News & Financial Advice

Wheat prices on the Chicago market gained nearly 8% in plenary on Thursday, near their highest level in two years, following the announcement by Russia to stop its exports of cereals.

The current drought in Russia, one of the worst in the history of the country, devastated crops in several regions, which causes several days a soaring wheat prices on international markets.

Investors are afraid that pressure on this market over the coming months in the absence of a major world exporters.

FAO, United Nations Organization for Food and Agriculture, on Wednesday reduced about 4%, or 25 million tonnes, its forecast for world wheat crop for 2010.

If it considers that the offer is sufficient for now, she warned that "if the drought in the Russian Federation continues, this could pose problems for winter crops in this country, with potentially serious implications for deliveries World wheat in 2011 and 2012.

The benchmark price of wheat in Chicago jumped 82% since June 9

On Thursday, panic buying of investment funds and traders on the Chicago Board of Trade (CBOT) also focused on corn and soybeans, which gained 2.6% and 0.8%.

Russian Prime Minister Vladimir Putin said Thursday the suspension of exports of cereals and processed agricultural products between August 15 and December 31, a decision that applies to contracts already signed.

He has confirmed information previously reported by Russian news agency Interfax, which had triggered the wave of purchases.

"The announcement of Putin panicked everyone (…).Nobody knows how far we could go, "said Paul Haugen, Vice-president of Newedge USA.

At midday in the U.S., the futures contract on wheat for September delivery gained 60 cents, its highest increase allowed to 785.75 cents, the highest level these last 23 months by the maturity nearest market.

DISTORTIONS

"I would not be surprised if it took 60 or 70 cents extra, even more during the next session," said Joe Bedore, the brokerage firm FC Stone in Chicago.

Kazakhstan, another major wheat producer in the Black Sea basin, said anticipating a fall of 35% of its harvest and study by the end of a request from Moscow to reduce its own exports.

International trading giant Cargill said he expected that such trade barriers distort the global wheat market.

In the European market Euronext, the benchmark November contract on wheat milling peaked Thursday at 236 euros before ending the session at 223.25, up 6.8% on the day.It was up nearly 60% since late June

Wheat has not yet regained its record levels of 2008, when prices in Chicago had exceeded 13.30 dollars a bushel, boosted by fears of a global food crisis.

Some analysts also believe that the current increase is overstated, noting the high level of global supply after two consecutive years of record crops.

The absence of Russian wheat in the coming months could also benefit other major exporters, U.S. or Europe.

"A Case of Russian exports would distribute maps of the international wheat market," said one European trader."This would open up enormous opportunities for new sales in Western Europe and the United States."

But the rise in food prices may be exaggerated, says a French professional, for whom the market is driven by purely financial factors.

"When the market (Chicago) won a dollar in four days, not for fundamental reasons," said he. "The decline, if it occurs, will be equally severe."

The European Commission announced that it authorized the repurchase of the French specialist of the PPE Sperian by the American conglomerate Honeywell, as the operation does not affect competition.

The transaction represents 1.4 billion dollars (1.06 billion euros), a sum which includes the takeover of Honeywell debt of 300 million euros Sperian.

The European Commission has estimated that all Honeywell-Sperian will face a significant number of competitors.

The American group, who beat the investment fund Cinven for redemption Sperian has developed on the segment of protective equipment in recent years. He acquired Norcross Safety Production including $ 1.2 billion in 2008.

Luxottica, the world leader in eyewear, has announced a 30% increase in net income and an increase of 13.8% of its turnover in the second quarter and said it was confident for the second half.

The Milanese group, which owns brands including Ray Ban and Oakley, said in a statement that its wholesale division has achieved the best performance in its history, its operating margin reaching 24.1% against 22.5% a a year ago.

"These results provide an excellent base to look with confidence towards the second half of the year," said in a statement the CEO Andrea Guerra.

Luxottica has made the quarter April-June net profit of 150.1 million euros, exceeding the consensus estimate of analysts Thomson Reuters I / B / E / S, which gave 145.3 million.

He said that sales were particularly strong in emerging markets and the U.S., its largest market.

In a presentation accompanying the results, Luxottica said track to achieve its annual targets. In April, he had said it expects growth of about 5% of its annual turnover.

Ericsson, the world leader in mobile network equipment, reported second-quarter results below analysts' expectations, the Swedish group, suggesting a difficult market including the continued reluctance of operators to invest.

The telecom equipment market begins to show signs of life but the level of customer spending is still very far from what it was before the crisis.

Ericsson, which has made tens of billions of crowns in savings to cope with falling demand, said that reducing costs would continue to be his priority as business conditions remain difficult.

In the second quarter, operating profit excluding joint ventures and excluding restructuring charges, stood at 5.3 billion kronor (564 million euros) against 6.1 billion a year ago and an average forecast of analysts of 5 8000000000.

Revenues fell 8% to 48 billion crowns, while analysts had forecast on 50500000000.

On Thursday, Nokia Siemens Network (NSN), one of his main rivals, posted a decline of 5% of its turnover in the period.

Like NSN, Ericsson said its sales had been affected by supply shortages of certain components.

"We believe (the break) weighed negatively to height of three to four billion kronor on sales for the quarter," the company said in a statement.

Ericsson's gross margin, 39%, came out at a level well above expectations, the group has benefited from the effect of cost reductions and a "mix" positive activities.

The Paris Bourse, as all European markets ended down sharply on Thursday following the publication of a series of disappointing U.S. indicators, confirming the interruption of a long sequence of increase initiated the day before.

The CAC 40 index finished down 1.41% at 3581.82 points, after playing a note on irregular closely during most of the session. The index had already paused Wednesday (-0.13%), having won more than 9% in six sessions of consecutive increase.

London fell by 0.8% and Frankfurt 0.97%.As for the European indices, the EuroStoxx 50 yielded 1.35% and 1.14% Eurofirst 300.

'Investors are still worried about the slowdown in the United States, and after the recent good performance of markets, profit-taking seem necessary given that the risks are always present ", says Claudia Panseri, chief strategist at SG CIB .

Falling producer prices and the index of the New York Fed has cooled the enthusiasm of investors even though they had enthusiastically welcomed the results published by JPMorgan.

Similarly, producer prices have fallen more sharply than expected in June and the condition index of industrial activity were sharply down in July.

After cutting their losses in early afternoon following the publication of excellent results by JP Morgan, the banks are heavily impact the market.

Dexia largest decline of ACC, ended down 5.12% to 3.243 euros, Crédit Agricole of 3.26% to 9.287 euros and BNP Paribas 4.01% to 48.705 euros.

The values "dollar" have suffered bad news on growth overseas as the U.S. currency.

In the aerospace sector, EADS lost 4.86% to 16.550 euros and 4.59% at Saffron 20.800 euros. In the area of semiconductors, STMicroelectronics has yielded 2.08% to 6.776 euros and 8.063 to 4.91% Soitec euros.The euro is trading at 1.2906 / 08 1.2738 dollars against the previous day.

U.S. light crude lost $ 1.05 per share to 75.99 dollars a barrel.

Sales at department stores conducted between last Wednesday, the first day of sales, and next Saturday are up 10-17% in Paris and about 6% in the province over the same period of 2009, told Reuters Claude Boulle, Chairman of the Union of the great trade center (UCV).

This period, during which traders are allowed to sell at a loss, will end Aug. 3.

"We are surprised by such enthusiasm," said Claude Boulle, who gives the rain, precipitation related to the timing of sales compared with the academic pace and demands of tourists, especially from emerging countries like Asians or Brazilians.

Claude Boulle, however, refuses "to be triumphalist" for now because, he says, should not at this very good start followed by a drop in purchases after July 15.

"The balances are played on a shorter and shorter," he observes.

As every year, the discounts offered in the department stores were included in 30 and 50% and new markdowns could be proposed "if there are still things to sell," added Claude Boulle.

The TCU brings together nearly nine billion euros in turnover with 600 stores in 300 cities in France, such as Galeries Lafayette, Printemps or C & A.

The players in the credit market begin the second half hoping to disappear or at least diminish the negative impact of the crisis of sovereign debt in the eurozone, which has largely contributed to the resurgence of risk aversion in the second quarter.

This crisis, which does not seem to have exhausted all its reserves, has hurt all risky assets, starting with the shares losing 7% to 19% since the beginning of the year in Europe.

Corporate bonds (corporate credit) have also suffered, premiums (spreads) having substantially eliminated.But they broadly maintain performance of 3.6% since the beginning of the year, while government bonds from all countries, took 2.4%.

"The second quarter of 2010 defeated the job right the first quarter due to the escalation of the crisis of sovereign debt.Risk aversion has increased rapidly, all assets have suffered (…) Credit spreads have strayed far beyond their level of early 2010, "credit strategists explain the General Society in their quarterly report.

Also taking stock of the quarter, analysts of Raiffeisen Capital Management noted that the credit offers "indisputably positive returns" to the beginning of the year.

But they add that with the sharp decline in bond rates – including German rates that serve as reference in the euro area – linked to the flight to quality stocks, "the potential of absolute return is now very limited."

"The high yield bonds (high yield bonds), the positive fundamentals, seem more attractive," they say.

Groupama Asset Management, as Societe Generale predicts a slowdown of the economy, promote investment grade credit and approach "stock picking" for high yield.

TIGHTENING OF SPREADS

Amund Asset Management, a leading European asset management, which is more optimistic about global growth, also favors the credit.

The sovereign crisis has largely closed the secondary credit market. The primary market, which had started on a flying in January led by financials, has been almost nonexistent from mid-April but has shown signs of lethargy output.

"The market recovered slowly and now spreads are improving.We believe that sovereign issues have less impact on the market and the spreads will be tighter at the end of the year compared to levels earlier this year, "say the strategists of Societe Generale.

After a very active quarter on the primary market, they are reviewing their forecasts down significantly from private bond issues to take into account also the small traditional activity in the third quarter.

They now expect 110 billion on non-financial corporate issues in 2010, or 55% less than in 2009 which was a record year where businesses, faced with tighter bank credit due to financial crisis, have use the market to restore their balance sheets.

They no longer need as use the market given the low investment costs, a lack of mergers and acquisitions and the continued improvement of treasury already abundant.

Societe Generale brings its projected emissions of senior debt of financial companies from 200 to 150 billion euros for 2010, against 152 billion in 2009. For emissions of subordinated debt, the forecast is reduced from 33 to 20 billion euros, against 17 billion in 2009.

European stock markets were down in mid-day, posting the seventh decline in eight sessions after the publication of indicators Chinese fuel fears about the state of the global economy.

For this first session running at a disastrous quarter for equity markets, the pan-European FTSEurofirst 300 index lost 1.19% to 10:45 GMT at 981.69, after touching a low of three weeks.

The Euro Stoxx 50 index of leading industrial stocks in the euro zone, meanwhile shrank by 1.1% to 2544.97 to go below the key level of 38% retracement of the rise between the lowest March 2009 and peak in January compared to the historic low of March 2009, raising fears that its decline is far from complete.

The next level of support is the lowest in 2010 at 2448.10, touched in May

On Wall Street, the S & P 500 fell on Wednesday under the 1040 he managed to maintain since February, falling firmly in a downtrend, which could lead to a sharp fall in the months ahead.

Indicators have shown that the growth of China's manufacturing sector slowed in June in response to efforts by Beijing to curb the expansion of housing and contain the increase in funding.

"The Asian growth has been the engine of the global economy, so if China loses its speed, it will not go well," said Jacques Henry, analyst at Louis Capital Markets.

"With very dull statistics from the U.S., there is growing nervousness over a new recession."

SLOWDOWN IN CHINA AND INDIA

The Chinese official PMI stood at 52.1 in June against 53.9 in MayThis is the lowest figure since February and is well below the expected figure of 53.1 on average by ten analysts polled by Reuters.

A similar survey conducted by HSBC for its shows a sharper decline to 50.4 last month against 52.7 in May

In India too, the growth of manufacturing activity slowed in June due to a deceleration in the rate of increase in production and new orders slightly lower than in May.

PMI Purchasing Managers HSBC, drawn on a survey of 500 companies fell to 57.3 in June against 59.0 in May, the level that had constituted a high of more than two years.

Very sensitive to changes in the Chinese economy, mining stocks are affected. Xstrata lost 2.67%, BHP was down 1.62% and Rio Tinto fell back to 0.88%.

The banking situation is more delicate approach to the recovery of around 500 billion euros at the European Central Bank.Credit Agricole fell 2.33%, 2.23% and BBVA Banco Popolare 0.66%.

Barclays accused it for an even more marked decline after announcing that business conditions in the segment of the investment bank had deteriorated over the last two months.

Adding to the gloom, the French manufacturing PMI came to show that growth in the French manufacturing industry slowed in June for the second consecutive month in France and the sector has continued to destroy jobs, according to PMI survey published Thursday by the Institute Markit Economics.

The German situation is rather less alarming because the industry has finally emerged while a stable flash estimate predicted a slowdown.

The European Commission has condemned the French Bolloré to pay a fine of 21 million euros for price fixing in the market for carbonless paper.

The Commission fined Bolloré fined 22.68 million euros in December 2001 but the company had appealed to the European Court of Justice annulled the decision in September 2009 for procedural issues.

"The Commission has re-adopted the decision by correcting the procedural error that led to the cancellation of the 2001 decision," the EU executive said in a statement.

It has reduced the original amount of the fine to reflect the cooperation of Bolloré.

How will the bailout work of the euro?

To stem the panic that erupted late last week, the states of the euro area have been working throughout the weekend and agreed on a massive rescue plan on several floors, as shown in this graphic.

The ECB breaks a taboo

It is an essential part of rescue plan devised this weekend in Brussels. While he did not hear of it, Jean-Claude Trichet has agreed that the European Central Bank buys government debt. All explanations in this article.