Overnight Developments
- The European DJ Stoxx 50 this morning is unchanged and Sep S&Ps are up +3.00 points (+0.33%). The Asia-Pacific stock markets today closed mixed with Japan (+1.79%), Hong Kong (-0.81%), China (-0.42%), Taiwan (+0.64%), Australia (+1.75%), Singapore (+0.69%), South Korea (+0.10%), India (-1.97%).
- European and US stocks are flat to slightly higher today led by gains in energy and commodity producers after crude oil climbed to an 8-month high and copper prices rose to a 2-week high. Deutsche Bank AG raised its forecast for global growth next year to +2.5%, up from a Mar forecast of +2.0%, citing an improved outlook for investment and exports. European consumer prices fell -0.1% y/y in Jun, their first annual decline since compilation of data began in 1996, while loans to households and companies in Europe rose by +1.8% y/y in May, the slowest annual growth since records began in 1991 as the worst recession since WWII is prompting companies to cut prices and banks to tighten credit standards. The economy in the UK shrank more than previously estimated in the first quarter after Q1 GDP in the UK contracted by -2.4% q/q and -4.9% y/y, larger than the expected -2.1% q/q and -4.3% y/y, and the biggest contraction since 1958.
- Japan's unemployment rate rose +0.2 to a five-year high of 5.2% in May, while the May job-to-applicant ratio, the ratio of positions available to each applicant, dropped to 0.44, the lowest since the survey began in 1963. May Japan household spending unexpectedly rose by +0.3% y/y after the government distributed cash to help lift the economy out of recession, while May Japan labor cash earnings tumbled -2.9% y/y, extending the longest losing streak in five years. Comments from the President of NEC Electronics helped to lift the Nikkei 225 Stock Index today after he said the "worst is over" in regards to the recession and that semiconductor orders for next quarter will jump "several percent" thanks to increased demand.
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Overnight U.S. Stock News
- September S&Ps this morning are up +3.00 points. The US stock market yesterday closed with moderate gains (Dow +1.08%, S&P 500 +0.91%, Nasdaq Composite +0.32%).
- Bullish factors for stock prices yesterday included (1) strength in energy producers after crude oil climbed to a 1-week high, (2) comments from Boston Fed President Rosengren that US gross domestic product "is expected to start being positive in the second half of this year," (3) a rally in technology shares led by Microsoft which rose 2.2% when Deutsche Bank raised its share-price forecast for the world's largest software maker to $30 from $22, saying Microsoft's Windows 7 operating system is "poised for rapid adoption," and (4) the prediction from Barclays Capital that industrial production and corporate profits are likely to accelerate in the next few months as the global economy emerges from recession.
- Bearish factors for stock prices yesterday included (1) weakness in health-care companies as uncertainties regarding legislative proposals for the health-care industry continue to weigh on share prices, and (2) the prediction from Gluskin Sheff & Associates that the US savings rate may climb to 10% to 15% in a decade, causing deflation and holding down consumer spending that could derail an economic recovery.
- H&R Block (HRB) jumped over 5% in after-hours trading yesterday after the biggest US tax preparer reported Q4 fiscal profit of $2.09 a share, higher than analysts' estimates of $2.05, citing higher fees for consumer financial services.
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Today's U.S. Market Focus
- September 10-year T-notes this morning are down -1.5 ticks. Sep T-note prices yesterday closed up +1.5 ticks at a 1-month high. Bullish factors for T-note prices yesterday included (1) comments from China's central bank govenor that his country's foreign-exchange reserve policy is "quite stable," easing concerns that China will halt its purchases of US Treasuries, (2) the prediction from Gluskin Sheff & Associates that the US savings rate may climb to 10% to 15% within a decade, which would hold down inflation and economic growth, and (3) the prediction from High Frequency Economics that government bonds are poised to keep rallying around the world as global economic conditions fail to signal an early recovery. Bearish factors for T-note prices yesterday included (1) the statement from the Bank for International Settlements (BIS) that there's a risk that central banks will raise interest rates and withdraw emergency liquidity too late, triggering inflation, and (2) r educed safe-haven demand for Treasuries after the equity market rallied.
- The dollar index this morning is trading at a 2-week low with the dollar/yen -0.20 yen and the euro/dollar +0.34 cents. The dollar index yesterday finished little changed. Bullish factors for the dollar yesterday included (1) comments from China's central bank governor that China's foreign-exchange reserve policy is "quite stable," easing concerns that China will cut its dollar assets and diversify its foreign-exchange reserves out of dollars and into other assets, and (2) the prediction from Commerzbank AG that the dollar will strengthen against the euro as the US emerges faster from recession than Europe. Bearish factors for the dollar yesterday included (1) the larger-than-expected increase in Jun Euro-Zone economic confidence which rose to its highest level in seven months, and (2) the action by UBS AG to cut its 2009 forecast for the dollar against the euro to $1.30 by year-end compared to a previous estimate of $1.20 and to cut its 2010 forecast for the dollar to $1.40 per euro from an earlier forecast of $1.25.
- August crude oil prices this morning are up +21 cents a barrel and August gasoline is +1.65 cents a gallon. In overnight electronic trading, Aug crude oil jumped to an 8-1/4 month high of $73.38 per barrel due to the slump in the dollar index to a 2-week low and continued attacks by militants to Nigerian oil installations. Aug crude oil prices yesterday closed up sharply by +$2.33 per barrel. Aug gasoline closed up +6.35 cents a gallon. Both Aug crude oil and Aug gasoline posted 1-week highs. Bullish factors for crude oil prices yesterday included (1) continued attacks by Nigerian militants on oil installations in Nigeria which forced Royal Dutch Shell to evacuate workers from its facilities in the Nigerian Delta, cutting its Nigerian crude oil prodution to less than 50,000 bpd from between 450,000 and 500,000 bpd, (2) the prediction from Algeria's oil minister that OPEC is unlikely to raise crude output levels at its next meeting in September because the market is "oversupplied," (3) extremely hot weather in southern Texas as Houston temperatures have topped 100 degrees for six straight days, which has caused power outages to many refineries and may result in lower refinery capacity and production, and (4) Citigroup's hike in its 2009 crude oil price forecast by +14% to $55.70 per barrel and its 2010 crude oil price forecast by +18% to $65 per barrel. Bearish factors for crude prices yesterday included (1) the stronger dollar, and (2) the IEA's cut in its 5-year world crude oil demand forecast because of the economic slump, slashing its demand estimates every year through 2013 by about 3.0 million bpd, and predicting that global crude consumption won't regain last year's levels until 2012.
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Today's U.S. Earnings Reports
Earnings reports (confirmed releases for companies with market caps above $100 mln listed by mkt cap) NLC-Nalco Holding Company (BEST earnings consensus $0.24 per share), SCHN-Schnitzer Steel ($0.15), SNX-Synnex ($0.50), IRET-Investors Real Estate Trust ($0.03), PKE-Park Electrochemical ($0.19), ZZ-Sealy ($0.05)
| Tuesday 6/30/2009 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int’l Council of Shopping Centers) weekly retailer sales, previous unchanged w/w and –0.9% weekly y/y. |
| 0855 ET | Redbook weekly retailer sales, previous –4.4% month-to-date m/m and –4.5% month-to-date y/y. |
| 0900 ET | Apr S&P/CaseShiller composite-20 home price index expected –18.6% y/y, Mar –18.7% y/y. |
| 0945 ET | Jun Chicago purchasing managers index expected +4.1 to 39.0, May –5.2 to 34.9. |
| 1000 ET | Jun consumer confidence expected +0.4 to 55.3, May +4.1 to 54.9. |
| 1200 ET | St. Louis Fed President James Bullard speaks on exit strategies for the Fed at an event in Philadelphia. |
| 1300 ET | Weekly 4-week T-bill auction. |
| 1610 ET | Kansas City Fed President Thomas Hoenig speaks at NYU’s Stern School of Business. |
| 1700 ET | ABC U.S. weekly consumer confidence, previous -4 to -53. |
| 2100 ET | San Francisco Fed President Janet Yellen speaks to the Commonwealth Club in San Francisco. |
| Japan | |
| 0100 ET | May Japan housing starts expected –27.8% y/y, Apr –32.4% y/y. |
| 0100 ET | May Japan construction orders, Apr –25.9% y/y. |
| 1950 ET | Q2 Japan Tankan large manufacturers index expected –43, Q1 –58. Q2 Tankan large manufacturing outlook expected –34, Q1 –51. |
| France | |
| 0245 ET | May French producer prices expected –0.2% m/m, Apr –0.9% m/m and –6.4% y/y. |
| Germany | |
| 0355 ET | Jun German unemployment change expected +45,000, May +1,000. Jun unemployment rate expected +0.1 to 8.3%, May –0.1 to 8.2%. |
| Euro-Zone | |
| 0400 ET | May Euro-Zone M3 money supply expected +4.8% 3-mo avg and +4.6% y/y, Apr +5.2% 3-mo avg and +4.9% y/y. |
| 0500 ET | Jun Euro-Zone CPI estimate expected –0.2% y/y, May unchanged y/y. |
| United Kingdom | |
| 0430 ET | Final revision UK Q1 GDP expected –2.1% q/q and –4.3% y/y, previous –1.9% q/q and –4.1% y/y. |
| 0430 ET | Revised Q1 UK total business investment expected unrevised a –5.5% q/q and –6.8% y/y. |
| n/a | Jun UK nationwide house prices expected –0.5% m/m and –10.8% y/y, May +1.2% m/m and –11.3% y/y. |
| Canada | |
| 0830 ET | May Canadian industrial product prices expected –0.6% m/m, Apr –0.5% m/m. |
| 0830 ET | May Canadian raw materials price index expected +2.0% m/m, Apr –0.5% m/m. |
| 0830 ET | Apr Canadian GDP expected –0.1% m/m, Mar –0.3% m/m. |
Morning Quote Board
Morning Quotes (ET) Last Chg %chg Updated US Stock Futures S&P (Globex) (U9) 924.20 3.00 0.33% 07:12:54 DJIA (CBOT) (U9) 8480 22 0.26% 07:11:18 European Stocks Europe DJ Stoxx 50 2124.06 -0.14 -0.01% 07:09:30 London UK FTSE Index 4291.36 -2.67 -0.06% 07:09:30 German Dax Index 4878.57 -6.52 -0.13% 07:09:42 French CAC 40 Index 3188.52 -5.16 -0.16% 07:09:30 Asian-Pacific Stocks Japan Nikkei Index 9958 175 1.79% 03:00:16 Hong Kong Hang Seng 18379 -150 -0.81% 04:01:30 China CSI 300 Index 3166 -13 -0.42% 03:01:03 Taiwan TAIEX Index 6432 41 0.64% 01:46:01 Australian S&P 200 3954.9 68 1.75% 02:47:03 Singapore Str. Times 2333.14 15.97 0.69% 05:10:01 South Korea KOSPI 200 178.99 0.18 0.10% 05:04:05 Bombay Sensex 30 14494 -291.9 -1.97% 06:28:07 Karachi KSE-100 7162 -44 -0.61% 05:40:40 US Interest Rates 10yr T-notes (CBT)(U9) 116.130 -0.015 -0.04% 07:14:36 Cash 10yr T-note Price 97.020 -0.005 -0.02% 07:24:31 Cash 10yr T-note Yield 3.479 0.002 0.06% 07:24 5yr T-note (CBT)(U9) 114.255 -0.030 -0.07% 07:14:41 Cash 5yr T-note Price 100.140 -0.015 -0.05% 07:24:31 Cash 5yr T-note Yield 2.531 0.010 0.40% 07:24 30-yr T-bond (CBT)(U9) 118.22 0.04 0.09% 07:14:38 Cash 30yr T-bond Price 99.100 -0.020 -0.06% 07:24:31 Cash 30yr T-bond Yield 4.291 0.004 0.09% 07:24 Eurodollars (CME)(U9) 99.330 -0.005 -0.01% 07:11:43 Eurodollars (CME)(Z9) 99.080 -0.015 -0.02% 07:14:39 Asian & European Rates 10-yr JGBs (TSE) (U9) 138.10 0.22 0.16% 02:00:00 EuroyenTibor(SGX)(U9) 99.500 -0.005 -0.01% 05:48:34 Bunds (Eurex) (U9) 121.12 -0.03 -0.02% 07:09:42 Euribor (Eurex) (U9) 98.96 0.00 -0.01% 05:19:46 UK Gilts (Liffe) (U9) 118.47 -0.28 -0.24% 07:09:24 Short Stlg (Liffe) (U9) 98.87 0.00 0.00% 07:06:47 Forex US Dollar-Japanese Yen 95.86 -0.20 -0.21% 07:24:43 EuroFX-US Dollar 1.4116 0.0034 0.34% 07:24:43 US Dollar-Swiss Franc 1.0805 -0.0019 -0.19% 07:24:42 British Pound-US$ 1.6597 0.0030 0.30% 07:24:43 US$-Canadian Dlr 1.1537 -0.0027 -0.27% 07:24:42 Yen (Globex) (U9) 1.0431 0.0006 0.06% 07:14:23 Euro FX (Globex) (U9) 1.4121 0.004 0.28% 07:14:43 SwissFranc (Globex)(U9) 0.9269 0.0016 0.17% 07:14:43 British Pound(Glbx)(U9) 1.6575 0.0003 0.02% 07:14:42 Canadian$ (Globex)(U9) 0.8676 0.0026 0.30% 07:14:42 Commodities Gold (Comex) (Q9) 940.8 0.1 0.01% 06:54:34 Silver (Comex) (U9) 14.020 0.045 0.32% 06:54:05 Copper (Comex) (U9) 233.2 0.6 0.26% 06:53:48 Crude Oil (Nymex) (Q9) 71.70 0.21 0.29% 06:54:42 Gasoline (Nymex) (Q9) 195.19 1.65 0.85% 06:51:31 Heating Oil(Nymex)(Q9) 183.59 0.22 0.12% 06:54:35 NaturalGas(Nymex)(Q9) 3.957 0.013 0.33% 06:50:09 Corn (CBOT) (Z9) 399.50 2.25 0.57% 07:00:28 Soybeans (CBOT) (X9) 986.00 2.50 0.25% 07:13:38 Wheat (CBOT) (Z9) 586.00 3.00 0.51% 07:13:40
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