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Pivotfarm Daily Harvest June 2nd 2010

|Includes: BP, Prudential Financial, Inc. (PRU)


  • Asian markets closed down over night as Yukio Hatoyama (Japanese Prime minister) resigns. The Yen weakened against the Dollar on the news. Nikkei 225 down 108 points (-1.12%). Hang Seng down 25 points (-0.13%).
  • European stocks declined in morning trading led by energy companies, but were starting to regain their losses as the morning session continued. At 0712ET the FTSE 100 was down 47 points (-0.91%).
  • The majority of Commodities were down. Gold and Copper fell for the first time in 3 and 8 days respectively. Gold traded not far below its highs at $1224, while copper traded 1.9% down at $300. Oil traded around the $72 level.
  • 2 year and longer dated US bond yields were up showing investors are reducing holdings in the debt market.
  • US Government investigates BP oil spill to see if criminal or civil charges can be brought against the UK oil company.
  • GBP/EUR reaches new yearly high. New highs above 1.2 EUR per GBP hit. GBP recovers as Prudential AIA deal falls apart.
  • US equity futures advance suggesting a higher open at the bell before home sales data is released.

Over night the Asian markets closed down as the Japanese prime minister announced his resignation. Yukio Hatoyama’s resignation less than 2 months before the elections puts pressure on the Worlds second largest economy. This hit the Yen in Forex markets as it dropped against the Dollar. This may put pressure on the yen against currencies across the board in the near future.

Investigations were launched yesterday by the US justice department into whether BP has contravened any criminal or civil laws. The oil spill in the Gulf of Mexico is the largest oil spill in US history. The large reduction seen in BP market cap since the oil rig explosion has prompted takeover speculation, but this would only be possible to a few very large institutions.

US equity futures showed gains ahead of data releases due later today. This suggests a higher open which may pare some of the losses seen at the close yesterday.

The GBP recovered on Wednesday morning as the Prudential AIG deal collapsed. AIA may have to be brought to market as an IPO offering in the second half of the year. The cost to Prudential of the failed bid is expected to be $660M. Calls for the resignation of Tidjane Thiam (NYSE:CEO) have been heard, but Mr Thiam has rejected these calls and has not stepped down.

Major News Events

1000ET – Pending Home Sales Index

Previous                 5.3%                 Consensus              6.1%

The pending home sales index is a leading indicator of sales of existing homes. The index shows the health of the housing market, and also gives an indication to the health of the wider economy. A higher than consensus figure will be a bullish sign for the economy and the markets. A figure above 6.1% will show an increase in health of the housing market and will suggest an increase in spending in other areas of the economy. An above consensus figure may see an increase in investor appetite for risk and a rise in the equity markets.

Today's levels for the ES, NQ, YM 

Disclosure: No positions