Markets Likely To Sour Monday On Dire Data

by: Markos Kaminis

European markets mostly moved higher this morning despite poor economic data, while Asia ex-Japan rose off last week's EU catalyst. U.S. data may not be uplifting when a manufacturing report reaches the wire at 10:00 AM. The holiday shortened week would be expected to produce lighter volume than usual except for today's dynamic trouble keeping traders on their toes. U.S. markets are indicating a higher open, but I have my doubts. The SPDR S&P 500 (NYSEARCA:SPY) is indicating up fractionally.


EURO STOXX 50 Price EUR: +1.0%

FTSE 100: +0.5%


Nikkei 225: Unchanged

Hang Seng: +2.2%

S&P/ASX 200: +0.9%

International economic data was mostly poor Monday morning, with exports falling in China, Japan, Korea and Taiwan. A Chinese factory order purchasing managers index fell to 48.2, from 48.4, indicating contraction at the fastest pace in seven months. A Japanese PMI showed slippage to 49.9, with its new export orders index falling to 47.5, again showing contraction. China and Japan are Asia's most important exporters and lightening activity is reflective of slowing in the EU and USA, and probably domestically as well. The iShares FTSE China 25 Index (NYSEARCA:FXI) was down in premarket trading despite the gain of the Hang Seng.

European data was no better, as Markit's Eurozone Manufacturing Purchasing Managers Index remained at 45.1 in June, a level reflecting deep contraction. It marked a revision higher from first report but kept at its lowest level since June of 2009. German manufacturing contracted along with Spain, as France held above water. Unemployment in the eurozone marked 11.1%, its highest since records began in 1995. The iShares S&P Europe 350 (NYSEARCA:IEV) is likely to open lower as well, despite the gain of the broader European indexes.

Oil prices moved lower Monday on the soft economic data from overseas. WTI benchmark oil for August delivery fell below $84 a barrel in electronic trading on the New York Mercantile Exchange. The shares of Exxon Mobil (NYSE:XOM) are indicating unchanged on the news.

US Data on Tap:

The Institute for Supply Management publishes its Manufacturing Report on Business at 10:00 AM EDT. The ISM's measure of manufacturing is expected by economists to have deteriorated in the month of June, to 52.0, from 53.5 in May. ISM's index fell in May as well, dropping from 54.8 in April. The expectation seems out of sync with last months' New Orders Index, which posted a 1.9 percentage point increase to 60.1. It is not, however, out of order, given the well-detailed decline in economies globally. American economic data has been deteriorating as well, though it is thus far not indicating recession.

The latest Construction Spending data is due at 10:00 AM as well Monday. Economists surveyed by Bloomberg expect construction spending rose 0.2% in May, after increasing by 0.3% in April.

Dell (DELL) is up in the morning after the company announced it would pay $2.4 billion to acquire Quest Software (NASDAQ:QSFT). DELL won a bidding war for Quest, and says the company's offerings as a specialist in solving IT problems are "strongly aligned" with its own software strategy.

Reporting earnings this Monday, Acuity Brands (NYSE:AYI), Bassett Furniture (NASDAQ:BSET), Cazador Acquisition (NASDAQ:CAZAU), Chimera Investment (NYSE:CIM), CHS Inc. (Nasdaq: CHSCP), GenCorp (GY), Griffin Land & Nurseries (NASDAQ:GRIF), Hicks Acquisition (Nasdaq: HKAC), Hoku (HOKU), Imperial Holdings (IFT), Ixia (NASDAQ:XXIA), JDA Software (NASDAQ:JDAS), Moduslink Global Solutions (MLNK), New Frontier Media (NASDAQ:NOOF), NewLead Holdings (NASDAQ:NEWL), Rocky Mountain Chocolate Factory (NASDAQ:RMCF), Saba Software (OTCPK:SABA), Tel Instrument Electronics (NYSEMKT:TIK) and a few others.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.