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.

Day Trader: Click here to read the complete Morning Call.

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.

Day Trader: Click here to read the complete Morning Call.

Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +1.47% and Sep S&Ps up +5.80 points. Better than expected earnings from Alcoa boosted US and European stocks to 2-week highs despite weakness in the euro after the action by Moody’s Investors Service to cut Portugal’s credit rating two notches to A1 because of a growing debt burden and "weak" economic growth prospects. The euro remained under pressure after the July German ZEW economic sentiment fell a more than expected -7.5 to a 15-month low of 21.2 as Europe’s debt crisis threatens to cripple economic growth and banks undergo stress tests to prove their durability. Helping to keep European stocks in positive territory was the action by Greece to sell 1.625 billion euros ($2.1 billion) of 26-week T-bills at 4.65%, below the 5.00% rate charged by the European Union for its bailout package, easing concern about its budget deficit and reviving confidence in the Greek government’s austeri ty measures. BMW jumped 6.6% and led automakers higher after it forecast 2010 sales volume will rise by about 10% to more than 1,4 million units, with a full-year profit margin of more than 5% expected for the automobilies segment.
• The Asian markets today closed mostly lower with Japan down -0.11%, Hong Kong -0.18%, China -1.56%, Taiwan -0.55%, Australia -0.67%, Singapore +0.12%, South Korea +0.12%, India +0.27%. Chinese stocks fell and led other Asian stock markets lower after the government quashed speculation that it will ease real estate curbs that drove property prices lower for the first time in 16 months. Chinese banks and property developers led declines after the government said it will "strictly" enforce housing policies to prevent speculative real estate investment. Also pressuring Asian stocks was the 3.6% fall in Infosys after India’s second-largest software services provider reported Q2 net income of 14.9 billion rupees ($318.5 million), below analysts’ estimates of 15.6 billion rupees.

Day Trader: Click here to read the complete Morning Call.

A Significant Change in Market Behavior? by Robert W. Colby

Summary: a significant change in market behavior? S&P 500 Composite (SPX) rose 0.72% to 1,077.96 on 7/9/10, for its fourth consecutive daily gain, its first such winning streak since April. That accomplishment may highlight a significant change in market behavior. Short-term price momentum os… Day Trader: More »

Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +0.45% and Sep S&Ps up +1.20 points. The dollar index is little changed, Treasuries are weaker and most commodities are higher. Rio Tinto rose 3.5% and led mining companies higher as copper rallied after LME copper inventories declined to a 7-1/4 month low. Antofagasta gained 3.4% after Citigroup raised its recommendation for the copper producer to "buy" from "hold." Also helping European stocks was the larger-than-expected +1.7% m/m increase in May French industrial production which was boosted by improving global trade and a pickup in output at car plants, while ECB President Trichet said that while the fiscal crisis isn’t over, the economic signs are "encouraging."
• The Asian markets today closed higher with Japan up +0.52%, Hong Kong +1.64%, China +2.76%, Taiwan +0.50%, Australia +0.91%, Singapore +0.69%, South Korea +1.66%, India +1.03%. Asian stocks were helped higher by Citigroup’s prediction that emerging-market stocks will rally as much as 25% by the end of the year as the global economy avoids a "double dip" recession and attractive valuations lure investors. The South Korean won strengthened over 1% against the dollar after the Bank of Korea unexpectedly raised its 7-day repurchase rate to 2.25% from a record low 2.00%, citing a pre-emptive strike against inflation. South Korea joins India, Malaysia and Taiwan in lifting interest rates in recent weeks, signaling that Asia’s expansion will remain resilient to Europe’s debt crisis.

Day Trader: Click here to read the complete Morning Call.

Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +0.92% and Sep S&Ps down -1.30 points. European stocks gained and the euro strengthened to a 1-3/4 month high on speculation stress tests on European banks will show narrower losses than estimated. European bank stocks led financial shares higher after Credit Suisse Group AG raised their recommendation for lenders to "benchmark," saying European sovereign-debt risk is overstated, the financial industry is undervalued and the European Union stress tests "may be a positive catalyst." Stocks and most commodities also received a boost after the IMF raised its estimate for global economic growth. The IMF now estimates the world economy will expand 4.6% this year; the biggest increase since 2007, from an April forecast of 4.2% after a stronger-than-expected first half. The IMF warned however, "recent turbulence in financial markets, reflecting a drop in confidence about fisca l sustainability, policy responses, and future growth prospects, has cast a cloud over the outlook." As expected, the BOE kept its benchmark interest rate unchanged at 0.50% and kept its asset purchase target unchanged at 200 billion pounds.
• The Asian markets today closed mostly higher with Japan up +2.76%, Hong Kong +0.97%, China -0.18%, Taiwan +0.99%, Australia +2.40%, Singapore +1.26%, South Korea +1.53%, India +1.03%. Japanese exporters rallied as the yen fell against the dollar and after the ICSC said that US retail sales in June grew at the fastest pace in 4 years, easing concern that growth in the world’s biggest economy is faltering. NEC Corp., Japan’s largest personal computer maker, led gains in Asian technology stocks after it jumped 2.6% when it said it aims to double its share of the world’s supercomputer market in the next 4 years. Australian job growth in Jun rose a more-than-expected 45,900, boosting stocks and the Australian dollar, and heightening odds that the RBA will have to resume raising interest rates. Australia’s jobless rate held steady in June at 5.1%, marking the first time it’s below Japan’s jobless rate since at least 1978. China’s Shanghai Stock Index closed lower, led by industrial companies and energy producers, as concern the government will step up tightening measures overshadowed rising earnings. Energy producers were undercut after the government said it would extend a resource tax to the entire nation, while industrial companies weakened after UBS AG said that China will "intensify" enforcement on land policies.

Day Trader: Click here to read the complete Morning Call.

Overnight Developments

• Global stocks are mostly lower with the European Euro Stoxx 50 Index down -0.70% and Sep S&Ps down -2.80 points. The dollar and Treasuries are stronger and most commodities are weaker as stocks give back some of Tuesday’s gains. The 10-year Spanish bond yield rose 6 bp after the Bank of Spain said the cost of recapitalizing and reorganizing savings banks would represent 1.5% of the economy. The yield premium investors demand to hold Spanish 10-year bonds instead of benchmark German debt widened 8 bp to 216 bp. Also adding to downside pressure in European stocks was the unexpected -0.5% m/m decline in May German factory orders, their first drop in the last 5 months, as demand for German goods weakened. CRH sank 10% and led construction and building companies lower after the world’s second-largest maker and distributor of building materials said first-half earnings before interest, taxes, depreciation and amortization probably fell about 20%, with sales slidin g 10%. Marks & Spencer slipped 3.8% even after the UK’s largest clothing retailer reported Q1 sales growth of 3.6%, beating analysts’ estimates, after it said a proposed increase in the UK value-added tax and other measures to curb the country’s deficit are likely to dampen consumer confidence.
• The Asian markets today closed mostly lower with Japan down -0.63%, Hong Kong -1.13%, China +0.69%, Taiwan -0.19%, Australia -0.50%, Singapore -0.24%, South Korea -0.76%, India -0.81%. Most Asian stocks retreated after yesterday’s weaker-than-expected Jun ISM non-manufacturing index increased concern that the global recovery will weaken. Japan’s Nikkei 225 Stock Index declined, led by losses in Honda Motor and Sony, while Hong Kong’s Hang Seng Index retreated after the head of the National Bureau of Statistics said in the bureau’s newspaper today that China’s economy faces increasing uncertainties and the economic situation is becoming more complex. The manager of China’s foreign exchange reserves said the US bond market is important and changes in holdings of Treausuries "shouldn’t be politicized." The State Administration of Foreign Exchange (SAFE) also said on its website that concern China might consider using the "nuclear" option of dumping i ts Treasury holdings is "completely unnecessary." Australia’s Jun building industry index fell -6.8 points to 46.4, its first contraction in 10 months, and a sign that interest rate increases by the RBA are eroding demand for new dwellings.

Day Trader: Click here to read the complete Morning Call.

Evidence of persistent stresses within the financial markets by Darrell Jobman

EUR/USD The Euro edged marginally weaker in European trading on Monday in quiet conditions and narrow ranges ahead of the US Independence Day market holiday. Market positioning will be important and a sustained reduction in short Euro positions will tend to lessen the potential for a further cove… Day Trader: Read More »

Overnight Developments

• Global stocks are higher with the European Euro Stoxx 50 Index up +2.34% and Sep S&Ps up +11.00 points. Speculation that stock valuations have become attractive is boosting global stocks today after the recent decline in equity prices may have overrun the outlook for company earnings. Analysts are projecting profit for S&P 500 companies will climb 34% in 2010 compared with a 27% projected gain on March 29. The revision, the most during any quarter in at least 6 years, comes as stocks posted their biggest losses in 16 months. Basis resource stocks are leading the rally today in European stocks as rising commodities boosts share prices. BHP Billiton, the world’s biggest mining company, gained 4% and Rio Tinto rose 4.8%. BP rallied 3.7% after RBS upgraded the company to "buy" from "hold," saying the "pessimistic view on the probable costs of Macondo oil spill is currently discounted" in the share price.
• The Asian markets today closed higher with Japan up +0.77%, Hong Kong +1.22%, China +2.00%, Taiwan +!.46%, Australia +1.28%, Singapore +0.84%, South Korea +0.76%, India +0.99%. The Australian dollar and financial stocks rallied today after Australia’s central bank paused in raising borrowing costs for a second month. RBA Governor Stevens kept the overnight cash rate at 4.5% and said "caution in financial markets has been evident in the past couple of months, driven principally by concerns about European sovereigns and banks but also by some uncertainty about the pace of future global growth." China’s Shanghai Stock Index rallied off of a 15-month low to close higher and provided support for gains in other Asian stock markets. Technology shares gained after Taiwan Semiconductor Manufacturing, the world’s largest contract manufacturer of chips, increased 2.6% after JPMorgan Chase maintained its "overweight" rating on the company, while Elpida Memory advanced 4.5% after the world’s third-biggest maker of computer-memory chips said it plans to cut debt and "seek opportunities including acquisitions" as a recovery in computer sales boosts profits.

Day Trader: Click here to read the complete Morning Call

U.S. Economic Data Weaker Than Expected by Darrell Jobman

EUR/USD The Euro found support close to 1.22 against the dollar on Thursday and then strengthened gradually during the European session. There was further relief surrounding the European tender results which eased fears surrounding the Euro-zone financial sector and also helped underpin the Euro…. More »