European Stocks / The Asian Markets

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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%.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.