Barchart Morning Call 6/24

Barchart Morning Call

Barchart.com - 33 mins ago

Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 up +0.31% and Sep S&Ps up +1.60 points. Stocks and commodities rose and Treasuries retreated after EU leaders vowed to stave off a Greek default as long as Prime Minister Papandreou pushes a 78 billion euro ($111 billion) package of budget cuts through the Greek parliament next week. German Chancellor Merkel said "we have agreed that there will be a new program for Greece" and Greek Prime Minister Papandreou called the commitment to a new 3-year aid program "not only a green light but also a positive sign for the future of Greece." European stocks also received a boost after German business confidence unexpectedly improved in June. The Jun German IFO business climate rose +0.3 to 114.5, stronger than expectations of -0.8 to 113.4 as the index remains near the record high of 115.4 posted in Feb. The euro gave back a slight advance and turned lower after BOE Governor King said "the most serious and immediate risk stems from the worsening debt crisis in the Euro-Zone."
• The Asian stock markets today closed mostly higher with Japan up +0.85%, Hong Kong +1.90%, China +2.36%, Taiwan -0.40%, Australia +0.17%, Singapore +0.73%, South Korea +1.85%, India +2.89%. Thursday's plunge in crude oil along with reduced European sovereign-debt concerns has boosted most Asian stocks today. Airline stocks rose due to the fall in fuel prices and shipping companies closed higher after the Baltic Dry Index, a measure of shipping rates for commodities, increased for the first time in 5 days. China's Shanghai Stock Index soared 2.36% after Prime Minister Jiabao said efforts to stem inflation have worked and the pace of consumer-price increases will slow, which reduced concern the government will raise interest rates.

Overnight U.S. Stock News

• September S&Ps this morning are trading up +1.60 points. The US stock market yesterday tumbled on concern the economy is slowing along with concern the European debt crisis will hurt banks but stock prices rallied late to finish mixed on reports that austerity measures proposed by Greece to win a bailout were endorsed by the EU and the IMF: Dow Jones -0.49%, S&P 500 -0.28%, Nasdaq Composite +0.66%. Bearish factors included (1) weakness in bank stocks after ECB President Trichet warned that risk signals for financial stability in the Euro-Zone are flashing "red" as the debt crisis threatens to infect banks, (2) the larger-than-expected increase in weekly US initial unemployment claims (+9,000 to 429,000 versus expectations of +1,000 to 415,000), (3) the plunge in energy producers after crude oil fell to a 4-month low when the IEA said it will release supplies from strategic reserves, and (4) a decline in commodity and raw-material producers after a rally in the dollar prompted fund liquidation of most commodities.
• Bullish factors for stocks included (1) the smaller-than-expected decline in May US new home sales (-2.1% to 319,000 versus expectations of -4.0% to 310,000), (2) strength in airline stocks on expectations of lower costs as crude oil tumbled, and (3) late-day short covering in stocks after austerity measures proposed by Greek Finance Minister Venizelos were endorsed by the EU and the IMF.
• Accenture (ACN) rose 2% in European trading after the company raised its full-year revenue growth estimates to an increase of 14% to 15% this year, higher than a previous projection of 11% to 14%.
• Oracle (ORCL) slid 4.1% in pre-market trading after the company said hardware sales declined 6% in the quarter ended May 31, weaker than a Mar projection of a 6% to 12% increase.

Today's Market Focus

• September 10-year T-notes this morning are unchanged. T-note prices yesterday moved higher throughout the day after ECB President Trichet warned that the European sovereign-debt crisis threatens to infect banks along with the larger-than-expected increase in weekly US jobless claims: TYU11 +22, FVU11 +15.5, EDZ11 -2.0. Bullish factors included (1) increased safe-haven demand for Treasuries after the stock market tumbled and after ECB President Trichet warned that risk signals for financial stability in the Euro-Zone are flashing "red" as the debt crisis threatens to infect banks, and (2) the larger-than-expected increase in weekly US initial unemployment claims (+9,000 to 429,000 versus expectations of +1,000 to 415,000). Bearish factors included (1) the smaller-than-expected decline in May US new home sales (-2.1% to 319,000 versus expectations of -4.0% to 310,000), and (2) supply pressures ahead of the Treasury's $99 billion in T-note auctions next week.
• The dollar index this morning is higher with the dollar/yen -0.31 yen and the euro/dollar -0.23 cents. The dollar index yesterday rallied sharply on increased safe-haven demand after the stock market tumbled and after ECB President Trichet warned that the European debt crisis threatens to infect banks: Dollar Index +0.664, USDJPY +0.229, EURUSD -0.00911. Bullish factors included (1) euro negative comments from ECB President Trichet who said that risk signals for financial stability in the Euro-Zone are flashing "red" as the debt crisis threatens to infect banks, (2) the report from the Financial Times that opposition leader in the Greek parliament said his party will vote against the government's new austerity measures, which may force Greece into default and is euro negative, (3) concerns the European economy is slowing after the Jun Euro-Zone PMI composite fell -2.2 to 53.6, weaker than expectations and its lowest level of expansion in 20 months, and (4) the plunge in the British pound to a 2-3/4 month low against the dollar after the Jun UK CBI retail-sales index sank to its lowest level in a year. A bearish factor was the larger-than-expected increase in weekly US initial unemployment claims.
• Aug crude oil prices this morning are trading up +47 cents a barrel and Aug gasoline is -1.12 cents per gallon. Crude oil and gasoline prices yesterday plunged after the IEA announced that it would release crude from strategic reserves: CLQ11 -$4.39, RBQ11 -15.24. Aug crude posted a 4-month low and Aug gasoline fell to a 3-1/4 month low. Bearish factors included (1) the stronger dollar, which reduces investment demand in commodities and prompted fund liquidation of long positions, (2) the action by the IEA to say it will release 60 million bbl of oil into the market to make up for lost Libyan oil production, (3) the larger-than-expected increase in weekly US jobless claims, which signals labor market weakness that may crimp fuel demand, (4) concern the Chinese economy is slowing after the Jun China HSBC PMI manufacturing index fell to an 11-month low, and (5) concern the European debt crisis could worsen and threaten the global economy after ECB President Trichet warned that risk signals for financial stability in the Euro-Zone are flashing "red."

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap) CZZ-Cosan Ltd. (BEST earnings consensus $0.25), AMN-Ameron International (0.23).
Global Financial Calendar

Friday 6/24/11
United States
0830 ET	May durable goods orders expected +1.5% and +0.9% ex transportation, Apr -3.6% and -1.6% ex transportation.
0830 ET	Revised US Q1 GDP expected +1.9% annualized, previous +1.8% annualized. Q1 personal consumption, previous +2.2%. Q1 GDP price index, previous +1.9%. Q1 core PCE deflator, previous +1.4% q/q.
France
0245 ET	Jun French consumer confidence indicator expected unchanged at 84, May +1 to 84.
Germany
0400 ET	Jun German IFO business climate expected -0.8 to 113.4, May unchanged at 114.2. Jun IFO current assessment expected -0.6 to 120.8, May +0.4 to 121.4. Jun IFO expectations expected -1.1 to 106.3, May -0.3 to 107.4.

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