4 Things You Need to Know Before Trading

Stocks in Asia were mixed overnight. The Nikkei led the way with a gain of 1.7% and Australia added a half percent, but the Hang Seng was unchanged and Shanghai lost two thirds of a percent. European indexes are generally higher; the Dax is currently up two thirds of a percent and the Footsie is up 0.4%. US stock futures are essentially unchanged.

*The June reading of German Factory Orders were more than twice as strong as forecast with a monthly gain of 3.2%.

*The Bank of England kept their benchmark interest rate steady at 0.5%, as expected.

*The ECB also stood pat on rates leaving their key rate at 1.00%. ECB boss Trichet will tell us all about it when he begins his press conference at 7:30am CDT.

*US chain stores are reporting their July same-store sale results this morning, some of the early returns include: Stein Mart -2.6%, Limited Brands +12%, The Wet Seal -4.3%, The Buckle -9.3% and The Bon-Ton Stores -0.3%.

*The weekly report on Initial Jobless Claims is due out at 7:30am CDT, it is expected to be 455k.

*The weekly report on inventories of Natural Gas is due out at 9:30am CDT, it is forecast to show an increase of 31 bcf.

*San Francisco Fed boss Yellen is scheduled to give some opening remarks at a hearing on the Home Mortgage Disclosure Act at 10:30am; she is not likely to comment on the economy or monetary policy.

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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

• 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.

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Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +0.35% and Sep S&Ps up +7.30 points. Treasuries are weaker, the dollar is little changed and commodities are mixed. A rally in media stocks is boosting European equities, led by a 20% surge in BSkyB, the UK’s biggest pay-TV provider, after News Corp. raised its bid for the shares of the company that it doesn’t already own. European stocks are higher and the euro is little changed despite the plunge in German investor confidence in June. The June German ZEW economic sentiment dropped a larger-than-expected -17.1 to a 14-month low of 28.7 as concerns mount that the European sovereign debt crisis will undermine exports and crimp growth in Germany, Europe’s largest economy. Greek bond yields surged 82 bp today to 8.89% after Moody’s Investors Service yesterday cut the country’s government bond rating 4 levels to junk. The downgrade prompted Citigroup to remove Greek government debt from it s World Government Bond Index.
• The Asian markets today closed mostly higher with Japan up +0.08%, Hong Kong +0.05%, China closed for holiday, Taiwan +0.90%, Australia -0.01%, Singapore unchanged, South Korea -0.04%, India +0.43%. The yen was little changed after the BOJ kept its benchmark interest rate at 0.10% as expected following the conclusion of its 2-day policy meeting. The BOJ did say however, that it would offer as much as 3 trillion yen ($33 billion) for a new program aimed at expanding credit available to companies. Financial stocks prompted a mild rally in Japanese equities led by a 2.8% rise in Nomura, a 4.1% gain in Mizuho Securities and a 2.8% gain in Daiwa after Credit Suisse boosted its ratings on the stocks to "outperform" from "neutral," saying their valuations have fallen to "attractive" levels. The Australian dollar weakened after the release of the Reserve Bank of Australia’s (RBA) minutes of its Jun 1 meeting. The minutes said "the situatio n in Europe had deteriorated significantly over the previous month" and that previous rate increases had given them "flexibility," fueling speculation that it will keep interest rates unchanged until at least Q4.

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Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +0.57% and June S&Ps up +12.20 points. The dollar and Treasuries are weaker and commodity prices rose after economic reports from Asia show accelerating growth. China’s exports in May jumped by the most in 6 years, while Q1 Japan GDP was unexpectedly revised higher. Daimler AG climbed 4% after forecasting Mercedes-Benz sales will advance at twice the rate of the overall market on demand from China, while Lafarge SA, the world’s biggest cement maker, gained 4.3% after Citigroup recommended buying the shares. Overnight deposits at the ECB rose to a record 369 billion euros ($444 billion) today, the most since the start of the euro currency in 1999, as an increase in counterparty risks prompts European banks to deposit their excess funds with the ECB’s overnight deposit facility rather than lend. As expected, the Bank of England maintained its benchmark interest rate at 0.50% and held its asset purchase target at 200 billion pounds.
• The Asian markets today closed mostly higher with Japan up +1.10%, Hong Kong +0.06%, China -1.15%, Taiwan +1.56%, Australia +1.14%, Singapore +1.23%, South Korea +0.22%, India +1.59%. Japanese stocks closed higher after Japan’s Q1 GDP was unexpectedly revised up to a 5.0% annualized rate from 4.9%, driven by exports and an upward revision to consumer spending (+0.4% q/q from the previously reported +0.3% q/q). In a separate report, May Japan CGPI rose +0.4% y/y, the first increase in producer prices in 17 months, which may ease deflation concerns as an increase in raw-material costs fueled price gains. Aussie stocks closed higher after Australia’s jobless rate declined -0.2 to a 16-month low of 5.2% in May when employers added 26,900 to payrolls, more than market expectations of 20,000. China’s May exports rose +48.5% y/y, the biggest gain in more than six years, which indicates the European debt crisis has yet to slow the world’s fastest-growing major economy. Desp ite the strong export figure, China’s Shanghai Stock Index closed lower after China’s property prices jumped +12.4% y/y in May, the second-fastest pace on record, which raises concern the government will step up tightening measures to cool the property market.

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