Barchart Morning Call
- Global stocks are mostly lower with the European Euro Stoxx 50 down -0.73% and Sep S&Ps down -6.80 points. The dollar and Treasuries are higher and most commodities lower on concern over a Greek default. Euro-Zone finance misters meeting in Luxembourg pushed Greece to pass laws to cut its deficit and sell state assets, and left open a decision on whether Greece will get the full 12 billion euros ($17 billion) promised for July as part of last year's 110 billion-euro bailout until early next month. Credit-default swaps to insure Greek debt surged to a record ahead of a confidence vote late Tuesday on Greek Prime Minister Papandreou's government. A decline in bank stocks in leading European stocks lower while crude oil tumbled to a 4-month low on speculation a weakening global economy and Greece's debt crisis will lead to reduced fuel demand. On the positive side, May German producer prices were unchanged m/m and +6.1% y/y, weaker than expectations of +0.1% m/m and +6.3% y/y.
- The Asian stock markets today closed lower with Japan up +0.03%, Hong Kong -0.44%, China -0.60%, Taiwan -1.22%, Australia -0.74%, Singapore +0.28%, South Korea -0.69%, India -2.04%. Asian stocks faltered on concern the Greek debt crisis will crimp demand for the region's exports. Stocks in Japan were also pressured after May Japan exports fell -10.3% y/y, weaker than expectations of a -8.4% y/y decline. China's Shanghai Stock Index slumped to an 8-1/2 month low after Credit Suisse AG said the nation's economy is heading for a "sluggish landing," while Nomura Holdings predicts that China is likely to raise interest rates within the next 10 days to combat rising inflation pressures.
- September 10-year T-notes this morning are up +10 ticks as global stock markets slide. T-note prices last Friday fell on reduced safe-haven demand after German Chancellor Merkel signaled a willingness to compromise with the ECB to prevent a Greek default along with the stronger-than-expected US leading indicators: TYU11 -7.5, FVU11 -3.2, EDZ11 +2.5. Bearish factors included (1) comments from German Chancellor Merkel who said she would compromise on German demands that bondholders shoulder a "substantial" share of the Greek rescue, saying she'll work with the ECB to resolve the crisis, which lifted the stock market and reduced the safe-haven demand for Treasuries, and (2) the stronger-than-expected May US leading indicators (+0.8% versus expectations of +0.3%). Bullish factors included (1) the larger-than-expected decline in the Jun US University of Michigan consumer confidence (-2.5 to 71.8 versus expectations of -0.3 to 74.0), and (2) the action by the IMF to cut its 2011 US growth forecast for the second time in 2 months, to 2.5% from an Apr projection of 2.8%.
- The dollar index this morning is stronger with the dollar/yen +0.24 yen and the euro/dollar -0.82 cents. The dollar index last Friday weakened after German Chancellor Merkel agreed to a Greek debt compromise: Dollar Index -0.764, USDJPY -0.604, EURUSD +0.01026. Bearish factors included (1) euro strength after German Chancellor Merkel signaled she would compromise on German demands that bondholders shoulder a "substantial" share of the Greek rescue, saying she'll work with the ECB to resolve the crisis, and (2) the weaker-than-expected Jun US University of Michigan consumer confidence. Bullish factors included (1) the stronger-than-expected May US leading indicators, and (2) the warning from former Fed Chairman Greenspan that a Greek default is "almost certain," and could help drive the US into recession, which may boost the safe-haven demand for the dollar.
- July crude oil prices this morning are trading down -$1.24 a barrel at a 4-month low and July gasoline is -4.09 cents per gallon. Crude oil and gasoline prices last Friday settled lower on concern the European debt crisis may limit economic growth and energy demand along with the weaker-than-expected US consumer confidence an the action by the IMF to cut its US growth forecast for this year: CLN11 -$1.94, RBN11 -0.34. Jul crude slumped to a 3-3/4 month low and Jul gasoline fell to a 3-week low. Bearish factors included (1) doubts that a German willingness to compromise on the Greek debt crisis will settle markets and spur economic growth, (2) the action by the IMF to cut its 2011 US growth forecast to 2.5%, down from an April forecast of 2.8%, (3) data from the API that showed US crude oil inventories increased for the fifth consecutive month in May to 367.6 million bbl, a record for May in data going back to 1980, and (4) the larger-than-expected decline in the Jun University of Michigan consumer confidence. Bullish factors included (1) the weaker dollar and (2) the larger-than-expected increase in May US leading indicators.
Earnings reports (confirmed releases, sorted by mkt cap) RENN-Renren (BEST earnings consensus -$0.01).
Global Financial Calendar
|1100 ET||USDA weekly grain export inspections.|
|1130 ET||Weekly 3-mo and 6-mo T-bill auctions.|
|1700 ET||USDA weekly crop progress report for week ended Jun 19.|
|0100 ET||Revised Apr Japan coincident index CI, previous 103.8. Revised Apr leading index CI, previous 96.4.|
|0200 ET||May German producer prices expected +0.1% m/m and +6.2% y/y, Apr +1.0% m/m and +6.4% y/y.|
|0500 ET||Q1 Euro-Zone labor costs expected +1.9% y/y, Q4 +1.6% y/y.|
|1200 ET||ECB Council member Juergen Stark speaks at an event in Munich.|
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