Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.63% and Dec S&Ps up +11.00 points. The dollar and Treasuries are lower and most commodities rose, with crude oil at a 2-week high. The euro rallied as the 10-year Italian bond yield slid to a 1-month low of 6.16% after Italy's Cabinet proposed a 30 billion-euro package of emergency economic measures in which Prime Minister Monti proposed a debt-reduction plan that includes more than 12 billion euros in spending cuts. European bank stocks rallied as German Chancellor Merkel arrived in Paris to meet with French President Sarkozy to develop a plan for stricter enforcement of the region's deficit rules that they will present to EU leaders at a summit in Brussels this Friday. European stocks also received a boost after Oct Euro-Zone retail sales rose +0.4% m/m, stronger than expectations of +0.1% m/m. Limiting gains in stocks however, was the unexpected downward revision to the Nov Euro-Zone PMI composite index to 47.0 from the originally reported 47.2, while the Dec Euro-Zone Sentix investor confidence unexpectedly fell -2.8 to a 29-month low of -24.0, weaker than expectations for a +0.2 point increase to -21.0.
- Asian stocks today closed mixed with Japan up +0.60%, China -1.40%, Australia +0.78%, South Korea +0.41%, India -0.25%. Asian stock markets finished mixed after Italy's premier announced a 30 billion-euro package to cut debt, which boosted optimism Europe's debt crisis would be contained. Japanese exporters gained as the yen weakened and traded near a 1-month low against the dollar. China's Shanghai Stock Index closed lower after the Nov China non-manufacturing PMI slumped -8.0 to 49.7 and contracted for the first time in 9 months, while property developers retreated after the China Business Journal reported that an unidentified official at the Ministry of Housing and Rural Development said the government may extend restrictions on purchasing properties in selected cities when the restrictions are supposed to expire at the end of the year.
- December S&Ps this morning are trading up +13.40 points. The US stock market last Friday settled little changed after opening higher on an unexpected decline in the U.S. unemployment rate but then drifting lower the rest of the day on concern about Europe's sovereign debt crisis: Dow Jones -0.01%, S&P 500 -0.02%, Nasdaq Composite +0.03%. The S&P 500, the Dow and the Nasdaq all posted 2-week highs. Bullish factors included (1) the unexpected decline in the Nov U.S. unemployment rate which fell to its lowest level in 2-1/2 years (-0.4 to 8.6% versus expectations of unchanged at 9.0%), (2) the upward revision to Oct U.S. payrolls (+100,000 versus the originally reported +80,000), and (3) strength in financial stocks on speculation the IMF will play a larger role in resolving the European debt crisis after two people familiar with the negotiations said that Euro-Zone finance ministers gave the go-ahead for work on a euro supportive IMF plan that would funnel ECB loans through the IMF and deliver up to 200 billion euros to fight the debt crisis.
- Bearish factors included (1) the smaller-than-expected increase in Nov manufacturing payrolls (+2,000 versus expectations of +9,000), (2) concern that slack U.S. incomes may crimp consumer spending after Nov avg hourly earnings unexpectedly fell -0.1% m/m and rose +1.8% y/y, weaker than expectations of +0.2% m/m and +2.0% y/y, (3) uncertainty about the resolve of European leaders to stem the region's debt crisis after German Chancellor Merkel rejected the idea of joint Euro-Zone bonds or trying to make the ECB the lender of last resort, saying overcoming the region's sovereign debt crisis "will take years," and (4) a report from the Hill newspaper that said Republican lawmakers may try to block the IMF from getting involved in the Euro-Zone bailout.
- March 10-year T-notes this morning are down -11 ticks. T-note prices last Friday fell to a 1-month low after the Nov U.S. unemployment rate unexpectedly fell to a 2-1/2 year low, but prices erased their losses and settled higher amid uncertainty that European leaders will be able to resolve the region's debt crisis: TYH12 +17, FVH12 +7.7, EDM12 -3.5. Bullish factors included (1) slack wage pressures after Nov avg hourly earnings unexpectedly fell -0.1% m/m and rose +1.8% y/y, weaker than expectations of +0.2% m/m and +2.0% y/y and (2) a report from the Hill newspaper that said Republican lawmakers may try to block the IMF from getting involved in the Euro-Zone bailout, which took stocks off of their best levels and raises uncertainty about a resolution to the European debt crisis as the IMF is supported heavily by the U.S. and any IMF involvement in a bailout would need U.S. support. Bearish factors included (1) the unexpected decline in the Nov U.S. unemployment rate which fell to its lowest level in 2-1/2 years (-0.4 to 8.6% versus expectations of unchanged at 9.0%) and (2) the upward revision to Oct U.S. payrolls (+100,000 versus the originally reported +80,000).
- The dollar index this morning is weaker with the dollar/yen +0.04 yen and the euro/dollar +0.48 cents. The dollar index last Friday shook off early weakness and settled higher after the euro weakened on reports U.S. lawmakers may try to stop ECB loans through the IMF: Dollar Index +0.326, USDJPY +0.268, EURUSD -0.00694. Bullish factors for the dollar included (1) the report from the Hill newspaper that said some U.S. lawmakers may try to block the plan to channel central-bank loans through the IMF to aid the European debt crisis, which undercut the euro and (2) weakness in the yen after Japanese Finance Minister Azumi said he will take action on speculative currency moves, which increased speculation of additional Japanese currency intervention to curb the yen's strength. Bearish factors included (1) reduced safe-haven demand for the dollar after stocks rallied early when the Nov U.S. unemployment rate unexpectedly fell to a 2-1/2 year low and (2) a report from two people familiar with the negotiations who said that Euro-Zone finance ministers gave the go-ahead for work on a euro supportive IMF plan that would funnel ECB loans through the IMF and deliver up to 200 billion euros to fight the debt crisis.
- Jan crude oil prices this morning are up +57 cents a barrel at a 2-week high and Jan gasoline is +1.40 cents per gallon. Crude oil and gasoline prices last Friday settled higher after the Nov U.S. unemployment rate unexpectedly fell to a 2-1/2 year low along with a boost to gasoline after Sunoco said it will idle a 194,000 barrel a day refinery in Pennsylvania: CLF12 +$0.76, RBF12 +5.83. Jan gasoline posted a 3-week high. Bullish factors included (1) the unexpected drop in the U.S. unemployment rate to a 2-1/2 year low of 8.6%, which may lead to increased fuel demand as consumer confidence and spending increases, (2) strength in gasoline after Sunoco said it will idle a 194,000 barrel a day Marcus Hook refinery in Pennsylvania, which may lead to gasoline shortages on the East Coast, and (3) concern that tensions between Iran and the West will intensify after the U.S. Senate passed a bill aimed at Iran's central bank and the EU tightened sanctions as Iran continues to ramp up its nuclear program. Bearish factors included (1) the stronger dollar, which encourages investment demand for commodities and (2) concern that European leaders will fail to stem the region's debt crisis, which took stocks and commodities off of their best levels.
Global Financial Calendar
| Monday 12/5/11 | |
|---|---|
| United States | |
| 1000 ET | Oct factory orders expected -0.3%, Sep +0.3%. |
| 1000 ET | Nov ISM non-manufacturing index expected +0.6 to 53.5, Oct -0.1 to 52.9. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1210 ET | Chicago Fed President Charles Evans speaks at the Ball State University Center for Business and Economic Research. |
| France | |
| 0350 ET | Revised Nov French PMI services, expected no change at 49.3. |
| Germany | |
| 0355 ET | Revised Nov German PMI services, expected no change at 51.4. |
| Euro-Zone | |
| 0400 ET | Revised Nov Euro-Zone PMI composite, expected no change at 47.8. |
| 0430 ET | Dec Euro-Zone Sentix investor confidence expected +0.2 to -21.0, Nov -2.7 to -21.2. |
| 0500 ET | Oct Euro-Zone retail sales expected +0.1% m/m and -0.8% y/y, Sep -0.6% m/m and -1.4% y/y. |
| United Kingdom | |
| 0430 ET | Nov U.K. PMI services expected -0.8 to 50.5, Oct -1.6 to 51.3. |
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