:00:12. > :00:18.Now for the latest financial news Hello and welcome to World Business
:00:18. > :00:25.Report. Germany's top-notch credit rating is under threat, as worries
:00:25. > :00:31.over Europe's debt crisis deepen. Is the Apple money machine running
:00:31. > :00:41.smoothly? We will find out later when it releases results.
:00:41. > :00:42.
:00:42. > :00:50.Hello from Singapore. The Chinese economy reveals manufacturing is
:00:50. > :00:53.bouncing back from recent weakness. It is shaping up to be another day
:00:53. > :00:55.of concern over Europe's debt crisis. There are a number of
:00:55. > :01:01.events that investors and politicians will be reacting to
:01:01. > :01:04.today. First, Germany's top-notch credit rating is under threat.
:01:04. > :01:07.That's after Moody's changed the outlook for Germany to negative,
:01:07. > :01:17.saying there is an increased risk of Spain and Italy needing a
:01:17. > :01:22.
:01:22. > :01:28.bailout, which would require German backing.
:01:28. > :01:31.Meanwhile, Germany is an issue there. And the Greek government
:01:31. > :01:34.will have to explain to its international creditors how it will
:01:34. > :01:36.deliver promised budget cuts. Finally, there is some important
:01:36. > :01:40.economic data out later. Closely watched surveys of purchasing
:01:40. > :01:42.managers for July will be released. Guy Wolf is a strategist at Marex
:01:43. > :01:52.Spectron, a brokerage firm specialising in commodities and
:01:52. > :01:57.energy. Starting with this move by Moody's to change its outlook for
:01:57. > :02:03.Germany. I suppose not a surprise, given the threats to the eurozone?
:02:03. > :02:13.To a certain extent, it reflects almost a positive outcome that the
:02:13. > :02:15.
:02:15. > :02:19.euro may stay together. In order to do that, it has to guarantee
:02:19. > :02:23.helping those suffering economies. Does this move reflect what was
:02:23. > :02:32.going on yesterday, the concern about Spain? The rising interest
:02:32. > :02:37.rate on its ten-year bonds? Many say now this is really reducing
:02:37. > :02:41.Spain's ability to borrow on the financial markets? Confidence in
:02:41. > :02:46.the row has been lost and it no longer functions as a common
:02:46. > :02:50.currency. -- in the euro. The yields have to reflect the
:02:50. > :03:00.possibility of this country's leading the euro area. Greek,
:03:00. > :03:01.
:03:01. > :03:05.Spanish, Italian bond yields. Equally, German bond yields
:03:05. > :03:09.comprise of appreciation. They can still potentially offer value.
:03:10. > :03:16.we are looking at interest on the steps to governments in the
:03:16. > :03:21.eurozone? So, for Germany, and some of their bonds or three-year bonds,
:03:21. > :03:24.it is negative. So if you were to put money in that, you would get
:03:24. > :03:28.nothing in return. Explain what investors are thinking when they do
:03:28. > :03:34.that. If the euro were to break up or if Germany were to leave
:03:34. > :03:38.independently, then the new currency would appreciate in value
:03:38. > :03:42.because Germany has the strongest export industry of all of the euro
:03:42. > :03:47.area. So when you own German bonds, you are potentially going to have a
:03:47. > :03:51.financial instrument that could appreciate 20% overnight when it
:03:51. > :03:55.moves from the road to the mark. So, potentially, you are getting a
:03:55. > :04:05.negative in beef short-term but it will be more than offset by capital
:04:05. > :04:09.The tech giant Apple is due to publish its latest quarterly
:04:09. > :04:11.results later. By Apple's extraordinary standards, the
:04:11. > :04:15.figures are likely to be solid rather than spectacular, with
:04:15. > :04:20.profits up a mere 20% or so, according to analyst forecasts.
:04:20. > :04:28.Investors and customers are waiting for a refresh of the product line.
:04:28. > :04:34.This report from New York. The company that Steve Jobs founded
:04:34. > :04:40.in his parents' garage is the start of Wall Street. Ten years ago,
:04:40. > :04:46.Apple shares train -- changed hands at less than $8 each. Now, they are
:04:46. > :04:52.worth over $600 - a huge increase. And there are reasons why the
:04:52. > :04:58.shares could go up more. This Apple Macs Store and others like it are
:04:58. > :05:04.believed to be preparing for up to three blockbuster launches. --
:05:04. > :05:08.Apple stall. The next generation iPhone is expected in September or
:05:08. > :05:17.October. There is also talk of a smaller and cheaper version of the
:05:17. > :05:23.iPad tablet and the long-awaited Apple television. The iPhone launch
:05:23. > :05:29.is the biggest in iPhone history. A new form factor, the networks are
:05:29. > :05:35.super-fast and you will have the euro. We will see massive line-out
:05:35. > :05:38.we believe around the world. -- have video. But not everything is
:05:38. > :05:43.rosy. There are complaints about poor working conditions in China
:05:43. > :05:47.and the potential to damage their brand. Working conditions in those
:05:47. > :05:52.factories have been very harsh. People have worked longer than is
:05:52. > :05:55.allowed by law and people have been injured by workplace accidents and
:05:55. > :05:59.workplace conditions. It is an issue that increasingly consumers
:05:59. > :06:05.are asking about because they want to know where their computers and
:06:05. > :06:10.smartphones come from. That is for the long-term. Right now, the focus
:06:10. > :06:17.is on the anticipated launch of the new iPhone. Will it looked like
:06:17. > :06:21.this, circulating on the internet, or maybe this one? In a couple of
:06:21. > :06:24.months or so, we will find out. Fresh data out this morning has
:06:24. > :06:27.raised optimism over the state of the Chinese economy. A closely
:06:27. > :06:32.watched survey of purchasing managers indicates that Chinese
:06:32. > :06:40.manufacturing has bounced back from some recent weakness. Rico Hizon is
:06:40. > :06:45.in Singapore. Just the story we want to hear
:06:45. > :06:51.today. We have the crisis in Europe and things are looking a bit better
:06:51. > :06:55.in China? It is picking up on the mainland. It is a preliminary flash
:06:55. > :07:00.reading but some good news for the Chinese economy, which has been
:07:00. > :07:06.slowing down of late. The HSBC courtesy managers index rose in
:07:06. > :07:16.July to its highest level in five months. -- purchasing managers'
:07:16. > :07:23.index. There was a pick up in manufacture during production. --
:07:23. > :07:33.manufacturing. There was expansion from contraction and this is the
:07:33. > :07:37.
:07:37. > :07:42.first to -- significant Chinese data. The index has been below 58
:07:42. > :07:46.for nine months. The data indicates that recent measures implemented by
:07:46. > :07:51.the Government to boost growth has started to take effect and the
:07:51. > :07:54.economy has started to rebound. Thank you.
:07:54. > :08:00.In other business news, Cisco, the biggest maker of equipment for
:08:00. > :08:03.computer networks, is cutting 1,300 jobs. That is in addition to 6,500
:08:03. > :08:06.job cuts announced last year. Chief Executive John Chambers has been
:08:06. > :08:11.revamping the company, to help boost profits and cope with growing
:08:11. > :08:15.competition. Chinese oil and gas giant CNOOC has
:08:15. > :08:18.agreed to buy the Canadian energy firm Nexen for $15 billion. If
:08:18. > :08:23.approved, the deal would mark China's biggest takeover of an
:08:23. > :08:27.overseas business. CNOOC is looking to boost its reserves, which are
:08:27. > :08:34.among the lowest of the world's biggest energy firms.
:08:34. > :08:38.The price of oil tumbled in New York. The benchmark contract fell
:08:38. > :08:48.4% to $88 and 14 cents a barrel. Traders blamed ongoing concern over
:08:48. > :08:55.Europe's debt crisis and its possible impact on global growth.
:08:55. > :08:59.possible impact on global growth. Let's have a look at the market.
:08:59. > :09:06.There is a mixed picture. Don't be fooled by what is happening in Hong
:09:06. > :09:12.Kong. It has been closed due to a typhoon warning. No trading in Hong
:09:12. > :09:17.Kong today. Elsewhere, it is fairly flat. Even more negative than
:09:17. > :09:20.normal because of the response to the news from Moody's that it is
:09:20. > :09:28.cutting its outlook for Germany and other economies as well. The
:09:28. > :09:32.currency markets, will at the bottom. The US, we saw losses
:09:32. > :09:36.across the board, reflecting the heavy losses on the markets in
:09:36. > :09:43.Europe. Of course there was a lot of reaction to that decision in
:09:43. > :09:47.Spain, or at least the increase in the ten-year bond interest. 7.5%.