Month: November 2015

Markets could be in for macro overload in the week ahead with central bankers, next Friday’s jobs report and OPEC dominating the headlines.

“My guess is most of the action will be a tail wind for stocks,” said Jack Ablin, CIO of BMO Private Bank.

Central bankers in the US and Europe are in high gear in the coming week, with the European Central Bank expected to expand its easing program and cut its already negative deposit rate. That coincides with a week that could bring the most important US jobs report and other data the Fed will consider when it meets December 15 and 16.

“I think people should be starting to shift their focus away from the December meeting because they’re going to raise. They should be asking themselves if the economic data is good enough to augur a multi-rate hike cycle, rather than just a one and done,” said Peter Boockvar, chief market analyst at Lindsey Group.

Despite avoiding the Black Friday bustle, Apple is still managing to generate holiday buzz on Main Street and Wall Street alike, an Internet analyst told CNBC.

Though Apple is not promoting Black Friday savings this year, other retailers are advertising their Apple products to lure in shoppers — and boosting Apple’s brand in the process, Gene Munster, managing director and senior research analyst at Piper Jaffray, told CNBC.

“If you just look at Target and Best Buy as two examples, and use them as a barometer, the fact is, they’re really embracing these doorbusters as a sign that demand is pretty healthy here,” Munster said on CNBC’s “Squawk Alley.” “So, so far, so good.”

Apple iPads were top sellers in stores and online at Target, the company said in a release, saying that on average, Target sold an iPad every second throughout the day on Thanksgiving. Apple Watch particularly enticed in-store shoppers, Target said.

“Our simulations indicate that climate change-related natural hazards can harm sovereign ratings,” S&P credit analyst, Marko Mrsnik, said in a report on Thursday.

“In terms of average impact of climate change by peril, our simulations show that tropical cyclones and associated storm surges will be more damaging than floods as the earth’s temperature rises. Geographically, ratings of sovereigns in the Caribbean and Southeast Asia appear to be most at risk,” he added.

Worsening climate change risks include tropical cyclones in the Bahamas, Barbados, Dominican Republic, Jamaica and Vietnam and floods in Thailand, S&P said.

The credit rating agency said that tropical cyclones and floods led to an average downgrade of around one notch — but this would become an average decline of 1.2 notches with the impact of climate change.

As India embarks on an aggressive drive to become a manufacturing powerhouse and revamp its ailing infrastructure, Asia’s third-largest economy may emerge as bright spot for iron ore demand.

“India comes up as an alternative buyer. It is a country growing in terms of steel and iron ore demand so that might be an area to keep an eye on,” Annalisa Jeffries, associate editorial director for Asia metals at Platts, told CNBC on Friday.

The nation’s potential growth could be the long-awaited catalyst to knock beleaguered iron ore prices out of its bear market.

Prices of the commodity, a vital ingredient for steelmaking, tumbled to USD 43.4 a ton this week, according to the Steel Index—the weakest reading on record. At blame were the usual suspects: excess supply as low-cost miners like BHP Billiton and Vale continue to churn out output and dwindling demand from China, the world’s largest iron ore importer.

Even more gloom is looming over the horizon, with Fitch Ratings predicting more than 145 million metric tons of new supply next year, according to a statement on Thursday. Meanwhile, Jeffries warned prices could go below USD 40 next year based on pessimistic views from steel mills in China and traders.

While the UK’s Vedanta Resources is one of the only major foreign miners active in India, Jeffries believes that other heavyweight firms could gradually shift their focus to India.

“It’s interesting to see that trend. Going back to 2008-2010, India used to be one of the biggest exporter of iron ore and now the reverse has happened.”

Indeed, imports are already on the rise, hitting a record of more than 15 million metric tons during the 2014-2015 financial year. A 2011 ban on domestic mining in the mineral-rich states of Karnataka, Odisha and Goa led to a severe supply deficit, paving the way for imports. While the ban has since been lifted, output caps have been imposed, which should further underpin import growth.

In Goa, for instance, iron-ore production can’t exceed 20 million tons per year and each miner is allocated a specific amount. The cap is 5.5 million tons for Vedanta, for example.

Prime Minister Modi’s decision to triple spending on roads, highways and other public infrastructure projects could boost the nation’s steel demand by 7-8 percent in 2015, Fitch said in a note last week.

“It is feasible to consider India as new catalyst for iron ore demand. India has the potential to follow same growth trajectory we saw in China over the past decade,” said David Lennox, resources analyst at Fat Prophets.

With US interest rates set to rise and Europe’s likely headed lower, certain assets on the continent look like a good bet, Goldman Sachs said.

It’s staying overweight European equities and local-currency credit on a three-month basis to position for “tailwinds” from the European Central Bank (ECB) and the currency.

“We expect the ECB to ease further at the December meeting to counter downside risks to inflation,” Goldman said in a note Wednesday, forecasting the deposit rate to be lowered by 10 basis points to negative 30 basis points. It also expects the bank to extend its quantitative easing (QE) program through the end of the third quarter of 2017.

A basis point is 1/100th of a percentage point.

That’s likely to weaken the euro as funds flow out of the currency and toward assets offering better-than-negative returns.

The ECB’s likely cuts come as the US Federal Reserve is widely expected to implement its first hike to its benchmark rate in nine years at its December meeting. That’s likely to strengthen the dollar as it will increase expected returns in the US.

Here’s another sign that investors are getting tetchy about the performance of precious metals such as gold.

According to Bank of America Merrill Lynch’s weekly flows report, investors yanked USD 1 billion from precious metals funds in the week to Nov. 25, the chunkiest outflow in 17 weeks. Data this week were based on four days of fund flows as opposed to the normal five due to Thanksgiving holiday, the bank said.

Precious metal funds typically focus investments in companies that mine, explore or deal in gold and other metals such as silver and platinum, the prices of which have been under the cosh recently.

Gold is currently trading at USD 1,072 an ounce, near its lowest level since February 2010. Platinum, meanwhile, is close to a seven-year trough at USD 852 an ounce.

Investment-grade bond funds saw outflows of USD 2.6 billion, the heftiest in eight weeks, while investors piled into money market funds, as shown by USD 12 billion of inflows.

The World Bank is calling for USD 16 billion in funding to help Africa and its people adapt to climate change or face diseases and crippling food price inflation.

The Africa Climate Business Plan will be presented on November 30 at the COP21 environmental summit in Paris.

Described by its organizers as “crucial”, COP21 will see the world’s leaders, scientists, pressure groups and United Nations agencies attempt to thrash out, “a new international agreement on the climate, applicable to all countries, with the aim of keeping global warming below 2 degrees Celsius.”

“Sub-Saharan Africa is highly vulnerable to climate shocks, and our research shows that could have far-ranging impact — on everything from child stunting and malaria to food price increases and droughts,” World Bank Group President Jim Yong Kim said in a press release.

“This plan identifies concrete steps that African governments can take to ensure that their countries will not lose hard-won gains in economic growth and poverty reduction, and they can offer some protection from climate change,” Kim added.

According to the plan, based on current estimates, Africa will need between USD 5-10 billion every year in order to adapt to global warming of two degrees.

Three areas of action are identified in the plan. The first will seek to improve the resilience of African assets, comprising natural capital, physical capital and human and social capital.

The second area will focus on, “powering resilience, including opportunities for scaling up low-carbon energy sources.”

The third area will look at enabling resilience via the provision of data and information to aid “climate-resilient development across sectors.”

“The plan is a ‘win-win’ for all especially the people in Africa who have to adapt to climate change and work to mitigate its impacts,” Jamal Saghir, the World Bank’s Senior Regional Adviser for Africa, said.

“We look forward to working with African governments and development partners, including the private sector, to move this plan forward and deliver climate smart development.”

For 32-year-old Varsha Deerpaul, shopping these days no longer involves weekend trips to her favorite mall in South Delhi’s Saket area.

Instead, she now indulges in retail therapy “mostly on the go” through her Samsung smartphone. For example, during her daily commute to work, Deerpaul spends most of her time browsing through the latest deals on e-retailers Flipkart and Jabong.

“If I wanted to buy a dress, I probably will have to check out many shops before deciding on one and that takes up too much time and effort. But now, I can easily browse through 20-30 dresses and there are discounts almost throughout the year. It’s really easy and by the time I reach my metro station, I would have decided on what I want,” the human resource senior executive told CNBC.

With consumers such as Deerpaul, it is little wonder that India’s e-commerce companies are racing to embrace mobile, with some ditching their web platforms entirely to go mobile-only such as online fashion retailer Myntra earlier this year.

Most recently, the country’s biggest e-commerce player Flipkart unveiled a new mobile website on November 9, which aims to give users an experience close to standalone apps.

“In July 2014, we had about 15 percent of transactions coming from mobile. In a year, we have gone from 15 percent to 70 percent. This kind of revolution is almost unforeseen and we have to come up with a whole new set of products to deal with that,” Flipkart’s chief product officer Punit Soni told CNBC in September.

Read More: Snapdeal CEO: We will be India’s biggest e-commerce player

Drivers and limitations

According to a report released in April by market research firm Zinnov, India’s mobile commerce market could balloon to USD 19 billion by 2019, up 850 percent from its current size of USD 2 billion. Surging smartphone sales in the world’s second most populous country amid a tidal wave of low-cost handsets is the key driver, the report said.

Projections by Cisco put the number of smartphone users in India at 651 million by 2019, a near five-fold jump from 140 million by end-2014. The study, released in February, noted a 54 percent surge in the number of smartphone users in 2014 as the average price of handsets fell to around USD 150 last year and as smartphone penetration increases in rural India.

With the availability of cheap mobile data plans increasing, analysts believe this will help boost internet usage via mobile handsets — and consequently online shopping.

“India has a huge opportunity for mobile commerce. This is the first time a majority of Indians are getting connected to the internet. They are discovering products at costs that are lower than they’ve never seen before, and they are getting products that were not available in their market before. So it’s a huge opportunity,” FreeCharge’s co-founder Sandeep Tandon told CNBC.

Read More: Flipkart founders debut on Forbes billionaire list

To be sure, obstacles that threaten to stymie the growth potential of mobile commerce in India remain aplenty.

For one, India’s focus on cash usage and security concerns about e-transactions are creating friction with the burgeoning online shopping market, analysts say. Large players are wary of the ‘Cash on Delivery’ system as it is manpower intensive, and requires time to collect the cash from the consumer’s doorstep.

In addition, India’s poor logistics infrastructure creates a challenge for e-retailers to offer quick delivery services, while the lack of stable telecommunications infrastructure across the country could also limit the pace of growth.

However, companies such as India’s second-biggest e-commerce player Snapdeal have taken the proactive approach by actively investing in solutions that will iron out these obstacles.