WASHINGTON (Reuters) - U.S. efforts to stimulate the economy with infrastructure projects are “ahead of schedule and under budget,” President Barack Obama said on Monday, as data from China, Japan and India offered mixed signals.
Seeking a concerted escape from the worst global crisis since the Great Depression, finance ministers from the Group of Seven leading nations will meet in Washington on April 24 and follow that with a Group of 20 ministerial session.
U.S. Treasury Secretary Timothy Geithner will host both meetings, which come just weeks after the G20 leaders summit in London and before semi-annual gatherings of the International Monetary Fund and World Bank.
The G20 has agreed on a $1.1 trillion deal to fight the crisis, including a huge infusion of funds for the IMF. But there are differences over what steps should be taken and what priority to accord to them to rebuild the financial sector, free up lending and give economies a boost.
In a key part of Obama’s $787 billion stimulus plan, the United States is embarking on thousands of major infrastructure projects to create jobs and shore up highways, bridges and mass transit systems.
“This government effort is coming in ahead of schedule and under budget,” said Obama, who has also pushed tax cuts and reforms of the healthcare and energy sectors. “It is now clear that day by day, project by project, we are making progress.”
A jump in China’s industrial output last month, along with a record rise in new lending, lent credence to the idea that the bottom may not be far away and lifted the Chinese yuan and stocks in Shanghai.
“It does seem that confidence is slowly growing among investors that the worst may be over for the global economy,” said Hideyuki Ishiguro, a supervisor at the investment information section of Okasan Securities in Japan.
But data on Monday showing a big fall in Japanese wholesale prices suggested the world’s second-largest economy is sliding back toward deflation.
In India, a huge emerging market, the effects of the global downturn slowed economic growth to just below 7 percent in the 2008/09 fiscal year that ended in March, Prime Minister Manmohan Singh said.
U.S. stocks .N cut losses and the BENCHMARK S&P turned positive as investors snapped up financial shares on hopes that the quarterly results of major banks will show stabilization of is returning to the financial sector.
Goldman Sachs (GS.N), JPMorgan (JPM.N), Citigroup (C.N) and General Electric (GE.N) will report results this week.
Energy shares eased on falling oil prices and a profit warning by Boeing Co (BA.N) gave investors jitters before quarterly earnings that will offer insight about the health of large U.S. companies.
“Earnings season started last week but we really don’t get into the hot and heavy until this week,” said Craig Peckham, equity trading strategist at Jefferies & Company in New York.
In stocks, benchmark indexes were mixed. The Dow Jones industrial average .DJI was down 36.80 points, or 0.46 percent, at 8,046.58. The Standard & Poor's 500 Index .SPX was up 0.19 points, or 0.02 percent, at 856.75. The Nasdaq Composite Index .IXIC was down 6.03 points, or 0.36 percent, at 1,646.51.
The market was also weighing a report the U.S. Treasury has directed General Motors (GM.N) to prepare for a fast “surgical” bankruptcy if GM fails to reach agreement with bondholders to exchange about $28 billion in debt into equity and with the auto workers union on concessions.
GM shares were down 15 percent.
Markets in Hong Kong and Australia were shut for the Easter break, as were most European markets.
Oil was down 2 percent at just above $51 per barrel but had rebounded from lows near $49 that were hit after the International Energy Agency cut its forecast for oil demand.
Despite mixed signals on Monday, hopes the global economic slump may be abating and some stability returning to the banking sector have helped to underpin a month-long recovery in stocks from 12-year closing lows hit in early March.
Further evidence of the state of the U.S. economy will come this week with U.S. retail sales, housing and industrial production data. But some analysts see little hope of a meaningful rebound.
“I’m still very pessimistic about the prospects of any enduring recovery,” said T.J. Marta, chief market strategist at Marta on the Markets, in Scotch Plains, New Jersey.
China is planning a new economic stimulus package to boost consumption, the China Securities Journal reported, citing a senior official of the State Information Center, which is affiliated with the top planning agency.
In a sign that Beijing’s efforts are bearing fruit, new loans and money supply growth hit record highs in March.
Industrial output grew 8.3 percent in March after a record low of 3.8 percent in the first two months of the year, Premier Wen Jiabao said over the weekend.
But all was not rosy for China, which needs economic growth of around 8 percent to keep its massive work force employed.
An adviser to China’s central bank said the economy was unlikely to hit bottom soon, while the Ministry of Finance said the outlook for fiscal revenue in the coming months was “not optimistic.
In Japan, the economic situation remained bleak.
Wholesale prices are falling at their fastest rate since 2002, March figures showed, as weakening domestic demand on top of falling commodity prices drives Japan toward its second bout of deflation this decade.
With interest rates already near zero, analysts say the Bank of Japan has limited weapons at hand to fight the slide in the economy.
“If prices continue to slide, the BOJ may need to expand its government bond buying and move toward quantitative easing,” said Norihiro Fujito, general manager at Mitsubishi UFJ Securities.
Reporting by Jason Subler in Beijing, Yuzo Saeki in Tokyo, Glenn Somerville in Washington and Edward Krudy in New York; Editing by Theodore d'Afflisio
