ASIA
Asian stocks rose, with the benchmark regional index gaining for a third week, after the Federal Reserve unexpectedly refrained from cutting stimulus and Japanese exports surged.
The MSCI Asia Pacific Index climbed 2.6% to 140.67 last week.
Japan’s Topix index rose 5.3% last week to a two-month high, with reports showing the nation’s exports jumped the most since August 2010 as the trade deficit narrowed. Hong Kong’s Hang Seng Index advanced 2.6% and the Nikkei 225 added 2.34%, while the Shanghai Composite Index lost 2%.
Australia’s S&P/ASX 200 Index gained 1.1%, touching a five-year high. New Zealand’s NZX 50 Index climbed 1.7%, reaching a record on Sept. 19. Singapore’s Straits Times Index increased 3.8%. Holidays cut trading last week to four days in Hong Kong, three days in China and Taiwan, and two in South Korea. Taiwan’s Taiex index gained 0.8%, while South Korea’s Kospi index added 0.6%.
Exporters advanced. Li & Fung, which gets 63% of sales of from the U.S., climbed 3.3% in Hong Kong. Panasonic gained 4.2% and James Hardie Industries SE, a building materials supplier, jumped 5.7%.
Wing Hang joins Chong Hing Bank Ltd. in acquisition talks as the city’s role as an international yuan center attracts mainland financial institutions seeking overseas expansion. Chong Hing, Hong Kong’s smallest family-run lender, surged 21%.
Billabong International Ltd. lost 2.3% after accepting a refinancing plan from Oaktree Capital Management LP and Centerbridge Partners LP. Ranbaxy, India’s largest drugmaker, slumped 2.9% in Mumbai. Recommendations on the stock were lowered by brokerages including Jefferies LLC, HSBC Holdings Plc, and Edelweiss Securities Ltd. after the U.S. Food & Drug Administration issued an import alert against a Ranbaxy facility in Mohali, Punjab state. Parent company Daiichi Sankyo Co. lost 3.1% in Tokyo.
EUROPE
European stocks climbed for a third straight week after the Federal Reserve unexpectedly refrained from reducing its monthly bond purchases and Lawrence H. Summers withdrew from consideration as chairman of the central bank.
The Stoxx Europe 600 Index advanced 0.9% to 314.2 last week. The equity gauge has surged 5.7% in September, putting it on course for the biggest monthly gain in almost two years. The measure has climbed 12% in 2013 as the euro area emerged from recession and central banks pledged to keep borrowing costs low to support the global economy.
National benchmark indexes climbed: Germany’s DAX added 2%, France’s CAC 40 rose 2.2% and the U.K.’s FTSE 100 gained 0.2%.
The Stoxx 600 climbed to its highest level since June 2008 on Sept. 19, a day after the Fed said it needs to see more evidence of lasting improvement in the U.S. economy before slowing bond purchases.
European equities fell Thursday after Fed Bank of St. Louis President James Bullard said a “small taper” in stimulus is possible next month and as investors awaited Sunday’s elections in Germany.
The Bank of England released last week the minutes from its Sept. 4-5 meeting, which showed that officials unanimously concluded there was no need for additional stimulus given the improving outlook for the British economy.
Glanbia rallied 9.2% last week, Kilkenny was higher by 2.3% and Nutreco NV, the world’s biggest maker of fish feed, rose 6.2% in Amsterdam.
Banks also climbed. Banco de Sabadell SA surged 9.1% for the second-biggest increase in the Stoxx 600. HSBC Holdings Plc raised Spain’s fifth-biggest lender to neutral, or hold, from underweight. Unione di Banche Italiane SCPA jumped 7.5% after Goldman Sachs Group Inc. said capital-sensitivity at Italian banks is decreasing.
H&M gained 6.9%, the biggest rally in 15 months. Europe’s second-largest clothing retailer said revenue at stores open at least a year rose 4% in August compared with the same month last year. The average estimate in a SME Direkt survey was for a 2.5% increase.
Edenred climbed 7.8% for the biggest advance in 18 months.
Remy Cointreau SA jumped 6%, the most since January as Chinese cognac shipments increased 20.5% in August, rising for the first time since January.
Meanwhile, Fresnillo tumbled 14% for the biggest decline since June. The precious-metals producer wasn’t added to the NYSE Arca Gold Miners Index (GDX), after the gauge’s methodology was changed to include companies not listed in the U.S.
USA
US Stocks rallied to a fresh record high and bond yields dropped sharply after the Federal Open Market Committee said it would continue buying $85bn of bonds each month. The S&P 500 rallied 1.3% for the week and is up 4.7% for September. The S&P 500 and the Dow Jones Industrial Average reached record highs on Sept. 18 after the Fed’s announcement. Policy makers meet Oct. 29-30. For the week, tech NASDAQ Composite added 1.4% and the Dow Jones Industrial Average rose 0.5%.
Fed policy makers “decided to await more evidence” of economic progress, including holding its interest-rate target at almost zero until the unemployment rate falls below 6.5%. Fed Chairman Ben S. Bernanke previously said he expected the central bank to complete its asset-purchase program in the middle of next year when the unemployment rate is around 7%, down from August’s 7.3%. Bernanke and the Federal Open Market Committee have said they won’t consider raising its federal funds rate target as long as unemployment is 6.5% or higher.
The Federal Reserve on Wednesday cut its U.S. growth forecast for the third time this year, saying the economy is likely to expand between 2% to 2.3% in 2013 instead of its original estimate of 2.3% to 2.8%. By 2016, the central bank predicts U.S. growth will accelerate to a range of 2.5% to 3.3%, with short-term interest rates rising from zero to an average of about 2.25%. The central bank also trimmed its growth projection for 2014 and kept its estimate for 2015 largely intact, according to its "central-tendency" forecast. Inflation as measured by the PCE index is not expected to exceed 2% for at least four years. The Fed predicts an inflation rate of no higher than 1.2% in 2013, rising to a range of 1.7% to 2% by 2016.
The unemployment rate, meanwhile, is forecast to fall to as low as 7.1% at the end of 2013, 6.4% in 2014, 5.9% in 2015 and 5.4% in 2016. In light of these predictions, the vast majority of Fed policymakers predict the bank will not raise the short-term fed funds interest rates until 2015. By 2016, the fed funds rate could move to a range of 1.75% to 2.25%.
The latest bout of U.S. economic data came in mostly upbeat. The Philadelphia Fed’s manufacturing index jumped to a reading of 22.4 in September — the highest reading since March 2011. Leading indicators climbed 0.7% in August while the number of people applying for new unemployment benefits climbed by 15,000 in the week ended Sept. 14 to 309,000. Economists forecast a climb to 338,000.
Among Dow additions, Visa climbed 2.1%, Goldman Sachs added 1.2% and Nike lost 0.2%. They will replace Hewlett-Packard Co., which slipped 0.4%, and Alcoa Inc. and Bank of America Corp, which fell 1.8% and 1.2%, respectively.
Microsoft Corp. and General Electric Co. slipped at least 1.8% to pace declines among large companies. Caterpillar Inc. slumped 3.4% after its global retail machine sales dropped for a ninth consecutive month. BlackBerry Ltd. plunged 17% after announcing 4,500 job cuts. AK Steel Holding Corp. sank 8%, leading declines among steelmakers, after predicting a third-quarter loss. Apple Inc. fell 1% as its iPhone 5s and 5c handsets went on sale.
Reports this week on data from second-quarter gross domestic product to consumer confidence and new home sales may help investors gauge the prospect of economic growth. Investors are also watching the political wrangling over the approaching limit on federal spending. Government funding expires Oct. 1 and the Treasury is expected to exhaust its ability to borrow funds in mid-October, when it will hit the statutory debt limit.
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