3SOF

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.