Actual finance blog

Asian stock markets fell Tuesday after Standard and Poor’s warned 15 countries using the euro currency that their credit ratings are at risk of a downgrade.

Japan’s Nikkei 225 dropped 0.8 percent to 8,628.73. South Korea’s Kospi dipped 0.7 percent to 1,908.75 and Hong Kong’s Hang Seng lost 1 percent to 18,988.82. Australia’s S&P/ASX 200 shed 0.6 percent to 4,293.90. Benchmarks in Singapore, Taiwan and New Zealand also gave up ground.

The S&P announcement came only hours after French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday unveiled sweeping plans to change the European Union treaty in an effort to keep tighter checks on overspending nations.

The S&P warning left out only two of 17 countries that use the euro: Cyprus, whose bonds have near-junk status, and Greece, which already has ratings low enough to suggest that it’s likely to default soon anyway. The inclusion on the list of Germany, Europe’s strongest economy, was the biggest surprise.

The Franco-German plan, which would tie the 17 euro nations closer together, would likely also result in heavier financial burdens for Germany and other stronger economies that have already put up billions of euros to rescue Greece, Ireland and Portugal no fax payday loans.

Sarkozy and Merkel discussed several broad changes for the EU treaty, including the introduction of a penalty for any government that allows its deficit to exceed 3 percent of gross domestic product. The penalty would be automatic _ unless a majority of nations opposed it, a loophole that drew sharp criticism from analysts.

Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong, said the sanctions were “subject to political control” and in reality represent no change from mechanisms already in existence.

The French-German proposal will be taken up at a summit of EU leaders on Thursday and Friday aimed at fixing a debt crisis so severe that it threatens the viability of the euro currency.

On Wall Street, the Dow Jones industrial average rose 0.7 percent to 12,097.83. The S&P 500 rose 1 percent to 1,257.1. The Nasdaq added 1.1 percent to 2,655.76.

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A new report says a record number of shoppers made purchases online on the Monday after the Thanksgiving holiday weekend, pushing sales up 33 percent.

The report from IBM Benchmark says the average order rose 2.6 percent to $193.24 on the day known as “Cyber Monday,” when retailers amp up online promotions. The data says about 80 percent of retailers offered online deals.

It says traffic peaked at 2:05 p.m. Eastern.

About 6.6 percent used a mobile device to shop, up from 2.3 percent in 2010. The Cyber Monday numbers point to Americans’ growing comfort with using their personal computers, tablets and smartphones to shop.

A clearer picture of how holiday sales are shaping up will come on Thursday, when major retailers report November sales.

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With winter fast approaching, the bailiffs of Budapest are in a race against the clock.

They have only days before temperatures plummet and evictions are frozen by law. Demand for their services is soaring, and in the last seven weeks at least three people in the capital have committed suicide over the prospect of losing their homes.

Ani Beres, a 58-year-old woman whose family farming business went bankrupt, sat on her bed and spoke of hurling herself out of the window as the debt men knocked on the door of her 9th floor apartment this week. Her last line of defense was a throng of angry family members and activists trying to get in their way.

Hungary’s eviction crisis has its roots in 2005, when hundreds of thousands of Hungarian families began taking out mortgages and other loans in foreign currencies _ overwhelmingly in Swiss francs _ to take advantage of lower interest rates and a strong Hungarian forint.

But the Hungarian currency has plummeted over the past two years as the economy, highly dependent on exports, spiraled downward in the global economic crisis.

Today, the currency is falling further as the economy teeters on the verge of recession. Hungary’s credit rating is threatened with downgrade to junk status. Investors are spooked by the government’s unorthodox economic policies. And exports to Western Europe are being buffeted by the eurozone’s own debt crisis.

In a sign of the depth of the currency shock, authorities said Thursday that state security services will investigate possible speculative attacks on the forint after it plunged to an all-time low against the euro this month.

While a Swiss franc was worth 150 forints in 2008, it has now risen to around 250 forints and the Beres family’s 8-million-forint loan ($34,500, euro25,700) has ballooned to at least 12 million forints ($69,000, euro51,400).

The family depends on welfare payments of 48,000 forints ($208, euro155), not enough to live on, much less to repay their loan.

“We get food from the neighbors to survive,” Beres said. “You can ask them!”

A bailiff backed by several police officers had come to evict her family, whose home was bought at auction by real estate investors after she was unable to repay a foreign-currency bank loan.

“We took out the loan to invest in our vegetable-growing business … but we went bankrupt and had to sell everything,” Beres said, as her husband, Laszlo, screamed at the bailiff in the stairwell and had to be restrained from attacking him.

“I’m hopeful we can sort things out. But I’ll do it, I’ll jump out right here in front of everyone!” she said. “How many people need to die in this country until a solution is found?”

Hungary was a favored destination for international investors during the years after the first post-communist elections in 1990. But in the 2008 global recession, it became the first EU country to receive a bailout from the International Monetary Fund to avoid defaulting on its loans.

Last year, Prime Minister Viktor Orban’s government decided to forgo IMF support so it could apply its unconventional economic policies, including allowing people to pay back foreign currency loans at exchange rates much lower than current market rates, with banks forced to absorb the difference.

Last week, however, the government announced it would seek a “safety net” from the IMF and the EU but denied that the financial assistance would take the shape of a new loan, thereby giving the IMF undeniable say in Hungary’s economic policy.

Despite Orban’s intention of keeping a “free hand” in economic matters, analysts are skeptical lenders will be so considerate.

“The government would like to preserve its total independence … but it’s unlikely that the IMF would provide money without having some say,” said Zoltan Arokszallasi, a macroeconomic analyst at Erste Bank in Budapest.

A government ban on evictions in place during the first half of the year will return Dec. 1 because of the freezing weather, so the number of forced expulsions has risen greatly during the past weeks as lenders or the new owners attempt to take possession of their properties.

There have been at least three suicides during recent evictions in Budapest.

On Oct. 6, Eva Stiaszni, a 49-year-old subway conductor slammed the door when authorities came to throw her out, sent a farewell text message on her cell phone to her 21-year-old daughter and jumped to her death from her apartment window on the 9th floor of a low-cost housing estate.

“My daughter never asked for my help or anyone else’s,” said her 77-year-old mother, Ica Stiaszni. “How did she end up in a such a state that she was driven to her death?”

At the Beres home _ after much shouting, pleading and threats _ the bailiff agreed to the family’s request for a three-month stay of eviction.

But their problems are far from over.

“We’ve been looking for an emergency home for months and have not found anything,” Beres said. “We have no place to go.”

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Asian stocks fell Wednesday after the U.S. government revised its economic growth estimate downward and climbing yields on Spanish bonds magnified worries over Europe’s debt load.

Hong Kong’s Hang Seng index fell 1.7 percent to 17,941.62. South Korea’s Kospi lost 1.7 percent to 1,795.81 and Australia’s S&P ASX 200 index lost 1.2 percent to 4,082.40.

Japanese stock markets were closed for a public holiday.

Stocks on Wall Street slipped Tuesday after a government report showed the U.S. economy grew at a 2 percent annual rate from July through September, down from an initial estimate of 2.5 percent. Economists had expected the figure to remain the same.

The Dow Jones industrial average lost 0.5 percent to close at 11,493.72. The Standard & Poor’s 500 fell 0.4 percent to 1,188.04. The Nasdaq composite fell 0.1 percent to 2,521.28.

Higher borrowing costs for Spain, meanwhile, renewed worries about Europe’s debt crisis. The higher rates suggest that investors are still skeptical that the country will get its budget under control despite a new government coming to power this week.

Investors have been worried that Spain could become the next country to need financial support from its European neighbors if its borrowing rates climb to unsustainable levels.

Greece was forced to seek relief from its lenders after its long-term borrowing rates rose above 7 percent on the bond market. The rate on Spain’s own benchmark 10-year bond is dangerously close to that level, 6.58 percent.

But fears of the debt crisis spreading elsewhere in Europe were allayed somewhat after the International Monetary Fund announced a plan to provide quick cash on flexible terms to countries facing sudden financial stress.

Concerns remain that Europe’s debt crisis is pushing the region toward recession, which would slow industrial activity in Europe and in countries around the world that export to Europe.

Benchmark oil for January delivery fell 65 cents to $97.36 per barrel on the New York Mercantile Exchange. The contract rose $1.09 to finish at $98.01 per barrel on the Nymex on Tuesday.

In currency trading, the euro fell to $1.3466 from $1.3509 late Tuesday in New York. The dollar rose slightly to 76.99 yen from 76.97 yen.

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A push to build a Pacific free trade bloc gained ground Friday with Japan’s decision to join negotiations, as Asia-Pacific leaders converging on Hawaii for an annual summit mulled ways to prevent Europe’s crisis from derailing the global recovery.

The weekend meeting of the 21-member Asia-Pacific Economic Cooperation forum, which brings together leaders from Russia to Chile, is focused on creating jobs and business through nuts-and-bolts measures such as investment in infrastructure and reforms aimed at providing more access to financing for the poor.

Such moves are gaining urgency, with the European Union warning of a possible “deep and prolonged recession” next year as the debt crisis that has engulfed Ireland, Portugal and Greece shows signs of spiraling out of control. A European recession would be felt sharply in the U.S., where growth is already anemic, and in Asia, which relies on Europe as a big market for its cars, clothing, consumer electronics and other exports.

“In the coming 12 months there is quite a strong likelihood that things will go worse,” Hong Kong’s chief executive, Donald Tsang, told a gathering of business leaders on the sidelines of the APEC meetings. “Global performance will be dragged down and then there will be an awakening, I hope,” he said.

U.S. Secretary of State Hillary Clinton said in opening a meeting of foreign and economic ministers that many forces outside the Pacific region will have an impact on it. “Global trends and world events have given us a full and formidable agenda,” she said. “And the stakes are high for all of us.”

As host of the annual summit, the U.S. has made expanding trade, promoting green growth and deepening cooperation on regulation and standards to help dismantle barriers to trade and nurture faster growth.

“We’ve even created an unofficial slogan: ‘Get Stuff Done,” Clinton said.

The U.S. also is hoping to garner support for a Pacific free trade pact that many APEC members see as a building block for a free trade area that encompasses all of Asia and the Pacific, covering half the world’s commerce and two-fifths of its trade.

That goal advanced Friday with Japan’s announcement that it will seek to join the bloc, called the Trans-Pacific Partnership, despite strong opposition from farmers fearful of exposure to greater foreign competition.

The Pacific trade pact, known as the TPP, currently includes Chile, New Zealand, Brunei and Singapore _ all relatively small economies. The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join. The participation of Japan, the world’s third-largest economy, would vastly expand its reach.

At the same time they are working toward a broader agreement, countries continue to forge separate free-trade agreements. On Friday, Vietnam and Chile were to due to sign a free trade agreement on the sidelines of the APEC meetings.

The U.S. recently clinched long-sought free trade pacts with South Korea, Colombia, and Panama _ agreements that if ratified will bring to 20 the number of countries that have free trade agreements with the U.S.

In Honolulu, Washington was keeping up pressure on China to commit to faster trade liberalization and to freeing its currency, which U.S. officials say remains undervalued even though it has gained substantially against the U.S. dollar in recent years.

A statement by APEC finance ministers released Thursday included a call for exchange rate flexibility. Treasury Department officials said China’s willingness to back such a commitment _ both at the Group of 20 meeting in Cannes last week and in Honolulu this week _ could encourage similar moves by other Asia-Pacific economies.

But Beijing’s apparent openness to move faster on its currency policy was not matched by similar support for the Trans-Pacific Partnership, which earlier this week a senior official in Beijing described as “overly ambitious.”

Overall, given APEC’s lack of negotiating power _ all decisions are by consensus _ prospects for major changes are slim. But over the years the group’s incremental efforts have helped build support for closer economic ties and freer trade.

Clinton said that by agreeing on something as rudimentary as shared safety standards for televisions, countries in the region saw exports of TVs jump by nearly half in three years.

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Olympus Corp. said Thursday it is postponing an earnings announcement set for next week amid an accounting scandal that has wiped out about four-fifths of its stock price and tarnished Japan’s corporate image.

The Japanese camera and medical equipment maker said in a statement Thursday that it cannot submit its earnings report for the April-September period on Nov. 14 as planned due to an ongoing review by a company-appointed investigation panel.

In response, the Tokyo Stock Exchange placed Olympus stock on supervisory status, warning that it could be removed from the stock exchange if it fails to release its earnings within a month, or by Dec. 14.

Olympus has been battered by a scandal over a $687 million payment for financial advice and expensive acquisitions of companies unrelated to its mainstay businesses.

On Tuesday, the company said top executives used the payment and acquisitions to hide massive losses, reversing denials of any wrongdoing. Its British CEO Michael Woodford first raised the concerns last month, calling for Olympus executives to resign _ and was then promptly fired by the board.

Olympus said it will do its “utmost” to submit the earnings report by Dec. 14, and said it was cooperating with the “strict and thorough investigation” being conducted by the independent committee. Results of the probe are expected in early December.

“We deeply apologize for causing trouble to our shareholders, investors, customers and anyone else who are affected by the matter,” Olympus said online pay day loans.

The company’s shares have plunged to 484 yen Thursday from 2,482 yen on Oct. 13, the day before Woodford’s dismissal.

Olympus dismissed Executive Vice President Hisashi Mori on Tuesday, saying he was involved in the cover-up along with Tsuyoshi Kikukawa, who abruptly resigned as chairman last month in an attempt to placate angry shareholders.

Shuichi Takayama, who took over as president in late October, has said he can not disclose the size of the losses or any other detail because all data had been handed over to the independent panel.

The Tokyo-based company had denied wrongdoing over the $687 million payment to the Wall Street financial adviser as part of a $2 billion purchase of U.K.-based Gyrus Group Plc. The payment represented more than a third of the acquisition price. Fees for advisers are normally 1 to 2 percent of the deal value.

Business groups and analysts have said the scandal reflects weaknesses in Japan’s corporate governance including too few independent directors on company boards.

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OTTAWA—A surging energy sector gave a healthy 0.3 per cent boost to the economy in August, suggesting Canada rebounded much more strongly than believed during the summer, following a surprising dip in the spring.

Statistics Canada also upgraded July’s gross domestic product a tick to 0.4 per cent on Monday, which places the economy on track to post a strong three per cent gain in the third quarter.

Following a 0.4 per cent contraction in the second quarter, and expectations of softness due to the market turmoil that took hold in early late July, some analysts had speculated it was possible for Canada to have suffered a technical recession of two negative quarters over the summer.

But that is no longer in the realm of possibility, given the bigger than expected numbers in the first two months.

“Even assuming a soft September, the quarter could come in at 2.9 per cent,” said Avery Shenfeld, chief economist with CIBC World Markets.

“We still see growth slipping back below two per cent in the fourth quarter, but odds are increasing that the second half should end up well above the Bank of Canada’s recent projection barring some new, unforeseen shock,” he added.

Scotiabank’s Derek Holt said the stronger two months means that September would need to have seen a disastrous 0.5 per cent retrenchment — and there were no signs that happened given the 61,000 pick up in jobs during the month — for third-quarter growth to have come in as weak as the Bank of Canada’s call of two per cent.

“Indeed, the recession chatter of a few weeks ago looks pretty ridiculous in light of almost four per cent GDP growth in the latest three months.

The consensus of economists had expected a 0.2 per cent increase in August, and did not foresee July’s revision.

However, August’s expansion was not as strong in other areas — the agency noted the country’s gross domestic product would have remained unchanged but for the 2.8 per cent jump in the energy sector.

Overall, industries tied to Canada’s domestic economy did well, while those related to exports did not.

The financial sector, as well as real estate and insurance, retail and construction all posted gains.

On the flipside, manufacturing fell 0.4 per cent, wholesale trade 1.4 per cent, and transport and warehousing was also down slightly on weak foreign demand and strong dollar.

The public sector (public administration, education and health care) overall was unchanged, as was mining.

Economists were uniform in saying the stronger than expected state of the economy is unlikely to materially impact the Bank of Canada’s position on interest rates.

Analysts still expect the central bank to keep its target overnight rate at one per cent until at least the middle of next year, and some say until well into 2013.

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For the second week in a row, the Chinese aren’t coming.

China Cargo has canceled its scheduled Monday freight flight to Lambert-St. Louis International Airport, airport officials said Friday, a move that raises serious concerns about the viability of Lambert’s fledgling cargo hub project.

Last month the airline landed its first Shanghai-to-St. Louis cargo flight to great fanfare, then ran a second on Oct. 19. But now it has canceled the regularly scheduled Monday flight for the second consecutive week.

Lambert officials said they have not been told exactly why, but suspect there are two reasons: one local, one global.

Both cancellations have come since the collapse of the so-called Aerotropolis tax credits, a $60 million program to subsidize air exports from Missouri. It was intended to make cargo flights from Lambert cheaper than from competing cargo hubs like Chicago-O’Hare, but it died in the Legislature last week.

“We believe there is some correlation” between the tax credit demise and the canceled flights, said airport director Rhonda Hamm-Niebruegge.

But perhaps a bigger factor is the global economy.

Demand for air cargo has been weaker than expected this year, and while there’s typically a fall rush ahead of the holidays, this fall it isn’t panning out. International freight flown by Asian-based carriers was down 6.5 percent in September compared with last year, according to the Association of Asia Pacific Airlines quick payday loan. And Chinese aviation officials this week slashed their cargo forecast for the rest of 2011.

“It’s not isolated to St. Louis,” Hamm-Niebruegge said. “The air cargo market out of China is softer than expected and the impact is being felt across the world.”

Still, the timing is tough for St. Louis.

Lambert and local business leaders have been talking with the Chinese for four years and call the hub project a potential game-changer for the region’s economy. They had hoped to start with three flights a week but said they would build from one after the Aerotropolis bill fell apart. Meanwhile, Gov. Jay Nixon spent the week in China on a long-planned trade trip and was set to meet with aviation officials there.

It’s unclear how that meeting went. Nixon canceled a conference call Wednesday with reporters because of scheduling conflicts, and his spokesman hasn’t answered questions about the aviation meeting.

Nor is it clear what happens next. China Cargo has a two-year lease on a building and ramp space at Lambert, at a cost of $14,549 a month, but that doesn’t mean they have to fly planes. As of Friday, Lambert had gotten no word on when the next flight would land.

“It’s going to be a week-to-week thing at this point,” said airport spokesman Jeff Lea.

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Banks and homebuilders pulled the stock market higher Tuesday, overriding early jitters about a potential stalemate in Europe over a bailout for Greece.

Bank of America Corp. rose 7 percent in early afternoon trading after it beat Wall Street earnings expectations for third quarter thanks to accounting gains and the sale of a stake in a Chinese bank. Goldman Sachs rose 2 percent, even after reporting only its second quarterly loss since going public in 1999.

There was also positive news in the housing sector, which has rattled banks since the real estate collapse.

A survey of U.S. homebuilders showed they are less pessimistic about the struggling market. The National Association of Home Builders said its index of builder sentiment this month rose from 14 to 18, the highest level since May 2010. But any reading below 50 reflects overall pessimism.

Building company stocks jumped on the news. D. R. Horton Inc. soared 9 percent. Lennar Corp. and PulteGroup Inc. both gained more than 8 percent.

The Dow Jones industrial average was up 54 points, or 0.5 percent, to 11,451 at 12:15 Eastern. International Business Machines tugged on the Dow average, falling 5 percent, the most of any Dow stock by far.

The Standard & Poor’s 500 index rose 10, or 0.8 percent, to 1,210. The Nasdaq composite rose 14, or 0.6 percent, to 2,629.5

Markets wavered in early morning trading after some disappointing corporate earnings reports and concerns that France and Germany may not reach an agreement on additional support for Greece.

Moody’s said late Monday that the stable outlook for France’s top-notch credit rating is under pressure. On Tuesday, that country’s finance minister said that the French economy will likely grow a rate of less than 1.5 percent next year. France is Europe’s second-largest economy.

Investors were troubled by reports that France and Germany remain divided on a plan to provide more support for Greece. An agreement between the two countries, the two largest economies that use the euro, is seen as the bedrock for a rescue package that can pass all 17 countries that share the euro.

The Greek government is widely expected to go through some kind of default or restructuring of its debt. European banks could face big losses on Greek government bonds and that could ripple overseas, jolting global credit markets.

Tuesday brought full day of corporate earnings reports in the U.S.

UnitedHealth Group Inc.’s fell 4 percent after its third-quarter profit dipped. The country’s largest health insurer by sales said medical costs climbed and more patients visited their doctors’ office.

Coca-Cola Co. lost 0.6 percent after narrowly beating Wall Street’s earnings estimates. Johnson & Johnson rose 0.2 percent after posting a 6 percent in decline in third-quarter profit, roughly in line with analyst expectations.

Apple Inc. and Intel will report their results from the last quarter after the market closes.

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A gender discrimination lawsuit filed two years ago by Francine Katz, a former high-ranking female executive at Anheuser-Busch, will finally go to trial in St. Louis Circuit Court after the Missouri Supreme Court declined the brewer’s request for a transfer.

Katz, a lawyer who formerly worked at the Armstrong Teasdale law firm, joined Anheuser-Busch’s legal division in St. Louis in 1988 and ultimately rose to vice president of communications and consumer affairs for the brewer. She also was a member of the company’s strategy committee. She resigned from A-B after it was acquired by Belgium-based InBev in late 2008. 

Katz filed a gender discrimination lawsuit against A-B in October 2009 that alleged she was given a smaller salary and bonuses than male executives and alleged the company had a “frat party” atmosphere that excluded females from informal social networks, in violation of the Missouri Human Rights Act personal loans for people with bad credit.

Anheuser-Busch sought to have the case go through arbitration rather than a trial, but the Missouri Court of Appeals ruled in Katz’ favor in June, allowing the lawsuit to proceed in the St. Louis Circuit Court. A-B sought a transfer to the state’s highest court, but on Tuesday, the Missouri Supreme Court denied A-B’s request.

Katz is seeking lost wages and compensatory and punitive damages.

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