U.S. Markets Tumble as Fear Spreads

   
      According to a report from the Wall Street Journal,U.S. stocks tumbled Friday to their biggest loss in more than seven months, extending a global selloff that investors fear signals turmoil to come as financial markets adjust to a pullback in central-bank stimulus.
The Dow Jones Industrial Average fell 318.24 points, or 2%, to 15879.11. The Stoxx Europe 600 lost 2.39%, and Germany's DAX, down 2.48%, had its sharpest fall in months. The Nikkei also fell 1.94%.

While those drops were dramatic, much of the pain of investors' readjustment is landing on developing economies, from Brazil and India to Thailand and South Africa.

In recent years they were buoyed by the high tide of cash from the U.S. Federal Reserve's stimulus and by China's voracious growth.

Now, those forces are receding, with the Fed expected to reduce monthly bond purchases again on Wednesday.

Investors are pulling back with them.

Slowing growth in China could(will) crimp demand from goods and services from its trading partners.

At the same time, a shifting Federal Reserve policy could alter the tides of capital flowing through the world economy. As the Fed has pumped dollars into the U.S. financial system to boost growth at home, waves of investment money have flooded into markets overseas in search of returns that beat exceptionally low U.S. interest rates, pushing up prices there.

Now, as the Fed steps back, the prospect of higher returns in the U.S. promises to pull that money back in. Investors in emerging markets are struggling to figure out how much compensation to demand for their risks, especially in economies that appear weak.

That has been on display for months in Turkey, where a political corruption scandal and weak economic fundamentals have combined to punish the Turkish lira. The central bank has been unable to arrest its slide, and investors in Turkish assets are sitting on big losses. The lira slumped almost 2% Friday, to 2.34 per dollar.

Other emerging-market currencies, including the Peruvian sol and the South African rand, suffered as well. Stocks have taken a hit, too. Turkey's main stock index is down 4.4% in the last two days; Brazil's Bovespa is down 3.1%. A widely traded emerging-markets bet, the iShares MSCI Emerging Markets exchange-traded fund, is down 5%.

The rout has left Paul Zemsky, chief investment officer of multiasset strategies for ING U.S. Investment Management, wondering whether he could unload more emerging-market holdings. He initially cut his emerging-markets exposure in the fourth quarter of last year.

"It's too early to buy emerging markets, but it's probably too late to sell," said Mr. Zemsky, whose firm manages $200 billion.

     Nearly all major equity markets were in the red. In foreign-exchange markets, the selloff began with currencies such as the South African rand and Turkish lira that have been viewed as vulnerable because of sluggish domestic growth. But it soon spread to currencies of countries with relatively solid fundamentals, such as Mexico's peso and South Korea's won. Currencies also slid in Eastern Europe.

   Several big emerging-market countries, Turkey among them, are running large deficits with the rest of the world. That makes them dependent on financing from abroad to make up the difference.

  As investors become less likely to provide it, the countries get squeezed. One way to right the balance is to increase exports, but China's deceleration makes that tough for its competitors and trading partners. A weaker currency is another option—it both potentially sparks exports, making them cheaper on world markets, and discourages imports, which get more expensive at home—but it comes at the cost of boosting payments on foreign debt.

Investors in a country's bonds, attuned to that spiral, pull out. That pushes harder on the currency.

Buying emerging-market stocks is also tricky because of the risk of losing money on currency fluctuations. Indeed, emerging-market stocks have floundered for years. The MSCI emerging markets equities index, priced in dollars, stood Friday at close to its level of four years ago. The Dow is up more than 50% in that period.

Some investors believe more comparative weakness is in store as the Fed withdraws its stimulus, known as quantitative easing, or QE. The U.S.'s recovery appears sturdy—which, after all, is why the central bank feels comfortable paring back.

At the same time, a slowdown in the growth of U.S. company earnings is raising some concern among investors, despite generally solid fourth-quarter numbers so far.

WSJ: Emerging Mix Rattles Nervous Markets. But Investors Shouldn't Panic.

           According to a report from the Wall Street Journal,jitters about China, the meltdown in the Turkish lira, violent protests in Ukraine and the plummeting Argentine peso—underlaid with continuing nerves about the withdrawal of U.S. monetary stimulus—have all combined to hit risk appetite. The problems aren't particularly new and don't have much in common, but the combination is proving toxic.
The biggest repercussions have been in the foreign-exchange markets, where even currencies of countries with relative fundamental strengths, such as the Polish zloty and the Mexican peso, have started to show signs of strain. Pressures have also emerged in asset classes that have so far remained resilient, such as U.S.-dollar-denominated emerging-market bonds. That will understandably make investors nervous.
  But some of the concerns may ease. China is seeking to shift from an economy led by investment to one driven by consumption. This is such a vast and complex process that worries about how it is progressing will be with us for a long time yet. The small dip in the Flash HSBC Chinese PMI  that some cite as a key reason for the market turmoil seems just a pretext.
Ukraine and Argentina both look worrying, but their impact on global financial markets should be limited. 

The solution to the continuing selloff in the Turkish lira—which Friday hit a fresh record low of 2.33 to the dollar—seems clear: the Central Bank of Turkey needs to raise interest rates. But political turmoil means it is unwilling to do so; its interventions in support of the lira are inadequate in the meantime.

This could cause larger problems. Turkish companies have large foreign-debt exposures, and the lira's slide could cause balance-sheet strains.

Meanwhile, the risk aversion in developed markets smacks of using the situation to exit some very popular and profitable bets. Southern European government bonds and stocks, hybrid securities that blend features of equity and debt and subordinated bank bonds have all had a strong start to the year; but they are also volatile. No wonder investors might take the chance to step back.

  Nerves are clearly running high; after so many years of economic and market turmoil, that's hardly surprising. But growth in developed economies looks likely to accelerate this year, which should yet be a vital support for markets. Investors should keep a watchful eye on emerging-markets developments, but they shouldn't rush to assume a new crisis is under way.

Europe Markets Fall Sharply

       The Wall Street Journal reports: "the Stoxx Europe 600 ended 2.4% lower, Germany's DAX shed 2.5%, while France's CAC-40 was 2.8% lower. In London, the FTSE 100 dropped 1.6%. The Spanish stock market was also hard hit, due to concerns around the exposure of its constituents to Latin America. The IBEXX 35 index ended down 3.7%.

"European equities had a very good run between December and January and some investors had started to find benchmark indexes overvalued," said Jeremy Batstone-Carr, chief economist and strategist at London-based brokerage and wealth manager Charles Stanley, which has around £18 billion ($29.86 billion) in assets under management. "All was required was a trigger for investors to start to take money off the table and take profit."

It was difficult to place a single catalyst for this episode of risk aversion. Concerns on the slowdown of the Chinese economy, the withdrawal of global stimulus by the world's central banks, and local strains on emerging-market economies contributed to the negative shift in global sentiment.

Emerging-market currencies also dropped sharply, with the Turkish lira, the South African rand and the Russian ruble touching multiyear lows against the dollar, and investors found safety in U.S. Treasury bonds with the yield on the 10-year Treasury dropping 1.3% to 2.74%.

Sterling also dropped sharply after Bank of England Gov. Mark Carney said the central bank will update its interest-rate guidance in February after a faster-than-expected fall in unemployment. In a speech at the World Economic Forum in Davos, Switzerland, Mr. Carney indicated that interest rates wouldn't be rising any time soon, despite U.K. unemployment approaching the 7% threshold.

WSJ: Emerging-Market Currencies, Bonds Fall Sharply

          According to a report from the Wall Street Journal, the selloff in emerging markets continued Friday, sending currencies in places such as Turkey and South Africa to fresh lows and spreading to the bond market, as investor concerns mounted over how the developing world will cope with the withdrawal of global stimulus.

The Turkish lira fell to a record low for the 10th straight day, while the South African rand and Russia's ruble also hit new, multiyear lows. The Indian rupee and the Israeli shekel, which had withstood Thursday's exodus, also succumbed as jitters spread across currencies.

"Global emerging markets are now trading in full-blown panic mode," said Benoit Anne, global head of emerging-market strategy at Société Générale in London.

Riskier assets around the globe came under pressure Thursday, with stocks falling in several markets. U.S. stocks fell, with the Dow Jones Industrial Average hovering near 16000, a level it hadn't seen since mid-December.

Investors' fears that emerging-market countries may not be able to support their currencies or prop up their growth have escalated in recent days on a combination of local and global factors. This latest round of unwinding comes on increasing concerns that China—a key driver of global demand—is slowing down again. This comes at a time when the U.S. Federal Reserve is expected to accelerate the withdrawal of its bond purchase program, which had provided global liquidity.

The improved economic outlook for the developed world—from the U.S. to Europe—also has investors positioning themselves for a shift in global growth patterns. Over the past decade, heady growth in emerging economies and their resilience after the global credit crisis drew investors in hordes to these countries. But the current slackening in their pace of growth, fall in global demand for commodities and lack of reforms in many of these countries have all contributed to investors' disappointment.

Capital flows into the developing world have fallen to 4.5% of their gross domestic product this year from a high of 7% in 2008, according to the Institute of International Finance.

Still, the latest slump pales in comparison to declines seen in May and June of last year, when the Fed began to signal that it was considering how to wind down its bond purchases. MSCI Inc.'s Emerging Markets Currency index fell by 0.4% on Thursday, but it saw bigger drops than that on 20 occasions last year.

Turkey has seen its currency plunge 6.1% so far this year. The country's debt also fell, with its recently issued 10-year bonds trading one point lower at a price of 97.25 cents to the dollar. Turkey issued this dollar-denominated bond Wednesday, just before the latest selloff began.

Investors say the country's political uncertainty and high current-account deficit mean they should get paid more in compensation for holding Turkey's bonds. But, the hesitation by Turkey's central bank to raise policy rates earlier this week was a disappointment to investors, and triggered the fall in the country's asset prices.

The current situation puts the central banks of developing countries in a squeeze. If they raise interest rates to support their currencies and fight inflation, that would also tighten the flow of credit and slow domestic economic growth. But a failure to raise rates at the right time can diminish the central bank's credibility.

Argentina's central bank, in a surprise move this week, allowed the currency to slide as  a way to preserve the country's dwindling dollar reserves. In late morning trading on Friday, the dollar was up 1.75% at 8.040 pesos.

A Kiev, des manifestants racontent la brutalité policière

Après plusieurs semaines d'un bras de fer entre opposants et forces de l'ordre, Kiev menace de sombrer dans la violence. Depuis mardi soir, au moins cinq personnes ont été tuées dans la capitale ukrainienne, selon des manifestants, dont trois confirmées par le parquet ukrainien. Plus de cent cinquante policiers auraient également été blessés.

Si les rues étaient plus calmes, jeudi 23 janvier, les occupants de la place de l'Indépendance ayant accepté de cesser temporairement les hostilités, les premiers témoignages affluent de brutalités policières et de scènes de torture.

ENLÈVEMENTS ET TORTURE

Le Wall Street Journal évoque notamment le cas d'Ihor Loutsenko, un manifestant qui raconte avoir été enlevé par un groupe d'hommes dans un hôpital avec Yuriy Verbytsky, un autre militant, mardi à l'aube. Après l'avoir retenu prisonnier pendant plusieurs heures, les hommes l'ont abandonné dans la forêt, sans qu'il sache ce qu'il était arrivé à M. Verbytsky. Selon la BBC, le corps de ce dernier a été retrouvé mercredi dans une forêt en dehors de Kiev, portant des signes de torture.

Jeudi soir, la disparition d'un autre leader de l'opposition était signalée à la police. Il s'agit de Dmytro Boulatov, 35 ans, l'un des leaders d'Automaïdan, mouvement de manifestants en voiture qui a organisé plusieurs actions spectaculaires devant la résidence de campagne du chef de l'Etat, devenue un symbole de la corruption. « Il est devenu dangereux d'être militant d'Automaïdan », déclarait ce père de trois enfants dans une récente interview au site d'opposition en ligne Ukraïnska Pravda.

Par ailleurs, Duncan Crawford, de la BBC, a recueilli le témoignage de Mikhail Nizkoguz, un étudiant de 17 ans, qui accuse la police antiémeute de l'avoir traîné dans la rue et de l'avoir torturé en le battant et le poignardant. Son visage et son corps étaient couverts de coupures et de contusions, selon le journaliste. Le jeune homme a expliqué que la police l'avait accusé de tirer des feux d'artifice sur eux alors qu'il ne faisait que prendre des photos. La BBC précise qu'un porte-parole de la police de Kiev avait assuré n'avoir connaissance d'aucun cas avéré de torture.

BERKOUT

Plusieurs vidéos sont également apparues en ligne, témoignant de la violence des forces de police. Dans l'une d'entre elles, on peut voir un homme contraint de poser nu dans la neige devant l'objectif d'un policier, alors qu'une dizaine de ses collègues regardent la scène. La police a présenté ses excuses pour cet « acte inadmissible » et a fait savoir qu'une enquête était ouverte.

Source: Le Monde

Les pesticides interdits dans les espaces verts et les jardins

C'est une petite avancée dans la bataille contre les pesticides : le Parlement a définitivement adopté, jeudi 23 janvier, une proposition de loi écologiste qui interdit en France les produits phytosanitaires (insecticides, herbicides, fongicides, etc.) dans les espaces verts publics à partir de 2020 et dans les jardins particuliers àcompter de 2022. 

L'Assemblée nationale a voté ce texte dans les mêmes termes que le Sénat le 19 novembre. Outre les écologistes, les socialistes, les radicaux, l'UDI et le Front de gauche ont voté pour, tandis que les élus UMP se sont prononcés contre ou abstenus.

Le texte interdit aux personnes privées ou publiques d'utiliser, à partir du 1er janvier 2020, les produits phytosanitaires pour l'entretien des espaces verts, des forêts ou des promenades « accessibles ou ouverts au public et relevant de leur domaine public ou privé », à l'exception des voies ferrées, des pistes d'aéroport ou des autoroutes pour des « raisons de sécurité publique ». Les pesticides pourront par contre toujours être utilisés en cas d'urgence sanitaire.

Par ailleurs, à partir du 1er janvier 2022, la commercialisation et la détention de produits phytosanitaires à usage non professionnel seront interdites. Cette disposition vise les 45 % de Français qui possèdent un jardin ou un potager. Autotal, cette loi concerne 5 à 10 % des pesticides utilisés en France — le reste étant destiné à l'agriculture.

En juin, une vaste expertise collective pilotée par l'Institut national de la santé et de la recherche médicale (Inserm) avançait une « présomption forte » de lien entre certains cancers ainsi que la maladie de Parkinson avec l'usage de pesticides chez les professionnels qui les manipulent. Selon l'étude, l'exposition des femmes enceintes — les agricultrices mais aussi les femmes qui utilisent les pesticides à des fins domestiques — augmente également le risque, pour l'enfant à naître, de tumeurs cérébrales, de leucémies, de troubles de la motricité fine ou de déficit cognitif.

« Les jardiniers et non-professionnels ne sont pas formés pour les manipuler.Même à faible dose, ces produits exposent la population, et notamment les enfants et les femmes enceintes, plus fragiles », confirme François Veillerette, président de l'organisation non gouvernementale Générations futures, association qui se consacre à la lutte contre les pesticides, et qui regrette toutefois le long délai de mise en application de la loi.

Pour Brigitte Allain, ce calendrier doit permettre aux collectivités de former leurs agents à de nouvelles pratiques, et aux industriels d'orienter leur recherche et leur production vers des solutions plus naturelles.

Emerging Currencies Weaken on China Data

           The Wall Street Journal reports, some emerging Asian currencies weakened Friday after Chinese manufacturing data renewed concerns about a slowdown in the country.

The Korean won has led the decline of currencies this year, followed by the Philippine peso and the Malaysian ringgit.

China is South Korea’s biggest trading partner. While the country’s economic prospects look robust — data Thursday showed South Korea’s gross domestic product expanded 2.8% last year, up from a three-year low of 2% in 2012 – the currency has dropped. Friday, the won hit a four-month low of 1,078.6 against the U.S. dollar, and it is down 2.7% this year, data from Thomson Reuters Eikon show.

The Philippine peso extended losses on fears of higher inflation. Earlier this week, it hit its lowest level since August 2010. Friday, the peso was down 2.1% for the year. Waning investor interest has been pushing bond yields in Malaysia higher and dragging the currency down. Yields on 10-year Malaysian bonds hit a multiyear high on Jan. 23, touching 4.25%, the highest since March 2010. On Friday, the notes yielded 4.24%. The ringgit is down 1.65% this year.

Fund outflows from emerging Asia intensified in the seven days to Jan. 22, based on EPFR data, which showed $1.4 billion had been yanked out of equity and bond funds from the region in that period.

“With sentiment towards emerging market assets still poor, we can expect further outflows to come, putting downward pressure on EM currencies,” analysts from ANZ noted on Jan 24.

But signs of improvement in some of the worst hit countries like India and Indonesia are luring investors back in.

“Intriguingly, it [India] is the only Asian market that has performed since the Fed has officially announced in December it was reducing its bond purchases. Clearly, the first decisions made by the new RBI [Reserve Bank of India] Governor Mr. Rajan, aiming at reducing the volatility of the rupee have worked out well analysts said.

"WSJ: Buy the Dips? Not Yet

          According to a report rom the Wall Street Journal,bargain hunters aren’t pouncing on the latest pullback in U.S. stocks. At least not yet.

Stocks opened broadly lower on Friday, with the Dow Jones Industrial Average off by more than 100 points. The decline comes after the blue-chip average slumped 176 points on Thursday, its second-biggest drop of the month.

Significant volatility in emerging-market stocks and currencies spread into other asset classes, with stocks across the globe falling broadly in Friday’s trading.

The S&P 500 fell 0.7% to 1815, as nine of the index’s 10 large-cap sectors traded in the red.

Even with stocks on pace for the fourth straight day of declines, one market watcher expects more pain ahead. Chris Verrone, head of technical analysis at Strategas Research Partners in New York, noted 27% of S&P 500 stocks traded at their 20-day lows on Thursday, a level that has been rising in recent weeks but doesn’t yet signal the market has hit a short-term bottom.

“We look to the 50% threshold as more consistent with an oversold signal,” Mr. Verrone says. The market is “not there yet.”

The rest of the first quarter will likely “remain on the choppier side,” he said, as the rout in emerging markets unfolds, earnings season continues and the Federal Reserve’s tapering plans develop.

WSJ: Dow Transports Get Shellacked

   According to a report from the Wall Street Journal,the   Dow Jones Transportation Average, a 20-member index of airlines, railroads and trucking companies, slumped more than 3% at session lows Friday. The decline comes after the index set a record high on Thursday, bucking the broader trend of declining stocks, currencies and emerging markets.

.  Followers of the age-old Dow Theory generally look for the industrials and transports to move in tandem to confirm a market’s trend. The theory’s ideology stems from the notion that making goods is one leg of the industrial economy and moving those goods around is the second leg, so their trends should be in sync.

Ahead of Friday’s action, the Dow Jones Industrial Average was down 2.3% this month, while the Dow transports were up 2.3%. With the transports holding up, there was hope that the rest of the market would reverse course and follow their lead.

Friday’s slump throws some cold water on that theory.

Dow Dips Below 16000

       The Wall Street Journal reports,the Dow Jones Industrial Average briefly dipped below 16000 Friday morning for the first time this year, as the rout in emerging markets continued to spillover into U.S. stocks. The last time the Dow was below 16000 on an intraday basis was on Dec. 18, the day the Federal Reserve announced it would start dialing back its bond-buying program.

Friday’s 200-point decline, combined with yesterday’s 176-point tumble, marked the Dow’s biggest two-day drop since June. At Friday’s session low, the Dow was down 2.9% for the week, on track for its worst weekly performance since May 2012.

WSJ’s John Shipman says the large “industrials” are the stocks that are leading the market lower:

“The real “industrials” in the Dow — the big manufacturers like United Technologies Corp., Boeing Co., 3M Co., General Electric Co. and Caterpillar Inc.with significant exposure to the fortunes of developing markets overseas — getting roundly hammered and doing the lion’s share of damage to the index today.

Worries about China, global growth and expanding turmoil in emerging-market currencies all weigh heavily on sentiment toward riskier assets. Boeing, United Technologies, 3M and Caterpillar combine for roughly 40% of the Dow’s drop. Industrials are the S&P 500′s worst-performing sector, down 2.3%.”

The stock market’s slide comes amid concerns over how the developing world will cope with the withdrawal of global stimulus. Currencies in places such as Turkey and South Africa fell to fresh lows on Friday. Fears are escalating that emerging-market countries may not be able to support their currencies or prop up their growth.

US Markets: VIX Traders Gear Up for More Fear Ahead

    According to a report from the Wall Street Journal, with stocks suffering a second straight day of declines amid growing emerging market turmoil, options traders are increasingly betting that the months of calm in the stock-markets fear gauge won’t last much longer.

Total bullish bets on the Chicago Board Options Exchange Volatility Index–which reflect expectations of a spike in market volatility– reached a record this week of 8.4 million contracts at January options expiration Wednesday. The record is 9% more than the prior high reached in March, when twitchy investors looked to hedge the best start to the year for the Dow Jones Industrial Average since 1998.

“There have been a lot of buyers this week across months, and a lot are buying in big size,” said Mike Palmer of Group One Trading, who sits at the center of the VIX pit at CBOE.  With the VIX so low, and volatility of the index itself low too, investors “can get a lot of bank for their buck,” he said.

Still, the trading was orderly and didn’t show any signs of panic, Mr. Palmer said.

The VIX jumped 7.2% Thursday, and was up big again Friday, adding 14% to 15.67 in recent trade. But even with the strong back-to-back gains, the index was low relative to its 20-year average of about 20.50.

The index is calculated from the prices investors pay for options on the S&P 500. It tends to rise as stocks fall, thus boosting demand for contracts that can hedge losses.

About 81% of VIX options trading Thursday was in call options that profit should the VIX rise above a set price, with the most actively traded contract looking for the index to reach a four-month high over the next four weeks.

Nearly 94,000 February 16 call options traded during the session, accounting for about 12% of total volume. Volume in that contract was helped by the largest VIX trade of the day, which involved the purchase of 18,763 February 16 calls. At a price of $70 per contract, that bet needs the VIX to be above 16.70 when the options expire on Feb. 19 to profit.

London Metal Exchange Closing Data

London Metal Exchange
Aluminium Alloy Cash Unofficial Confirmed $/m tonne			Fri 16:35	1819.50	+9.50		+0.5
Aluminium Alloy 3mo Unofficial Confirmed $/m tonne			Fri 16:35	1852.50	+42.50		+2.4
Primary Aluminium Cash Unofficial Confirmed $/m tonne			Fri 16:35	1726.25	-4.75		-0.3
Primary Aluminium 3mo Unofficial Confirmed $/m tonne			Fri 16:35	1765.50	-4.50		-0.3
Copper Cash Unofficial Confirmed $/m tonne			Fri 16:35	7197.50	-87.50		-1.2
Copper 3mo Unofficial Confirmed $/m tonne			Wed 16:35	7262.50	-28.00		-0.4
Lead Cash Unofficial Confirmed $/m tonne			Fri 16:35	2161.00	-20.50		-0.9
Lead 3mo Unofficial Confirmed $/m tonne			Wed 16:35	2172.00	-2.00		-0.1
N. American Special Alum Alloy Cash Unofcl Confmd $/m tonne			Fri 16:35	1819.50	+34.50		+1.9
N. American Special Alum Alloy 3mo Unofcl Confmd $/m tonne			Fri 16:35	1830.25	+9.75		+0.5
Nickel Cash Unofficial Confirmed $/m tonne			Fri 16:35	14520.00	-110.00		-0.8
Nickel 3mo Unofficial Confirmed $/m tonne			Wed 16:35	14132.50	+77.50		+0.6
Tin Cash Unofficial Confirmed $/m tonne			Fri 16:35	22112.50	-62.50		-0.3
Tin 3mo Unofficial Confirmed $/m tonne			Fri 16:35	22025.00	-175.00		-0.8
Zinc Cash Unofficial Confirmed $/m tonne			Fri 16:35	2031.00	-20.00		-1.0
Zinc 3mo Unofficial Confirmed $/m tonne			Wed 16:35	2005.00	+8.00		+0.4

Source: BBC

US STOCK MARKETS EXTENDING DECLINES

The U.S. equity markets are extending their solid declines in late-morning action, as global sentiment remains hampered by yesterday's disappointing Chinese manufacturing data, as well as recent sell-offs in the emerging market currency markets. Treasuries are continuing to rally amid the global uneasiness, while the domestic economic calendar is void of any major releases today. Meanwhile, stronger-than-expected earnings reports from Dow members Microsoft and Procter & Gamble, along with Starbucks, Bristol-Myers Squibb and Honeywell International, are failing to lift the equity markets. Gold is higher, while crude oil prices are lower and the U.S. dollar is flat. Overseas, Asian stocks finished mostly lower on the China concerns and emerging market foreign exchange movements, which are also pressuring European equities.

SOURCE; Schwab

Official Sino-Japanese Bitter Row Continues.

China on Friday responded to Japanese Prime Minister Shinzo Abe's new year message calling for cooperation in addressing bilateral problems by urging him to retreat from the wrong path and to never visit the war-linked Yasukuni Shrine again.

The Japanese government released Abe's message for the Chinese Lunar New Year on Thursday, in which he proposed the two countries return to the basic focus of establishing mutually beneficial strategic relations, overcoming obstacles and moving forward together.

China hopes the Japanese side will be honest and make solid efforts to improve bilateral ties, rather than sidestepping the core of the problem, and talking in one way while acting in another, Chinese Foreign Ministry spokesman Qin Gang told a regular press briefing.

"For the upcoming Chinese Lunar New Year, the Japanese leader's best message for the Chinese people and China-Japan ties should be this: he would step back from the brink regarding historical issues, acknowledge and correct his mistakes and never visit the shrine again," Qin said.

He said China has always attached great importance to China-Japan ties, and advocates developing bilateral ties based on the four political documents between both countries in the spirit of facing up to history.

Abe's visit to Tokyo's Yasukuni Shrine last December, where 14 Japanese Class-A World War II criminals are honored, sparked protests from China and the Republic of Korea (ROK), as well as international criticism. The visit caused further deterioration in Japan's relations with China and the ROK.

On the sidelines of the World Economic Forum in Davos, Switzerland, Abe compared current China-Japan relations to those between Britain and Germany ahead of World War I.

Qin denounced Abe's comments, condemning his arms-building efforts and intention to realize his domestic political aims by building tensions with neighboring countries.

Such ambitions are very dangerous, the spokesman added.

"The reason why China and the ROK firmly oppose such behavior is that it is a major issue of right and wrong that concerns regional and world peace and stability," Qin said.

The opposition revealed China's efforts to maintain regional peace and stability and safeguard the international order based on the victory in the international anti-fascist war, he said.

sOURCE: xINHUA

China preparing for Spring Festival: Night high-speed rail service to ease transport pressure

China has allowed night high-speed rail service to relieve the strain on transportation due to the approaching Spring Festival.

The first high-speed night train departing from Beijing this year was bound for Taiyuan, capital of north China's Shanxi Province, on Thursday, Beijing municipal railway authorities said.

A staff member surnamed Song from Beijing West Railway Station said the night trains have been added temporarily to help more passengers go home during Spring Festival, the most important festival for family reunions in the country, which falls on Jan. 31 this year.

The southern mega-city of Guangzhou also launched night high-speed rail service on Wednesday for the country's Spring Festival transport rush.

"I caught the train after work in the afternoon and arrived at my home in Changsha City, Hunan Province at night. It's very convenient," a passenger on the night train from Guangzhou to Changsha said.

A train attendant said all 1,003 seats on the train were sold out.

The Ministry of Transport has forecast that Chinese passengers will make 3.62 billion trips this Spring Festival, placing tremendous pressure on trains, planes and roads.

Despite the rapid expansion of China's railway network, which totaled 100,000 kilometers at the end of 2013, including 10,000 km of high-speed rail, tickets remain a highly sought-after commodity.

Guangzhou added 42 high-speed overnight trains, mainly traveling to Hubei and Hunan provinces between Jan. 22 and Jan. 29, according to the local railway authorities.

But safety concerns over the night trains may hold some people back from buying tickets.

Source: Xinhua

Xinhua Insight: Vigor of global capital market in doubt as liquidity falls off

The global capital market, having been spoiled over the years by ample liquidity, may be put to the test with the U.S. Federal Reserve's tapering of quantitative easing (QE) measures.

Global business elites and government officials, pooling wisdom at this year's World Economic Forum (WEF) in the Swiss town of Davos, say they are looking for a new stabilizer in a market with perhaps less mobility, while financial products pegged to the Chinese currency Renminbi (RMB) inch closer to the limelight.

SIGNS OF RECOVERY IN DEVELOPED MARKETS

Market confidence is being restored and stock exchanges in developed countries are pushed to new highs thanks to the waking up of the U.S. economy, Japan's ridding of deflation stress, and the European economy having started to collect itself in the second half of 2013.

Experts say that the bud of revival is clearly visible as trade and service industry indices take a turn for the better, despite high unemployment rate possibly continuing to haunt the way back to full rejuvenation.

"We have certainly avoided the worst-case scenario over the past five years," IMF Managing Director Christine Lagarde said Wednesday via her WEF blog account, adding that the latest forecast by the International Monetary Fund (IMF) put global GDP growth at 3.7 percent in 2014, "which is decent."

"But the time has come to push further, including by using the room created by unconventional monetary policies to implement structural reforms that can jump-start growth and create jobs," she said.

Policy adjustments like the downsizing of Washington's QE program can also pressurize the markets, while uncertainties resulting from foreseeable reforms of other major economic powers cannot be underestimated.

Lagarde also warned that risks of stagnation and deflation could loom large despite the recent stronger performance of advanced economies.

QE TAPERING RAISING SPILLOVER OF RISKS

Late last year, the money-printing Fed announced a "modest reduction" in monthly asset purchases from 85 billion U.S. dollars to 75 billion, with another 10 billion trimmed from mortgage-backed securities and Treasury bonds.

"The risks associated with emerging markets remain high, but the way in which QE tapering is applied can play a role in either enabling growth or throwing currencies and economies into turmoil," FTI Consulting said in a report published Wednesday, when the annual Davos forum began.

"The global economy is more interlinked now than ever before so a lack of synchronization across the central banks deploying QE could have drastic destabilizing effects," said Mark Malloch-Brown, chairman of Europe, Middle East and Africa at FTI Consulting.

The expert also warned that inflation destabilization and the rising costs of borrowing can be possible threats to emerging economies should they give poor responses.

RMB PRODUCTS BECOMING POPULAR

The Chinese currency has repeatedly marched to new highs against the dollar at the beginning of 2014, carrying on the strong momentum from last year.

China has signed various currency swap deals with its trading partners, evincing the RMB's rising recognition in global markets, while derivatives of currency options and RMB bonds have been gaining popularity as a result of China's steady and healthy growth over the years.

Yu Yongding, a senior fellow of the Institute of World Economics and Politics at Chinese Academy of Social Sciences, said the practice of overseas institutions issuing RMB bonds should be encouraged as a way of exporting the yuan and allowing China to become the creditor of its own currency.

However, reforms on exchange rate need to be carried out in steps to avoid external arbitrage and properly assess the impact of foreign trade on the economy in macro-terms, said the Chinese expert.

Source: EnglishNews.cn