3SOF

Overnight Developments.......

•   European stocks are slightly weaker with the European DJ Stoxx 50 down -0.36% and Sep S&Ps down -1.20 points. The dollar and Treasuries are little changed while copper rose to a 4-month high after the IMF raise its economic forecast for South Korea, the world's fourth largest copper consumer. European and US stock prices are fluctuating on either side of unchanged ahead of the conclusion of today's ECB's monetary policy meeting in which policy makers are likely to extend emergency lending measures to banks into 2011. The French Q2 jobless rate unexpectedly slipped -0.2 to 9.7%, its first decline in 2 years as companies began hiring again. DSG International Plc rose 1.2% after the UK's largest consumer-electronics retailer reported an increase in Q1 sales, boosted by the World Cup soccer tournament and the introduction of Apple's iPad. On the negative side, Pernod Ricard SA slid 2.2% after it reported first-half profit of 951 million euros ($1.2 billion), bel ow analysts' estimates of 987 million-euros, while Yara International ASA, the largest publicly traded maker of nitrogen fertilizer, dropped 3.2% after Morgan Stanley downgraded the shares to "equal weight" from "overweight."

•   The Asian markets today closed higher with Japan up +1.52%, Hong Kong +1.19%, China +1.30%, Taiwan +0.69%, Australia +0.82%, singapore +0.13%, South Korea +0.54%, India +0.18%. Asian stocks rose after faster-than-estimated growth in US Aug manufacturing supported confidence in global economic growth. Japanese exporters rose as the yen weakened with Honda Motor up 1.9%, Nissan Motor up 3% and Sony up 2.2%. Chinese automakers advanced after China's passenger-car sales grew 59% y/y in Aug, more than 3 times July's pace, while Ping An Insurance, China's second-largest insurer, gained 2.7% on plans to merge its bank unit with Shenzhen Development Bank after it said it will pay 29.1 billion yuan ($4.3 billion) for a stake that will give it control of Shenzhen. South Korean stocks rallied after the IMF raised its economic growth forecast for the country to 6.1% this year from 5.75% previously, and said the country still has room to raise its benchmark interest rate to a mor e neutral 4.0% from 2.25% currently. The Bank of Korea raised its benchmark rate 25 bp to 2.25% on July 9 as it joined Asian counterparts including India and Malaysia in removing monetary stimulus.

Overnight Developments.......

•   European stocks are higher with the European DJ Stoxx 50 up +0.59% and Sep S&Ps up +0.10 of a point, both at 2-week highs. The dollar is weaker while Treasuries and most commodities are little changed as the markets anxiously await the monthly US payrolls report. Speaking to reporters in Seoul today, ECB Council member Draghi said that while the economic recovery remains "fragile," it is becoming more broad-based. Draghi, who is also the governor of Italy's central bank, said the ECB's monetary stance would remain "accommodative." The euro strengthened after ECB Council member Wellink told Market News International that the yen's appreciation against the euro is helping some Euro-Zone exporters. Yell Group Plc rose 6.2% as the publisher of the UK's yellow pages directories rallied for a third straight day on takeover speculation, while Theolia SA plunged 9.4% after the French wind-power company reported a first-half net loss of 24.2 milli on euros, larger than the 14.1 million-euro loss a year earlier.

•   The Asian markets today closed mostly higher with Japan up +0.57%, Hong Kong +0.49%, China -0.04%, Taiwan +1.42%, Australia +0.19%, Singapore +0.53%, South Korea +0.16%, India -0.09%. Asian stocks rose after US reports showed an unexpected increase in pending home sales and improved retail sales that eased concerns of an economic slowdown. Sony, the electronics maker that gets 22% of sales from the US, rose 2.4% and James Hardie Industries SE, the biggest seller of home siding in the US, climbed 2.1%. Technology stocks also advanced with Wintek Corp., a component maker for Apple's iPads, surging 7% after saying its Aug revenue rose 17% m/m, while Chimei Innolux, Taiwan's largest maker of liquid-crystal displays, closed 6.9% higher amid speculation that Q4 demand for consumer electronics will improves from the previous 3 months. Japan's economy probably grew more than three times the government's initial estimate of +0.4% annualized in Q2 after a Finance Ministry repo rt today showed Japan Q2 capital investment excluding software fell -1.5% y/y, its smallest decrease since 2007 as a result of strong overseas demand. Japan will release its revised Q2 GDP growth estimate on Sep 10.

Overnight Developments.......

•   European stocks are higher with the European DJ Stoxx 50 up +0.56% and Sep S&Ps are up +3.90 points. European bank stocks are weaker for a second day on concern the sovereign-debt crisis may force them to raise more capital. The yen climbed to a 15-year high against the dollar as investors flock into the Asian currency to avoid risk and gold rallied to a 2-1/4 month high on increased safe-haven demand. Well-known bank analyst Meredith Whitney added further pressure to bank stocks when she predicted that securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow. Jul German industrial production rose a less-than-expected +0.1% m/m and Jul German exports unexpectedly declined -1.5% m/m, their first drop in 3 months, which suggests the recovery is beginning to lose momentum. Helping to push stock prices into positive territory is the 2.1% jump in Ericsson AB after Credit Suisse predicted the world's largest maker of wireless phone networks should "enjoy a robust" second half in 2010, along with the 2.2% increase in Sanofi-Aventis SA after Citigroup raised its price estimate for the drugmaker by 15% to 70 euros, saying the next 12 months could be a "turning point" for the company.

•   The Asian markets today closed mostly lower with Japan down -2.18%, Hong Kong -1.46%, China -0.07%, Taiwan -0.42%, Australia -0.79%, Singapore -0.81%, South Korea -0.65%, India +0.12%. Asian stocks fell for a second day, led by Japanese equities, as the yen's advance to a 15-year high against the dollar threatens the earnings of its exporters. Nomura Holdings cut sales and profit forecasts for Japanese companies this year because of the stronger yen, predicting year-on-year sales growth of 353 companies excluding financials in the Nomura 400 stock index of 4.0%, down from its Jun estimate of 4.4%. China's Shanghai Stock Index closed lower, led by declines in property stocks, on concern the Chinese government may put further restrictions on the housing market after the 21st Century Business Herald cited an unidentified person close to the Ministry of Housing and Urban-Rural Development as saying new curbs may include ending loans to real estate developers, a compulsory lowering of home prices, and a ban on third-home purchases.

Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.37% and Sep S&Ps are up +4.10 points. As expected, the BOE left its benchmark interest rate unchanged at 0.50% and its asset purchase program unchanged at 200 billion pounds following the conclusion of its monetary policy meeting. European automakers are leading stock prices higher with Daimler AG up 2.1% after Credit Suisse forecast the carmaker will raise its full-year earnings forecast before interest and taxes to more than 7 billion euro s ($8.9 billion) from 6 billion euros currently. Fiat SpA, Italy's biggest automaker, rose 2.3% after JPMorgan Chase raised its recommendation on the company to "neutral" from "underweight," and PSA Peugeot Citroen and Renault SA both advanced over 3%. Stocks also benefited from comments from ECB Council member Liikanen who said a double dip in the global economy is "not likely." Limiting gains in European stocks was the warning from Fitch Ratings that Euro-Zone governments have yet to start implementing budget cutbacks in earnest and only a handful of peripheral nations have taken "substantive" efforts to reduce deficits, while the OECD said that the global economic recovery is proving slower than projected and policy makers may need to extend or bolster stimulus programs to support it.

•   The Asian markets today closed mixed with Japan up +0.82%, Hong Kong +0.37%, China -1.83%, Taiwan -0.20%, Australia +0.99%, Singapore +0.36%, South Korea +0.26%, India +0.71%. China's Shanghai Stock Index closed lower on speculation the PBOC may hike interest rates this weekend after it brought forward the release of Aug economic indicators by 2 days. Chinese economic data, including consumer prices and industrial output will be reported on Sep 11 instead of the previously scheduled Sept 13, the National Bureau of Statistics said today, which is fueling speculation the central bank may be preparing to raise its benchmark rate before markets open on Monday. Australian stocks closed higher and the Aussie dollar rose to a 4-month high after Aug Australian employment rose a more than expected +30,900, its 11th gain in the last 12 months, while the nation's unemployment rate dipped to 5.1% fro 5.3%, which spurred optimism that the Asian recovery will be sustained.

Overnight Developments...

•   European stocks are lower with the European DJ Stoxx 50 down -0.42% while Dec S&Ps are up +3.80 points. European stocks weakened after people with knowledge of the matter said Deutsche Bank AG, Germany's largest bank, is preparing a stock sale of as much as 9 billion euros ($11.4 billion), which fuels concern that more European banks may need to raise capital. Deutsche Bank fell 5.2% and Commerzbank AG, Germany's second-biggest bank, lost 2.8%. Comments from ECB President Trichet and fellow ECB member Ordonez kept pressure on European stock prices when Trichet said it will "take time" to wean banks off of its emergency lending measures, while Ordonez said that another bout of financial instability can't be ruled out. Limiting losses in European stocks was the 5% surge in the shares of Nokia Oyj which rallied after the company named Stephen Elop, the head of Microsoft's business division, as its CEO effective Sep 21. After the news, Royal Bank of Sc otland Group Plc raised its recommendation for Nokia stock to "buy" from "hold" and lifted its share price estimate by 33%. European automakers were also higher with PSA Peugeot Citroen and Renault SA up at least 2% after both companies said they would each reimburse 33% of their 3 billion-euro government loans ahead of schedule.

•   The Asian markets today closed mostly higher with Japan up +1.55%, Hong Kong +0.43%, China +0.21%, Taiwan +0.70%, Australia -0.48%, South Korea +1.04%. Singapore and India were closed for holidays. Japan's Nikkei 224 Stock Index led gains among Asian stock markets after the government revised up Japan's Q2 GDP to 1.5% annualized, faster than the 0.4% reported in Aug. Japanese exporters also received a boost after the yen weakened against the dollar. A larger-than-expected decline in weekly US initial unemployment claims helped to lift Asian stocks as concerns eased that the US economy was deteriorating. Helping Chinese stocks close higher was the 9.3% y/y increase in Aug China property prices, the slowest gain in 8 months, which may allow the Chinese government more time before deciding if additional measures are needed to slow the property market.

Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.86% and Dec S&Ps are up +9.40 points, both at 1-month highs. The dollar and Treasuries are weaker while most commodities rallied with crude oil at a 1-month high as a larger-than-expected increase in Aug China industrial production lifted mining stocks and raw material producers and boosted optimism in the global recovery. The European Commission raised its economic growth forecast for the Euro-Zone this year to 1.7% instead of a previously projected 0.9%, and said the economy may slow to a more "moderate" expansion in the second half. Bank stocks and the euro currency strengthened after the Basel Committee on Banking Supervision reached a compromise that more than doubles capital requirements for the world's banks and gives them as long as 8 years to comply with the higher capital requirements intended to prevent future crisis. Credit Agricole jumped 6.7%, Societe Generale climbed 4.6% and Commerzbank advanced 2.0%. Deutsche Postbank AG slipped 6.8% after Deutsche Bank AG said it plans to raise at least 9.8 billion euros in its biggest-ever share sale to take over Postbank and meet stricter capital rules. Deutsche Bank expects to offer between 24 euros and 25 euros a share in cash to Postbank shareholders to increase its 29.95% stake in the lender.

•   The Asian markets today closed higher with Japan up +0.89%, Hong Kong +1.89%, China +1.01%, Taiwan +2.55%, Australia +1.20%, Singapore +1.47%, South Korea +1.03%, India +2.17%. Strong economic data from China lifted Asian stocks and eased concern about a slowdown in the economic recovery. China's Aug industrial production increased 13.9% y/y, more than market expectations of 13.0% y/y and Aug China retail sales rose +18.4% y/y. The PBOC reported Aug new loans of 545.2 billion yuan ($80 billion) and a 19.2% y/y increase in M2, the broadest measure of money supply. Both numbers were stronger than expected with the increase in M2 growth the first in 9 months. Aug China consumer prices rose 3.5% y/y, their biggest increase in 22 months due to a rise in food costs.

Overnight Developments...

•   European stocks are lower with the European DJ Stoxx 50 down -0.03% and Dec S&Ps down -2.60 points. The euro retreated from a 1-week high against the dollar and Treasuries strengthened after German investor confidence tumbled. The Sep German ZEW economic sentiment survey fell for the fifth consecutive month and by a larger-than-expected -18.3 to a 19-month low of -4.3 as budget cuts across the Euro-Zone and slowing global growth clouded the outlook for Europe's largest economy. Declines in utility stocks also pressured stock prices with E.ON sliding 3.0% after Germany's biggest utility was downgraded to "hold" from "buy" at UniCredit SpA, which cited uncertainty on nuclear power plant extensions. Aug UK consumer prices unexpectedly rose +3.1% y/y, the same pace as July, and the sixth straight month prices have exceeded the government's 3.0% limit as higher costs from airfare to food stoked price pressures.

•   The Asian markets today closed mixed with Japan down -0.24%, Hong Kong +0.17%, China +0.09%, Taiwan +0.51%, Australia +0.25%, Singapore -0.59%, South Korea -0.15%, India +0.72%. Japanese stocks fell as the yen climbed to a fresh 15-year high against the dollar after Japanese Prime Minister Kan beat his rival Ozawa in a party vote today, reducing the likelihood the government will intervene in the foreign-exchange markets to weaken the yen. China's yuan gained after the PBOC fixed the reference rate at 6.7378 per dollar, the highest since a peg against the dollar was scrapped in July 2005, on speculation the Chinese government will allow faster appreciation of the yuan to head off US trade sanctions. The action by the European Commission to raise its Euro-Zone GDP estimate yesterday for this year to 1.7% from 0.9% gave support to Asian equity markets on optimism that demand for Asian exports will remain strong. Asian bank stocks rallied for a second day after regulato rs agreed to give banks as long as 8 years to comply with new capital requirements and after Zhu Min, former deputy governor of the PBOC and current vice president of Bank of China Ltd. said that banks in Asia have high capital ratios and will be able to avoid the degree of fundraising needed elsewhere to meet the new international standards.

Overnight Developments...

•   European stocks are weaker with the European DJ Stoxx 50 down -0.58% and Dec S&Ps down -3.80 points. The dollar and Treasuries are lower, and the yen weakened to a 2-week low against the dollar as Japan intervened in the foreign-exchange market for the first time since 2004 after the surge in the yen to a 15-year high against the dollar threatened to derail the Japanese recovery. A 1.4% loss in Nokia Oyj led European stocks lower after the world's largest mobile-phone maker was downgraded to "sell" from "hold" at Citigroup which said "We expect the stock to continue to materially de-rate as the investment community focuses on worsening fundamentals, driven by intensifying competitive dynamics." Drax Group Plc slid 3.4% after the British utility and owner of Western Europe's largest coal-fired power plant was cut by JPMorgan Chase to "underweight" from "neutral" and Goldman Sachs downgraded the shares to "n eutral" from "buy." Limiting losses in European stocks was a 5% jump in Next Plc after Britain's second-largest clothing retailer reported a 15% increase in first-half profit while PSA Peugeot Citroen gained 4.1% after Morgan Stanley raised its recommendation for the carmaker to "overweight" from "underweight."

•   The Asian markets today closed mostly higher with Japan up +2.34%, Hong Kong +0.14%, China -1.75%, Taiwan +0.38%, Australia +0.76%, Singapore +0.73%, South Korea +0.49%, India +0.80%. Japan's Nikkei 225 Stock Index jumped to a 1-month high as exporters surged after the yen slumped to a 2-week low against the dollar when the Japanese government intervened in the currency market for the first time in 6 years. Canon closed 2.3% higher and Toyota and Honda Motors, which get more than 70% of their revenue from abroad, ended 4% or more higher. Japan's Chief Cabinet Secretary Sengoku said the finance ministry "seems to think" 82 yen per dollar to be the line of defense after the yen climbed to a 15-year high of 82.88 per dollar in overnight trade before the government intervention. The BOJ's intervention in the currency market may have exceeded 100 billion yen, the Nikkei newspaper reported, without citing anyone. China's Shanghai Stock Index ended lower led by a decline in bank stocks after a person with knowledge of the matter said China's banking regulator might require the nation's biggest lenders to boost their capital adequacy ratios to as high as 15% by the end of 2012. The biggest banks must currently meet an 11.5% ratio.

Overnight Developments...

•   European stocks are weaker with the European DJ Stoxx 50 down -0.46% and Dec S&Ps down -3.20 points. The dollar is lower and the price of gold climbed to yet another record high in overnight trade. An unexpected decline in UK retail sales is pressuring stock prices today on concern that global economic growth is stalling. Aug UK retail sales with auto fuel slipped -0.5% m/m when the market was expecting a +0.3% m/m increase. Weakness in phone companies is another negative factor on stock prices with Ericsson AB down 2.9% after the world's biggest maker of mobile networks had its EPS cut by Svenska Handelsbanken Capital Markets who said industry margin was "likely" to come under renewed pressure. BT Group plc slumped 3.2% after Morgan Stanley cut its recommendation on the phone company to "equal weight" from "overweight." On the positive side, Siemens, Europe's largest engineering company, gained 3.4% after Morgan Stanley raised its recommendation on the company to "overweight" from "equal weight" and Goldman Sachs upgraded then to "conviction buy" from "buy."

•   The Asian markets today closed lower with Japan down -0.07%, Hong Kong -0.16%, China -1.90%, Taiwan -0.78%, Australia -1.21%, Singapore -0.13%, South Korea -0.75%, India -0.43%. The Chinese yuan climbed to 6.7257 per dollar, the strongest level since 1993, after the PBOC set the reference rate at a record high for a fifth straight day. The Chinese government is trying to placate the US as Treasury Secretary Geithner testifies to the House of Representatives today on China's exchange-rate policy. Asian stocks fell as declines among banks and mining companies overshadowed speculation Japan will take additional steps to weaken the yen. Australian company James Hardie Industries SE, the biggest seller of home siding in the US, dropped 5.9% after Credit Suisse Group AG said that macroeconomic data pointing to continued weakness in the US housing market indicates "more negatives, than positives" in the short term. Stocks in India closed lower after the Reserve B ank of India (RBI) increased interest rates for the fifth time this year and said its actions have brought the "monetary situation close to normal." The RBI boosted the repurchase rate by 25 bp to 6.00% and the reverse repurchase rate by 50 bp to 5.00%.

Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.67% and Dec S&Ps up +6.80 points. Earnings results that topped estimates at Oracle and Research in Motion have boosted European and US stocks today on optimism for increased technology spending. The dollar index slipped to a 1-1/4 month low which helped lift copper to a 4-1/2 month high and gold to a record high. Carrefour jumped 5.7% after its CEO said the world's second-largest retailer plans to invest about 1.5 billion euros ($2 billion) over 2-1/2 years to revive its superstore format in western Europe and it forecast higher sales and profits through 2015. BNP Paribas raised their recommendation on Carrefour to "outperform" from "neutral" and Kepler upgraded the retailer to "buy" from "reduce." Crucell NV soared 54% after Johnson & Johnson said it is talks to buy the Dutch vaccine maker for about 1.75 billion euros ($2.3 billion) in cash.

•   The Asian markets today closed higher with Japan up +1.23%, Hong Kong +1.29%, China +0.13%, Taiwan +0.72%, Australia +0.73%, Singapore +0.30%, South Korea +0.96%, India +0.91%. Asian technology stocks closed higher after Research in Motion and Oracle reported better-than-expected profits, while Japanese exporters gained after the yen slid to a 1-month low against the dollar on fears of increased yen sales from the BOJ. Raw-material producers also rose on the prospects for increased demand and after metals prices gained. Asian exporters that link their currencies with the dollar also rose after US Treasury Secretary Geithner called for "significant" gains in the yuan. The yuan advanced against he dollar for its biggest weekly gain in 28 months on speculation a faster pace of appreciation will be tolerated. Company earnings tied to the dollar would increase as the yuan appreciates.

September 20, 2010
Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.66% and Dec S&Ps up +5.30 points. The dollar is weaker and most commodities are stronger, with gold posting another record high. The main bullish factor for stock prices today is comments from Irish Finance Minister Lenihan who said that his country wouldn't require a EU bailout. Credit default swaps on Irish debt jumped to a record last week on renewed concern that Ireland's banks may need more aid and Central Bank Governor Honohan said today that costs related to the country's banking system remain "manageable." Ireland plans to auction as much as 1.5 billion euros ($2 billion) in 2014 and 2018 notes tomorrow. The British pound and European stocks also received a boost after Moody's Investors Service said the UK's top credit rating will withstand the challenging economic outlook as the government stabilizes the public finances. M&A activity is also supporting European equities wit h Brit Insurance NV up 5% after Apollo Global Management teamed up with CVC Capital Partners to make a sweetened offer for the company, while Safran SA climbed 4.4% after its CEO said it's buying most of the assets of L-1 Identity and that it still wants to purchase Zodiac Aerospace. Limiting gains in European stocks was the monthly report released from the Bundesbank that said growth in Germany, Europe's largest economy, slowed "markedly" in Q3 as the global recovery weakened.

•   The Asian markets today closed mostly higher with Japan closed for holiday, Hong Kong +0.03%, China -0.40%, Taiwan +0.35%, Australia -0.16%, Singapore +0.15%, South Korea +0.27%, India +1.59%. Most Asian stock market closed higher on optimism that corporate earnings growth could withstand a possible US economic slowdown. Hong Kong's Dongfeng Motor Group jumped 5.3% after the company's executive director predicted that total automobile sales in China might reach 30 million vehicles a year by 2020. Taiwan Semiconductor, the world's largest custom manufacturer of chips, gained 1.3% after buying $37.9 million of equipment from KLA-Tencor, spurring optimism capital spending is picking up. China's Shanghai Stock Index dropped to a 1-1/4 month low and finished weaker after an adviser to the PBOC said the nation needs to increase domestic consumption to help survive in a global economic environment that is growing more challenging, while stocks closed lower in Australia afte r RBA Governor Stevens said policy makers may resume raising interest rates due to a "robust upswing" in growth.

September 21, 2010
Overnight Developments...

•   European stocks are slightly higher with the European DJ Stoxx 50 up 0.13% and Dec S&Ps up 0.40 points due to reduced concerns about the European debt crisis. Ireland today sold 1.5 billion worth of 8-year bonds at 6.023% and 500 million worth of 4-year bonds at 4.767%. Spain today sold 7 billion euros worth of 12-month bills at 1.908%, which was the maximum allotment for the auction. Ireland's auctions were five times oversubscribed, showing strong demand and general confidence in Ireland's ability to repay the bonds. The favorable auction results caused the spread of Irish 10-year bonds over German bonds to fall by 21 bp to 381 bp. Sovereign credit default swap prices today fell by 24 bp to 421 bp for Ireland, by 2 bp to 234 bp for Spain, by 11 bp to 833 for Greece, and by 1 bp to 193 bp for Italy.

•   The Asian markets today closed narrowly mixed: Japan -0.25%, Hong Kong +0.11%, China +0.27%, Taiwan +0.12%, Australia -0.30%, Singapore +0.47%, Bombay +0.48%. President Obama in his town hall meeting that aired last night on CNBC said that China's leaders have not done "everything they said would be done" to allow the yuan to appreciate. The recent pressure by Washington on China to allow the yuan to rise seems to be having some impact. The yuan today rose slightly for the ninth day and hit a new 7-year high against the dollar. The 12-month forward for the yuan appreciated sharply by 0.5%, the largest gain in 3 months. The stronger yuan is negative for Chinese exporters but is positive for U.S. exporters. Japanese stocks were hurt by the diplomatic row with China over the Chinese fishing boat captain that is being held by Japanese authorities for being in disputed waters and colliding with two Japanese coast guard ships.

September 22, 2010
Overnight Developments...

•   European stocks are lower with the European DJ Stoxx 50 down -1.34% and Dec S&Ps down -3.20 points. The dollar index slumped to a 6-month low and gold rallied to an all-time high, while bond markets around the world gained on speculation the Fed will expand its balance sheet and purchase more government debt. European and US stocks markets are unnerved after credit-default swaps to insure Portuguese sovereign debt rose to 383, a 4-1/2 month high, while credit-default swaps on Ireland's debt climbed 27 bp to a record 467.5. Jul Euro-Zone industrial new orders fell -2.4% m/m, more-than-expected and its biggest monthly decline in 19 months as orders for capital goods slumped. Banco Santander SA fell 3.5% after Credit Suisse Group AG downgraded Spain's largest bank to "neutral" from "outperform," saying the bank's structural growth will probably decline and its profitability in Brazil may be slower-than-forecast. The minutes of the Sep 8-9 BOE monetary policy meeting revealed that the UK economy might need further stimulus when they stated "for some members, the probability that further action would become necessary to stimulate the economy and keep inflation on track to hit the target in the medium term had increased."

•   The Asian markets today closed mixed with Japan down -0.37%, Hong Kong +0.21%, China, Taiwan and South Korea closed for holiday, Australia +0.17%, Singapore +0.02%, India -0.30%. BOJ Governor Shirakawa was quoted by the Yomiuri newspaper as saying that Japan's currency market intervention last week was appropriate and that the BOJ must monitor "more carefully than before" the risk that the yen's gain would hurt exports and corporate profits. The BOJ may be pressured to consider further liquidity injections if currency market intervention fails to slow the advancing yen. A stronger yen led Japanese exporters to close lower today but a rally in Japanese property developers limited losses in stocks after the nation's land-price declines slowed for the first time since 2007.

September 23, 2010
Overnight Developments...

•   European stocks are lower with the European DJ Stoxx 50 down -0.49% at a 2-week low and Dec S&Ps down -7.40 points. The dollar and global bond markets are higher as a re-widening of bond spreads in Europe is increasing safe haven flows with the Irish 10-year yield widening to a record 414 bp over German bunds and Portuguese 10-year yields rising to a record 400 bp over bunds. German bunds also received support after Germany's Federal Finance Agency announced that it would sell 60 billion euros ($80.4 billion) of bonds and bills in Q4, 29 billion euros less than forecast in Dec. European stock prices were undercut after growth in Europe's services and manufacturing industries weakened more than expected in Sep with the Sep Euro-Zone PMI composite declining -2.4 points to 53.8, its lowest level in 7 months. European bank stocks are leading the market lower with Credit Suisse Group AG down 2.8%, Bank of Ireland down 3.0% and Banco Santandar SA off by 1.3%.

•   The Asian markets today that were open closed mixed with markets in Japan, Hong Kong, China, and South Korea closed for holiday. Australia closed up +0.18%, Taiwan +0.07%, Singapore -0.42%, India -0.40%. Asian mining stocks closed higher after copper prices climbed to a 5-month high and gold rose to a record. Limiting gains in Asian stocks was the 2.9% decline in Taiwan Semiconductor, the world's largest custom maker of chips, after the Economic Daily News said its capital expenditure may reach a new high of $6 billion, which raises concern the aggressive spending may lead to an oversupply of chips. The yen remained in a tight range ahead of today's meeting in New York between US President Obama and Japanese Prime Minister Kan. The Tokyo Shimbun newspaper reported that the two leaders are likely to discuss the dollar-yen rate and Japan's recent currency intervention.

September 24, 2010
Overnight Developments...

•   European stocks are lower with the European DJ Stoxx 50 down -0.42% and Dec S&Ps are up +4.90 points. The dollar is weaker against most major currencies, which has boosted commodities with gold climbing to a record high, silver rallying to a 30-year high and copper jumping to a 5-1/4 month high. European stocks are weaker despite the unexpected +0.1 point increase in the Sep German IFO business climate to a 3-year high of 106.8. Merck plunged 8.8% after the European Medicines Agency rejected the German drugmaker's application to approve its Cladribine multiple-sclerosis pill saying the benefits fail to outweigh the risks. Most mining companies are lower despite the rally in metals to significant highs as several companies were downgraded. Kazakhmys Plc fell 2% after UBS AG cut its recommendation for the copper producer to "sell" from "buy." Anglo American Plc dropped 2.5% and Vedanta Resources Plc slipped 1.3% after UBS cut its recommend ation for both companies to "neutral" from "buy," and Antofagasta fell 3.1% after Societe Generale SA downgraded the company to "sell."

•   The Asian markets today closed mixed with Japan down -0.99%, Hong Kong +0.33%, China closed for holiday, Taiwan -0.44%, Australia -0.68%, Singapore +0.31%, South Korea +0.63%, India +0.93%. The Japanese yen fell back from a 1-week high against the dollar after Kyodo News cited an unidentified market source as saying Japan sold the yen today to protect exporters. Most Asian stock markets were under pressure after US initial unemployment claims unexpectedly rose, raising concern about the pace of the economic recovery. Shipping companies weakened after an index of cargo rates declined for a ninth straight day and Aug Singapore industrial production rose at a smaller-than-expected +8.1% y/y, its slowest pace in 9 months. On the positive side, investors put about $45 billion into emerging-market equity funds in the year through Sep 22, according to EPFR.

September 27, 2010
Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.16% and Dec S&Ps up +1.00 point. The dollar is weaker and Treasuries are firmer while commodities are mixed, with silver climbing to a fresh 30-year high. Increased M&A activity is boosting European and US stock prices today with Unilever up 2.7% after agreeing to buy Alberto Culver for $3.7 billion and Wal-Mart plan's to buy South Africa's Massmart Holdings Ltd. in a transaction worth $4.6 billion. Southwest Airlines said it would acquire AirTran for $1.4 billion, or about $7.69 a share. Limiting a rally in stocks is the 7.3% drop in Actelion after Switzerland's largest biotechnology company fell after it said its clazosentan medicine didn't meet the main goal of a study in patients who had suffered from bleeding in the brain.

•   The Asian markets today closed higher with Japan up +1.39%, Hong Kong +1.00%, China +1.66%, Taiwan +0.31%, Australia +1.60%, Singapore +0.67%, South Korea +0.66%, India +0.36%. Asian stocks rallied after last Friday's bigger-than-expected increase in US capital goods orders bolstered optimism that demand for Asian exports will strengthen. Komatsu Ltd., the world's second-biggest maker of construction equipment, closed 3.2% higher, while Canon, which gets 28% of its sales in the Americas, gained 2.5%, and Honda Motor, which gets about 46% of its sales in North America, ended 2.9% higher. Japanese stocks gained despite the slowest increase in its exports this year. Aug Japan exports rose 15.8% y/y; the slowest pace since December, as a decrease in global demand and an advance in the yen threaten to undermine Japan's recovery. A Japanese government official said on condition of anonymity that Japan is considering a stimulus plan of as much as 4.6 trillion yen ($54.6 bi llion) that will be funded with tax revenue and left over funds from the 2009 budget.

September 28, 2010
Overnight Developments...

•   European stocks are slightly lower with the European DJ Stoxx 50 down -0.19%. Dec S&Ps are slightly higher by +1.20 points (+0.11%). European credit default swap prices are higher this morning as the European debt crisis continues to simmer with continued speculation about the impact of the need for a bailout of nationalized lender Anglo Irish Bank Corp, which could cost as much as 35 billion euros of additional funds. The Irish government is expected to announce this week the exact bailout figure for Anglo Irish Bank, which has already cost the Irish government 23 billion euros. The 2-year Irish bond yield today rose 46 bp to a record high of 4.70%. Irish credit default swap (CDS) prices today rose 31 bp to a record 519 bp and have now more than doubled in the past two months. CDS prices today rose 12.5 bp for Portugal, 20 bp for Greece, and 4.5 bp for Italy. The European Stoxx 600 Bank index today fell 0.6% in response to the continuing European banking problems. In European stock news, Michelin today fell 11% after announcing a rights offering to issue new shares. UK Q2 GDP was left unrevised at +1.2% q/q, which was in line with the market consensus.

•   The Asian markets today closed lower across the board on bearish overhang from Monday's lower close in US stocks and on increased concern about the Euorpean debt crisis: Japan -1.12%, Hong Kong -1.03%, China -0.83%, Taiwan -0.03%, Australia -0.12%, Singapore -0.52%, South Korea -0.33%, Bombay -0.06%.

September 29, 2010
Overnight Developments...



.European stocks are lower with the European DJ Stoxx 50 down -0.65% and Dec S&Ps down -1.40 points. The dollar index fell to an 8-month low which helped push commodities higher with copper at a 5-1/2 month high and gold at a record high. European sovereign-debt concerns continue to weigh on stock prices with the yield spread between Irish 10-year bonds and German bunds widening to a record 454 bp and the spread between Spanish 10-year bonds and bunds widening to a 2-1/2 month high of 198 bp. The euro climbed to a 5-1/2 month high against the dollar after Sep Euro-Zone economic confidence unexpectedly improved +0.9 to a 103.2, its best level in 2-1/2 years. Limiting losses in European stocks was the 4.1% jump in Rolls-Royce Group Plc after the world's second-largest maker of aircraft engines was upgraded to "overweight" from "equalweight" by Morgan Stanley, which said profitability will be boosted by a recovery in after-sales such as mainte nance and spare parts.

.The Asian markets today closed mixed with Japan up +0.67%, Hong Kong +1.22%, China -0.21%, Taiwan +0.63%, Australia -0.53%, Singapore +0.28%, South Korea +0.70%, India -0.74%. Confidence among Japan's large manufacturers rose the least since early 2009 in Sep as companies are increasingly worried that a rising yen will threaten Japan's economic recovery. The Q3 Tankan index of sentiment climbed +7 points to 8, compared with a +15 point increase in Q2. Still, the Tankan index climbed to its best level in 2-1/2 years as global demand remains strong for Japanese exports. Manufacturing in China accelerated for a second straight month in Sep after the Sep China HSBC purchasing managers' index climbed +1.0 to 52.9, its highest level in 5 months, and adds to signs the Chinese economy is stabilizing after policy makers curbed lending in an effort to avert asset bubbles. Asian mining companies and raw materials producers rallied after the release of China's manufacturing rep ort on speculation that Chinese demand for industrial metals and commodities will remain strong.

September 30, 2010
Overnight Developments...



.European stocks are weaker with the European DJ Stoxx 50 down -0.20% and Dec S&Ps down -2.80 points. The dollar index slipped to a new 8-month low, which boosted most commodities, with crude oil at a 2-week high and gold at a record high. European stocks are weaker led by weakness in financials as Allied Irish plunged 28% after the Irish government said it will take majority control of the bank in its second bailout of the lender. It also said that Anglo Irish Bank and Allied Irish Bank Plc may both need as much as 14.4 billion euros ($19.6 billion) in extra capital, taking the total cost of bailing out banks to as much as 50 billion euros ($68 billion). Irish Finance Minister Lenihan said today there is "no question" that Ireland will have to seek outside help, saying his nation is "fully funded." The other major bearish factor for European stocks today was the action by Moody's Investors Service to downgrade Spain's top credit rating on e level to Aa1, citing a "weak" economic outlook and doubts that the nation will reach deficit reduction targets. On the positive side, Sep German unemployment declined a more-than-expected -40,000, its 15th straight monthly decline, as carmakers and other manufacturers boosted hiring to meet export-led demand. Germany's jobless rate in Sep unexpectedly declined -0.1 to 7.5%, the lowest since April 1992.

.The Asian markets today closed mixed with Japan down -1.99%, Hong Kong -0.09%, China +2.11%, Taiwan -0.04%, Australia -1.34%, Singapore -0.27%, South Korea +0.28%, India +0.57%. Japanese stocks closed lower after Aug Japan industrial production unexpectedly fell -0.3% m/m, its third monthly decline, adding to concern the nation's export-led recovery is slowing. Nintendo declined 9.3% and led the makers of electronic parts for its devices lower as well after the world's largest maker of portable video games slashed their annual profit forecast by 55% and said it won't release its 3DS handheld game player in time for the year-end holiday season. Australian banks tumbled, led by a 2.2% fall in National Australia Bank, after UBS downgraded the lender to "neutral" from "buy." Chinese stocks closed higher, led by a surge in property stocks, on speculation government measures to tame real-estate prices will help to prevent asset bubbles from hurting the economy. China said it would speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country to curb rising real-estate prices. The government also asked commercial banks to stop offering loans to buyers of third homes and extended a 30% down payment requirement to all first-home buyers.

October 1, 2010
Overnight Developments...



.European stocks are higher with the European DJ Stoxx 50 up +0.03% and Dec S&Ps up +3.00 points. The dollar continues to weaken as the dollar index slipped to a fresh 8-month low which has boosted most commodities with copper soaring to a 2-year high, crude oil climbing to a 1-1/2 month high and gold posting a record high. The expansion in manufacturing in China at the fastest pace in four months in Sep is the main bullish factor for stocks. Respol jumped 6% and led a rally in energy producers after China's Sinopec pledged to invest $7.1 billion in Respol YPF SA's Brazilian unit. Celesio advanced 5.6% after BNP Paribas raised its recommendation for Europe's biggest publicly traded drug wholesaler to "outperform" from "neutral," while HSBC gained 1.3% after Goldman Sachs added Europe's biggest bank to its "conviction buy" list. Limiting gains in European stocks were the unexpected -0.2% m/m decline in Aug German retail sales, whi ch fell for a second month, while the Aug Euro-Zone unemployment rate remained unchanged at an upwardly revised 10.1%, its highest level in 12 years.

.The Asian markets today closed mostly higher with Japan up +0.37%, Taiwan +0.08%, Australia -0.08%, Singapore +1.07%, South Korea +0.22%, India +1.87%. Markets were closed in Hong Kong today, and are shut in China for a week for public holidays. The Sep China purchasing managers' index climbed a larger-than-expected +2.1 to 53.8, a 4-month high that reinforces evidence from a separate non-government purchasing manager survey two days ago that suggests China's industries are expanding again after the economy slowed in Q2. Mining companies and energy producers rallied as the manufacturing data boosted oil and copper prices. Japanese stocks gained as consumer spending increased, deflation moderated and the unemployment rate fell, indicating the recovery remains intact. Aug Japan overall household spending rose +1.7% y/y, more-than-expected and its biggest increase in 5 months, while the Aug Japan jobless rate slipped -0.1 to 5.1% and the Aug Japan national CPI fell -1. 0% y/y, less than July's -1.1% y/y. Today's reports show little sign that the yen's climb to a 15-year against the dollar has hurt the domestic economy so far. The BOJ meets next week to consider whether to expand a credit program or to consider other stimulus measures to protect the economy from the strengthening yen.

Monday, October 4, 2010
Overnight Developments...



*European stocks are lower with the European DJ Stoxx 50 down -0.39% to a 1-month low and Dec S&Ps down -5.30 points. The dollar and Treasuries strengthened and most commodities fell. Volkswagen AG and Daimler AG slipped at least 3% and led a retreat in auto sales as German new-car sales in Sep fell 18% to about 260,000 vehicles, according to the VDIK industry group. Yara International ASA dropped 3.9% after UBS AG downgraded the largest publicly traded nitrogen-fertilizer maker to "neutral" from "buy" and Gas Natural SDG SA lost 2.9% after the company said a ruling related to a gas dispute with Algeria's Sonatrach may reduce profit by as much as 450 million euros ($619 million). The euro weakened against the dollar on concern sovereign-debt issues will hamper Europe's economic recovery after the Irish central bank cut its growth estimate for this year to 0.2% from a July forecast of 0.8% and reduced its growth forecast for next year to 2.4 % from 2.8%. On the positive side, the Oct Euro-Zone Sentix investor confidence rose a more-than-expected +1.2 to 8.8, its highest level in 2-3/4 years.

*The Asian markets today closed mostly higher with Japan down -0.25%, Hong Kong +1.17%, China closed for holiday, Taiwan +0.02%, Australia +1.01%, Singapore +0.85%, South Korea +0.21%, India +0.15%. Bank stocks in Japan led Japanese stocks lower with Mizuho Financial Group closing down 5.9% and Mitsubishi UFJ Financial Group losing 2.6% on renewed concern that stricter capital rules will require Japanese banks to raise more capital. Bank stocks weakened after a Swiss government-appointed panel today said UBS AG and Credit Suisse Group AG, Switzerland's two biggest banks, need to hold almost double the capital required under Basel III rules. Supporting Asian stocks was the increase in the Sep China non-manufacturing purchasing managers' index by +1.6 to 61.7 along with comments from Chinese Premier Wen Jiabao who said in an interview with CNN that his nation would stimulate domestic demand to stabilize and further expand its economy. South Korean automakers led the Kos pi index higher with Hyundai closing up 1.3% after its US sales rose to a record 46,556 units in Sep while Kia Motors, an affiliate of Hyundai Motor, climbed 3% after it sold 30,071 autos in the US last month, up 39% from a year earlier.

Tuesday, October 5, 2010
Overnight Developments...

•   European stocks are higher with the European DJ Stoxx 50 up +0.14% and Dec S&Ps up +2.90 points. The dollar index slumped to an 8-1/4 month low, which has boosted most commodities, with silver rallying to a 30-year high and gold posting another record high. The yen weakened against the dollar after the BOJ lowered interest rates and pledged asset purchases, while the euro gained after the Sep Euro-Zone PMI composite index was unexpectedly revised up to 54.1 from the previously reported 53.8. Greek stocks led a rally in European equities after Moody's Investors Service said it's "impressed" by steps to overhaul the nation's public finances. TUI Travel jumped 4.8% after Europe's largest tour operator said bookings for winter 2010/2011 have strengthened in all markets and that full-year results will meet forecasts, while Bayerische Motoren Werke AG (BMW) rallied 1.5% after the world's largest luxury automaker was rated "buy" in new coverage a t Banco Santander SA, which cited "a strong product cycle," a volume recovery in the premium car market segment, and "exposure to China." Undercutting stock prices was the unexpected -0.4% m/m decline in Aug Euro-Zone retail sales which adds to signs that Europe's recovery is losing momentum as governments step up budget cuts, while the quarterly report released by the European Commission warns that European companies' reluctance to borrow in the wake of the financial crisis may restrain investment and demand and lead to a "protracted" period of weak economic growth.

•   The Asian markets today closed mixed with Japan up +1.47%, Hong Kong +0.09%, China closed for holiday, Taiwan -0.55%, Australia -0.40%, Singapore +0.16%, South Korea +0.09%, India -0.33%. Japanese stocks rallied and provided support for other Asian markets after the BOJ cut the overnight call rate to a range of 0.0% to 0.1%, the lowest level in 4 years, and pledged to keep the rate at "virtually zero" until deflation has ended. The BOJ also expanded its balance sheep by setting up a 5 trillion yen ($60 billion) fund to buy government bonds and other assets and BOJ Governor Shirakawa said the bank would consider expanding the fund "if necessary." The yen sank after the announcement but has since recouped its losses and is little changed. Australian stocks closed lower despite the action by the RBA to unexpectedly keep Australia's overnight cash rate target at 4.5% for the fifth straight month, although RBA Governor Stevens said that higher borrowin g costs will likely be needed "at some point."

Wednesday, October 6, 2010
Overnight Developments...



*European stocks are higher with the European DJ Stoxx 50 up +0.66% and Dec S&Ps up +2.10 points. The dollar index rebounded from an 8-1/2 month low while Treasuries and commodities are higher with gold at a record high, copper at a 26-month high and crude oil at a 2-month high. Lifting stock prices was speculation that central banks round the world will follow the BOJ in announcing measures to boost their economies along with the action by the Organization for Economic Cooperation and Development (OECD) to raise its estimate of the combined growth rate among its 33 member countries to 0.9% in Q2, up from a 0.7% estimate in Aug, on signs that investment began picking up for the first time since 2008. Also boosting European stocks was the larger-than-expected +3.4% m/m increase in Aug German factory orders led by demand for investment goods such as machinery. The rally in metals has benefited mining companies with BHP Billiton up 2.4%, Rio Tinto up 2.3% and Ant ofagasta Plc up 5.2%, while Saipem gained 2% after Europe's largest oilfield-services provider was raised to "buy" from "sell" at Citigroup. On the negative side, Ericsson AB fell 1.6% after Royal Bank of Canada cut its estimate for the world's biggest maker of mobile-phone networks Q3 sales to 46 billion kroner ($6.9 billion) from 50 billion kroner, saying "currency impact, lingering component shortages and the lack of improvement in emerging markets may point to underwhelming results for Ericsson in the near term." The euro weakened and European stock gains were limited after the action by Fitch Ratings to cut Ireland's long-term foreign and local currency issue default ratings to A+ from AA- with a negative outlook.

*The Asian markets today closed higher with Japan up +1.81%, Hong Kong +1.07%, China closed for holiday, Taiwan +1.02%, Australia +1.73%, Singapore +0.88%, South Korea +1.42%, India +0.66%. Carry-over support from the BOJ's surprise action on Tuesday to expand its quantitative easing measures to spur economic growth is boosting Asian stocks. Raw material companies advanced as commodity prices climbed on optimism that expanding global economies will lead to increased demand for commodities. Japanese stocks also benefited from a proposal from Japan's ruling Democratic Party for an economic stimulus plan in excess of 4.8 trillion yen ($58 billion) that would help local governments and small businesses create jobs. Prime Minister Kan said passing the stimulus is his top priority in the parliament session to keep Japan's economic recovery intact.

Thursday, October 7, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.31% and Dec S&Ps +1.50 points. The dollar index continues its downward trajectory as it fell to an 8-1/2 month low, with the yen surging to a 15-year high and most commodities gaining with gold posting another record high. The BOE as expected left its benchmark interest rate at 0.50% and held its asset purchase plan at 200 billion pounds. European stocks rose after Aug German industrial production rose a more-than-expected +1.7% m/m, led by demand for investment goods such as machinery. Demand was decent for Spain's first bond auction since Moody's Investors Service stripped the nation of its top Aaa credit rating. The bid-to-cover ration, a gauge of demand, was 2.15 times the amount sold, compared with 1.89 times in August. Limiting gains in stocks was the -3.6% m/m plunge in Sep UK home prices, the biggest decline since records began in 1983 as higher supply and faltering consumer confidence w eakened the property market and adds to evidence that the housing market faces a renewed slump.

•   The Asian markets today closed mixed with Japan down -0.07%, Hong Kong +0.02%, China closed for holiday, Taiwan unchanged, Australia +0.10%, Singapore -0.73%, South Korea -0.19%, India -1.11%. Samsung Electronics, Asia's largest maker of semiconductors, dragged chipmakers lower after reporting profit that missed analyst estimates, while most Japanese exporters weakened after the yen surged to a 15-year high against the dollar. The Australian dollar rose to a record against the US dollar after Australian employers in Sep added 49,500 jobs from Aug, the seventh straight monthly gain and the biggest increase in 8 months, which bolsters the case for the RBA to resume raising interest rates. Asian raw-materials producers closed higher on speculation that demand for commodities will remain strong, while shipping companies gained after the Baltic Dry Index, a measure of commodity-shipping costs, rose 2.7% yesterday.

Friday, October 8, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.73% and Dec S&Ps down -5.10 points as participants square positions ahead of the all-important US payrolls report. The dollar is higher and Treasuries and most commodities are lower across the board. Bank stocks are leading European share prices lower with Barclays Plc down 2.2% after Nomura Holdings sold 220 million shares of the UK lender as part of a hedging transaction with Abu Dhabi. Credit Suisse Group AG fell 1.5% after Barclays downgraded the company to "underweight" from "equal weight," saying the Swiss bank has more of a capital shortfall than UBS AG and is trading "more expensively." Also pressuring European stocks was the -0.4% m/m decline in Aug German exports which fell for a second month as a strengthening euro and slowing global growth curbed demand. On the positive side, the Sep Bank of France business sentiment unexpectedly rose +1 to 102, its best level in 6 months, while Alcoa, the largest US aluminum producer, climbed 2.9% as it kicked off Q3 earnings season by reporting profit late yesterday that beat analysts' estimates.

•   The Asian markets today closed mostly lower with Japan down -0.99%, Hong Kong +0.26%, China +3.70%, Taiwan -0.48%, Australia -0.21%, Singapore -0.42%, South Korea -0.29%, India -0.32%. The Shanghai Composite Index closed sharply higher and at a 5-month high as trading resumed in China after a 5-day national holiday. Boosting Chinese stocks was the fall in the cost of protecting against a default by China to a 2-year low after Moody's Investors Service said it was poised to upgrade the country's debt. A fall in technology shares undercut Asian stocks when Samsung slipped 2.1% after it reported Q3 operating income of 4.8 trillion won ($4.3 billion), short of the 5.03 trillion won analysts were expecting. Weakness in retail stocks led Japanese shares lower after Seven & I holdings, Japan's largest retailer, sank 4.1% after it cut its sales forecast by 1.2% for the year ending Feb, saying a stronger yen may reduce revenue from the US.

Monday, October 11, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.11% and Dec S&Ps +2.30 points. The dollar weakened and boosted most commodities after global finance chiefs failed to narrow differences at their weekend meeting in Washington. G-7 finance ministers and central bankers pledged to improve cooperation, yet did little to show how they would alter their ways beyond agreeing to let the IMF study the matter. A reduction in sovereign-debt concerns ins boosting European stocks, with the yield on 10-year Greek bonds tumbling 21 bp to 9.63%, after IMF Managing Director Dominique Strauss-Kahn said his institution is prepared to give Greece more time to repay its loan should European nations decide to do so first because Greek officials are doing "exactly what they need to do" to rein in spending and meet the benchmarks set out as a condition of aid. Also boosting European stocks was a rally in fertilizer makers after corn prices surged to a 2-year high in overnight trade. Limiting gains in European stocks was the unexpected stalling in French industrial output after Aug French industrial production was unchanged m/m, weaker than expectations of +0.3% m/m, which signals the recovery in the Euro-Zone's second-largest economy is losing momentum.

•   The Asian markets today closed mixed with Japan closed for holiday, Hong Kong +1.15%, China +2.91%, Taiwan -0.82%, Australia +0.34%, Singapore +0.32%, South Korea -0.43%, India +0.44%. Mining companies and raw materials producers led gains in Asian stocks after most commodities rallied, with copper soaring to a 27-month high, on speculation of increased demand. Despite the weaker-than-expected Sep US payrolls report on Friday, Asian stocks were boosted on expectations that additional Fed stimulus will inflate asset prices and provide a solid platform for equities to rally in the short term. A Reuters report that the PBOC will unexpectedly raise reserve requirements for six large commercial banks may be a negative on Chinese bank stocks tomorrow. The report, which was released after the Asian markets closed, says the reserve requirement ratio for China's 6 big commercial banks will increase 50 bp to 17.5% for 2 months as the PBOC attempts to rein in liquidity as the economy stabilizes and money flows in from abroad.

Tuesday, October 12, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.53% and Dec S&Ps down -6.70 points. Weaker stocks have boosted the dollar and Treasuries and prompted a retreat in most commodities. European steelmakers lost ground and led stock prices lower after Posco, the world's third-largest steelmaker, cut its full-year profit forecast by 7% and reported its first decline in earnings in four quarters as rising commodity costs erode earnings. ArcelorMittal, the world's biggest steelmaker, dropped 3.1% and ThyssenKrupp AG, Germany's biggest steelmaker, lost 2.1%. Stock prices in France led declines in Europe as workers there demonstrated in nationwide marches against the government's overhaul of the pension system, which disrupted rail and air traffic. Fed Vice Chairman Yellen warned late yesterday "it is conceivable that accommodative policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system." The m arket is eagerly awaiting the minutes of the Fed's Sep 21 FOMC meeting today in the hope that some clarity to further asset purchases will be provided.

•   The Asian markets today closed mostly lower with Japan down -2.09%, Hong Kong -0.37%, China +1.27%, Taiwan -1.06%, Australia -1.69%, Singapore -0.44%, South Korea -1.26%, India -0.67%. Most Asian markets closed lower on concern China's efforts to rein in bank lending will slow the global economic recovery. The PBOC temporarily raised reserve requirements for six lenders, which led to a decline in material companies and raw material producers as commodity prices fell on concern demand will weaken as China tightens credit further. Exporters in Japan closed lower after the yen strengthened to near a 15-year high against the dollar and dimmed the outlook for export earnings. China's Shanghai Composite Index rallied to a 5-month high as the country's share prices caught up with regional measures after a weeklong holiday from Oct 1 to Oct 7.

Wednesday, October 13, 2010...

Overnight Developments



*European stocks are higher with the European DJ Stoxx 50 up +0.89% and Dec S&Ps up +7.20 points at a 5-1/4 month high. The dollar and Treasuries are weaker and most commodities are higher, with copper at a 27-month high. Crude oil is stronger after the IEA raised its global oil demand forecasts for this year and next amid signs of "apparently resurgent" consumption in the US, Germany and Japan in the past quarter. ASML Holding NV led semiconductor stocks higher in Europe after it gained 3.6% when it reported better-than-expected Q3 profit of 268.5 million euros ($375.6 million), beating analysts' estimates of 247 million-euros, while Intel jumped 2% after the world's largest chipmaker reported a jump in net income late yesterday. Also giving European stocks a boost was the better-than-expected Sep French CPI (unchanged m/m versus expectations of +0.2% m/m) along with the stronger-than-expected Aug Euro-Zone industrial production (+1.0% m/m versus ex pectations of +0.8% m/m). A slide in bank stocks limited gains in European stocks after Standard Chartered lost 1.5% when the lender announced a 3.3 billion-pound ($5.2 billion) share sale, which also prompted a 3.3% slide in Barclays Plc on concern that it may also have to announce a share sale to improve its capital buffer. Sep UK nationwide consumer confidence plummeted a bigger-than-expected 9 points to 53, a 1-1/2 year low, as Britons braced themselves for the biggest spending cuts since WWII.

*The Asian markets today closed higher with Japan up +0.16%, Hong Kong +1.45%, China +1.41%, Taiwan +0.20%, Australia +0.04%, Singapore +1.68%, South Korea +0.26%, India +2.40%. China's Shanghai Stock Index rallied to a 5-1/4 month high after its foreign-exchange reserves increased by a record to $2.65 trillion at the end of Sep while a 25% y/y jump in exports lifted its trade surplus to $16.9 billion for Sep, reinforcing optimism that China will continue to lead the global recovery. Chinese construction companies rallied after the Ministry of Housing and Urban-Rural Development said the country will start trials of a program to promote sales of construction materials in rural areas, while bank stocks rallied after the PBOC said Sep new local lending was 595.5 billion yuan, higher than estimates for 500 billion yuan of new loans. Asian technology companies rallied after Intel predicted Q4 sales that beat estimates and Japanese industrial companies closed higher after A ug Japan machine orders unexpectedly increased +10.1% m/m, their biggest monthly gain in 8 months.

Thursday, October 14, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 down -0.01% and Dec S&Ps are up +1.20 points. The dollar index slumped to a 10-month low on the outlook for additional quantitative easing from the Fed, which has boosted most commodities, with gold soaring to a record high, silver to a 30-year high and copper to a 27-month high. European stock prices were supported after Germany's leading economic institutes revised up their German growth forecasts for this year and next. The institutes predict German GDP will expand 3.5% in 2010 and 2.0% in 2011, higher than their April estimates of 1.5% this year and 1.4% next year. ECB Council member Mersch also sounded upbeat about Euro-Zone growth prospects when he said today that economic indicators don't give a reason for "increased pessimism" about the Euro-Zone economy. A drop in bank stocks is limiting gains in European equities as Barclays fell 3.7%, Societe Generale SA slipped 3.2% and Ro yal Bank of Scotland Plc fell 2.8%. Standard Chartered Plc's announcement yesterday that it will seek to raise 3.3 billion pounds ($5.3 billion) in a rights offer may encourage other banks to increase their capital. Credit Suisse Group AG predicts that UK lenders will have to constrain dividend payments to shareholders for up to 3 years to meet the more stringent capital requirements under the new Basel III capital rules agreed by regulators last month, which require that banks have a Core Tier 1 ratio of at least 7%.

•   The Asian markets today closed mostly higher with Japan up +1.91%, Hong Kong +1.68%, China +0.20%, Taiwan +1.34%, Australia +1.71%, Singapore -0.22%, South Korea +1.34%, India -0.92%. Asian stocks rallied on increased confidence in the economic outlook as global economic and corporate earnings data strengthen. Raw materials producers and mining stocks closed higher as metals prices surged on speculation that Chinese demand for commodities will remain strong. Japanese exporters strengthened despite the soaring yen that climbed to a fresh 15-year high against the dollar today. Royal Bank of Scotland Group Plc turned bullish on stocks in China and the rest of Asia, saying they will benefit from a global "liquidity wave" as they upgraded China and Asian stocks to "overweight" from "underweight." The chief investment officer at Cabot Money Management says that China's stocks are in a "solid bull market" and predicts that the Shangh ai tock Index may rise 20% in the next 6 months.

Friday, October 15, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 up +0.10% and Dec S&Ps down -2.10 points. The dollar is weaker and Treasuries and most commodities are higher ahead of this morning's speech by Fed Chairman Bernanke at a Boston Fed conference. A rally in European chipmakers is bolstering the overall market after Advanced Micro Devices posted better-than-estimated earnings results as demand from China increased. Infineon Technologies, Europe's second-largest chipmaker rose 1.3% and STMicroelectronics NV, Europe's largest chipmaker gained nearly 1.0%. Aug Euro-Zone exports rose 1.0%, which suggests the Euro-Zone economy is weathering a global slowdown and a stronger euro, while the Sep Euro-Zone CPI accelerated to 1.8% y/y, in line with market estimates and its highest level in 22 months. A decline in European retailers limited gains in the overall market when Carrefour SA, the world's second-largest retailer, fell 3.7% after it cut its full-yea r forecast of so-called activity contribution, a measure of operating profit, to about 3 billion euros ($4.2 billion) from 3.1 billion euros because of a 100 million-euro charge related to Brazil.

•   The Asian markets today closed mixed with Japan down -0.87%, Hong Kong -0.40%, China +3.21%, Taiwan -0.12%, Australia -0.21%, Singapore +0.29%, South Korea +0.13%, India -1.82%. Weakness in bank stocks led Japanese share prices lower after Mizuho Financial Group, Japan's third-biggest bank by market value, tumbled 4.9% and Mitsubishi UFJ lost 2.8% after the Nikkei English News reported that Japan's biggest banks may sell 2 trillion yen ($24.6 billion) in shareholdings to meet capital requirements. Other Asian bank stocks also weakened after US home seizures reached a record in Sep and scrutiny of home foreclosure practices grew. Japanese exporters closed lower after the yen strengthened to near a 15-year high against the dollar, as the stronger yen cuts the value of overseas income at Japanese companies when converted into their home currency. China's Shanghai Stock Index closed at a 5-1/2 month high after foreign direct investment in China rose 6.1% y/y in Sep to $8 .4 billion, which underscores confidence in the outlook for China's economy. Total foreign direct investment in China in the first 9 months of 2010 climbed +16.6% to $74.3 billion, which has prompted the PBOC to increase its foreign-exchange reserves to $2.65 trillion, the world's largest, in order to avert gains in the yuan.

Monday, October 18, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.23% while Dec S&Ps are down -4.60 points. The dollar is stronger and most commodities are weaker, while Treasuries strengthened after comments from Fed officials speaking over the weekend at a Boston Fed conference. Boston Fed President Rosengren said that deflation risk warrants an "active policy" saying Japan's battle with deflation shows policy makers should take action to stimulate growth before price levels drop, while Chicago Fed President Evans said the US is in a "bona fide liquidity trap" and needs "much more" monetary accommodation in the face of high unemployment and inflation that's too low. The euro weakened after the Italian newspaper La Stampa reported that ECB President Trichet rejected fellow ECB Council member Weber's call to end the central bank's bond purchase program when he said that Weber's opinion "is not the position of the Governing Counc il with an overwhelming majority." European stocks fluctuated on either side of unchanged with financial service stocks gaining on increased M&A activity after BlueBay Asset Management Plc surged 30% when it agreed to be bought by Royal Bank of Canada for about 963 million pounds ($1.5 billion). Limiting gains in European stocks was the 1.7% drop in BHP Billiton and the 2.4% decline in Rio Tinto after the world's number one and number three mining companies abandoned a plan to create the largest iron-ore exporter after regulators from Europe to Asia were concerned it would limit competition. Also undercutting European stocks was the 4.2% fall in Royal Philips Electronics NV after the world's largest lighting company said it's "cautious" on sales for the final 3 months of the year.

•   The Asian markets today closed mostly lower with Japan down -0.02%, Hong Kong -1.21%, China -0.65%, Taiwan -1.76%, Australia -0.79%, Singapore -0.72%, South Korea -1.59%, India +0.22%. Asian stocks slumped on speculation that the Fed may not provide enough monetary stimulus to sustain a recovery, which would crimp demand for Asian exports. Asian mining companies closed lower as gold prices weakened for a second day and after BHP Billiton and Rio Tinto Group scrapped a plan to create the world's largest iron ore producer. Japanese exporters moved lower as the yen strengthened to near a 15-year high against the dollar on speculation Japan will refrain from intervening to weaken its currency ahead of this week's G-20 policy meeting in South Korea.

Tuesday, October 19, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.31% while Dec S&Ps are down -6.80 points. US stock futures extended declines and European stocks erased gains on concern the Chinese economy may slow after the PBOC raised 1-year lending and deposit rates by 25 bp. The dollar strengthened after Treasury Secretary Geithner late yesterday said the US will preserve confidence in its currency and "will not engage" in currency devaluation. The euro weakened after the Oct German ZEW economic sentiment survey decreased a larger-than-expected -2.9 to -7.2, its lowest level in 21 months. Deutsche Bank, Germany's largest lender, and Banco Santander SA, Spain's biggest bank, both advanced 2.8% to lead European bank stocks higher on reduced concerns about illegal foreclosures after Bank of America yesterday prompted a rally in US bank stocks when it said it will start resubmitting foreclosure affidavits next week in 102,000 cases in which judgment is pending. Weakness in technology stocks is limiting gains in the overall market with Apple down 5% in European trading amid concern supply constraints will hamper iPad computer sales. ARM Holdings Plc, the UK designer of chips that power some of Apple's products, is down -2.5% and IBM slipped 3% after it reported that services signings fell -7% to $11 billion in Q3. Porsche SE dropped 3% after the CEO of Volkswagen AG said the merger of the two companies might have to be put on hold until risks from US lawsuits and German tax issues are resolved.

•   The Asian markets today closed mixed with Japan up +0.43%, Hong Kong +1.25%, China +2.10%, Taiwan -0.18%, Australia +0.08%, Singapore +0.35%, South Korea -1.04%, India -0.92%. The Asian markets were already closed when the PBOC hiked its 1-year lending and deposit rates by 25 bp. Japanese financial stocks closed higher after upbeat earnings reported by Citigroup boosted the outlook for corporate earnings. Undercutting Japanese stocks was the action by the government to downgrade its assessment of the economy for the first time in 20 months as a rising yen and slower global demand put pressure on the Japanese economy. Japan's Cabinet Office said in its monthly report today that the economic rebound is "pausing," removing last month's reference to the economy "picking up." Asian technology stocks closed lower and were a drag on the overall market, led by a 2.8% drop in Samsung Electronics and a 2.0% fall in India's Infosys Technologies, after Apple and IBM fell. In its semiannual report released today, the World Bank lowered its outlook for growth next year in China and across East Asia as it urged officials in the region to curb inflation and ward off asset bubbles to avoid a repeat of the Asian financial crisis. The World Bank cut its estimate for Chinese growth next year to 8.5%, down from an April estimate of 8.7%, and cut its 2011 estimate for growth in East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea, Singapore and India, to 7.8% from an April estimate of 8.0%.

Wednesday, October 20, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.48% and Dec S&Ps up +4.20 points. The dollar and Treasuries are weaker and most commodities are higher. Gains in health-care stocks are leading an advance in European equities after Novo Nordisk, the world's biggest insulin maker, surged 6.7% after the US Food and Drug Administration said that Amylin Pharmaceuticals, Eli Liliy and Alkermes must conduct a new study on their rival diabetes drug Byetta, which may delay its debut by as much as 20 months. The British pound weakened against most other currencies after the minutes of the Oct 7 BOE policy meeting showed policy makers split 3 ways on interest rates and debt purchases with Governor King voting to keep the benchmark interest rate at 0.5% and the asset-purchase plan at 200 billion pounds ($314 billion), while policy maker Sentance pushed for an increase in the benchmark rate to 0.75% and policy maker Posen sought to boost the asset-purchase pl an by 50 billion pounds. Limiting gains in European stocks is renewed sovereign-debt concerns after Irish Finance Minister Lenihan said today that growth is weaker than originally forecast. This boosted credit-default swaps on Irish government bonds by 8 bp to 425.5 and pushed up the yield on Ireland's 10-year bond by 4 bp to 6.40%.

•   The Asian markets today closed mostly lower with Japan down -1.65%, Hong Kong -0.87%, China +0.63%, Taiwan +0.97%, Australia -0.66%, Singapore -0.41%, South Korea +0.70%, India -0.56%. Most Asian markets closed lower on concern economic growth will slow in China and limit demand for exports from other Asian nations after China unexpectedly increased interest rates for the first time since 2007. Shares of Chinese real-estate companies led a drop among Asian equities on concern higher borrowing costs will deter housing demand. Asian energy and raw-material producers also declined on concern the rate increase in China will crimp demand for commodities. Despite the negative overhang of the interest rate increase, China's Shanghai Stock Index rallied to a 6-month high and closed higher after Chinese insurance companies rose on speculation they will benefit from higher interest rates and on a recommendation by Goldman Sachs for investors to buy Chinese stocks on dips as &q uot;earnings are solid, valuations are reasonable and the rate hike could actually remove the risk of an overhang."

Thursday, October 21, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.13% and Dec S&Ps up +6.10 points. The dollar and Treasuries are lower and most commodities are higher. The euro strengthened after the Oct French business confidence indicator unexpectedly rose +2 to 102, its highest level in 28 months and the Oct Euro-Zone PMI manufacturing index unexpectedly increased +0.4 to 54.1 versus expectations of -0.5 to 53.2. A 3.8% gain in Fiat SpA led European automakers higher after the company raised its 2010 earnings forecast saying full-year earnings before interest, taxes and one-time items will be at least 2 billion euros, compared with its previous target of as much as 1.2 billion euros. Nokia jumped 8.2% after the world's biggest maker of mobile phones reported Q3 net income of 529 million euros ($740 million) and sales of 10.3 billion euros, handily beating analysts' estimates for profit of 182.5 million euros on sales of 9.99 billion euros. Also boosting Eur opean stocks was the action by the German government to raise its economic growth forecast for this year to 3.4% annualized from a previous forecast of 1.4% and to raise its 2011 growth estimate to 1.8% annualized from a prior projection of 1.6%. Limiting gains in European stocks was the larger-than-expected decline in the Oct Euro-Zone PMI composite which fell -0.7 to a 1-year low of 53.4, greater than expectations of a -0.4 decline to 53.7, along with the 2.5% fall in Credit Suisse reported Q3 profit of 609 million francs ($630 million), missing analysts' estimates of 861 million-franc profit as lower client activity curbed trading revenue.

•   The Asian markets today closed mixed with Japan down -0.05%, Hong Kong +0.39%, China -0.65%, Taiwan +0.08%, Australia -0.04%, Singapore -0.49%, South Korea +0.31%, India +1.95%. Q3 China GDP expanded 9.6% annualized, higher than market expectations for a 9.5% increase, although the smallest increase in a year, while Sep China consumer prices rose an as-expected 3.6% y/y, a 23-month high. China Mobile Ltd., the world's biggest phone company, closed down 1.5% and dragged telecommunication stocks lower after the company reported Q3 net income of 29.6 billion yuan ($4.5 billion), below analysts' estimates for profit of 30 billion yuan. Asian financial stocks fell on concern that financial regulations will be tightened after Mario Draghi, the chairman of the Financial Stability Board, said officials will continue to work on options to regulate large lenders. Mitsubishi UFJ Financial Group, Japan's largest publicly traded bank, lost 1%, while National Australia Bank Ltd., t he country's biggest lender, slid 2.1%, and Shinhan Financial Group, South Korea's number 1 financial company by market value, declined 2.5%. On the bright side, Samsung Electronics, Asia's biggest maker of semiconductors and mobile phones, gained 2.7% after Verizon Wireless, the largest US mobile-phone carrier, said it will start selling Samsung's tablet computer next month, introducing one of the first competitors to Apple's iPad in the US.

Friday, October 22, 2010...

Overnight Developments

•   European stocks are slightly lower with the European DJ Stoxx 50 down 0.17%. Dec S&Ps are up 0.60 points (+0.05%). The markets are awaiting the outcome of the G20 finance ministers meeting that began today and concludes on Saturday. G20 finance ministers are considering a plan offered by Treasury Secretary Geithner that would require G20 countries to commit to current account targets, which would then be monitored by the IMF. Developing and surplus nations are pushing back on Mr. Geithner's proposal, which is being seen as a means for the US to force currency appreciation in surplus nations. Honeywell and Verizon this morning reported earnings that were slightly above the market consensus.

•   The Asian markets today closed mostly higher: Japan +0.54%, Hong Kong -0.56%, China +0.12%, Taiwan +0.45%, Australia +0.55%, Singapore +0.32%, South Korea +1.36%, Bombay -0.47%. Asian stocks were boosted by Thursday's drop in initial unemployment claims and by positive earnings reports from LG Display and Tata Consultancy Services.

Tuesday, 26 Oct 2010...

Overnight Developments

European stocks are lower with the European DJ Stoxx 50 down -0.09% and Dec S&Ps down -1.10 points. The dollar is slightly higher and commodities are mixed with copper posting a 27-month high. UBS sank 5.3% and is leading European financial stocks lower after the bank reported reduced flows from cash equities and a q/q decline in revenue from fixed income, currencies and commodities. ArcelorMittal fell 5.0% after the world's largest steelmaker forecast Q4 earnings before interest, taxes, depreciation and amortization of $1.5 billion to $1.9 billion, below analysts' projections of $2.44 billion, saying "our outlook for Q4 remains cautious as the expected higher input prices continue to work through the business and demand remains muted." German bunds turned lower after Sep German import prices rose for a second month, +0.3% m/m, higher than market expectations for a +0.2% m/m increase. Offsetting losses in stock prices was the +0.8% q/q increase in Q3 UK GDP, double the +0.4% q/q increase the market was expecting, which eases the pressure on the BOE and the UK government to expand its quantitative easing measures. Soon after the Q3 UK results were released, the British pound strengthened when Standard & Poor's Ratings Service raised its outlook on the UK to stable from negative and affirmed the country's AAA ratings.


The Asian markets today closed mostly lower with Japan down -0.25%, Hong Kong -0.11%, China -0.43%, Taiwan +0.44%, Australia -0.47%, Singapore -0.62%, South Korea +0.09%, India -0.40%. Japanese stocks closed lower on concern the yen near a 15-year high against the dollar will crimp export earnings of Japanese companies. The yen did fall back slightly from its 15-year high after Japanese Vice Finance Minister Igarashi said currency-market intervention is most effective when it's a "surprise," which suggests that Japan may be prepared to act again to stem the yen's advance.

Wednesday, October 27, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 up +0.14% and Dec S&Ps down -4.70 points. The dollar is stronger and Treasuries are weaker after the WSJ reported that the Fed next week is likely to offer a program of Treasury purchases worth only a few hundred billion dollars over several months, without saying where it obtained the information. That is lower than market expectations and compares with the asset-purchase program of about $1.7 trillion during the financial crisis. Most commodities are lower which has undercut mining companies with Rio Tinto down 2.1%, BHP Billiton off by 1.2% and Xstrata down 2.8%. SAP AG, the world's biggest maker of business-management software, tumbled 3% after it reported Q3 net income of 501 million euros ($692 million), missing the 553 million-euro estimates of analysts. Heineken NV slipped 3.8% after it reported Q3 revenue excluding the effect of acquisitions fell -2.1%, worse than analysts' estimates o f a -0.4% decline. On the positive side, Sep French consumer spending rose +1.5% m/m and +1.1% y/y, higher than expectations of +0.4% m/m and -0.3% y/y, as expectations of better job prospects and higher wages boosted French consumer confidence for 3 straight months. Deutsche Bank rose 2.1% after Germany's biggest bank reported a Q3 net loss of 1.2 billion euros after writing down the value of its existing stake in Deutsche Postbank AG, smaller than analysts' estimates for a 1.5 billion-euro loss. STMicroelectronics gained 3.6% after Europe's largest semiconductor maker forecast Q4 revenue of between $2.71 billion and $2.84 billion, higher than analysts' estimates of $2.7 billion.

•   The Asian markets today closed mostly lower with Japan up +0.10%, Hong Kong -1.85%, China -1.79%, Taiwan -0.63%, Australia -0.85%, Singapore -1.21%, South Korea -0.71%, India -1.07%. Raw materials and basic resource producers led most Asian stocks lower as the dollar strengthened and commodities declined on speculation that a possible Fed asset-purchase program to be announced next week will disappoint investors. Japanese stocks bucked the trend and closed slightly higher as exporters advanced after the yen fell to a 2-week low against the dollar. South Korean stocks retreated after the country's Q3 GDP slowed to a 4.5% y/y increase from 7.2% y/y in Q2 as export gains and global growth cooled. South Korean bond yields jumped and the won weakened after BOK Governor Kim Choong Soo said his country may consider imposing capital controls to slow fund inflows that have driven up the won 7.2% against the dollar in Q3, the biggest increase of any Asian currency.

Thursday, October 28, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.61% and Dec S&Ps up +1.70 points. The dollar is weaker and most commodities and Treasuries are stronger. The New York Fed has released a survey to bond dealers and investors which asks them about projections of Fed asset purchases over the next 6 months, along with the likely effect on yields, as it seeks to gauge the possible impact of new efforts to spur growth. Strong reported earnings results have lifted European stocks with Shell Plc up 1.4% after it reported Q3 profit excluding items of $4.9 billion, beating analysts' estimates of $4.3 billion. Sanofi-Aventis, which is seeking to take over Genzyme of the US, rose 1.8% after it forecast full-year EPS may rise as much as 2%, higher than a July projection of unchanged at best. Also boosting European share prices was the larger-than-expected +0.9 gain in Oct Euro-Zone economic confidence to a 2-3/4 year high of 104.1 as manufacturing sentiment strengthened. The quarterly Bank Lending Survey released by the ECB today said net demand for business loans in Europe turned positive for the first time in more than 2 years in Q3 even as banks tightened credit standards. Limiting gains in European stocks was the weaker-than-expected report on UK home prices as the Oct US nationwide house prices slid -0.7% m/m to its lowest level in 8 months. ECB Executive Board member Stark said today that the financial crisis "is not yet over and will have long-term implications on growth rates and potential" for years to come.

•   The Asian markets today closed mixed with Japan down -0.22%, Hong Kong +0.20%, China -0.18%, Taiwan +0.76%, Australia +0.79%, Singapore +0.16%, South Korea -0.08%, India -0.32%. The BOJ following its 2-day meeting today said it will buy corporate debt with lower credit ratings than it previously purchased, including BBB rated corporate bonds and a-2 commercial paper. The central bank maintained its benchmark overnight call rate between 0.0% and 0.1% and kept the amounts of its 5 trillion yen ($61 billion) asset buying program and 30 trillion-yen credit program unchanged. The BOJ also moved up its next meeting to Nov 4-5, a week ahead of schedule, so that it can react to any Fed easing following the FOMC meeting Nov 2-3. The BOJ also left unchanged its forecast for consumer price growth of 0.1% in the fiscal year starting Apr 2011, and predicted a +0.6% increase the following year. Both forecasts are below BOJ expectations that prices should rise +1.0% to be consider ed stable. China's Shanghai Stock Index closed lower after the PBOC said rapid increases in global commodity prices and quantitative easing in major economies may fuel inflation.

Friday, October 29, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.57% and Dec S&Ps down -5.60 points. The dollar and Treasuries are higher and most commodities are weaker. A plethora of negative economic news out of Europe is driving stock prices lower today. Sep German retail sales unexpectedly declined for a second month after they plunged -2.3% m/m, their biggest monthly decline in 2-1/2 years. The Oct Euro-Zone CPI estimate unexpectedly increased +0.1 to +1.9% y/y to its highest level in 23 months, while the Sep Euro-Zone unemployment rate remained unchanged at 10.1%, a 12-year high. The extra yield that investors demand to hold Greek bonds instead of German bunds widened today to a 4-week high of 813 bp, as concerns increase that Greece will not meet its budget deficit targets. Sandvik AB slumped 4.7% after the world's biggest maker of metal-cutting tools reported Q3 net income of 1.58 billion kroner ($232.9 million), below analysts estimates of 1.72 bil lion kroner, while Piraeus Bank sank 5.4% after Greece's fourth-biggest bank announced plans to raise 800 million euros ($1.11 billion) in a sale of new shares to boost its capital.

•   The Asian markets today closed mostly lower with Japan down -1.75%, Hong Kong -0.49%, China -0.52%, Taiwan -0.80%, Australia -0.50%, Singapore +0.42%, South Korea -1.39%, India +0.46%. Japan's Nikkei 225 Stock Index tumbled to a 1-1/2 month low after factory production slumped and deflation deepened in Sep. Sep Japan industrial production declined -1.9% m/m, its biggest monthly drop in 19 months and its fourth straight monthly decrease, as the yen's surge to a 15-year high against the dollar prompts companies to scale back production. The threat of deflation in Japan rose after the Sep Japan national CPI ex food & energy remained at -1.5% y/y for the fourth straight month. Sep Japan overall household spending unexpectedly stagnated, while the Oct Japan Nomura/JMMA manufacturing PMI slipped -2.3 to 47.2, its lowest level in 17 months. On the positive side, Sony, Japan's biggest exporter of consumer electronics, raised its full-year profit forecast to 70 billion ye n ($868 million), compared with a previous projection of 60 billion yen, citing improved earnings at its games and personal-computer businesses.

Monday, 01 November 2010...

Overnight Developments
•European stocks are lower with the European DJ Stoxx 50 down -0.15% but Dec S&Ps are up +6.40 points. The dollar is weaker, while Treasuries and most commodities are higher, with gold at a 1-1/2 week high. European stocks weakened on increased sovereign-debt concerns after the extra yield investors demand to hold 10-year Irish government bonds instead of benchmark German bunds widened to a record 458 bp, the most since Bloomberg began collecting the data in 1991. Limiting losses in European stocks was a rally in mining companies and raw material producers as commodity prices gained after Chin's manufacturing activity expanded by the most in 6 months and the Oct UK PMI manufacturing unexpectedly rose +1.4 to 53.9.


•The Asian markets today closed mostly higher with Japan down -0.52%, Hong Kong +2.41%, China +2.75%, Taiwan +1.12%, Australia +0.79%, Singapore +1.58%, South Korea +1.82%, India +1.61%. China's Shanghai Stock Index closed higher after the Oct China PMI manufacturing index unexpectedly rose +0.9 to 54.7, its fastest pace of growth in 6 months. Japan's Nikkei 225 Stock Index sank to a 1-1/2 month low as exporters weakened after the yen rallied to a fresh 15-year high against the dollar. Japanese stocks were also undercut after Honda Motor closed 5% lower when it cut its second-half profit estimate to 92 billion yen ($1.1 billion), compared with an earlier projection of 105 billion yen in profit. South Korean stocks rallied, led by gains in automakers, after Hyundai rose 6.2% after it reported a 38% increase in Q3 profit and Kia Motors surged 10% after Morgan Stanley raised its price estimates for the stock, citing earnings results released last week.

Tuesday, November 2, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.34% and Dec S&Ps up +4.40 points. The dollar is weaker and Treasuries and most commodities are higher. European stocks received a boost after the Oct German and Euro-Zone PMI manufacturing indexes were both revised higher. The Oct Euro-Zone PMI manufacturing index was revised up to 54.6 from the previously reported 54.1, while the Oct German PMI manufacturing index was revised up to 56.6 from 56.1. Oil and gas stocks are leading gains in European stocks with BP Plc up 1.3% and BG Group Plc up 2.3% after earnings at both companies beat analysts' estimates. Limiting gains in Europe are increased sovereign-debt concerns after the Irish 10-year yield spread over German bunds widened to 476 bp. the second consecutive all-time high. Credit-default swaps on Irish debt climbed 9 bp to a record 507 bp, while swaps on Greek debt gained 7 bp to a 5-week high of 839 bp.

•   The Asian markets today closed mixed with Japan up +0.06%, Hong Kong +0.08%, China -0.28%, Taiwan -0.42%, Australia +0.06%, Singapore +0.41%, South Korea +0.21%, India -0.05%. The Australian dollar climbed to parity against the dollar for the first time since it was floated in 1983 after the RBA unexpectedly raised interest rates. RBA Governor Stevens hiked the overnight cash rate target by 25 bp to 4.75%, saying the economy has "relatively modest amounts of spare capacity" and that he sees the risk of "inflation rising again over the medium term." India also raised interest rates today for the sixth time this year as the RBI boosted the repurchase rate by 25 bp to 6.25% and reverse repurchase rate by 25 bp to 5.25%. India's rate hike is aimed at lowering inflation as the Sep India CPI for industrial workers is at 9.9%. RBI Governor Subbarao said "excess global liquidity" along with the "significant" growth and interest-rate d ifferentials between advanced countries and India may result in an "intensification" of capital flows into India and that the chance of further policy tightening in the "immediate future is relatively low." Most Asian stock markets weakened after the rate hikes by Australia and India.

Wednesday, November 3, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.37% and Dec S&Ps up +0.80 points. Treasuries are higher and the dollar is lower on anticipation the Fed will announce more asset purchases when the FOMC convenes later today. Growth in the UK service sector unexpectedly expanded to its best level in 4 months when the Oct UK PMI services rose +0.4 to 53.2, when the market was expecting a -0.2 point decline to 52.6. Gains in construction companies were leading European stocks higher with Lafarge SA, the world's biggest cement maker up 4.4%, while bank stocks were also strong with Societe Generale up 3.6% after France's second-biggest bank reported Q3 net income of 896 million euros ($1.26 billion), beating analysts' estimates of 688 million-euros. Limiting gains in European stocks was the 7.8% drop in Cobham Plc after the world's largest maker of airborne-refueling equipment said organic profit growth may be limited this year, held back by delays to defense and security contracts in the US. Irish 10-year bonds dropped for the seventh consecutive session with the cost of insuring Irish sovereign-debt against default surging to a record, with credit-default swaps rising 15.5 bp to 533.5 bp.

•   The Asian markets today closed mostly higher with Japan closed for holiday, Hong Kong +2.00%, China -1.24%, Taiwan -0.61%, Australia +0.45%, Singapore +0.61%, South Korea +0.81%, India +0.59%. The World Bank said China should raise interest rates further and allow a stronger yuan to damp inflation, along with guarding against a surge of capital inflows. The World Bank also said China's economic prospects are "sound" as it raised its 2010 GDP forecast for China to 10.0% from a June forecast of 9.5% and hiked its 2011 GDP forecast to 8.7% from a previous estimate of 8.5%. Hong Kong's Hang Seng Stock Index climbed 2% after Goldman Sachs raised its 1-year price target to 29,000, saying the city has the most to gain from extra liquidity from global quantitative easing programs and China's growth. South Korea's Kospi Stock Index gained nearly 1% after Deutsche Bank AG upgraded its prediction for the index, saying the gauge may reach 2,350 by the end of 2011. Asi an commodity and energy producers closed higher on optimism for continued strong Asian demand for raw materials along with the rally in crude oil to a 3-week high.

Thursday, November 4, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +1.35% and Dec S&Ps up +6.90 points. Global stocks and commodities are higher after the Fed announced an additional $600 billion of bond purchases following yesterday's FOMC meeting. The dollar index slumped to a 10-3/4 month low, while crude oil climbed to a 6-month high. European stocks also received a boost after the Oct Euro-Zone PMI composite was revised higher to 53.8 from the originally reported 53.4. BNP Paribas is up 3.9% and leading bank stocks higher after it reported Q3 profit of 1.91 billion euros ($2.7 billion), well ahead of analysts' estimates of 1.75 billion euros. Unilever rallied 5.1% after the world's second-biggest consumer products maker reported Q3 net income of 1.25 billion euros, beating analysts' estimates of 1.18 billion euros. Limiting gains in European stocks is the 2.1% drop in Rolls-Royce Group Plc which fell after Qantas Airways grounded its entire Airbus SAS A380 fl eet after an engine, made by Rolls-Royce, exploded mid-flight and forced an emergency landing in Singapore, and another engine failed earlier today during a Qantas flight from Singapore to Sydney. Another negative for the European market is the increase in sovereign-debt concerns after credit-default swaps on Irish government debt rose 7 bp to a record 567 bp.

•   The Asian markets today closed higher with Japan up +2.17%, Hong Kong +1.62%, China +1.76%, Taiwan +0.77%, Australia +0.48%, Singapore +0.48%, South Korea +0.45%, India +2.09%. The action by the Fed yesterday to boost its quantitative easing measures propelled Asian stocks higher on optimism the global economic recovery will continue. Japanese exporters rallied after the yen weakened against the dollar and Fast Retailing, Asia's biggest clothing chain operator, jumped 8.1% after the company's Uniqlo chain posted its smallest domestic sales decline in 3 months. India's Sensitive Stock Index surged over 2% and closed at a record high today, as foreign buying of India's equities surged on the expectation consumer spending will boost corporate earnings. Overseas investors bought a net 9.3 billion rupees ($209 million) on Indian equities on Nov 2, extending this year's record inflows to 1.2 trillion rupees, according to data on the website of the Securities and Exchange B oard of India.

Friday, November 5, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.35% and Dec S&Ps down -5.00 points. The dollar is stronger and Treasuries are weaker as the markets wait for the release of this morning's US payrolls report. The rally in metals prices continues as gold posted an all-tine high of $1,394.40 an ounce in overnight trade and copper climbed to a 28-month high as miners in Chile prepared to strike. Sep Euro-Zone retail sales unexpectedly declined -0.2% m/m, worse than market expectations for a +0.1% m/m increase as governments stepped up budget cuts and slowing economic growth prompted companies to keep hiring plans on hold. Sep German factory orders unexpectedly plunged -4.0% m/m, weaker than expectations for a +0.4% m/m increase as the stronger euro hurts price competitiveness outside of the Euro-Zone. Increased sovereign-debt risk concerns are also pressuring European stocks after credit-default swaps on Irish government debt surged 27 bp to a rec ord 606 bp.

•   The Asian markets today closed higher with Japan up +2.86%, Hong Kong +1.39%, China +1.16%, Taiwan +1.09%, Australia +1.17%, South Korea +0.04%, Singapore and India closed for holidays. Japan's Nikkei 225 Stock Index closed higher after the BOJ said it will use part of its 5 trillion yen ($62 billion) fund to buy exchange-traded funds that track the Nikkei 225 Stock Average and the Topix index and Japanese real-estate investment trusts with credit rating of AA or higher. Japanese automakers closed higher led by a 6% advance in Nissan after Japan's third-largest carmaker boosted its forecast for full-year net income by 80%. Asian raw materials producers and mining companies strengthened as silver surged to a 30-year high and copper climbed to a 28-month high. Caltex Australia Ltd., the nation's largest oil refiner, jumped 6% after Morgan Stanley upgraded the stock to "overweight" from "equal-weight."

Monday, November 8, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.09%% and Dec S&Ps down -2.60 points. The dollar is higher while Treasuries and most commodities are lower. The euro is weaker on an increase in European sovereign-debt risks with EU economic and Monetary Affairs Commissioner Rehn in Ireland to examine the government's budget plans. Credit default swaps on Irish government debt soared 28 bp to a record 606 bp on concern the cost of bailing out its financial system is unsustainable. Also undercutting stock prices was the unexpected decline in Sep German industrial production which fell -0.8% m/m, much weaker than expectations for a +0.4% m/m increase, which raises concern that momentum in Europe's largest economy may be faltering. Financial stocks are weaker, led by a 3.8% drop in Commerzbank AG, after Germany's second-biggest bank reported Q3 net income of 113 million euros ($157 million), below analysts' estimates of 148.4 million euros. On the positive side, Sep German exports rose +3.0% m/m, a much larger increase than the +0.5% m/m gain expected, while the Nov Euro-Zone Sentix investor confidence climbed +5.2 to 14.0, more than expected and a 29-month high. National Bank of Greece SA gained 4.1% and led Greek stocks higher after Greek Prime Minister Papandreou said his government would continue to press ahead with reducing the budget deficit after an initial victory in local elections

•   The Asian markets today closed mostly higher with Japan up +1.11%, Hong Kong +0.35%, China +0.79%, Taiwan -0.22%, Australia -0.46%, Singapore +1.85%, South Korea +0.20%, India -0.73%. Japan's Nikkei Stock Index rose to a 3-month high and China's Shanghai Stock Index climbed to a 6-3/4 month high as exporters rallied on optimism demand will strengthen after last Friday's US jobs report was stronger than expected. Raw materials and energy producers also rallied, led by a 6.3% surge in JX Holdings after Japan's biggest oil refiner raised its full-year profit forecast by 19% to 320 billion yen ($3.9 billion) as margins for selling oil products improved.

Tuesday, November 9, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.66% and Dec S&Ps up +3.70 points. Commodities surged as the dollar fell with gold at a record high, silver at a 30-year high, crude oil at a 25-month high and copper at a 28-month high. European stocks received a boost after Deutsche Bank AG predicted that European stocks will rally 16% by the end of next year as growth in the global economy drives earnings. The Oct Bank of France business sentiment unexpectedly rose +1 to 103, matching a 2-1/2 year high, as improved consumer spending and investment help lift demand. Vodafone Group Plc rallied 1.1% as the world's largest mobile-phone company raised its full-year profit forecast after it reported first-half profit of 7.36 billion pounds ($11.9 billion), higher than analysts' estimates of 7.29 billion pounds. Vodaphone also announced plans to sell its interests in Japanese wireless operator Softbank Corp. for 3.1 billion pounds ($5 billion) as it d isposes of minority assets to focus on data services and other growth areas. Limiting gains in European stocks is an increase in sovereign-debt risks after the yield spread between Irish 10-year bonds and similar-maturity benchmark German bunds widened to a record 553 bp and the yield spread between Portuguese 10-year bonds and bunds widened to 450 bp, also a record.

•   The Asian markets today closed mixed with Japan down -0.39%, Hong Kong -1.02%, China -0.69%, Taiwan +0.18%, Australia -0.79%, Singapore +0.40%, South Korea +0.14%, India +0.38%. China will force banks to hold more foreign exchange and strengthen auditing of overseas fund raising after China's State Administration of Foreign Exchange said it will introduce new rules on currency provisioning and tighten management of banks' foreign-debt quotas. China is stepping up efforts to curb hot-money inflows that may inflate asset bubbles and add pressure for a stronger yuan. The yuan jumped to 6.6440 per dollar, its highest since the end of a dollar peg in 2005, on speculation that China will permit faster appreciation of the yuan before Group of 20 leaders meet this week in South Korea. Also today, Taiwan's Financial Supervisory Commission said it would restore curbs on foreign investments in fixed-income securities to include government debt due in more than a year after capi tal inflows from overseas investors helped push the Taiwan dollar up the most in more than a decade.

Wednesday, November 10, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.19% and Dec S&Ps are little changed, up +0.70 of a point. The dollar is higher, which has prompted a retreat in most commodity prices, while Treasuries are lower. A 2.8% decline in Holcim is leading European stocks lower after the world's second-biggest cement maker said reaching last year's operating profit will be "challenging." Natixis, the investment-banking unit of Credit Agricole SA, plunged 7.6% and is leading financial stocks lower after it reported Q3 profit of 305 million euros ($421 million), well below analysts' estimates of 366 million euros. European sovereign-debt risk concerns are still high as the yield spread between Irish 10-year bonds and similar-maturity German bunds widened to a record 571 bp. Government bonds in Greece and Portugal have been under pressure and Irish bond prices have fallen for 12 straight days since European Union leaders agreed on Oct 29 to cons ider German Chancellor Merkel's proposal for a permanent rescue mechanism as of 2013 that would involve debt restructuring with losses for private holders of sovereign bonds.

•   The Asian markets today closed mixed with Japan up +1.40%, Hong Kong -0.85%, China -0.70%, Taiwan +0.06%, Australia -0.86%, Singapore -0.74%, South Korea +1.21%, India -0.27%. China's Shanghai Stock Index closed lower after the PBOC said it will increase the reserve ratio requirement for the nation's banks by 50 bp starting Nov 16. The Chinese yuan rose to 6.6395 against the dollar, the strongest level since China unified official and market exchange rates at the end of 1993, as the government seeks to appease world leaders ahead of this weekend's G-20 summit. Japan's Nikkei Stock Index rallied to a 4-1/2 month high led by gains in Japanese banks after the FT reported that Group of 20 leaders meeting in South Korea this week may seek to exempt large Asian banks from stricter global regulations. Asian chipmakers rallied after Taiwan Semiconductor Manufacturing, the world's largest maker of custom chips, said its Oct parent-level sales rose +28% from a year earlier.

Thursday, November 11, 2010...

Overnight Developments

•   European stocks are weaker with the European DJ Stoxx 50 down -0.02% and Dec S&Ps down -6.30 points. The dollar is higher on an increase in safe-haven demand as most European stocks retreated on continued concern about the region's most indebted nations. An 11% plunge in Cisco Systems led technology shares lower after the company late yesterday forecast lower-than-expected earnings. Bank of Ireland Plc and Royal Bank of Scotland Group Plc led a sell off in banks, falling more than 3%, after Ireland's central bank Governor and ECB Council member Honohan said Irish and international banks' loan losses in the country may total at least 85 billion euros ($117 billion). Comments from French Finance Minister Lagarde fueled further losses in the bonds of Europe's most indebted nations when she said "investors must share the cost of sovereign debt restructurings," which raised concern some nations may need to restructure their debt in order to avoid default ing. Limiting losses in European stocks is a rally in mining companies after copper surged to a 2-1/2 year high and Moody's Investors Service raised China's debt rating.

•   The Asian markets today closed mostly higher with Japan up +0.31%, Hong Kong +0.82%, China +0.31%, Taiwan -0.16%, Australia +0.61%, Singapore +0.13%, South Korea -2.99%, India -1.37%. China's Shanghai Stock Index rose to a 9-1/2 month high after Moody's Investors Service raised China's debt rating by one step to Aa3, the fourth-highest investment grade, saying the Chinese economy's "resilient performance" and the prospects of "continued strong growth" mean China will be able to manage and contain losses from record lending. Commodity prices surged after the upgrade, with crude oil posting a 25-month high and copper surging to a 2-1/2 year high; as the upgrade bolsters optimism the economic recovery will continue. Ahead of the G-20 meeting starting today in Seoul, the yuan reached 6.6173 per dollar, its highest since 1993, amid speculation Chinese policy makers will accept a stronger currency to curb inflation, which was reported at a 2-1/2 year hig h of +4.4% y/y today, and also to meet the demands of the international community. Japan's Nikkei 225 Stock Index climbed to a 4-1/2 month high after bank stocks rallied when Deutsche Bank AG raised its rating on Japan's banks, while South Korea's Kospi index plunged in the last minutes of trading as the expiration of options contracts spurred the largest-ever sales of equities by foreign investors.

Friday, November 12, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.64% and Dec S&Ps down -7.10 points. The dollar index climbed to a 5-week high on increased safe-haven demand as global equity markets tumbled, while Treasuries rose and most commodities weakened. Concerns that China is poised to increase interest rates again after its Oct consumer prices accelerated to their fastest pace in 25 months is pressuring global equities. European Q3 GDP figures were all revised lower with growth in the Euro-Zone cut to a +0.4% q/q increase from the previously reported +0.5% q/q, while Germany was cut to +0.7% q/q from +0.8% q/q and growth in France was revised lower to +0.4% q/q from +0.5% q/q. Keeping the pressure on European equities was the unexpected decline in Sep Euro-Zone industrial production, which fell -0.9% m/m, weaker than the expected +0.3% m/m gain and the biggest decline in 18 months. In an attempt to stem the rout in the bond markets of Europe's periphe ral nations (i.e., Ireland, Spain & Portugal), European finance ministers that are meeting other global leaders at the G-20 summit in South Korea, said a crisis-resolution mechanism they're discussing that may force bondholders to share the cost of a bailout wouldn't apply to outstanding debt. The euro rebounded from a 1-1/4 month low against the dollar and Irish bonds rallied for the first time in 14 days after the statement was released.

•   The Asian markets today closed lower with Japan down -1.39%, Hong Kong -1.93%, China -6.21%, Taiwan -1.43%, Australia -0.76%, Singapore -1.26%, South Korea +0.34%, India -2.10%. Concern that growth in China may slow as it takes additional steps to damp inflation undercut most Asian stock markets with China's Shanghai Stock Index falling the most in over a year. Japanese exporters declined as the yen rallied and Japanese bank stocks tumbled after a WSJ article contradicted a Nov 10 report from the FT that the Group of 20 leaders may consider different capital rules for lenders with mostly domestic operations and those for global banks. Sep India industrial production rose +4.4% y/y, smaller-than-expected and the slowest pace of growth in 16 months, which may prompt the RBI from further raising interest rates as consumer demand slows from the previous six rate hikes the RBI has already made this year.

Monday, 15 November 2010...

Overnight Developments
•European stocks are higher with the European DJ Stoxx 50 up +0.17% and Dec S&Ps are up +3.70 points. The dollar index climbed to a 1-1/4 month high and the euro weakened after Greece's 2009 budget deficit was revised up to 15.4% of GDP from 13.6%, the largest in the Euro-Zone. According to the EU's statistics office, the total budget gap for the Euro-Zone in 2009 widened to 6.3% of GDP in 2009, the biggest since the euro was introduced in 1999. Treasuries weakened after Richmond Fed President Lacker said the Fed may need to tighten monetary policy, even with an elevated US unemployment rate, to avoid a surge in inflation. European stocks fluctuated as the market awaits more information on whether Ireland will seek assistance to deal with its debt burden. Bank of Ireland slumped 4.2% after an Irish Finance Ministry spokesman said his country is in talks with officials about current "market conditions" as Germany pushes it to accept a bailout before tomorrow's meeting of European finance ministers. A report in the Irish Independent newspaper said Irish Finance Minister Lenihan may ask his European counterparts at Tuesday's meeting for as much as 80 billion euros ($10 billion) in aid between 2011 and 2013, according to Barclays Capital. Increased M&A activity is boosting European stocks with MAN SE up 6.6%, after Scania, the Swedish truck maker controlled by Volkswagen AG, said it's considering merging with MAN to create Europe's largest maker of commercial vehicles. Premier Oil Plc jumped 6.5% after the Observer newspaper reported Korea National Oil Corp. may make a bid for the UK oil producer, and Invensys Plc surged 7.4% after the Daily Telegraph reported the producer of control panels for Whirlpool Corp. washing machines may be bought by Chinese railcar maker CSR Corp.


•The Asian markets today closed mixed with Japan up +1.06%, Hong Kong -0.81%, China +0.70%, Taiwan -0.91%, Australia -0.10%, Singapore -0.47%, South Korea +0.35%, India +0.76%. The yen weakened to a 1-1/4 month low against the dollar and Japanese stocks rallied after Q3 Japan GDP was reported up +0.9% q/q and +3.9% annualized, stronger than expectations of +0.6% q/q and +2.5% annualized. Chinese bank stocks weakened after the state-run China Real Estate Business reported that China's four largest lenders have stopped making new loans to property developers until next year. Asian mining companies also weakened as copper prices fell on concern demand will wane as China takes steps to curb lending and cool its economy.

Tuesday, November 16, 2010...

Overnight Developments

•   European stocks are weaker with the European DJ Stoxx 50 down -1.50% and Dec S&Ps down -7.40 points. The dollar index climbed to a 1-1/2 month high which prompted a fall in commodities with crude oil sliding to a 1-1/2 week low. European and US stocks are under pressure on concern that China will have to rake additional measures to cool inflation, while European finance ministers are in Brussels to address Ireland's debt crisis. In the UK, the Oct UK CPI unexpectedly accelerated to 3.2% y/y, exceeding the government's 3.0% limit and forcing BOE Governor King to write his fourth letter of explanation to the Treasury this year. Mining companies and basic-resource producers are weaker as metals prices fell and European banks are weaker as well, with HSBC down 2.2% and Santander, Spain's largest lender, down 1.6%. Salzgitter slid 3.3% and led steelmakers lower after Deutsche Bank AG downgraded Germany's second-largest steelmaker to "hold" from "bu y." European stocks fell even after German investor confidence rose for the first time in 7 months in November after the Nov German ZEW economic sentiment rose +9.0 to 1.8.

•   The Asian markets today closed mostly lower with Japan down -0.31%, Hong Kong -1.39%, China -4.38%, Taiwan +0.87%, Australia +0.26%, Singapore -0.76%, South Korea -0.55%, India -2.19%. China's Shanghai Stock Index slumped to a 1-month low and dragged other Asian markets lower after the China Securities Journal reported the country will introduce measures to control rising food prices and after PBOC Governor Zhou Xiaochuan said China is under "pressure" from capital inflows as he reiterated the central bank's goals of "moderate" credit growth and stronger liquidity management. South Korea's Kospi Stock Index declined after the Bank of Korea increased interest rates for the second time this year and dropped a reference to keeping borrowing costs "accommodative." The BOK raised the 7-day repurchase rate by 25 bp to 2.50% and BOK Governor Kim said that while the benchmark isn't currently at a neutral level, the economy isn't ready for "n ormal" rates yet, which signals the central bank will be slow to raise rates further.

Wednesday, November 17, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.31% and Dec S&Ps up +2.00 points. The dollar is slightly higher and commodities are mixed with copper sliding to a 1-1/2 month low and crude oil falling to a 2-week low. Credit-default swaps on Irish government debt rose after Irish Finance Minister Lenihan said talks with the European Commission, the ECB and the IMF on potential aid for his country's banks will start tomorrow. Irish bonds also fell after LCH.Clearnet Ltd. raised the margin requirement for trading the securities to 30% of net positions, making it more expensive to buy the nation's debt. A rally in health-care stocks is boosting the European market after Actelion Ltd. surged 9.6% on reports that Amgen is considering buying the Swiss drugmaker. GlaxoSmithKline Plc climbed 2.2% after the UK drugmaker and Human Genome Sciences won a US panel's backing to sell the first new lupus drug, Benlysta, in more than 50 years. In the UK, the number of people receiving jobless benefits in Oct unexpectedly declined -3,700 m/m, the first drop since July, and better than an expectations for a +6,000 increase.

•   The Asian markets today closed mostly lower with Japan up +0.15%, Hong Kong -2.02%, China -2.07%, Taiwan -0.68%, Australia -1.62%, South Korea -0.22%, Singapore and India closed for holiday. China's Shanghai Stock Index fell to a 1-month low on concern the government will take further measures to curb inflation. China's cabinet said today that the government may impose price controls on "important daily necessities" and production materials, while the China Securities Journal reported that the PBOC may raise interest rates for a second time this year as soon as Nov 19. Asian energy and basic resource companies fell, as commodities declined on concern demand will decrease on China's tightening policies. Japan's Nikkei 225 Stock Index closed slightly higher as exporters gained after the yen held near a 1-1/4 month low against the dollar.

Thursday, November 18, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +1.24% and Dec S&Ps up +13.20 points. Treasuries are weaker and the euro and commodities rallied sharply on the prospect of a European Union-led bailout for Ireland. Credit-default swaps on Irish government debt sank 14.5 bp after Irish central bank Governor Honohan said Ireland will probably seek a bailout from the EU and the IMF worth "tens of billions" of euros to rescue its battered banks and probably pay an interest rate close to 5%, similar to what was offered to Greece when it requested a bailout in April. EU, IMF and ECB officials are scheduled to arrive in Dublin later today to study the books of the country's lenders as European policy makers put pressure on Ireland to accept a bailout to prevent contagion spreading through the Euro-Zone. European stocks rallied even after the Organization for Economic Cooperation and Development (OECD) cut its global forecast for next year, predicting a "soft spot" in 2011 as government stimulus is withdrawn and an investment recovery slows. The OECD now predicts the global economy will expand 4.2% next year instead of the 4.5% predicted in May.


•   The Asian markets today closed higher with Japan up +2.06%, Hong Kong +1.82%, China +1.42%, Taiwan +0.34%, Australia +0.34%, Singapore +0.10%, South Korea +1.56%, India +0.33%. Asian markets received support from news that Ireland is on the brink of accepting a bailout with gains in mining and energy companies leading the way as commodities rallied. Japanese exporters led a gain the Nikkei 225 Stock Index to its highest level in 4-3/4 months as the yen held near a 1-1/4 month low against the dollar. South Korea's won climbed from a 7-week low and stocks gained after sales at the 3 largest department stores climbed 13.3% in Oct, the fastest pace of growth in 8 months and a sign that the recovery in Asia's fourth-biggest economy is in tact. In an attempt to slow capital inflows that are driving up the won, South Korea's finance ministry said today that policy makers will revive a tax on foreigners' debt holdings.

Friday, November 19, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -1.18% and Dec S&Ps down -2.90 points. The dollar is weaker and Treasuries and most commodities are higher, while the euro strengthened on optimism that a European Union bailout of Ireland would limit contagion of sovereign-debt risks throughout the rest of the Euro-Zone. The main bearish factor for stocks today was the action by China to order its banks to set aside larger reserves for the fifth time this year in an attempt to limit inflation and asset bubbles. Also undercutting European stock prices was the larger-than-expected increase in Oct German producer prices which rose +0.4% m/m and +4.3% y/y, with the +4.3% y/y gain the fastest pace of increase in nearly 2 years. Speaking at a ECB conference in Frankfurt today, Fed Chairman Bernanke defended the Fed's QE 2 program, saying it will aid the world economy, while he implicitly took a shot at China saying countries that undervalue their currenc ies may eventually inhibit growth around the world and risk financial instability at home. Also speaking at the same ECB conference, ECB President Trichet said that while the ECB and the Fed are dealing with different economic structures, they both have a "very large unity of purpose" when maintaining price stability.


•   The Asian markets today closed mixed with Japan up +0.09%, Hong Kong -0.13%, China +0.98%, Taiwan +0.27%, Australia -0.24%, Singapore -0.56%, South Korea +0.75%, India -1.73%. After the Asian markets closed, the PBOC said it will increase the ratio requirements for China's banks by 50 bp with effect from Nov 29 as it drains cash from the financial system, saying the aim is to step up liquidity management and "appropriately control" credit and loans. Japan's Nikkei 225 Stock Index rose to a 4-3/4 month high after exporters rallied as the yen slipped to a 1-1/2 month low against the dollar. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency. Technology stocks in Japan also gained after computer-memory chipmaker Elpida Memory jumped 4% after receiving a brokerage upgrade.

Monday, November 22, 2010...

Overnight Developments

•   European stocks are slightly lower with the European DJ Stoxx 50 down -0.17% and Dec S&Ps down -0.20 of a point. The euro strengthened to a 1-week high against the dollar and most commodities gained after Ireland became the second Euro-Zone member to seek a rescue from the European Union and the IMF in an attempt to prevent a run on its banks. Credit-default swaps on Irish government debt slid 28.5 bp to a 3-week low as Irish Prime Minister Cowen said he expected talks on the rescue package to be completed in the "next few weeks." Finance Minister Lenihan said the loan would be less than 100 billion euros ($137 billion), though he refused to give any further details, while Moody's Investors Service said a "multi-notch" downgrade on Ireland's credit rating was most likely as an increase in the debt burden poses a "credit negative" for the country. European stocks fluctuated between slight gains and losses as the euphoria of the Ir ish bailout was offset by a plunge in Irish banks, with Bank of Ireland down 17% and Irish Life & Permanent down 24% on concern that a bailout will dilute existing shareholder stakes. Strength in European stocks was also limited on concern that the debt crisis may not be over with credit-default swaps on Portuguese government debt increasing 5 bp.

•   The Asian markets today closed mixed with Japan up +0.93%, Hong Kong -0.35%, China -0.22%, Taiwan +0.83%, Australia +0.31%, Singapore -0.20%, South Korea +0.38%, India +1.90%. Asian stocks received support on news of a bailout for Ireland, with Japan's Nikkei 225 Stock Index climbing to a 5-month high as exporters rallied after the yen weakened. China's Shanghai Stock Index closed lower however, as the markets react to the 50 bp increase in the reserve ratio requirements for Chinese banks announced by the PBOC following the markets' close last Friday.

Tuesday, 23 November 2010...

Overnight Developments

•European stocks are lower with the European DJ Stoxx 50 down -0.72% and Dec S&Ps down -11.10 points. The dollar and Treasuries are stronger and most commodities are weaker on escalating tensions in Korea along with concern the European sovereign-debt crisis will spread. The Markit iTraxx SovX Western Europe Index of credit-default swaps linked to the debt of 15 governments rose 3 bp to a record 180 bp. Bank of Ireland sank 21% after Irish Prime Minister Cowen said he will seek national elections early next year, while Barclays slipped 2.1% after the US Securities and Exchange Commission said the bank got two transfers totaling about $1.3 billion from Lehman Brothers in Sep 2008 that may have violated securities laws. European Union and IMF officials said Greece will need to make an "extra effort" to cut its 2011 budget deficit enough to keep receiving emergency aid and that "deep structural reforms are needed" to boost tax revenue and make state spending and agencies more efficient. Limiting losses in European stocks was the larger than expected increases in the European PMI manufacturing indexes. The Nov Euro-Zone PMI composite unexpectedly rose +1.6 to 55.4, stronger than expectations for a -0.2 point decline to 53.6.


•The Asian markets today closed lower with Japan closed for holiday, Hong Kong -2.67%, China -2.04%, Taiwan -0.55%, Australia -1.17%, Singapore -2.03%, South Korea -0.74%, India -1.33%. Asian stocks were undercut after North Korea fired dozens of artillery shells at Yeonpyeong island, near the western border with South Korea, which injured 14 South Korean soldiers and prompted South Korea to scramble fighter jets and return fire. China's Shanghai Stock Index fell to a 6-week low as bank stocks plunged after people with knowledge of the matter said China's biggest banks are close to reaching annual lending quotas and plan to stop issuing new loans. China's regulators are monitoring banks' loan balances to ensure the official target of 7.5 trillion yuan ($1.1 trillion) in new lending for 2010 isn't exceeded as the government steps up efforts to limit credit expansion after inflation quickened and property prices surged.

Wednesday, November 24, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.44% and Dec S&Ps up +2.30 points. The dollar index climbed to a 2-week high after Standard & Poor's cut Ireland's long-term debt rating two steps to A-1 from A-1+ with a negative outlook, while the euro slumped to a 2-month low against the dollar on concern the European sovereign-debt crisis is spreading. Spain's 10-year note yield relative to benchmark German bunds widened 12 bp to 246 bp, the highest level since the inception of the euro in 1999, while credit-default swaps insuring Portuguese government debt climbed 13.5 bp to 500.5 and rose 9 bp on Spanish debt to 310, both at record highs. Despite the negativity regarding the debt crisis, European stocks moved higher after the Nov German IFO business climate unexpectedly rose +1.6 to 109.3, its highest level since data began in 1991. Porsche SE jumped 4.3% and led automakers higher after it reported earnings before interest and taxes surge d to 395 million euros between Aug and Oct compared with 52 million euros a year earlier as sales soared 80% to 2.1 billion euros, while Compass Group Plc rallied 3.7% after the world's largest catering company said its full-year profit rose 15%, beating analysts estimates. Sep Euro-Zone industrial new orders fell -3.8% m/m, more than expected and the biggest monthly decline in 1-3/4 years.

•   The Asian markets today closed mixed with Japan down -0.84%, Hong Kong +0.56%, China +2.25%, Taiwan -0.38%, Australia -0.10%, Singapore +0.34%, South Korea +0.10%, India -1.18%. Asian markets were still feeling the negative effects of North Korea's artillery attack Tuesday on South Korea, although the markets settled well above their worst levels. Defense-related stocks rallied as US President Obama said he "strongly condemned the attack" and told South Korean President Lee Myung Bak that the US "stands shoulder to shoulder" with its Asian ally. After an emergency meeting of government and central bank officials, South Korea's finance ministry said the BOK would supply "ample" liquidity in local and foreign currencies if needed to shield markets.

Friday, November 26, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -1.40% and Dec S&Ps down -12.10 points. The dollar index jumped to a 2-month high and Treasuries were stronger after global stock markets declined as tensions between North and South Korea escalated and concerns remained high over Europe's debt crisis. The euro slumped to a 2-month low against the dollar after credit-default swaps to insure Spain's government debt rose 21 bp to a record 320.5 bp, climbed 19 bp to a record 599.5 to insure Ireland's government debt and rose 31.5 bp to a record 507.5 bp to insure Portuguese government debt. The euro was also pressured after comments from ECB Council member Liikanen who said that the ECB might keep emergency liquidity measures in place for longer "if required." European bank stocks are leading stock market declines with Santander, Spain's biggest lender, down 3.7%, Banco Bilbao Vizcaya Argentaria SA down 3.9% and BNP Paribas down 3.1%. Concer ns that Portugal may become the next victim of Europe's debt crisis intensified after the Financial Times Deutschland reported that by putting pressure on the Portuguese government, the ECB and other countries within the Euro-Zone aim to avoid a bailout of Spain, citing unidentified people within Germany's finance ministry. Also helping to keep European stocks in negative territory was the weaker-than-expected Oct French consumer spending that fell -0.7% m/m and -0.3% y/y, worse than expectations of -0.5% m/m and +0.4% y/y.

•   The Asian markets today closed mostly lower with Japan down -0.40%, Hong Kong -0.77%, China -0.89%, Taiwan -0.45%, Australia +0.11%, Singapore -0.04%, South Korea -1.24%, India -0.94%. Rising tensions on the Korean peninsula undercut Asian stocks after North Korea said that joint military exercises between South Korea and the US will bring the region to the "brink of war" and it threatened a "shower of terrifying fire" should the US or South Korea infringe on its sovereignty. The US aircraft carrier Washington was headed toward the Yellow Sea for joint drills with South Korea between Nov 28 and Dec 1. A decline in Chinese bank stocks and property developers led China's Shanghai Stock Index lower after Shanghai Securities News said the Chinese government may cut the target for new lending next year.

Monday, November 29, 2010...

Overnight Developments

•   European stocks are trading lower with the European DJ Stoxx 50 down -0.33%. However, Dec S&Ps are trading mildly higher by 2.60 points (+0.22%). Eurozone finance ministers on Sunday approved an 85 billion euro bailout package for Ireland that did not force senior bondholders of major Irish banks to take a write-down. Eurozone finance ministers also gave Greece an extra 4-1/2 years to repay its bailout package, extending the term to 7 years in order to match the loan length in the new Irish bailout package. Eurozone finance ministers also agreed that the post-2013 bailout facility will not force automatic losses on sovereign bondholders and that instead the IMF will have the power to determine bondholder losses on a case-by-base basis, which was a defeat for German Chancellor Angela Merkel's hardline position for automatic losses that helped cause of the latest phase of the European debt crisis. The question now is whether Sunday's agreements will relieve th e pressure in the markets, or whether the markets are going to keep pushing Portuguese and Spanish risk measures higher and force a near-term bailout of at least Portugal and perhaps Spain. The markets have thus far been unimpressed with Sunday's agreements. The euro is down by 0.72% and credit default swap prices today have risen by 23 bp for Spain and by 40 bp for Portugal. However, CDS prices today are down by 20 bp for Ireland and by 21 bp for Greece. The European Commission today in its latest GDP forecasts said that Eurozone GDP growth will weaker to +1.5% in 2011 from +1.7% in 2010. The report forecast 2.2% GDP growth for Germany in 2011 but only 1.6% growth for French GDP growth and 1.1% for Italian GDP growth. The report forecast contractions for Greece and Portugal but +0.9% growth for Ireland. The European Commission reported today that Eurozone Nov confidence rose to 105.3 from 103.8 in October, which was stronger than expectations of 105.0 and was the hig hest level in 3 years.

•   The Asian markets today closed mostly higher: Japan +0.86%, Hong Kong +1.26%, China -0.15%, Taiwan +0.66%, Australia +0.44%, Singapore unchanged, South Korea -0.16%, and India +1.40%. Asia stocks were supported today by Nomura's upgrade for Sony to a "buy."

Tuesday, November 30, 2010...

Overnight Developments

•   European stocks are slightly higher with the European DJ Stoxx 50 up +0.12% and Dec S&Ps are down -4.20 points. The euro slumped to a 2-1/2 month low against the dollar and most commodities declined on concern the European sovereign-debt crisis is deepening. The difference in yield between Italian 10-year bonds and German bunds widened to as much as 212 bp, the most since 1996, while credit-default swaps insuring Italian, Spanish and Portuguese government bonds all rose to record highs. The Oct Euro-Zone unemployment rate rose +0.1 to 10.1% a 12-year high, and Oct French producer prices rose a more-than-expected +0.8% m/m and +4.3% y/y, a 2-year high. German unemployment fell for a 17th straight month in Nov by -9,000 to 3.14 million, the lowest amount of unemployed in 18 years, which may keep domestic demand firm in Europe's largest economy.


•   The Asian markets today closed mostly lower with Japan down -1.87%, Hong Kpng -0.68%, China -1.66%, Taiwan +0.06%, Australia -0.74%, Singapore -0.43%, South Korea +0.29%, India +0.60%. Asian stock markets were undercut after an economist at the Chinese Academy of Social Sciences said that China needs to raise interest rates by 200 bp as the recent increases in the reserve-requirement ratios of Chinese banks won't be enough to reign in excess liquidity in the system. Oct Japan industrial production fell -1.8% m/m, its fifth consecutive monthly drop and the biggest decline in 20 months, while the Japanese economy lost -180,000 jobs in Oct, the biggest drop since May, as the jobless rate increased +0.1 to 5.1%. The data adds to evidence that Japan's economy may contract for the first time in 5 quarters, as the expiration of stimulus measures and weak exports prompt companies to curb production.

Wednesday, December 1, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +1.15% and Dec S&Ps up +13.30 points. The euro and commodities strengthened while Treasuries fell after ECB President Trichet signaled the ECB may step up their response to the debt crisis. Credit-default swaps to insure European government debt fell after ECB President Trichet said he didn't believe that financial stability in the Euro-Zone "could really be called into question," which fueled speculation that ECB policy makers at their monthly meeting on Thursday may indicate further measures to curb the spread of the debt crisis. Stocks rose despite the comment from Standard & Poor's Ratings Service that it may cut Portugal's credit ratings on concern the government has made little progress at boosting economic growth to offset the fiscal drag from scheduled 2011 budget cuts. European banks gained and basic-resource stocks rose as commodities moved higher after Chinese manufacturing e xpanded for a fourth month in November. Oct German retail sales jumped +2.3% m/m, more than expected and the biggest monthly increase in 2-1/2 years, while the Nov UK PMI manufacturing unexpectedly rose +2.6 to 58.0, its fastest pace in 16 years as export orders climbed.


•   The Asian markets today closed mostly higher with Japan up +0.51%, Hong Kong +1.05%, China -0.03%, Taiwan +1.76%, Australia +0.05%, Singapore +1.18%, South Korea +1.27%, India +1.88%. Asian stocks received a boost after manufacturing activity in China expanded more than expected in November when the Nov China manufacturing PMI rose +0.5 to 55.2, its fastest pace of expansion in 7 months. Asian stocks also rose after US consumer confidence rose more than expected in Nov, which benefited Asian exporters. The Australian dollar slid to a 10-week low against the US dollar after Q3 Australia GDP was reported at +0.2% q/q, less than the expected increase of +0.4% q/q as a stronger currency contributed to the biggest drop in exports in more than 7 years. This slowing in growth indicates little immediate need for the RBA to add to its seven interest rate increases since Oct 2009 that have slowed consumer spending and reined in an expansion in housing.

Thursday, December 2, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.25% and Dec S&Ps up +4.00 points at a 2-1/2 week high. The euro and most commodities are higher with copper and crude oil posting 2-1/2 week highs on speculation the ECB at its monthly policy meeting today will act to stem the European sovereign-debt crisis. The yield on the 10-year German bund climbed to a 6-1/2 month high of 2.854% as strength in the equity market reduces the safe-haven demand of government debt. Bayerische Motoren Werke AG is up 1.3% and leading gains among carmakers after its Nov US auto sales surged +30% y/y. IMF Managing Director Dominique Strauss-Kahn said the current European debt crisis is "serious" and that the IMF stands ready to support member countries that seek help. The Oct Euro-Zone PPI rose +0.4% m/m and +4.4% y/y, more than expected with the +4.4% y/y gain the biggest annual increase in 2 years.


•   The Asian markets today closed higher with Japan up +1.81%, Hong Kong +0.86%, China +0.61%, Taiwan +0.77%, Australia +1.95%, Singapore +0.50%, South Korea +1.27%, India +0.72%. Asian markets closed higher and were supported by gains in European and US stock markets as concerns eased over the European debt crisis, while exporters rallied after the Fed's Beige Book said that manufacturing and job growth expanded in the US. Japan's Nikkei Stock Index jumped to a 5-1/4 month high after Japanese companies boosted spending for the first time in 3 years. Q3 Japan capital spending excluding software rose +4.8% y/y, its first increase since Q1 of 2007 and a positive sign that Japan's economic recovery may continue.

Friday, December 3, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 down -0.06% and Dec S&Ps down -0.20 of a point. The dollar is weaker and commodities and Treasuries are little changed ahead of the release of the Nov US employment report later this morning. The Bundesbank raised its forecast for German economic growth this year by the most since data for a reunified Germany began in 1992. In its bi-annual economic outlook released today, the German central bank predicts German GDP will expand 3.6% in 2010 and 2.0% in 2011, higher than its Jun estimates of 1.9% for this year and 1.4% next year. Other positives for European stock prices include the upward revision to the Nov Euro-Zone PMI composite which was raised to 55.5 from the previously released 55.4, and strength in retail sales as the Oct Euro-Zone retail sales increased +0.5% m/m and +1.8% y/y, stronger than expectations of +0.2% m/m and +1.0% y/y. Limiting strength in European bourses was the action b y Standard & Poor's Ratings Services to place Greece's "BB+" long-term sovereign credit rating on "CreditWatch" with negative implications. Standard & Poor's Ratings Services also placed the long and short-term counterparty credit ratings on Portugal's three largest publicly traded banks, Banco Espirito Santa SA, Banco BPI SA and Banco Comercial Portugues SA on CreditWatch with "negative implications."


•   The Asian markets today closed mostly higher with Japan up +0.10%, Hong Kong -0.55%, China +0.10%, Taiwan +0.45%, Australia +0.38%, Singapore -0.80%, South Korea +0.64%, India -0.13%. The state-run Xinhua News agency reported that China will shift to a "prudent" monetary policy next year as the government seeks to rein in liquidity, accelerating inflation and limit the risk of asset bubbles. The PBOC last used the term "prudent" for monetary policy in 2007 before shifting to a tighter stance and has described the current monetary stance as "moderately loose" since late 2008. The PBOC last hiked interest rates on Oct 19 and today's announcement suggests further rate hikes as soon as this month. Japan's Nikkei 225 Stock Average posted a 6-1/2 month high today and closed higher after stronger-than-expected US economic data on pending home sales and retail sales prompted a rally in exporters on increased optimism that the economic recovery m ay continue.

Monday, December 6, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.03% and Dec S&Ps down -3.00 points. Treasuries are stronger and most commodities are weaker after Fed Chairman Bernanke said on Sunday's "60 Minutes" news program that Fed purchases beyond the $600 billion already announced are "possible" given that US unemployment may take 5 years to fall to a normal level. Bernanke also said a return to recession "doesn't seem likely" because sectors of the economy such as housing can't become more depressed. European bank shares slipped and led stock prices lower and the euro weakened after Moody's Investors Service cut Hungary's debt to the lowest investment grade and indicated it may cut the rating to junk. The euro and European stocks were also pressured after the Belgian finance minister said that the 750 billion-euro ($1 trillion) bailout fund might be expanded, while Germany opposes any increase. European finance ministers meet later today in Brussels and Reuters reported that the IMF would ask the EU to enlarge the bailout package. Today's meeting also comes after Luxembourg Finance Minister Juncker and his Italian counterpart Tremonti wrote a letter to the Financial Times calling for the introduction of a joint European government bond or an "E-bond" which would be sold by a European Debt Agency. German Chancellor Merkel rejected the idea for an E-bond saying European treaties don't "allow Eurobonds as far as we're concerned," which points to a rift among European leaders over the steps needed to stem the sovereign debt crisis.


•   The Asian markets today closed mixed with Japan down -0.11%, Hong Kong -0.36%, China +0.23%, Taiwan +0.91%, Australia -0.12%, Singapore +0.28%, South Korea -0.13%, India +0.07%. Japanese exporters weakened and led Japanese stocks lower after the yen strengthened to a 3-week high against the dollar last Friday. Hyundai Motor slid 1.6% and led South Korean stocks lower after South Korea and the US revised a stalled free-trade accord, which allows the US to end a 2.5% tariff on automobiles in 5 years instead of immediately or after 3 years, as was previously agreed. Chinese raw material and material producers closed higher and lifted Chinese stocks after crude oil touched a 26-month high in overnight electronic trade. Crude oil has since fallen back as the dollar strengthened.

Tuesday, December 7, 2010...

Overnight Developments

European stocks are higher with the European DJ Stoxx 50 up +1.34% and Dec S&Ps up +11.40 points at a contract high. Stock and commodity prices surged, with crude oil at a 26-month high and gold at a record high, after President Obama agreed to a 2-year extension of the Bush-era tax cuts. The European Union is set to give formal approval to Ireland's 85 billion euro rescue package, while European finance ministers ruled out immediate aid for Portugal or Spain or an increase in the 750 billion-euro ($1 trillion) debt crisis fund. Treasuries are lower on reduced safe-haven demand, with the yield on the 10-year German bund rising to a 6-1/2 month high of 2.915%. Unilever climbed 4.2% after Morgan Stanley raised its recommendation on the world's second-largest consumer-goods maker to "overweight" from "underweight," and Porsche SE gained 7.1% after Barclays Plc lifted its recommendation on the carmaker to "overweight" from "equal weight." European stocks extended their gains when Oct UK manufacturing rose +0.6% m/m, twice as much as market expectations, and a sign that the economic recovery is maintaining momentum into the final quarter of the year.


The Asian markets today closed mostly higher with Japan down -0.26%, Hong Kong +0.82%, China +1.10%, Taiwan +0.02%, Australia +0.81%, Singapore +0.33%, South Korea +0.51%, India -0.23%. Honda Motor closed down 1.9% and led shares of Japanese exporters lower on concern the dollar at a 3-week low against the yen will cut overseas earnings. Material and energy companies led gains in other Asian markets as copper climbed to a 2-1/2 year high and silver surged to a 30-year high. The Reserve Bank of Australia left its overnight cash rate target at 4.75% today and RBA Governor Stevens said monetary policy is "appropriate for the economic outlook."

Wednesday, December 8, 2010...

Overnight Developments

•   European stocks are slightly higher with the European DJ Stoxx 50 up +0.40% and Dec S&Ps down -1.60 points. The dollar strengthened and Treasuries and bunds fell, with the yield on the German 10-year bund climbing to a 7-month high of 3.03%, on speculation an extension of the Bush-era tax cuts will help spur economic growth. Most commodities declined on concern China may raise interest rates as soon as this weekend. European stocks received a boost from the stronger-than-expected Oct German industrial production, which climbed +2.9% m/m, stronger than expectations for a +1.0% m/m gain. The Nov Bank of France business sentiment was also better than expected after it climbed +3 to 107, a 2-3/4 year high. Insurance companies are leading gains in European stocks with Prudential Plc up +2.7% after UBS AG added Britain's largest insurer to its European "key calls" list. Limiting gains in stocks was the unexpected decline in Oct German exports that fell -1.1% m/m as Europe's sovereign debt crisis and a cooling global economy curbed demand.


•   The Asian markets today closed mixed with Japan up +0.90%, Hong Kong -1.43%, China -0.89%, Taiwan -0.01%, Australia -0.57%, Singapore +0.34%, South Korea -0.43%, India -1.19%. Chinese stocks declined after the China Securities Journal reported that the PBOC may raise interest rates around the time set for the release of November's inflation data, which has been moved up to Dec 11, 2 days earlier than planned. South Korea's Kospi Stock Index closed lower after Yonhap News reported that North Korea fired artillery shells into its own waters near the disputed western border with South Korea. Japan's Nikkei 225 Stock Index climbed to a 6-1/2 month high as the yen fell back from a 3-week high against the dollar, which prompted a rally in exporters. Japanese railway companies also rallied after Goldman Sachs maintained its "buy" rating on the sector saying, "we think recent declines have left the stocks undervalued."

Thursday, December 9, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.58% and Dec S&Ps up +4.10 points at a fresh contract high. The dollar and most commodities are higher after strong economic reports from the Asia Pacific region boosted confidence in the global economic recovery. Japan's Q3 GDP was revised higher and Australian employers in Nov added more than double the number of workers forecast. As expected, the BOE maintained its benchmark interest rate at 0.50% and its asset purchase target at 200 billion pounds. The euro weakened after the release of the ECB's monthly bulletin which said the central bank will keep its emergency liquidity measures "as long as necessary, and at least" until mid-April. The ECB also stepped up its purchases of government bonds this month to fight "acute" financial market tensions and last week settled 1.97 billion euros ($2.62 billion) of government bond purchases, the most in 22 weeks. Undercutting gains i n European stocks is weakness in automakers with Volkswagen down 7% and Porsche SE down 3.9% after the vice secretary-general of the China Automobile Industry Association said that China may end tax incentives for buying passenger cars next year.


•   The Asian markets today closed mostly higher with Japan up +0.52%, Hong Kong +0.34%, China -1.53%, Taiwan +0.58%, Australia +0.88%, Singapore +0.23%, South Korea +1.87%, India -2.31%. Japan's Nikkei 225 Stock Index rallied to a 6-1/2 month high after Japan's Q3 GDP was revised up to a 4.5% annualized pace, faster than the 3.9% annualized pace reported last month as capital investment in Q3 was revised up to 1.3% from the +0.8% originally reported. Deflation concerns still remain however, after Japan's Q3 GDP deflator was revised down to -2.4% compared with the -2.0% drop originally reported, its fourth straight quarterly decrease. Stocks in Australia closed higher and the Aussie dollar rallied after Nov Australian payrolls were reported up +54,600 m/m, more than double market expectations of +20,000 and the biggest monthly increase in 10 months. The jobless rate fell -0.2 to 5.2% even as more people entered the workforce. The improvement in Australia's labor market will keep the pressure on the RBA to raise interest rates, which it has done 7 times since Oct 2009, in order to keep inflation in check.

Friday, December 10, 2010...


•   European stocks are little changed with the European DJ Stoxx 50 -0.19% and Dec S&Ps up +4.10 points. The dollar is slightly weaker and Treasuries and most commodities are higher. The euro is under pressure as European leaders disagreed on how to stem the sovereign-debt crisis. France backed Germany in refusing to add to the European Union's 440 billion ($581 billion) rescue fund and rejected the idea of issuing joint euro-bonds, which deepens bloc-wide divisions before the Dec 16-17 EU summit. European stocks are slightly weaker after Oct French industrial and manufacturing production both unexpectedly declined -0.8% m/m, after strikes and protests blocked ports and triggered the shutdown of refineries and petrochemical plants. On the positive side, Goldman Sachs predicts that European equities will climb 12% through the end of 2011 as rising earnings and record-low interest rates help companies overcome the sovereign-debt crisis.


•   The Asian markets today closed mixed with Japan down -0.72%, Hong Kong -0.04%, China +1.24%, Taiwan -0.40%, Australia +0.10%, Singapore -0.77%, South Korea -0.22%, India +1.39%. China's Shanghai Stock Index closed higher after China's trade surplus and lending exceeded forecasts in November. Nov China exports rose +24.9% y/y to a record $153.3 billion and imports advanced +37.7% y/y to a record $130.4 billion, leaving a +$22.9 billion surplus, higher than expectations of +$21.0 billion. Nov Chinese new lending was reported at 564 billion yuan ($85 billion), which exceeded market expectations of 500 billion yuan and leaves this year's total about 50 billion yuan short of the government's maximum target of 7.5 trillion yuan. Undercutting gains in Chinese stocks was the action by the PBOC to raise the reserve requirements for banks by 50 bp to 18.5%, the third increase in the last five weeks, as the central bank tries to counter an increase in inflation. Chinese leader s meet tomorrow in Beijing to set economic guidelines for next year. Chinese inflation data is also to be released tomorrow with Nov China CPI expected at +5.1% y/y, the highest since Jul 2008.

Monday, December 13, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.42% and Mar S&Ps up +2.30 points. Global stocks and commodities rallied after China decided not to raise interest rates over the weekend even as consumer prices climbed at the fastest pace in more than 2 years in Nov. Treasuries sank to a 5-1/2 month low on decreased safe-haven demand and crude oil moved higher after OPEC kept its production output for 11 of its members at 24.845 million barrels a day at its Dec 11 meeting. Mining companies and raw material producers are and leading gains in European stocks as copper soared to a 2-1/2 year high. Increased M&A activity is also boosting share prices with Wellstream up 5.1% after General Electric agreed to buy the UK based oilfield-services provider for about 800 million pounds ($1.3 billion) and Q-Med surged 13% after the Swiss maker of Cetaphil skin creams agreed to be bought by Galderma SA for as much as 7.45 billion kroner ($1.08 billion). U ndercutting European share prices was the quarterly report released from Germany's Bundesbank that said 2011 German GDP growth may weaken to 2.0% from 3.6% this year and that in Q1 of 2011 the German economy may show a "considerable slowdown" given "continuous uncertainty" in financial markets and the "fragile situation" of government budgets in some countries.


•   The Asian markets today closed mostly higher with Japan up +0.80%, Hong Kong +0.67%, China +3.13%, Taiwan +0.20%, Australia +0.24%, Singapore -0.10%, South Korea +0.60%, India +0.94%. Asian stocks rallied and helped to boost global stock markets after China refrained from raising interest rates over the weekend despite the surge in consumer prices when Nov China CPI surged 5.1% y/y, its largest increase in 28 months. Chinese policy makers have instead drained money from the financial system over the past 2 months by setting higher reserve requirements for banks. The Xinhua News Agency reported after an annual conference in Beijing by Chinese leaders to set economic policy guidelines that the government is likely to set a target of at least 7 trillion yuan ($1.1 trillion) of new lending for 2011, from a target of 7.5 trillion yuan this year. The government also aims for 4% inflation, 8% GDP growth and a 16% expansion in money supply for 2011 from this year's targets o f 3% inflation. 8% GDP growth and a 17% increase in money supply.

Tuesday, December 14, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 down -0.16% and Mar S&Ps up +1.80 points. The dollar index slipped to a 3-week low and most commodities are higher with copper posting a 2-1/2 year high on speculation the Fed may announce at its FOMC meeting today more bond purchases to stimulate the economy. The yield on Spain's 10-year bond rose by 9 bp to 5.58% after the nation raised less than its 3 billion-euro maximum target at a sale of 12-month and 18-month bills today. Outokumu fell 6.1% and led European steel makers lower after the Finnish stainless-steel maker forecast that Q4 operating profit would be "clearly negative." In its quarterly report released today, the European Commission predicts that Europe's economic growth will moderate next year amid national deficit-cutting measures before improving in 2012 on an increase in private demand. The commission predicts that the Euro-Zone expansion will weaken to 1.5% in 2011 from 1.7% this year and that Ireland and Spain will return to growth next year while Greece will remain in recession. On the positive side, German investor confidence rose for a second month in Dec after the Dec German ZEW economic sentiment rose a more-than-expected +2.5 to 4.3. European airline stocks rallied after Credit Suisse Group AG raised its recommendation on Air France and Lufthansa to "outperform" from "neutral."


•   The Asian markets today closed mostly higher with Japan up +0.22%, Hong Kong +0.49%, China +0.26%, Taiwan +0.04%, Australia +0.21%, Singapore -0.17%, South Korea +0.69%, India +0.55%. Raw-material and commodity producing stocks have pushed most Asian stock markets higher on speculation that demand for commodities will grow and the global expansion will continue after China refrained from raising interest rates. Li & Fung, the number one supplier of goods to Wal-Mart Stores, advanced 1.6% on speculation that today's US Nov retail sales report will show strong consumer demand, while Hyundai Heavy Industries jumped 8.9% after the world's largest shipbuilder said that Hapag-Lloyd AG increased an order to 10 container ships from 6. Japanese stocks also received a boost after Prime Minister Kan called for a 5% cut in Japan's corporate tax rate.

Wednesday, December 15, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.52% and Mar S&Ps down -4.30 points after Moody's Investors Service said it may cut Spain's credit rating. Treasuries and the dollar are stronger and most commodities are weaker after Moody's placed Spain's Aa1 debt rating on review for a possible downgrade, citing the 170 billion euros ($226 billion) the nation needs to raise next year, while also having to refinance 30 billion euros for its regions and 90 billion euros for its banks. The euro slumped and the yield on Spain's 10-year government note climbed to near its highest yield in 10 years on concern the European sovereign-debt crisis is spreading. Bank stocks are leading stock prices lower with Banco Santander SA, Spain's largest bank, down 3.6% and Barclays Plc down 2.9%. European Union leaders are meeting tomorrow for a 2-day summit to discuss the creation of a permanent mechanism to shore up over-indebted countries. Limiting stock losse s was a rally in healthcare stocks led by a 7.1% surge in Novartis AG after the company agreed to pay $12.9 billion to take full control of Alcon, ending an 11-month dispute with minority shareholders.


•   The Asian markets today closed mixed with Japan down -0.07%, Hong Kong -1.95%, China -0.67%, Taiwan +0.19%, Australia +0.02%, Singapore -0.94%, South Korea +0.31%, India -0.76%. Japanese stocks closed lower after confidence among its largest manufacturers worsened for the first time since Mar 2009. The Q4 Japan Tankan large manufacturers business sentiment index dropped to 5 from 8 in Q3 after a strong yen eroded export gains and the effect of government stimulus measures faded. Asian raw materials and energy producers closed lower after crude oil and metals prices declined. Weakness in Chinese bank stocks led Chinese stocks lower as Industrial & Commercial Bank of China Ltd., the world's number one bank by market value, closed down 1.9% on concern China will act further to slow inflation.

Thursday, December 16, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 up +0.16% and Mar S&Ps up +2.30 points. Treasuries are higher and the dollar is lower, while commodities and stocks fluctuated as European leaders gather for a 2-day summit in Brussels to discuss the debt crisis. Spanish borrowing costs rose after Spain sold 2.4 billion euros of 10-year and 15-year bonds at an auction today, below a maximum target of 3 billion euros. Europe's services and manufacturing industries slowed more than expected in Dec, as smaller Euro-Zone countries failed to keep up with Germany's export-led expansion. The Dec Euro-Zone composite index fell to 55.0 from 55.5 in Nov, weaker than the 55.3 level that was expected. Helping to boost European stocks was the +2.8 increase in the Dec German PMI manufacturing index to a 5-month high of 60.9, stronger than expectations for a +0.1 increase to 58.2 and points to continued strength in the German economy. Also benefiting stock p rices was the +0.8% y/y increase in Q3 Euro-Zone lobar costs, the smallest increase since data began in 1996.


•   The Asian markets today closed mixed with Japan up +0.01%, Hong Kong -1.33%, China -0.52%, Taiwan +0.29%, Australia +0.34%, Singapore +0.01%, South Korea -0.39%, India +1.10%. Asian stocks fluctuated as chip-industry stocks rose after analysts said prices of some memory may climb, while raw materials producers finished weaker after metal prices dropped. India refrained from raising interest rates today after six increases already this year as a cash crunch prompted a pause in the central bank's rate hike cycle. The RBI said today it plans to buy government bonds worth as much as 480 billion rupees via open-market auctions in the next month to inject liquidity into the country's banks, and also cut the statutory liquidity ratio, or the proportion of deposits commercial banks need to invest in government bonds, to 24% from 25%. After the Asian markets closed, Standard & Poor's raised China's debt rating to AA-, the fourth-highest ranking, from A+ with a stable outl ook as it cited China's "substantial" foreign-exchange reserves and strong fiscal position.

Friday, December 17, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.62% and Mar S&Ps down -0.90 of a point. The dollar is weaker and Treasuries and most commodities are higher after EU leaders agreed to amend the bloc's treaties to create a permanent debt-crisis mechanism in 2013. EU leaders are still debating the issue of debt sustainability and possible insolvency problems prior to 2013. The euro strengthened after the Dec German IFO business climate unexpectedly rose +0.6 to 109.9, the highest since records for a reunified Germany began in 1991. Also supporting the euro was the unexpected rise in the Dec French business confidence indicator, which rose +3 to 103, a 2-1/2 year high. Pressuring stock prices was the action by Moody's Investors Service to downgrade Ireland's credit rating five notches to Baa1 from Aa2, with a negative outlook. Allied Irish Bank and Bank of Ireland each sank 6.2% as Moody's said Ireland's banks may need to use 10 billion euros ($ 13.3 billion) out of a 25 billion-euro contingency capital fund being set up for the country's banks as part of an international bailout package. Also undercutting market sentiment was the unexpected -7 point decline in Nov UK nationwide consumer confidence to a 20-month low of 45 as the looming budget squeeze dented Britons' outlook for 2011.


•   The Asian markets today closed mixed with Japan down -0.07%, Hong Kong +0.20%, China -0.15%, Taiwan +0.41%, Australia -0.44%, Singapore +0.17%, South Korea +1.04%. The BOJ reported that Japanese companies accumulated a record amount of cash last quarter, funds that have failed to bolster business sentiment or spur economic growth. Non-financial companies held 206 trillion yen ($2.5 trillion) in currency and deposits at the end of Q3, up +5% y/y, the eighth straight quarter cash holdings have increased and the largest amount since quarterly data began in 1979. According to the China Daily newspaper, PBOC Governor Zhou Xiaochuan indicated that turbulence in the global economy is limiting the nation's ability to raise interest rates to counter inflation. The PBOC raised reserve requirements for lenders for the third time in five weeks on Dec 10, while refraining from adding to October's interest rate increase, the first since 2007. The China Daily also said the PBOC Go vernor pledged more measures to curb liquidity and inflation, without being more specific.

Monday, December 20, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up % and Mar S&Ps up +5.50 points at a fresh contract high. Treasuries and commodities are higher; while the euro slipped to a 2-week low against the dollar amid concern Europe's debt crisis is deepening. The ECB said in a report that it has "serious concerns" that Ireland's new banking legislation might threaten the central bank's ability to run liquidity operations. The ECB is concerned that the Irish government may alter the status and the treatment of incumbent bondholders of Irish banks and could raise uncertainty about the collateral, which is used in the ECB refinancing operations. A rally in automakers is leading European stocks higher with Volkswagen AG, Europe's biggest automaker, up 2.8% after saying it expects sales in China to grow 10% to 15% next year, and PSA Peugeot Citroen gained 1.9% after the French automaker said it plans to sell 200,000 vehicles in China in 2011 and 150,00 0 this year. Limiting gains in European stocks was a decline in airline stocks with British Airways Plc down 2.4% and Deutsche Lufthansa down 1.5% as snow in Europe disrupted air travel for a third day. The Confederation of British Industry predicts the BOE will start raising interest rates within 6 months to curb inflation and may increase its benchmark rate by 25 bp every 3 months from Q2 of 2011 until mid-2012.


•   The Asian markets today closed mostly lower with Japan down -0.85%, Hong Kong -0.33%, China -1.46%, Taiwan -0.56%, Australia -0.56%, Singapore -0.64%, South Korea -0.09%, India +0.12%. South Korean stocks retreated and undercut other Asian-Pacific markets after South Korea's armed forces commenced a live-firing drill that drew threats of retaliation from North Korea and the United Nations Security Council couldn't agree on steps to ease tensions in the region. Chinese stocks closed lower, led by declines in pharmaceutical and health-care companies after the Economic Observer reported that the Chinese government may cut medicine prices by 40%. Asian shipping companies also closed lower after the Baltic Dry Index, which measures the cost of shipping commodities, fell for the ninth consecutive session to its lowest level in 4-1/2 months.

Tuesday, December 21, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.28% and Mar S&Ps up +3.90 points. The dollar is weaker and most commodities gained with copper climbing to a 2-1/2 year high. Treasuries are slightly higher as the cost of insuring Portuguese government debt rose to a 3-week high after Moody's Investors Service said it may cut Portugal's bond rating "by a notch or two" because of concerns over "sluggish" economic growth. European stocks received a boost after Chinese Vice Premier Wang Qishan said that China has taken "concrete action" to help ease the European sovereign-debt crisis. The Spanish newspaper Jornal de Negocios reported that China is willing to invest 4 billions euros ($5.3 billion) to 5 billion euros in Portuguese government debt in the first quarter of next year. China's purchases would cover about a third of Portugal's refinancing needs through April, the Jornal said. An increase in M&A activity i s also lending support to stock gains after Royal DSM NV climbed 3% after it agreed to buy Martek Biosciences for $1.09 billion and UPM-Kymmene Oyj surged 7% after Europe's second-biggest papermaker agreed to buy Myllykoski Oyj and Rhein Papier Gmbh for about 900 million euros ($1.2 billion) in total as the industry consolidates. Limiting stock gains was the unexpected drop in the Jan German GfK consumer confidence survey, which fell -0.1 to 5.4.


•   The Asian markets today closed higher with Japan up +1.51%, Hong Kong +1.57%, China +2.23%, Taiwan +0.67%, Australia +0.75%, Singapore +0.22%, South Korea +0.71%, India +0.86%. Asian stocks climbed as tensions between North and South Korea eased after the North failed to respond to military drills near the disputed western sea border. North Korea also agreed to let inspectors visit its uranium-enrichment facilities. As expected, the BOJ left its benchmark rate unchanged at 0.0% to 0.1% and left the size of its asset-buying fund at 5 trillion yen ($60 billion) and its credit program at 30 trillion yen. The BOJ also said following its monetary policy meeting today "the bank will steadily purchase various financial assets and provide longer-term funds" so that "the effects of comprehensive monetary easing spread." Japanese exporters gained as the yen weakened and after St. Louis Fed President Bullard said that recent US economic data "bodes wel l" for 2011.

Wednesday, December 22, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 up +0.08% and Mar S&Ps up +0.40 of a point. The dollar and Treasuries are weaker and most commodities are stronger, with crude over $90 a barrel and copper at a 22-year high. The British pound weakened to a 3-1/4 month low against the dollar after Q3 UK GDP was unexpectedly revised lower to +0.7% q/q and +2.7% y/y from the previously reported +0.8% q/q and +2.8% y/y. Credit-default swaps insuring Greek government debt rose 13 bp to a 1-month high of 983 bp after Fitch Ratings said Greece may have its credit cut to non-investment grade within 6 weeks after a review of the government's "fiscal sustainability." Nov German import prices rose more than expected at +1.2% m/m and +10.0% y/y, with the +10.0% y/y increase the biggest annual gain in 10 years. ARM Holdings Plc climbed 8.5% after Microsoft said it will unveil a version of its Windows operating system that runs battery-powered dev ices, such as tablet computers and other handhelds, on the UK company's technology.


•   The Asian markets today closed mixed with Japan down -0.23%, Hong Kong +0.22%, China -1.05%, Taiwan +0.37%, Australia +0.14%, Singapore +0.14%, South Korea +0.11%, India -0.22%. Chinese stocks closed lower, led by consumer companies and banks, after the government raised fuel prices and sparked concern that inflation will accelerate. Japanese stocks closed lower after a monthly report from Japan's Cabinet Office said the economic rebound is "pausing" and that it is becoming more pessimistic about exports and business sentiment. Nov Japan exports rose +9.1% y/y, weaker than expectations of a +10.3% y/y increase.

Thursday, December 23, 2010...

Overnight Developments

•   European stocks are little changed with the European DJ Stoxx 50 up +0.05 % and Mar S&Ps down -0.90 of a point. The dollar and Treasuries are little changed and most commodities fell after China stepped up scrutiny of property investments. Nov French consumer spending rose a larger-than-expected +2.8% m/m, matching its biggest monthly increase in 7 years, as the pending expiration of a government auto subsidy spurred car sales. Helping to support stock prices is the 7.4% rally in Aixtron AG, which makes equipment used to produce light-emitting diode screens, after Digitimes reported that China's LED industry would more than double the installation of MOCVD equipment next year. Undercutting stock prices and the euro was the action by Fitch Ratings to cut Hungary's long-term credit rating to BBB-, the lowest investment grade and one step above junk, from BBB with a negative outlook. Another negative for stocks was the 1.3% drop in Ericsson after the world's bi ggest maker of mobile-phone networks was cut to "neutral" from "buy" at Goldman Sachs.


•   The Asian markets today closed mostly lower with Japan closed for holiday, Hong Kong -0.62%, China -0.83%, Taiwan +0.43%, Australia +0.43%, Singapore -0.21%, South Korea +0.01%, India -0.16%. Most Asian stocks declined as developers in China fell after the government stepped up scrutiny of real estate investments to curb rising property prices. China's Commerce Ministry ordered local authorities to halt approval of some foreign property investments to curb speculative buying.

Monday, December 27, 2010...

Overnight Developments

•   European stocks are lower with the European DJ Stoxx 50 down -0.84% and Mar S&Ps down -4.80 points. The dollar, Treasuries and most commodities are weaker after China moved to curb inflation with an unexpected interest rate hike on Christmas Day. European automakers led the slide in stock prices, with Daimler AG down 4.0% and Volkswagen AG off by 4.9% as China raised interest rates for the second time in just over 2 months, which may cool China's lending and consumer spending. The newspaper Wolfsburger Allgemeine reported the ECB Executive member Stark said the action by a ratings company to cut Ireland's debt grade by 5 notches is an example of a rating company having been "asleep," and that while some European economies have shown surprisingly strong recoveries, high debt levels don't only affect individual nations and "we are still in an open crisis."


•   The Asian markets today closed mixed with Japan up +0.75%, Hong Kong closed for holiday, China -2.00%, Taiwan +0.35%, Australia closed for holiday, Singapore +0.49%, South Korea -0.43%, India -0.22%. China's Shanghai Stock Index closed lower and dragged down other global stock markets as well after the PBOC on Saturday raised its key interest rates in an attempt to cool inflation. The benchmark 1-year lending rate was increased 25 bp to 5.81% and the benchmark 1-year deposit rate was increased by 25 bp to 2.75%. Profits at Chinese industrial companies rose 49.4% in the 11 months through Nov with sales climbing 31.8%, according to China's statistics bureau. Japanese stocks closed higher despite China's interest rate hike, led by a 1.6% gain in Elpida Memory after the world's third-largest maker of computer-memory chips said it is in talks with Taiwanese semiconductor companies on business mergers and tie-ups.

Tuesday, December 28, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.28% and Mar S&Ps up +2.50 points at a fresh contract high. The dollar index is weaker at a 1-week low and most commodities are higher with copper posting a record high in overnight trade of $4.3075 a pound. Treasuries and bunds advanced after Q3 French GDP was revised down to +0.3% q/q and +1.7% y/y, weaker than the previously reported +0.4% q/q and +1.8% y/y. Helping to lift European stock prices was the 1.6% gain in Alcatel-Lucent after the company agreed to pay $137 million over allegations from US prosecutors that it violated the internal controls and books and records provisions of the Foreign Corrupt Practices Act when it paid bribes in Costa Rica, Taiwan and Kenya.


•   The Asian markets today closed mostly lower with Japan down -0.61%, Hong Kong -0.93%, China -1.77%, Taiwan -0.24%, Australia closed for holiday, Singapore +0.77%, South Korea +0.63%, India -0.02%. China's Shanghai Stock Index fell to a 2-1/2 month low on fears of further interest rate hikes when central bank advisor Li Daokui said adjustments in rates and reserve requirements are "very necessary" in 2011. Japan's Nikkei 225 Stock Index closed lower after Japanese consumer prices declined for the 21st consecutive month in Nov and the nation's unemployment rate remained unchanged at 5.1%. The yen gained to a 1-1/2 month high against the dollar and pressured exporters despite jawboning from Japanese officials. Finance Minister Noda said the yen's recent appreciation has been "one-sided" and he warned of "bold" action against the yen's advance if needed, while Economy Minister Kaieda said, "abrupt yen moves must be avoided." On th e positive side, Nov Japan retail sales increased more than forecast and Nov Japan industrial production climbed +1.0% m/m, its first increase in 6 months.

Wednesday, December 29, 2010...

Overnight Developments

•   European stocks are higher with the European DJ Stoxx 50 up +0.19% and Mar S&Ps up +1.10 points at a fresh contract high. The dollar is weaker and most commodities are mixed in thin, uninspired holiday trade. The ECB reported that Nov European loan growth to the private sector rose +2.0% y/y, the fastest pace since Apr 2009, as the economic recovery boosted demand for credit. The rate of growth in M3 money supply also increased as the Nov Euro-Zone M3 money supply rose +1.9% y/y, its fastest pace of growth in 15 months. Also helping to boost European stock prices is the 3.2% advance in Skanska AB, the Nordic region's biggest builder, after it sold its 50% stake in the PPP highway Autopista Central Chilean venture to Alberta Investment Management Corporation of Canada. Skanska will book a gain after tax of about 5 billion kroner ($731 million).


•   The Asian markets today closed mostly higher with Japan up +0.50%, Hong Kong +1.54%, China +0.55%, Taiwan -0.05%, Australia -0.04%, Singapore +0.76%, South Korea +0.52%, India +1.15%. China's Shanghai Stock Index snapped a 5-day slump and closed higher after the China Securities Journal reported the nation's banking industry might have 800 billion yuan ($120 billion) of profit this year. Asian energy producers gained as crude prices traded just below a 26-month high and metal producers also rallied after copper climbed to a record high yesterday.

Thursday, December 30, 2010...

Overnight Developments

•   European stocks are weaker with the European DJ Stoxx 50 down -0.86% and Mar S&Ps down -1.40 points. Treasuries are lower and the dollar index slipped to a 1-1/2 week low, which boosted most commodities, as copper climbed to a record high. European and US markets remain in holiday mode as they await US economic data later today. The biggest negative factors on stock prices today was year-end profit taking and a decline in Chinese manufacturing growth for the first time in 5 months in December.


•   The Asian markets today closed mostly higher with Japan down -1.12%, Hong Kong +0.13%, China +0.07%, Taiwan +0.47%, Australia +0.32%, Singapore +0.14%, South Korea +0.28%. The Dec HSBC China manufacturing PMI slipped -0.9 to 54.4, its first decline in 5 months, as the government tightened monetary policy, although China's Shanghai Stock INdex did finish higher and RBC Capital Markets raised its 2011 economic growth forecast for China to 9.5% from 8.8%. Japanese stocks closed lower, led by weakness in exporters, as the yen strengthened to a 1-1/2 month high against the dollar. South Korean stocks closed higher and the won strengthened after Nov South Korean industrial production rose +10.4% y/y, its 17th consecutive increase.

Friday, December 31, 2010...

Overnight Developments

•   European stocks are down with the European DJ Stoxx 50 off by -0.44% and Mar S&Ps down -1.80 points. The dollar index weakened for the seventh consecutive session, as it fell to a 2-1/2 week low and boosted most commodities with copper posting a record high. The euro received a boost when German Chancellor Merkel vowed to defend the euro as the "foundation" of her nation's economy amid Europe's debt crisis. Jean-Claude Juncker, head of the Euro-Zone finance ministers, also aided a rally in the euro to a 2-1/2 week high against the dollar when he said the euro is the world's "most solid" currency and that "the euro's existence and its essence are not at risk." The British pound strengthened against the dollar when Dec UK nationwide house prices unexpectedly gained +0.4% m/m, their first increase in 7 months.


•   The Asian markets today closed higher with Japan closed for holiday, China +2.09%, Taiwan +0.73%, Australia, Singapore and South Korea closed for holiday, India +0.59%. China's Shanghai Stock Index closed higher for a third day, led by gains in mining companies and raw material producers, after copper surged to another record high. Taiwan technology companies rose on optimism the US economic recovery will continue after jobless claims dipped to their lowest level in 2-1/3 years. Taiwan's central bank raised the discount rate on 10-day loans to banks by 0.125 percentage points to 1.625% and increased the reserve requirement on some local-currency deposits by foreigners to as much as 90% in an attempt to counter capital inflows which have pushed up the Taiwan dollar more than 10% in the past 6 months.

Monday, January 3, 2011...

Overnight Developments

•   Global stocks are trading higher today on optimism that investors will come out of the box buying for their New Year portfolios. The European DJ Stoxx 50 index is up +0.75% this morning with support from news that the Dec Euro-Zone PMI manufacturing index was revised higher by 0.3 points to 57.1 from 56.8, and was therefore up by 1.8 from 55.3 in November. Germany's Dec manufacturing PMI rose by 2.6 points to 60.7 from November's 58.1. France's Dec manufacturing PMI fell by 0.7 points to 57.2 from 57.9 in November. Italy's Dec manufacturing PMI rose by 2.7 points to 54.7 from November's 52.0. The German Dax this morning is up 1.16% and the French CAC40 is up 1.76%. The UK markets are closed today for a holiday. March S&Ps are up 0.57% this morning, supported by higher European and Asian stocks. Bank of America will take a $2 billion charge in Q4 on home loans and its insurance unit and a $3 billion provision for obligations to repurchase Freddie Mac and F annie Mae.


•   The Asian stock markets that are open today are generally trading higher: Hong Kong +1.74%, Taiwan +0.59%, Singapore +1.43%, South Korea +0.97%, Bombay +0.25%. Asian stocks are also being supported from general optimism for investor buying at the start of the New Year. China's Dec manufacturing purchasing managers index was reported on Saturday at -1.3 to 53.9, which was weaker than the market consensus of -0.2 to 55.0. However, the Dec non-manufacturing index showed strength by rising to 56.5 from 53.2 in November.

Tuesday, January 4, 2011...

Overnight Developments

•   Global stocks are trading mostly higher on continued optimism about global economic growth. The European DJ Stoxx 50 index is up 1.46% and March S&Ps are trading up 4.40 points (+0.35%). The UK PMI index rose to a 16-year high of 58.3 from 57.5, indicating strength in the UK manufacturing sector. In addition, Spanish unemployment fell slightly by 0.25% (10,221 persons). On the negative side, however, German Dec unemployment rose slightly by 3,000 persons due to the cold weather in December, which caused some disruptions in the transportation and construction industries. In addition, French Dec household confidence fell to a 4-month low of -36 from -33 in November due to fiscal austerity measures.


•   The Asian stock markets today are trading mostly higher: Japan +1.65%, Hong Kong +0.99%, China +1.96%, Taiwan -0.31%, Australia -0.06%, Singapore +0.45%, South Korea +0.72%, and Bombay -0.30%. Japanese stocks, which were closed Monday, were boosted today by Monday's US stock market rally (S&P 500 +1.13%) and by strong energy and mining company stocks.

Wednesday, January 5, 2011...

Overnight Developments

•   Global stocks are trading lower with the European Euro Stoxx 50 index down -0.77% and March S&Ps down -7.10 points. The dollar and Treasuries are stronger with the Mar T-note climbing to a 2-week high on carryover support from Tuesday's FOMC minutes of the Dec 14 meeting in which Fed members said they need to keep stimulating the economy. Bund prices also strengthened after the additional yield investors demand to hold 10-year Greek government bonds instead of benchmark bunds widened to a record 974 bp. The euro weakened after John Lipsky, deputy managing director of the IMF, said that risks of more turmoil in sovereign debt markets still "clouded" the outlook for global recovery. Th euro also weakened after the Swiss central bank said it won't accept Irish government bonds due to be repaid between 2011 and 2025 as collateral. On the positive side, the Dec Euro-Zone PMI composite was revised up to 55.5 from the originally reported 55.0 and Nov Spai n industrial production rose +2.3% y/y, its first increase in 3 months.


•   The Asian stock markets today are trading mostly weaker with Japan down -0.17%, Hong Kong +0.38%, China -0.44%, Taiwan -1.68%, Australia -0.58%, Singapore +0.12%, South Korea -0.16%, India -0.96%. The Australian dollar weakened after RBA Board member McGauchie said that the worst flooding in half a century in Australia's northern state of Queensland might have a "significant impact" on the nation's economy as exports are interrupted. Asian exporters weakened on demand concerns after the Fed yesterday warned that the US economy isn't strong enough for it to scale back its bond purchase plans. Raw materials and energy producers also weakened as commodity prices declined and the dollar strengthened. A rally in Asian automakers was a bright spot for stocks after Asia-based car brands accounted for 46.5% of US auto sales in Dec, an increase from 45.7% a year earlier.

Friday, January 7, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.08% and March S&Ps down -0.40 points. The euro sank to a 3-1/2 month low against the dollar on increased sovereign-debt risks after the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments rose to a record high 214. The euro weakened despite comments from PBOC Deputy Governor Yi Gang who said that "the euro and the European financial markets are an important part of the global financial system and were, are and will be one of the most important investment areas for China's foreign-exchange reserves." European bank stocks led declines in the overall market with Banco Santander, Spain's biggest bank, down 3.2% and UniCredit, Italy's largest lender, down by 2.1%. Nov German retail sales unexpectedly declined -2.4% m/m, its biggest drop in 2-1/2 years and Nov German industrial production slid -0.7% m/m, weaker than expectations for a -0.1% d ecline.


•   The Asian stock markets today closed mixed with Japan up +0.11%, Hong Kong -0.42%, China +0.22%, Taiwan -1.13%, Australia -0.42%, Singapore -0.56%, South Korea +0.32%, India -2.44%. The yen weakened to a 2-week low against the dollar, which helped to strengthen Japanese exporters and push the Nikkei 225 Stock Index up to a 7-1/2 month high. China's Shanghai Stock Index closed higher after the Xinhua news agency reported that Vice Premier Li Keqiang said that China's economy expanded at about 10% in 2010 and that retail sales rose +18.5% from a year earlier. India's Sensex Stock Index closed lower for a fourth day, the longest losing streak in 6 weeks, on speculation the RBI may boost interest rates, while the Aussie dollar slid to a 3-week low against the US dollar on speculation that the worst floods in 50 years may slow the Australian economy and prompt the RBA from raising interest rates.

Monday, January 10, 2011...

Overnight Developments

•   Global stocks are trading lower with the European Euro Stoxx 50 index down -0.68% and March S&Ps down -5.90 points. The dollar index climbed to a 1-1/4 month high and the euro slumped to a 3-3/4 month low against the dollar as bond risks increase in Europe. Portugal, Spain and Italy are scheduled to hold their first bond auctions this year after borrowing costs rose at bill sales last week. European sovereign-debt risks continue to pressure stocks as the Markit Group Ltd.'s index of credit-default swaps protecting the debt of 15 western European governments rose 3.5 bp to a record 223. Bank stocks are leading European stock prices lower with Banco Espirito Santo, Portugal's biggest publicly traded bank by market value, down 5.2% on concern that Portugal may be forced to seek a bailout. According to the Handelsblatt newspaper, EU leaders may discuss expanding the 750 billion-euro ($967 billion) rescue fund for indebted nations at their next meeting in Feb, wh ile Der Spiegel magazine said the EU could time such a pledge to coincide with granting aid to Portugal. Limiting declines in European stocks was strong industrial and manufacturing data from France after Nov French industrial production rose +2.3% m/m and Nov French manufacturing production increased +2.2% m/m, both rising more than expected. Also aiding stock prices was an increase in M&A activity after Danisco A/S surged 25% after DuPont agreed to buy the world's largest maker of food ingredients for $5.8 billion.


•   The Asian stock markets today closed mostly lower with Japan closed for holiday, Hong Kong down -0.67%, China -1.85%, Taiwan +0.40%, Australia +0.16%, Singapore -0.98%, South Korea -0.59%, India -2.38%. China reported a smaller-than-expected +$13.1 billion trade surplus for December, its smallest since April, after Dec China exports rose +17.9% y/y to $154.2 billion and Dec imports increased +25.6% to $141.1 billion. China's full-year trade gap narrowed 6% to $183.1 billion even as exports and imports rose to records in Dec, which supports China's case that it is contributing to global economic rebalancing by ramping up domestic consumption. Most Asian stock markets closed lower on speculation central banks in China, India and Indonesia will raise interest rates to curb inflation.

Tuesday, January 11, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +1.08% and March S&Ps up +6.50 points. The main bullish factor for stocks today is the statement from Japanese Finance Minister Noda who said his country plans to use its foreign-exchange reserves, the second largest in the world, to buy more than a fifth of bonds to be issued later this month by the European Financial Stability Facility. Japan now joins China in assisting the Euro-Zone in helping to alleviate the region's debt crisis. The euro also received a boost after Portuguese Prime Minister Socrates said that Portugal doesn't need a bailout from the European Union and its 2010 budget deficit will be lower than forecast. Gains in bank stocks led a rally in European shares after Societe Generala SA upgraded Europe's banking industry to "overweight," citing "attractive" valuations and an improved economy. Also helping to lift stock prices was the +1 point increa se in the Dec Bank of France business sentiment to 108, a 3-year high.


•   The Asian stock markets today closed mixed with Japan down -0.29%, Hong Kong +0.99%, China +0.54%, Taiwan +1.29%, Australia -0.03%, Singapore +0.38%, South Korea +0.41%, India -0.14%. China's foreign-exchange reserves rose in Q4 by $199 billion to a record $2.85 trillion, the biggest quarterly gain since records began in 1996. China's 2010 full-year yuan-denominated lending was 7.95 trillion yuan ($1.2 trillion), compared with the PBOC's target of 7.5 trillion yuan. The rise in currency reserves and the increases in bank lending will put pressure on the PBOC to tighten policies and reign in liquidity and inflation. The Australian dollar slipped to a 1-month low against the US dollar on speculation that a worsening of flooding in Queensland may potentially weigh on economic growth.

Wednesday, January 12, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +1.29% and March S&Ps up +7.40 points at a new contract high. The dollar and Treasuries weakened as European debt risks temporarily subside on speculation European officials are stepping up efforts to solve the debt crisis. European Union Economic and Monetary Affairs Commissioner Rehn said that Europe's bailout fund "should be reinforced and the scope of its activity widened." European bank stocks are leading the market's advances with Banco Santander SA, Spain's biggest lender, up 6.4% and UniCredit SpA, Italy's largest bank, up 5.3%. The euro received a boost today after Portugal raised 599 million euros ($778 million) in the sale of 10-year bonds at an average yield of 6.72%, down from a yield of 6.81% on Nov 10. Also benefiting European stocks and the euro was the larger-than-expected increase in Nov Euro-Zone industrial production which climbed +1.2% m/m, stronger than expectations of a +0.5% m/m increase.


•   The Asian stock markets today closed higher with Japan up +0.02%, Hong Kong +1.54%, China +0.56%, Taiwan +0.38%, Australia +0.29%, Singapore +0.11%, South Korea +0.39%, India +1.76%. According to 2 Japanese officials familiar with the matter, Japan may extend purchases of bonds sold by a European financial aid fund in coming months beyond what Finance Minister Noda said Japan would purchase later this month. China and Japan, with the two largest foreign-exchange reserves in the world, are working to prevent the European sovereign-debt crisis from spreading. Japanese banks closed higher on speculation that BOJ Governor Shirakawa, who was appointed vice chairman of the Bank for International Settlements, will seek to prevent regulations that could hurt the profits of Japanese banks. Asian chip stocks also advanced led by a 3.7% gain in Hynix Semiconductor after the second-largest maker of computer-memory chips said it expects a Q4 operating profit and it will repay 700 billion won ($626 million) of debt this year.

Thursday, January 13, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.10% and March S&Ps down -0.30 of a point. As expected, the BOE kept its benchmark interest rate unchanged at 0.50% and its asset purchase target at 200 billion pounds. Treasuries are little changed and the dollar index fell to a 1-week low after strong demand was seen at a Spanish auction of 5-year bonds today. Investors bid for 2.1 times the 3 billion euros ($3.9 billion) of Spanish 5-year bonds today, more than the previous auction of 5-year bonds on Nov 4 when investors bid for only 1.6 times the amount offered. Spanish banks rallied after the auction with Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain's largest banks, up over 4%. Weakness in retailers undercut European stock prices as Tesco Plc fell 1.6% after Britain's biggest retailer reported holiday sales growth that missed estimates as snowstorms kept Britons from visiting out-of-town supermarkets. Dixons Retail Plc slumped 7.3% after Britain's largest consumer-electronics retailer said earnings for fiscal 2011 are now likely to be "around the bottom end" of analysts' estimates.


•   The Asian stock markets today closed mixed with Japan up +0.73%, Hong Kong +0.47%, China -0.03%, Taiwan +0.12%, Australia +1.50%, Singapore +0.34%, South Korea -0.24%, India -1.80%. Strength in commodity producers pushed Japan's Nikkei 225 Stock Index up to an 8-month high and Asian shipbuilders advanced on speculation orders will increase. Nov Japan machine orders unexpectedly fell -3.0% m/m, weaker than expectations of a +2.0% m/m gain, which signals companies are reluctant to increase spending on factories and equipment because of concern about the strong yen's effect. South Korea's Kospi Stock Index closed lower and the won rose after the BOK raised the 7-day repurchase rate by 25 bp to 2.75%. BOK Governor Kim Choong Soo said inflationary pressures will likely gather pace and the South Korean economy will probably post "sold growth." The rate increase adds to a combined half a percentage-point rise in July and Nov from a record low as South Korea attem pts to tackle price pressures spurred by economic growth and foreign capital inflows.

Friday, January 14, 2011...

Overnight Developments

•   Global stocks are trading weaker with the European Euro Stoxx 50 index down -0.86% and March S&Ps down -4.40 points. The dollar index slipped to a 2-week low and most commodities are lower after China raised reserve requirements for its banks in an attempt to cool its economy. Inflation concerns are also hurting stock prices after ECB Council member Weber said, "the economic outlook has brightened considerably" and that inflation risks "could well move to the upside." Dec Euro-Zone CPI climbed to +2.2% y/y and rose above the ECB's +2.0% limit for the first time in more than 2 years. Citigroup revised its forecast for the ECB's first rate increase to the second half of this year from the first quarter of 2012. A rally in technology companies is limiting declines in European stocks with ASML, Europe's biggest maker of semiconductor equipment, up 1.9% and Infineon Technologies AG up 1.1% after Intel, the biggest maker of computer chips, fore cast Q1 revenue will range from $11.1 billion and $11.9 billion, ahead of analysts' estimates of $10.7 billion.


•   The Asian stock markets today closed mostly lower with Japan down -0.86%, Hong Kong +0.18%, China -1.57%, Taiwan -0.03%, Australia +0.13%, Singapore -0.30%, South Korea +0.96%, India -1.68%. In an attempt to slow expansion in money supply to control price increases, China told banks to set aside more deposits as reserves for the fourth time in 2 months as the PBOC raised banks' reserve ratio requirements by 50 bp to 19.0%. Asian stock markets tumbled today, led by losses in commodity producers, on concern that monetary tightening may slow economic growth. Chinese property developers also sank after the China Securities Journal reported that the deputy director of the pricing department at the National Development and Reform Commission said that China wouldn't rule out introducing new price control measures if inflationary pressures in Q1 are too great.

Tuesday, January 18, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +1.03% and at an 8-1/2 month high and March S&Ps up +1.60 points at a fresh contract high. The dollar index slipped to a 1-3/4 month low and most commodities strengthened after Euro-Zone finance ministers pledged to strengthen the safety net for debt-strapped countries. After a meeting with Euro-Zone finance ministers in Brussels yesterday, European Union Economic and Monetary Affairs Commissioner Rehn said, "We shall improve our current existing financial backstops so that the so-called market forces cannot have even the slightest doubt about our capacity to act even in the most stresses scenarios." Also helping to boost European stocks was the larger-than-expected increase in the Jan German ZEW survey of economic sentiment, which rose +11.1 to 15.4, a 6-month high. European bank stocks rallied after Belgium's finance minister pushed for a "common view" on bank stre ss tests with the IMF and said greater transparency in stress tests can be achieved by having "the same criteria in the US and Europe." Undercutting stock market gains was a 4.5% slump in Apple stock in European trading after CEO Jobs announced he would take a leave of absence to focus on his health. The British pound surged to a 1-3/4 month high against the dollar after Dec UK CPI rose more-than-expected and climbed to a 2-year of +3.7% y/y, which fueled speculation that the BOE may need to raise interest rates.


•   The Asian stock markets today closed mostly higher with Japan up +0.15%, Hong Kong -0.01%, China +0.11%, Taiwan +0.70%, Australia +0.81%, Singapore +0.34%, South Korea -0.16%, India +1.11%. Asian technology stocks closed higher and led the broader market with gains after the Nikkei newspaper reported Elpida Memory, the world's third-largest maker of computer memory chips, will raise prices on its dynamic random-access memory chips by 10% as early as this month. China's Ministry of Commerce reported that foreign direct investment in China rose +17.4% y/y in 2010 to a record $105.7 billion, which underscores global confidence in the Chinese economy and puts pressure on the PBOC's policy of restraining yuan appreciation. India's Sensix Stock Index closed higher after Tata Consultancy Services Ltd., India's biggest software services company, posted record profit.

Wednesday, January 19, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index down -0.30% and March S&Ps off by -1.40 points. The dollar index weakened to its lowest level in 1-3/4 months, which has given most commodities a lift. The British pound strengthened against eh dollar after Dec UK jobless claims unexpectedly fell -4,100 to their lowest level in 21 months, while Nov Spain home sales fell -6.2% y/y, their third month of declines. Greek 10-year government bonds fell, which widened the yield spread with German bunds by 24 bp to 856 bp, after Die Zeit newspaper reported that the German government is considering a plan that would help Greece "restructure" its debt. ECB officials are toning down their threat to raise interest rates, saying financial markets have over-reacted to their change in tone on inflation when ECB Council member Nowotny said that ECB President Trichet's CPI statements were interpreted in a "one-sided-way" and that he &quo t;sees present rates adequate" for the "foreseeable future."


•   The Asian stock markets today closed mostly higher with Japan up +0.36%, Hong Kong +1.10%, China +2.26%, Taiwan +1.09%, Australia +0.68%, Singapore -0.23%, South Korea +0.96%, India -0.60%. Asian technology stocks rose after US bellwethers Apple and IBM reported earnings that exceeded analyst expectations. Phoenix Television reported that an unidentified official with the PBOC said economic figures due tomorrow were leaked and will show Dec China CPI rising +4.6% y/y, right on market expectations, and that China's economy grew 10.3% last year, which would exceed market expectations of 10.2% y/y. Jan Australia consumer confidence plunged -6.4 to 104.6, its lowest level in 7 months on concern that flood damage in Queensland state will weaken the country's economy. The worst floods in 50 years in Australia may cost as much as A$20 billion ($19.9 billion), or about 1.5% of GDP, according to the Australia & New Zealand Banking Group Ltd., and prompt the RBA from raisi ng interest rates in the foreseeable future.

Thursday, January 20, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.53% and March S&Ps down -1.00 point. Commodities are lower on concern that further action by China to curb economic growth will hurt demand for raw materials after China's Q4 economic growth quickened to +9.8% q/q from +9.6% q/q in Q3. European automakers are leading the overall market lower with Volkswagen down 3.5% and Fiat down 5.1% amid speculation that further action by China to cool its economy may hurt demand. Fiat was also pressured after JPMorgan Chase downgraded Italy's biggest carmaker to "underweight" from "neutral." EasyJet tumbled 13% and led airline stocks lower after it forecast a first-half loss of as much as 160 million pounds due to surging fuel costs and exchange rate losses. German bund prices fell as inflation concerns increased when Dec German producer prices rose a more-than-expected +0.7% m/m, its biggest gain in 7 months, and als o rose +5.3% y/y, the biggest annual increase in 2 years.


•   The Asian stock markets today closed mostly lower with Japan down -1.13%, Hong Kong -1.70%, China -3.29%, Taiwan -0.70%, Australia -1.05%, Singapore -1.13%, South Korea -0.54%, India +0.36%. China's Shanghai Stock Index tumbled to a 3-1/2 month low after strong Chinese economic data prompted speculation the country will take further measures to slow its economy and curb inflation. Q4 China GDP increased +9.8% q/q, faster than market expectations of +9.4% q/q, and expanded 10.3% for all of 2010, the fastest pace in 3 years. Dec China CPI rose 4.6% y/y and while it slowed from November's +5.1% y/y pace, for 2010 as a whole, consumer pries rose +3.3% y/y, which breached the government's target of +3.0%. Also undercutting Asian stocks was the weaker-than-expected Dec US housing starts data, which raised concern about the sustainability of the US recovery and demand for Asian goods.

Friday, January 21, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.98% at a 9-month high and March S&Ps up +4.50 points. Commodities strengthened and the euro rose to a 1-3/4 month high against the dollar after German business confidence unexpectedly climbed to an all-time high. The Jan German IFO business climate rose +0.5 to 110.3, the highest since records for a reunified Germany began in 1991. Also boosting the euro and helping to lift the Euro Stoxx 50 to a 9-month high was the +6 point increase in the Jan French business indicator to a 2-3/4 year high of 108. Helping to lift US stocks in early trade is the 2.7% increase in GE after the company late yesterday reported Q4 profit from continuing operations of 36 cents a share, beating analysts' estimates of 32 cents. Undercutting the euro and stock gains was the warning from Fitch Ratings that there is a continuing risk that Euro-Zone nations will have their credit ratings downgraded until fisca l consolidation is secured and the economic recovery is broad-based.


•   The Asian stock markets today closed mostly lower with Japan down -1.56%, Hong Kong -0.53%, China +1.32%, Taiwan -0.75%, Australia -0.59%, Singapore -0.65%, South Korea -1.83%, India -0.20%. In its monthly report released today, Japan's Cabinet Office raised its assessment of the Japanese economy for the first time in 7 months, saying the economy is beginning to show signs of a rebound and that industrial production was beginning to bottom out. The Cabinet Office also said Japan is still in a "mild deflationary phase" and the government will work together with the BOJ to put an end to price declines. China's Shanghai Stock Index closed higher, led by a rebound in commodity producers, while South Korea's Kospi Index closed lower after Morgan Stanley downgraded the nation's stocks.

Monday, January 24, 2011...

Overnight Developments

•   Global stocks are trading weaker with the European Euro Stoxx 50 index down -0.03% and March S&Ps down -0.20 of a point. The euro retreated from a 2-month high after ECB President Trichet hinted that a temporary jump in commodity prices would not prompt the central bank into raising interest rates. In an interview with the WSJ, President Trichet said the ECB wouldn't react to a temporary jump in inflation caused by higher commodity prices as long as it doesn't fuel wage increases, or so-called "second-round effects." Crude oil prices fell in overnight electronic trade after Saudi Arabian Oil Minister Ali al-Naimi said OPEC might boost oil supply this year to meet growing demand in China and India. A drop in automakers, led by a 4.1% slide in Porsche, a 2.8% drop in Volkswagen, and a 3.3% fall in Fiat SpA led the overall market lower after BofA Merrill Lynch Research downgraded Fiat to "underperform" from "neutral." Philips sank 6.4% after the company reported Q4 profit of 463 million euros, below analysts' estimates of 513 million-euros. Limiting stock declines was the unexpected increase in the Jan Euro-Zone PMI composite index, which expanded +0.8 to 56.3, a 6-month high.


•   The Asian stock markets today closed mixed with Japan up +0.69%, Hong Kong -0.31%, China -0.98%, Taiwan -0.07%, Australia +0.64%, Singapore +0.04%, South Korea +0.67%, India +0.76%. The Japanese yen weakened and helped Japanese stocks to close higher after an economic policy paper released today in Tokyo said that authorities stand ready to take action on the yen should the nation's currency appreciate and that "We will continue to take bold action when necessary." Also helping to lift Japanese stocks was the 3.8% advance in Honda Motor after Nomura Holdings upgraded its recommendation on he stock to "buy," citing the outlook for earnings from North America. Chinese stocks finished lower, led by declines in bank shares, after the 21st Century Business Herald reported that China's banking regulator will require lenders to "strictly" control growth in loans to local government financing vehicles in 2011 and will hold bank executives account able for any violations.

Tuesday, January 25, 2011...

Overnight Developments

•   Global stocks are trading lower with the European Euro Stoxx 50 index down -0.61% and March S&Ps down -4.40 points. Treasuries advanced and most commodities fell as crude oil slid to a 1-3/4 month low after the UK economy unexpectedly contracted in Q4. The British pound declined to a 1-1/2 week low against the dollar and stock prices were pressured after Q4 UK GDP fell -0.5% q/q, mostly due to the adverse weather in Dec that hampered services and retailing, although the statistics office said growth would have been "flattish" without the weather's impact. Another negative factor for the market is concern that Spanish banks may need more capital after Spain's Finance Minister said his country's banks will probably need no more than 20 billion euros ($27 billion) of capital. Bankinter SA led a sell off in Spanish banks as it fell 4.8%, while Santander SA, Spain's biggest bank, fell 2.8%. Limiting declines in stocks was the unexpected +0.2 increase in the Feb German GfK consumer confidence survey which rose to a 3-year high of 5.7 along with the action by the IMF to raise their forecast for global economic growth this year to 4.4%, up from an Oct forecast of 4.2%. Despite its upward revision to global growth, the IMF warned that risks to its projections remain "elevated" and that Euro-Zone governments should build a comprehensive plan to prevent sovereign-debt "financial stresses" from spreading to other countries.


•   The Asian stock markets today closed mixed with Japan up +1.15%, Hong Kong -0.05%, China -0.53%, Taiwan +0.49%, Australia +0.46%, Singapore -0.14%, South Korea +0.25%, India -0.95%. Japanese stocks rallied after the BOJ raised its growth forecasts for the year to March to 3.3% from 2.1% and BOJ Governor Shirakawa said "The economy will probably emerge from its slump soon and return to a moderate recovery path." Japanese bonds fell as the BOJ also predicted faster inflation as they raised their forecast for consumer prices to increase +0.3% in the year starting April, up from an Oct prediction of +0.1%, citing strength in overseas demand that will bolster exports and push up commodity prices. Stock prices in India closed lower after India's central bank (RBI) lifted the repurchase rate by 25 bp to a 2-year high of 6.50% and the RBI hiked its inflation outlook to 7.0% by March 31, more than its earlier prediction of 5.5%. RBI Governor Subbarao also warned of further interest rate hikes saying "current growth and inflation trends warrant persistence with the anti-inflationary monetary stance."

Wednesday, January 26, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +1.00% and March S&Ps up +5.50 points. The dollar index slid to a 2-1/2 month low and most commodities gained on speculation the Fed will keep stimulus measures intact when it concludes its 2-day policy meeting today. US stock prices rose after President Obama in Tuesday night's State of the Union speech vowed to create jobs and spur growth. Treasuries weakened as stocks rallied and bund prices were also pressured after Dec German import prices surged +12.0% y/y, the fastest annual pace in 29 years. European automakers are leading stock gains with Porsche SE up over 5% after it reported unit sales in China rose 63% to a record, while Renault SA climbed 3.3% after Barclays Plc boosted its recommendation on the company. The British pound rose against the dollar after BOE policy maker Weale joined fellow policy maker Sentance in voting for a 25 bp interest rate increase this month. In th e minutes of the Jan 13 BOE policy meeting, the BOE voted 6-2-1 to maintain policy at current levels, although officials said the balance of risks to inflation had moved "upwards." England's inflation rate as a whole has exceeded the central bank's 2.0% target for more than a year and BOE Governor King forecast yesterday that the inflation rate may rise above 4.0% in the coming months due to higher commodity prices and an increase in the sales tax.


•   The Asian stock markets today closed mostly higher with Japan down -0.60%, Hong Kong +0.23%, China +1.35%, Taiwan +0.71%, Australia closed for holiday, Singapore +1.25%, South Korea +1.32%, India closed for holiday. Japanese stocks closed lower as a drop in commodity prices weakened raw materials and energy producers, while a stronger yen undercut exporters. Strong earnings results are underpinning most Asian markets as earnings have grown at 44 of the 61 companies in the MSCI Asia Pacific Index that reported results since Jan 10. In an attempt to control soaring real estate prices, China's State Council set the minimum down payment for second home purchases at 60% and Fitch Ratings warned that inflation in China could hinder Asia's economic growth and damage the ratings outlook for countries in the region this year as China battles "hot money inflows" and consumer prices that are near multi-year highs.

Thursday, January 27, 2011...

Overnight Developments

•   Global stocks are trading mostly higher with the European Euro Stoxx 50 index up +0.14% and March S&Ps down -0.10 of a point. The dollar index relinquished early gains and sank to a 2-1/2 month low and European and US stocks fluctuated after Standard & Poor's downgraded Japan's sovereign credit rating for the first time since 2002. S&P also said that it sees Spain, Ireland, Greece and Portugal "stuck in recession," as it forecasted a "three-speed recovery" in Western European economies, with Germany and Finland growing the fastest. The 10-year German bund yield jumped to a 9-1/2 month high and the euro rebounded from losses and rose to a 2-month high against the dollar after ECB Council member Bini Smaghi said policy makers in advanced economies "can no longer afford" to ignore imported inflation. European stocks maintained slight gains, despite the plethora of negative news, on carry-over support from the Fed's actions ye sterday to maintain its stimulus plans. Mining companies and raw material producers rallied as metals prices climbed, while the Jan Euro-Zone business climate indicator rose a larger-than-expected +0.20 to 1.58, the highest level since data began in 1985.


•   The Asian stock markets today closed mixed with Japan up +0.74%, Hong Kong -0.27%, China +1.61%, Taiwan +0.52%, Australia -0.04%, Singapore -0.03%, South Korea +0.14%, India -1.50%. The Japanese yen fell to a 2-week low against the dollar after Standard & Poor's cut Japan's credit rating one step to AA-, with a stable outlook, saying the government lacks a "coherent strategy" to address a 943 trillion yen ($11 trillion) debt burden, the world's largest. Asian stocks held gains after the Fed maintained efforts to stimulate the US economy and US new home sales topped forecasts, which bolstered confidence in a global recovery. Saying rising real-estate prices are the "biggest danger," Li Daokui, academic advisor to the PBOC, said that China needs to extend interest-rate increases and allow the yuan to gain by about 5.0% annually to combat inflation and avoid fueling asset bubbles. Australian stocks closed slightly lower after Prime Minister Gilla rd said the government would apply a one-off levy to most income earners from July 1 to fund rebuilding after major floods decimated Queensland state.

Friday, January 28, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index down -0.02% and March S&Ps unchanged. The dollar and Treasuries are weaker after Treasury Secretary Geithner said the US fiscal situation is "unsustainable" in the long run and Moody's Investors Service said its timeframe for possibly placing a negative outlook on the Aaa rating of US government bonds is shortening as the deficit widens. Leading losses in European stocks is weakness in mining companies with BHP Billiton down 2% and Rio Tinto down 1.5% after European basic-resource stocks were downgraded to "neutral" from "buy" at Royal Bank of Scotland Group Plc. Also undercutting stock prices was the larger-than-expected decline in Jan UK GfK consumer confidence which plunged -8 points to a 22-month low of -29 after UK Prime Minister Cameron raised the value-added tax this month to 20% from 17.5% and hurt consumers' appetite for spending. Limiting losses in eq uity markets is the gain in Bayerische Motoren Werke AG (BMW), which advanced 2.5% after the stock was added to Goldman Sachs Group's "conviction buy" list.


•   The Asian stock markets today closed mixed with Japan down -1.13%, Hong Kong -0.68%, China +0.34%, Taiwan +0.47%, Australia -0.65%, Singapore +0.31%, South Korea -0.27%, India -1.54%. Japanese stocks closed lower, led by a sell-off in bank stocks, after Japan had its credit rating cut to AA-, which is negative for banks that hold government bonds. Consumer spending in Japan also weakened after Dec Japan overall household spending plunged -3.3% y/y, its biggest decline in 1-3/4 years. Japanese stocks fell despite the unexpected -0.2 point drop in Dec Japan jobless rate to 4.9%, the lowest in 10 months. A rally in Asian semiconductor stocks limited declines in Asia-Pacific markets after Hynix Semiconductor, the world's second-largest maker of computer-memory chips, rose 5.4% after Mirae Asset Securities and Meritz Securities raised their share-price estimates on the stock, citing an expected price recovery in computer-memory chips.

Monday, January 31, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.53% and March S&Ps up +1.60 points. The dollar and Treasuries are weaker as the US stock market recovers slightly, despite the continuing civil unrest in Egypt, which has prompted the closure of banks and the stock market there for a second day. European banks are leading stocks lower in Europe after the BIS reported that international banks have lent $49.3 billion to Egyptian lenders, with European banks having the most exposure with $40.3 billion of loans outstanding. European travel companies and airlines also declined on concern that earnings at those companies will fall because of political instability in Egypt. Weakness in Dec German retail sales is another negative for the market after sales unexpectedly fell -0.3% m/m, the second month of declines. German bund prices also weakened after the Jan Euro-Zone CPI estimate rose +2.4% y/y, more than expected and a 2-1/4 yea r high.


•   The Asian stock markets today closed mostly lower with Japan down -1.18%, Hong Kong -0.72%, China +1.31%, Australia -0.44%, Singapore -1.55%, South Korea -1.91%, India -0.37%. Japan's Nikkei 225 Stock Index tumbled to a 1-1/2 month low as the Egyptian crisis undercuts the earnings potential of Japanese companies doing business there. Nissan Motor closed 2.2% lower after closing its factory in Egypt, while Chiyoda, a Japanese engineering company that counts the Middle East as its main market by sales, fell 2.5%. Japanese stocks fell despite industrial production rising more than expected. Dec Japan industrial production climbed +3.1% m/m, the largest increase in 11 months, driven by higher output in the transport equipment and electronic parts industries. Japanese industrial output gained +15.9% for all of 2010, the first increase in 3 years, led by strong demand from the US and China.

Tuesday, February 1, 2011...

Global stocks are trading higher with the European Euro Stoxx 50 index up +0.93% and March S&Ps up +6.40 points. The dollar index fell to a 2-1/2 month low and copper soared to a record on the outlook for global economic growth. The crisis continues in Egypt with its stock market closed again today and for the rest of the week, although concerns eased somewhat after the Egyptian military said it wouldn't fire on anti-government demonstrators as it recognized "the legitimacy of the people's demands." German unemployment in Jan fell -13,000, more than expected, to 3.135 million, the lowest in 18 years as the jobless rate slipped -0.1 to 7.4%. Unemployment in the Euro-Zone also declined after the Dec Euro-Zone unemployment rate slipped -0.1 to 10.0%. All of the Jan European PMI manufacturing indexes were unexpectedly revised higher with the Jan Euro-Zone PMI manufacturing index revised up +0.4 to 57.3, a 9-month high. Inflation concerns helped to boo st the euro to a 2-1/4 month high against the dollar after Dec French producer prices rose +5.4% y/y, more-than-expected and a 2-1/4 year high.


The Asian stock markets today closed mostly higher with Japan up +0.36%, Hong Kong +0.15%, China +0.03%, Australia -0.04%, Sngapore +0.16%, South Korea +0.12%, India -1.67%. The Jan China PMI manufacturing index slipped -1.0 point to 52.9 as it remains above the 50.0 level and continues to show expansion, while Jan China home prices rose +1.0% m/m, the biggest month-on-month gain in 6 months, according to SouFun Holdings. Asian mining companies rallied as copper posted a record high and commodity producers also gained on optimism that further economic growth would boost demand for raw materials. In Japan, the yen rallied to a 4-week high against the dollar and Honda Motor closed 2.0% higher after forecasting net income of 530 billion yen ($6.5 billion) in the year ending Mar 31, compared with an earlier estimate of 500 billion yen. The Australian dollar strengthened above parity with the US dollar after Australia's central bank refrained from raising interest rates a nd RBA Governor Stevens characterized the outlook for the world economy as "strong going into 2011" and said it will "look through" the near-term impact on growth and prices of flooding across Australia's east coast.

Wednesday, February 2, 2011...

Overnight Developments

•   Global stocks are trading mostly higher with the European Euro Stoxx 50 index up +0.48% at a 9-1/2 month high and March S&Ps down -0.20 of a point. The dollar index slumped to a 2-3/4 month low and most commodities are higher with copper posting yet another record high. Concerns that the political turmoil in the Middle East will spread eased as Egyptian President Mubarak said he wouldn't seek a new term. The euro rose to a 2-3/4 month high against the dollar and bond-risk premiums for Spain, Portugal, Italy and Belgium narrowed for a third day on speculation that a summit this Friday in Brussels by European leaders will lead to stronger efforts to end the sovereign-debt crisis. European Union President Rompuy said that leaders will set out a "clear path" to forging a "comprehensive package" to stamp out the debt crisis by the end of March. An increase in inflation pressures is also boosting her euro after Dec Euro-Zone PPI rose more than expected at +5.3% y/y, its biggest annual increase in 2 years.


•   The Asian stock markets today closed mostly higher with Japan up +1.78%, Australia +0.93%, India +0.38%. Stock markets in China, Hong Kong, South Korea and Singapore are shut from today for the Lunar New Year. The Asian stock markets that were open rallied on upbeat earnings results along with strength in the US manufacturing sector that boosts confidence in the global economic recovery. BOJ board member Kamezaki said today that Japan's economic slowdown is probably temporary and is showing signs of picking up due to growing exports and a weaker yen. He also added that any rebound in Japan's growth probably wouldn't be strong because companies and households remain unwilling to spend "actively" because of uncertainties over the outlook.

Thursday, February 3, 2011...

Overnight Developments

•   Global stocks are trading weaker with the European Euro Stoxx 50 index down -0.36% and March S&Ps down -1.50 points. The dollar strengthened and crude oil rallied after protests in Egypt turned violent and unrest spread to Yemen with tens of thousands of Yemeni pro- and anti-government protesters flooding the capital city of Sanaa. The euro weakened ahead of the conclusion of this morning's ECB meeting and after retail sales in the Euro-Zone unexpectedly declined for a second month in December. The Dec Euro-Zone retail sales fell -0.6% m/m and -0.9% y/y, much weaker than expectations of +0.5% m/m and +0.2% y/y, with the -0.9% drop the biggest year-over-year decline in 13 months. The British pound climbed to a 2-3/4 month high after the Jan UK PMI services index increased a more than expected +4.8 to an 8-month high of 54.5, which bolstered speculation the BOE has room to raise interest rates this year. Limiting losses in European stocks and helping send copp er prices to a record high of $4.5800 a pound was the unexpected +0.7 point upward revision to the Jan Euro-Zone PMI composite index to a 9-month high of 57.0.


•   The Asian stock markets today closed mixed with Japan down -0.25%, Australia +0.50%, India +1.98%. The rest of the Asian-Pacific markets remained closed for the Lunar New Year holiday. Japanese stocks closed lower as company earnings missed estimates and violence flared among protesters in Egypt's 10th day of unrest. Panasonic, the world's largest maker of plasma televisions, fell 3.2% after it reported Q3 net income of 40 billion yen ($491 million), missing analysts' estimates of 44.7 billion yen. Australian stocks closed higher, led by gains in raw material and energy producers, after crude oil gained on violence in Egypt and copper climbed to a record high. Sugar prices remained near a 30-year high after Tropical Cyclone Yasi severely damaged sugar cane plantations in Australia, while Chinese Premier Wen Jiabao said a drought in China may cut grain output and undermine government efforts to stabilize prices.

Friday, February 4, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.25% and March S&Ps up +0.60 of a point. The dollar and Treasuries are little changed and stock prices are fluctuating ahead of the release of the Jan US payrolls report later this morning. The cost of insuring European sovereign debt fell as Euro-Zone leaders are meeting in Brussels today to discuss solutions to the region's debt crisis. A rally in European bank stocks is leading the overall market higher today with UniCredit, Italy's largest bank, up 2.8% and Barclays Plc, the UK's third-biggest, up 2.0% after Goldman Sachs Group upgraded European banks to "overweight." The euro weakened and expectations for ECB interest rate increases were pushed back after Austria's Der Standard newspaper reported that ECB Council member Nowotny said "The ECB anticipates 1.8% inflation" next year. Although the ECB isn't supposed to publish its 2012 inflation forecast until nex t month, Nowotny's comments suggest the ECB still expects inflation to fall back below its 2.0% limit over its policy-relevant time horizon, which reduces pressure on the central bank to increase interest rates.


•   The Asian stock markets today closed mostly higher with Japan up +1.08%, Australia +0.87%, India -2.39%. The rest of he Asia-Pacific markets remain closed for the Lunar New Year holiday. Better-than-expected earnings results pushed Japanese stocks higher with Sony closing up 1.8% after it reported Q3 profit of 72.3 billion yen ($886 million), beating analysts' estimates of 65.9 billion yen. Softbank Corp., the exclusive provider of Apple's iPhone in Japan, gained 3.6% after it raised its profit forecast and Nippon Steel, Japan's largest steelmaker, jumped 9.1% on plans to combine with Sumitomo Metal Industries Ltd., which surged 16%. India's Sensitive Stock Index finished sharply lower after Prime Minister Singh said inflation posed a "serious threat" to growth, which ramped up expectations for further interest rate increases from the RBI.

Monday, February 7, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.80% at a 1-year high and March S&Ps up +4.10 points at a contract high. The dollar and most commodities are higher with copper posting another record high of $4.6350 a pound. Global stock markets received a boost on an easing of tensions in Egypt after Egyptian Vice President Suleiman promised, within a month; to draft a list of constitutional changes needed for free elections. European stocks were also bolstered after the Feb Euro-Zone Sentix investor confidence climbed a more-than-expected +6.1 to a 3-1/4 year high of 16.7. The euro slipped to a 2-week low against the dollar after Dec German factory orders fell a more-than-expected -3.4% m/m. The euro had gained earlier against the dollar after hawkish comments from ECB Council member Gonzalez-Paramo who said that interest rates would have to rise if inflation doesn't start to decline by the end of the year.


•   The Asian stock markets today closed mostly higher with Japan up +0.46%, Hong Kong -1.49%, China and Taiwan closed for the Lunar Mew Year holiday, Australia +0.12%, Singapore -0.59%, South Korea +0.53%, India +0.16%. Japanese stocks gained as company earnings rose and the US unemployment rate unexpectedly declined, which boosts confidence in the global economy. A weaker yen lifted exporters and raw-material producers gained as copper climbed to a record, which helped push the Nikkei 225 Stock Index to a 9-month high. Australian retailers weakened after Myer Holdings Ltd., Australia's largest department store, plunged 11% when the company cut its profit forecast for 2011. Stocks in India advanced and the rupee strengthened after India's Central Statistical Organization said that India's GDP will rise +8.6% in the year ending March 31. That would be the strongest expansion in 3 years and stronger than the +8.0% expansion of the previous 12 months.

Tuesday, February 8, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index down -0.55% and March S&Ps up +0.20 of a point. The dollar is lower and commodities are mixed, with crude oil sliding to a 1-week low. Global stocks were undercut after China raised interest rates for the third time since mid-October. Adding pressure to European stock markets was the unexpected decline in Dec German industrial production, which fell -1.5% m/m, its second monthly drop and the biggest decline in 20 months. Limiting losses in European stocks was the rally in automakers with BMW up 3.4% and PSA Peugeot Citroen up 3.7% after Toyota Motor, the world's biggest automaker, raised its full-year profit forecast by 40% as sales in Asia and other emerging markets beat company estimates. Also lifting stock prices was the +3 point increase in the Jan Bank of France business sentiment to a 3-1/4 year high of 110.



•   The Asian stock markets today closed mostly lower with Japan up +0.41%, Hong Kong -0.29%, Taiwan -0.37%, Australia +0.45%, Singapore -0.21%, South Korea -0.63%, India -1.45%. China raised its key interest rates after the close of Asian markets today. The benchmark 1-year lending rate will increase by 25 bp to 6.06% from 5.81% and the deposit rate will climb to 3.00% from 2.75%, effective tomorrow. The PBOC lifted rates on the last day of the weeklong Lunar New Year holiday and before a report next week that may show consumer prices rose +5.3% y/y in Jan. Japan's Nikkei 225 Stock Index climbed to its best level in 9 months after the Dec Japan current account surplus widened +30.5% y/y as the global economy boosted demand for Japanese goods. Dec exports increased +14.0% y/y while imports advanced +12.8% y/y, and for all of 2010 Japan's current account surplus winded +28.5% to 17.1 trillion yen, the first increase in 3 years.

Wednesday, February 9, 2011...

Overnight Developments

•   Global stocks are trading lower with the European Euro Stoxx 50 index down -0.33% and March S&Ps down -4.20 points. The dollar and Treasuries are firmer and commodities are mixed ahead of Fed Chairman Bernanke's testimony before the House Budget Committee later this morning. Inflation fears are sending the market lower today after China's interest rate hike yesterday along with soaring food inflation in the UK. The British Retail Consortium reported that Jan UK food prices rose +4.6% y/y, their fastest pace in 19 months and up from a +4.0% y/y pace in Dec. Also undercutting European stocks was the smaller-than-expected increase in Dec German exports, which rose +0.5% m/m, weaker than expectations of a +1.0% m/m increase. Dec German imports were weak as well after they unexpectedly fell -2.3% m/m, weaker than expectations of a +0.8% m/m increase. The euro trimmed gains and the 10-year German bund yield advanced to an 11-month high after Reuters reported that well-known monetary policy hawk Axel Weber will drop out of the race to succeed Jean-Claude Trichet as head of the ECB.


•   The Asian stock markets today closed mostly lower with Japan down -0.17%, Hong Kong -1.36%, China -1.18%, Taiwan -1.15%, Australia +0.29%, Singapore -1.09%, South Korea -1.19%, India -1.03%. Asian stocks declined as the market reacted to China's action to hike interest rates yesterday after the Asian markets were closed. Chinese stocks closed lower as exchanges reopened following a weeklong holiday for the Lunar New Year. Chinese homebuilders, real-estate companies and commodity producers led the market lower on demand concerns following the Chinese rate hike. Limiting losses in Japanese stocks was strength in exporters after the yen slipped to a 1-1/2 week low against the dollar and after Toyota Motor surged 5.2% when it boosted its profit forecast.

Thursday, February 10, 2011...

Overnight Developments

•   Global stocks are trading lower with the European Euro Stoxx 50 index down -0.86% and March S&Ps down -7.70 points. As expected, the BOE held its benchmark interest rate at 0.50% and maintained its asset purchase plan at 200 billion pounds. The dollar rallied and most commodities fell on an increase in European sovereign debt concerns after the yields on Portuguese government bonds rose to records. The yield on the 10-year Portuguese bond climbed to 7.64%, the highest since the introduction of the euro in 1999, before the yield backed off to 7.36% when the ECB came in to purchase Portuguese debt. A nearly 8% plunge in Cisco Systems in after-hours trading is leading US stock futures lower after the company posted a gross margin that missed analysts' estimates. In Europe, Air France sank 6.8% after it reported an unexpected loss in Q3 of 46 million euros and cut its full-year forecast, while Credit Suisse fell 4.3% after saying that Q4 net income rose to 841 mi llion francs ($873.1 million), below analysts' estimates of 928 million francs. Limiting European stock declines was the 3.9% gain in Deutsche Boerse as the company's acquisition of NYSE Euronext would create the world's biggest exchange operator with a combined host of publicly traded companies worth about $15 trillion, or 28% of global stock market value, according to Bloomberg data.



•   The Asian stock markets today closed mostly lower with Japan down -0.11%, Hong Kong -1.97%, China +2.08%, Taiwan -1.89%, Australia +0.20%, Singapore -1.50%, South Korea -1.97%, India -0.74%. Comments yesterday from Fed Chairman Bernanke that US unemployment may remain high "for some time" is undercutting Asian stocks on concern that the US recovery may struggle and demand for Asian goods may wane. Dec Japan machine orders rose +1.7% m/m, their first increase in 4 months, but weaker than the +5.0% m/m expected. Losses in Japanese stocks were limited as the yen fell to a 1-1/2 week low against the dollar and lifted exporters. China's Shanghai Stock Index closed higher as investors snapped up bargains in banks and property shares that tumbled following the recent sell off sparked by China's interest rate hike.

Friday, February 11, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.58 % and March S&Ps down -5.80 points. The dollar and Treasuries are higher on a flight-to-safety after Egyptian President Mubarak refused to resign and vowed to stay on until elections in Sep. Mubarak handed day-to-day powers to Vice President Suleiman and the Egyptian army's supreme military council said it will guarantee Mubarak's plans for a peaceful transition to free and fair elections within the set timetable, much to the disappointment of investors who had hoped for a quick resolution to the Egyptian crisis. Oil prices also advanced as Mubarak's refusal to resign stoked concern that renewed turmoil may disrupt oil supplies through the Suez Canal. Stocks prices were also pressured by a 9.9% drop in Nokia Oyj after the world's biggest maker of mobile phones said it's forming a software partnership with Microsoft, a sign that its own platform strategy has faltered in its challenge to take on Apple's iOS and Google's Android platforms. L'Oreal SA tumbled 5.2% after the world's largest cosmetics maker reported 2010 net income of 2.24 billion euros, below analysts' estimates of 2.27 billion euros.


•   The Asian stock markets today closed mixed with Japan closed for holiday, Hong Kong +0.53%, China +0.54%, Taiwan -2.57%, Australia -0.68%, Singapore -0.84%, South Korea -1.58%, India +1.52%. Dec India industrial production rose +1.6% y/y, smaller than expectations of +2.0% y/y and the weakest pace in 20 months, which adds to concern the Indian economy may slow after the RBI raised interest rates to a 2-year high last month. In South Korea, the BOK unexpectedly left interest rates unchanged, although BOK Governor Soo said the pause may only be temporary, saying the central bank will move at its own pace in "normalizing" rates. The market had been expecting a 25 bp rate increase in the 2.75% 7-day repurchase rate after Jan South Korean consumer prices rose 4.1% y/y, breaching the central bank's 4.0% ceiling.

Monday, February 14, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.20% and March S&Ps down -1.40 points. The dollar index rose to a 3-week high and copper surged after China's Jan exports increased more than expected. The euro slipped to a 3-week low against the dollar ahead of a meeting of Euro-Zone finance ministers in Brussels later today. Global stocks received a boost after Egypt's ruling army council said it aims to transfer power within 6 months to a democratically elected government. Gains in European stocks were limited after Dec Euro-Zone industrial production unexpectedly declined -0.1% m/m along with a Reuters report that a rescue plan for WestLB AG, the German state-owned bank bailed out during the financial crisis, may founder. US stock prices were undercut in European trading after Wal-Mart slid 1.4% when JPMorgan Chase cut its recommendation on the stock to "neutral" from "overweight."



•   The Asian stock markets today closed higher with Japan up +1.13%, Hong Kong +1.28%, China +3.15%, Taiwan +0.88%, Australia +1.12%, Singapore +0.88%, South Korea +2.16%, India +2.67%. China's Shanghai Stock Index advanced to a 1-1/2 month high after its trade balance narrowed to +$6.5 billion, the smallest in 9 months. Jan China exports rose more than expected at +37.7% y/y and Jan imports surged +51.0% y/y, signaling strength in the Chinese economy that should benefit the global economy as well. Japan's Nikkei Stock Index soared to a 9-1/4 month high despite its economy contracting for the first time in 5 quarters. Q4 Japan GDP fell -0.3% q/q and -1.1% y/y, but the figures were stronger than the -0.5% m/m and-2.0% y/y expected as Japan's Cabinet Office said gross domestic product fell because of slowing exports and fading government stimulus programs. The Cabinet Office also said that China's $5.88 trillion GDP surpassed Japan's $5.47 trillion GDP in 2010, which pus hes China ahead of Japan as the world's second-largest economy.

Tuesday, February 15, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.36% and March S&Ps down -0.20 of a point. The dollar and Treasuries are weaker after German investor confidence advanced for a fourth month in Feb. The Feb German ZEW survey of economic sentiment rose +0.3 to a 7-month high of 15.7, although it was weaker than expectations of +4.6 to 20.0. The European economy expanded less-than-expected in Q4 as cold weather curbed output in France and Germany. The Q4 Euro-Zone GDP expanded +0.3% q/q and +2.0% annualized, slightly weaker than expectations of +0.4% q/q and +2.1% annualized. Jan UK consumer prices rose an as-expected +0.1% m/m and +4.0% y/y. The +4.0% y/y increase is a 2-year high and double the BOE's 2.0% target, although BOE Governor King said an acceleration in inflation is only temporary and raising interest rates "quickly" risks undermining the economic recovery.



•   The Asian stock markets today closed mixed with Japan up +0.20%, Hong Kong -0.96%, China -0.05%, Taiwan +0.42%, Australia -0.10%, Singapore -0.77%, South Korea -0.23%, India +0.39%. Japan's Nikkei 225 Stock Index climbed to a 9-1/4 month high after the BOJ raised its economic assessment for the first time in 9 months. Japan's central bank kept the benchmark interest rate between 0.00% and 0.10% and the size of its asset-purchase program at 5 trillion yen ($60 billion) following its policy meeting and said, "Japan's economy is gradually emerging from the current deceleration phase." Jan China consumer prices rose +4.9% y/y, weaker than expectations of +5.4% y/y, while Jan China new lending climbed +18.3% y/y to 1.04 trillion yuan ($157.7 billion), the third-highest Jan total, although slightly weaker than expectations for new loan growth of 1.2 trillion yuan. In a research report published in the China Securities Journal, China's State Information Center sai d the PBOC might raise interest rates again in Q1 because of pressure from rising prices.

European Stocks / The Asian Markets...

Banks push European shares to 29-mth closing high.
Tue Feb 15, 2011 12:58pm EST

* FTSEurofirst 300 closes 0.2 pct higher

* Barclays gains on forecast-beating results

* Danone rises as sales beat expectations

* Fall in copper price weighs on miners


LONDON, Feb 15 (Reuters) - European shares edged to a fresh 29-month closing high on Tuesday, as Barclays (BARC.L) led the banking sector up on the back of forecast-beating profits.

Gains for key indexes were limited as miners gave up some of their recent advances.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares rose 0.2 percent to 1,180.05 points, its highest close since early September 2008.

British bank Barclays gained 5.8 percent after it reported a 32 percent rise in annual earnings and detailed how it would boost returns.

Other banks to rise included Societe Generale (SOGN.PA), up 2.2 percent, ahead of its results on Wednesday. BNP Paribas (BNPP.PA), Deutsche Bank (DBKGn.DE), Intesa SanPaolo (ISP.MI) and UniCredit (CRDI.MI) rose between 2.2 and 3.3 percent.

"Barclays was reassuring in how they said they will achieve a 15 percent return on capital," said Colin McLean, managing director at SVM Asset Management in Edinburgh.

"But markets are more likely to have a setback before they go higher. A lot of cash has been committed to the market and that will be exhausted in the short term.

French food group Danone (DANO.PA) rose 3.3 percent after 2010 sales beat forecasts and it set higher 2011 sales goals than analysts expected.

Heavyweight miners were among the biggest losers. Copper fell from record highs on concerns further monetary tightening in China may affect base metals demand, and as worries about the political situation in the Middle East took the edge off risk appetite.

BHP Billiton (BLT.L), Rio Tinto (RIO.L) and Xstrata (XTA.L) fell between 2.2 and 2.8 percent. Anglo American (AAL.L) slid 3.8 percent after Citigroup downgraded it to "hold" from "buy".

COMFORT

Deutsche Boerse (DB1Gn.DE) fell 2.4 percent after providing further detail on its takeover of NYSE Euronext (NYX.N), down 2.8 percent, to create the world's largest exchange operator in a deal worth $10.2 billion.

On Wall Street, the S&P .SPX was down 0.3 percent around the time European bourses were closing. Sales at U.S. retailers increased less than expected in January amid weak receipts at building material and restaurant outlets, a government report showed.

The euro zone economy ended last year with stable growth, missing expectations as expansion rates in the region's three largest nations fell short of forecasts, while Greece and Portugal contracted.

Earlier, the market got some support after the German ZEW economic sentiment indicator rose in February, indicating confidence in the country's recovery.

"We had some reassurance from the ZEW figures, there had been comfort in the Chinese inflation figures and UK inflation data was as expected," Philip Isherwood, European equities strategist at Evolution Securities, said.

UK consumer price inflation was in line with economists' forecasts. Earlier, Asian markets had been steady after Chinese inflation came in lower than forecast in the year to January.

Across Europe, the FTSE 100 .FTSE index fell 0.4 percent, while Germany's DAX .GDAXI and France's CAC 40 .FCHI rose 0.1 and 0.3 percent respectively.

Wednesday, February 16, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.41% at a 2-1/3 year high and March S&Ps up +4.30 points at a new contract high. The dollar is lower while crude oil is higher as reports that civil unrest has spread to Libya, the holder of Africa's largest oil reserves. Increased M&A activity along with strong earnings results continue to propel stock prices higher. Sanofi-Aventis SA climbed 3.8% after France's biggest drug maker agreed to buy Genzyme for at least $20.1 billion, while Dell is up over 6% in European trading after the company reported profit, excluding some costs, of 53 cents a share in the quarter that ended Jan 28, well ahead of analysts' estimates of 37 cents. Bunds, Gilts and Treasuries rallied after BOE Governor King said risks to UK inflation are "equally balanced" and that inflation will fall back toward the central bank's 2.0% target by 2012 and below it within 2 years, along with saying he has no t laid the groundwork for an interest rate increase. Jan UK jobless claims unexpectedly increased by 2,400 while Jan UK nationwide consumer confidence fell a bigger-than-expected 7 points to 47 as rising taxes and inflation put pressure on household budgets.



•   The Asian stock markets today closed mixed with Japan up +0.57%, Hong Kong +1.12%, China +0.96%, Taiwan -0.10%, Australia -0.02%, Singapore +0.46%, South Korea -1.07%, India +0.15%. Japan's Nikkei 225 Stock Index soared to a 9-1/4 month high after Nomura Research Institute predicted that Japan will "break out of its current lull" in the first half of 2011, instead of its earlier prediction of the second half. Asian technology stocks closed led by a 3.6% gain in Elpida Memory, Japan's number one maker of computer memory chips, after Dell reported stellar earnings. Australian stocks finished lower after Moody's Investors Service warned that Australia's four biggest banks and their New Zealand unit may have their ratings cut on concern that access to overseas markets for funding will be "significantly restrained." Moody's said that funds from capital markets account on average for 43% of the lenders' liabilities, making them vulnerable to shifts in i nvestor confidence.

Thursday, February 17, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.20% and March S&Ps down -1.50 points. European and US stocks are fluctuating on either side of unchanged ahead of reports on US consumer prices and jobless claims later this morning. The dollar is little changed and commodities are mixed with cotton continuing its parabolic rise to over $2.00 a pound, while copper slumped to a 2-week low after LME copper inventories surged to a 6-month high. Strong earnings results continue to boost the stock market with 72% of the 378 companies in the S&P 500 that have reported earnings since Jan 10 have beaten estimates, while in Europe 57% have beaten forecasts. The yield on Spanish bonds rose and the gap between Spanish and German 10-year borrowing costs widened after Spain sold 3.5 billion euros of bonds, less than the 4 billion targeted by Spain's debt office. Demand for the 10-year debt fell to 1.54 from a bid-to-cover ratio of 1.67 at a p revious auction in Dec.



•   The Asian stock markets today closed mixed with Japan up +0.26%, Hong Kong +0.63%, China -0.08%, Taiwan -0.33%, Australia +0.17%, Singapore -0.38%, South Korea -0.51%, India +1.13%. Japan's Nikkei 225 Stock Index advanced to a 9-1/4 month high and China's Shanghai Stock Index climbed to a 3-month high after the Jan 25-26 FOMC minutes showed policy makers raised their projections for US economic growth this year, which should translate into strong demand for Asian goods. Foreign direct investment in China surged +23.4% y/y in Jan, stronger than expectations of +17.2% y/y, which adds to record inflows last year that are complicating Chinese government efforts to reduce excess liquidity and reign in inflation.

Friday, February 18, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.10% and March S&Ps down -0.70 of a point. Global stock markets and commodity prices were undercut after China raised banks' reserve requirements for the second time this year and just 10 days after it raised interest rates in an attempt to cool inflation and curb property-price gains. Inflation concerns were heightened after Jan German producer prices rose a more-than-expected +1.2% m/m and +5.7% y/y, the fastest pace of increase in 2-1/4 years. The euro weakened after Feb France business confidence unexpectedly declined -2 to 106, while the British pound climbed to a 2-week high against the dollar after Jan UK retail sales rose by almost four times expectations. Jan UK retail sales with auto fuel jumped +1.9% m/m and +5.3% y/y as consumer spending rebounded after the coldest UK December in a century. The markets will be awaiting any comments to come from the Group of 20 pol icy makers that begin their 2-day meeting today in Paris to discuss imbalances that pose a risk to the global economy.



•   The Asian stock markets today closed mixed with Japan up +0.06%, Hong Kong +1.26%, China -1.05%, Taiwan +1.84%, Australia -0.03%, Singapore +0.13%, South Korea +1.75%, India -1.60%. In an attempt to tackle accelerating inflation and rising property bubbles, the PBOC raised banks' reserve ratios by 50 bp for the second time this year. Reserve ratios will now be 19.5% for China's biggest banks starting Feb 24. PBOC Governor Xiaochuan said in Paris after the reserve-ratio announcement that policy makers may also use means "including rates and currency" to tackle inflation. The renminbi rallied to a 17-year high ahead of the G-20 summit in Paris as China allows the yuan to move higher to placate critics of its foreign exchange policy. The yuan reached 6.5721 per dollar, the strongest level since China unified official and market exchange rates at the end of 1993. Asian stock markets received a boost after Q4 Taiwan GDP was revised higher to 6.92% y/y from a p reliminary estimate of 6.48% last month.

Tuesday, February 22, 2011...

Overnight Developments

•   Global stocks are trading sharply lower with the European Euro Stoxx 50 index down -1.03% and March S&Ps down -17.40 points. Increased safe-haven demand has pushed the dollar and Treasuries higher, with the 10-year T-note yield falling to a 2-1/2 week low, while crude oil and precious metals surged, with crude at a 28-month high, as violence escalated in Libya, holder of the biggest oil reserves in Africa. Al-Jazeera reported that at least 250 people died overnight in Libya as civil unrest continues throughout North Africa and the Middle East. The Italian Stock Exchange failed to open today because of "technical issues" after Italy's benchmark FTSE MIB Index declined Monday amid concern Libya's unrest will affect Italian companies. Airline stocks tumbled amid speculation higher oil prices will boost fuel costs and the euro recovered from losses after ECB Council member Mersch said ECB officials may toughen their language on inflation next week, indi cating a readiness to raise interest rates in coming months.


•   The Asian stock markets today closed lower with Japan down -1.78%, Hong Kong -2.11%, China -2.90%, Taiwan -1.87%, Australia -0.88%, Singapore --1/68%, South Korea -1.67%, India -0.77%. Japan's Nikkei 225 Stock Index tumbled after Moody's Investors Service lowered Japan's Aa2 debt rating to negative from stable saying economic and fiscal policies "may not prove strong enough to achieve the government's deficit reduction target and contain the inexorable rise in debt." Moody's also lowered the credit-rating outlook for Japan's three largest banks to negative from stable, saying "the government debt rating is a key input into the supported senior unsecured ratings for the Japanese banks." According to people with knowledge of the matter, China told its banks, which have lent at least $1.2 trillion to local governments, to recalculate capital levels by March 31 to account for higher risk ratings on such loans. The move may increase pressure on banks t hat fall below required capital ratios to raise money or reduce lending.

Wednesday, February 23, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.01% and March S&Ps up +5.10 points. The dollar and Treasuries are weaker as stocks attempt a rebound from yesterday's drubbing. Civil unrest continues in Libya, which has boosted crude prices, as Libyan leader Qaddafi vowed to keep fighting the rebellion in which over 300 people have been killed. Helping to lift European stock prices was the weaker-than-expected Jan French CPI, which fell -0.3% m/m and rose just +1.9% y/y. Also helping equity prices gain was the unexpected increase in Dec Euro-Zone industrial new orders which rose +2.1% m/m, stronger than expectations for a -1.0% m/m decline. Limiting a rally in stocks is weakness in airlines, which fell for a third day as higher crude prices threatens to cut into company profits. The euro rose to a 2-week high against the dollar on speculation rising energy costs will out further pressure on ECB policy makers to raise interest rate s. The British pound rose to a 2-1/2 week high against the dollar after the release of the minutes of the Feb 10 BOE policy meeting showed BOE policy maker Dale joined fellow policy members Sentance and Weale in voting for an interest rate increase.



•   The Asian stock markets today closed mostly lower with Japan down -0.80%, Hong Kong -0.36%, China +0.35%, Taiwan -1.67%, Australia -0.22%, Singapore -0.57%, South Korea -0.35%, India -0.64%. Q4 Chinese consumer confidence fell to 100 from 104 in Q3, its lowest level in nearly 2 years, as rising inflation threatens to restrain consumer spending. Nielson Co. and the Chinese statistics bureau's Economic Monitoring and Analysis Center, which prepared the confidence data, said that consumers' willingness to spend dropped "notably" as inflation expectations grew and food prices jumped. 83% of Chinese consumers expected prices to rise further in the next 12 months, 6 percentage points higher than in the previous quarter. The Jan Japan trade balance showed a trade deficit of 471.4 billion yen ($5.7 billion), Japan's first trade deficit in 22 months, as exports to Asia slowed and a surge in commodity prices pushed up import costs. The shortfall is unlikely to signal a weakening in Japan's economy as total exports rose 1% in Jan from a month earlier, their fifth consecutive monthly advance.

A look at economic developments around the globe...

By The Associated Press The Associated Press – Thu Feb 24, 1:16 pm ET
A look at economic developments and activity in major stock markets around the world Thursday:

___

LONDON — The violence in Libya dominated markets, sending stocks lower and oil prices higher.

Libya produces about 1.6 million barrels of crude per day and has the biggest oil reserves in Africa.

But the biggest worry in the markets is not necessarily Libya but whether the crisis spreads through the Persian Gulf.

In Europe, the FTSE 100 index of leading British shares closed down 0.1 percent, Germany's DAX fell 0.9 percent and the CAC-40 in Paris ended 0.1 percent lower.

Oil prices in New York hovered around $100 a barrel — up about 20 percent in the past week — while Brent crude in London rose nearly $3 to above $114.

___

TOKYO — Earlier in Asia, Japan's Nikkei 225 dropped 1.2 percent as the yen jumped on a safe-haven bid. A stronger yen hurts Japan's exports.

Hong Kong's Hang Seng index closed down 1.3 percent, Australia's S&P/ASX 200 shed 0.8 percent, South Korea's Kospi fell 0.6 percent and benchmarks in Singapore, New Zealand and India also declined.

China's main benchmark rose 0.6 percent.

___

ROME — Libya's violent upheaval has taken 1.2 million barrels of oil off the global market as energy plants and ports are shut down, according to Italy's Eni, the largest producer in Libya.

The figure represents most of Libya's total daily production, which before the crisis was about 1.6 million barrels of crude. The country sits on the biggest proven oil reserves in Africa.

___

LONDON — When Moammar Gadhafi told the world he was a changed man, some leaders were skeptical. Others, like Britain's Tony Blair, were quicker to see the benefits of rapprochement with the oil-rich nation.

Now, as Gadhafi's regime crumbles, questions are being raised about whether Britain, the United States, and others were too quick to embrace a volatile despot linked to terrorism and oppression as they sought lucrative business deals.

___

BRUSSELS — Russia's premier and the president of the EU's executive Commission clashed over EU plans to stop suppliers of oil or gas from also directly managing pipelines — a move that threatens to hit Russian gas monopoly OAO Gazprom.

___

BERLIN — German government lawmakers are demanding that the eurozone's future bailout fund not be allowed to buy the bonds of troubled governments — a veiled threat they might also block long-awaited changes to the current fund.

___

CAIRO — Egypt's stock exchange says an announcement about its reopening, already repeatedly delayed, will come next week. The Egyptian Exchange has been closed for nearly a month amid unrest surrounding Hosni Mubarak's ouster.

___

BERLIN — Germany's budget deficit was 3.3 percent of gross domestic product in 2010, lower than previously estimated and only just above the limit set by European Union rules.

An initial estimate in January was 3.5 percent. Germany last year exceeded the 3 percent limit set for members of the 17-nation eurozone for the first time in five years.

___

LONDON — Confidence over Europe's economic recovery improved further in February, another sign that the impact from the government debt crisis has for now abated.

The EU's executive branch said its economic sentiment indicator spiked by a point in the eurozone to 107.8, its highest level for nearly three and a half years.

Much of the survey was taken before this week's sharp rise in oil prices.

___

LONDON — The Royal Bank of Scotland, Britain's largest government-owned bank, reported a smaller net loss for 2010 after returning to profit in the final quarter of the year. RBS said its recovery from the crisis was ahead of schedule.

___

JOHANNESBURG — The launch of a state-owned mining company is renewing questions about whether South Africa has long-term plans to nationalize the lucrative industry.

___

LONDON — Moody's rating agency cut Cyprus' credit grade by two notches, citing worries about its banks' exposure to crisis-hit Greece, rising debt and a lack of economic competitiveness.

Moody's lowered its rating on Cypriot government bonds to A2 from Aa3 with a stable outlook, meaning no further downgrades are being considered.

___

CAIRO — Leading international ratings agency Standard & Poor's placed two Bahrain-based insurers on "CreditWatch Negative," citing the mass unrest that prompted the earlier downgrade of the Gulf nation's sovereign rating.

Thursday, February 24, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.73% and March S&Ps down -7.50 points, both at 3-week lows. The major bearish factor today is the continued surge in crude oil, which rallied to over $103 a barrel in overnight trade as the violent uprising in Libya intensifies. Barclays Capital estimates that about 1 million barrels of daily crude production may have been shut due to the unrest in Libya, while Societe Generale estimates that a $20 a barrel increase in oil prices may cut global GDP by 1%. An increase in safe-haven demand has pushed the yield on Treasuries and the 10-year bund down to 3-week lows, while safe-haven demand has propelled gold to a 1-1/2 month high. The euro climbed to a 3-week high against the dollar after Feb Euro-Zone economic confidence rose a larger-than-expected +1.0 to 107.8, its highest level in 3-1/2 years.



•   The Asian stock markets today closed mostly lower with Japan down -1.19%, Hong Kong -1.34%, China +0.51%, Taiwan +0.15%, Australia -0.76%, Singapore -0.96%, Soth Korea -0.59%, India -3.00%. The surge in crude oil to a 2-1/3 year high amid Middle East unrest is dragging Asia-Pacific stock markets lower as well, with automakers leading declines. Mining companies also closed lower as copper slumped to a 4-week low on concern the surge in fuel prices will derail the global economic recovery and crimp copper demand. Japanese exporters retreated as the yen strengthened to a 2-1/2 week high against the dollar on increased safe-haven demand for the yen as the Middle East crisis intensifies.

Friday, February 25, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.86% and March S&Ps up +9.70 points. The dollar is stronger and crude oil is slightly higher, but less of a concern after Saudi Arabia and the IEA said yesterday that they could compensate for any disruption to crude oil supplies caused by the turmoil in Libya. The British pound fell to a 1-week low against the dollar after Q4 UK GDP was revised weaker to -0.6% q/q and +1.5% annualized from the originally reported -0.5% q/q and +1.7% annualized. The euro weakened against the dollar after European retail sales failed to increase for the first time in 4 months in Feb after the Feb Euro-Zone Markit Economics gauge of retail sales fell -5.9 to 49.9. A bullish factor for European stocks was the stronger than expected Jan French consumer spending which fell -0.5% m/m, stronger than expectations for a -0.7% m/m decline. Russia's central bank unexpectedly raised its discount rate by 25 bp t o 8.00% and the overnight deposit rate to 3.00% starting Feb 28 and Bank Rossii also decided to raise banks' reserve requirements starting Mar 1 in an attempt to curb inflation.



•   The Asian stock markets today closed higher with Japan up +0.71%, Hong Kong +1.82%, China +0.21%, Taiwan +0.68%, Australia +0.57%, Singapore +1.75%, South Korea +0.62%, India +0.38%. Japan's deflation eased to the slowest pace in 21 months after the Jan Japan national CPI ex-fresh food slipped -0.2% y/y, stronger than expectations of a -0.3% y/y decline, as increases in global energy and food prices prompted companies to raise prices. Information-technology companies led gains in Asia-Pacific markets with Hynix Semiconductor, the world's second-largest maker of computer chips, closing up 4.1% after LIG Investment & Securities said contract prices for chips may rise in March and analysts will increase their Q1 earnings estimates for the company. Elpida Memory, the world's third-biggest maker of computer-memory chips, ended 6.4% higher after it scrapped plans to merge with Taiwanese memory makers because of opposition from the target companies. Toyota advanced 2.2% and led gains in automakers after Credit Suisse lifted its rating on the carmaker to "outperform" from "neutral."

Monday, February 28, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.02% and March S&Ps down -0.30 of a point. The dollar index fell to a 3-1/2 month low ahead of Fed Chairman Bernanke's semiannual report to Congress tomorrow in which the Fed Chairman may signal that interest rates will remain at a record low. Treasuries and crude are higher as the violent uprising in Libya continues and civil unrest in the Middle East has spread to Oman, which produces about 800,000 barrels of oil a day. Bank stocks are limiting gains in European bourses with HSBC, Europe's biggest bank, down 4% after it reported full-year net income of $13.2 billion, below analysts' estimates of $13.72 billion. Inflation concerns are pushing up bund yields after Jan German import prices rose a more then expected +1.5% m/m and +11.8% y/y, while Jan French producer prices climbed an as-expected +5.6% y/y, their fastest pace in 2-1/3 years. Jan Euro-Zone consumer prices were slightly w eaker than expected, but the +2.3% y/y advance is still the fastest annual pace of increase in 2-1/4 years.



•   The Asian stock markets today closed mostly higher with Japan up +0.92%, Hong Kong +1.42%, China +1.31%, Australia -0.12%, Singapore -0.48%, South Korea -1.13%, India +0.69%. A stronger-than-expected Jan Japan retail sales report helped Japanese stocks close higher, despite Jan industrial production advancing at a slower than expected pace. Asian stocks received a boost and crude oil prices fell back from over a $2.00 a barrel increase in overnight trade after a WSJ report said oil shipments from Libya's rebel-controlled eastern territory might have resumed, even as political unrest spread to Oman. South Korean stocks finished lower as tensions rose on the Korean peninsula after North Korea threatened to take military action if the South continues to drop leaflets and other propaganda encouraging revolt. The North also threatened "all-out war" if there is an attack during annual US-South Korean military drills that began today.

Tuesday, March 1, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.08% and March S&Ps up +5.10 points. Expanding growth in Europe is lifting stock prices and undercutting Treasuries and the dollar, with the dollar index sliding to a fresh 3-1/2 month low. The Feb Euro-Zone PMI manufacturing index was left unrevised at 59.0, a 10-1/3 year high, while Jan Euro-Zone unemployment unexpectedly fell -0.1 to 9.9%. Feb German unemployment fell three times more than expected, -52,000 to 3.07 million, the lowest since Sep 1992, while the Feb German unemployment rate slipped -0.1 to 7.3%, the lowest since Dec 1991. The euro strengthened against the dollar after the European Commission raised its 2011 Euro-Zone GDP forecast to 1.6% from a 1.5% forecast in Nov, while the recent surge in commodity prices prompted the commission to raise its 2011 inflation forecast to 2.2% from a Nov estimate of 1.8%. The British pound surged to a 13-month high against the dollar after Feb UK PMI manufacturing remained unchanged at 61.5, its best level since the survey began in 1992, which suggests the British economy has regained momentum after contracting in Q4 2010.



•   The Asian stock markets today closed higher with Japan up +1.22%, Hong Kong +0.25%, China +0.47%, Taiwan +1.49%, Australia -0.11%, Singapore +1.90%, India +3.50%. Strong economic data out of the Asia-Pacific region benefited stock prices with Japan's unemployment rate in Jan holding steady at 4.9%, while the number of people in work increased by 170,000. The Feb China PMI manufacturing index fell -0.7 to 52.2, stronger than expectations of -0.8 to 52.1, and the twenty-fourth consecutive month that the level has been above 50, which signals continued expansion in Chinese manufacturing. The Feb India PMI manufacturing index rose +0.9 to 57.8, its fastest pace in 3 months, which will keep pressure on the RBI to increase interest rates for the eighth time in a year. Australia's central bank left its benchmark interest rate unchanged as expected at 4.75% and said a stronger currency and forecasted slower growth in employment will help to control inflation.

Wednesday, March 2, 2011...

Overnight Developments

•   Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.38%, although March S&Ps are up +2.90 points. A push in crude oil prices above $100 a barrel in overnight trade has weakened most global stock markets on concern the unrest in the Middle East will disrupt supplies. The dollar and Treasuries are weaker and the euro strengthened after European producer prices accelerated more than expected in Jan. The Jan Euro-Zone PPI rose +1.5% m/m and +6.1% y/y, higher than expectations of +1.1% m/m and +5.7% y/y, with the +6.1% y/y gain the fastest pace of increase in 2-1/3 years. Renewed sovereign-debt concerns are also weighing on European stocks with the extra yield investors demand to hold Greek 10-year bonds instead of benchmark German bunds rose to 893 bp, a 2-month high. Standard & Poor's kept Greece's BB+ long-term ratings and Portugal's A- long-term and A3 short-term classifications on credit watch negative, saying both countr ies debt ratings remain at risk of being cut on concern about how a European Union rescue fund may affect holders of the two nations' sovereign bonds.



•   The Asian stock markets today closed lower with Japan down -2.43%, Hong Kong -1.49%, China -0.36%, Taiwan -1.23%, Australia -0.48%, Singapore -1.31%, South Korea -0.55%. A rise in crude oil prices above $100 a barrel also spooked Asia-Pacific markets, fueling concern that higher energy costs will hinder the global economic recovery. Qantas Airways, Australia's biggest carrier and Singapore Airlines Ltd., the world's second-biggest carrier by market value, both fell more than 2% and led airlines lower on concern rising jet fuel prices will eat into company profits. Mitsubishi Motors and Toyota fell at least 3% and led carmakers lower on concern rising fuel prices will undercut demand for autos, while China Railway Construction tumbled 7.8% after the company said it halted work on 3 projects in Libya that have a combined value of $4.24 billion. Australia's Q4 GDP rose +0.7% q/q and +2.7% y/y, its eighth straight quarterly expansion, and validates RBA Governor Steven's view that floods and cyclones in the state of Queensland this quarter will be only a temporary drag on growth. Australia's economy is undergoing a boom in resource investment as mining and energy firms boost output to meet demand from China and India.

Thursday, March 3, 2011...

Overnight Developments

•   Global stocks are trading mostly higher with the European Euro Stoxx 50 index up +1.01%, and March S&Ps up +12.50 points. Crude oil is weaker and the euro is slightly bid ahead of the conclusion of the ECB's monetary policy meeting and comments from ECB President Trichet later this morning. Stronger consumer spending in Europe helped to lift European stock prices as both Jan German retail sales and Jan Euro-Zone retail sales were better than expected. Stellar company earnings results are also a positive for stocks with AB InBev up 3.1% after the brewer reported Q4 earnings of $3.9 billion, higher than analysts' estimates of $3.4 billion, while Adecco, the world's largest supplier of temporary workers, rose 5.8% after reporting Q4 net income of 141 million euros ($196 million), stronger than estimates of 115 million euros. A slight negative for stock prices was the unexpected downward revision to the Feb Euro-Zone PMI composite index by -0.2 to 58.2.



•   The Asian stock markets today closed mostly higher with Japan up +0.89%, Hong Kong +0.32%, China -0.67%, Taiwan +1.37%, Australia +0.07%, Singapore +0.33%, South Korea +2.17%, India +0.23%. Most Asia-Pacific stock markets received a boost after the Fed's Beige Book yesterday said the US labor market improved, which benefits the sustainability of the economic recovery. India's services industry grew at its fastest pace n 7 months after the Feb India services PMI rose +2.1 to 60.2, adding pressure to the RBI to raise interest rates. South Korea's Kospi Index closed higher after Jan Korea industrial production jumped +13.7% y/y, higher than estimates of +12.4% y/y. China's Shanghai Stock Index closed lower after China's services industries contracted in Feb for the first time in a year. The Feb China non-manufacturing PMI tumbled -1.3 to 44.1, its lowest level in 2 years.

Friday, March 4, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.28% and March S&Ps up +0.60 of a point. The dollar is little changed and crude oil rose to a 1-week high as Libya's rebels continue to fight off attacks from forces loyal to Muammar Qaddafi. European stocks gained and the euro pushed to a fresh 3-3/4 month high against the dollar after ECB Council member Wellink said that European economic growth in 2011 might very well be "more positive than we now expect." The 3-month Euribor, the rate at which European banks lend each other in euros for 3 months, climbed 6 bp to a 20-month high of 1.162% amid speculation the ECB will tighten monetary policy as soon as next month. The possibility of higher rates may make it harder for Europe's most indebted nations to tackle their debt issues as Portuguese 10-year bond yields climbed to 7.51%, just below the record 7.64% from last month, while Greek 2-year yields jumped 32 bp to 15.24%, t he highest in 10 months.



•   The Asian stock markets today closed higher with Japan up +1.02%, Hong Kong +1.24%, China +1.52%, Taiwan +0.53%, Australia +1.20%, Singapore +0.79%, South Korea +1.90%, India -0.02%. The decline in US weekly jobless claims to a 2-3/4 year low increases confidence in the prospects for a sustained US economic recovery and boosted Asia-Pacific stock markets. Exporters such as Li & Fung Ltd., the biggest supplier to Wal-Mart Stores, closed up 4.4% and Toyota Motor, the world's largest carmaker, finished 1.2% higher. Also benefiting Japanese exporters was the slide in the yen to a 1-week low against the dollar. Newcrest Mining, Australia's largest gold producer, surged 4.7% after it revised up an exploration target in a Papua New Guinea gold deposit to more than 30 million ounces of gold and 8 MMT of copper from an earlier estimate of 16 million ounces of gold and 4.9 MMT of copper.

Tuesday, March 8, 2011...

Overnight Developments

•   Global stocks are trading higher with the European Euro Stoxx 50 index up +0.14% and March S&Ps up +3.20 points. The dollar is stronger and crude oil is weaker after Kuwait's oil minister said OPEC members are holding "consultations" and have not yet decided on raising output. European stocks gained on stronger-than-expected Jan German factory orders, which climbed +2.9% m/m and +16.0% y/y. Stock prices rallied further after Bundesbank President and ECB Council member Weber said Germany's "strong" economic recovery would continue this year as companies increase investment to meet export demand and "private consumption increases amidst continued positive labor market developments." Limiting stock market gains and undercutting the euro are concerns over the ongoing European sovereign-debt crisis after the extra yield between 10-year Greek bonds and similar maturity German bunds climbed 38 bp to a 2-month high of 944 bp. Greece rai sed 1.625 billion euros ($2.28 billion) in an auction of 26-week T-bills that had a yield of 4.75%, up from a 4.64% rate for a similar auction last month, with a bid-to-cover ratio of 3.59, weaker than the 4.59 seen at last month's auction.


•   The Asian stock markets today closed higher with Japan up +0.19%, Hong Kong +1.71%, China +0.09%, Taiwan +0.38%, Australia +0.21%, Singapore +1.22%, South Korea +0.72%, India +1.19%. Chinese bank stocks gained after Reuters reported that China canceled punitive increases of required reserves previously imposed on several banks. Asian shipping lines closed lower and were led by a -2.5% drop in Nippon K.K., Asia's largest listed line, after the company said it may slow vessels speed to cut fuel costs. Asian semiconductor stocks also closed lower on the heels of Wells Fargo's cut in its ratings on the semiconductor industry to "market weight" from "overweight."

Wednesday, March 9, 2011...

Overnight Developments

•   Global stocks are trading mostly higher with the European Euro Stoxx 50 index unchanged and March S&Ps up +3.90 points. Treasuries and the dollar are little changed and crude oil is slightly lower. The decline in crude has boosted European automakers and travel companies, while increased M&A activity has lifted the entire market. Daimler and Rolls-Royce offered to buy German engine maker Tognum for 24 euros a share, while Iberdrola Renovables agreed to but out minority investors in its renewable energy unit. A larger-than-expected +1.8% m/m and +12.5% y/y increase in Jan German industrial production is also boosting stock prices as well. Limiting market gains, however is the statement from the managing director of European sovereign ratings at Standard & Poor's, who warned some countries in the Euro-Zone might have their credit ratings cut further while a Greek debt default is a "possibility." Portugal's 10-year bond yield rose to 7.70%, t he most since data began in 1997, as demand fell for a debt sale by the government.


•   The Asian stock markets today closed mostly higher with Japan up +0.61%, Hong Kong +0.42%, China +0.04%, Taiwan +0.03%, Australia -0.84%, Singapore -0.35%, South Korea +0.18%, India +0.16%. A larger-than-expected +4.2% m/m increase in Jan Japan machine orders, the biggest jump in 5 months, helped to lift Japanese stocks on signs companies will increase spending as economic recoveries abroad strengthen. Asia-Pacific airlines closed higher after crude oil prices fell for a second day, while Nintendo, the world's largest maker of video-game consoles, climbed 3.7% after saying it sold more than 1.08 million new Pokemon games after 1 day. Feb China passenger-car sales climbed +2.6% y/y to 967,200 units, its slowest pace of growth in more than 2 years, after the government ended vehicle-buying incentives and the weeklong Lunar New Year holidays last month stymied demand.

Thursday, March 10, 2011...

•   Global stocks are trading weaker with the European Euro Stoxx 50 index down -0.71% and March S&Ps down -5.80 points. Treasuries and the dollar are higher, with the dollar index at a 1-week high, while most commodities fell after Chinese and German exports unexpectedly declined and Moody's Investors Service cut Spain's credit rating by one level to Aa2, saying the government has underestimated the cost of shoring up the banking industry. Moody's forecasts that Spanish lenders will need as much as 50 billion euros ($69 billion) to meet new capital requirements, more than the 20 billion-euro estimate seen by the government. Moody's adds the risks to Spain's public finances are "skewed to the downside" and the outlook is "negative," which suggests more rating cuts are under consideration. The euro slid to a 1-week low against the dollar as the cost to insure European government debt rose. The cost to insure Spain's government bonds rose 8 bp to a 1-month high of 258, while the cost to insure Portugal's debt rose 8.5 bp to a 2-month high of 505.5, and the cost to insure Greek debt climbed 6 bp to a record 1,040, according to CMA. European stocks were also pressured after Jan German exports unexpectedly fell -1.0% m/m, weaker than market expectations of a +0.7% m/m increase. As expected, the BOE kept its benchmark rate unchanged at 0.50% and kept its asset purchase target at 200 billion pounds ($324 billion).



•   The Asian stock markets today closed lower with Japan down -1.46%, Hong Kong -0.82%, China -1.76%, Taiwan -1.22%, Australia -1.43%, Singapore -0.56%, South Korea -1.22%, India -0.77%. Chinese stocks closed lower and weighed down other global equity markets after China reported an unexpected -$7.3 billion trade deficit in Feb. Feb China exports rose +2.4% y/y, the least in 2 years, while Feb imports climbed +19.4% y/y. The weakness in Chinese exports undercut other world stock markets on concern a slowdown in China, the engine of world growth, may also slow the global economy as well. Japanese stocks were also pressured after Q4 Japan GDP was revised down to -1.3% annualized, more than the -1.1% previously reported, because of a downward revision to capital investment and consumer spending. The Bank of Korea raised the benchmark 7-day repurchase rate by 25 bp to 3.00%, the second rate increase this year, after inflation exceeded the central bank's target ceiling for 2 consecutive months.

Friday, March 11, 2011...

Overnight Developments

•   Global stocks are trading lower with the European Euro Stoxx 50 index down -0.67% and June S&Ps down -5.50 points. The dollar and Treasuries are stronger and most commodities sold off after the biggest earthquake hit Japan in a century. Crude oil fell below $100 a barrel for the first time in over a week and copper plunged to a 2-3/4 month low. The 8.9-magnitude quake also unleashed a 30-foot high tsunami with over 20 countries, including the US west coast, issuing tsunami warnings. Insurance and reinsurance stocks are sharply lower amid the Japanese quake with Munich Re and Swiss Reinsurance, the world's biggest reinsurers, both down over 5%. The extra yield investors demand to hold Irish, Portuguese, and Spanish securities instead of benchmark 10-year bunds widened ahead of a meeting of EU leaders in Brussels later today to discuss measures to tackle the debt crisis, while anti-government demonstrators in Saudi Arabia are advocating a "Day of Rage&quo t; today with police in anti-riot vehicles patrolling Riyadh.



•   The Asian stock markets today closed lower with Japan down -1.72%, Hong Kong -1.55%, China -1.00%, Taiwan -0.87%, Australia -1.17%, Singapore -1.04%, South Korea -1.44%, India -0.84%. Japan's Nikkei 225 Stock Index sank to a 1-1/4 month low after an 8.9 magnitude earthquake struck northeast of Tokyo and spawned tsunami warnings. Most stocks sold-off after the quake, although building stocks such as Fukuda surged 30% and another builder Ueki, jumped 23%. Crude oil tumbled as Japanese refiners shut plants after he quake and the BOJ set up an emergency task force and said it will do everything it can to provide ample liquidity. China's inflation and industrial production exceeded forecasts in Feb, which prompted PBOC Governor Zhou Xiaochuan to say that interest rates will be used to curb inflation, a sign of additional interest rate hikes. Feb China consumer prices were unchanged at 4.9% y/y, stronger than expectations of 4.8% y/y, while Feb China industrial production climbed 14.9% y/y. stronger than expectations of +13.3% y/y.

Monday, March 14, 2011...

Overnight Developments

•Global stocks are trading mostly lower with the European Euro Stoxx 50 index down -0.32% and June S&Ps down -6.0 points. Crude oil sank to a 1-1/2 week low on speculation the worst earthquake in Japan's history will hurt growth and reduce fuel demand in the world's third-largest economy. The euro strengthened against the dollar and default swaps on European sovereign debt declined after European leaders over the weekend agreed to expand the scope of their rescue fund, allowing officials to buy debt in primary markets, while also cutting the cost of bailout loans to Greece by extending the repayment period of Greek loans to 7-1/2 years from 3 years. A final agreement is slated for a summit on Mar 24-25. European bank stocks rallied sharply on news of the agreement, with JPMorgan Chase raising its recommendation for European banks to "overweight" from "neutral." Gains in European stocks were limited as insurers fell for a second day after AIR Worldwide said the insurance industry may face claims of as much as 2.8 trillion yen ($34 billion) from the Japanese earthquake, although estimates don't include damage caused by the tsunami that followed the quake. European utility companies also weakened on concern explosions at two reactors in Japan may persuade Germany to backtrack on extending the life of atomic plants after German Chancellor Merkel had extended the lives of Germany's 17 nuclear power plants by an average of 12 years in 2010



•The Asian stock markets today closed mostly lower with Japan down -6.18%, Hong Kong +0.41%, China +0.48%, Taiwan -0.56%, Australia -0.40%, Singapore -0.41%, South Korea +1.50%, India +1.46%. Japan's Nikkei 225 Stock Index plunged to a 4-1/4 month low as the extent of Japan's earthquake damage is unknown and its rebuilding costs are likely to be astronomical. The yen weakened and fell back from a 4-month high against the dollar after the BOJ pumped a record 15 trillion yen ($183 billion) into money markets today and doubled the size of its asset-purchase program in an attempt to assure financial stability amid a plunge in stocks and surge in credit risk. BOJ Governor Shirakawa said cash injections would continue as needed and it is "crucial" the central bank stabilizes money markets; a signal it will take additional steps in coming days. Manufacturers from Sony to Toyota closed plants today, with Sony halting operation at 10 factories and 2 research centers, while Toyota said it would close all 12 of it Japanese factories through Mar 16.

Tuesday, March 15, 2011...

Overnight Developments

•Global stocks are trading sharply lower with the European Euro Stoxx 50 index down -2.63% and June S&Ps down -28.80 points. The dollar rose and Treasuries surged to a 3-1/4 month high on increased safe-haven demand, while commodities tumbled, with crude oil cascading down to a 2-week low, on concern a nuclear disaster is unfolding in Japan. Japanese Prime Minister Kan said "there is still a very high risk of further radioactive material escaping" after a third blast at the Fukushima Dai-Ichi nuclear power plant today sent radiation levels soaring to 8 times permitted levels outside the facility. European utility stocks plummeted on concern government officials will close existing nuclear power plants in Europe, while the euro fell against the dollar after as an unexpected decline in German investor confidence pressured stock prices further. The March German ZEW investor confidence fell -1.6 to 14.1, weaker than expectations of +0.1 to 15.8 and its first decline since October.



•The Asian stock markets today closed lower as Japan sank -10.55%, Hong Kong -2.86%, China -1.81%, Taiwan -3.35%, Australia -2.11%,Singapore -2.80%, South Korea -2.46%, India -1.47%. Japan's Nikkei 225 Stock Index posted its biggest 2-day drop since 1987 as the stock index collapsed to a 1-3/4 year low. Tokyo Electric Power Co.'s stricken nuclear power plant was hit by 2 more explosions today as workers struggle to avert a meltdown that may lead to more radiation leaks in the wake of the Mar 11 earthquake. Credit-default swaps on Japan's government debt soared 25.8 bp to a record 122.3 as concerns rise about Japan's finances in regard to reconstruction from the earthquake. Tokyo Electric Power, Asia's biggest power generator, sank the daily 25% limit while Sony, Japan's biggest exporter of consumer electronics tumbled 13% after the company halted production at some factories. The BOJ injected an additional 8 trillion yen to the financial system today on top of the record 15 trillion yen the central bank pumped into money markets yesterday as it attempts to stabilize financial markets.

Wednesday, March 16, 2011...

Overnight Developments

•Global stocks are trading mixed with the European Euro Stoxx 50 index down -0.71% and June S&Ps down -4.90 points. The dollar and Treasuries are high on increased safe-haven demand and crude oil jumped over $1 a barrel after Bahrain suspended stock market trading as its government declared a state of emergency and let Gulf nation troops into the country to quell anti-government protests. The Middle East unrest outweighed concerns about radiation leaks from a Japanese nuclear plant damaged by last week's earthquake and tsunami. The euro fell against the dollar after Moody's Investors Service cut Portugal's long-term credit rating 2 levels to A3 from A1 and kept a negative outlook, which implies further downgrades in the future. European bank stocks weakened after Portugal's credit rating was cut with BNP Paribas down 2.3%. Feb Euro-Zone CPI rose an as-expected +2.4% y/y, its fastest pace in 2-1/4 years and Q4 Euro-Zone labour costs rose a more-than-expected +1.6% y/y, which will keep the pressure on the ECB to raise interest rates. On the positive side, Feb UK jobless claims unexpectedly fell -10,200, their biggest decline in 8 months to 1.45 million, their lowest level in 2 years and a sign the labor market is continuing to recover.



•The Asian stock markets today closed higher with Japan up +5.68%, Hong Kong +0.10, China +1.38%, Taiwan +1.09%, Australia +0.65%, Singapore +0.85%, South Korea +2.03%, India +1.05%. Japanese stocks rebounded from the 2-day sell-off that sent valuations to a 28-month low. The advance was limited, however after further temblors struck Japan and as clouds of white smoke started rising from reactor buildings at eh crippled Fukushima Dai-Ichi Plant. Toyota Motor climbed 9.1% after the company said it would restart production at 7 parts plants in Japan from tomorrow. The BOJ pumped an additional 5 trillion yen into the financial system today in one-day operations on top of the 8 trillion yen yesterday and record 15 trillion yen on Monday. Tokyo Electric has begun rolling blackouts across Japan that will continue until the end of April in an attempt to conserve energy lost from the damage to its nuclear facility. Factories have suspended or reduced operations and as a result Goldman Sachs estimates if the power blackouts continue through the end of June, Japan's GDP will contract at an annual 2% pace in Q2 and if the blackouts continue through December, the economy will keep contracting for the year.

Thursday, March 17, 2011...

Overnight Developments

•   Global stocks are trading mixed with the European Euro Stoxx 50 index up +0.71% and June S&Ps up +9.30 points. The dollar is getting battered with the euro climbing to a 4-1/4 month high and the Japanese yen soaring to a post WWII high of 76.36. The G-7 nations will hold an emergency meeting tomorrow to discuss the financial markets and the Japanese economy, which may indicate possible coordinated intervention in currency markets to curb the yen's gains. Treasuries are little changed while crude oil is up over $1 a barrel as fighting intensifies in Libya. More than 300 workers are attempting to prevent a meltdown and spread of radiation at the crippled Fukushima power plant today, an increase from a group of 50 engineers yesterday. Insurance stocks are leading a rally of European and US shares after UBS AG said the sector has become "unjustifiably oversold" since the Japan earthquake. European stocks were also boosted after Spain sold 4.1 billion euros of 10-year and 30-year bonds today with the bid-to-cover ratio for the 10-year debt at 1.81, compared with 1.54 for last month's auction, a sign of strong demand.



•   The Asian stock markets today closed mostly lower with Japan down -1.44%, Hong Kong -1.83%, China -1.57%, Taiwan -0.50%, Australia -0.06%, Singapore -0.95%, South Korea +0.14%, India -1.14%. Asian stocks fell as workers were sent to connect power to damaged cooling systems of the crippled Fukushima Dai-Ichi power station and Japanese exporters sold-off as the yen surged to a post WWII high. The BOJ added 6 trillion yen to the financial system in one-day operations today, bringing total emergency injections this week to 34 trillion yen. The United Nations' nuclear agency plans an emergency meeting to discuss the nuclear crisis as fear and uncertainty have gripped the financial markets. India's central bank (RBI) raised its repurchase rate by 25 bp to 6.75% and hiked the reverse repurchase rate by 25 bp to 5.75% in an attempt to bring soaring inflation under control. The RBI has now increased interest rates for the eighth time in a year after raising its inflation for ecast twice in 3 months. India's wholesale-price inflation quickened to 8.31% in Feb and the RBI today raised its March-end inflation forecast to 8% from 7%.

Friday, March 18, 2011...

Overnight Developments

•Global stocks are trading mostly higher with the European Euro Stoxx 50 index down -0.11% and June S&Ps up +9.60 points. The yen plunged and most world stock markets rose after the G-7 announced coordinated intervention in the currency markets for the first time since 2000 in order to slow yen strength that threatens to hamper Japan's recovery. G-7 finance chiefs said in a joint statement after a conference call they will "provide any needed cooperation" with Japan and "we will monitor exchange markets closely and will cooperate as appropriate." Stock gains were limited however, after China announced it would raise banks' reserve requirements for the third time this year. Crude oil prices jumped to a 1-week high after the United Nations Security Council voted to establish a no-fly zone over Libya and demanded a cease-fire with rebels. Feb UK nationwide consumer confidence plunged 10 points to 38, the lowest since records began n 2004, as Britons grew more pessimistic about the sustainability of the economic recovery and the outlook for jobs.



•The Asian stock markets today closed mostly higher with Japan up +2.72%, Hong Kong +0.07%, China +0.58%, Taiwan +1.35%, Australia +1.56%, Singapore -0.24%, South Korea +1.00%, India -1.49%. Asian stock markets climbed as concern eased about the spread of radiation from Japan's crippled power plant and after G-7 leaders said their central banks will jointly intervene in foreign-exchange markets to weaken the yen. The Sankei newspaper reported that Japan's government may sell more than 10 trillion yen ($122 billion) of reconstruction debt, all of which the BOJ may buy. The BOJ today added 4 trillion yen to the financial system, bringing its emergency fund injections this week to 38 trillion yen. After the Asian markets closed, China raised banks reserve requirements for the third time this year after inflation and industrial output exceeded forecasts in Feb. The PBOC announced a 50 bp increase in reserve ratios to 20.0% from March 25 for the nation's biggest banks and said it may impose extra requirements on individual lenders as part of efforts to rein in liquidity.

Monday, March 21, 2011...

Overnight Developments

•Global stocks are trading higher with the European Euro Stoxx 50 index up +1.73% and June S&Ps up +14.50 points. The dollar and Treasuries are weaker and most commodities are higher after Japanese Prime Minister Kan said progress is being made in restoring power to 2 reactors at the Fukushima Dai-Ichi power plant and as workers continue to spray water on reactor buildings, preventing fuel rods from overheating and causing further radiation leaks. Crude oil is up nearly $2 a barrel after the US, UK and France attacked military targets in Libya, effectively grounding Mummar Qaddafi's air force. Increased M&A activity is also giving a lift to equity prices after Deutsche Telekom AG jumped 14% after AT&T agreed to buy T-Mobile USA from the German phone company for about $39 billion. The acquisition is the largest in the wireless industry since 2004 and would push AT&T past Verizon Wireless to become the biggest mobile-phone company in America.



•The Asian stock markets today closed mostly higher with Japan closed for holiday, Hong Kong +1.73%, China -0.27%, Taiwan +0.87%, Australia +0.35%, Singapore +1.63%, South Korea +0.95%, India -0.22%. Asia-Pacific stocks closed mostly higher today as Japan made progress in tackling its nuclear crisis and after Sony and Nissan Motor said they are prepared to resume production at some factories in Japan that had been halted after Japan's quake crisis forced then to shut some plants. Many Japanese businesses still face blackouts, transportation slowdowns, shortages of materials and suppliers unable to make shipments. The World Bank says "Japan's GDP growth will be negatively affected through mid-2011," but that "growth should pick up in subsequent quarters as reconstruction efforts, would could last 5 years, accelerate." The World Bank also says that despite the PBOC's actions to raise banks' reserve requirements 6 times since Nov, inflationary pressure in China is unlikely to diminish quickly as higher international commodity prices are still feeding through into the economy. The World Bank estimates Chinese CPI will average 4.7% this year compared with 3.3% in 2010.

Tuesday, March 22, 2011...

Overnight Developments

•               Global stocks are mostly higher with the European Euro Stoxx 50 index up +0.22% and June S&Ps down -0.10 of a point. The dollar and Treasuries retreated, with the dollar index falling to a 1-1/4 year low, as Japan makes progress in averting a nuclear meltdown. In Libya, allied forces are expanding their air strikes to thwart Muammar Qaddafi's fighters, while unrest in Yemen escalated as thousands of people protested on the street against President Ali Abdullah Saleh, who is also facing an internal revolt from army leaders, ministers and diplomats. The British pound surged to a 14-month high against the dollar after Feb UK CPI rose a more-than-expected +4.4% y/y, its fastest pace of increase in 2-1/4 years. The euro climbed to a 4-1/2 month high against the dollar after European officials announced a permanent rescue fund to lend 500 billion euros ($710 billion) from 2013. The 3-month Euribor rate, the rate at which Euro-Zone banks borrow between each other, rose 6 bp to a 1.185%, its highest level in 1-3/4 years as speculation builds about an ECB interest rate hike next month.



•               The Asian stock markets today closed higher with Japan up +4.36%, Hong Kong +0.76%, China +0.49%, Taiwan +0.48%, Australia +0.01%, Singapore +0.64%, South Korea +0.44%, India +0.84%. Asia-Pacific stocks received a boost after Japan made progress in stabilizing reactors at its crippled power plant and as Japanese Prime minister Kan said there was "light at the end of the tunnel" for the country's nuclear crisis. The BOJ pumped an additional 2 trillion yen into the financial system today, bringing its total amount of emergency liquidity pumped into money markets at 40 trillion yen. The Chinese yuan today rose to 6.5552 against the dollar, its highest level since China unified official and market exchange rates in 1993, as speculation mounts that the PBOC will raise interest rates again.

Wednesday, March 23, 2011...

Overnight Developments

•               Global stocks are mostly higher with the European Euro Stoxx 50 index up +0.51% and June S&Ps up +2.50 points. The dollar is little changed while crude and Treasuries are higher with crude oil at a 1-1/2 week high as the alliance enforcing a no-fly zone over Libya prepared to attack Mummar Qaddafi's ground forces. The British pound weakened after the minutes of the Mar 10 BOE monetary policy meeting showed policy makers voted 6-3 to keep interest rates on hold. The euro is little changed after the yield on Ireland's 2-year notes rose 54 bp to a record 10.41%, while the yield on the 10-year Irish note exceeded 10% for the first time since the euro was introduced in 1999. Portuguese bond yields also surged, with Portugal's 5-year bond climbing to a record 8.14% ahead of a parliamentary vote later today against its deficit-cutting plan that may push the country toward a EU bailout. A rally in metals is pushing commodity producers higher as copper climbed to a 2-week high after canceled warrants, or orders to draw metal from LME copper inventories, jumped 45% to 15,525 metric tons, the most in 11 months.



•               The Asian stock markets today closed mixed with Japan down -1.65%, Hong Kong -0.14%, China +1.30%, Taiwan +0.44%, Australia +0.19%, Singapore +0.65%, South Korea -0.14%, India +1.21%. Japan's government estimates the damage from this month's earthquake and tsunami at as much as 25 trillion yen ($309 billion), an amount that might push down Japan's GDP by as much as 2.75 trillion yen for the year starting April 1. The government predicts that Japan's growth will return to normal "very soon" as reconstruction work starts and that rebuilding efforts in fiscal 2011 could push up GDP by 5 trillion yen to 7.75 trillion yen. Japanese stocks closed lower after levels of iodine unsafe for infants were reported in Tokyo tap water as workers struggle to reconnect power to 1 of 4 damaged reactors as the crippled Fukushima Dai-Ichi power plant. Japanese carmakers Toyota and Honda closed lower after they extended production halts due to quake damage. PBOC Deputy Governor Yi Gang said interest rates are at a "comfortable" level and he's "not too worried" by inflation because the pace of price increases will slow in the second half of the year. He predicts "a relatively high CPI of around 5%" until June or July and then increases should slow. The PBOC may be trying to dampen expectations of an imminent rate hike as it assesses the fallout from the Japanese earthquake.

Thursday, March 24, 2011...

Overnight Developments

•               Global stocks are mostly higher with the European Euro Stoxx 50 index up +0.43% and June S&Ps up +6.30 points. The dollar and Treasuries are slightly weaker and commodities are mostly higher with crude oil and copper at 2-week highs. Portugal's borrowing costs rose to the highest since the euro's inception in 1999, but stocks prices are still higher on speculation the European Union will bail out indebted nations. European leaders meet in Brussels today for the start of a 2-day meeting. The extra yield investors demand to hold 10-year Portuguese bonds instead of benchmark German bunds rose 9 bp to a 4-month high of 448 bp, while the Irish-German 10-year spread widened to 609 bp, the most since at least 1991. Citing heightened financial pressure on the country's sovereign rating and "many weak banks," Moody's Investors Service cut 15 of Spain's banks by 2 levels and 5 banks by 3 or 4 levels. Moody's also cut 30 of Spain's smaller banks' senior debt and deposit ratings saying the outlook remains negative. The Mar Euro-Zone PMI composite fell -0.7 to 57.5, slightly weaker than market expectations of -0.4 to 57.8, while the unexpected increase in French business confidence is giving stock prices a lift after the Mar French business confidence indicator rose 3 points to a 3-year high of 109.


•               The Asian stock markets today closed mostly higher with Japan down -0.15%, Hong Kong +0.39%, China -0.42%, Taiwan +0.37%, Australia +1.01%, Singapore +0.69%, South Korea +1.23%, India +0.79%. Engineers at Japan's damaged nuclear plant today resumed work on reconnecting power as Tokyo authorities prepared to hand out bottled water to families after determining that tap water may be unsafe for babies. The CEO of Nissan said about 40 auto-parts makers remain hampered after the Japanese earthquake and Toyota said its North American production might also be disrupted. Efforts to resume production are complicated by the need for hundreds of different components from suppliers whose plants may have been damaged or lack power, as well as disruptions of transportation infrastructure. The PBOC on its website today said that China will make more use of price tools to implement monetary policy and interest rates will be at the "core" of that strategy that moves away from the use of quantitative tools, such as banks' reserve requirement ratios and loan quotas.

Friday, March 25, 2011...

Overnight Developments

•               Global stocks are higher with the European Euro Stoxx 50 index up +0.18% and June S&Ps up +5.40 points. The dollar and Treasuries are little changed but stock markets around the world are higher on better-than-expected earnings from Oracle and Accenture. Portugal continued to rule out a rescue package as the yields on its government bonds rose to a record, while EU leaders bowed to German demands to pare startup capital upfront payments as of 2013 to 16 billion euros ($23 billion), less than the 40 billion euros foreseen in Monday's accord. German Chancellor Merkel argued that Monday's accord had Germany putting up too much capital versus the other European countries. European bank demand for euros continues to be strong after the 3-month Euribor rate climbed to 1.203%, a 1-3/4 year high. The euro was little changed after German business confidence in March fell less than expected. The Mar German IFO business climate fell -0.1 to 111.1, better than expectations of -0.7 to 110.5. Price pressures remain sticky after the Feb German import price index rose +1.1% m/m and +11.9% y/y, stronger than expectations of +0.9% m/m and +11.6% y/y.



•               The Asian stock markets today closed higher with Japan up +1.07%, Hong Kong +1.06%, China +1.33%, Taiwan +0.40%, Australia +0.91%, Singapore +0.91%, South Korea +1.02%, India +2.53%. In a positive sign for Japanese stocks, the Ministry of Finance reported that foreign investors bought 891 billion yen ($11 billion) in Japanese stocks in the week through Mar 18, the most since comparable records began in 2005. Japan's Nikkei 225 Stock Index tumbled 10% last week after the earthquake crisis. Strength in construction firms led a rally in Asian stocks today on optimism demand will grow as Japan rebuilds. A spokesman for Japan's Nuclear and Industrial Safety Agency said one reactor core at the quake-damaged Fukushima Dai-Ichi power plant might be cracked and leaking radiation. Radioactive cesium above the government limit was found yesterday on komatsuna, a leafy vegetable known as Japanese mustard spinach that was harvested in Tokyo's Edogawa ward, 220 kilometers (135 miles) south of the crippled power plant.

Monday, March 28, 2011...

•   Global stocks are mixed with the European Euro Stoxx 50 index up +0.32% and June S&Ps up +2.40 points. Stocks fluctuated on concern over what Japan's nuclear crisis will do to global economic growth. The dollar index climbed to a 1-week high and Treasury prices weakened after St. Louis Fed President Bullard said over the weekend that policy makers should review halting the $600 billion QE2 asset-purchase program before its June completion because the economy may not require that much stimulus. The euro slid to a 1-week low against the dollar after the yield on Portugal's 10-year bond rose to 7.894%, the highest since 1997 when Bloomberg began collecting the data. Also undercutting the euro was the defeat of German Chancellor Merkel's coalition in Sunday's state elections. Merkel's CDU party won 39% of the votes in Baden-Württemberg, its worst result since 1952, while its Free Democratic Party allies won only 5.2%, leaving the 2 parties short of a majori ty rule and marks the end of the CDU's 58-year rule in the state. The British pound tumbled to a 1-3/4 month low against the dollar after the Feb UK Lloyds business barometer, a gauge of sentiment which aims to predict economic developments in the UK four months in advance, fell -2 points to 1, its lowest level in 2 years.


•   The Asian stock markets today closed mostly lower with Japan down -0.60%, Hong Kong -0.39%, China -0.12%, Taiwan -0.67%, Australia -0.19%, Singapore -0.44%, Soth Korea +0.17%, India +0.68%. Japanese stocks closed lower on concern that it may take months to end production halts and electricity shortages from the quake crisis. Tokyo Electric Power, the operator of the crippled Fukushima Dai-Ichi nuclear plant, tumbled 15% to its lowest since 1977 after radiation levels that can prove fatal were detected outside reactor buildings for the first time. Japan's chief government spokesman said a partial meltdown of fuel rods in the No. 2 reactor probably caused a jump in the radioactive readings, which further complicates efforts to contain the worst nuclear disaster since Chernobyl in 1986. Copper prices and Japanese automakers fell on concern Japanese carmakers may have to suspend production at pants in China, potentially curbing copper demand and undercutting automakers' profits. Declines in Japanese exporters were limited after the yen fell to a 1-week low against the dollar.

Tuesday, March 29, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index down -0.53%, while June S&Ps are up +1.80 points. Treasuries and commodities are lower and the dollar is little changed. Crude oil fell over -$1.00 a barrel as the advance of Libyan rebels against Qaddafi's troops spurs hope the conflict in Africa's third-largest oil producer may end soon. A decline in European bank stocks is dragging the overall market lower on concern European banks need more capital. Treasuries are lower after St. Louis Fed President Bullard, speaking at a forum in Prague, said the Fed might need to tighten monetary policy before the outlook for the global economy clears up later this year. Limiting losses in European stocks was the stronger than expected Feb French consumer spending, which climbed +0.9% m/m and +5.5% y/y, stronger than expectations of +0.5% m/m and +4.8% y/y. German consumer confidence fell less than expected after the Apr German GfK consumer confidence surve y fell -0.1 to 5.9, better than expectations of -0.2 to 5.8.


•   The Asian stock markets today closed mixed with Japan down -0.21%, Hong Kong -0.03%, China -0.99%, Taiwan +0.51%, Australia +0.47%, Singapore -0.01%, South Korea +0.77%, India +0.94%. Japanese stocks declined on concern over whether the country can contain its nuclear crisis and after Goldman Sachs predicted Japan's economy would contract next quarter as it cut its GDP forecast for Japan for the fiscal year starting Apr 1 to 0.7% from 1.3%. Concerns are rising that the increased radioactive pollution found at the crippled Fukushima Dai-Ichi power plant could delay Japan's reconstruction recovery. Limiting declines in Japanese exporters was the decline in the yen to a 1-week low against the dollar, which may help boost exporters' profits.

Wednesday, March 30, 2011...


Overnight Developments

•   Global stocks are higher with the European Euro Stoxx 50 index up +0.71% and June S&Ps up +6.50 points. Stock markets around the world are all higher on speculation that neither the Japanese nuclear crisis nor Middle East turmoil will derail the global economic recovery. The dollar is higher and Treasuries and commodities are mixed. Credit-default swaps insuring Portuguese government debt rose to a record 557 bp as the yield on Portugal's 5-year bond rose to 9% for the first time since the euro was introduced in 1999. The WSJ reported that Portugal might revise official data for a report to be sent to Eurostat, the EU statistics agency, which could show a wider 2010 budget deficit. Barclays Capital speculates that Portugal, which faces total bond redemptions of about 9 billion euros ($12.7 billion) by June, has no more than 5 billion euros in cash, making a bailout a near certainty. Bank of Ireland Plc slumped over 6% amid speculation the government may be forced to take a controlling stake after the results of a third round of stress tests are published tomorrow. Mar Euro-Zone economic confidence fell -0.6 to 107.3, slightly more than expectations of a -0.3 point decline to 107.5.


•   The Asian stock markets today closed mostly higher with Japan up +2.64%, Hong Kong +1.70%, China -0.06%, Taiwan +0.58%, Australia +1.40%, Singapore +1.26%, South Korea +1.03%, India +0.89%. Japan's Nikkei 225 Stock Index rallied to a 2-week high as Japanese companies resumed production following the Mar 11 earthquake and on speculation the economic recovery in the US will boost earnings. An unexpected increase in industrial production also lifted Japanese stocks after Feb Japan industrial production rose +0.4% m/m, stronger than expectations of a -0.1% m/m decline. The fall in the yen to a 2-1/2 week low against the dollar is another positive for Japanese stocks, while the Australian dollar strengthened to $1.0333, the most since it was freely floated in 1983, on prospects that global growth will increase demand for commodities.

Thursday, March 31, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index down -0,73% and June S&Ps up +0.10 of a point. A weaker dollar has pushed most commodities higher and Treasuries are stronger on concern the European sovereign-debt crisis may worsen. Credit-default swaps on Portuguese government debt rose 13 bp to a record 579 bp while default swaps on Irish government bonds rose 8 bp to a 2-1/2 month high of 633 bp. The 10-year German bund yield climbed to a 14-month high of 3.364% after European inflation accelerated. The Mar Euro-Zone CPI estimate unexpectedly climbed to 2.6% y/y, the fastest pace since Oct 2008. An increase in French producer prices is undercutting bunds as well as Feb French producer prices rose a more than expected +6.3% y/y, its fastest pace in 2-1/2 years. Strength in the German labor market is limiting losses in European stocks as German unemployment fell for the 21st straight month in Mar. The Mar German unemployment change fell a mor e than expected -55,000 to 3.01 million, the lowest level of unemployment since Jun 1992. That helped push the Mar German unemployment rate down -0.2 to 7.1%, its lowest level since records for a reunified Germany began in 1991.


•   The Asian stock markets today closed mostly higher with Japan up +0.48%, Hong Kong +0.32%, China -1.01%, Taiwan +0.43%, Australia +0.33%, Singapore +0.34%, South Korea +0.66%, India +0.80%. Japan's Nikkei 225 Stock Index climbed to a 2-week high on optimism a strengthening recovery in the US will boost Japanese exports. The Mar Nomura/JMMA manufacturing PMI tumbled -6.5 to a 1-3/4 year low of 46.4 as Japan's manufacturing sector contracted following the aftermath of the Mar 11 earthquake. An electricity shortage after the disaster is threatening to exacerbate Japan's post-quake slump even as intact factories move to conserve power. Tokyo Electric Power has begun rolling blackouts in the capital and Toyota Motor said automakers may want to consider taking turns in running assembly lines to save energy, while Tokyo Steel Manufacturing has already shifted production west because of the power disruptions. Goldman Sachs Group today raised Chinese stocks to "overweig ht" from "market weight" saying investors should increase their holdings in Chinese stocks as the government may delay further policy tightening measures given signs inflation and the economy are slowing.

Friday, April 1, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 index up +0.81% and June S&Ps up +5.70 points. The dollar is higher and Treasuries are weaker ahead of the US payrolls report for Mar later this morning. Crude oil rose to a 2-1/2 year high of $107.65 a barrel in overnight trade after manufacturing data in China accelerated for the firs time in 4 months. A rally in European bank stocks is leading the overall market higher, with BNP Paribas SA, France's largest bank, up 2.7% and Barclays Plc up 3.7%. Bank of Ireland Plc soared 30% after it outlined plans to avoid majority government control after being ordered to raise 5.2 billion euros following a stress test. An easing of sovereign-debt concerns is also boosting European stocks after credit default swaps to insure Portugal's government debt fell 11 bp to 570; swaps fell 4 bp on Irish debt to 640, declined 5.5 bp on Spanish debt to 229 and slipped 3 bp on Greek debt to 991. The euro weakened af ter the Mar Euro-Zone PMI manufacturing index was unexpectedly revised down -0.2 to 57.5, while manufacturing activity in England fell to its lowest level in 5 months after the Mar UK PMI manufacturing index tumbled -3.8 to 57.1.


•   The Asian stock markets today closed mostly higher with Japan down -0.48%, Hong Kong +1.17%, China +1.53%, Taiwan +0.25%, Australia +0.49%, Singapore +0.47%, South Korea +0.67%, India -0.13%. Japanese stocks closed lower as Mar Japan vehicle sales plunged -37% y/y to 279,389 vehicles, its biggest decline since sales data began in 1980 after last month's earthquake and ensuing nuclear crisis deterred buyers and forced automakers to shut factories. Losses in Japanese stocks were limited however, as the yen fell to a 1-1/2 month low against the dollar. Chinese stocks closed higher and boosted global stocks as well after Chinese manufacturing growth in Mar accelerated for the first time in 4 months when the Mar China PMI manufacturing index rose +1.2 to 53.4, which eases concern that recent monetary tightening by the PBOC may lead to a marked slowdown in the Chinese economy. South Korean stocks finished higher after Mar Korea exports surged +30.3% y/y, which will also ad d pressure on the BOK to raise interest rates further as Mar Korea CPI rose to +4.7% y/y, its highest level in 29 months.

Monday, April 4, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 index up +0.16% and June S&Ps up +3.30 points. Treasuries are lower and commodities are higher with crude oil at a 2-1/2 year high above $108.00 a barrel. The euro fell back from a 5-month high against the dollar after European investor confidence fell more than expected from a surge in fuel costs. The Apr Euro-Zone Sentix investor confidence fell -2.9 to a 3-month low of 14.2. M&A activity is lifting European stocks as Vodafone Group Plc agreed to sell its stake in SFR to Vivendi for 7.95 billion euros ($11.3 billion) and Solvay SA agreed to buy chemical maker Rhodia SA for 3.4 billion euros ($4.8 billion). German bund prices fell for an eighth day, their longest streak of declines in almost 5 years, after Feb Euro-Zone producer prices climbed +6.6% y/y, their fastest pace in 2-1/2 years.



•   The Asian stock markets today closed mostly higher with Japan up +0.11%, Hong Kong +1.46%, China and Taiwan closed for Tomb Sweeping Holiday, Australia +0.51%, Singapore +0.65%, South Korea -0.26%, India +1.45%. The plunge in the yen to a 6-month low against the dollar along with a stronger-than-expected US payrolls report on Friday lifted Asian stocks on increased optimism in the economic recovery. South Korea's won rose to a 2-1/2 year high against the dollar as increased confidence in the global economy prompts investors to increase risks as they pump money into emerging markets. In an effort to allow workers in to fix damaged pumps at its crippled Fukushima Dai-Ichi nuclear plant, Tokyo Electric Power (Tepco) said it will dump radioactive water into the sea as it runs out of space to store fluids used to cool the plant's 6 reactors. The Japanese government approved a plan by Tepco to release water with low radioactive contamination into the sea to make room for l iquids with higher radiation levels.

Tuesday, April 5, 2011...

Overnight Developments

•   Global stocks are weaker with the European Euro Stoxx 50 index down -0.08% and June S&Ps down -4.30 points. The dollar is stronger after Fed Chairman Bernanke said at an Atlanta Fed conference last night that inflation must be watched "extremely closely," which fueled speculation that the Fed may tighten monetary policy sooner than previously expected. Stock prices were pressured after China raised its interest rates and after Moody's Investors Service cut Portugal's long-term government bond rating to Baa1 from A3, its second downgrade in the last 3 weeks, saying another downgrade may follow and the winner of Portugal's elections in June will probably tap Europe's bailout fund with "urgency." Credit-default swaps on Portuguese government debt jumped 9 bp to a record 589 bp and the extra yield that investors demand to hold Portuguese bonds instead of benchmark German bunds rose to 531 bp, the most since Bloomberg began tabulating the data i n 1997. The euro remained lower after Feb Euro-Zone retail sales unexpectedly declined -0.1% m/m as high energy costs curbed spending, while ECB Council member Bonello said that risks to the ECB's economic growth projections "are on the downside." On the positive side, the Mar Euro-Zone PMI composite index was revised up +0.1 to 57.6.



•   The Asian stock markets today closed mixed with Japan down -1.06%, Hong Kong, China and Taiwan closed for holiday, Australia +0.27%, Singapore +0.20%, South Korea +0.72%, India -0.08%. China raised interest rates for the fourth time since the global financial crisis in an attempt to restrain inflation and limit the risk of asset bubbles. The PBOC hiked the 1-year lending rate by 25 bp to 6.31% from 6.06%, effective tomorrow, and boosted the 1-year deposit rate to 3.25% from 3.00%. A fall in chipmakers led technology stocks lower in Asia after the Semiconductor Industry Association said the 3-month average for global chip sales fell -1.1% m/m in Feb. Toyota closed down over 3% after it said it may temporarily shutter factories in North America as component supplies are running low after production in Japan was halted in the aftermath of the earthquake, while Sony fell 1.1% after it said it may delay the release of its new Playstation Portable game machine as the earth quake disrupted production. Tokyo Electric Power (Tepco) plunged the daily limit, or 18%, to its lowest price since the company was listed in 1951 as it continues to dump radioactive water into the ocean. Tepco has now lost 83% of its value since the Mar 11 earthquake crippled its Fukushima Dai-Ichi power plant.

Wednesday, April 6, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index up +0.50% and June S&Ps up +8.90 points. The dollar index slipped to a 1-1/2 week low while precious metals soared, as silver posted a 31-year high and gold climbed to a record. Expectations for an ECB rate hike at tomorrow's monetary policy meeting has boosted the euro to a 14-1/2 month high against the dollar, while the outlook for further emergency stimulus from the BOJ has pushed the yen to a 6-1/4 month low against the dollar. The expected tightening of ECB monetary policy has strengthened the euro's interest rate differentials with the 3-month Euribor rate, the rate at which European banks say they see each other lending in euros for 3 months, increasing for the fourteenth consecutive day as it rose +0.7 bp to a 1-3/4 year high of 1.269%. European stocks received a boost after Feb German factory orders surged +2.4% m/m, nearly 5 times as much as forecast. Limiting stock gains however, was th e unexpected decline in Feb UK industrial production which slipped -1.2% m/m, weaker than expectations of a +0.4% m/m increase.



•   The Asian stock markets today closed mixed with Japan down -0.32%, Hong Kong +0.56%, China +1.17%, Taiwan +1.69%, Australia +0.26%, Singapore +0.75%, South Jorea -0.24%, India -0.38%. Japanese stocks closed slightly lower as the country's industrial output struggles to recover from the quake crisis, although most exporters strengthened as the yen tumbled to a 6-1/4 month low against the dollar. On the positive side, workers at the crippled Fukushima Dai-Ichi nuclear complex finally stopped the flow of radioactive water from flowing into the Pacific Ocean, although highly contaminated water continues to pool around the complex. China's Shanghai Stock Index closed higher despite the PBOC raising interest rates yesterday as speculation mounts that the PBOC may be nearing an end to its rate-tightening cycle.

Thursday, April 7, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index up +0.57% and June S&Ps up +0.50 of a point. The dollar is higher and Treasuries are weaker while copper rose to a 1-1/2 week high. As expected, the BOE maintained its benchmark interest rate at 0.50% and kept its asset purchase target at 200 billion pounds following the conclusion of its monetary policy meeting. A rally in European bank stocks is leading the market higher after Portugal's government asked for a bailout. According to European officials with knowledge of the situation, Portugal is aiming for a bailout that may be worth as much as 75 billion euros ($107 billion) as record high borrowing costs forced the country to be the third in the Euro-Zone to seek a rescue package. After climbing to a record high of 585 bp on Tuesday, credit-default swaps tied to Portuguese bonds tumbled to 535 bp today. German bunds tumbled on reduced safe-haven demand with the yield on the benchmark 10-year b und climbing to a 1-1/2 year high of 3.46%. Another positive for stocks and a negative for government debt is the strength in German industrial output. Feb German industrial production rose +1.6% m/m and +14.8% y/y, stronger than expectations of +0.5% m/m and +13.2% y/y.



•   The Asian stock markets today closed mixed with Japan up +0.07%, Hong Kong -0.01%, China +0.40%, Taiwan +0.56%, Australia -0.10%, Singapore +0.04%, South Korea -0.32%, India -0.11%. Following the conclusion of its 2-day monetary policy meeting today, the BOJ downgraded their economic assessment of the Japanese economy for the first time since Oct and unveiled a 1 trillion yen ($12 billion) lending facility to help the economy rebuild from last month's earthquake. The BOJ said Japan's economy is under "strong downward pressure" after the earthquake damaged production facilities and weakened financial positions of companies, and pressure will persist "for the time being" before the economy recovers. The Australian dollar climbed to $1.0482, the highest level since being freely floated in 1983, after Australia's unemployment rate fell to a 2-year low of 4.9% in March as employers added 37,800 workers, more than the 24,000 forecast.

Friday, April 8, 2011...

Overnight Developments

•   Global stocks are higher with the European Euro Stoxx 50 index up +0.40% and June S&Ps up +5.50 points. The dollar index slumped to a 16-month low, which has sent commodities soaring, with crude oil at a 2-1/2 year high and gold at a record. Limited damage to Japan from yesterday's 7.1-magnitude temblor along with strength in German exports is lifting stock prices across the globe. The euro climbed to a 14-3/4 month high against the dollar after Feb German exports rose +2.7% m/m, stronger than expectations of +2.0% m/m. The strong economic data along with a rally in equities has pushed the 10-year German bund yield up to a 1-1/2 year high of 3.477%. The British pound surged to a 14-1/2 month high against the dollar after Mar UK PPI output prices rose a larger-than-expected +5.4% y/y, their fastest pace in 29 months.



•   The Asian stock markets today closed mostly higher with Japan up +1.85%, Hong Kong +0.47%, China +0.87%, Taiwan -0.08%, Australia +0.66%, Singapore +0.49%, South Korea +0.21%, India -0.71%. Japanese stocks rose after minimal damage was caused from yesterday's 7.1 magnitude temblor. Toyota closed 1.4% higher after it said it will resume output at its factories in Japan on Apr 18, while shipbuilders and engineering companies rallied on speculation that they may benefit from Japan's rebuilding efforts. China's Shanghai Stock Index rose to a 4-3/4 month high led by gains in mining companies and energy producers, while China's airline stocks rose after China National Radio reported that the airlines will raise fuel surcharges after the government increased the price of jet fuel. According to data from EPFR Global, developing-nation equity funds saw a $5.7 billion inflow in the week ended Apr 6, the biggest increase in nearly 6 months.

Monday, April 11, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 index down -0.12% and June S&Ps up +3.50 points. The dollar is little changed and Treasuries are weaker on inflation concerns as the difference in yield between 10-year T-notes and 10-year TIPS widened to 2.66 percentage points, the highest in 3 years, while the 10-year German bund yield climbed to a 1-1/2 year high of 3.50%. Crude oil is lower after the African Union said Libyan leader Ghaddafi agreed to a plan that called for a cease-fire, which boosted speculation that crude exports may recover. The euro weakened on renewed European sovereign-debt concerns after German Finance Minister Schaeuble said it is "unclear" whether Greece will need another cut in its bailout rate or a further extension of repayment terms to return to fiscal health. Weakness in carmakers led European stocks lower after the China Association of Automobile Manufacturers said sales may grow at a slower pace than previously forecast this year. This led Credit Suisse Group AG to downgrade the sector to "benchmark," saying it's cautious on stocks that are more reliant on economic growth.



•   The Asian stock markets today closed mostly lower with Japan down -0.50%, Hong Kong -0.38% China -0.59%, Taiwan -0.16%, Australia +0.62%, Singapore -0.84%, South Korea -0.20%, India -0.97%. Japanese stocks closed lower, led by declines in automakers, after Citigroup downgraded Japan's auto sector to "sell" from "buy," saying investors have yet to price in the impact on earnings from Japan's quake crisis. A German government official said the IMF will lower its forecast for economic growth for the US and Japan when the IMF publishes its World Economic Outlook later today in Washington. The official, speaking on condition of anonymity, said damage from Japan's quake crisis would probably amount to between 3.0% and 5.0% of the country's GDP. After the Asian markets closed, a magnitude 6.6 earthquake hit Japan about 35 miles from Tokyo Electric's stricken nuclear power plant, causing fires and power disruptions. Strong Chinese exports last month may prompt the PBOC into additional interest rate hikes and increases in banks' reserve requirement ratios after Mar China exports surged +35.8% y/y, stronger than expectations of +23.4% y/y.

Tuesday, April 12, 2011...

Overnight Developments

•   Global stocks are lower with the European Euro Stoxx 50 index down -1.12% and June S&Ps down -7.20 points at a 2-week low. Stock prices retreated after Tokyo Electric Power said its crippled Fukushima Dai-Ichi power plant might release more radiation than Chernobyl and after German investor confidence slipped to a 4-month low. The Apr German ZEW survey of economic sentiment fell a more-than-expected -6.5 to 7.6 as oil prices surged and the ECB raised interest rates. Global stock futures also took a hit after Alcoa reported Q1 sales of $5.96 billion, weaker than market expectations of $6.06 billion. The release of Alcoa's earnings is the unofficial start of US earnings season. The euro gained after ECB Council member Stark said the ECB will adjust interest rates at an "appropriate" pace, which indicates the ECB has embarked on a gradual tightening cycle, despite last week's comments from ECB President Trichet that last week's rate hike wasn't necess arily the start of a series of rate hikes. Inflation worsened after Mar German CPI was unexpectedly revised up to +2.3% y/y, the fastest pace of price increases in 29 months. Inflation in England however, increased less than expected, which helped the British pound slide to a 1-week low against the dollar. Mar UK core CPI rose +3.2% y/y, less than expectations of +3.3% y/y.



•   The Asian stock markets today closed lower with Japan down -1.69%, Hong Kong -1.34%, China -0.20%, Taiwan -1.66%, Australia -1.46%, Singapore -0.71%, South Korea -1.55%. Asian stock markets closed lower and global equity markets weakened after Japan's Nuclear and Industrial Safety Agency raised the level of the Fukushima crisis to 7, the highest in the standard global scale. Level 7 accidents mean that there has been a "major release of radioactive material with widespread health and environmental effects requiring implementation of planned and extended countermeasures," according to the IAEA. The yen rose to a 1-week high against the dollar after Japan's Economic and Fiscal Policy Minister said the country's earthquake may result in a larger hit to the economy than the government had previously estimated. The Bank of Korea left interest rates unchanged today as expected after 2 increases this year, saying it wants to see how rising oil prices and Japan's q uake crisis will affect economic growth.

Wednesday, April 13, 2011...

Overnight Developments

•   Global stocks are stronger with the European Euro Stoxx 50 index up +0.65% and June S&Ps up +7.40 points. The dollar and Treasuries are weaker, while most commodities are higher as the market bounces back from yesterday's declines. European automakers followed their Japanese counterparts higher after Nomura Holdings said Asian carmakers were "oversold." Feb Euro-Zone industrial production rose +0.4% m/m and +7.3% y/y, weaker than expectations of +0.8% m/m and +8.0% y/y. The euro strengthened after Mar French CPI and Mar German wholesale prices accelerated, stoking bets that the ECB will tighten monetary policy further after last week's interest rate increase. Mar French CPI climbed +2.2% y/y, higher than expectations of +1.9% and its fastest pace in 29 months, while Mar German wholesale prices rose +10.9% y/y, higher than expectations of +10.7% y/y and the largest pace of increase since Oct 1981. Treasuries were pressured after commentary in the G erman newspaper Handelsblatt quoted Dallas Fed President Fisher saying, "I see the risk that we won't be able to keep inflation under control."



•   The Asian stock markets today closed higher with Japan up +0.90%, Hong Kong +0.66%, China +1.36%, Taiwan +0.55%, Australia +0.25%, Singapore +1.09%, South Korea +1.65%, India +2.25%. The Japanese government cut its assessment of the economy for the first time in 6 months because of last month's earthquake saying "Although the Japanese economy was picking up, it has shown weakness" since the temblor and that power shortages, delays in resolving supply chain disruptions and rising oil prices threaten to depress growth further. Asian automakers rose and led the overall equity market higher after Nomura Holdings said they were "oversold." As aftershocks continue to rock Japan, NRC Chairman Jaczko said Japan's nuclear crisis "has yet to stabilize and significant additional problems" could still occur at the crippled Fukushima Dai-Ichi power plant. The Chinese yuan appreciated to as much as 6.5317 per dollar, the highest since China unified of ficial and market exchange rates in 1993, after China's Economic Information Daily said banks' reserve ratios may be increased by 50 bp on either Apr 15 or Apr 22 as part of the PBOC's efforts to contain inflation.

Thursday, April 14, 2011...

Overnight Developments

•   Global stocks are lower with the European Euro Stoxx 50 index down -0.62% and June S&Ps down -6.90 points at a 2-week low. The dollar and Treasuries are higher, with the yield on the 10-year T-note falling to a 1-week low on increased safe-haven demand due to renewed European sovereign-debt concerns. German Finance Minister Schaeuble told Germany's Die Welt newspaper Greece may need to restructure its debt should an audit in June question the nation's ability to pay creditors. The head of Standard & Poor's European debt evaluation team said bondholders of Greek debt might see a 50% to 70% "haircut" on their Greek securities if the nation restructures its debt. Credit-default swaps to insure Greek government debt rose 7 bp to a record 1,068 bp, according to CMA. The yield on Greek 10-year debt rose 14 bp to a euro-era record high of 13.06% and Portuguese 10-year government bond yields rose 10 bp to 8.84%, the highest since Bloomberg began collec ting the data in 1997. In its monthly bulletin for Apr released today, the ECB said it will monitor upside inflation risks "very closely" and that "risks to the medium-term outlook for price developments remain on the upside." Hawkish commentary from ECB policy makers bolstered speculation the ECB will further tighten monetary policy after ECB Executive Board member Bini Smaghi said that inflation risks in the Euro-Zone mean low interest rates are no longer acceptable, while ECB Council member Weber said further monetary policy tightening will be "warranted" in 2011 if the ECB's economic forecasts are met.



•   The Asian stock markets today closed mixed with Japan up +0.13%, Hong Kong -0.50%, China -0.55%, Taiwan +0.26%, Australia -0.55%, Singapore -0.41%, South Korea +0.88%. Asian stock markets were undercut after Phoenix TV reported that China's Mar CPI, to be released later today, will show an increase of +5.3% y/y to +5.4% y/y, higher than expectations of +5.2% y/y. Takeover speculation lifted some Japanese stocks as Isuzu Motors closed 6.2% higher, even after it denied a report that Volkswagen AG is considering taking a stake or purchasing the company. South Korea's Kospi Stock Index finished higher after Hyundai Motor, South Korea's largest automaker, closed up 4.5% after it said its Indian unit will introduce 2 new models a year until 2014 to retain its number two sales ranking there. A decline in banking stocks led China's Shanghai Stock Index lower after estimates from a Chinese banking regulator said China's banks may have to raise about 860 billion yuan ($131 bil lion) of stock over 6 years to meet stricter capital rules and that lenders may need an additional 1.26 trillion yuan in supplementary capital by the end of 2016. The report from China Securities Journal that China is likely to raise the reserve requirements for banks in the "near future," also pressured Asian stock prices today.

Friday, April 15, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index up +0.07% and June S&Ps down -1.40 points. The euro weakened and gold jumped to a record high after Ireland's credit rating was cut, while Treasuries and the yen moved higher on speculation that increased inflation pressures may prompt the ECB and PBOC into further tightening measures. Mar Euro-Zone CPI accelerated at a +1.4% m/m and +2.7% y/y pace, stronger-than-expected with the +2.7% y/y increase the fastest pace in 29 months. Moody's Investors Service cut Ireland's credit rating two levels to Baa3, the lowest investment grade, from Baa1 with a negative outlook as the government struggles to lower the budget deficit and restore economic growth. Better-than-expected company earnings are lifting European stocks with Nestle up 1.1% after it reported Q1 organic sales growth of 6.4%, higher than analysts' estimates of 5.9%, while Syngenta rose 2.3% after it reported sales of $4.02 billion, stronger t han analysts' estimates of $3.93 billion.



•   The Asian stock markets today closed mostly lower with Japan down -0.65%, Hong Kong -0.02%, China +0.16%, Taiwan -0.96%, Australia -0.66%, Singapore -0.18%, South Korea -0.12%, India -1.57%. The yen matched a 2-week low against the dollar, which weakened Japanese exporters, and after China released a plethora of stronger-than-expected economic data. Q1 China GDP expanded at a +9.7% y/y pace, stronger than expectations of +9.4% y/y, while Mar China industrial production climbed +14.8% y/y, higher than expectations of +14.0% y/y. Price pressures in China also increased after Mar China CPI accelerated at a +5.4% y/y pace, stronger than expectations of +5.2% y/y and the fastest pace in 2-3/4 years, while Mar China producer prices rose at a +7.3% y/y clip, faster than expectations of +7.2% y/y and the fastest pace in 2-1/2 years. Along with yesterday's report that China's foreign-exchange reserves rose to a world-record $3 trillion, today's data may prompt the PBOC to boo st reserve requirements for banks as early as this evening, while also keeping the pressure on the central bank to boost interest rates further.

Monday, April 18, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 index down -1.07% and June S&Ps down -8.50 points. Treasuries and the dollar are higher, while most commodities weakened after China raised reserve requirements for banks and the yields on Greek and Portuguese government bonds surged to records on default concerns. The euro fell to a 1-week low against the dollar after Greece's 2-year yield surged 90 bp to a euro-era high of 19.40%, even after Greek Finance Minister Papaconstantinou said "Greece isn't discussing restructuring its debt." Increased European sovereign-debt concerns pushed stock prices lower and prompted an increase in safe-haven demand for US and German government debt as the German 10-year bund yield fell to a 2-week low. Credit-default swaps insuring Greek bonds jumped 56 bp to a record 1,211 bp, signaling a 64.5% chance of a default within 5 years, while swaps for Portuguese government debt climbed 16 bp to a record 614. Interest rate concerns are also undercutting stock prices after ECB Council member Nowotny said that expectations the ECB's 2-week refinancing rate will be increased by another 50 bp in 2011 are "well-founded," while fellow ECB Council member Coene said that monetary "conditions are too accommodative." On the positive side, Germany's Bundesbank said today in its monthly report that the German economy will probably maintain its growth momentum in the current quarter as "strong" factory orders boost output.



•   The Asian stock markets today closed mostly lower with Japan down -0.36%, Hong Kong -0.74%, China +0.01%, Taiwan -0.04%, Australia +0.20%, Singapore -0.29%, South Korea -0.23%, India -1.53%. Most Asian stocks fell after China raised the reserve requirements for the country's banks to tame inflation, which fuels concern more tightening measures will curb economic growth. China increased banks' reserve requirements by 50 bp as of Apr 21 to a record 20.5% and PBOC Governor Zhou Xiaochuan said monetary tightening will continue for "some time" and that he sees no "absolute" limit on how high reserve requirements can go. Japanese stocks were also undercut by strength in the yen, which rallied to a 2-week high against the dollar.

Tuesday, April 19, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index up +0.62% and June S&Ps up +0.10 of a point. The dollar and Treasuries are weaker as stocks rebound from Monday's slide. The euro gained against the dollar after European services and manufacturing growth unexpectedly accelerated in April, which suggest the Euro-Zone economy is weathering surging energy costs and tougher austerity measures. The Apr Euro-Zone PMI composite increased +0.2 to 57.8, stronger than expectations of -0.6 to 57.0. Better-than-expected company earnings are boosting European stocks with Novartis up 3.5% after the drug maker reported Q1 profit of $2.77 billion, stronger than analysts' estimates of $2.57 billion, while SKF, the world's biggest maker of ball bearings, reported Q1 net income of 1.57 billion kroner ($250 million), higher than analysts' estimates of 1.43 billion kroner.



•   The Asian stock markets today closed mostly lower with Japan down -1.21%, Hong Kong -1.30%, China -1.89%, Taiwan -0.87%, Australia -1.41%, Singapore -0.60%, South Korea -0.61%, India +0.16%. Technology stocks fell in Asia after Texas Instruments forecast revenue and profit below analysts' estimates, while energy producers closed lower as crude oil prices declined. Texas Instruments, whose earnings provide a broad guide of demand across the electronics industry, said that Japan's quake crisis cost the company $20 billion in revenue in Q1. Mar China foreign direct investment rose +32.9% y/y as rising inflation and interest rates failed to dampen foreign confidence in China's economy. The yuan strengthened to 6.5276 against the dollar, the highest since China unified official and market exchange rates in 1993, after PBOC Deputy Governor said increased flexibility in the yuan may "ease imported inflation pressures," which fueled speculation that China may let t he yuan appreciate to counter inflation.

Wednesday, April 20, 2011...

Overnight Developments

•   Global stocks are sharply higher with the European Euro Stoxx 50 index up +1.60% and June S&Ps up +18.60 points. Stocks and commodities are higher across the globe, with gold posting another record high, while Treasuries and the dollar are lower, with the dollar index sliding to a 16-1/2 month low, after Intel late yesterday forecast stronger than expected revenue for Q2. STMicroelectronics NV, Europe's biggest chipmaker, jumped 6% and ASML Holding NV, the largest semiconductor-equipment maker, climbed 5.9% on the heels on Intel's strong results. PSA Citroen gained 4.2% as Europe's second-biggest automaker posted a 10% increase in Q1 revenue, while L'Oreal SA rose 3% after the world's largest cosmetics maker reported a 9.3% increase in sales. As of Apr 11, 81% of the 42 companies in the S&P 500 that reported earnings results have beaten expectations. Another positive factor for stocks was the smaller than expected increase in Mar German producer prices w hich rose +0.4% m/m and +6.2% y/y, weaker than expectations of +0.8% m/m and +6.6% y/y. The euro rose to a 15-month high against the dollar as European debt concerns eased after Spain sold 3.4 billion euros ($4.9 billion) of bonds with a bid-to-cover ratio on the 10-year debt at 2.10, higher than the 1.81 bid-to-cover ratio seen at last month's auction, a sign of strong demand.



•   The Asian stock markets today closed higher with Japan up +1.76%, Hong Kong +1.60%, China +0.01%, Taiwan +2.02%, Australia +1.37%, Singapore +1.29%, South Korea +2.41%, India +1.83%. Technology stocks gained in Asia-Pacific markets, led by a 2.4% increase in Advantest, Japan's largest maker of chip-testing equipment, after Intel forecast quarterly sales that topped analysts' estimates. Samsung Electronics closed 3.3% higher after it agreed to sell its computer hard-disk drive business, while LG Chemical, South Korea's biggest chemical maker, rose 5% after it reported a 27% gain in Q1 profit. The Australian dollar rose to a record $1.0599 against the US dollar, the strongest since it was freely floated in 1983, after the Q1 Australian export price index rose +5.2% q/q, higher than expectations of +5.0% q/q, which gives the RBA more reason to raise interest rates.

Thursday, April 21, 2011...

Overnight Developments

•   Global stocks are higher with the European Euro Stoxx 50 index up +0.84% and June S&Ps up +8.70 points. Treasuries and the dollar weakened with the dollar index plummeting to a 2-2/3 year low. Commodities gained with gold at a record and crude at a 1-week high. Global equity markets extended this week's gains after Apple said its Q2 profit almost doubled to $6.40 a share from $3.33 a year earlier. Other companies also reported stellar earnings results that helped lift the market as well with Nokia Oyj up 2.2% after it reported Q1 profit that beat estimates and Akzo Nobel soared 4.5% after the world's biggest maker of paints reported increased Q1 profit. The British pound rose to a 16-monthhigh against the dollar after Mar UK retail sales unexpectedly rose +0.2% m/m, stronger than expectations for a -0.4% month decline. Apr German IFO business confidence slipped -0.7 to 110.4, slightly weaker than expectations of -0.6 to 110.5. The euro rose to a 16-month h igh against the dollar despite the surge in yields on Greek, Portugal and Irish government debt to euro-era records as the European sovereign-debt crisis intensifies.



•   The Asian stock markets today closed higher with Japan up +0.82%, Hong Kong +1.01%, China +0.66%, Taiwan +1.64%, Australia +1.13%, Singapore +0.91%, South Korea +1.38%, India +0.67%. Asian stocks rose with gains in technology stocks leading the way, after Apple reported increased profits, which signals the global economic recovery is accelerating. Raw-materials and energy producers also gained with silver rising to a 31-year high and copper and crude oil at 1-week highs. Japanese stocks gained despite the rise in the yen to a 3-week high against the dollar. The Australian dollar surged to $1.0772, its strongest since it was freely floated in 1983, after Q1 Australia producer prices rose +1.2% q/q, stronger than expectations of +1.0% q/q, which fuels speculation the RBA will continue to tighten monetary policy.

Monday, April 25, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 index closed for Easter Monday holiday, while June S&Ps are up +3.60 points. Treasuries are up slightly and the dollar weakened, which has prompted gains in commodities with gold posting yet another record high. Oil prices rose as escalating violence in the Middle East and Africa threatens to prolong supply disruptions. Crude oil prices also gained after a Saudi Arabian oil official said his country's oil output will stay at 12.5 million barrels a day, squashing rumors that the country was considering hiking output to 15 million barrels a day.



•   The Asian stock markets today closed mostly lower with Japan down -0.11%, China -1.53%, Taiwan -0.21%, Singapore -0.22%, South Korea +0.64%, India -0.09% Asian stock markets were undercut after China International Capital Corp. said that China's consumer prices may accelerate to +5/5% y/y this month. Japanese stocks also weakened after the Nikkei newspaper reported that the BOJ may cut its forecast for GDP growth in half for fiscal 2011 to +0.8% annualized from +1.6% annualized as a result of last month's earthquake crisis. Japanese automakers fell after Honda reported a 63% drop in auto production last month and Toyota reported a 30% decline in global auto output due to last month's earthquake. India's Sensex 30 Stock Index closed lower, led by a 3% drop in Reliance Industries, India's biggest company, after it reported Q1 net income of 53.8 billion rupees ($1.2 billion), below analysts' projections of 54.3 billion rupees. Korean automakers rose, which led South Ko rea's Kospi 200 Stock Index higher, after Kia Motors said it sold a record number of vehicles in Q1.

Tuesday, April 26, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.14% and June S&Ps up +4.40 points. The euro rose to a 16-1/4 month high against the dollar after ECB President Trichet said the ECB must continue "solidly anchoring" inflation expectations, which bolstered speculation of further ECB rate hikes. Crude oil weakened after the CEO of Saudi Arabia's state oil company, Saudi Arabian Oil Co., said it is "not comfortable" with the current price of oil and is concerned about its effect of global economic growth. UBS AG surged nearly 6% and is leading European stocks higher after Switzerland's biggest lender reported Q1 net income of 1.81 billion francs, beating analysts' estimates of 1.69 billion francs, as the bank attracted the most new money from wealthy customers since the end of 2007. Credit-default swaps to insure Greek government debt jumped 13 bp to a record 1,345 bp after Europe's statistics agency reported Greece's 2010 budget gap was 10.5% of GDP, more than the 9.4% the Greek government reported back in Feb. A member of German Chancellor Merkel's council of economic advisers said Greece will have to restructure its debt and should avoid waiting too long to do it, while ECB Council member and ECB Chief Economist Stark said a debt restructuring by a euro country risks triggering a banking crisis that in a "worst case" could exceed the effects of the failure of Lehman Brothers Holdings.



•   The Asian stock markets today closed lower with Japan down -1.17%, Hong Kong -0.54%, China -0.57%, Taiwan -0.03%, Australia closed for holiday, Singapore -0.50%, South Korea -0.45%, India -0.20%. Chinese bank stocks weakened and led the Shanghai Stock Index lower after 3 people with knowledge of the matter said China's banking regulator set capital targets for the nation's 5 biggest lenders above the minimum 11.5% ratio last month amid concern that credit risks may rise. A report in the Economic Information Daily by a member of China's State Council Development Research Center said the PBOC may raise interest rates and bank reserve requirement ratios in Q2 to control liquidity. Japanese stocks closed lower after the yen rallied to a 4-week high against the dollar, which may hurt exporters' earnings as they repatriate overseas profits back into yen, while Nintendo fell 1.6% after it said sales and profits this year may grow less than analysts' estimates.

Wednesday, April 27, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.69% and June S&Ps up +5.20 points. Treasuries are weaker ahead of the conclusion of the 2-day Fed meeting later today and most commodities are higher with gasoline rising to a 2-3/4 year high. Better-than-expected company earnings results are lifting European and US stocks with Ericsson AB up over 9% after the biggest maker of mobile-phone networks reported Q1 net income of 4.1 billion kroner ($675 million), well ahead of analysts' estimates of 3.06 billion kroner. Volkswagen is up over 4% after Europe's largest automaker reported Q1 profit of 1.71 billion euros ($2.51 billion), beating analysts; estimates of 1.63 billion euros, while Volvo climbed 2.6% after it raised its 2011 sales forecast for Europe and North America to 230,000 to 240,000 tucks from a previous forecast of 220,000 vehicles. The dollar index recovered from a 2-1/2 year low after credit-default swaps to insure the government debts of Greece, Portugal and Ireland all rose to records.



•   The Asian stock markets today closed mixed with Japan up +1.39%, Hong Kong -0.48%, China -0.66%, Taiwan +1.13%, Australia -0.83%, Singapore +0.34%, South Korea +0.24%, India -0.49%. The yen retreated from a 1-month high against the dollar after Standard & Poor's cut Japan's sovereign-rating outlook to "negative" from "stable," saying the nation's reconstruction needs following last month's earthquake will likely boost net government debt to 145% of GDP in fiscal 2013, higher than an earlier forecast of 137%. Mar Japan retail sales weakened more than expected after they tumbled -8.5% y/y, the biggest decline in 13 years. Despite the negative news, Japanese stocks finished higher after the larger-than-expected increase in US consumer confidence boosted the outlook for Asian exporters along with the statement from Japan's Trade Ministry that 60% of factories in earthquake-stricken areas have restarted production. Australia's S&P 200 Stock Ind ex finished lower and the Australian dollar climbed to a record against the US dollar after Q1 Australia consumer prices rose +1.6% q/q, higher than expectations of +1.2% q/q and the biggest increase in 5 years, which gives the RBA more reason to continue their interest rate tightening campaign.

Thursday, April 28, 2011...


•   Global stocks are mixed with the European Euro Stoxx 50 up +0.01% and June S&Ps down -0.90 of a point. Weakness in the dollar accelerated after the FOMC pledged yesterday to keep record stimulus measures in place as the dollar index plunged overnight to a 2-3/4 year low. Gold soared to a record high and Treasuries are higher on expectations that this morning's US Q1 GDP report will show the economy slowed. US stocks were boosted on increased M&A activity after Exelon agreed to buy Constellation Energy for $7.9 billion, or about $28.59 a share. European stocks received a boost after Apr German unemployment fell -37,000, as expected, to 2.97 million, the lowest level of unemployment in 19 years. Interest rate differentials are supporting the euro, which climbed to a 16-1/2 month high against the dollar as the 3-month Euribor rate rose to 1.375%, the highest level in 2 years. Limiting gains in European stocks was the unexpected decline in Mar French consum er spending, which fell -0.7% m/m, weaker than expectations of a +0.2% increase, as soaring fuel prices eroded income.



•   The Asian stock markets today closed mixed with Japan up +1.63%, Hong Kong -0.37%, China -1.49%, Taiwan -0.09%, Australia unchanged, Singapore +0.07%, South Korea +0.02% and India -0.81%. Japan's economy took a bigger hit than expected from last month's earthquake crisis as Mar Japan industrial production plunged -15.3% m/m, the biggest drop since data began in 1953. The BOJ also cut its growth estimate for the year ending Mar 2012 to 0.6% from a Jan prediction of 1.6%. Deputy Governor Nishimura's proposal to expand the BOJ's asset-purchase fund was rejected by the policy board, which boosted the yen against the dollar. China's Shanghai Stock Index slipped to a 1-month low and closed lower on fears the PBOC may raise interest rates again as soon as next week. Credit Suisse Group AG predicts that China may raise interest rates as early as a public holiday on May 2 to counter rising price pressures. Since Jan 2010, 11 of the 13 PBOC decisions to either raise interest rates or boost banks' reserve requirements came on weekends or public holidays.

Friday, April 29, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.12% and June S&Ps up +1.00 point. The dollar and Treasuries are slightly lower, while gold is stronger and trading just below yesterday's all-time high. Strong company earnings results are supporting European stocks with Yara up 3.8% after the world's largest publicly traded nitrogen-fertilizer maker reported Q1 net income of 2.89 billion kroner ($550 million), which beat analysts' estimates of 2.39 billion kroner, while SSAB jumped 6.5% after the world's largest supplier of high-tensile steel reported Q1 net income of 390 million kroner, well ahead of analysts' estimates of 154 million kroner. Undercutting stock prices is the unexpected decline in Mar German retail sales which fell -2.1% m/m, its biggest decline in 14 months, and weaker than expectations of a +0.2% m/m gain. Also, the Apr Euro-Zone economic confidence slipped -1.1 to a 5-month low of 106.2 as soaring energy prices threaten to unde rmine growth. The euro rose to just under a 16-1/2 month high against the dollar after the Apr Euro-Zone CPI estimate quickened to +2.8% y/y, higher than expected and its fastest pace in 2-1/2 years.



•   The Asian stock markets today closed mostly lower with Japan closed for holiday, Hong Kong -0.36%, China +0.98%, Taiwan -0.36%, Australia -1.02%, Singapore -0.16%, South Korea -0.60%, India -0.81%. Factory output slowed in South Korea after Mar Korea industrial production rose +8.7% y/y, its slowest pace in 6 months and weaker than expectations of a +11% y/y increase. Samsung Electronics closed down 1.8% and led South Korean stocks lower after the world's biggest maker of televisions and flat screens reported Q1 net income of 2.78 trillion won ($2.6 billion), below analysts' estimates of 2.8 trillion won. The company said that it expects the "adverse" business environment to continue in Q2 as "global demand is not 100% clear" due to uncertainty about the global recovery and a possible impact from the earthquake in Japan. The Chinese yuan strengthened to a 17-year high of 6.4892, supported by speculation the PBOC will allow the currency to apprecia te to help tame the fastest rate of inflation in China in more than 2 years.

Monday, May 2, 2011...

Overnight Developments

•   Global stocks are higher with the European Euro Stoxx 50 up +0.08% and June S&Ps up +6.60 points after an elite team of US Navy Seals stormed a secret compound in Pakistan and killed Osama Bin Laden. Crude oil is down over $2 a barrel and Treasuries are weaker, while the dollar index dropped to a fresh 2-3/4 year low and pushed gold prices to a record high. Silver prices plunged to a 2-week low after the CME raised margin requirements 13%, while copper sank to a 1-1/2 month low on concern that China's growth is slowing after its Apr purchasing managers' index unexpectedly fell. European stocks also received a boost after German and French Apr PMI manufacturing indexes were both revised upward.



•   The Asian stock markets today closed mostly higher with Japan up +1.57%, Australia +0.04%, South KOrea +1.71%, India -0.72%. Hong Kong, China, Taiwan and Singapore were all closed for holiday. The Apr China PMI manufacturing index, released Saturday, unexpectedly fell -0.5 to 52.9, weaker than expectations of +0.5 to 53.9. South Korean stocks closed higher after Apr Korea exports climbed a record +26.6% y/y, stronger than expectations of +23.7% y/y, and as construction companies and land developers gained when the government said it will give tax incentives to real-estate investment trusts that buy unsold housing, and will establish a bank to purchase soured loans owed by builders and developers. The Australian dollar climbed to a record $1.1011 on speculation increasing commodity prices will keep pressure on the RBA to raise interest rates.

Tuesday, May 3, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.69% and June S&Ps down -15.70 points. Stock prices are correcting lower while the dollar and Treasuries are stronger and most commodities are weaker. European markets are being led lower by a drop in auto makers with Volkswagen down 3.8%, Bayerische Motoren Werke AG down 2.7% and Daimler AG off by 2.3%. Credit Suisse Group AG cut its price estimate for Daimler by 7.7% to 60 euros, citing a "disappointing set of Q1 numbers." Also undercutting automakers was the report in the Financial Times Deutschland that said the German environment ministry found flaws in the taxation of company cars and that they deny the government as much as 5 billion euros ($7.4 billion) in tax revenue. European producer-price inflation unexpectedly quickened in March after the Mar Euro-Zone PPI accelerated to a +6.7% y/y gain, its fastest pace of increase in 2-1/2 years. The British pound tumbled against the dollar after the Apr UK PMI manufacturing index fell a more-than-expected -2.3 to 54.6, its lowest level of expansion in 7 months.



•   The Asian stock markets today closed mostly lower with Japan closed for Golden Week, Hong Kong -0.37%, China +0.58%, Taiwan -0.69%, Australia -0.84%, Singapore -0.83%, South Korea -1.25%, India -2.44%. India's Bombay Sensex 30 Stock Index closed sharply lower after the Reserve Bank of India (RBI) raised the repurchase rate by a more-than-expected 50 bp to 7.25% after forecasting inflation will stay at an "elevated level" until at least Sep. RBI Governor Subbarao said the central bank has given up its "baby step" approach on changing interest rates after wholesale-price inflation accelerated to 8.98% in Mar and exceeded the central bank's 8% estimate. Australia's central bank left its overnight cash rate at 4.75% for a fifth meeting with RBA Governor Stevens saying "the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters."

Wednesday, May 4, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.54% and June S&Ps down -1.70 points. Treasuries are mixed while the dollar and commodities are weaker, as copper fell to a 3-week low on concerns China may further tighten its monetary policy. The euro rose against the dollar when Portugal's government announced an agreement on a 78 billion-euro ($116 billion) 3-year loan package. The yield on the 10-year Portuguese bond fell 18 bp and the difference in yield versus bunds narrowed to 610 bp, the least since April 21. Portugal last month became the third Euro-Zone country to request EU aid after Greece and Ireland. European stocks were undercut after Mar Euro-Zone retail sales fell -1.0% m/m, more than expectations of a -0.1% m/m fall and the biggest drop in 11 months.



•   The Asian stock markets today closed mostly lower with Japan closed for holiday, Hong Kong down -1.35%, China -2.56%, Taiwan +0.01%, Australia -0.93%, Singapore -1.26%, South Korea -1.09%, India -0.35%. China's Shanghai Stock Index tumbled to a 1-1/2 month low on concern that further interest rate hikes may cut profits and growth when the PBOC said in its Q1 monetary policy report that stabilizing prices and managing inflation expectations are "critical," and that the economy faces "increasing pressure from imported inflation." The China Securities Journal said the PBOC may boost banks' reserve requirements this month, while the Shanghai Securities News said that government officials may expand controls on the property market to more cities. Most Asia-Pacific stock markets closed lower, led by declines in raw-material and energy producers, as metals and crude oil fell.

Thursday, May 5, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.85% and June S&Ps down -4.50 points. Treasuries are firmer and the dollar is little changed, while commodities are weaker with crude oil sliding to a 2-week low. Mar German factory orders unexpectedly declined -4.0% m/m, the biggest monthly fall in 2 years, which undercut European stocks and sent copper tumbling to a 5-month low. The BOE as expected maintained its benchmark interest rate at 0.50% and kept its asset purchase plan at 200 billion pounds. The market now awaits in earnest the ECB meeting later today and comments from ECB President Trichet into just how fast he's prepared to raise interest rates over the coming months. A sell-off in bank stocks is leading European shares lower with Lloyds Banking Group Plc plunging 8.2% after Britain's largest mortgage lender reported a Q1 loss after setting aside 3.2 billion pounds ($5.3 billion) to compensate clients mis-sold insurance on loa ns, while Societe Generale lost 3.7% after reporting Q1 net income of 916 million euros, below analysts' estimates of 1.06 billion euros.



•   The Asian stock markets today closed mixed with Japan closed for holiday, Hong Kong -0.23%, China -0.09%, Taiwan +0.80%, Australia +0.29%, Singapore -0.13%, South Korea closed for holiday, India -1.40%. Asian stocks were undercut after lower-than-expected growth in US service industries and jobs sparked concern the US economy is weakening. March Australia retail sales unexpectedly fell -0.5% m/m, its first drop in 5 months, and weaker than expectations for a +0.5% m/m increase. The Japanese yen strengthened to less than 80 yen per dollar for the first time in 1-1/2 months, which increases the chances of further intervention in currency markets by Japanese and or G-7 central banks to stem the yen's strength.

Friday, May 6, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.23% and June S&Ps up +3.80 points. Treasuries and the dollar are little changed while commodities extended this week's fall with crude oil sliding to a 2-1/4 month low and copper dropping to a 5-month low on concern economic growth is faltering. ECB President Trichet said policy makers remain "extremely alert" on inflation, and indicated they may take further decisions on interest rates when they have new economic projections in June. European stocks received a boost after German industrial production rose for a third month. Mar German industrial production rose +0.7% m/m and +11.2% y/y, stronger than expectations of +0.5% m/m and +10.3% y/y.



•   The Asian stock markets today closed mostly lower with Japan down -1.45%, Hong Kong -0.44%, China -0.15%, Taiwan -0.46%, Australia -0.23%, Singapore -0.33%, South Korea -1.66%, India +1.69%. Asian stock markets fell, with China's Shanghai Stock Index declining to a 2-1/2 month low, after the surge in US jobless fueled concern the world's biggest economy may be weakening. Japanese exporters led declines in Japanese stocks as the yen held just below a 1-1/2 month high and most Asian energy and raw material producers fell as commodities extended their slide. The Australian dollar strengthened after the RBA in its quarterly review today said higher interest rates will likely be needed "at some point" to contain inflation that's predicted to accelerate this year faster than previously forecast. The RBA hiked its forecast for consumer prices this year to increase by +3.25% from an earlier estimate of +3.00% and core inflation to quicken to +3.00% from +2.75%.

Monday, May 9, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.64% and June S&Ps are up +6.20 points. The dollar and Treasuries are lower and commodities are higher with crude oil up over +$3.00 a barrel. Weakness in banks is leading European stocks lower on increased European sovereign-debt concerns with credit-default swaps insuring Greek government debt for 5 years climbing 19 bp to a record 1,360 bp. In an unannounced meeting on May 6, the European Union agreed to review the terms of the 110 billion-euro ($158 billion) bailout plan that Greece received last year with Jean-Claude Juncker, head of the European finance ministers, saying Greece "does need a further adjustment program." Also undercutting stock prices was the decline in the May Euro-Zone Sentix investor confidence which fell -3.3 to 10.9, its lowest level in 4 months and greater-than-expectation of a -0.4 decline to 13.8. The euro strengthened against the dollar after Mar German ex ports surged +7.3% m/m to 98.3 billion euros ($141.4 billion), stronger than expectations of +1.1% m/m and the most since records began in 1950.



•   The Asian stock markets today closed mixed with Japan down -0.66%, Hong Kong +0.76%, China +0.27%, Taiwan +0.65%, Australia +0.29%, Singapore +1.21%, South Korea -0.38%, India +0.05%. Asian energy-related and raw-material producing stocks closed higher after US jobs growth bolstered confidence in the economic outlook and halted a rout in commodity prices. Japanese stocks finished lower, led by declines among power companies, after Japanese Prime Minister Kan asked Chubu Electric Power to shut its Hamaoka nuclear plant because it was located close to an earthquake fault-line. Prime Minister Kan cited a government study that shows an 87% likelihood of a magnitude-8 quake striking the area within 30 years.

Tuesday, May 10, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.90% and June S&Ps up +5.80 points. The dollar is higher and Treasuries are weaker, while commodities are mixed. European stocks received a boost after the Greek newspaper Kathimerini reported that the IMF is arranging a package of as much as 100 billion euros ($144 billion) to replace Greece's existing bailout, while ECB Executive Board member Bini Smaghi said allowing a Euro-Zone member to default on or restructure its debt would be "wrong." The cost to insure European sovereign debt fell for the first time in 4 days, with the Markit iTraxx SovX Index of credit-default swaps on 15 European governments falling 5.5 bp to 190 bp. The euro fell against the dollar after Mar French industrial production unexpectedly declined -0.9% m/m, weaker than expectations of a +0.4% m/m increase.



•   The Asian stock markets today closed mixed with Japan up +0.25%, China +0.75%, Taiwan -0.14%, Australia -0.65%, Singapore +0.62%, India -0.09%. China's Shanghai Stock Index closed higher and boosted other Asia-Pacific stock markets after Apr China exports climbed +29.9% to a record $156 billion, stronger than expectations of a +29.5% y/y increase. China's Apr trade balance rose to the highest this year as it surged to +$11.42 billion, higher than expectations of +$3.20 billion. The PBOC set the yuan's reference rate at 6.495 per dollar, a record high for the third day ahead of the final day of an annual economic meeting between US and Chinese officials in Washington. Asian stocks also received a lift from strength in commodity prices, which prompted gains in energy and raw-material producers and bolstered confidence in the global economic outlook.

Wednesday, May 11, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.63% and June S&Ps up +1.40 points. The dollar is higher, Treasuries are weaker and commodities are mixed. The British pound rose against the dollar after the BOE said that inflation remains "uncomfortably high." In its quarterly inflation report, the BOE said "there is a good chance that inflation will reach 5% this year and it is more likely than not to remain above the 2% target throughout 2012." The euro weakened against the dollar on speculation European leaders are slowing the drive to grant Greece additional aid after German Chancellor Merkel said Greece needs to stay the course on its budget-cutting program to deserve an extension of the 110 billion-euro ($158 billion) bailout granted last year. German inflation accelerated more than estimated last month after the Apr German CPI was revised up to +2.7% y/y, higher than the +2.6% y/y originally reported and a 2-1/ 2 year high.



•   The Asian stock markets today closed mixed with Japan up +0.46%, Hong Kong -0.19%, China -0.26%, Taiwan -0.03%, Australia +1.15%, Singapore +0.66%, South Korea +1.31%, India +0.39%. Japanese stocks closed higher, led by gains in exporters, after the yen weakened against the dollar, while Chinese stocks closed lower after inflation rose more than expected and China's factory output rose less than expected. Apr China consumer prices climbed +5.3% y/y, stronger than expectations of +5.2% y/y, while Apr China industrial production rose +13.4% y/y, weaker than expectations of +14.6% y/y. The PBOC may be prompted to tighten monetary policy further after new lending in China also exceeded expectations with Apr China new loans at 739.6 billion yuan ($114 billion), higher than estimates of 700 billion yuan. South Korea's Kospi Stock Index closed higher after South Korea's unemployment rate fell to a 3-month low of 3.6% in Apr.

Thursday, May 12, 2011...

Overnight Developments

•   Global stocks are lower with the European Euro Stoxx 50 down -1.13% and June S&Ps down -7.00 points. The dollar and Treasuries are stronger, with the dollar index at a 3-1/2 week high, while commodities slumped, with copper dropping to a 5-1/4 month low. Crude oil declined over -$2 a barrel after the IEA cut its 2011 global oil demand forecast by -190,000 barrels a day saying "high oil prices have finally begun to dent demand." Stock prices fell as China raised banks reserve ratio requirements again and after European factory output unexpectedly declined in March. Mar Euro-Zone industrial production fell -0.2% m/m and rose +5.3% y/y, weaker than expectations of +0.3% m/m and +6.3% y/y. The euro slipped to a 1-1/4 month low against the dollar amid speculation Greece may have to restructure its debt after ECB Executive Board member Tumpel-Gugerell said other countries will be asked to help Greece as the country will need "longer" to be able to refinance itself via the markets. The British pound fell to a 3-week low against the dollar after Mar UK industrial production increased +0.3% m/m and +0.7% y/y, weaker than expectations of +0.7% m/m and +1.1% y/y.



•   The Asian stock markets today closed mostly lower with Japan down -1.50%, Hong Kong -0.94%, China -1.38%, Taiwan +0.15%, Australia -1.76%, Singapore -1.47%, South Korea -2.19%, India -1.34%. A slump in commodities fueled declines in Asia-Pacific markets led by losses in mining companies and raw material producers on concern demand for commodities will wane as global central banks tighten their monetary policies. The Australian dollar fell as markets cut back their expectations for an RBA rate hike next month after Apr Australian employment unexpectedly fell -22,100, weaker than an expected increase of +17,000 and the biggest decline in 2 years. After the Asian markets closed, the PBOC raised banks' reserve requirements by 50 bp to 21% for the biggest lenders effective May 18.

Friday, May 13, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.07% and June S&Ps up +1.80 points. The dollar and Treasuries are weaker and most commodities are higher as economic growth in Europe exceeded forecasts. Q1 French GDP rose +1.0% q/q and +2.2% y/y, stronger than expectations of +0.6% q/q and +1.8% y/y, while Q1 German GDP expanded +1.5% q/q and +4.9% y/y, higher than expectations of +0.9% q/q and +4.5% y/y. The euro rose against the dollar as Q1 Euro-Zone GDP rose +0.8% q/q and +2.5% y/y, stronger than expectations of +0.6% q/q and +2.2% y/y as booming exports fueled domestic spending and offset turmoil sparked by debt woes in Greece, Ireland and Portugal. Also underpinning the euro was the action by the European Commission to raise its inflation forecast for the Euro-Zone this year, which adds pressure to the ECB to raise borrowing costs further. In its European Economic Forecast published today, the commission raised its 2011 Euro-Zone inflatio n estimate to 2.6% from a previous projection of 2.2%. Limiting gains in European stocks was the action by the European Commission to raise its estimate for Greece's budget deficit to 9.5% of GDP in 2011, higher than the 7.4% target adopted by the EU and the IMF in last years bailout, which may fuel calls for a new rescue package to help Greece stave off default.



•   The Asian stock markets today closed mixed with Japan down -0.70%, Hong Kong +0.88%, China +0.85%, Taiwan -0.30%, Australia +0.33%, Singapore +1.06%, South Korea -0.15%, India +1.07%. Japanese stocks closed lower as bank stocks declined after the government said public pressure may force lenders to forgive loans to Tokyo Electric Power Co., the operator of the crippled nuclear power plant. The yen strengthened and undercut exporters when Japanese Economy and Fiscal Policy Minister Yosano said the yen's strength was the result of the dollar weakening, not the yen gaining independently. Chinese stocks closed higher, led by gains in bank stocks, after Goldman Sachs said the increase in China's reserve requirements will have a limited effect on net interest margins.

Monday, May 16, 2011...

Overnight Developments

•   Global stocks are lower with the European Euro Stoxx 50 down -0.60% and June S&Ps down -6.00 points. The dollar index rose to a 1-1/4 month high and most commodities fell as Greece prepares to ask for an increased bailout. Greece's ASE Stock Index tumbled to a 13-year low before European leaders and the IMF meet later today in Brussels as Germany demands deeper budget cuts in exchange for granting Greece extra aid or giving it more time to pay back loans. Also clouding the bailout talks in Brussels will be the absence of IMF Director Strauss-Kahn who was arrested over the weekend in New York on sexual-assault charges. Apr Euro-Zone CPI rose an as-expected +0.6% m/m and +2.8% y/y, with the +2.8% y/y increase the biggest annual gain in 2-1/2 years. Treasuries rose after Atlanta Fed President Lockhart said it's too early to consider an exit from record stimulus until the recovery becomes "more clearly sustainable."



•   The Asian stock markets today closed lower with Japan down -0.94%, Hong Kong -1.36%, China -0.88%, Taiwan -1.05%, Australia -1.30%, Singapore -0.86%, South Korea -0.85%, India -1.01%. Japanese stocks closed lower after Goldman Sachs cut Japan's equities to "underweight" due to "greater cautiousness" on US growth and domestic risks such as electricity supply and yen strength. South Korean stock prices were undercut after Goldman Sachs downgraded Korean equities to "market weight," citing slowing global growth and "persistent" local inflation, however, Goldman did keep its recommendation for Chinese and Taiwanese equities at "overweight."

Tuesday, May 17, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.06% and June S&Ps up +2.90 points. The euro is higher and credit-default swaps to insure European government debt fell to a 5-week low after Jean-Claude Juncker, the leader of the EU finance ministers, said the first tranche of Portugal's aid package is due by the end of May and a treaty on the European Stability Mechanism will be signed in June. Juncker also said that the EU would consider "reprofiling" Greek bond maturities as part of a package that includes stepped-up sales of state assets and deeper spending cuts. Hawkish comments from ECB Executive Board member Tumpel-Gugerell also supported the euro when she said interest rates should be consistent with economic activity, which suggests she sees room for further monetary tightening. European stocks were undercut after the May German ZEW economic sentiment fell -4.5 to 3.1, weaker-than-expected to its lowest level in 6 months. The British pound rose against the dollar as UK inflation accelerated more than expected and forced BOE Governor King to explain publicly why officials haven't raised interest rates yet. Apr UK CPI climbed +4.5% y/y, stronger than expectations of +4.1% y/y and the fastest pace of increase in 2-1/2 years, while Apr CPI core prices quickened to 3.7% y/y, higher than expectations of +3.2% y/y and the fastest pace since records began in 1997.



•   The Asian stock markets today closed mixed with Japan up +0.09%, Hong Kong -0.26%, China +0.50%, Taiwan -0.31%, Australia +0.73%, South Korea -0.03%, India -1.13%. The Japanese yen fell to a 2-1/2 week low against the dollar and boosted Japanese exporters after BOJ Governor Shirakawa said the Japanese economy is in a "very severe" state, which fueled speculation that monetary policy may be eased further. Asian mining stocks rose as copper prices climbed and Chinese stocks gained as coal producers rose on speculation power shortages will boost coal demand. The China Electricity Council estimated that China may face a summer shortage of 30 gigawatts as supply lags behind demand growth and the Shanghai Securities News reported that limits on power usage in China caused by a shortage of electricity may reduce China's Q2 economic growth by 0.5 points.

Wednesday, May 18, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.26% and June S&Ps up +2.90 points. The dollar is lower and most commodities are higher, which has led to gains in stocks led by basic-resource companies. The British pound fell against the dollar after minutes from the BOE meeting earlier this month showed policy makers voted 6-3 to keep interest rates on hold as the majority warned that tightening policy now could dampen consumer spending. The pound was also undercut after Apr UK unemployment claims unexpectedly rose +12,400 to 1.47 million, the fastest pace since Jan 2010. Mar Euro-Zone construction output fell for a second month as it slipped -0.3% m/m and -4.9% y/y. ECB officials ruled out ideas of a "soft" restructuring of Greek debt by European finance ministers after ECB Council member Bini Smaghi said there is no difference between a "hard" or "soft" restructuring and fellow ECB member Stark said that any restructuring would undermine the collateral Greek banks use to gain loans from the ECB and "this holds true for all kinds of restructuring." The ECB has bought 76 billion euros ($108 billion) of bonds of fiscally stressed countries in the past year and may suffer along with private investors in any restructuring and is also concerned that allowing Greece to renege on some of its obligations would create similar expectations for other indebted Euro-Zone nations.



•   The Asian stock markets today closed mostly higher with Japan up +0.99%, Hong Kong +0.48%, China +0.75%, Taiwan +0.68%, Australia +0.21%, Singapore +0.15%, South Korea +1.66%, India -0.28%. Asian stocks were boosted on improved company earnings results and increased M&A activity. Austar United jumped 6.1% on speculation Foxtel is in advanced talks over a potential takeover and Mizhuo Financial gained 3.2% after the Nikkei newspaper reported it plans to merge its retail and corporate banks. Australian bank stocks declined after Moody's Investors Service downgraded the long-term, senior unsecured debt ratings of the country's four major banks on concern their reliance on wholesale debt markets makes them vulnerable to swings in investor confidence.

Thursday, May 19, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.97% and June S&Ps up +4.50 points. The dollar and Treasuries are weaker while the British pound rallied when UK retail sales rose more than expected. Apr UK retail sales with auto fuel rose +1.1% m/m and +2.8% y/y, stronger than expectations of +0.8% m/m and +2.5% y/y as warm weather and the extra bank holiday for the royal wedding boosted consumer spending. The euro strengthened against the dollar after Goldman Sachs cut its 3-month dollar forecast to $1.45 per euro from $1.40, saying "With unemployment still high, fiscal consolidation looming and continued weakness in the real estate sector, the growth outlook remains less compelling in the US than in may other regions or countries." Stock prices received a boost after Citigroup revised up its global per-share earnings forecast for this year to +18% from a Sep forecast of +12%, citing stronger revenue growth and sustained margins. Incr eased M&A activity also lifted US and European stocks as Takeda Pharmaceutical agreed to buy Nycomed for 9.6 billion euros ($13.7 billion) and Toshiba offered $2.3 billion for Switzerland's Landis+Gyr AG.



•   The Asian stock markets today closed mixed with Japan down -0.43%, Hong Kong +0.66%, China -0.60%, Taiwan -0.58%, Australia +1.34%, Singapore +1.00%, South Korea -1.88%, India +0.31%. Japanese stocks closed lower after the economy shrank more than expected in Q1 as the Mar 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending. Q1 Japan GDP was revised down to a contraction of -0.9% q/q and -3.7% annualized from the originally reported -0.5% q/q and -2.0% annualized, which sent Japan into its third recession within the last decade. The yen weakened to a 3-week low against the dollar on speculation the BOJ and the government will continue to provide record stimulus measures to Japan's economy. China's Shanghai Stock Index closed lower, led by declines in property developers and power producers, on concern the PBOC will boost borrowing costs and higher coal prices will hurt power producers' corporate earnings. China's National Busin ess Daily reported that inflation may exceed 6% in June or July due to a lower comparison base last year.

Friday, May 20, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.09% and June S&Ps down -4.00 points. Treasuries are higher after Chicago Fed President Evans said late yesterday that "slow progress" in the economy justifies stimulus measures, while gold and the dollar strengthened on speculation Greece will have to reorganize its debt. The yield on the 10-year Greek bond jumped 52 bp to a record 16.51%, which widened the difference with German bunds to a record 1,344 bp. Increased M&A activity is boosting European equities as Micro Focus International Plc rose 5.7% after the FT reported Advent International approached the company about a takeover, while Barnes & Noble surged 25% after it received a takeover offer from Liberty Media Corp. The euro weakened against the dollar after the Bundesbank said in its monthly bulletin that "growth is likely to ease somewhat in the foreseeable future." The decline in the euro was limited however, after Apr German producer prices rose a more-than-expected +1.0% m/m and +6.4% y/y, which will keep the pressure on the ECB for further interest rate hikes.



•   The Asian stock markets today closed mixed with Japan down -0.14%, Hong Kong +0.16%, China +0.03%, Taiwan -0.63%, Australia -0.51%, Singapore -0.13%, South Korea +0.77%, India +1.02%. At the conclusion of its 2-day meeting, the BOJ kept its benchmark interest rate unchanged at 0.00% to 0.10%, as-expected, and refrained from increasing its credit programs or asset purchases. Chinese stocks closed little changed after PBOC Governor Xiaochuan said that inflation remains "high" and China needs to strike a balance between economic growth and consumer prices, which fueled speculation the central bank will implement additional tightening measures. Concern the US economic recovery is losing momentum also pressured Asian stocks after Apr US existing home sales and the May Philadelphia Fed manufacturing index unexpectedly declined.

Tuesday, May 24, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.18% and June S&Ps up +3.20 points. The dollar and Treasuries are lower and commodities rallied after Goldman Sachs said it's turning "more bullish" on raw materials. European sovereign-debt fears eased after the Greek government endorsed an asset-sale plan and 6 billion euros ($8.4 billion) of budget cuts to win extra aid. The euro rose against the dollar after the May German IFO business climate index remained unchanged at 114.2, stronger than expectations of -0.5 to 113.7. Limiting European stock gains was the larger than expected drop in May French business confidence which fell -2 to 107, greater than expectations of -1 to 109, along with the larger-than-expected decline in Mar Euro-Zone industrial new orders which fell -1.8% m/m, greater than expectations of -1.1% m/m.



•   The Asian stock markets today closed mostly higher with Japan up +0.17%, Hong Kong +0.09%, China +0.11%, Taiwan +0.10%, Australia -0.31%, Singapore +0.08%, South Korea +0.22%, India +0.10%. Chinese stocks were undercut after Goldman Sachs lowered its 2011 China GDP estimate to 9.4% annualized, lower than a previous call of 10.0% annualized. Goldman also raised its forecast for Chinese inflation this year to 4.7% from 4.3%. Japanese stocks closed higher, led by gains in technology stocks, after Sony finished up 2.7% when it said it expects to turn a profit in fiscal 2011. Asian shipping companies were stronger after the Baltic Dry Index, a measure of shipping costs for commodities, rose for a third day.

Wednesday, May 25, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.40% and June S&Ps down -2.10 points. The dollar and Treasuries are higher amid speculation Europe's debt crisis is getting worse. European stocks rose, led by gains in German utility companies, after the Financial Times Deutschland reported that the German government may scrap a tax on nuclear reactors. Limiting stock gains was the 3% drop in Applied Materials after the world's largest producer of chip-making equipment forecast earnings that missed estimates. The euro weakened against the dollar after EU Economic and Monetary Affairs Commissioner Rehn told the French newspaper Les Echos that Greece is the "most difficult case" among the three countries that have received bailouts from the EU and IMF. The euro was also pressured after the Jun German GfK consumer confidence survey fell -0.2 to 5.5, weaker than expectations of -0.1 to 5.6 and its lowest level in 6-months.



•   The Asian stock markets today closed mixed with Japan down -0.57%, Hong Kong +0.07%, China -1.19%, Taiwan -0.34%, Australia -0.95%, Singapore +0.18%, South Korea -1.16%, India -0.91%. Japanese stocks closed lower after Apr Japan exports plunged -12.5% y/y, their biggest decline in 1-1/2 years as Japan posted its first trade deficit (-463.7 billion yen) for the month of April in 31 years. BOJ Governor Shirakawa said his board members were "examining whether there's a way to enhance" a 3 trillion yen ($37 billion) lending program for industries that can spur growth. Asian technology stocks took a hit after Applied Materials forecast weaker-than-expected Q3 profit and sales. China's Shanghai Stock Index fell for a fifth day and posted a 3-3/4 month low as a decline in lenders led the index lower after Standard & Poor's said policy tightening may spur a jump in credit losses and weaken profitability in Chinese banks. Chinese property developers weakened af ter the Shanghai Securities News reported that China will curb speculative demand for homes and maintain basically stable real estate prices to control the property market. Societe Generale predicts that the PBOC will raise interest rates twice more this year and increase lenders' reserve-rate requirements three more times in an attempt control excess liquidity in the markets.

Thursday, May 26, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.12% and June S&Ps up +2.10 points. The dollar and Treasuries are weaker, while the euro gained and gold slumped on speculation China will increase its purchases of European bonds, which eases concern that the European sovereign-debt crisis will spread. The Financial Times reported that European Financial Stability Facility (EFSF) CEO Regling said that Asian investors, including the Chinese government, may compromise a "strong proportion" of Portuguese bailout bond buyers when the EFSF sells them next month. China, the world's biggest holder of foreign-exchange reserves, bought 16% of the 4.75 billion euros ($6.7 billion) of 5-year notes sold yesterday to fund Portugal's bailout, according to the European Commission. Another positive for European stocks was the Apr German import price index which climbed +0.3% m/m and +9.4% y/y, weaker than expectations of +0.7% m/m and +9.9% y/y.



•   The Asian stock markets today closed mostly higher with Japan up +1.48%, Hong Kong +0.67%, China -0.40%, Taiwan +0.70%, Australia +!.65%, Singapore +0.16%, South Korea +2.87%, India +1.11%. China's yuan strengthened to a 17-year high today as the PBOC set the currency's reference rate at 6.4921 per dollar, the highest in 6 years. The yuan briefly touched 6.4858, the strongest level since 1993, as speculation mounts that China will tighten monetary and fiscal policies further to curb rising domestic inflation. Most Asian stocks rose, led by raw material producers, after Deutsche Bank AG upgraded basic resource companies to "overweight." South Korea's Kospi Index closed nearly 3% higher after Credit Suisse Group AG and Citigroup predicted that South Korean stocks may gain amid improved earnings and attractive valuations and recommended that investors buy the nation's equities on "dips."

Friday, May 27, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.43% and June S&Ps up +1.00 point. The dollar weakened and commodities advanced after leaders of the Group of Eight said the strengthening of the world economy will pave the way for reductions in debt. European debt concerns eased after ECB Council member Wellink said he's "fully confident" Greece will meet conditions to receive its 3.3 billion-euro ($4.7 billion) aid payment by the IMF next month. Treasury and bund prices gained on a flight-to-safety after Japan's credit outlook was lowered to negative by Fitch Ratings while European confidence in the economic outlook weakened for a third month in May as the worsening debt crisis and surging commodity costs weighed on sentiment. The May Euro-Zone economic confidence slipped -0.6 to a 7-month low of 105.5, weaker than expectations of -0.5 to 105.7. European money supply growth rose less than expected in April, which may prompt the ECB to pause in its interest rate tightening cycle, after the Apr Euro-Zone M3 money supply rose +2.1% 3-month avg and +2.0% y/y, weaker than expectations of +2.3% 3-month avg and +2.4% y/y. Strength in European banking shares in leading gains in European stocks after Citigroup raised its recommendation on the sector to "overweight."



•   The Asian stock markets today closed mixed with Japan down -0.42%, Hong Kong +0.95%, China -0.51%, Taiwan +0.25%, Australia +0.51%, Singapore +0.38%, South Korea +0.37%, India +1.23%. Japan had its AA- credit rating outlook lowered to negative from stable by Fitch Ratings which cited "rising government indebtness." Japan's gross government debt reached 210% of GDP by the end of 2010, the highest ratio for any Fitch rated sovereign, the ratings company said. A weaker than expected Q1 US GDP along with a rally in the yen to a 1-1/2 week high against the dollar undercut Japanese exporters, while China's Shanghai Stock Index tumbled to a 4-month low after profit growth slowed among industrial companies and concern intensified inflation will accelerate this month. The National Bureau of Statistics reported that profit at China's industrial companies rose +29.7% in the first four months y/y, weaker than the +32% y/y gain in Q1, while the National Business Daily r eported that China's consumer prices may increase as much as +5.5% y/y this month, higher than April's +5.3% y/y pace.

Tuesday, May 31, 2011...

Overnight Developments

•   Global stocks are higher with the European Euro Stoxx 50 up +0.90% and June S&Ps up +12.30 points. The dollar slumped to a 2-1/2 week low and Treasuries are weaker, while commodities rose with crude at a 2-week high and copper and gold at 3-week highs. Jean-Claude Juncker, leader of the Euro-Zone finance ministers, said in Paris yesterday that EU leaders will decide on a new aid package for Greece by the end of June and that EU officials have ruled out a "total restructuring" of Greece's debt, which sent the yields on Greek government bonds tumbling 30 bp and boosted the euro to a 3-week high against the dollar. The WSJ also reported that Germany may stop demanding an early rescheduling of bonds for Greece so the nation can get a new package of loans. A rally in Greek bank stocks led the rally in European equity prices, with Alpha Bank SA and EFG Eurobank Ergasias SA up over 5%. May German unemployment -8,000 to 2.97 million. its 23rd straight mont hly decline, while the unemployment rate fell -0.1 to 7.0%, the lowest since records for a reunified Germany began in 1991. Another boost to European stocks was the May Euro-Zone CPI estimate which slowed to a +2.7% y/y pace, weaker than the +2.8% y/y increase expected, and eases pressure on the ECB for further interest rate increases.


•   The Asian stock markets today closed higher with Japan up +1.99%, Hong Kong +2.16%, China +1.59%, Taiwan +1.87%, Australia +0.87%, Singapore +0.63%, South Korea +2.33%, India +1.49%. Japanese stocks rallied as the yen weakened against the dollar, lifting exporters, and after a Trade Ministry survey of Japanese manufacturers said they plan to increase factory output 8% this month and a further 7.7% in June, which would confirm that Japanese factory production is coming back online to pre-quake levels. Japanese stocks gained even after Moody's Investors Service put Japan's debt rating on review for a downgrade, citing faltering growth prospects and "a weak policy response" that may hinder government efforts to cut the nation's debt burden. Separately, Apr Japan industrial production rose +1.0% m/m, half of market expectations for a +2.0% m/m increase, while Japan's Apr jobless rate rose +0.1 to 4.7%. China's Shanghai Stock Index closed higher after hte Apr Ch ina leading index rose to 102.11, its highest level in 6 months.

Wednesday, June 1, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.19% and June S&Ps down -1.60 points. The dollar index is little changed after falling to a 3-1/2 week low in overnight trade and most commodities are weaker. The euro fell back from a 3-1/2 week high against the dollar after the German newspaper Frankfurter Allgemene Zeitung reported that the IMF may not pay out its fifth tranche of aid to Greece in June after officials assess the country's progress in cutting its budget deficit. European stocks fell back after manufacturing activity in the Euro-Zone was unexpectedly revised lower in May. The May German PMI manufacturing index was revised down to 57.7 from the originally reported 58.2 and the May Euro-Zone PMI manufacturing index was revised down to 54.6 from 54.8, both to 7-month lows. The British pound weakened against the dollar after the May UK PMI manufacturing index fell -2.3 to 52.1, a 1-1/2 year low and weaker than expectations of -0.5 t o 54.1.


•   The Asian stock markets today closed mixed with Japan up +0.27%, Hong Kong -0.24%, China +0.09%, Taiwan +0.82%, Australia -0.02%, Singapore +0.41%, South Korea unchanged, India +0.57%. Chinese manufacturing activity in May fell to its slowest pace in 9 months as the May China PMI manufacturing index slid -0.9 to 52.0, although it was slightly stronger than expectations of -1.3 to 51.6. Asian technology companies gained, especially those that are rivals to Nokia Oyj such as HTC, LG Electronics and Samsung, after Nokia said mobile phone sales will "substantially" fall short of expectations and it lowered its sales and profit forecasts as it lost market share to competitors. Australian stocks finished slightly lower after Q1 Australia GDP slumped -1.2% q/q, its biggest quarterly decline in 20 years, after flooded coal mines, railways and farmland hurt exports.

Thursday, June 2, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.78% and June S&Ps are up +3.40 points. Treasuries are little changed and the euro climbed to a 3-1/2 week high against the dollar after German Chancellor Merkel said the European Union remains committed to the euro and the outlook for German growth is "very positive." European stocks weakened on concern the economic recovery is faltering and as Portuguese and Greek debt insurance surged to records after Moody's Investors Service late yesterday said Greece has a 50% chance of default. US stock futures gained after yesterday's plunge left the S&P 500 at 13.2 times estimated earnings of its companies, its lowest valuation since March 18.


•   The Asian stock markets today closed lower with Japan down -1.69%, Hong Kong -1,58%, China -1.61%, Taiwan -0.78%, Australia -2.27%, Singapore -0.39%, South Korea -1.41%, India -0.62%. Asian stocks were undercut after May US manufacturing data expanded at its weakest pace in 20 months and employers hired fewer workers than forecast, which fueled concern the global economic recovery will slow. Japanese automakers led declines in Japanese stocks as Toyota's May US monthly sales fell -33% y/y, Honda's US sales fell -23% y/y and Nissan's May US sales slipped -9.1% y/y, as the quake crisis limited production and supplies of some models ran low. China's Shanghai Stock Index tumbled to a 4-1/4 month low on concern slowing economic growth and government tightening policies will hurt corporate earnings. The Shanghai Daily News reported that the PBOC may raise interest rates ahead of a public holiday on Jun 6 because consumer prices are expected to rise to a new high in May. C hinese automakers closed lower after China's Passenger Car Association reported that China's May passenger car sales, excluding minivans, fell -11% m/m and -1.0% y/y to 850,000 units.

Friday, June 3, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.49% and June S&Ps down -3.90 points. Treasuries are higher and the dollar is little changed as the market awaits the US May payrolls report later this morning. The euro is little changed as European Union and IMF officials today complete a review of Greece's plan for 78 billion euros ($113 billion) in asset sales and austerity measures as they prepare for the nation's second bailout in little more than a year. The British pound slipped to a 1-week low against the dollar after May UK PMI services fell -0.5 to 53.8, weaker than expectations of -0.1 to 54.2. A drop in EON AG and RWE AG, Germany's biggest utilities, is weighing on European stocks after Financial Times Deutschland reported that Germany's four largest electric companies will lose about 3.5 billion euros in sales per year from the permanent shut down of 8 out of Germany's 17 nuclear power plants. Limiting stock declines was the unexpected upward revisions of May German PMI services to 56.1 from the originally reported 54.9, and to the May Euro-Zone PMI composite to 55.8 from the originally reported 55.4.


•   The Asian stock markets today closed mixed with Japan down -0.66%, Hong Kong -1.31%, China +1.04%, Taiwan +0.61%, Australia -0.38%, Singapore -0.47%, South Korea +0.03%, India -0.64%. Most Asian markets closed lower on concern recent economic data that point to a slowdown in the US economy will lead to weakened demand for Asian goods. A rally in the yen to a 2-1/2 week high against the dollar undercut Japanese exporters, while Prime Minister Kan's pledge to step down sparked a contest to select the next Japanese leader. Kan survived a no-confidence vote in parliament yesterday, but the process of selecting a new leader may add to delays in reconstruction from the March earthquake and to approval of plans to boost taxes and shrink the deficit needed to restore growth and ease credit concerns.

Monday, June 6, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.41% and June S&Ps down -2.50 points. The dollar index slipped to a 1-month low and most commodities are weaker on concern the global economic recovery is faltering. The euro fell back from a 1-month high against the dollar after the Jun Euro-Zone Sentix investor confidence fell a more-than-expected -7.3 to 3.5, its lowest level in 11 months. German bund yields declined and fell back toward 3.00% after ECB Executive Board member Smaghi said a Greek sovereign debt restructuring should be an option of "last resort" as it may have "severe implications" on the country and investors. Bank stocks are leading declines in European shares after data from the BIS showed that at the end of 2010, Greek government bonds held by banks in countries reporting to the BIS totaled $54.2 billion, of which 96% was owned by European lenders. Airline stocks are weaker after the International Air Transport Association cut its 2011 industry profit forecast by 54% because of higher oil prices, political protests in the Middle East and North Africa, and the Japan earthquake. A larger-than-expected increase in European producer prices is also weighing on stocks after the Apr Euro-Zone PPI rose +0.9% m/m and +6.7% y/y, greater than expectations of +0.8% m/m and +6.6% y/y.


•   The Asian stock markets today closed mostly lower with Japan down -1.18%, Australia -0.31%, Singapore -1.02%, India +0.24%, while the markets in Hong Kong, China, Taiwan, and South Korea were closed for a holiday. Asian stocks closed lower after last Friday's weaker-than-expected US May payrolls report questioned the sustainability of the global economic recovery. Japan's Nikkei 225 Stock Index fell to a 2-1/4 month low, led by a slump in exporters, after the yen climbed to a 1-month high against the dollar. Shares of Tepco, owner of the crippled Fukushima Dai-Ichi nuclear power plant, slumped as much as 28% to a 37-year low after the President of the Tokyo Stock Exchange said the utility should follow the same route as Japan Airlines did in 2010 and file for bankruptcy protection. Tepco has slumped 90% since the Mar 11 earthquake and the Japan Center for Economic Research estimates that the cost of dismantling the Fukushima plant may reach 20 trillion yen and compen sation for households in the 20-kilometer evacuation zone may total 630 billion yen over 10 years.

Tuesday, June 7, 2011...

Overnight Developments

•   Global stocks are higher with the European Euro Stoxx 50 up +0.20% and June S&Ps up +6.50 points. The dollar index slipped to a 1-month low and most commodities are higher on optimism over the European debt crisis. The euro climbed to a 1-month high against the dollar after ECB President Trichet said a rollover of Greek debt as an alternative means of easing Greece's funding squeeze "is not a default, and is something the ECB would consider appropriate." The ECB has been opposed to any measure that could be classified as a default to avoid what EU Economic and Monetary Affairs Commissioner Rehn said would be a "Lehman Brothers catastrophe." European stocks were also boosted by better-than-expected economic data as Apr Euro-Zone retail sales rose +0.9% m/m and +1.1% y/y, stronger than expectations of +0.3% m/m and unchanged y/y, while Apr German factory orders advanced +2.8% m/m and +10.5% y/y, stronger than expectations of +2.0% m/m and +9 .1% y/y. Crude oil prices slipped in overnight trade after a Gulf delegate said OPEC will raise its oil output target tomorrow. Speculation has been building that Saudi Arabia is seeking an agreement to boost production by as much as 1.5 million barrels a day.



•   The Asian stock markets today closed mixed with Japan up +0.67%, Hong Kong -0.35%, China +0.60%, Taiwan +0.12%, Australia -0.06%, Singapore +0.07%, South Korea -0.67%, India +0.41%. The yen fell back from a 1-month high against the dollar and lifted Japanese exporters after Japan's Finance Minister Noda said "I will closely monitor developments in the markets." Chinese stocks closed higher despite the report from the Economic Information Daily that said the PBOC may raise interest rates by 25 bp this weekend and may increase banks' reserve requirement ratios by 50 bp next week after inflation and other economic indicators are released. The RBA left its benchmark interest rate unchanged for a sixth straight meeting and signaled little urgency to increase borrowing costs as a stronger currency helps contain inflation. RBA Governor Stevens held Australia's overnight cash rate at 4.75% and said "inflation will be close to target over the next 12 months.&qu ot;

Wednesday, June 8, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -1.01% and June S&Ps down -6.30 points, both at 2-1/2 month lows. The dollar and Treasuries strengthened and most commodities are lower as concern deepened the global recovery may slow. Crude oil is lower on expectations for an increase in OPEC production when the cartel meets later today in Vienna. The World Bank lowered its global growth projection for this year to 3.2%, from a Jan forecast of 3.3%, while Fed Chairman Bernanke said late yesterday that the US recovery was "frustratingly slow." The euro weakened against the dollar and European stocks were undercut after German industrial production unexpectedly declined and German exports were weaker than expected. Apr German industrial production was down -0.6% m/m and +9.6% y/y, weaker than expectations of +0.2% m/m and +10.0% y/y, while Apr German exports slid -5.5% m/m, weaker than expectations of -3.0% m/m.



•   The Asian stock markets today closed mostly lower with Japan up +0.07%, Hong Kong -0.91%, China +0.15%, Taiwan -0.55%, Australia -0.65%, Singapore -0.42%, South Korea -0.91%, India -0.55%. Most Asian stocks closed lower after comments from Fed Chairman Bernanke late yesterday questioned the sustainability of the global economic recovery. Japanese utility stocks slumped after the Nikkei newspaper reported that all of Japan's 54 nuclear reactors could be idled by next spring if those shut for scheduled maintenance don't receive the required local approval to restart. An estimate by Japan's trade and industry ministry predicts using fossil fuel instead of nuclear for power would cost Japan's utilities 3 trillion yen annually ($37 billion). Japanese stocks managed to eke out a small gain despite the rally in the yen to a 1-month high against the dollar, after the May Japan Eco Watchers Survey rose more than expected to 36.0, a 3-month high. China bought a net 1.33 trill ion yen ($16.6 billion) in Japanese long-term government bonds in Apr, the most since records began in 2005, as it seeks to diversify the world's largest currency reserves.