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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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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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 »

Global equity markets were subjected to sharp selling pressure by Darrell Jobman

EUR/USD The Euro was unable to push back above 1.23 against the dollar in early Europe on Wednesday and was then subjected to renewed selling pressure during the day. The Euro-zone capital markets and banking sector remained an important focus during the day. There were fears that banks would fin… More »

Overnight Developments

• Global stocks are higher with the European Euro Stoxx 50 Index up +0.60% at a 3-week high and Sep S&Ps up +8.30 points at a 1-week high. Treasuries are weaker and the dollar index fell to a 1-week low, while commodities are stronger with copper at a 1-week high. European stocks rallied after April Euro-Zone industrial production rose a more-than-expected +0.8% m/m and its +9.5% y/y increase is the biggest year-over-year gain since the data series began in 1991. Mining companies gained after copper rose to a 1-week high and Salzgitter AG, Germany’s second-biggest steelmaker, advanced 3.2% after UBS AG raised its recommendation on the stock to "neutral" from "sell." The euro jumped to a 1-week high against the dollar after Greek Finance Minister Papaconstantinou told the Real News that the receipt of 110 billion euros ($134 billion) in emergency loans is enough to cover most of Greece’s borrowing needs in the coming years and that his nation isn’t considering restructuring its debt. Treasuries were pressured after equities rallied and after St. Louis Fed President Bullard, who was speaking at a press briefing in Tokyo, said that Europe’s sovereign-debt crisis shouldn’t postpone the Fed from raising interest rates.
• The Asian markets today closed higher with Japan up +1.80%, Hong Kong +0.90%, China closed for holiday, Taiwan +1.20%, Australia closed for holiday, Singapore +0.78%, South Korea +1.01%, India +1.60%. Japan’s large manufacturers said business conditions improved in Q2 from Q1 as the Q2 BSI large manufacturing rose to 10 from 4.3 in Q1, signaling that Japan’s export-led recovery is gaining traction. Japanese companies said they plan to increase spending on plants and equipment by 9.7% this fiscal year, compared with the -5.5% in cutbacks projected 3 months ago. The Q2 BSI data suggests that the Q2 Japan Tankan survey, due to be released July 1, may also be on the strong side. Japanese exporters gained as the yen slumped to a 1-week low against the dollar, easing concern that a stronger currency will erode exporters’ earnings. May India wholesale prices accelerated 10.16% y/y, more than market expectations of a 9.6% y/y gain, and increases pressure on India’s central bank to raise interest rates. The RBI has raised the benchmark reverse repurchase rate by 25 bp twice since Mar to the current 3.75% level and the central bank said it will tighten monetary policy at a "moderate" pace given the risks to economic expansion from Europe’s debt crisis. India and China, Asia’s fastest-growing major economies, are battling to contain inflation as the region shows little signs of being affected by Europe’s debt woes.

Overnight U.S. Stock News

• Sep S&Ps this morning are trading up +8.30 points. The US stock market opened lower last Friday but recovered its losses and zigzagged higher into the close to finish with modest gains (Dow Jones +0.38%, S&P 500 +0.44%, Nasdaq Composite +1.12%). Bullish factors included (1) the larger-than-expected increase in the Jun US University of Michigan consumer confidence which jumped to a 2-1/3 year high (+1.9 to 75.5 versus expectations of +0.9 to 74.5), (2) comments from Philadelphia Fed President Plosser who said that he doesn’t expect a "big impact from Europe’s fiscal crisis on the US economy," and (3) the report from the Fed that said net worth for US households and non-profit groups rose by $1.6 trillion in Q1, the fourth consecutive quarterly increase, to $54.6 trillion, which may keep consumer attitudes positive about the economy.
• Bearish factors included (1) weakness in consumer companies after the unexpected decline in May US retail sales which had its biggest decline in 8 months (-1.2% and -1.1% less autos versus expectations of +0.2% and +0.1% less autos), (2) the warning from billionaire investor George Soros who said the fiscal crisis that prompted European governments to curb their budget deficits may push the global economy back into recession, and (3) comments from Minneapolis Fed President Kocherlakota who said that he’s concerned about "weakness in the labor market."
• Alcoa (AA) rose 2% and Freeport-McMoRan Copper & Gold (FCX) gained 1.6% in premarket trading after copper prices climbed to a 1-week high.
• SanDisk (SNDK) advanced 1.6% in European trading after an article in Barron’s said the memory chip supplier may rise as much as 17% as flash memory sales for Apple’s iPad and other mobile devices expand.

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Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +1.78% and June S&Ps up +3.80 points. The dollar is little changed, Treasuries are weaker and most commodities are higher on increased economic optimism. European stocks received a boost after the May Euro-Zone PMI composite was unexpectedly revised up to 56.4 from the originally reported 56.2. Automakers gained, led by a 5.5% jump in Peugeot, after Deutsche Bank AG raised its recommendation on Europe’s second-largest carmaker to "buy" from "hold," and Daimler AG rose 2.5% after its Mercedes Benz division reported a 23% gain in US sales in May. Air France-KLM Group jumped 4.8% after Europe’s biggest airline said passenger traffic rose 4.3% in May. Limiting stock gains was the unexpected decline in Apr Euro-Zone retail sales which fell -1.2% m/m, the biggest drop in 1-1/2 years and weaker than market expectations for a +0.1% m/m increase. European banks are parking c ash with the ECB amid concern that a 750 billion-euro European rescue package may not be enough to stop the crisis from spreading and spilling into the banking industry. Overnight deposits with the ECB rose to a record 320.4 billion euros ($394 billion) and deposits have exceeded 300 billion euros for the past five days as the sovereign debt crisis makes banks wary of lending to each other.
• The Asian markets today closed mostly higher with Japan up +3.24%, Hong Kong +1.62%, China -0.78%, Taiwan +2.29%, Australia +2.40%, Singapore +2.42%, South Korea +2.14%,India +1.68%. Japanese businesses cut spending for the 12th consecutive quarter after Q1 capital spending excluding software fell -12.9% y/y. The much larger than expected decrease in capital spending will lead the government to downgrade Japan’s Q1 GDP figures later this month. Japanese exporters closed higher as the yen slumped to a 2-week low against the dollar and Asian carmakers gained on increased US sales. Nissan Motor closed 4.8% higher after reporting a +24% y/y increase in US car sales in May, Toyota rose 3.6% after posting a 5.7% sales gain and Kia Motors advanced 3.2% after its US sales rose 21% last month. The South Korean won rose sharply after JPMorgan Chase raised the nation’s equities to "overweight" and said the won is one of the "most undervalued" emerging-marke t currencies.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +3.80 points. The US stock market yesterday opened higher and maintained a positive tone throughout the day as it trended higher into the close and finished on its high (Dow Jones +2.25%, S&P 500 +2.58%, Nasdaq Composite +2.64%). Bullish factors included (1) a rally in homebuilders after the stronger-than-expected Apr US pending home sales (+6.0% m/m and +24,6% y/y versus expectations of +5.0% m/m and +21.0% y/y), (2) a rally in energy producers and oil service providers after crude oil rose, (3) strength in airline stocks after Continental airlines beat monthly estimates for monthly unit revenue, which signals a stronger return of business travelers who pay higher fares, and (4) the prediction from MFS Investment Management that "the US is in the middle of a V-shaped economic recovery and that the European bank crisis does not have the scale and scope of Lehman and AIG and it doesn’t have the ingredients to bring down the banking system."
• Bearish factors included (1) the slump in the MBA’s home purchase index to its lowest level since Apr 1997, which indicates future US housing sales may be weak as the expiration of government tax incentives to purchase homes by the end of April has led to a reduction in home sales since then, and (2) carry-over weakness from a slump in European stocks on concern the region’s sovereign debt contagion is spreading after the yield premium between Spanish 10-year government bonds and 10-year German bunds widened to a 13-year high of 177 bp.
• Alcoa (AA) rose 1.6% in European trading after the company was upgraded to "outperform" from "neutral" at Macquarie Group Ltd.
• Las Vegas Sands (LVS) climbed 2.6% in pre-market trading after Morgan Stanley raised its recommendation on the casino company to "overweight" from equal weight."

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