European Stocks / The Asian Markets

[setravis]

Monday, April 11, 2011...

Overnight Developments

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



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

[setravis]

Tuesday, April 12, 2011...

Overnight Developments

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



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

[setravis]

Wednesday, April 13, 2011...

Overnight Developments

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



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

[setravis]

Thursday, April 14, 2011...

Overnight Developments

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



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

[setravis]

Friday, April 15, 2011...

Overnight Developments

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



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

[setravis]

Monday, April 18, 2011...

Overnight Developments

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



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

[setravis]

Tuesday, April 19, 2011...

Overnight Developments

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



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

[setravis]

Wednesday, April 20, 2011...

Overnight Developments

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



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

[setravis]

Thursday, April 21, 2011...

Overnight Developments

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



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

[setravis]

Monday, April 25, 2011...

Overnight Developments

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



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

[setravis]

Tuesday, April 26, 2011...

Overnight Developments

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



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

[setravis]

Wednesday, April 27, 2011...

Overnight Developments

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



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

[setravis]

Thursday, April 28, 2011...


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



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

[setravis]

Friday, April 29, 2011...

Overnight Developments

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



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

[setravis]

Monday, May 2, 2011...

Overnight Developments

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



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