Overnight Developments

• European stocks are higher with the European DJ Stoxx 50 up +0.90% and Sep S&Ps up +5.50 points. An increase in M&A activity is boosting European and US stocks today with Old Mutual Plc up over 4% after it said it might sell 70% of its Nedbank Group Ltd. banking unit to HSBC Holdings. Metals producers are higher as well with gains of 2% for Rio Tinto Group and BHP Billiton Ltd. amid speculation that a proposed mining tax in Australia might be scrapped or diluted after Australia’s general election failed to deliver a majority government for the first time in 70 years. A negative factor for European stock prices is the larger-than-expected -0.6 point decline in the Aug Euro-Zone PMI composite to 56.1, which signals the pace of the recovery might have peaked.
• The Asian markets today closed mostly lower with Japan down -0.68%, Hong Kong -0.44%, China -0.07%, Taiwan +0.61%, Australia -0.04%, Singapore -0.36%, South Korea -0.42%, India +0.04%. The yen climbed to near a 1-3/4 month high against the euro and pressured Japanese stocks along with last Friday’s comments from ECB Council member Weber who said that the ECB should continue with its emergency funding measures until at least year-end, which fueled speculation about the sustainability of Europe’s economic recovery and its demand for Asian exports. Japanese Prime Minister Kan and BOJ Governor Shirakawa spoke today about the economy and the strength of the yen and the yen rallied after Chief Cabinet Secretary Dengoku said that there was "absolutely no" discussion of intervention in the currency markets to slow the yen’s rise against the dollar. On the positive side, Japan’s 3 major shipping companies closed higher after the Nikkei English news reported that the companies are considering increasing their earnings outlook for 2010 as they were able to increase shipping rates on some routes.

Overnight U.S. Stock News

• Sep S&Ps this morning are up +5.50 points. The stock market last Friday traded in negative territory into early afternoon but then recovered into the close to finish mixed (Dow -0.56%, S&P 500 -0.37%, Nasdaq Composite +0.04%). The S&P 500 and the Dow posted 1-month lows. Bearish factors included (1) carry-over weakness from the slide in European stocks after the French government cut its GDP estimate for next year to 2.0% from 2.5% along with comments from ECB Council member Weber who said the ECB should keep its emergency funding measures in place through year-end along, which fueled speculation the global recovery may be faltering, (2) JPMorgan Chase’s cut in its US Q4 GDP forecast to 2.0% from 3.0%, (3) JPMorgan Chase’s cut in its GDP for China to +9.8% from 10% for 2010 and to 8.6% from 8.8% for 2011, citing a near-term "loss of momentum" in the US and global recoveries, and (4) the prediction from Strategic Research Partners that current combined profit estimates for 2011 S&P 500 companies’ of $96 a share is too optimistic and that profits will be only $87 a share as revenue growth trails forecasts in a slow recovery.
• Bullish factors included (1) comments from ECB Council member Honohan who said he sees a "stronger tone" to the European economy, which may help sustain the global economic recovery, (2) the prediction from HSBC Global Asset Management that global stocks stand a "decent chance" of a rally in Q4 as investors are "overly pessimistic" about the outlook for economic growth, and (3) the drop in the 10-year T-note yield to a 1-1/3 year low of 2.53%.
• Newmont Mining (NEM) rose 1% in European trading on speculation that BHP Billiton’s hostile takeover offer for Potash of Saskatchewan will increase other companies’ takeover attempts in the basic-resources industry.
• Cumberland Pharmaceuticals (CPIX) fell 2.4% in pre-marlet trading after the drugmaker said the FDA extended its review of its application for the use of the drug Acetadote in patients with acute liver failure.

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Overnight Developments

• European stocks are weaker with the European Stoxx down -0.45% and Sep S&Ps down -2.20 points. The euro weakened and German bunds rallied after the yield premium investors demand to hold Greek 10-year bonds instead of benchmark German bunds of similar maturity widened to over 800 bp for the first time since Jun 28. European stocks weakened and failed to hold an early rally amid renewed concern that the region’s sovereign debt crisis will curb economic growth in the second half of 2010. Bank stocks led the downturn with HSBC, Europe’s largest bank, down 1.6%, and Santander, the biggest Spanish bank, down 1.9%. Retail stocks also moved lower led by a 8% slump in Delhaize Group after the owner of Food Lion supermarkets cut its full-year profit forecast after a decline in US same-store sales accelerated. European stocks had rallied earlier after strong GDP reports within the region. Q2 German GDP expanded by a more-than-expected +2.2% q/q, the fastest pace sinc e the country’s reunification two decades ago. Combined with a larger-than-expected +0.6% q/q gain in Q2 French GDP helped Q2 Euro-Zone GDP to increase +1.0% q/q, its fastest pace of expansion in 4 years.
• The Asian markets today closed mostly higher with Japan up +0.44%, Hong Kong -0.16%, China +1.39%, Taiwan +0.79%, Australia +1.33%, Singapore +0.44%, South Korea +1.36%, India +0.52%. Strong earnings reports throughout Asia helped most Asian stock markets to close higher today. Wintek surged 6.9% after the maker of parts for Apple’s iPad reported Q2 net income of $9.81 million, its first profit after 9 quarters of losses, while Genting Singapore soared 14% after the casino operator reported Q2 profit of $291 million compared with a loss a year earlier, which prompted Credit Suisse Group AG, Citigroup and Morgan Stanley to raise their recommendations on the stock. Korean Air jumped 2.8% after the country’s largest carrier reported record operating profit as cargo sales climbed 86% to 1 trillion won. Minutes of the BOJ policy meeting from Jul 14-15 released today showed that some policy makers indicated they were worried about the yen’s advance, a sign they see the cur rency’s threat to exporters as a bigger economic risk than fallout from Europe’s sovereign-debt crisis. Concern about the rising yen may indicate the BOJ is prepared to curb currency gains, either through additional easing measures or currency intervention, to protect Japan’s recovery.

Overnight U.S. Stock News

• Sep S&Ps this morning are down -2.20 points. The stock market yesterday opened on its low and recovered most of its losses into late morning but then faded the rest of the day and finished moderately lower (Dow -0.57%, S&P 500 -0.54%, Nasdaq Composite -0.83%). All of the indexes fell to 3-week lows. Bearish factors included (1) carry-over weakness from a drop in European stocks on signs that the European economy is weakening after Jun Euro-Zone industrial production unexpectedly declined, (2) the unexpected increase in weekly initial unemployment claims which rose to a 5-1/2 month high and adds to evidence that the US economic recovery may falter (+2,000 to 484,000 versus expectations of -14,000 to 465,000), and (3) weakness in technology stocks after Cisco Systems plunged when it forecast weaker-than-expected Q3 sales and after BMO Capital Markets reduced its ratings on semiconductor companies to "underperform" from "market perform," c iting rising inventory and weakening demand.
• Bullish factors included (1) a rally in fertilizer companies after the USDA estimated that global wheat production will fall to a 3-year low, and (2) the prediction from PIMCO that the Fed’s recent decision to reinvest principal payments on mortgage holdings into Treasuries should eventually boost demand for riskier assets, including stocks.
• Intel (INTC) slipped 1.2% in European trading after a report surfaced that Nvidia has a team of engineers developing chips that could be used by computer makers instead of Intel, according to people who declined to be identified because the project hasn’t been made public.

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Overnight Developments

• European stocks are slightly higher with the European Stoxx up +0.45% although Sep S&Ps are down -1.30 points after sliding to a 3-week low in overnight electronic trade when Cisco Systems, the largest maker of networking equipment, forecast sales that missed analysts’ estimates. The dollar index strengthened to a 2-1/2 week high, while Treasuries and most commodities weakened with copper falling to a 2-week low and crude oil sinking to a 1-1/2 week low. European stocks fluctuated between slight losses and gains as equities try to regain their footing following Wednesday’s deep slide. AB InBev gained 3.7% after the world’s largest brewer reported Q2 net income rose to $1.15 billion, beating analysts’ estimates of $1.08 billion, and Vestas Wind Systems A/S, the world’s largest maker of wind turbines, rose 3.8% after winning an order for turbines in what will be Australia’s biggest wind-energy project. Undercutting European stock prices was the unexpected -0.1% m/m drop in Jun Euro-Zone industrial production, which was dragged lower by a decline in durable consumer goods such as furniture and home appliances. In its monthly bulletin for Aug released today, the ECB said that Q3 growth in the Euro-Zone is likely "better than expected," echoing ECB President Trichet’s comments last week, while the central bank cut its forecast for 2011 GDP growth in the Euro-Zone to 1.4% versus a previous projection of 1.5%.
• The Asian markets today closed mostly lower with Japan down -0.86%, Hong Lomg -0.89%, China -1.19%, Taiwan -0.83%, Australia -1.23%, Singapore -0.75%, South Korea -2.19%, India +0.02%. The yen fell back slightly from a 15-year high against the dollar after Japanese Vice Finance Minister Tamaki met with BOJ members to discuss the financial markets. Nintendo and Sony, which get more than 70% of their sales abroad, slumped at least 3% on concern the yen’s appreciation will hurt the value of Japanese exports, while concerns that the global economic recovery is unraveling sent Japan’s Nikkei 225 Stock Index tumbling to a 13-month low. Australian stocks closed lower after the country’s jobless rate in July rose to 5.3% from 5.1% in June. India’s industrial production rose 7.1% y/y in June, the slowest pace in 13 months, which adds to evidence that Asian economies are weakening.

Overnight U.S. Stock News

• Sep S&Ps this morning are down -1.30 points. The stock market yesterday sold-off steadily the entire day and finished sharply lower (Dow -2.49%, S&P 500 -2.82%, Nasdaq Composite -3.01%). All of the indexes sank to 1-1/2 week lows. Bearish factors included (1) carry-over weakness from Tuesday on speculation that the decision by the Fed to purchase long-term Treasuries indicates the economic recovery is in jeopardy, (2) concerns that the global economy is slowing after China’s July industrial output rose the least in 11 months and the BOE cut its economic growth estimate for England to a 3.0% annual pace instead of the 3.6% rate forecast in May, (3) the unexpected widening of the US Jun trade balance to -$49.9 billion, its highest level in 20 months which indicates that trade subtracted more from Q2 GDP than previously estimated, and (4) weakness in materials and energy producers after metals and crude prices sank on demand concerns.
• Bullish factors included (1) the smaller-than-expected budget deficit in the July US monthly budget statement (-$165.0 billion versus expectations of -$169.0 billion), and (2) the plunge in the yield on the 10-year T-note to a 1-1/3 year low of 2.680%.
• Cisco Systems (CSCO) sank 7.3% in European trading after the company late yesterday forecast revenue for the current quarter of between $10.64 billion and $10.83 billion, below analysts’ estimates of $10.95 billion. Cisco was then downgraded to "perform" from "outperform" at Oppenheimer after the results.
• EBay (EBAY) gained 1.1% in pre-market trading after Citigroup upgraded the company to "buy" from "hold," saying that losses in 2010 and an appealing valuation set up a good "entry point" for investors.

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Overnight Developments

• European stocks are weaker with the European Stoxx down -1.15% and Sep S&Ps down -15.10 points. The drop in US stocks that began after the FOMC meeting yesterday afternoon accelerated in overnight trade with Sep S&Ps falling to a 1-week low as the Fed signaled the recovery is decelerating. Treasuries around the globe gained, with the US 2-year T-note yield dropping to a record low of 0.4892%, while the yield on the 10-year German bund slipped to a record low of 2.458%. The dollar index rose to a 1-1/2 week high and commodities slumped with copper declining to a 1-week low. Adding to pressure on European stocks was the Bank of England’s quarterly inflation report in which the BOE cut its economic growth estimate for England to a 3.0% annual pace instead of the 3.6% rate forecast in May and said that inflation will be at about 1.5% in 2012, lower than its 2.0% goal, which signals the economy may need more emergency stimulus. July UK nationwide consumer con fidence tumbled a more-than-expected 7 points to a 15-month low of 56, which aided a drop in the British pound to a 1-1/2 week low against the dollar.
• The Asian markets today closed mostly lower with Japan down -2.70%, Hong Kong -0.83%, China +0.62%, Taiwan -1.02%, Australia -1.88%, Singapore -1.17%, South Korea -1.32%, India -0.82%. Japan’s Nikkei 225 Stock Index fell to a 2-1/2 week low on economic growth concerns after Jun Japan machine orders, an indicator of business investment in 3 to 6 months, rose +1.6% m/m, far less than the expected +5.4% m/m increase. Japan’s exporters also closed lower after the yen surged to a 15-year high against the dollar as a stronger yen reduces the value of overseas income at Japanese companies when converted into their home currency. Chinese bank stocks weakened after China’s banking regulator ordered banks to transfer off-balance-sheet loans onto their books and make provisions for those that may default. Adding to evidence that China’s economy is cooling, China’s July industrial output rose +13.4% y/y, the least in 11 months, while new loans in July were 532.8 billion yuan, be low expectations of 600 billion yuan. China’s July inflation quickened to 3.3% y/y, the fastest pace in 21 months, boosted by a low year-earlier base for comparison and rising food costs.

Overnight U.S. Stock News

• Sep S&Ps this morning are down -15.10 points. The stock market yesterday traded in negative territory throughout the day, although a late-day rally helped it to close well above its worst levels (Dow -0.51%, S&P 500 -0.60%, Nasdaq Composite -1.24%). Bearish factors included (1) carry-over weakness from a fall in Chinese stocks on evidence that China’s economic growth is slowing after July China imports rose at their slowest pace of growth in 9 months, while July property prices in 70 major Chinese cities posted their smallest increase in 6 months, (2) the unexpected decline in Q2 nonfarm productivity which fell for the first time in over 2 years (-0.9% versus expectations of +0.2%), (3) weakness in materials and energy producers after the dollar index rallied to a 1-week high and the prices of most commodities tumbled, and (4) the fall in technology stocks led by a slump in semiconductor shares after Barclays Plc and R.W. Baird & Co. reduced their rating s on Intel, the world’s largest semiconductor manufacturer, because of weakening orders for personal computer components.
• Bullish factors included (1) strength in US phone companies after Wells Fargo upgraded the sector to “marketweight” from “underweight,” saying that US telephone stocks are increasingly appealing as a haven from slowing growth in the economy and because the industry pays out historically high dividends relative to the S&P 500 Index and that the industry “appears to be on the verge of a turnaround,” and (2) the post FOMC statement in which the Fed said they will reinvest principal payments on mortgage holdings into long-term Treasury securities as they expand their quantitative easing in an attempt to bolster economic growth and keep the US economy from lapsing back into recession.
• Cree (CRE) slumped 9.8% in European trading after the company forecast Q1 sales of $280 million at most, below analysts’ estimates of $284.3 million.

A123 Systems (AONE) dropped 4.6% in European trading after the company reported a Q2 loss of 33 cents a share, wider than the 27-cent loss estimated by analysts.

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Overnight U.S. Stock News

• Sep S&Ps this morning are down -15.10 points. The stock market yesterday traded in negative territory throughout the day, although a late-day rally helped it to close well above its worst levels (Dow -0.51%, S&P 500 -0.60%, Nasdaq Composite -1.24%). Bearish factors included (1) carry-over weakness from a fall in Chinese stocks on evidence that China’s economic growth is slowing after July China imports rose at their slowest pace of growth in 9 months, while July property prices in 70 major Chinese cities posted their smallest increase in 6 months, (2) the unexpected decline in Q2 nonfarm productivity which fell for the first time in over 2 years (-0.9% versus expectations of +0.2%), (3) weakness in materials and energy producers after the dollar index rallied to a 1-week high and the prices of most commodities tumbled, and (4) the fall in technology stocks led by a slump in semiconductor shares after Barclays Plc and R.W. Baird & Co. reduced their rating s on Intel, the world’s largest semiconductor manufacturer, because of weakening orders for personal computer components.
• Bullish factors included (1) strength in US phone companies after Wells Fargo upgraded the sector to “marketweight” from “underweight,” saying that US telephone stocks are increasingly appealing as a haven from slowing growth in the economy and because the industry pays out historically high dividends relative to the S&P 500 Index and that the industry “appears to be on the verge of a turnaround,” and (2) the post FOMC statement in which the Fed said they will reinvest principal payments on mortgage holdings into long-term Treasury securities as they expand their quantitative easing in an attempt to bolster economic growth and keep the US economy from lapsing back into recession.
• Cree (CRE) slumped 9.8% in European trading after the company forecast Q1 sales of $280 million at most, below analysts’ estimates of $284.3 million.

A123 Systems (AONE) dropped 4.6% in European trading after the company reported a Q2 loss of 33 cents a share, wider than the 27-cent loss estimated by analysts.

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Overnight Developments

• European stocks are slightly higher with the European Stoxx up +0.59% and Sep S&Ps up +1.90 points. The dollar and Treasuries are a little stronger as the markets await the US employment report for July later this morning. The euro weakened after June German industrial production unexpectedly declined -0.6% m/m versus expectations for a +0.5% m/m gain. A 1.8% increase in Royal Bank of Scotland (RBS) led gains in European bank stocks after RBS said its first-half net income unexpectedly increased to 9 million pounds ($14 million), higher than analysts’ estimates for a -47 million pound loss and its first profit since 2007. Unicore SA climbed 3.2% after the world’s largest precious-metals recycler raised its full-year profit forecast to a range of 315 million euros ($415 million) to 335 million euros, up from a previous forecast of 260 million euros to 290 million euros. Declines in brewing companies limited gains in European stocks after Anheuser-Busch InBev, the world’s largest brewer, fell 3.9%, and Heinekin NV dropped 3.5% on concern that wheat prices may continue to climb as other nations follow Russia’s wheat export ban.
• The Asian markets today closed mixed with Japan down -0.12%, Hong Kong +0.59%, China +1.64%, Taiwan +0.33%, Australia -0.01%, Singapore -0.39%, South Korea -0.02%, India -0.16%. Most Asian exporters lost ground on concern that the unexpected increase in US initial unemployment claims to a 3-1/2 month high signals a slowdown in the US economy. Korea’s Hyundai Motor, which counts North America as its biggest overseas market, closed down 2.4% and Fanuc Ltd, the Japanese industrial robot maker that gets 18% of its sales from North America, lost 1.2%. The Reserve Bank of Australia (RBA) said today that Australia’s economic expansion is unlikely to stoke inflation pressures for the next 2 years as weaker household and government spending offset the stimulatory boost from the nation’s mining boom. The RBA forecasts that Australia’s core inflation will average 2.75% until the end of next year before accelerating to the top of the central bank’s 2.0% to 3.0% target range by m id-2012. The RBA also reiterated its prediction from 3 months ago that annual economic growth will quicken to 3.75% late this year to 4.0% at he end of 2012.

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Overnight Developments

• European stocks are higher with the European Stoxx up +0.41% and Sep S&Ps up +1.60 points. The BOE as expected left its benchmark interest rate unchanged at 0.5% and kept its asset purchase plan unchanged at 200 billion pounds. The markets will now await the outcome of the ECB’s policy meeting later this morning and comments from ECB President Trichet. The euro is stronger and near a 3-month high after comments from the IMF that Greece has shown “great progress” in implementing austerity measures and should qualify for the next installment of emergency loans in a 110 billion-euro rescue package. European stocks also received a boost after June German factory orders climbed a more-than-expected +3.2% m/m as the global recovery strengthened and spurred demand for German goods. Aviva Plc soared 6.7% and led insurance companies higher after the UK’s second-biggest insurer reported first-half profit of 1.27 billion pounds ($2 billion), beating analysts’ estimate of 1.17 billion pounds. Aviva also increased its dividend as it raised its half-year payout to 9.5 pence a share from 9 pence a year earlier. Undercutting European stock gains was the 3.6% drop in Unilever after the world’s second-largest maker of consumer goods said Q2 sales rose 3.6% from a year earlier, below analysts’ estimates of 4.0%.
• The Asian markets today closed mixed with Japan up +1.73%, Hong Kong +0.01%, China -0.89%, Taiwan -0.45%, Australia +0.54%, Singapore +0.16%, South Korea -0.32%, India -0.24%. Toyota closed nearly 2% higher and led a rally in Japanese automakers after it raised its full-year profit forecast to 340 billion yen ($3.94 billion) for the year ending in March, compared with an earlier estimate of 310 billion yen, as sales in Asia grow and demand in the US recovers following Toyota’s recall of 8 million vehicles. Japanese exporters also gained after the yen weakened against the dollar, which boosts the value of repatriated overseas revenue. Property stocks and bank shares led declines in Chinese stocks today on concern that China’s proposed new stress tests of its banks signals the government may be growing more concerned about the health of the real estate market.

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Overnight Developments

• European stocks are weaker with the European Stoxx down -0.81% and Sep S&Ps down -2.90 points. The dollar and Treasuries are higher on increased safe-haven demand as stocks falter. European bank stocks are leading financial shares lower after Allied Irish Banks Plc, Ireland’s second-biggest bank, dropped 8.2% after its first-half loss widened as bad debts rose. Standard Chartered Plc fell 6.3% after Royal Bank of Scotland Group Plc cut its recommendation on the bank to "hold" from "buy," citing weakness in capital-market related sales and pre-impairment profit that missed forecasts. Next Plc slid 7.4% and led retailers lower after Britain’s second-largest clothing retailer said consumer spending will be "more restrained" in the second half. Limiting losses in European stocks was the 4.0% jump in Electricite de France SA after the French government said that electricity prices would rise 3.4% starting Aug 15. Demand for dollars continues to weaken after the 3-month dollar Libor rate fell for the 16th consecutive session to a 2-3/4 month low of 0.424%.
• The Asian markets today closed mixed with Japan down -2.11%, Hong Kong +0.43%, China +0.37%, Taiwan +0.19%, Australia -0.65%, Singapore -0.43%, South Korea -0.10%, India +0.57%. Asian stocks were undercut after weaker-than-expected US economic data on home sales and factory orders renewed concerns about the strength of the global economy. Japanese exporters were pressured as the yen rose to an 8-month high against the dollar, which threatens to hurt the value of overseas sales when converted to the local currency. Canon, the world’s biggest maker of digital cameras, fell 4.3%, and Sony, which gets 22% of its sales from the US, slipped 3%. Toyota Motor dropped 1.6% and Honda Motor fell 2.2% after the companies posted declines in US auto sales last month of 3.2% and 2.0% respectively. The yield on Japanese 10-year government bonds fell below 1.00% for the first time in 7 years on speculation the strengthening yen will increase deflationary pressures.

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Overnight Developments

• European stocks are weaker with the European Stoxx down -0.81% and Sep S&Ps down -2.90 points. The dollar and Treasuries are higher on increased safe-haven demand as stocks falter. European bank stocks are leading financial shares lower after Allied Irish Banks Plc, Ireland’s second-biggest bank, dropped 8.2% after its first-half loss widened as bad debts rose. Standard Chartered Plc fell 6.3% after Royal Bank of Scotland Group Plc cut its recommendation on the bank to "hold" from "buy," citing weakness in capital-market related sales and pre-impairment profit that missed forecasts. Next Plc slid 7.4% and led retailers lower after Britain’s second-largest clothing retailer said consumer spending will be "more restrained" in the second half. Limiting losses in European stocks was the 4.0% jump in Electricite de France SA after the French government said that electricity prices would rise 3.4% starting Aug 15. Demand for dollars continues to weaken after the 3-month dollar Libor rate fell for the 16th consecutive session to a 2-3/4 month low of 0.424%.
• The Asian markets today closed mixed with Japan down -2.11%, Hong Kong +0.43%, China +0.37%, Taiwan +0.19%, Australia -0.65%, Singapore -0.43%, South Korea -0.10%, India +0.57%. Asian stocks were undercut after weaker-than-expected US economic data on home sales and factory orders renewed concerns about the strength of the global economy. Japanese exporters were pressured as the yen rose to an 8-month high against the dollar, which threatens to hurt the value of overseas sales when converted to the local currency. Canon, the world’s biggest maker of digital cameras, fell 4.3%, and Sony, which gets 22% of its sales from the US, slipped 3%. Toyota Motor dropped 1.6% and Honda Motor fell 2.2% after the companies posted declines in US auto sales last month of 3.2% and 2.0% respectively. The yield on Japanese 10-year government bonds fell below 1.00% for the first time in 7 years on speculation the strengthening yen will increase deflationary pressures.

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Overnight Developments

• European stocks are trading mildly lower with the European Stoxx 50 down -0.28%. Sep S&Ps are down 4.80 points (-0.44%). S&Ps are on edge ahead of this morning’s Q2 GDP report (expected +2.6%). There is also some caution ahead of Sunday’s expected release of China’s purchasing managers index due to talk of a sharply weaker figure. The market consensus is for a moderate 0.7 point decline to 51.4 from 52.1 in June. The Eurozone July CPI rose to a 20-month high of +1.7% y/y from +1.4% y/y in June, which was in line with market expectations. However, the core CPI rose to only +0.9% y/y from +0.8% y/y in June. Meanwhile, the Eurozone June unmeployment rate remained at 10%, the highest level in almost 12 years. The IMF said today that US banks may need as much as $76 billion more in capital. A senior executive from Moody’s said that Spain, already on review for a possible downgrade, will probably lose its Aaa rating. Spain has already lost its triple-A ra ting from S&P and Fitch. The Moody’s executive also said that the U.S. needs a "clear plan" for tackling its deficit.
• The Asian markets today closed lower across the board: Japan -1.64%, Hong Kong -0.30%, China -0.32%, Taiwan -0.49%, Australia -0.68%, Singapore -0.33%, South Korea -0.83%, Bombay -0.69%. Asian markets were undercut by the report that Japan’s June unemployment rate rose to a 7-month high of 5.3%, which was higher than the consensus of 5.2%. In addition, Japan’s factory output fell 1.5% m/m versus the consensus for a +0.2% rise.

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Overnight Developments

• European stocks are higher with the European Stoxx 50 up 0.55% after hitting a 3-month high. Sep S&Ps are up 5.70 points (+0.52%). European stocks received support from positive earnings reports from AstraZeneca and Volkswagen and from positive confidence and employment reports. The European Commission’s business and consumer confidence index rose to a 2-1/3 year high of 101.3 from 99 in June. Meanwhile, Germany unemployment fell by 20,000 to 3.21 million, which was the lowest level in 1-1/2 years and was the 13th consecutive monthly decline. The Germany unemployment rate fell to 7.6% from 7.7%. French Finance Minister Christine Lagarde today said she expects a "serious pickup" in global growth in 2011, "if only because global trade has significantly improved." UBS upgraded European stocks to "neutral" from "underweight," cut U.S. stocks to "neutral," and cut Japanese stocks to "underweight."
• The Asian markets today closed mixed: Japan -0.59%, Hong Kong +0.01%, China +0.50%, Taiwan +0.18%, Australia -0.13%, Singapore +0.41%, South Korea -0.17%, Bombay +0.19%. Asian stocks were undercut by Wednesday’s U.S. Beige Book report, which suggested lackluster U.S. demand for Asian exports. Panasonic fell 7.7% today after news that the company would offer stock to help it purchase full control of its Sanyo Electric and Panasonic Electric Works units.

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