Overnight Developments

• European stocks are slightly higher with the European Stoxx up +0.59% and Sep S&Ps up +1.90 points. The dollar and Treasuries are a little stronger as the markets await the US employment report for July later this morning. The euro weakened after June German industrial production unexpectedly declined -0.6% m/m versus expectations for a +0.5% m/m gain. A 1.8% increase in Royal Bank of Scotland (RBS) led gains in European bank stocks after RBS said its first-half net income unexpectedly increased to 9 million pounds ($14 million), higher than analysts’ estimates for a -47 million pound loss and its first profit since 2007. Unicore SA climbed 3.2% after the world’s largest precious-metals recycler raised its full-year profit forecast to a range of 315 million euros ($415 million) to 335 million euros, up from a previous forecast of 260 million euros to 290 million euros. Declines in brewing companies limited gains in European stocks after Anheuser-Busch InBev, the world’s largest brewer, fell 3.9%, and Heinekin NV dropped 3.5% on concern that wheat prices may continue to climb as other nations follow Russia’s wheat export ban.
• The Asian markets today closed mixed with Japan down -0.12%, Hong Kong +0.59%, China +1.64%, Taiwan +0.33%, Australia -0.01%, Singapore -0.39%, South Korea -0.02%, India -0.16%. Most Asian exporters lost ground on concern that the unexpected increase in US initial unemployment claims to a 3-1/2 month high signals a slowdown in the US economy. Korea’s Hyundai Motor, which counts North America as its biggest overseas market, closed down 2.4% and Fanuc Ltd, the Japanese industrial robot maker that gets 18% of its sales from North America, lost 1.2%. The Reserve Bank of Australia (RBA) said today that Australia’s economic expansion is unlikely to stoke inflation pressures for the next 2 years as weaker household and government spending offset the stimulatory boost from the nation’s mining boom. The RBA forecasts that Australia’s core inflation will average 2.75% until the end of next year before accelerating to the top of the central bank’s 2.0% to 3.0% target range by m id-2012. The RBA also reiterated its prediction from 3 months ago that annual economic growth will quicken to 3.75% late this year to 4.0% at he end of 2012.

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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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