Barchart Morning Call
Barchart.com - 2 hrs 35 mins ago
- Global stocks this morning are lower with the Euro Stoxx 50 down -0.56% and Mar S&Ps down -6.00 points. The dollar index rose to a 2-week high and Treasuries are stronger while stocks and commodities moved lower after China announced its lowest economic growth target in 8 years and European services and manufacturing output last month was revised lower. The euro fell to a 2-week low against the dollar and the cost of insuring against default on European government debt rose to a 1-1/2 month high after the Feb Euro-Zone PMI composite was unexpectedly revised down -0.4 to 49.3 from the originally reported 49.7. The euro recovered from its worst levels against the dollar after Jan Euro-Zone retail sales unexpectedly rose +0.3% m/m and was unchanged y/y, stronger than expectations of -0.1% m/m and -1.5% y/y. The British pound slipped to a 1-week low against the dollar after Feb U.K. PMI services dropped -2.2 to 53.8, weaker than expectations of -1.1 to 54.9.
- Asian stocks today closed lower with Japan down -0.80%, China -0.64%, Australia -0.24%, South Korea -1.01%, India -1.55%. The biggest negative factor dragging Asian and other global equity markets lower was the action by Chinese Premier Wen Jiabao to cut China's growth target to 7.5% from an 8.0% goal in place since 2005, saying China needs to shift to a more sustainable and efficient economic model and achieve "higher-quality development over a longer period of time." China will also aim for inflation of about 4% this year, unchanged from its 2011 goal, even after China's consumer prices rose 5.4% last year. Another negative factor for Chinese stocks was the -4.5 point decline in the Feb China non-manufacturing index to 48.4, its weakest pace of growth in a year. Japanese stocks closed lower on the China news along with a stronger yen, which clouds the earnings outlook for exporters.
- March S&Ps this morning are trading down -6.00 points. The U.S. stock market Friday settled lower on concern the recent rally in the S&P 500 to a 3-3/4 year high has outpaced global growth prospects: Dow Jones +0.22%, S&P 500 +0.62%, Nasdaq Composite +0.74%. The Nasdaq posted a fresh 11-year high but shed its gains and closed lower. Bearish factors Friday included (1) concern over sustainability of the global expansion after Jan German retail sales unexpectedly declined and Jan Japan overall household spending fell more than expected, (2) concern over contagion of the European crisis after Spain's Prime Minister raised his country's budget deficit target for 2012 to 5.8% of GDP, defying a previous 4.4% level previously agreed to with EU leaders, and (3) weakness in energy and raw material producers after a surge in the dollar index to a 2-week high prompted weakness in most commodities.
- Bullish factors included (1) comments from St. Louis Fed President Bullard who said recent U.S. economic data is "better than expected," and the U.S. could weather a recession in Europe and (2) carry-over support from a rally in European banks after Goldman Sachs raised the European banking industry to "overweight" from "neutral," citing an anticipated boost in liquidity and profits from the ECB's 3 year loans to European lenders.
- Freeport-McMoran Copper & Gold (NYSE:FCX) slipped 1.2% in European trading after copper declined on concern China's demand for industrial metals may slow after Premier Wen Jiabao cut China's growth target.
- June 10-year T-notes this morning are up +0.5 of a tick. T-note prices Friday settled higher on dovish comments from San Francisco Fed President Williams along with increased safe-haven demand on concern European economic growth may slow after Jan German retail sales unexpectedly declined: TYM2 +18.0, FVM2 +9.7, EDU2 +2.0. Bullish factors Friday included (1) comments from San Francisco Fed President Williams who said the Fed should maintain an "extraordinarily supportive policy" to reduce an unemployment rate that will probably exceed 7% for years and "we may need to do more if the recovery falters or if inflation stays below 2%," (2) concern the European economy may slow after Jan German retail sales unexpectedly declined, and (3) increased safe-haven demand for Treasuries as stocks retreated. A bearish factor was comments from St. Louis Fed President Bullard who said recent U.S. economic data is "better than expected," and the U.S. could weather a recession in Europe.
- The dollar index this morning is higher and at a 2-week high with the dollar/yen -0.48 yen and the euro/dollar -0.11 cents. The dollar index Friday posted a 2-week high and settled higher after the euro weakened on an unexpected decline in German retail sales while the yen sank on speculation the BOJ may expand its monetary easing measures: Dollar Index +0.614, USDJPY +0.583, EURUSD -0.01146. The euro fell to a 1-1/2 week low and the yen sank to a 9-month low against the dollar. Bullish factors included (1) concern that economic growth in Europe may slow after Jan German retail sales unexpectedly declined, (2) the action by Spain's Prime Minister to raise the country's budget deficit target for 2012 to 5.8% of GDP, defying a previous 4.4% level previously agreed to with EU leaders, which may worsen the European debt crisis and weaken the euro, (3) the weaker-than-expected Jan Japan household spending along with the unexpected increase in the Jan Japan jobless rate, which undercut the yen on speculation the BOJ may boost its easing measures to stimulate economic growth, and (4) increased safe-haven demand for the dollar as stocks tumbled. Bearish factors included (1) dollar negative comments from San Francisco Fed President Williams who said the Fed should maintain an "extraordinarily supportive policy" to reduce the unemployment rate and (2) reduced safe-haven demand for the dollar after Goldman Sachs upgraded the European banking industry to "overweight" from "neutral," citing an anticipated boost in liquidity and profits from the ECB's 3 year loans to European lenders.
- Apr crude oil prices this morning are down -39 cents a barrel and Apr gasoline is +0.05 of a cent per gallon. Crude oil and gasoline prices Friday settled lower after Saudi Arabia denied a report of sabotage at its oil facilities and after the dollar rallied: CLJ12 -$2.14, RBJ -7.96. Bearish factors included (1) the rally in the dollar index to a 2-week high, which discourages investment demand in commodities, (2) the denial from a Saudi official who said there was no damage or sabotage to its oil facilities in the Qatif area, contradicting reports from Iran's Press TV late Thursday that an explosion hit pipelines in the area, (3) comments from President Obama who said in an interview with The Atlantic magazine that a pre-emptive strike against Iran might generate "sympathy" for Iran and allow it to portray itself as a victim, which eases concern that a pre-emptive attack may take place, and (4) concern that economic growth in Europe may slow after Jan German retail sales unexpectedly declined. Bullish factors included (1) concern over Monday's meeting between President Obama and Israeli Prime Minister Netanyahu and whether it will lead to military action against Iran over its nuclear program and (2) comments from San Francisco Fed President Williams who said the Fed should maintain an "extraordinarily supportive policy" to reduce the unemployment rate, which may spur economic growth and boost fuel demand.
Earnings reports (confirmed releases, sorted by mkt cap): EEP-Enbridge Energy Partners LP (BEST earnings consensus $0.38), PAY-Verifone Systems (0.52), ARCO-Arcos Dorados Holdings (0.23), MSG-Madison Square Garden (0.15), CASY-Casey's General Stores (0.44), HGIC-Harleysville Group (0.65), ABM-ABM Industries (0.22), GA-Giant Interactive Group (0.17), SONO-SonoSite (0.84), NX-Quanex Building Products (-0.03).
Global Financial Calendar
|1000 ET||Feb ISM non-manufacturing index expected -0.7 to 56.1, Jan +3.8 to 56.8.|
|1000 ET||Jan factory orders expected -1.3%, Dec +1.1%.|
|1130 ET||Weekly 3-mo and 6-mo T-bill auctions.|
|1320 ET||Dallas Fed President Richard Fisher speaks to the Dallas Regional Chamber on ?The State of the Economy.?|
|0200 ET||Zhang Ping, head of the National Development and Reform Commission, China?s top planning agency, holds a press briefing during the annual session of the National People?s Congress.|
|0350 ET||Revised Feb French PMI services expected no change at 50.3.|
|0355 ET||Revised Feb German PMI services expected no change at 52.6.|
|0400 ET||Revised Feb Euro-Zone PMI composite expected no change at 49.7.|
|0430 ET||Mar Euro-Zone Sentix investor confidence expected+6.1 to -5.0, Feb +10.0 to -11.1.|
|0500 ET||Jan Euro-Zone retail sales expected -0.1% m/m and -1.5% y/y, Dec -0.3% m/m and -1.3% y/y.|
|0430 ET||Feb U.K. PMI services expected -1.1 to 54.9, Jan +2.0 to 56.0.|
|2030 ET||Jan Japan labor cash earnings expected -0.3% y/y, Dec +0.1% y/y.|
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