Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


World Week Ahead: Fiscal, economic challenges

World Week Ahead: Fiscal, economic challenges

By Margreet Dietz

Dec. 3 (BusinessDesk) – The agonisingly slow rate of progress in talks to avoid the fiscal cliff in the US with now less than a month to reach an agreement will remain the key focus for investors this holiday season.

Progress is difficult to discern, if not absent at this point. Last week President Barack Obama warned of “prolonged negotiations”, while House of Representatives Speaker John Boehner declared “a stalemate”, saying the White House needed to get serious.

The importance of preventing a fresh setback to the American economy – the automatic tax increases and spending cuts that will take effect on January 1 if an agreement is not reached – was highlighted by an unexpected drop in consumer spending in October.


The 0.2 percent decline in purchases came after a 0.8 percent increase in September, according to Commerce Department data released on Friday. The report suggests that consumers may have shifted to more defensive positions ahead of the year’s most important season for retailers.

There will be more numbers to mull in the coming days for a more current read on the state of the economy including the all-important November jobs report on Friday. Also due are the PMI Manufacturing Index and the ISM Manufacturing Index, both on Monday, the ADP employment report on Wednesday and weekly jobless claims on Thursday.

"We have a week with a lot of economic data, and obviously most of the economic data is going to reflect the effects of Sandy, and that might be a little bit negative for the market," Peter Cardillo, chief market economist at Rockwell Global Capital in New York, told Reuters. Superstorm Sandy devastated the East Coast in late October.

In the past five days, the Dow Jones Industrial Average gained 0.1 percent, the Standard & Poor’s 500 Index rose 0.5 percent, while the Nasdaq Composite Index climbed 1.5 percent.

For the month of November, the S&P 500 posted its fifth advance in six, according to Reuters. The index gained 0.29 percent.

November also proved a good climate for US Treasuries as some investors relished their perceived safety amid concern about the economy.

“Our sense is that we are no closer to a deal than we were two weeks ago,” Ian Lyngen, a government-bond strategist at CRT Capital Group in Stamford, Connecticut, told Bloomberg News. “The primary issue at hand is the fiscal cliff and the likelihood that any budget agreement negatively affects gross domestic product in 2013.”

In Europe, the Stoxx 600 Index posted a gain of 0.9 percent for the week, bringing its advance for the month to 2 percent. And even the beleaguered euro benefited, touching the highest level in 5-1/2 weeks against the greenback on Friday.

Germany’s parliamentary approval of the latest aid package for Greece helped underpin the mood.

Still, European Central Bank chief Mario Draghi warned the euro zone’s troubles are far from over. “We have not yet emerged from the crisis," Draghi told Europe 1 radio. "The recovery for most of the euro zone will certainly begin in the second half of 2013."

Late on Friday Moody’s cut its rating on both the European Stability Mechanism and the European Financial Stability Facility, reflecting its recent downgrade of France.

Eyes will be on meetings of policy makers at the ECB and the Bank of England this week. The ECB is expected to leave its key interest rate on hold at a record low 0.75 percent.

One positive from the weekend, which might bolster enthusiasm at least for a short period of time, was that China’s official manufacturing purchasing managers’ index reached a seven-month high in October, confirming a recovery trend in the world’s second biggest economy, Reuters reported.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Inflation: CPI Increases 0.3 Percent In June Quarter

The consumers price index (CPI) rose 0.3 percent in the June 2014 quarter, Statistics New Zealand said today. This follows rises of 0.3 percent the March quarter and 0.1 percent in the December 2013 quarter. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news