- Global stocks this morning are mixed with the Euro Stoxx 50 up +0.93% and Mar S&Ps up +10.80 points. Treasuries retreated, stocks gained and the euro rebounded from a 1-week low against the dollar and moved higher after European leaders holding all-night talks in Brussels added 200 billion euros to their rescue fund and tightened anti-deficit rules, an accord hailed by ECB President Draghi as a "very good outcome." The leaders also sped the start of the 500 billion-euro rescue fund to July 2012, a year ahead of schedule, and dropped a demand that bondholders shoulder losses in future rescues. Gains in stocks were limited as economic data point to a slowdown in global growth. Oct German exports fell -3.6% m/m, weaker than expectations of -1.3% m/m, while China's industrial output climbed by the slowest pace in 2 years.
- Asian stocks today closed lower with Japan down -1.48%, Chia -0.85%, Australia -1.82%, South Korea -2.15%, India -1.67%. Asian stocks closed lower on concern a slowing global economy will dampen exporters' earnings. Q3 Japan GDP was revised lower to +1.4% q/q and +5.6% annualized from the previously reported +1.5% q/q and +6.0% annualized, while Japan's large manufacturers turned pessimistic in Q4 with sentiment among those companies falling to -6.1 from +10.3 in Q3. Chinese stocks closed lower after Nov China industrial production rose +12.4% y/y, weaker than expectations of +12.6% y/y and its smallest increase in 2 years. Losses were limited however, as Nov China CPI rose +4.2% y/y, slower than expectations of +4.5% y/y and its smallest increase in 14 months, while Nov China PPI rose +2.7% y/y, weaker than expectations of +3.3% y/y and its smallest gain in 23 months. This slowdown in inflation gives Chinese policy makers more room to loosen monetary policy.
- March S&Ps this morning are trading up +10.80 points. The US stock market yesterday sold-off sharply after the ECB dampened speculation it would increase its government bond purchases along with global banking concerns after regulators said European lenders need to raise additional capital: Dow Jones -1.63%, S&P 500 -2.11%, Nasdaq Composite -1.99%. The S&P 500, Dow, and the Nasdaq all posted 1-week lows. Bearish factors included (1) concern that European leaders may not do enough to alleviate the region's debt crisis after ECB President Draghi said the ECB has no plans for additional bond purchases, (2) weakness in financial stocks on concerns over European banks after the European Banking Authority said the region?s banks will need to raise 114.7 billion euros in fresh capital, and (3) trepidation ahead of the outcome of Friday's EU summit and whether European leaders will finally agree on steps to resolve the region's debt crisis.
- Bullish factors included (1) efforts by the ECB to help alleviate the debt crisis after they cut the 2-week refinancing rate by 25 bp, cut banks' reserve ratios to 1% from 2%, provided 3-year loans to banks and lowered the rating threshold on asset-backed securities banks may use for collateral for ECB loans, (2) the larger-than-expected decline in weekly initial unemployment claims which fell to their lowest level in 9-1/4 months (-23,000 to 381,000 versus expectations of -7,000 to 395,000), and (3) the larger-than-expected increase in Oct wholesale inventories which rose by the most in 5 months and should boost Q4 GDP as companies ramp up production to rebuild stockpiles (+1.6% versus expectations of +0.3%).
- Cooper Companies (NYSE:COO) rose 3% in European trading after the company forecast fiscal 2012 earnings of at least $4.80 a share, topping analysts' estimates of $4.65.
- March 10-year T-notes this morning are down -10.5 ticks. T-note prices yesterday erased early losses and rallied up to a 1-1/2 week high on increased safe-haven demand as stock markets tumbled after ECB President Draghi dampened speculation of further bond purchases by the ECB: TYH2 +13, FVH2 +6, EDM2 +1.5. Bullish factors included (1) increased safe-haven demand for Treasuries after stocks fell on concern the debt crisis will be prolonged when ECB President Draghi said the ECB has no plans to expand its bond purchases, and (2) concerns over European banks after the European Banking Authority said the region?s banks will need to raise 114.7 billion euros in fresh capital. Bearish factors included (1) the larger-than-expected decline in weekly initial unemployment claims which fell to their lowest level in 9-1/4 months (-23,000 to 381,000 versus expectations of -7,000 to 395,000), and (2) the larger-than-expected increase in Oct wholesale inventories which rose by the most in 5 months and should boost Q4 GDP as companies ramp up production to rebuild stockpiles (+1.6% versus expectations of +0.3%).
- The dollar index this morning is weaker with the dollar/yen +0.03 yen and the euro/dollar +0.64 cents. The dollar index yesterday rallied to a 1-week high and settled higher after the euro slumped on concern European leaders will fail to do enough to stem the region's debt crisis: Dollar Index +0.347, USDJPY -0.041, EURUSD -0.00712. Bullish factors for the dollar included (1) comments from ECB President Draghi that indicate he will not push for additional bond purchases by the ECB, which undercut the euro on concern that current actions by the ECB are still insufficient to stem the debt crisis, (2) the action by the ECB to lower its 2-week refinancing rate by 25 bp to match a record low of 1.00%, which undercuts the euro's interest rate differentials, and (3) the drop in U.S. weekly initial unemployment claims to a 9-1/4 month low, which signals labor market strength and is dollar supportive. Bearish factors included (1) the action by the ECB to cut banks' reserve ratios to 1% from 2% along with providing 3-year loans to banks and lowering the rating threshold on asset-backed securities banks may use for collateral for ECB loans, which may promote bank lending and is euro supportive and (2) strength in the yen which rose to a 1-1/2 week high against the dollar.
- Jan crude oil prices this morning are up +43 cents a barrel and Jan gasoline is +1.46 cents per gallon. Crude oil and gasoline prices yesterday settled lower for a second day after the dollar rallied, stocks faltered and on concern that European leaders may fail to do enough to stem the region's debt crisis: CLF12 -$2.15, RBF12 -2.03. Jan crude posted a 1-week low. Bearish factors included (1) the rally in the dollar index to a 1-week high, which discourages investment demand in commodities, (2) the slump in equity prices, which diminishes confidence in the economic outlook and energy demand, and (3) comments from ECB President Draghi who said that central bank bond purchases were not eternal or infinite, which dampened speculation the ECB would increase its bond buying to stem the debt crisis. Bullish factors included (1) the action by the ECB to cut interest rates by 25 bp, which may stimulate economic growth and energy demand and (2) the larger-than-expected decline in weekly U.S. jobless claims to their lowest level in 9-1/4 months, which temporarily bolstered optimism in the U.S. economic outlook and fuel demand.
Earnings reports (confirmed releases, sorted by mkt cap): FGP-Ferrelgas Partners LP (BEST earnings consensus -$0.31), CMVT-Comverse Technology (0.16), OYOG-OYO Geospace (1.28), TITN-Titan Machinery (0.50), KMGB-KMG Chemicals (0.24).
Global Financial Calendar
|0830 ET||Oct trade balance expected -$44.0 billion, Sep -$43.1 billion.|
|0955 ET||Preliminary Dec U.S. University of Michigan consumer confidence expected +1.7 to 65.8, Nov +3.2 to 64.1.|
|0200 ET||Revised Nov German CPI (EU harmonized) expected no change at unchanged m/m and +2.8% y/y).|
|0200 ET||Oct German trade balance expected +15.0 billion euros, Sep +17.4 billion euros. Oct exports expected -1.3% m/m, Sep +1.0% m/m. Oct imports expected +0.3% m/m, Sep -0.5% m/m.|
|0245 ET||Oct French industrial production expected -0.2% m/m and +2.8% y/y, Sep -1.7% m/m and +2.3% y/y.|
|0245 ET||Oct French manufacturing production expected -0.2% m/m and +3.5% y/y, Sep -1.6% m/m and +3.4% y/y.|
|0430 ET||European leaders hold summit meeting in Brussels.|
|0430 ET||Nov U.K. PPI input prices expected -0.2% m/m and +12.9% y/y, Oct +0.8% m/m and +0.8% y/y.|
|0430 ET||Nov U.K. PPI output prices expected unchanged m/m and +5.4% y/y, Oct unchanged m/m and +5.7% y/y.|
|0430 ET||Nov U.K. PPI output core expected unchanged m/m and +3.3% y/y, Oct +0.3% m/m and +3.4% y/y|
|0830 ET||Q3 Canada labor productivity expected -0.3% q/q, Q2 -0.9% q/q.|
Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.