Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are higher with the European Euro Stoxx 50 up +0.50% and Sep S&Ps up +4.50 points. The euro and most commodities strengthened on speculation that Greek Prime Minister Papandreou will win a confidence vote later today that will keep Greece from default. Papandreou is struggling to convince Greeks to accept a 78 billion-euro ($112 billion) package of state-asset sales and budget cuts in order to receive additional funds from the EU and the IMF. Fitch Ratings said Greek banks could avoid default in the case of a sovereign-debt rollover if the ECB keeps open their lines of emergency liquidity support. Limiting gains in the euro and European stocks was the -12.1 plunge in Jun German ZEW economic sentiment to -9.0, much weaker than expectations of -6.1 to -3.0 and its lowest level in 29 months.
- The Asian stock markets today closed higher with Japan up +1.13%, Hong Kong +1.16%, China +1.19%, Taiwan +0.78%, Australia +1.27%, Singapore +1.32%, South Korea +1.61%, India +0.31%. Asian stocks gained as concern eased Greece will default on its debt after the leader of the Euro-Zone finance ministers, Jean-Claude Juncker, said a solution to the crisis will be found. Mining companies and energy producers closed higher after crude oil and metals advanced. Chinese property developers and homebuilders rose after the Shanghai Securities News reported that the National Development and Reform Commission said it will allow local government financing vehicles to sell bonds to fund the construction of affordable housing. South Korea's Kospi Stock Index rallied, led by banks, after Daewoo Securities said the nation's loan growth may improve, while minutes of the Jun 7 RBA monetary policy meeting indicate Australia's monetary policy may remain unchanged for the foreseeable future as the RBA said it will weigh the effects of the European debt crisis against any pickup in domestic growth in making future policy decisions.
- September S&Ps this morning are trading up +4.50 points. The US stock market yesterday recovered from early losses and moved higher after the head of the Euro-Zone finance ministers ensured that a solution will be found to spare Greece from default: Dow Jones +0.63%, S&P 500 +0.54%, Nasdaq Composite +0.50%. Bullish factors for stocks included (1) reduced concerns over Greece's debt crisis after comments from Jean-Claude Juncker, head of the Euro-Zone finance ministers, who said he's "convinced" that Greece will do all that is needed in order for it to ensure delivery of financial aid from the EU and the IMF, and (2) cheap valuations for US stocks after the S&P 500 fell to 12.1 times forecasted earnings for the next 12 months, near the cheapest valuation in almost a year.
- Bearish factors included (1) carry-over weakness from a decline in European stocks after EU leaders at a weekend meeting in Luxembourg failed to agree on a bailout plan for Greece, (2) the action by Goldman Sachs to cut its Q2 GDP estimate for the US to 2% annualized from a previous estimate of 3% annualized, and (3) concern that Tuesday's no confidence vote in Greece will show that Greek Prime Minister Papandreou lacks the support needed to implement the austerity measures necessary for Greece to receive additional aid from the EU and IMF, which could worsen the European debt crisis.
- Biogen Idec (BIIB) climbed 2.4% in pre-market trading after Deutsche Bank raised its recommendation on the stock to "buy" from "hold."
- September 10-year T-notes this morning are down -2 ticks. T-note prices yesterday erased an early rally and settled lower on reduced safe-haven demand after Greek Prime Minister Papandreou assured Jean-Claude Juncker, leader of the Euro-Zone finance ministers, that his government would do everything necessary to ensure delivery of financial aid from the EU and IMF: TYU11 -3, FVU11 -2.2, EDZ11 -1.0. Bearish factors included (1) reduced safe-haven demand for Treasuries after Jean-Claude Juncker, head of the Euro-Zone finance ministers, said he's "convinced" that Greece will do all that is needed in order for it to ensure delivery of financial aid from the EU and the IMF, and (2) speculation that the Fed will not signal for additional quantitative easing measures after the conclusion of this week's 2-day FOMC meeting on Wed. Bullish factors included (1) early safe-haven demand for Treasuries after global stock markets slumped when EU leaders at a weekend meeting in Luxembourg failed to agree on a bailout plan for Greece, and (2) the action by the Fed to purchase $4.62 billion of Treasuries as part of its QE2 asset-purchase program.
- The dollar index this morning is weaker with the dollar/yen -0.08 yen and the euro/dollar +0.58 cents. The dollar index yesterday erased an early rally and settled little changed after comments from the leader of Euro-Zone finance ministers reassured investors a Greek default can be avoided: Dollar Index +0.026, USDJPY +0.212, EURUSD -0.00070. Bearish factors included (1) comments from Jean-Claude Juncker, head of the Euro-Zone finance ministers, who said he's "convinced" that Greece will do all that is needed in order for it to ensure delivery of financial aid from the EU and the IMF, (2) comments from ECB Council member Stark who said "strong vigilance" is warranted to counter inflation risks, which indicates the ECB may raise interest rates again at its next policy meeting in July, and (3) reduced safe-haven demand for the dollar as the stock market rallied. Bullish factors included (1) concern that Tuesday's no confidence vote in Greece will show that Greek Prime Minister Papandreou lacks the support needed to implement the austerity measures necessary for Greece to receive additional aid from the EU and IMF, and (2) weakness in the yen which fell against the dollar after May Japan exports declined more than expected.
- July crude oil prices this morning are trading up +$1.17 a barrel and July gasoline is +1.90 cents per gallon. Crude oil and gasoline prices yesterday finished mixed after the head of the Euro-Zone finance ministers eased concern over Greece's debt crisis: CLN11 +$0.25, RBN11 -3.45. Jul crude dropped to a 4-month low but recovered its losses and settled higher. Bearish factors included (1) failure by EU leaders at a weekend meeting in Luxembourg to agree on a bailout plan for Greece, which raises concern a default by Greece may stall the European recovery and reduce fuel demand, and (2) the bigger-than-expected decline in May Japan exports, which signals weak economic growth and energy demand. Bullish factors included (1) the statement from the Centre for Global Energy Studies that Saudi Arabia and 3 other Persian Gulf States of OPEC who pledged to increase crude supplies will be "cautious" in raising output to avoid weakening prices, and (2) comments from Jean-Claude Juncker, head of the Euro-Zone finance ministers, who reduced Greek debt concerns when he said he's "convinced" that Greece will do all that is needed in order for it to ensure delivery of financial aid from the EU and the IMF.
Global Financial Calendar
| Tuesday 6/21/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0855 ET | Redbook weekly retailer sales. |
| 0900 ET | FOMC begins 2-day monetary policy meeting. |
| 1000 ET | May existing home sales expected -5.0% to 4.80 million, Apr -0.8% to 5.05 million. |
| 1300 ET | Weekly 4-week T-bill auction. |
| Japan | |
| 0030 ET | Apr Japan all industry activity index expected +1.8% m/m, Mar -6.3% m/m. |
| United Kingdom | |
| 0430 ET | May UK public sector net borrowing expected +16.5 billion pounds, Apr +7.7 billion pounds. |
| 0600 ET | Jun UK CBI trends total orders expected -5, May -2. |
| Germany | |
| 0500 ET | Jun German ZEW survey of economic sentiment expected -6.1 to -3.0, May -4.5 to 3.1. Jun ZEW current situation expected -1.5 to 90.0, May +4.4 to 91.5. |
| Canada | |
| 0830 ET | May Canada leading indicators expected +0.5% m/m, Apr +0.8% m/m |
| 0830 ET | Apr Canada retail sales expected +0.5% and +0.5% less autos, Mar unchanged and -0.1% less autos. |
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