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

 

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Food: Govt Obesity Plan - No Tax Or Legislation

Speaking to Q+A’s Corin Dann this morning, health minister Jonathan Coleman said tackling obesity was at the top of the Government’s priority list, but there was “no evidence” a sugar tax worked, and further regulation was unnecessary. More>>

ALSO:

Treasury Docs On LVR Policy: Government Inaction Leads To Blurring Of Roles

The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. More>>

ALSO:

Final EPA Decision: Tough Bar Set For Ruataniwha Dam

Today’s final decision by the Tukituki Catchment Board of Inquiry is good news for the river and the environment, says Labour’s Water spokesperson Meka Whaitiri. “Setting a strict level of dissolved nitrogen in the catchment’s waters will ensure that the dam has far less of an impact on the Tukituki river." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news