Morning MoneyBeat Asia: U.S. Stocks Ease on Fed Comments on Rates

     

By Paul Vigna
        Market Snap: At the New York close: S&P 500 down 0.2% at 2093.32. DJIA down 0.3% at 17550.69. Nasdaq Comp down 0.2% at 5105.55. Treasury yields rose; 10-year at 2.211%. Nymex crude oil up 1.3% at $45.74. Gold up 0.1% at $1,090.70/ounce.
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        How We Got Here: A generally quiet day on Wall Street, albeit U.S. stocks lost a bit of ground on comments from the Atlanta Fed's Dennis Lockhart about just how close the Fed is to raising rates.
        Mr. Lockhart said the central bank is close to being ready to raise rates. Now, he didn't say it's raising rates. He said it's close, to being ready, to raise rates. If the data cooperates, of course. If you look at his statement close enough, we think you'll see that he didn't really say anything the markets didn't already know, or at least should have known.
        The market may have read "close" as synonymous with "September," but that says more about the market than the Fed. While the market is betting against September for that first hike, most economists think it will come in September. In fact, we'd say the bank is itching to raise rates. It's had short-term rates at zero for nearly seven years, and it's been making noise about raising them for two years. The economy has its problems, but a debilitating crisis isn't one of them, so there's little reason for crisis-level monetary policy anymore.
        Coming Up: China took another step to curb volatility in its stock markets, moving to clamp down on short selling in the country. Under new rules, short sellers must wait at least one day to cover their positions and pay back loans used to buy shares. Previously, investors could cover their positions within the same day, a practice China's stock exchanges said tends to "add to abnormal volatility of stock prices and affect market stability."
        The new rules may help discourage short selling because they effectively force investors to keep their bets open overnight and leave them vulnerable to any new stimulus measures introduced by Beijing before trading resumes.
        But Li Lei, an analyst at China Minzu Securities, said the revision is expected to have limited impact on the market, due to the small scale of short selling. "Securities firms and listed firms have little incentive to develop short selling trade, for fear of dragging down stock prices," added Mr. Li.
        What You Missed Overnight
        Lockhart Says Fed is 'Close' to Ready to Raise Rates Federal Reserve Bank of Atlanta President Dennis Lockhart said the economy is ready for the first increase in short-term interest rates in more than nine years and it would take a significant deterioration in the data to convince him not to move in September.
        Oil Companies Struggle to Live With $50 Crude The world's biggest oil company's have vowed to bring down the costs of big projects in the face of slumping oil prices, but the unrelenting price weakness--with crude below $50 a barrel--suggests they could have to dig deeper still.
        Shire Makes Unsolicited $30.6 Billion Bid for Baxalta Dublin-based Shire said Tuesday that it has made an unsolicited offer to acquire rare-disease treatment maker Baxalta for roughly $30.6 billion in stock, in the latest sign of drug makers' strong appetite for deals.
        Epson Kills the Printer-Ink Cartridge Epson has finally put an end to the horror of ink cartridges, at least for people willing to throw cash at the problem up front.
        From The Wall Street Journal Asia
        China's Response to Stock Rout Exposes Regulatory Disarray As China's summer stock slide deepened, threatening a key plank of Beijing's plan to overhaul the world's No. 2 economy, the country's premier pounded the table and demanded that regulators get their act together.
        North Korea's Private Finance: No Banks but Lots of Loans As unauthorized private commerce has bolstered North Koreans' incomes, an unregulated system of lending and currency exchange has also emerged, they said.
        China Brokerage IPOs Likely to Face Cooler Climate Before the year is out, three Chinese brokerages are planning to tap Hong Kong's stock markets for initial public offerings that could raise billions of dollars.
        MGM Profit Falls on Continued Hit From Macau Business MGM Resorts International's second-quarter earnings fell 11% as continued weakness in Macau was partly offset by growth in the Las Vegas market.
        From MoneyBeat
        Baxalta Well-Armed to Fend Off Shire There is a good reason newly minted Baxalta isn't rushing to embrace the unsolicited $30.6 billion takeover bid Shire made on July 10 and announced Tuesday morning. Baxter International gave Baxalta state-of-the-art takeover protections when it spun the company off in June.
        Apple in Correction Territory; More Carnage to Come? The tech giant is in correction territory and sitting below its 200-day moving average after dropping 10 times in the past 11 sessions. The stock is now only up 4.5% on the year, almost three percentage points above the S&P 500's gain. That's after Apple was up by as much as 18% for 2015 in April.
        M&A Borrowing Hits a Fresh Record Amid Deal Splurge Companies are issuing debt at record rates to fund acquisitions in a move at least partly motivated by expectations of a rise in U.S. borrowing costs.
        These Stocks Bucked the Trend When the Athex Reopened While some stocks plummeted when the Greek market reopened, some so fast they triggered circuit breakers, with falls of 30%, a handful of stocks were in the green, one equally sharply.
        (END) Dow Jones Newswires

        August 04, 2015 20:20 ET (00:20 GMT)

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