Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are higher with the European Euro Stoxx 50 index up +0.18% and June S&Ps up +5.40 points. The dollar and Treasuries are little changed but stock markets around the world are higher on better-than-expected earnings from Oracle and Accenture. Portugal continued to rule out a rescue package as the yields on its government bonds rose to a record, while EU leaders bowed to German demands to pare startup capital upfront payments as of 2013 to 16 billion euros ($23 billion), less than the 40 billion euros foreseen in Monday's accord. German Chancellor Merkel argued that Monday's accord had Germany putting up too much capital versus the other European countries. European bank demand for euros continues to be strong after the 3-month Euribor rate climbed to 1.203%, a 1-3/4 year high. The euro was little changed after German business confidence in March fell less than expected. The Mar German IFO business climate fell -0.1 to 111.1, better than expectations of -0.7 to 110.5. Price pressures remain sticky after the Feb German import price index rose +1.1% m/m and +11.9% y/y, stronger than expectations of +0.9% m/m and +11.6% y/y.
- The Asian stock markets today closed higher with Japan up +1.07%, Hong Kong +1.06%, China +1.33%, Taiwan +0.40%, Australia +0.91%, Singapore +0.91%, South Korea +1.02%, India +2.53%. In a positive sign for Japanese stocks, the Ministry of Finance reported that foreign investors bought 891 billion yen ($11 billion) in Japanese stocks in the week through Mar 18, the most since comparable records began in 2005. Japan's Nikkei 225 Stock Index tumbled 10% last week after the earthquake crisis. Strength in construction firms led a rally in Asian stocks today on optimism demand will grow as Japan rebuilds. A spokesman for Japan's Nuclear and Industrial Safety Agency said one reactor core at the quake-damaged Fukushima Dai-Ichi power plant might be cracked and leaking radiation. Radioactive cesium above the government limit was found yesterday on komatsuna, a leafy vegetable known as Japanese mustard spinach that was harvested in Tokyo's Edogawa ward, 220 kilometers (135 miles) south of the crippled power plant.
- June S&Ps this morning are trading up +5.40 points. The US stock market yesterday moved steadily higher the entire day after weekly jobless claims fell along with optimism that European leaders will seek a solution to their debt crisis: Dow Jones +0.70%, S&P 500 +0.93%, Nasdaq Composite +1.41%. The Dow, S&P 500 and the Nasdaq all posted 2-week highs. Bullish factors for stocks included (1) carry-over support from a rally in European stocks on optimism that European leaders in the midst of a 2-day summit in Brussels will come up with a solution to the region's debt crisis, (2) the larger-than-expected decline in weekly initial unemployment claims (-5,000 to 382,000 versus expectations of -2,000 to 383,000), (3) strength in technology stocks after Red Hat and Micron Technology, the largest US maker of computer-memory chips, reported better-than-expected earnings.
- Bearish factors included (1) the unexpected decline in Fed durable goods orders (-0.9% and -0.6% ex transportation versus expectations of +1.2% and +2.0% ex transportation), (2) concern that the European debt crisis may worsen after Moody's Investors Service cut the ratings on 30 Spanish banks and European official said a bailout of Portugal may total as much as 70 billion euros ($99 billion), and (3) concerns over a setback in the automotive industry after the report from IHS Automotive that predicts parts shortages caused by the Japanese quake crisis may reduce global automobile production by about 30%.
- Oracle (ORCL) jumped 4% in pre-market trading after the company late yesterday forecast profit this quarter, excluding acquisition costs and other expenses, of 69 cents to 73 cents, better than analysts' estimates of 66 cents.
- Accenture (ACN) rose 5% in European trading after the company forecast Q3 revenue would grow to a range of $6.3 billion to $6.5 billion, higher than analysts' estimates of $6.08 billion.
- June 10-year T-notes this morning are trading up +1.5 ticks. T-note prices yesterday fell to a 2-week low and closed lower on reduced safe-haven demand after stock prices moved higher: TYM11 -15, FVM11 -10.5, EDU11 unchanged. Bearish factors included (1) the larger-than-expected decline in weekly initial unemployment claims (-5,000 to 382,000 versus expectations of -2,000 to 383,000), and (2) reduced safe-haven demand for Treasuries after the stock market rallied. Bullish factors included (1) the unexpected decline in Fed durable goods orders (-0.9% and -0.6% ex transportation versus expectations of +1.2% and +2.0% ex transportation), (2) increased safe-haven demand on concern the European sovereign-debt crisis will worsen after Moody's Investors Service cut the ratings on 30 Spanish banks and European officials said a bailout of Portugal may total as much as 70 billion euros ($99 billion), (3) the Treasury's $11 billion auction of 10-year TIPS that had a bid-to-cover ratio of 2.97, well above the 12-auction average of 2.60 and a sign of strong demand, and (4) the Fed's action to purchase $6.987 billion of Treasuries as part of its QE2 asset-purchase program.
- The dollar index this morning is slightly higher with the dollar/yen +0.30 yen and the euro/dollar -0.07 cents. The dollar index closed lower yesterday as the euro strengthened on speculation that European leaders will come up with a solution to the region's debt crisis as they begin a 2-day meeting in Brussels: Dollar Index -0.138, USDJPY +0.063, EURUSD +0.00908. Bearish factors included (1) strength in the euro on anticipation that EU leaders will come up with a solution to the European debt crisis, and (2) heightened speculation that the ECB will raise interest rates when it meets next on Apr 7, which would further improve the euro's interest rate differentials against the dollar. Bullish factors included (1) concern the European sovereign-debt crisis will worsen after European officials speculated that a bailout of Portugal would cost as much as 70 billion euros ($99 billion), (2) the action by Moody's Investors Service to cut the ratings on 30 Spanish banks to reflect Spain's sovereign downgrade, and (3) weakness in the British pound which retreated against the dollar after Feb UK retail sales came in weaker than expected.
- May crude oil prices this morning are trading up +13 cents barrel and May gasoline is +0.18 of a cent per gallon. Crude oil and gasoline prices yesterday closed mixed as allied air attacks on Libya supported prices while the lingering European debt crisis and an unexpected decline in US durable goods orders limited gains: CLK11 -$0.15, RBK11 +2.22. May crude posted a 2-week high but shed its gains and closed lower. Bearish factors include (1) concern the European debt crisis may worsen and slow the global economy and energy demand after European officials said a bailout of Portugal may total as much as 70 billion euros ($99 billion), (2) the unexpected decline in Feb US durable goods orders, which hints at economic weakness that may curtail fuel demand, and (3) the prediction from PFC Energy that OPEC may agree to an increase in production when it meets in Jun because of a "sustained" supply disruption from Libya. Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, (2) sustained allied attacks in Libya, which may further reduce Libyan crude output, and (3) an escalation of anti-government protests in Syria and Yemen, which may spread further civil unrest to oil-producing nations in the Middle East and North Africa.
Global Financial Calendar
| Friday 3/25/11 | |
|---|---|
| United States | |
| 0730 ET | Dallas Fed President Richard Fisher speaks at the Bruegel Research Institute in Brussels on the U.S. economy. |
| 0830 ET | Revised Q4 U.S. GDP expected +3.0% annualized, previous +2.8% annualized. Q4 personal consumption, previous +4.1%. Q4 GDP price index, previous +0.4%. Q4 PCE deflator, previous +0.5% q/q. |
| 0915 ET | Atlanta Fed President Dennis Lockhart speaks about the U.S. economic outlook at the Estero Market Pulse conference in Fort Myers FL. |
| 0955 ET | Final Mar U.S. University of Michigan consumer confidence expected –0.2 to 68.0, previous –9.3 to 68.2. |
| 1200 ET | Fed releases annual revisions to U.S. industrial production and capacity utilization. |
| 1215 ET | Philadelphia Fed President Charles Plosser speaks at the Shadow Open Market Committee symposium on the topic “Beyond the Short Run: A Framework for Long-Run Monetary Policy.” |
| France | |
| 0230 ET | Revised Q4 French GDP expected no change at +0.3% q/q and +1.5% y/y. |
| 0345 ET | Mar French consumer confidence indicator, Feb unchanged at 85. |
| Germany | |
| 0300 ET | Apr German GfK consumer confidence survey expected –0.2 to 5.8, Mar +0.2 to 6.0. |
| 0300 ET | Feb German import price index expected +0.9% m/m and +11.6% y/y, Jan +1.5% m/m and +11.8% y/y. |
| 0500 ET | Mar German IFO business climate expected –0.7 to 110.5, Feb +0.9 to 111.2. Mar IFO current assessment expected –0.1 to 114.6, Feb +1.9 to 114.7. Mar IFO expectations expected –1.1 to 106.8, Feb +0.1 to 107.9. |
| Euro-Zone | |
| 0500 ET | Feb Euro-Zone M3 money supply expected +1.6% 3-mo avg and +1.7% y/y, Jan +1.7% 3-mo avg and +1.5% y/y. |
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