Global Weekly Report - International

International Markets – Weekly Report

May 28, 2010

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Energy/Currencies
US crude oil futures fell on Friday, ending May with their worst monthly
Weekly Y-T-D decline since December 2008, at the height of the financial crisis, as a
US ($) Close
Performance Performace downgrade of Spain's credit rating sparked further Euro zone worries and
prompted oil traders to seek less risky assets. On the New York Mercantile
Oil - WTI (Spot) 73.20 ▲ 3.83% -7.67% Exchange, July crude <CLN0> settled down 58 cents, or 0.78 percent, at
Oil - Brent (Spot) 73.31 ▲ 4.45% -6.33% US$73.97 a barrel, after trading from US$73.13 to US$75.72. Front-month
Gold/ounce 1211.75 ▲ 3.11% 10.59% crude futures fell US$12.18, or 14.1 percent, from April, their biggest
monthly percentage loss since December 2008, when prices fell 18.1 percent
from the previous month.

US crude oil imports in March fell 1.6 percent from a year earlier to 9.292mn
barrels per day, the US Energy Information Administration said on
Thursday. March imports were down 149,000 bpd from 9.441mn bpd a year
earlier. Oil shipments from Saudi Arabia topped 1 million bpd for the first
time since last September, reaching 1.149mn bpd in March. It was the highest
level for Saudi imports since January 2009.

US spot natural gas prices for June 1 moved higher on Friday for a fourth
day, backed by steady storage buying and warm weather forecasts through
midweek next week, which should mean more cooling demand, despite
ongoing concerns about rising supplies. Gas for June 1 delivery at Henry
Hub <NG-W-HH>, a key supply point in Louisiana, climbed 9 cents to
Faisal Hasan, CFA
US$4.31 per million British thermal units, but late morning deals slipped
Head of Research
slightly to about flat with NYMEX from a 3-cent premium on Thursday. The
Tel: 2295-1270
fhasan@global.com.kw
current Hub average is above the May monthly index of US$4.27 and the
_____________________ year-ago price of US$3.49, but well below the US$11.85 mean on the same
Rasha I. Al-Huneidi day in 2008.
Assistant Vice President
Tel: 2295-1285 U.S.
huneidi@global.com.kw
_____________________ Orders for US manufactured durable goods rose by 2.9 percent in April, the
Mohannad Al-Doohan largest rise in three months, the Commerce Department reported. The April
Assistant Financial Analyst gain in orders for durable goods, big-ticket items expected to last at least
Tel: 2295-1288 three years, was much stronger than the 1.3 percent increase that had been
maldoohan@global.com.kw expected. For April, demand for transportation equipment, which accounts
for more than one quarter of total durable goods orders, jumped by 16.1
percent. Excluding transportation, durable goods orders in April fell by 1.0
percent.

US new-home sales rose 14.8 percent in April to their highest level since May
2008, the Commerce Department estimated. The increase in new-home sales
to a seasonally adjusted annual rate of 504,000 was well above the 425,000
 Global Weekly Report - International
pace expected by economists surveyed by Market Watch. New-home sales in
Weekly Y-T-D March were revised to a 439,000 level compared with the previous estimate
Close of 411,000. New-home sales are up 47.8 percent compared with a year ago.
Performance Performace
Dollar - Euro 1.2265 ▼ -2.43% -14.33% Sales of previously owned US homes rose more than expected in April to a
Dollar - Sterling Pound 1.4497 ▲ 0.21% -10.26% five-month high as buyers rushed to close contracts before the expiry of a
Yen - Dollar 90.44 ▲ 0.43% -2.65% homebuyer tax credit. The National Association of Realtors said sales rose
7.6 percent month-over-month to an annual rate of 5.77mn units, the highest
since November, from a slightly upwardly revised 5.36mn-unit pace in
March. Analysts polled by Reuters had expected April sales to increase 5.6
percent to a 5.65mn-unit pace from the previously reported 5.35mn units in
March. Sales were up 22.8 percent in the 12 months to April.

Prices of US single-family homes rose in March for the first time since
November, but fell in the first quarter, the Federal Housing Finance Agency
(FHFA) said. The FHFA's house price index rose a seasonally adjusted 0.3
percent after falling by a revised 0.4 percent, which was previously reported
as a 0.2 percent dip. Home prices dropped 1.9 percent in the first three
Weekly Y-T-D months of the year, following a 0.5 percent fall in the fourth quarter, the
Index Close
Performance Performace agency said.
US - DJ Average 10,136.63 ▼ -0.56% -2.79%
The number of mortgage applications in the US rose last week, led by a
US - Nasdaq Comp. 2,257.04 ▲ 1.26% -0.53%
rebound in refinancing as long-term borrowing costs dropped below 5
US - S&P500 1,089.41 ▲ 0.16% -2.30% percent for the first time in two months. The Mortgage Bankers
Association’s (MBA) index increased 3.9 percent in the week ended May 7,
the Washington-based group said today. Its refinancing gauge climbed 15
percent, while the purchase index fell 9.5 percent in the first week since the
end of a government incentive.

A measure of national economic activity last month rose to its highest level
since December 2006, the Chicago Federal Reserve said. The Chicago Fed
National Activity Index rose to 0.29 points from 0.13 points in March. A
reading above zero indicates the economy is growing above trend. However,
the three-month moving average showed there was some economic slack,
suggesting subdued inflationary pressure from economic activity over the
coming year, the Chicago Fed said.

Europe

Industrial new orders in the 16-nation Euro zone jumped 5.2 percent in
March compared to the previous month, the European Union statistics
agency Eurostat reported. Orders rose 19.8 percent compared to March
2009, the agency said. The March data far exceeded forecasts for a 2.5
percent monthly rise and a 15 percent annual increase.

The UK economy grew faster than originally thought in the first quarter of
this year, but still appeared hamstrung by a combination of poor weather and
the rise in VAT in January. The economy racked up 0.3 percent growth in
Weekly Y-T-D the first quarter, higher than the 0.2 percent initial estimate, but less than the
Index Close 0.4 percent expansion seen in the final quarter of 2009. The more rapid
Performance Performace
2.48% -4.15%
growth came as industrial production saw a faster recovery than was first
England - FTSE 100 5,188.43 ▲
thought, growing by 1.2 percent. Gross fixed capital formation increased 1.5
Germany - DAX 5,946.18 ▲ 2.01% -0.19% percent, its strongest rate since the third quarter of last year.
France - CAC 40 3,515.06 ▲ 2.46% -10.70%
Nationwide Building Society, the UK’s largest customer-owned lender, said
gross residential mortgage lending dropped 37 percent to GPB12bn in the
last fiscal year as housing transactions slumped. British house prices will be
“flat” this year, the Swindon England-based company said in a statement.
Nationwide’s residential mortgage customers repaid GPB3.60bn more than
they borrowed in the year ending April 4.

A leading survey shows that German consumer confidence has dropped

amid ongoing concerns about the weak euro and the highly unpopular rescue
 Global Weekly Report - International
plan for Greece. Germany's GfK institute said that consumers' confidence,
which increased significantly in April, has dropped 18.6 points in May to 3.9
points. The institute said Germans fear that the Greek rescue packages and
the weakening Euro could hamper their economy's recovery. German
companies, however, have viewed the weaker euro more positively as it
strengthens the exports.

Japan
The Japanese government kept its view of the economy unchanged in May
despite signs of a stronger recovery, suggesting it remains vigilant about
potential downside risks such as the European debt crisis. "The economy has
picked up steadily," but its growth momentum is "only weakly self-
sustaining," the Cabinet Office's monthly economic report said, using exactly
the same wording as in April. The unchanged assessment comes despite a
recent series of brighter economic indicators. Gross Domestic Product data
for the January-March period, released last week, showed an accelerating
annualized growth rate of 4.9 percent, and the Bank of Japan upgraded its
monthly economic assessment for effectively the second time in a row. The
government's cautious view is partly due to uncertainty over whether Japan
can maintain its growth momentum in the coming quarters, as domestic
demand remains weak and the country's export-oriented economy is exposed
to overseas shocks such as Europe's fiscal problems.

The Japanese Merchandise Trade Balance Total fell to JPY730bn in April

compared to JPY948.9bn reached in March. The Adjusted Merchandise
Trade Balance grew to JPY767.7bn in April from JPY666.2bn the previous
month.

Some Bank of Japan (BOJ) board members were concerned about side
Weekly Y-T-D
Index Close effects of the bank's easing in March, according to minutes of its April 30
Performance Performace meeting. A few members said trade in money markets had contracted and
Japan - Nikkei 225 9,762.98 ▼ -0.22% -7.43% market players' confidence in the availability of funds had weakened. A few
Japan - Topix 878.52 ▼ -0.133% -3.20% also said the March easing measure could harm smooth financial
intermediation if lower interest rates squeeze banks' profits, the minutes
showed. In March, the BOJ doubled the amount of funds in a fixed-rate
three-month fund operation. At the April 30 meeting, the BOJ said it would
consider a new scheme to help bolster growth, while leaving policy rates
unchanged at 0.1 percent. At the subsequent meeting, the central bank said it
would set up a loan scheme targeting growth industries.

Emerging Markets

China

The two-day China-US Strategic and Economic Dialogue ended Tuesday

with the signing of 26 agreements and both countries agreeing to deepen
cooperation to strengthen and reinforce the global economic recovery.
Consensus was reached in many issues involving financial, currency structure
reforms, trade and investment and the stability and reform of the financial
market. They also agreed to enhance dialogue and coordination in macro-
economic policies. China said it would introduce financial and monetary
policies and undergo structural reforms that would encourage consumption
which is expected to play a more important part in the economic growth.

India

Prime Minister Manmohan Singh said inflation would come down to 5-6
percent by December and projected an 8.5 percent economic growth for this
fiscal. “Price continues to be a matter of deep concern. The government
attaches highest priority to containing inflation so there is no distress to the
common man,” he said. India’s inflation in April was estimated at 9.6
 Global Weekly Report - International
percent, as food prices continued to remain at elevated levels. Inflation in
manufactured products, which has reached nearly 7 percent, has emerged as
Weekly Y-T-D the latest worry for policy makers mirroring signs that the specter of price
Index Close rise have lengthened across the broader economy.
Performance Performace
Honk Kong - Hang Seng 19,766.71 ▲ 1.13% -9.63%
Singapore - Straits Time 2,739.70 ▲ 1.43% -5.45%
Korea - KOSPI 1,622.78 ▲ 1.41% -3.56%
India - BSE 16,863.06 ▲ 2.54% -3.45%
Pakistan - KSE 9,521.15 ▼ -3.55% 1.43%
Brazil - BVSP 61,946.99 ▲ 2.80% -9.68%
Mexico - INMX 1,309.09 ▲ 3.49% -4.45%
China - SSE180 6,159.45 ▲ 2.65% -20.66%
Russia - IRTS 1,362.40 ▲ 4.78% -5.69%
 Global Weekly Report - International
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Research Index
Faisal Hasan, CFA Rasha Al-Huneidi
(965) 2295-1270 (965) 2295-1285
fhasan@global.com.kw huneidi@global.com.kw

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