiously to Obama immigration plan

—By CNBC’s Evelyn Cheng

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What’s selling better: iPhone 6 or iPhone 6 Plus?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Apple`s first phablet, the iPhone 6 Plus, has been well received by consumers, but its smaller-screened cousin is far outperforming in terms of sales, according to new research.

AppLovin, a mobile advertising firm, estimates that the 4.7-inch iPhone 6 accounts for 80 percent of new iPhones in use globally, with the 5.5-inch screen iPhone 6 plus taking the remaining share.

The firm, which processes 25 billion ad requests daily, looked at the high volume of data to ascertain its estimate.

“Since interaction and usage differences between the 6 and 6 Plus on our network are negligible, it`s fair to estimate that roughly one in five new iPhones sold is an iPhone 6 Plus,” AppLovin said in a blog post on its website.

The highly-anticipated iPhones were unveiled on September 9, drawing enthusiasm from consumers worldwide.

In their debut weekend, Apple sold 10 million of the devices, up from nine million sold when the previous generation of iPhones debuted last year.

Bigger is better, in Asia

Western nations have demonstrated a clear preference for mid-sized phones, but the same cannot be said for Asia.

In countries such as China, Japan, Vietnam and the Philippines, the iPhone 6 Plus accounts for 35 percent of new iPhones in use.

“No one expected iPhone 6 Plus to match or surpass the heights of iPhone 6, but usage was more robust than expected — especially in areas where phablets are already popular,” AppLovin said.

Phablets, smartphones with screen sizes from 5.5 to less than 7 inches, have been rapidly gaining popularity given their dual functionality as a tablet and phone.

So much so that phablet shipments are even expected to top 318 million units next year, surpassing the 233 million estimate for tablets, according to research firm International Data Corporation (IDC)

“While consumers in places like the United States and Western Europe are likely to own a combination of PCs, tablets, and smartphones, in many places the smartphone – regardless of size – will be the one connected device of choice,” IDC wrote in a recent report.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Abe dissolves parliament, sets stage for election

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Japan`s Prime Minister Shinzo Abe on Friday dissolved the lower house of parliament, setting the stage for snap elections next month.

The move comes on the back of fresh data that showed the world`s third-biggest economy slipping into recession in the third quarter, after a controversial sales tax hike that took effect in April battered consumption.

Abe this week postponed a second sales tax hike, initially scheduled for October 2015, by 18 months. The original plan was to raise consumption tax to 10 percent next year, after it was increased to 8 percent from 5 percent this year.

The dissolution effectively renders all 480 members of the lower house jobless. The date of the election, expected on December 14, will be set at a cabinet meeting later Friday.

Abe`s decision to call for an election confused many voters, as a poll is not needed for another two years. Plus, the sales tax hike was deeply unpopular and with the main opposition – Democratic Party of Japan (DPJ) – weak, most expect his Liberal Democratic Party (LDP) to win regardless.

A Kyodo survey this week showed 25.3 percent of voters plan to cast ballots for the LDP in proportional representation districts, far more than the 9.4 percent who favor the DPJ.

“In a nutshell, [Abe is calling for elections] because he can. Opposition parties are in total disarray, his poll numbers are holding up pretty well. There`s also the consumption tax hike that gives him a plausible excuse to hold one,” Jun Okumura, visiting scholar at the Meiji Institute for Global Affairs, told CNBC.

Analysts say Abe is also buying time for his policies, dubbed Abenomics, to kickstart Japan`s long-moribund economy.

Abenomics, launched when Abe took office about two years ago, is a three-pronged approach combining monetary and fiscal stimulus, and structural reforms. The outcome so far has been mixed; while the Bank of Japan`s dramatic quantitative easing program boosted stock markets and weakened the yen – making exports competitive – it`s still far from bolstering the inflation rate to central bank`s target of 2 percent by next year.

The consumption tax hike, designed to reduce the country`s massive public debt, has also seemingly backfired by hampering the economy`s fledgling recovery.

“I`ve always had the view that for Abenomics to work, the focus has to be on the monetary front. You have to end deflation, once you do that, most of the malaise that Japan faces will start to fade,” said Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital Investors.

“On the economic reforms you don`t want to push too far too fast because that could end up increasing supply side of economy when demand is still weak,” he added.

Abe has said he would resign if his coalition – which holds two-thirds of the lower house seats -fails to win a simple majority, an outcome experts dismissed as almost impossible. But Abe could end up weakened if the LDP loses seats.

“The ruling party will likely win a majority [although] I expect they are going to lose some seats. However, this is enough for PM Abe to continue his economic reforms,” said Harumi Taguchi, principal economist at IHS Global Insight.

“The sudden call of election makes it difficult for government to pass some bills regarding womenomics and releasing temporary workers. I think government needs to bring up these bills again and accelerate these issues,” Taguchi added.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow