European Stocks / The Asian Markets

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.