The week's top news in world financial markets from Maximus Capital

USA

U.S. executives are boosting earnings estimates at the fastest rate in at least eight years just as optimism fades among analysts, a signal that preceded gains for the Standard & Poor’s 500 Index in the past. Companies from Kellogg Co to McKesson Corp. pushed the number of U.S. companies raising forecasts to 10 percent this quarter, while 4.1 percent lowered them. The gap is the widest on record, according to data from Bespoke Investment Group LLC. At the same time, data compiled by Bloomberg show that analysts have cut first-quarter profit projections by 0.2 percent on average in the past month. The divergence may force Wall Street firms to increase estimates later this year, a bullish signal after the largest monthly drop for equities since February 2009. The last time companies were raising forecasts at a comparable rate while analysts reined them in was the start of 2004, when the S&P 500 gained 9 percent.

Euro zone

German investor confidence declined for a fifth month in February as the economic recovery lost momentum and the Greek fiscal crisis threatened to spill over into other euro-area nations. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months ahead, slipped to 45.1 from 47.2 in January. Economists forecast a bigger drop to 41, according to the median of 38 estimates in a Bloomberg survey. Germany’s economy unexpectedly stalled in the fourth quarter as domestic demand waned after the expiry of some government stimulus measures. At the same time, European stocks have dropped as concern mounted that Greece will struggle to pay its debts, prompting Chancellor Angela Merkel and other European leaders to make pledges of support for the nation.
 
CIS countries

Russia’s budget deficit may be wider than previously estimated as spending is set to increase and a stronger ruble diminishes foreign-currency export revenue. As Deputy Finance Minister Tatiana Nesterenko said last week, the fiscal shortfall may reach 7.2 percent of gross domestic product this year, compared with an earlier government forecast of 6.8 percent. The Finance Ministry’s goal is to limit the deficit by restraining spending and finding new revenue sources. The government may earmark 128 billion rubles ($4.2 billion) in additional spending to cover the Pension Fund’s expected shortfall, as the budget may collect 38 billion rubles less than previously estimated. As a result, Russia may spend 407.9 billion rubles from the National Wellbeing Fund instead of a projected 385 billion rubles to plug the gap.

Ukraine’s economic output plunged 15 percent last year, the most since at least 1996, because of the global financial crisis, the Economy Ministry said. Gross domestic product shrank 7 percent on an annual basis in the fourth quarter after slumping 15.9 percent in the third, 17.8 percent in the second and 20.3 percent in the first three months, the state statistics committee in Kiev said yesterday. According to Economy Minister Bohdan Danylyshyn, the fourth-quarter decline at a slower pace was because of a gradual recovery in industrial production. He also noticed that the main problem for the economic recovery is lack of credits.

Kazakhstan’s economy expanded last year as rising commodity prices helped pull the country out of recession. Gross domestic product rose 1.2 percent in the full year after contracting 2.2 percent in the first nine months and compared with 3.3 percent growth in 2008, the State Statistics Agency said in a report published last week.

Written using materials from Bloomberg and  Reuters Research