New year, old worries for U.S. stocks
NEW YORK (Reuters) - U.S. stocks closed out 2009 with the best performance in six years, but monthly employment figures in the first week of the new year will keep investors focused on what is likely to be 2010's reality -- the economy's struggle to recover.
On the data front, the main event will be Friday's report from the Labor Department on U.S. non-farm payrolls in December. Economists polled by Reuters have forecast that payrolls shed 20,000 jobs in the final month of 2009, compared with just 11,000 lost in November.
The Institute for Supply Management's report on manufacturing, due on Monday, is expected to show the ailing sector was still slow to expand in December, while a projected drop in November pending home sales, due on Tuesday, will underscore the housing market's shaky recovery.
Major factors in the stock market's 2009 rally have been ultra-low interest rates and the Federal Reserve's purchases of securities. A repeat of November's much better-than-expected unemployment report could cause investors to worry that the Fed will increase borrowing costs sooner than previously thought.
Thomas Wilson, managing director of institutional investments at Brinker Capital in Berwyn, Pennsylvania, said the unwinding of the fiscal and monetary stimulus, possibly in the second half of 2010, will be a "delicate and deliberate process" that could ruffle markets.
Expectations that interest rates may rise sooner than expected have been helping the U.S. dollar recently, which could make a sustained move higher -- if expectations for higher rates increase further.
The stock market moved inversely to the dollar through most of 2009. A continued bounce in the greenback in 2010 could hurt stocks.
"The market's reaction to the generally stronger dollar is going to dictate a lot of the investment themes for the first half of 2010 and maybe the year at large," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
A TURNAROUND YEAR
Despite a 65 percent gain in the S&P 500 from its 12-year closing low in early March, stock investors have lost money this decade when total returns are taken into account. Few will be overwhelmed with the long-term performance of their portfolios.
As 2009 ended, Wall Street capped its first-ever negative decade on a total return basis, even with dividends reinvested.
Nevertheless, investors will remember 2009 as the year that the U.S. stock market made a substantial turnaround from its plunge in 2008 when fallout from the implosion of subprime mortgages and the credit crisis forced Lehman Brothers into bankruptcy -- changing the landscape of Wall Street forever.
For 2009, the Dow Jones industrial average .DJI climbed 18.8 percent, the S&P 500 .SPX shot up 23.5 percent and the Nasdaq .IXIC surged 43.9 percent.
JOBS, RATES AND HOUSING
Friday's non-farm payroll report is expected to confirm that U.S. job losses continued to bottom out in December. The data is also likely to reinforce expectations that the U.S. unemployment rate will peak in the first half of next year.
The U.S. unemployment rate is expected to edge up to 10.1 percent in December after it unexpectedly fell to 10 percent the month before.
In December, the Fed stuck to its commitment to keep interest rates close to zero for an "extended period." Some investors took November's unemployment number as a sign that rates may need to rise faster. That debate could start again if Friday's number is better than expected.
Better economic data "will raise concerns about the possibility the Fed will tighten earlier than most investors anticipate, but given what we're hearing from the Federal Reserve, it seems unlikely," said Carmine Grigoli, chief U.S. investment strategist at Mizuho Securities, in New York.
Most economists in a Reuters poll said they do not expect the Fed to raise interest rates before the end of the first quarter of 2011.
Many analysts are expecting the fledgling recovery in the U.S. housing market to be bumpy. An index of pending home sales is seen dropping 2.1 percent in November after hitting a 3-1/2-year high the month before -- the culmination of nine straight months of gains. That data is due on Tuesday.
The housing recovery is being supported by an $8,000 tax credit for the first-time home buyer. Originally due to expire at the end of November, it was extended to the end of April. The possible removal of that support remains a wild card for financial markets.
If the tax credit doesn't get extended again, "that will certainly be a negative on the housing front, plus if we see mortgage rates rising as well in 2010, a combination of those two would be a negative for the housing market," Wilson said.
Mortgage rates generally follow the yield on the 10-year U.S. Treasury note, which rose to 3.8 percent on Thursday, the last day of 2009, from 3.2 percent at the end of November. So far, stock investors have looked past that as they focus on signs of an improving economy.
ISM DATA AND CAR SALES
On Monday, the ISM's manufacturing index could have the potential to surprise on the upside after the ISM-Chicago regional survey showed manufacturing in the U.S. Midwest expanded more than expected in December.
Economists polled by Reuters expect the ISM's manufacturing index to rise to 54 in December after edging lower to 53.6 in November. A reading over 50 indicates economic expansion.
"The equity market is going to continue to focus on improving economic prospects, assuming that the economic data next week continues along the path that we've seen," Grigoli said.
Two days later, on Wednesday, the ISM's snapshot of the U.S. services sector, which is the largest segment of the U.S. economy, will be released.
The Reuters forecast for the ISM non-manufacturing index calls for an increase in December to 50.0, which signals expansion, from November's reading of 48.7.
As for the nation's gross domestic product, which measures the economy in terms of all goods and services produced within U.S. borders, economists polled by Reuters expect that GDP will grow at an annual rate of 2.8 percent in 2010. The U.S. economy returned to growth in the third quarter of 2009 following a prolonged slump tied to a recession that began in December 2007.
Factory orders are pegged to rise 0.5 percent in November when the data is released on Tuesday. Better-than-expected data in October showed inventories at U.S. factories increased for the first time in more than a year -- a sign that manufacturers are ramping up production.
Reports on December sales from U.S. auto makers, also due out on Tuesday, will give yet another reading on the economy and manufacturing. Total vehicle sales are expected to rise to 11 million units in December after edging up last month.
Action-packed start to 2010 for U.S. Treasuries
The dismal job market has been the weakest point of the tentative U.S. economic recovery, but signs of hope recently led some economists to conclude employment growth may have commenced in December.
Although this is still the minority view, its adherents gained support on Thursday, when government figures showed an unexpected drop in the number of filings for jobless benefits during the latest week.
The claims numbers and possibility of a positive payrolls report represent a threat to investors who have socked away savings in safe-haven Treasuries on the view that weak economic conditions will keep inflation low and bond prices stable.
"I think that's really what the purpose of today's jobless claims was, kind of a forward read for that," said Aaron Kohli, interest rate strategist RBS Securities in Stamford, Connecticut.
"Treasuries have sold off right after and RBS economists are looking for a positive print in the number that is coming up ... in the payrolls number."
Inflation is the arch-enemy of long-term bond holders because it erodes the value of cash flows from fixed income assets.
Employment growth could force the Federal Reserve to consider raising interest rates sooner than previously expected to head off accelerated price growth, hitting shorter-term bonds, which trade primarily on monetary policy expectations.
All of this raises the stakes for next Friday's nonfarm payrolls report.
Analysts polled by Reuters expect the report to show payrolls fell by 20,000 in December, based on the median of their 38 forecasts, which would be worse than November's decline of 11,000 jobs.
However, the predictions ranged widely, from a loss of 80,000 jobs to an increase of 50,000. The unemployment rate is expected to edge up to 10.1 percent from 10.0 percent.
Before the jobs report, however, economists will scrutinize Monday's national manufacturing report from the Institute for Supply Management, which is expected to show a slight acceleration in the sector's growth.
Factory orders and pending home sales are the highlights of Tuesday's data and a slew of private sector employment figures comes out Wednesday, along with a reading on the health of the services sector.
Traders returning from the long weekend after Friday's New Years Day holiday will already have comments to digest from Fed Chairman Ben Bernanke, who speaks on Sunday, January 3 before the American Economic Association's annual meeting in Atlanta.
HONG KONG (Reuters) - Thousands of Hong Kong residents appealed to China on New Year's Day to allow full democracy to be introduced soon in the city, as opposition lawmakers pressed forward with a mass resignation plan later this month.
Congregating outside the city's historic domed legislature, protesters carried colorful banners with slogans such as "Democracy Now!" and made their way to Beijing's representative office.
Some demonstrators held aloft portraits of Chinese dissident Liu Xiaobo, demanding the release of the prominent activist and writer, jailed last week for 11 years on a subversion charge.
Organizers said more than 30,000 protesters turned out for the New Year's Day "return our right to universal suffrage" march. Police put the number at around 9,000.
Hundreds of police erected steel barricades as protesters with loudhailers converged on Beijing's liaison office in the former British colony, returned to Chinese rule in 1997.
There were minor scuffles when police tried to prevent a small number of protesters from storming the office.
A group of five pro-democracy legislators plan to resign en masse from the city's legislature, following the release of a political reform blueprint for elections in 2012, which democracy advocates say does not go far enough.
The subsequent city-wide by-elections in Hong Kong's five major districts will trigger what the liberals say amounts to a symbolic referendum on full democracy.
Beijing has already promised to allow a full-scale election in Hong Kong in 2017 for the city's leader. But recent signs, including comments by pro-Beijing figures, have suggested Beijing may only allow a power-preserving version of democracy with rules stacked against opposition candidates.
Hong Kong's mini-constitution guarantees full democracy as an "ultimate aim" but the city's seven million people now have no direct say in their leader.
Beijing remains wary of upsurges of public discontent in Hong Kong, with Chinese premier Wen Jiabao recently warning Hong Kong's bowtie-wearing leader Donald Tsang to be wary of "deep-rooted conflicts." In 2003, half a million protesters spilled onto the streets in anger at the administration of Hong Kong's then-leader Tung Chee-hwa, who resigned soon afterwards
The survey released on Friday also showed the rapid pace of activity pushed up prices of inputs such as labor, raw materials and capital to a 17-month high in China, potentially complicating efforts of officials who want to maintain growth-friendly policies without driving inflation expectations.
The official purchasing managers' index (PMI) jumped to 56.6 in December from 55.2 in the previous month, the China Federation of Logistics and Purchasing said.
It was the 10th consecutive month of expansion and the biggest monthly rise since March, reflecting that Chinese manufacturers, far from plateauing after a recovery, have actually gathered momentum heading into 2010.
"We expect China's strong economic growth momentum to continue in 2010, with the major source of growth coming from a broad-based improvement in private consumption, and further strengthening in private housing investment, and a solid recovery in exports," Jing Ulrich, chairman of China equities at J.P. Morgan in Hong Kong, said in a research note.
Chinese demand has given a welcome boost to economies of many neighboring Asian countries over the last year as the region's traditional Western markets remain weak.
South Korea, Asia's fourth-largest economy, said on Friday that its exports to China between December 1 to 20 were up 74.4 percent to $54.23 billion, while exports to the United States in the same period grew only 8.7 percent to $19.04 billion.
Overall Korean trade figures for December rose much faster than expected from a year earlier, indicating world trade was recovering quickly from the financial crisis and paving the way for an interest rate increase in Korea soon.
Exports during the final month of 2009 grew 33.7 percent from a year earlier to $36.24 billion, blowing away the median expectation for 25 percent growth. Imports gained 24.0 percent over a year earlier to $32.94 billion.
South Korea, home to global suppliers of ships, cars and electronics gadgets, is the first major exporting economy in the region to release monthly foreign trade figures and is an early indication of trends in North Asian trade.
"The export figures indicated an economic recovery is spreading to developed countries from emerging markets. The overseas momentum will boost Korea's overall growth, of course, including domestic demand," said Song Jae-hyeok, an economist at SK Securities in Seoul.
"That will confirm views of an interest rate rise in the first quarter, probably in February."
KOREA TO RAISE RATES WHILE CHINA IS ON HOLD
The Bank of Korea indicated on Thursday that rates will rise in 2010 at an appropriate pace.
By contrast, China's central bank said this week that monetary policy will remain loose, though flexibility will increase, a reference to slightly tighter controls on bank lending.
Indeed, a slower expansion of new export orders for the second straight month in December supported the cause of officials who have been extremely cautious in winding down pro-growth policies.
"The fall in the indicator for new export orders warrants attention, as it shows we must avoid undue optimism about the improvement in the international marketplace," said Zhang Liqun, a researcher at the State Council's Development Research Center who comments on the PMI for the logistics federation in Beijing.
China's economy is expected by some analysts to grow more than 9 percent in 2010, increasing worries among some economists that deflation experienced through most of 2009 will quickly flip to inflation.
However, the State Council Development Research Center, a leading national think tank, said in a report on Friday that China's gross domestic product would expand by 9.5 percent in 2010, thanks to robust real estate investment and mild inflation.
China's economy shot back to nearly double-digit growth in 2009 after nearly standing still at the end of 2008, giving a lift to Asia and countries such as Australia which have been able to feed its voracious appetite for commodities.
The country's 4 trillion yuan stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 percent year-on-year growth in the third quarter of 2009 and put it on track for even faster expansion this year
Gold ends at $1,096.20, up 24.8 percent in 2009
At the informal spot-market close of $1,096.20 an ounce, gold gained $218 this year, a sum eclipsed in recent history only by 1979's $286 surge -- gains that proved fleeting as bullion relapsed two years later. On a percentage basis gold rose 24.8 percent, short of 2007's 31 percent rise.
After 2008's roller-coaster, this year was one of fairly consistent gains for bullion, favored as a hedge against economic uncertainties after the worst economic crisis since the Great Depression.
Gold hit a record high above $1,220 on December 3 on a combination of renewed central bank interest, worries over paper currencies depreciation and long-term inflation fears due to massive economic stimulus programs.
Central banks played a key role in aiding the rally during a year in which China revealed that it had secretly increased its reserves over the past five years to the world's fifth-largest by buying up domestic production, while India nearly doubled its holdings by buying half of the IMF's stockpile slated for sale.
The tone for the precious metals market in early 2010 will now hinge on whether the U.S. dollar will continue its year-end rally, and if the central banks will keep interest rates at record lows to boost economic growth.
Other precious metals staged equally impressive gains after last year's deep decline, with platinum rising a record 58.7 percent and palladium up 220 percent on improving economic conditions, as well as hope for a boost in physical demand from new U.S. exchange traded funds expected to launch soon. Silver also jumped by a record 49.1 percent.
All Nippon mulls taking JAL's overseas flights
All Nippon is looking to increase its overseas flights by targeting profitable routes to Europe and the United States and has told Japan's government of its interest, the Yomiuri said, citing unidentified sources.
JAL, whose shares hit a record low this week on expectations that it was headed for bankruptcy under a state restructuring plan, has been burdened by unprofitable domestic and international routes.
JAL has already said it will terminate flights on 30 routes, including 13 international, by June.
All Nippon competes with JAL on more than 30 of All Nippon's 40 international routes, the paper said.
"We want to increase flights to Europe and the United States," the Yomiuri quoted an All Nippon executive as saying.
"We will need to consolidate routes in Asia where there is an overlap."
No one was available for comment at either airline. Offices and markets were closed on Friday for the New Year holiday.
Several cabinet ministers have asked JAL to completely withdraw from overseas flights and hand the business over to All Nippon, the Mainichi Shimbum said on Thursday.
But Transport Minister Seiji Maehara has been opposed to having only one Japanese airline offer international service, the Mainichi said.
JAL has applied for a bailout from a state-backed organization of turnaround specialists, which will decide whether to support the airline this month.
The Development Bank of Japan has agreed to increase the amount of its unsecured loans to the airline, Japanese media also reported on Thursday.
NEW YORK (Reuters) - U.S. stocks closed out 2009 with the best performance in six years, but monthly employment figures in the first week of the new year will keep investors focused on what is likely to be 2010's reality -- the economy's struggle to recover.
On the data front, the main event will be Friday's report from the Labor Department on U.S. non-farm payrolls in December. Economists polled by Reuters have forecast that payrolls shed 20,000 jobs in the final month of 2009, compared with just 11,000 lost in November.
The Institute for Supply Management's report on manufacturing, due on Monday, is expected to show the ailing sector was still slow to expand in December, while a projected drop in November pending home sales, due on Tuesday, will underscore the housing market's shaky recovery.
Major factors in the stock market's 2009 rally have been ultra-low interest rates and the Federal Reserve's purchases of securities. A repeat of November's much better-than-expected unemployment report could cause investors to worry that the Fed will increase borrowing costs sooner than previously thought.
Thomas Wilson, managing director of institutional investments at Brinker Capital in Berwyn, Pennsylvania, said the unwinding of the fiscal and monetary stimulus, possibly in the second half of 2010, will be a "delicate and deliberate process" that could ruffle markets.
Expectations that interest rates may rise sooner than expected have been helping the U.S. dollar recently, which could make a sustained move higher -- if expectations for higher rates increase further.
The stock market moved inversely to the dollar through most of 2009. A continued bounce in the greenback in 2010 could hurt stocks.
"The market's reaction to the generally stronger dollar is going to dictate a lot of the investment themes for the first half of 2010 and maybe the year at large," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
A TURNAROUND YEAR
Despite a 65 percent gain in the S&P 500 from its 12-year closing low in early March, stock investors have lost money this decade when total returns are taken into account. Few will be overwhelmed with the long-term performance of their portfolios.
As 2009 ended, Wall Street capped its first-ever negative decade on a total return basis, even with dividends reinvested.
Nevertheless, investors will remember 2009 as the year that the U.S. stock market made a substantial turnaround from its plunge in 2008 when fallout from the implosion of subprime mortgages and the credit crisis forced Lehman Brothers into bankruptcy -- changing the landscape of Wall Street forever.
For 2009, the Dow Jones industrial average .DJI climbed 18.8 percent, the S&P 500 .SPX shot up 23.5 percent and the Nasdaq .IXIC surged 43.9 percent.
JOBS, RATES AND HOUSING
Friday's non-farm payroll report is expected to confirm that U.S. job losses continued to bottom out in December. The data is also likely to reinforce expectations that the U.S. unemployment rate will peak in the first half of next year.
The U.S. unemployment rate is expected to edge up to 10.1 percent in December after it unexpectedly fell to 10 percent the month before.
In December, the Fed stuck to its commitment to keep interest rates close to zero for an "extended period." Some investors took November's unemployment number as a sign that rates may need to rise faster. That debate could start again if Friday's number is better than expected.
Better economic data "will raise concerns about the possibility the Fed will tighten earlier than most investors anticipate, but given what we're hearing from the Federal Reserve, it seems unlikely," said Carmine Grigoli, chief U.S. investment strategist at Mizuho Securities, in New York.
Most economists in a Reuters poll said they do not expect the Fed to raise interest rates before the end of the first quarter of 2011.
Many analysts are expecting the fledgling recovery in the U.S. housing market to be bumpy. An index of pending home sales is seen dropping 2.1 percent in November after hitting a 3-1/2-year high the month before -- the culmination of nine straight months of gains. That data is due on Tuesday.
The housing recovery is being supported by an $8,000 tax credit for the first-time home buyer. Originally due to expire at the end of November, it was extended to the end of April. The possible removal of that support remains a wild card for financial markets.
If the tax credit doesn't get extended again, "that will certainly be a negative on the housing front, plus if we see mortgage rates rising as well in 2010, a combination of those two would be a negative for the housing market," Wilson said.
Mortgage rates generally follow the yield on the 10-year U.S. Treasury note, which rose to 3.8 percent on Thursday, the last day of 2009, from 3.2 percent at the end of November. So far, stock investors have looked past that as they focus on signs of an improving economy.
ISM DATA AND CAR SALES
On Monday, the ISM's manufacturing index could have the potential to surprise on the upside after the ISM-Chicago regional survey showed manufacturing in the U.S. Midwest expanded more than expected in December.
Economists polled by Reuters expect the ISM's manufacturing index to rise to 54 in December after edging lower to 53.6 in November. A reading over 50 indicates economic expansion.
"The equity market is going to continue to focus on improving economic prospects, assuming that the economic data next week continues along the path that we've seen," Grigoli said.
Two days later, on Wednesday, the ISM's snapshot of the U.S. services sector, which is the largest segment of the U.S. economy, will be released.
The Reuters forecast for the ISM non-manufacturing index calls for an increase in December to 50.0, which signals expansion, from November's reading of 48.7.
As for the nation's gross domestic product, which measures the economy in terms of all goods and services produced within U.S. borders, economists polled by Reuters expect that GDP will grow at an annual rate of 2.8 percent in 2010. The U.S. economy returned to growth in the third quarter of 2009 following a prolonged slump tied to a recession that began in December 2007.
Factory orders are pegged to rise 0.5 percent in November when the data is released on Tuesday. Better-than-expected data in October showed inventories at U.S. factories increased for the first time in more than a year -- a sign that manufacturers are ramping up production.
Reports on December sales from U.S. auto makers, also due out on Tuesday, will give yet another reading on the economy and manufacturing. Total vehicle sales are expected to rise to 11 million units in December after edging up last month.
Action-packed start to 2010 for U.S. Treasuries
The dismal job market has been the weakest point of the tentative U.S. economic recovery, but signs of hope recently led some economists to conclude employment growth may have commenced in December.
Although this is still the minority view, its adherents gained support on Thursday, when government figures showed an unexpected drop in the number of filings for jobless benefits during the latest week.
The claims numbers and possibility of a positive payrolls report represent a threat to investors who have socked away savings in safe-haven Treasuries on the view that weak economic conditions will keep inflation low and bond prices stable.
"I think that's really what the purpose of today's jobless claims was, kind of a forward read for that," said Aaron Kohli, interest rate strategist RBS Securities in Stamford, Connecticut.
"Treasuries have sold off right after and RBS economists are looking for a positive print in the number that is coming up ... in the payrolls number."
Inflation is the arch-enemy of long-term bond holders because it erodes the value of cash flows from fixed income assets.
Employment growth could force the Federal Reserve to consider raising interest rates sooner than previously expected to head off accelerated price growth, hitting shorter-term bonds, which trade primarily on monetary policy expectations.
All of this raises the stakes for next Friday's nonfarm payrolls report.
Analysts polled by Reuters expect the report to show payrolls fell by 20,000 in December, based on the median of their 38 forecasts, which would be worse than November's decline of 11,000 jobs.
However, the predictions ranged widely, from a loss of 80,000 jobs to an increase of 50,000. The unemployment rate is expected to edge up to 10.1 percent from 10.0 percent.
Before the jobs report, however, economists will scrutinize Monday's national manufacturing report from the Institute for Supply Management, which is expected to show a slight acceleration in the sector's growth.
Factory orders and pending home sales are the highlights of Tuesday's data and a slew of private sector employment figures comes out Wednesday, along with a reading on the health of the services sector.
Traders returning from the long weekend after Friday's New Years Day holiday will already have comments to digest from Fed Chairman Ben Bernanke, who speaks on Sunday, January 3 before the American Economic Association's annual meeting in Atlanta.
HONG KONG (Reuters) - Thousands of Hong Kong residents appealed to China on New Year's Day to allow full democracy to be introduced soon in the city, as opposition lawmakers pressed forward with a mass resignation plan later this month.
Congregating outside the city's historic domed legislature, protesters carried colorful banners with slogans such as "Democracy Now!" and made their way to Beijing's representative office.
Some demonstrators held aloft portraits of Chinese dissident Liu Xiaobo, demanding the release of the prominent activist and writer, jailed last week for 11 years on a subversion charge.
Organizers said more than 30,000 protesters turned out for the New Year's Day "return our right to universal suffrage" march. Police put the number at around 9,000.
Hundreds of police erected steel barricades as protesters with loudhailers converged on Beijing's liaison office in the former British colony, returned to Chinese rule in 1997.
There were minor scuffles when police tried to prevent a small number of protesters from storming the office.
A group of five pro-democracy legislators plan to resign en masse from the city's legislature, following the release of a political reform blueprint for elections in 2012, which democracy advocates say does not go far enough.
The subsequent city-wide by-elections in Hong Kong's five major districts will trigger what the liberals say amounts to a symbolic referendum on full democracy.
Beijing has already promised to allow a full-scale election in Hong Kong in 2017 for the city's leader. But recent signs, including comments by pro-Beijing figures, have suggested Beijing may only allow a power-preserving version of democracy with rules stacked against opposition candidates.
Hong Kong's mini-constitution guarantees full democracy as an "ultimate aim" but the city's seven million people now have no direct say in their leader.
Beijing remains wary of upsurges of public discontent in Hong Kong, with Chinese premier Wen Jiabao recently warning Hong Kong's bowtie-wearing leader Donald Tsang to be wary of "deep-rooted conflicts." In 2003, half a million protesters spilled onto the streets in anger at the administration of Hong Kong's then-leader Tung Chee-hwa, who resigned soon afterwards
The survey released on Friday also showed the rapid pace of activity pushed up prices of inputs such as labor, raw materials and capital to a 17-month high in China, potentially complicating efforts of officials who want to maintain growth-friendly policies without driving inflation expectations.
The official purchasing managers' index (PMI) jumped to 56.6 in December from 55.2 in the previous month, the China Federation of Logistics and Purchasing said.
It was the 10th consecutive month of expansion and the biggest monthly rise since March, reflecting that Chinese manufacturers, far from plateauing after a recovery, have actually gathered momentum heading into 2010.
"We expect China's strong economic growth momentum to continue in 2010, with the major source of growth coming from a broad-based improvement in private consumption, and further strengthening in private housing investment, and a solid recovery in exports," Jing Ulrich, chairman of China equities at J.P. Morgan in Hong Kong, said in a research note.
Chinese demand has given a welcome boost to economies of many neighboring Asian countries over the last year as the region's traditional Western markets remain weak.
South Korea, Asia's fourth-largest economy, said on Friday that its exports to China between December 1 to 20 were up 74.4 percent to $54.23 billion, while exports to the United States in the same period grew only 8.7 percent to $19.04 billion.
Overall Korean trade figures for December rose much faster than expected from a year earlier, indicating world trade was recovering quickly from the financial crisis and paving the way for an interest rate increase in Korea soon.
Exports during the final month of 2009 grew 33.7 percent from a year earlier to $36.24 billion, blowing away the median expectation for 25 percent growth. Imports gained 24.0 percent over a year earlier to $32.94 billion.
South Korea, home to global suppliers of ships, cars and electronics gadgets, is the first major exporting economy in the region to release monthly foreign trade figures and is an early indication of trends in North Asian trade.
"The export figures indicated an economic recovery is spreading to developed countries from emerging markets. The overseas momentum will boost Korea's overall growth, of course, including domestic demand," said Song Jae-hyeok, an economist at SK Securities in Seoul.
"That will confirm views of an interest rate rise in the first quarter, probably in February."
KOREA TO RAISE RATES WHILE CHINA IS ON HOLD
The Bank of Korea indicated on Thursday that rates will rise in 2010 at an appropriate pace.
By contrast, China's central bank said this week that monetary policy will remain loose, though flexibility will increase, a reference to slightly tighter controls on bank lending.
Indeed, a slower expansion of new export orders for the second straight month in December supported the cause of officials who have been extremely cautious in winding down pro-growth policies.
"The fall in the indicator for new export orders warrants attention, as it shows we must avoid undue optimism about the improvement in the international marketplace," said Zhang Liqun, a researcher at the State Council's Development Research Center who comments on the PMI for the logistics federation in Beijing.
China's economy is expected by some analysts to grow more than 9 percent in 2010, increasing worries among some economists that deflation experienced through most of 2009 will quickly flip to inflation.
However, the State Council Development Research Center, a leading national think tank, said in a report on Friday that China's gross domestic product would expand by 9.5 percent in 2010, thanks to robust real estate investment and mild inflation.
China's economy shot back to nearly double-digit growth in 2009 after nearly standing still at the end of 2008, giving a lift to Asia and countries such as Australia which have been able to feed its voracious appetite for commodities.
The country's 4 trillion yuan stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 percent year-on-year growth in the third quarter of 2009 and put it on track for even faster expansion this year
Gold ends at $1,096.20, up 24.8 percent in 2009
At the informal spot-market close of $1,096.20 an ounce, gold gained $218 this year, a sum eclipsed in recent history only by 1979's $286 surge -- gains that proved fleeting as bullion relapsed two years later. On a percentage basis gold rose 24.8 percent, short of 2007's 31 percent rise.
After 2008's roller-coaster, this year was one of fairly consistent gains for bullion, favored as a hedge against economic uncertainties after the worst economic crisis since the Great Depression.
Gold hit a record high above $1,220 on December 3 on a combination of renewed central bank interest, worries over paper currencies depreciation and long-term inflation fears due to massive economic stimulus programs.
Central banks played a key role in aiding the rally during a year in which China revealed that it had secretly increased its reserves over the past five years to the world's fifth-largest by buying up domestic production, while India nearly doubled its holdings by buying half of the IMF's stockpile slated for sale.
The tone for the precious metals market in early 2010 will now hinge on whether the U.S. dollar will continue its year-end rally, and if the central banks will keep interest rates at record lows to boost economic growth.
Other precious metals staged equally impressive gains after last year's deep decline, with platinum rising a record 58.7 percent and palladium up 220 percent on improving economic conditions, as well as hope for a boost in physical demand from new U.S. exchange traded funds expected to launch soon. Silver also jumped by a record 49.1 percent.
All Nippon mulls taking JAL's overseas flights
All Nippon is looking to increase its overseas flights by targeting profitable routes to Europe and the United States and has told Japan's government of its interest, the Yomiuri said, citing unidentified sources.
JAL, whose shares hit a record low this week on expectations that it was headed for bankruptcy under a state restructuring plan, has been burdened by unprofitable domestic and international routes.
JAL has already said it will terminate flights on 30 routes, including 13 international, by June.
All Nippon competes with JAL on more than 30 of All Nippon's 40 international routes, the paper said.
"We want to increase flights to Europe and the United States," the Yomiuri quoted an All Nippon executive as saying.
"We will need to consolidate routes in Asia where there is an overlap."
No one was available for comment at either airline. Offices and markets were closed on Friday for the New Year holiday.
Several cabinet ministers have asked JAL to completely withdraw from overseas flights and hand the business over to All Nippon, the Mainichi Shimbum said on Thursday.
But Transport Minister Seiji Maehara has been opposed to having only one Japanese airline offer international service, the Mainichi said.
JAL has applied for a bailout from a state-backed organization of turnaround specialists, which will decide whether to support the airline this month.
The Development Bank of Japan has agreed to increase the amount of its unsecured loans to the airline, Japanese media also reported on Thursday.
