24/07/2012 World Business Report

Now for the latest financial news Hello and welcome to World Business

Report. Germany's top-notch credit rating is under threat, as worries

over Europe's debt crisis deepen. Is the Apple money machine running

smoothly? We will find out later when it releases results.

Hello from Singapore. The Chinese economy reveals manufacturing is

bouncing back from recent weakness. It is shaping up to be another day

of concern over Europe's debt crisis. There are a number of

events that investors and politicians will be reacting to

today. First, Germany's top-notch credit rating is under threat.

That's after Moody's changed the outlook for Germany to negative,

saying there is an increased risk of Spain and Italy needing a

bailout, which would require German backing.

Meanwhile, Germany is an issue there. And the Greek government

will have to explain to its international creditors how it will

deliver promised budget cuts. Finally, there is some important

economic data out later. Closely watched surveys of purchasing

managers for July will be released. Guy Wolf is a strategist at Marex

Spectron, a brokerage firm specialising in commodities and

energy. Starting with this move by Moody's to change its outlook for

Germany. I suppose not a surprise, given the threats to the eurozone?

To a certain extent, it reflects almost a positive outcome that the

euro may stay together. In order to do that, it has to guarantee

helping those suffering economies. Does this move reflect what was

going on yesterday, the concern about Spain? The rising interest

rate on its ten-year bonds? Many say now this is really reducing

Spain's ability to borrow on the financial markets? Confidence in

the row has been lost and it no longer functions as a common

currency. -- in the euro. The yields have to reflect the

possibility of this country's leading the euro area. Greek,

Spanish, Italian bond yields. Equally, German bond yields

comprise of appreciation. They can still potentially offer value.

we are looking at interest on the steps to governments in the

eurozone? So, for Germany, and some of their bonds or three-year bonds,

it is negative. So if you were to put money in that, you would get

nothing in return. Explain what investors are thinking when they do

that. If the euro were to break up or if Germany were to leave

independently, then the new currency would appreciate in value

because Germany has the strongest export industry of all of the euro

area. So when you own German bonds, you are potentially going to have a

financial instrument that could appreciate 20% overnight when it

moves from the road to the mark. So, potentially, you are getting a

negative in beef short-term but it will be more than offset by capital

The tech giant Apple is due to publish its latest quarterly

results later. By Apple's extraordinary standards, the

figures are likely to be solid rather than spectacular, with

profits up a mere 20% or so, according to analyst forecasts.

Investors and customers are waiting for a refresh of the product line.

This report from New York. The company that Steve Jobs founded

in his parents' garage is the start of Wall Street. Ten years ago,

Apple shares train -- changed hands at less than $8 each. Now, they are

worth over $600 - a huge increase. And there are reasons why the

shares could go up more. This Apple Macs Store and others like it are

believed to be preparing for up to three blockbuster launches. --

Apple stall. The next generation iPhone is expected in September or

October. There is also talk of a smaller and cheaper version of the

iPad tablet and the long-awaited Apple television. The iPhone launch

is the biggest in iPhone history. A new form factor, the networks are

super-fast and you will have the euro. We will see massive line-out

we believe around the world. -- have video. But not everything is

rosy. There are complaints about poor working conditions in China

and the potential to damage their brand. Working conditions in those

factories have been very harsh. People have worked longer than is

allowed by law and people have been injured by workplace accidents and

workplace conditions. It is an issue that increasingly consumers

are asking about because they want to know where their computers and

smartphones come from. That is for the long-term. Right now, the focus

is on the anticipated launch of the new iPhone. Will it looked like

this, circulating on the internet, or maybe this one? In a couple of

months or so, we will find out. Fresh data out this morning has

raised optimism over the state of the Chinese economy. A closely

watched survey of purchasing managers indicates that Chinese

manufacturing has bounced back from some recent weakness. Rico Hizon is

in Singapore. Just the story we want to hear

today. We have the crisis in Europe and things are looking a bit better

in China? It is picking up on the mainland. It is a preliminary flash

reading but some good news for the Chinese economy, which has been

slowing down of late. The HSBC courtesy managers index rose in

July to its highest level in five months. -- purchasing managers'

index. There was a pick up in manufacture during production. --

manufacturing. There was expansion from contraction and this is the

first to -- significant Chinese data. The index has been below 58

for nine months. The data indicates that recent measures implemented by

the Government to boost growth has started to take effect and the

economy has started to rebound. Thank you.

In other business news, Cisco, the biggest maker of equipment for

computer networks, is cutting 1,300 jobs. That is in addition to 6,500

job cuts announced last year. Chief Executive John Chambers has been

revamping the company, to help boost profits and cope with growing

competition. Chinese oil and gas giant CNOOC has

agreed to buy the Canadian energy firm Nexen for $15 billion. If

approved, the deal would mark China's biggest takeover of an

overseas business. CNOOC is looking to boost its reserves, which are

among the lowest of the world's biggest energy firms.

The price of oil tumbled in New York. The benchmark contract fell

4% to $88 and 14 cents a barrel. Traders blamed ongoing concern over

Europe's debt crisis and its possible impact on global growth.

possible impact on global growth. Let's have a look at the market.

There is a mixed picture. Don't be fooled by what is happening in Hong

Kong. It has been closed due to a typhoon warning. No trading in Hong

Kong today. Elsewhere, it is fairly flat. Even more negative than

normal because of the response to the news from Moody's that it is

cutting its outlook for Germany and other economies as well. The

currency markets, will at the bottom. The US, we saw losses

across the board, reflecting the heavy losses on the markets in

Europe. Of course there was a lot of reaction to that decision in

Spain, or at least the increase in the ten-year bond interest. 7.5%.