Barchart Morning Call 7/5

Barchart Morning Call

Barchart.com - 7 mins ago

Overnight Developments

• Global stocks are trading mixed with the European Euro Stoxx 50 up +0.27% and Sep S&Ps up +1.60 points. The dollar and Treasuries are stronger and commodities are mixed on concern the global economic recovery is fading. European stocks took a hit after the Jun Euro-Zone PMI composite was unexpectedly revised down -0.3 to 53.3, its slowest pace in 20 months, while the May Euro-Zone retail sales fell -1.1% m/m and -1.9% y/y, their biggest decline in a year and weaker than expectations of -1.0% m/m and -0.6% y/y. The euro weakened against the dollar after Standard & Poor's warned that a bond-rollover plan drafted by French banks to help Greece with its financial crisis would likely qualify as a distressed exchange and prompt a "selective default" grade on Greek securities.
• The Asian stock markets today closed mixed: Japan +0.07%, China +0.02%, Taiwan +0.11%, Australia -0.27%, Singapore -0.75%, South Korea +0.78%, Bombay -0.37%, Karachi +0.13%. Chinese bank stocks weakened after Moody's Investors Service said in a report that Chinese banks' loans to local governments are about 3.5 trillion yuan ($540 billion) more than the national auditor's estimate, and that the credit outlook for the Chinese banking system was potentially turning to negative. The PBOC said yesterday that China still faces "large" inflationary pressures snd the Information Daily reported today that the PBOC is likely to raise interest rates as soon as this weekend to combat consumer price increases that may have reached 6.2% y/y in June. Japan's Nikkei 25 Stock Index closed higher, led by gains in regional bank stocks, after Nomura Securities said regional Japan bank stocks were cheap and that it was "bullish" on Japan?s regional banks. The Australian dollar and the Aussie S&P 200 Stock Index weakened after the RBA kept its overnight cash rate unchanged at 4.75% for the seventh straight meeting and RBA Governor Stevens said Australia's "growth through 2011 is now unlikely to be as strong as earlier forecast" as the European debt crisis had "added to uncertainty" about the outlook for the world economy.

Overnight U.S. Stock News

• September S&Ps this morning are trading up +1.60 points. The US stock market last Friday rallied for a fifth day as Greek default concerns subsided and the Jun ISM manufacturing index was surprisingly strong: Dow Jones +1.36%, S&P 500 +1.44%, Nasdaq Composite +1.53%. The main bullish factor was the 1.8 point increase in the June ISM manufacturing index to 55.3 versus expectations for a decline of 1.7 points to 51.8. The stock market also found strength on the resolution of the fifth tranche of the Greek bailout package prior to the weekend meeting of Eurozone finance ministers. The stock market was able to shake off last Friday's weaker-than-expected U.S. economic data, which included the final-June U.S. consumer confidence index of -0.3 to 71.5 (versus expectations of +0.2 to 72.0), the 0.6% decline in May construction spending, and the decline in U.S. June vehicle sales to 11.41 million units from 11.76 million units in May (versus expectations for an increase of 12.08 million units).
• Google (GOOG) rose 1.1% in pre-market trading after the stock was raised to "overweight" from "equal weight" at Evercore Partners.
• SanDisk (SNDK) climbed 1.4% in European trading after Deutsche Bank upgraded the stock to "buy" from "hold," saying profit margins will become "far more sustainable."

Today's Market Focus

• September 10-year T-notes this morning are trading up +3 ticks. T-note prices last Friday continued lower on reduced Greek debt concernsalong with the stronger-than-expected ISM report: TYU11 -11, FVU11 -7, EDZ11 -1.
• The dollar index this morning is trading higher with the dollar/yen +0.34 yen and the euro/dollar -0.66 cents. The dollar index last Friday edged to a new 3-week low on reduced Greek debt concerns, which boosted the euro, but then regained some strength on the stronger than expected US Jun ISM report: Dollar Index +0.046, USDJPY +0.270, EURUSD +0.0024.
• Aug crude oil prices this morning are up +64 cents a barrel and Aug gasoline is -0.44 of a cent per gallon. Aug crude oil prices last Friday closed 48 cents lower while Aug gasoline prices closed slightly higher by 0.34 cents. Crude oil and gasoline prices last Friday generally consolidated near the top of the week's rally, which was based on expectations that Saudi Arabia and its Gulf partners will slow their announced production hike in order to offset the recent announcement by the IEA countries that they will release 80 million barrels of oil from emergency stockpiles.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): None.
Global Financial Calendar

Tuesday 7/5/11
United States
1000 ET	May factory orders expected +1.0%, Apr -1.2%.
1100 ET	USDA weekly grain export inspections.
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
1700 ET	USDA weekly crop progress report for week ended Jul 3.
France
0350 ET	Revised Jun French PMI services expected no change at 56.7.
Germany
0355 ET	Revised Jun German PMI services expected no change at 58.3.
Euro-Zone
0400 ET	Revised Jun Euro-Zone PMI composite expected no change at 53.6.
0500 ET	May Euro-Zone retail sales expected -1.0% m/m and -0.6% y/y, Apr +0.9% m/m and +1.1% y/y.
United Kingdom
0430 ET	Jun UK PMI services, May -0.5 to 53.8.

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