Annual increase in Euro-zone money supply for the first time since January by Darrell Jobman

EUR/USD The Euro maintained a robust tone in early Europe on Tuesday and pushed to challenge resistance levels above 1.30 against the dollar. The European economic data again provided support with German consumer confidence rising to 3.9 in the latest month from a revised 3.6 for June, maintainin…

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Overnight Developments

• European stocks this morning are trading with solid gains with the European Stoxx 50 up 1.04%. Sep S&Ps are up 6.20 points (+0.56%). European stocks have been boosted by the continued decline in bank risk and a sharp 9% rally in UBS due to a favorable earnings report. The Markit iTraxx Financial Index of credit default swaps for 25 banks and insurers fell for the 6th day by 6.5 bp to hit a 3-month low of 111 bp. Deutsche Bank rallied by 3.5% after also reporting stronger than expected earnings today. The European stock markets were also encouraged by the fact that Hungary was able to sell $228 million in 3-month T-bills despite the recent financial turmoil in Hungary and the forint rallied by 0.8%. In another favorable US earnings report, Du Pont reported Q2 EPS of $1.17 that was well above the analyst consensus of 94 cents and raised its full-year 2010 EPS guidance to $2.90-$3.05 from $2.50-$2.70.
• The Asian markets today closed mixed: Japan -0.07%, Hong Kong +0.64%, China -0.55%, Taiwan -0.51%, Australia +0.25%, Singapore +0.42%, South Korea +0.03%, Bombay +0.32%. India’s central bank today raised its reverse repo rate by 50 bp to 4.50% and its repo rate by 25 bp to 5.75% in order to address inflation concerns. The central bank raised its India GDP forecast to 8.5% from 8.0% and its wholesale price inflation forecast to 6.0% from 5.5% for the year through March.

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Overnight Developments

• Global stocks are higher with the European Euro Stoxx 50 Index up +0.30% and Sep S&Ps up +6.00 points. The dollar and Treasuries are weaker and commodities strengthened, with copper at a 2-1/4 month high and crude oil at a 3-1/2 week high. The euro rose against the dollar after German business confidence unexpectedly surged in July as exports climbed and economic growth accelerated. The Jul German IFO business climate index surged +4.4 points to a 3-year high of 106.2. Further boosting European stocks was the larger-than-expected expansion of the UK economy in the second quarter as Q2 UK GDP grew +1.1% q/q, nearly twice more than expected and the fastest rate of expansion in 4 years, with a rebound in services, manufacturing and construction igniting the recovery. On the negative side, Jun French consumer spending unexpectedly declined -1.4% m/m and -1.9% y/y and Moody’s Investors Service said it would review Hungary’s debt rating for possible downgrade. Ericsson AB, the world’s largest maker of wireless phone networks, slumped over 4% after it reported Q2 net income of 1.88 billion kroner ($260 million), well below analysts’ estimates of 3.12 billion kroner as phone companies spent less on telecommunications infrastructure. The markets will be eagerly awaiting the results from the European Union’s stress tests on banks that will be released later today. According to a document from the Committee of European Banking Supervisors, regulators are scrutinizing banks to assess if they have enough capital, defined as a Tier 1 ratio of at least 6%, to withstand a recession and sovereign-debt crisis.
• The Asian markets today closed higher with Japan up +2.28%, Hong Kong +1.10%, China +0.42%, Taiwan +1.24%, Ausrtalia +1.91%, Singapore +0.60%, South Korea +1.45%, India +0.10%. Asian technology stocks gained after Microsoft reported its biggest sales gain in 2-1/2 years, while mining companies and raw material producers closed higher after copper rallied to a 2-1/4 month high. The yen weakened against the dollar, which boosted most Japanese exporters, after policy makers signaled for the third straight day that a stronger yen poses a danger to growth. Cabinet Office official Tsumura said the yen, which had risen 9% since May, has been "a bit too high," while Macquarie Research said Japanese authorities are "close" to intervening in the currency market, and that the BOJ may pump additional funds into the financial system.

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Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +1.55% and Sep S&Ps up +12.80 points. The dollar and Treasuries are weaker and copper rose to a 1-3/4 month high as growth unexpectedly accelerated in the European manufacturing and service industries in July. The July Euro-Zone PMI composite rose +0.7 to 56.7 when the market was expecting a decline to 55.5. Also boosting European stocks was the stronger than expected UK retail sales for Jun, the unexpected increase in the July French business indicator which rose +2 points to a 2-year high of 98 and the unexpected increase in May Euro-Zone industrial new orders that climbed +3.8% m/m. Limiting gains in European stocks was the 2.7% drop in Credit Suisse AG after Switzerland’s second-largest bank reported a drop in profit at its investment banking unit in Q2 as trading revenue slumped amid Europe’s sovereign debt crisis, while SSAB Svenskt Staal AB, the largest supplier of high-tensile steel, slid 6.9% after it reported Q2 income of 369 million kroner ($49.9 million), below analysts’ estimates of 482 million kroner.
• The Asian markets today closed mixed with Japan down -0.62%, Hong Kong +0.50%, China +1.24%, Taiwan -0.45%, Australia -0.86%, Singapore +1.01%, South Korea -0.72%, India +0.76%. Japanese stocks closed lower for the fifth straight day as the Nikkei 225 Stock Index fell to a 2-week low after Fed Chairman Bernanke said the US economic outlook remains "unusually uncertain." Most Japanese exporters declined as the yen approached a 7-month high against the dollar, while Nintendo, the world’s biggest portable video-game maker that gets 80% of its revenue overseas, slipped 1.3% after Citigroup cut its rating on the stock to "hold" from "buy." Citigroup also cut its outlook for China’s 2010 economic expansion to 9.5% from 10.5% after China’s economy showed signs of slowing at the end of Q2. Citigroup also cut its 2011 growth estimate for China to 8.8%, lower than last month’s forecast of 9.3%.

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index down -0.45% and Sep S&Ps down -7.30 points. US Stock futures retreated and led European shares lower after IBM and Texas Instruments reported revenue that missed analysts’ estimates. Treasuries and the dollar are higher as the drop in stocks prompts an increase in safe-haven demand. Spain sold 6 billion euros ($7.8 billion) of Treasury bills, the maximum target for the auction, which pushed down the borrowing costs due to the increase in demand. Spain, which has to repay 24.7 billion euros of debt this month, has the third-largest deficit in the Euro-Zone and many of its banks are dependent on the ECB for funds. Greece sold 1.95 billion euros ($2.53 billion) of 13-week Treasury bills with a bid-to-cover ratio of 3.85, higher than last week’s 3.64, which shows strong demand and indicates an increase in investor confidence towards Greek government debt. Hungary, however, raised less than planned in a debt sale for a fourth time since June, which sent its borrowing costs soaring to a 19-week high and reignited concern about the ability to tame its budget deficit as the economy slows.
• The Asian markets today closed mixed with Japan down -1.15%, Hong Kong +0.86%, China +2.20%, Taiwan +0.81%, Australia +1.04%, Singapore +0.11%, South Korea +0.23%, India -0.28%. China’s Shanghai Stock Index closed higher after the International Strategy & Investment Group said China would relax polices that were aimed at curbing its housing industry as the economy faces a bigger risk from a slowdown than inflation. At a briefing in Beijing, China’s Commerce Ministry said that China’s domestic consumption will become the most important element of the nation’s economic growth in the future and that domestic consumption in the second half of this year will continue to grow at a relatively fast pace. Japanese stocks fell, led by declines in semiconductor-related stocks, after Texas Instruments reported disappointing profit and sales, while automakers and electronics companies also closed lower fell on concern demand from the US may falter after US home-builder confide nce sank to a 16-month low.

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +0.45% and Sep S&Ps up +5.70 points. The euro and Treasuries are little changed despite the action by Moody’s Investors Service to downgrade Ireland’s credit rating one notch to Aa2 from Aa1, citing the government’s "gradual but significant loss of financial strength." European stocks and the euro also saw little reaction after the cost to insure debt payments from Hungary surged and the forint tumbled 2.6% against the euro when deficit-reduction talks with the IMF broke down. Credit-default swaps on Hungarian government debt jumped 45.5 bp to a 5-week high of 362 bp after the IMF and European Union declined to endorse Prime Minister Orban’s plans to control the budget deficit as part of a 20 billion-euro ($25.8 billion) emergency bailout because "a range of issues remain open." The EU said that Hungary’s government must make "tough decisions, notably on spending," to comply with deficit requirements. M&A activity boosted European stock prices after International power and GDF Suez climbed after GDF Suez, operator of Europe’s largest natural-gas network, said it’s in preliminary talks to combine some of its assets with International Power, creating an enlarged company majority-owned by GDF. Tomkins rallied 34% after Onex Corp., Canada’s biggest publicly traded buyout firm, and the Canada Pension Plan Investment Board signaled they might bid 2.9 billion pounds ($4.4 billion) for Tomkins.
• The Asian markets today closed mostly lower with Japan closed for holiday, Hong Kong down -0.79%, China +2.54%, Taiwan -0.19%, Australia -1.46%, Singapore -0.42%, South Korea -0.45%, India -0.15%. Asian stocks were undercut as concern deepened that the global economic recovery is faltering which may hurt exports and curb demand for Asian goods after US July University of Michigan consumer confidence tumbled to an 11-month low. The China Securities Journal said a report from the State Information Center said that China’s export growth might slow over the rest of the year to less than half the pace of the first six months. The report states that China’s exports between July-through-December may rise only +16.3% from a year earlier, slowing from the +35% y/y increase in the first half as the removal of tax rebates, weaker demand because of Europe’s debt crisis, and comparisons with higher base levels leads to smaller increases. Still, the report predicts that China’s ex ports for the full year of 2010 will climb 24.5% compared with a -16% decline in 2009.

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +0.33 % and Sep S&Ps up +3.70 points. US and European shares are fluctuating between small gains and losses as disappointing earnings from Google offset gains in BP Plc and Goldman Sachs. BP is 4% higher after the company said late yesterday that oil has stopped flowing into the Gulf of Mexico from its damaged Macando well and Goldman Sachs is 5% higher in European trading after the firm agreed to pay $550 million to settle with US regulators that it misled investors in collateralized debt obligations linked to subprime mortgages. Google is trading down 3.7% after it reported Q2 profit of $6.45 a share, weaker than analysts’ estimates of $6.52 as expenses surged 22% to $4.46 billion during the quarter, higher than an 18% increase in Q1. Weakness in German utility companies is also undercutting European share prices after the Handelsblatt newspaper reported that Germany’s planned tax on utilities that run nuclear power plants would levy a tax of 220 euros ($284) per gram of plutonium or uranium when a reactor is refueled. The euro rallied to a 2-month high against the dollar after May Euro-Zone exports rose 1.6% from April, indicating a revival in global demand will help boost Q2 Euro-Zone growth and that the weaker euro is helping export competitiveness.
• The Asian markets today closed mixed with Japan down -2.86%, Hong Kong -0.03%, China +0.29%, Taiwan -0.52%, Australia -0.45%, Singapore +0.48%, South Korea -0.90%, India +0.26%. Japanese stocks weakened after the May Japan tertiary index, which shows demand for services and captures 63% of the economy, fell -0.9% from April and adds to signs that Japan’s economy has started to cool as the effects of government incentives for cars and home appliances fades. Asian technology stocks fell after Google missed earnings estimates and Japanese exporters and automakers closed lower after the yen rallied to a 2-week high against the dollar. Asian material and energy stocks also declined as signs of a slowing economy dimmed the outlook for global commodity prices.

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Reacceleration by Robert W. Colby

Summary: reacceleration. S&P 500 Composite (SPX) rose 1.54% to 1,095.34 on 7/13/10, for its sixth consecutive daily gain, its first such winning streak since April. SPX penetrated resistance at 1,085.27, the Fibonacci 61.8% of June-July 2010 range, and is challenging its 50-day SMA now at 1,0… Day Trader:  Click here to Read More »

Reacceleration by Robert W. Colby

Summary: reacceleration. S&P 500 Composite (SPX) rose 1.54% to 1,095.34 on 7/13/10, for its sixth consecutive daily gain, its first such winning streak since April. SPX penetrated resistance at 1,085.27, the Fibonacci 61.8% of June-July 2010 range, and is challenging its 50-day SMA now at 1,0… Day Trader:  Click here to Read More »

Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index down -0.48% and Sep S&Ps up +1.80 points. US stock futures rose to a 2-week high after Intel, the world’s biggest chipmaker, reported better-than-expected earnings late yesterday and boosted its profit forecast for the year to a record. Intel’s rally led a surge in global technology stocks with STMicroelectronics NV and Infineon Technologies AG, Europe’s biggest chipmakers, climbing more than 2% and ASML Holding NV, Europe’s largest manufacturer of chip technology, advancing 5.6%. European stocks failed to hold their gains however after ICAP, the biggest broker of transactions between banks, dropped 5.3% after saying, "volumes slowed significantly in June as our customers’ and end investors’ risk appetites reduced." Also undercutting European stocks and the euro was the smaller than expected +0.9% m/m increase in May Euro-Zone industrial production which was forecast to increase +1.2% m/m along with a report from the Bank of Spain that showed Spanish lenders borrowed a record 126.3 billion euros ($161 billion) from the ECB in June as investors shunned the nation’s banks.
• The Asian markets today closed mostly higher with Japan up +2.71%, Hong Kong +0.64%, China +0.72%, Taiwan +1.54%, Australia +1.87%, Singapore +0.82%, South Korea +1.38%, India -0.27%. Intel’s earnings report boosted Asian technology stocks with Samsung Electronics, Asia’s biggest semiconductor maker, advancing 2.6% and Advantest, the world’s largest maker of chip-testing equipment, gaining 5.9%. Japanese stocks also received a boost after Komatsu Ltd., the world’s second-largest maker of construction equipment, gained 5.5% after raising its first-half net income forecast by 41% to 52 billion yen on rising demand from Asia and Latin America. Singapore raised its 2010 economic growth forecast saying its economy will grow between 13% and 15% this year after it reported that growth in the first half of this year accelerated to a record 18.1% pace as casinos spurred tourism. Fitch Ratings claims that Chinese bank lending in the first half was 28% higher than official numb ers suggest as more loans were repackaged into investment products, "distorting" credit data. Fitch said after adjusting for "informal securitization," new loans stood at about 5.9 trillion yuan ($871 billion) in the first six months, more than the PBOC’s data that show new loans of 4.6 trillion yuan.

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