Overnight Developments

• European stocks are slightly weaker with the European DJ Stoxx 50 down -0.36% and Sep S&Ps down -1.20 points. The dollar and Treasuries are little changed while copper rose to a 4-month high after the IMF raise its economic forecast for South Korea, the world’s fourth largest copper consumer. European and US stock prices are fluctuating on either side of unchanged ahead of the conclusion of today’s ECB’s monetary policy meeting in which policy makers are likely to extend emergency lending measures to banks into 2011. The French Q2 jobless rate unexpectedly slipped -0.2 to 9.7%, its first decline in 2 years as companies began hiring again. DSG International Plc rose 1.2% after the UK’s largest consumer-electronics retailer reported an increase in Q1 sales, boosted by the World Cup soccer tournament and the introduction of Apple’s iPad. On the negative side, Pernod Ricard SA slid 2.2% after it reported first-half profit of 951 million euros ($1.2 billion), bel ow analysts’ estimates of 987 million-euros, while Yara International ASA, the largest publicly traded maker of nitrogen fertilizer, dropped 3.2% after Morgan Stanley downgraded the shares to "equal weight" from "overweight."
• The Asian markets today closed higher with Japan up +1.52%, Hong Kong +1.19%, China +1.30%, Taiwan +0.69%, Australia +0.82%, singapore +0.13%, South Korea +0.54%, India +0.18%. Asian stocks rose after faster-than-estimated growth in US Aug manufacturing supported confidence in global economic growth. Japanese exporters rose as the yen weakened with Honda Motor up 1.9%, Nissan Motor up 3% and Sony up 2.2%. Chinese automakers advanced after China’s passenger-car sales grew 59% y/y in Aug, more than 3 times July’s pace, while Ping An Insurance, China’s second-largest insurer, gained 2.7% on plans to merge its bank unit with Shenzhen Development Bank after it said it will pay 29.1 billion yuan ($4.3 billion) for a stake that will give it control of Shenzhen. South Korean stocks rallied after the IMF raised its economic growth forecast for the country to 6.1% this year from 5.75% previously, and said the country still has room to raise its benchmark interest rate to a mor e neutral 4.0% from 2.25% currently. The Bank of Korea raised its benchmark rate 25 bp to 2.25% on July 9 as it joined Asian counterparts including India and Malaysia in removing monetary stimulus.

Overnight U.S. Stock News

• Sep S&Ps this morning are down -1.20 points. The stock market yesterday rallied sharply and closed on its high (Dow +2.54%, S&P 500 +2.95%, Nasdaq Composite +2.97%). The Nasdaq climbed to a 1-1/2 week high, while the S&P 500 and the Dow rallied to 1-week highs. Bullish factors included (1) carry-over strength from a rally in Asian and European stock markets which bolstered confidence in the global economic outlook after China’s manufacturing activity accelerated more than expected in August and Australia’s economy expanded in Q2 at its fastest pace in 3 years, (2) a rally in industrial stocks after the unexpected increase in the US Aug ISM manufacturing index (+0.8 to 56.3 versus expectations of -2.7 to 52.8), (3) strength in commodity and energy producers after a slide in the dollar and increased optimism that an expanding global economy will boost demand for raw materials lifted most commodity prices, and (4) gains in semiconductor makers after resea rch firm Gartner predicted chip sales will grow by +32% to $300 billion this year.
• Bearish factors included (1) the unexpected decline in jobs in the Aug ADP employment change (-10,000 versus expectations of +15,000), which fuels concern about Friday’s Aug nonfarm payroll report, (2) the larger-than-expected decline in July US construction spending which fell for the third straight month along with the downward revision to June construction spending (Jul -1.0% versus expectations of -0.5% and Jun revised down to -0.8% from +0.1%), and (3) comments from Dallas Fed President Fisher who said he is "reluctant" to expand the Fed’s balance sheet to stimulate the economy unless there are additional tax and regulatory policies in place to spur job growth.
• Collective Brands (PSS) sank 7.3% in pre-market trading after the company reported Q2 earnings of 32 cents a share, missing analysts’ estimates of 45 cents.
• Costco (COST) may be active to the upside today after the largest warehouse club chain in the US reported sales rose 9% to $5.9 billion in the four weeks that ended Aug 29 with comparable revenue increasing 7% during the period.

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Overnight Developments

• European stocks are higher with the European DJ Stoxx 50 up +0.45% and Sep S&Ps up +1.00 point. Better-than-expected earnings results are leading European stocks higher as Credit Agricole, France’s largest bank by branches, jumped 3.8% after it reported Q2 net income of 279 million euros, beating analysts’ estimates of 318 million euros, while L’Oreal, the world’s biggest cosmetics maker, surged 6.6% after it reported first-half net income increased 21% from last year to 1.32 billion euros. Also boosting European stocks was the +0.1 point increase in the Sep German GfK consumer confidence survey to an 11-month high of 4.1 as stronger economic growth and declining unemployment in Germany boosted income expectations. Loan growth grew in Europe in July as the economic recovery gathered steam after the ECB reported a +0.9% y/y increase in loans to Euro-Zone households and companies in July, the fastest pace in 13 months, which suggests the economy may not lose as much momentum as some economists forecast.
• The Asian markets today closed mixed with Japan up +0.69%, Hong Kong -0.11%, China +0.25%, Taiwan -0.61%, Australia +0.83%, Singapore -0.02%, South Korea -0.27%, India +0.26%. Japanese exporters rallied and led Japanese stocks higher as the yen weakened against the dollar. The Asahi newspaper reported today that the Japanese government may ask the BOJ to ease monetary policy further as part of an economic stimulus package, while the Nikkei English news reported that Japanese Prime Minister Kan told business leaders he is in contact with the Finance Ministry and the central bank on the possibility of currency intervention. The yen has risen 15% this year and Suzuki Motor Corp. Chairman Suzuki said the strengthening currency poses an “extremely grave” situation and will have a “very big impact” on profit.

Overnight U.S. Stock News

• Sep S&Ps this morning are up +1.00 point. The stock market yesterday sold off early but recovered its losses the rest of the session and finished higher (Dow +0.20%, S&P 500 +0.33%, Nasdaq Composite +0.84%). The S&P 500, Dow and Nasdaq all fell to 1-1/2 month lows but erased their losses and finished higher. Bullish factors included (1) speculation that the recent plunge in equity prices overshot the potential damage from a slowdown in the economy, (2) strength in homebuilders, despite the plunge in Jul new home sales to a record low, after Toll Brothers rallied when it unexpectedly reported its first quarterly profit since 2007 as writedowns declined, and (3) a supportive interest rate picture that keeps stock valuations low and benefits consumers and businesses after the yield on the 10-year T-note fell to a 1-1/2 year low of 2.42%.
• Bearish factors included (1) carry-over weakness from a fall in European stocks after S&P cut Ireland’s long-term sovereign credit rating one step to AA-, its lowest since 1995, and raised its estimate for recapitalizing the Irish banking system to as much as 50 billion euros ($63 billion) from a previous estimate of 35 billion euros, which renews concern over the European sovereign-debt crisis, (2) the weaker-than-expected Jul durable goods orders (+0.3% versus expectations of +3.0%), and the unexpected decline in Jul durable goods orders ex transportation which had its biggest drop in 1-1/2 years (-3.8% versus expectations of +0.5%), (3) the unexpected plunge in Jul new home sales which fell to their lowest level since records began in 1963 (-12.4% to 276,000 versus expectations of unchanged at 330,000), and (4) the unexpected decline in the Jun FHFA house price index (-0.3% m/m versus expectations of +0.1% m/m).
• Schlumberger (SLB), the world’s biggest oilfied-services contractor, rose 1% in European trading after crude oil prices gained.

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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

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +1.55% and Sep S&Ps up +12.80 points. The dollar and Treasuries are weaker and copper rose to a 1-3/4 month high as growth unexpectedly accelerated in the European manufacturing and service industries in July. The July Euro-Zone PMI composite rose +0.7 to 56.7 when the market was expecting a decline to 55.5. Also boosting European stocks was the stronger than expected UK retail sales for Jun, the unexpected increase in the July French business indicator which rose +2 points to a 2-year high of 98 and the unexpected increase in May Euro-Zone industrial new orders that climbed +3.8% m/m. Limiting gains in European stocks was the 2.7% drop in Credit Suisse AG after Switzerland’s second-largest bank reported a drop in profit at its investment banking unit in Q2 as trading revenue slumped amid Europe’s sovereign debt crisis, while SSAB Svenskt Staal AB, the largest supplier of high-tensile steel, slid 6.9% after it reported Q2 income of 369 million kroner ($49.9 million), below analysts’ estimates of 482 million kroner.
• The Asian markets today closed mixed with Japan down -0.62%, Hong Kong +0.50%, China +1.24%, Taiwan -0.45%, Australia -0.86%, Singapore +1.01%, South Korea -0.72%, India +0.76%. Japanese stocks closed lower for the fifth straight day as the Nikkei 225 Stock Index fell to a 2-week low after Fed Chairman Bernanke said the US economic outlook remains "unusually uncertain." Most Japanese exporters declined as the yen approached a 7-month high against the dollar, while Nintendo, the world’s biggest portable video-game maker that gets 80% of its revenue overseas, slipped 1.3% after Citigroup cut its rating on the stock to "hold" from "buy." Citigroup also cut its outlook for China’s 2010 economic expansion to 9.5% from 10.5% after China’s economy showed signs of slowing at the end of Q2. Citigroup also cut its 2011 growth estimate for China to 8.8%, lower than last month’s forecast of 9.3%.

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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 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 +0.17% and Sep S&Ps up +0.60 of a point. The dollar and Treasuries are weaker and most commodities are higher as the markets square positions ahead of this morning’s Jun US payrolls report. The European Union’s statistics office today said that the May Euro-Zone unemployment rate remained at 10.0%, its highest level in nearly 12 years, after the April figure was revised down from a previously reported 10.1%. European automakers led stocks higher as Daimler AG rose 1.7% after it reported a 25% jump y/y in June US car sales and BMW gained 1.1% after it reported a 12% increase in June US car sales. Deutsche Boerse AG, the operator of the Frankfurt stock exchange, climbed 3% after Morgan Stanley upgraded the stock to "overweight" from "equal weight," saying that exchanges are "starting to look more attractive given lower balance sheet risks compared with banks and st rong, volatility-driven volumes." Steel makers also advanced led by a 2.3% jump in ThyssenKrupp AG after Goldman Sachs Group upgraded Germany’s largest steelmaker to "buy" from "neutral," saying "recent volatility in the equity markets has driven steel valuations to low levels."
• The Asian markets today closed mostly higher with Japan up +0.13%, Hong Kong -1.11%, China +0.32%, Taiwan +1.06%, Australia +0.03%, Singapore +0.85%, South Korea -0.75%, India -0.28%. Currencies of commodity-producing countries strengthened and mining stocks rallied after Australia reached a compromise on a new resource tax. Australian Prime Minister Gillard agreed to exempt most commodities from the tax, cut the planned tax on mining profits to 30% from 40% on coal and iron ore earnings and to raise the levy’s trigger level. Japanese exporters closed slightly higher after the yen fell back from a 7-month high against the dollar, although most shipping companies weakened after the Baltic Dry Index of shipping costs for commodities fell for a 25th consecutive session, its longest losing streak since Aug 2005. Goldman Sachs Group cut its growth forecast for China for this year to 10.1% from 11.4%, saying that government restrictions on lending and real estate will slow expansion in the world’s fastest-growing major economy.

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Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index up +0.76% at a 1-month high and Sep S&Ps up +4.70 points at a 4-week high. European and US stocks rallied while the dollar index slipped to a 3-week low after a successful Spanish bond sale eased concern that Spain’s government will struggle to finance its widening deficit. Spain sold 3.5 billion euros ($4.3 billion) of 10-year and 30-year bonds at yields lower than the prevailing market rates with a strong bid-to-cover ratio of 2.45, assuaging concern that it would face difficulty meeting bond repayments. The yield premium demanded by investors to hold Spanish debt rather than equivalent German bunds narrowed to 209.5 bp after the sale, as it retreated from a record wide 221 bp yesterday, the highest since the introduction of the euro. Limiting stock gains was the 1% drop in Nokia Oyj, extending yesterday’s 9% sell off, after Goldman Sachs slashed their share price estimates and profit forecasts f or the world’s largest maker of mobile phones which started the slide yesterday after it lowered its revenue and margin forecasts.
• The Asian markets today closed mixed with Japan down -0.67%, Hong Kong +0.38%, China -0.58%, Taiwan +0.83%, Australia -0.70%, Singapore -0.11%, South Korea +0.05%, India +0.88%. James Hardie Industries SE, the biggest seller of home siding in the US, lost 3.8% in Sydney after US building permits unexpectedly fell to a 1-year low and most Japanese exporters closed lower as the yen gained against the dollar, which threatens to cut the value of overseas income when repatriated. On the positive side, Nintendo, the world’s number one maker of portable video-game players, rose 5.2%, adding on to yesterday’s 5.2% gain, after UBS boosted its rating on the stock to "buy" from "neutral" as the company introduced a new handheld video-game player this week.

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