*Stocks were generally weak in Asian trade. The Nikkei in particular had a bad day as it fell almost 3.6% on the session; the biggest daily decline in about three months. Australia and the Hang Seng were each down by about one percent and Shanghai lost a half percent. European indexes were also broadly lower with both the Footsie and Dax off by one percent. US stock futures are trading down a half percent.

*The Q2 reading of Australia’s Current Account Balance was a deficit of AD$5.6 billion, about one billion less than forecast. Their Net Exports as a percent of GDP rose 0.4% in the quarter.

*The July reading of Australia’s Retail Sales were +0.7% on a month on month basis, beating the estimate of +0.4%.

*The preliminary July reading of Japan’s Industrial Production is +0.3% on a month on month basis, better than the forecast for a decline of 0.2%.

*The July reading of Japan’s Retail Trade was up 0.7% from the month before; it had been forecast to gain 0.5%.

*The August reading of Germany’s Unemployment Rate was steady at 7.6%, as expected. The net change in the number of Unemployed was -17k, just missing the -20k estimate.

*In July there were 48.7k Mortgage Approvals in the UK, according to the Bank of England; a couple thousand more than expected.

*The weekly report on chain store sales from ICSC shows an increase of 0.1% on a week to week basis for the week ended August 28. The Johnson Redbook report of the same thing is due out at 7:55am CDT.

*The June reading of the Case/Shiller Home Price Index is due out at 8:00am CDT, it is expected to be +3.50% on a year over year basis. The August reading of the Chicago Purchasing Managers Index is due out at 8:45am CDT, three minutes earlier for subscribers. The Chicago PMI is expected to be 57.0, which would be down from 62.3 the month before. The August reading of Consumer Confidence is set to be released at 9:00am CDT, it is forecast to improve three tenths on the month to 50.7.

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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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S&P 500

A weak July consumer confidence fell to a 5-month low offset the latest round of strong corporate earnings. On Wednesday June durable goods orders as well as the weekly mortgage applications and petroleum reports. The Beige Book is expected today which report economic conditions used for the FOMC meetings in 2 weeks. Expect the market to move after the 2pm Eastern Standard Time announcement.

On the S&P 500 on the 60-day chart shows we have been rallying since the beginning of July especially after options expiration last Friday. Expect the market to hit the January 2010 resistance level as we approach the slowest month of the year – August. The volume will not be enough in August to break through the January resistance levels.

TO BE CONTINUED WITH CHARTS AND VIDEOS HERE!

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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.

Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +0.64% and Sep S&Ps up +7.40 points. The dollar and Treasuries are weaker and most commodities are higher as the euro strengthened after ECB figures suggested reduced funding pressure for European banks. The ECB said it would lend banks 131.9 billion euros ($161.5 billion) for 3 months, less than some market estimates of 250 to 300 billion euros. Banks on July 1 need to repay 442 billion euros in 12-month funds, the biggest amount ever awarded by the ECB, and a main cog in its extraordinary liquidity measures designed to fight the financial crisis last year. The weaker-than-expected demand suggests that funding pressures for European banks aren’t as bad as originally feared and helped push the euro higher and send European bank stocks soaring. AstraZeneca Plc, the UK’s second-biggest drug maker, climbed 9.7% after winning a US court ruling that will help prevent the sale of generic copies of it s cholesterol medicine Crestor until 2016, while Portugal Telecom SGPS SA jumped 5.8% after Telefonica SA increased its offer for the Portuguese company’s stake in Brazil’s largest mobile-phone operator.
• The Asian markets today closed mostly lower with Japan down -1.96%, Hong Kong -0.59%, China -1.12%, Taiwan -1.27%, Australia -1.02%, Singapore +0.18%, South Korea -0.76%, India +0.95%. Most Asian stock markets declined, with Chinese stocks falling to a 14-month low, as Asian markets play catch up to yesterday’s global equity market rout that was extended by weaker-than-expected US Jun consumer confidence that’s spurring concern about a slowdown in US economic growth. Most Asian exporters closed lower on concerns demand will weaken for their goods if the US economy slows and Japan’s Nikkei 225 Stock Index tumbled to a 7-month low after Japan’s wages unexpectedly declined in May. May Japan labor cash earnings dropped -0.2% y/y when the market was expecting a +0.8% y/y increase, eroding prospects for acceleration in domestic demand and deepening concern that the global economic recovery will slow.

Overnight U.S. Stock News

• Sep S&Ps this morning are trading up +7.40 points. The US stock market yesterday opened lower and continued lower throughout the day and finished with sharp losses (Dow Jones -2.65%, S&P 500 -3.10%, Nasdaq Composite -3.85%). The S&P 500 plunged to a 7-3/4 month low, the Dow Jones fell to 3-week lows while the Nasdaq slid to a 1-3/4 month low. Bearish factors included (1) carry-over weakness from a plunge in Asian and European stock markets as industrial and commodity stocks declined on concern that China’s economy is weakening after the Conference Board revised down its April gauge for the outlook of China’s economy to indicate slower growth, (2) the larger-than-expected decline in Jun US consumer confidence (-9.8 to 52.9 versus expectations of -0.8 to 62.5), (3) weakness in bank stocks led by a plunge in JPMorgan Chase after Moody’s Investors Service said JPMorgan Chase, Bank of America and Wells Fargo may lose $1.38 billion in annual revenue from the proposed cap on credit-card swipe fees being considered by Congress, and (4) concerns over the health of European banks after the 3-month Euribor rate rose to an 8-month high of 0.688%, signaling a lack of trust between lenders, along with concerns that European banks must refinance $540 billion in 1-year ECB loans into 3-month loans by July 1.
• Bullish factors included (1) the larger-than-expected increase in the Apr S&P/CaseShiller composite-20 home price index which had its biggest year-over-year gain in 3-1/2 years (+0.4% m/m and +3.8% y/y versus expectations of -0.15% m/m and +3.4% y/y), (2) comments from President Obama who said after meeting with Fed Chairman Bernanke that he and the Fed Chairman both agree that the US economy is strengthening "into recovery," and (3) the plunge in the 10-year T-note yield to a 14-month low of 2.95%.
• Citigroup (C) rose 2.1% and Bank of America (BAC) climbed 1.5% in pre-market trading on carry-over support from a rally in European bank stocks on weaker-than-expected demand for ECB funds.
• Peabody Energy (BTU) increased 1.3% in pre-market trading after Deutsche Bank AG raised its recommendation on the stock to "buy" from "hold."

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