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- U.S. files massive fraud suit against S&P
Citing Standard & Poor's incentive to win business from investment banks, the U.S. Justice Department has filed a $5 billion fraud lawsuit against the ratings agency. The allegation is that S&P understated risks associated with mortgage-backed securities, whose collapse eventually led to the global economic meltdown. "Put simply, this alleged conduct is egregious -- and it goes to the very heart of the recent financial crisis," said Attorney General Eric Holder. Reuters
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, Financial Times (tiered subscription model)
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- U.S. service industries extend growth in January
The outlook for U.S. consumer spending improved as service industries sustained their December pace of expansion in January. The Institute for Supply Management's nonmanufacturing index of 55.2 remained well above the 50 break-even mark and indicates the U.S. is "starting to see more evidence of an improving labor market," said Kevin Cummins, an economist at UBS Securities in Stamford, Conn. "So far, it doesn't seem the consumer has fallen off a cliff" due to a payroll tax increase that took effect last month, Cummins said. Bloomberg
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- U.K. service sector turns positive; eurozone index improves
A U.K. purchasing managers' index for the service sector swung to a positive reading of 51.5 in January from December. Meanwhile, a similar index for the eurozone improved as well, though it remained in a negative mode with a reading of 48.6, marking a full year of contraction. BBC
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- Retail sales plunge in austerity-hobbled eurozone
Eurozone retail sales took a dive in December, down on both a month-to-month and year-to-year basis. For the year, sales were off 1.7%, the poorest performance since 2009. With punishing unemployment across the region and austerity-imposed tax bills, "it still seems unrealistic to expect any marked pickup in consumer spending in the near term at least as [households] still face serious headwinds," said Howard Archer, an economist at IHS Global Insight. The Wall Street Journal
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- German machinery orders pick up pace with eurozone boost
German economic performance continued to outpace that of its eurozone partners in December with a smart 4% rise in orders for machinery and plants. The gain reverses a 3% drop in November, with foreign orders "mainly driven by demand from euro member states," said Ralph Wiechers, chief economist for the VDMA machine-makers' association. Bloomberg Businessweek
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- Tame inflation is seen for China
Economists predict that China's January inflation rate will come in at a modest 2%, with no likely upward price pressures for the time being. However, the widespread "impression of a Goldilocks economy with inflation under control and solid growth ... is unlikely to last," said Credit Agricole economist Dariusz Kowalczyk. The Business Times (Singapore)
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| Market Activities
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- INTERNATIONAL MARKETS OVERVIEW
Corporate news and earnings on both sides of the Atlantic lifted shares Tuesday, with European stocks getting a further boost from a favorable reading on eurozone service-sector activity. The Stoxx Europe 600 rose 0.58% to 285.56, and the S&P 500 gained 1.04% to 1,511.29. Here is a continuously updated list of global stock indexes. The Wall Street Journal
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, Bloomberg
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, CNNMoney
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- Unsteady outlook for Europe unsettles Asian markets
Investor concern over what appears to be a return of Europe's debt crisis pushed down shares Tuesday across Asia. The Nikkei fell 1.90% to 11,046.92, the Hang Seng plunged 2.27% to 23,148.53, the Kospi lost 0.77% to 1,938.18 and the S&P/ASX fell 0.51% to 4,882.70. Bloomberg
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| Economic Trends & Outlook
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- Taiwan inflation eases
Taiwan's inflation rate eased in January to 1.15% from 1.6% in December. The moderation should give the central bank more leeway "to keep monetary policy accommodative," said Ma Tieying, a Singapore-based economist at DBS Group Holdings. However, Taiwan's Directorate-General of Budget, Accounting and Statistics said inflation could pick up in February because of the Lunar New Year holiday. Bloomberg Businessweek
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, The Taipei Times (Taiwan)
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- Philippine inflation heats up
The Philippines' headline inflation rate and core inflation both rose in January, but the headline rate remained well within the central bank's forecast range. Looking ahead, "inflation is likely to drift upwards moderately amid strong economic growth, but there is no urgency to hike policy rates," said DBS Bank economist Eugene Leow. Business World (Philippines)
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| Capital Markets & Financial Products
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- Global investor risk appetite rose in January
January was a pivotal month for global investor sentiment, switching from an emphasis on safety to a higher tolerance for risk, according to the Institute of International Finance. The IIF noted that equities and higher-yielding corporate bonds were more in demand last month as funds flowed out of U.S. Treasurys and other safe instruments. Xinhuanet.com (China)
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