Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are higher with the European Euro Stoxx 50 index up +0.40% and June S&Ps up +5.50 points. The dollar index slumped to a 16-month low, which has sent commodities soaring, with crude oil at a 2-1/2 year high and gold at a record. Limited damage to Japan from yesterday's 7.1-magnitude temblor along with strength in German exports is lifting stock prices across the globe. The euro climbed to a 14-3/4 month high against the dollar after Feb German exports rose +2.7% m/m, stronger than expectations of +2.0% m/m. The strong economic data along with a rally in equities has pushed the 10-year German bund yield up to a 1-1/2 year high of 3.477%. The British pound surged to a 14-1/2 month high against the dollar after Mar UK PPI output prices rose a larger-than-expected +5.4% y/y, their fastest pace in 29 months.
- The Asian stock markets today closed mostly higher with Japan up +1.85%, Hong Kong +0.47%, China +0.87%, Taiwan -0.08%, Australia +0.66%, Singapore +0.49%, South Korea +0.21%, India -0.71%. Japanese stocks rose after minimal damage was caused from yesterday?s 7.1 magnitude temblor. Toyota closed 1.4% higher after it said it will resume output at its factories in Japan on Apr 18, while shipbuilders and engineering companies rallied on speculation that they may benefit from Japan's rebuilding efforts. China's Shanghai Stock Index rose to a 4-3/4 month high led by gains in mining companies and energy producers, while China's airline stocks rose after China National Radio reported that the airlines will raise fuel surcharges after the government increased the price of jet fuel. According to data from EPFR Global, developing-nation equity funds saw a $5.7 billion inflow in the week ended Apr 6, the biggest increase in nearly 6 months.
- June S&Ps this morning are trading up +5.50 points. The US stock market yesterday fluctuated on both sides of unchanged and finished with small losses after another earthquake hit Japan and offset the bullishness of a larger-than-expected drop in weekly jobless claims: Dow Jones -0.14%, S&P 500 -0.15%, Nasdaq Composite -0.13%. The Nasdaq slipped to a 1-week low. Bearish factors for stocks included (1) a magnitude 7.1 earthquake to strike Japan, which fuels concern that the global economy may slow as Japan's recovery from last month's earthquake is delayed, (2) concern that the continued stalemate over the federal budget will lead to a shutdown of the US government if Congress fails to extend the government?s spending authority by Friday, and (3) concern the European sovereign-debt crisis will worsen after Portugal became the third Euro-Zone country to ask for a bailout.
- Bullish factors included (1) the larger-than-expected decline in weekly initial unemployment claims (-10,000 to 382,000 versus expectations of -3,000 to 385,000), (2) strength in retailers after Retail Metrics reported that US retailers industry wide posted an unexpected 2.2% increase in March, stronger than expectations of a -0.5% decline, and (3) the larger-than-expected increase in Feb US consumer credit which posted its largest monthly gain in 2-1/2 years (+$7.617 billion versus expectations of +$4.600 billion).
- Expedia (EXPE) surged 13% in European trading after the company said it will split into two, giving investors a chance to own shares in its TripAdvisor unit.
- June 10-year T-notes this morning are trading down -13.5 ticks at a 1-month low. T-note prices yesterday rebounded from a 1-month low and closed higher after a 7.1 magnitude earthquake struck Japan along with dovish comments from ECB President Trichet: TYM11 +3, FVM11 +6.2, EDU11 +3.0. The 10-year T-note yield rose to a 1-month high of 3.572%. Bullish factors included (1) increased safe-haven demand for Treasuries after a 7.1 magnitude earthquake struck Japan, which fuels concern that the global economy may slow as Japan's recovery from last month's earthquake is delayed, (2) dovish comments from ECB President Trichet who said after raising interest rates Thursday that the increase wasn?t the "first of a series" of rate hikes, which eased concern that the ECB will continue to raise interest rates, and (3) the Fed's purchase of $6.58 billion of Treasuries as part of its asset-purchase program. Bearish factors included (1) the larger-than-expected decline in weekly initial unemployment claims (-10,000 to 382,000 versus expectations of -3,000 to 385,000), and (2) an early slump in prices on carry-over weakness from an increase in the 10-year bund yield to a 1-1/2 year high after the ECB raised interest rates by 25 bp.
- The dollar index this morning is weaker and slumped to a 16-month low with the dollar/yen +0.39 yen and the euro/dollar +1.06 cents t a 14-3/4 month high. The dollar index yesterday moved higher on comments from ECB President Trichet along with a larger-than-expected drop in weekly initial unemployment claims: Dollar Index +0.011, USDJPY -0.578, EURUSD -0.00237. Bullish factors included (1) comments from ECB President Trichet who said after raising interest rates Thursday by 25 bp that the increase wasn?t the "first of a series" of rate hikes, which dampened speculation that the ECB will be overly aggressive in tightening monetary policy, (2) the larger-than-expected decline in weekly jobless claims, which signals economic strength and is dollar supportive, and (3) the ongoing European sovereign-debt crisis after Portugal became the third Euro-Zone country to ask for a bailout. Bearish factors included (1) improved interest rate differentials for the euro after the ECB hiked interest rates 25 bp, and (2) the stronger-than-expected Feb German industrial production which is euro supportive.
- May crude oil prices this morning are trading +$1.54 a barrel and May gasoline is +3.90 cents per gallon, both at fresh 2-1/2 year highs. Crude oil and gasoline prices yesterday settled mixed as a strong dollar and an ECB rate hike undercut gasoline but strong economic data along with an oil field fire in Libya lifted crude: CLK11 +$1.47, RBK11 -0.64. May crude posted a 2-1/2 year high. Bullish factors included (1) a fire at the al-Sarir oil field in Libya caused by Qadaffi's forces, and (2) stronger than expected economic data on weekly US jobless claims and Feb German industrial production, which signals economic strength that may boost energy demand. Bearish factors include (1) the stronger dollar, which reduces investment demand in commodities, and (2) the action by the ECB to raise interest rates, which bolsters concern that economic growth and energy demand will slow.
Global Financial Calendar
| Friday 4/8/11 | |
|---|---|
| United States | |
| 0800 ET | Atlanta Fed President Dennis Lockhart speaks on the U.S. economic outlook to the University of Tennessee?s Knoxville Economics Forum. |
| 1000 ET | Feb wholesale inventories expected +1.0%, Jan +1.1%. |
| 1015 ET | Dallas Fed President Richard Fisher speaks on monetary and fiscal policy at the 2011 Society of American Business Editors and Writers Annual Conference. |
| Japan | |
| 0030 ET | Mar Japan bankruptcies, Feb ?9.4% y/y. |
| 0100 ET | Mar Japan eco watchers survey current, Feb 48.4. Mar eco watchers survey outlook, Feb 47.2. |
| Germany | |
| 0200 ET | Feb German trade balance expected +13.0 billion euros, Jan +10.1 billion euros. Feb exports expected +2.0%, Jan ?1.0%. Feb imports expected +1.0%, Jan +2.3%. |
| Euro-Zone | |
| 0200 ET | ECB Executive Board members Gertrude Tumpel-Gugerell and Jose Manuel Gonzalez-Paramo speak on a panel in Berlin on the future of European economic and currency union. |
| 0630 ET | EU finance ministers and central bankers meet in Budapest. Press conference to follow. |
| France | |
| 0230 ET | Mar Bank of France business sentiment, Feb unchanged at 110. |
| United Kingdom | |
| 0430 ET | Mar UK PPI input prices expected +2.1% m/m and +12.5% y/y, Feb +1.1% m/m and +14.6% y/y. |
| 0430 ET | Mar UK PPI output prices expected +0.6% m/m and +5.1% y/y, Feb +0.5% m/m and +5.3% y/y. |
| 0430 ET | Mar UK PPI output core prices expected +0.3% m/m and +2.9% y/y, Feb +0.1% m/m and +3.1% y/y. |
| Canada | |
| 0700 ET | Mar Canada employment change expected +30,000, Feb +15,100. Mar employment rate expected ?0.1 to 7.7%, Feb unchanged at 7.8%. |
| 0815 ET | Mar Canada housing starts expected +184,500, Feb +181,900. |
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