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Weekly Market WEEKLY MARKET MONITOR WEEK 13 / 25 MAR -31 MAR, 2013 THE WEEK IN BRIEF Ö INDIA Cuts Rates by 25 Basis Points To 7.5 % To Revive Growth Ö Senate Passes Legislation to Avoid U.S Government Shutdown CONTACTS Ö Fed Keeps $85 B Pace of Bond Buying as Job Market Improves Ö U.K Deficit Seen Falling to %7.4 GDP in 2013, 6.8% in 2014 Ibrahim Itani 961‐1‐360460 Ext.786 Ö ECB Says It Will Provide Liquidity to Cyprus Within Existing Rules [email protected] Ö Buffett Reclaims World’s Third Richest Title as Ortega Retreats Fouad Abou Hassan Ö Cyprus Cut to CCC From CCC+ by S&P, Outlook Negative 961‐1‐360460 Ext.787 Ö Congress Clears Spending Plan for FY 2013, Averting Shutdown [email protected] Ö Index of Leading Economic Indicators in the U.S Increase 0.5% Joseph Kalaydjian Ö Emirates $1 B Sukuk Officially Listed on Nasdaq Dubai 961‐1‐360460 Ext.788 [email protected] Ö Bernanke Says Easing by Advanced Nations Helps World Economy Ö Cyprus Reaches 10 Billion Euro Rescue Deal with Troika Ö Saudi Bank Deposits Rise to SAR 1.27 Trillion Ö Cyprus Delay Bank Re‐Open Until Thursday EURO TECHNICALS 1.3051 RESISTANCE 1.3165 1.3290 1.2828 1.2714 SUPPORT 1.2590 On Monday Euro/Dollar sunk with 220 pips on Cyprus deal details. The European currency depreciated from 1.3051 to 1.2828 yesterday, Break above the nearest resistance and yesterday's top at 1.3051 may trigger further strengthening of the Euro. Going bellow yesterday's bottom and first support at 1.2828, however, would confirm continuation of the bearish trend, towards next objective downwards 1.2714. GOLD TECHNICALS 1613 RESISTANCE 1624 1633 1590 SUPPORT 1577 1665 Gold prices traded lower by 0.25% against the USD at 1604.36 per ounce, as a bailout deal to avoid a collapse of Cyprus’ banking system reduced the metal’s safe‐haven appeal. In the Asian session today, Gold was trading at 1601.98, 0.15% lower from yesterday’s close. Gold is expected to find support at 1590.29, and a fall through could take it to the next support level of 1578.61. Gold is expected to find its first resistance at 1613.24, and a rise through could take it to the next resistance level of 1624.51. GLOBAL COVERAGE INDEX MARKET OPEN MARKET CLOSE The European Union gave CYPRUS until Monday to 18‐03‐13 22‐03‐13 raise the billions of Euros it needs to secure an DOW 14452.06 14447.75 INTERNATIONAL BAILOUT or face a collapse of its S&P 500 1552.10 1551.69 financial system that could push it out of the euro NASDAQ 3237.59 3235.30 currency bloc. A bailout deal brokered between Cypriot President Nicos Anastasiades and the EU last INDEX MARKET OPEN MARKET CLOSE weekend in Brussels was unanimously rejected by the 18‐03‐13 22‐03‐13 Mediterranean island nation’s parliament. The deal NIKKEI 12220.63 12546.46 would have imposed a tax on Cypriot deposit accounts HANGSENG 22083.36 22251.15 to raise 5.8 billion Euros that the EU required in return ASX 200 5015.40 4990.20 for a 10 billion euro bailout. Standard & Poor’s cut the sovereign long term foreign currency credit rating on INDEX MARKET OPEN MARKET CLOSE Cyprus deeper into junk status, lowering the rating to 18‐03‐13 22‐03‐13 CCC from CCC‐plus as the country struggles with a DAX 8010.70 7.911.351 banking crisis. Jeroen Dijsselblem, the head of the STOXX 50 2705.47 2681.67 Euro Group, which comprises the finance ministers of FTSE 100 6457.92 6392.76 countries whose currency is the euro, urges Cyprus to present a new proposal on the bailout. The European Central Bank has provided a liquidity lifeline, allowing Cyprus’ banks to operate. However, that lifeline knows as Emergency Liquidity Assistance (ELA), will be cut on Monday if no new deal is in place. Under the levy rejected by parliament, EU lenders, notably Germany, had wanted uninsured bank depositors to bear some of the cost of recapitalizing the banks, but Cyprus feared for its future reputation as an offshore banking haven and planned to spread the burden also to small savers whose deposits under 100,000 were covered by state insurance. Lawmakers threw it out. In Moscow since Tuesday, Cypriot Finance Minister Michael Sarris said he was discussing possible Russian investments in banks and energy recourses, as well as an extension of an existing 2.5 billion euro Russian loan. The Russian Finance Ministry had said that Nicosia sought an extra 5 billion euro loan. The senate approved legislation to AVERT A GOVERNMENT SHUTDOWN next week freeing Democrats and Republicans to spend the next few months arguing over deeply divided strategies to shrink longer term budget deficits. Congress gave final approval to legislation to avert a partial government shutdown in a rare example of bipartisan cooperation on federal spending. The House voted 318‐109 to send the budget bill, which would fund federal agencies through Sept. 30, the end of the 2013 fiscal year to President Barack Obama for his signature. The bill will keep government agencies and programs funded through the end of the fiscal year. Without new government spending legislation enacted by March 27, federal agencies and discretionary programs ranging from the department of transportation to national parks would have faced a shutdown. Both parties opted against risking such a shutdown as they wrangle over longer term tax and spending policy. The measure pushes the next critical fiscal deadline to late July or early August, when the next increase in the federal borrowing limit will be needed. CORPORATE NEWS ORACLE CORPORATION (NASDAQ:ORCL) dive after severe third quarter miss. The company’s shares sank more than 8 percent a day after the company reported sharply disappointing third quarter new software revenue, which it blamed on poor sales execution. The severe miss, reported after the market close triggered a series of price target cuts from Wall Street. Credit Agricole reduced its rating on Oracle, the world’s No.3 software maker, to “underperform” from “outperform” and cut its share target price to $35 from $38. The company, which is battling fast growing rivals like Sales force and Workday in the field of Internet based software services, reported a 2 percent slip in new software sales and Internet based subscriptions. The company forecast that new software license sales, a key indicator of future revenue, will rise 1 percent to 11 percent this quarter. It warned that from its ailing hardware business will continue to shrink significantly. BP PLC (NYSE:BP) will buy back $8 billion shares from investors after completing the sale of 50 percent of Russian oil producer TNK‐BP. BP’s first buyback since 2008 will return the original amount invested in the venture 10 years ago, the London based company said. The sum is twice as much as Chief Financial Officer Brian Gilvary signaled last year would be enough to offset earning per share lost from selling the stake in Russia’s third largest producer. The deal to sell out TNK‐BP gives Chief Executive Officer Bob Dudley a fresh start in Russia after a fractious 10 year partnership with a group of billionaires. BP shares have slumped since the 2010 Gulf of Mexico oil spill and the company face fines after a trial in New Orleans. After selling its TNK‐BP stake to OAO ROSNEFT (MCX: ROSN), BP will become the second biggest investor in Russia’s largest oil company with a 19.8 percent shareholding. Following the buyback, which will take eight to 12 months to complete, BP will retain $4.5 billion in cash from the deal. DELL INC (NASDAQ:DELL) said it received alternative proposals from Blackstone group LP and Carl Icahn that could be superior to the $24.4 billion takeover offer from founder Michael Dell and private equity fund Silver Lake Partners. Michael Dell is willing to explore the possibility of working with third parties regarding alternative offers, the company said. However, it said the special board committee considering a sale continues to support the company’s pending sale to Michael Dell and Silver Lake. Southeaster Asset Management, the company’s largest shareholder after Michael dell and a staunch opponent of the founder’s buyout offer, said it was pleased that the two new bids were structures in such a way that shareholders could remain invested in the company. The special committee was evaluating the new takeover proposals to decide whether either or both were likely to trump the existing take private deal. ENERGY & COMMODITIES CHINA anticipates a breakthrough in energy talks during President Xi Jinping’s visit to Moscow this week, an achievement that may strengthen ties between neighbors wary of U.S motive on issues from Iran to Asia policy. China wants to sign an agreement on a NATURAL GAS PIPELINE during Xi’s three day trip. The visit will be the first state trip abroad for Xi since he was appointed Communist Party chief in November and president last week. A deal for the pipeline would open a new market for Russian supplies as demand in Europe weakens. That and other agreements during Xi’s visit may boost relations as RUSSIA and China seek stronger alliances to counter what they see as U.S efforts to exert more influence in the Asia‐Pacific and the Middle East. Energy cooperation is the crown jewel of China and Russia cooperation.
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