Barchart Morning Call 8/22

Barchart Morning Call

Barchart.com - 2 hrs 26 mins ago

Overnight Developments

• Global stocks this morning are trading mixed with the Euro Stoxx 50 up +1.80% and Sep S&Ps up +13.40 points. The dollar and Treasuries are weaker and commodities are stronger with gold rising to a record high of $1,895.00 an ounce. European stocks and U.S. futures rose on speculation that Fed Chairman Bernanke may signal this Friday at the Fed's annual symposium in Jackson Hole, Wyoming of additional measures to stimulate the economy. European oil companies rallied amid speculation the civil war in Libya may be drawing to a close, which may allow foreign oil producers to restart Libyan oil fields closed by the civil war. Gains in European stocks were limited after credit default swaps to insure Euro-Zone government debts rose as German Chancellor Merkel said euro-zone common bonds are "the wrong answer," which fueled speculation that her resistance will prolong the debt crisis. Another negative for equity prices was the action by Goldman Sachs to cut its 2011 U.S. GDP forecast to 1.5% from a previous estimate of 1.7% on signs the recovery has stalled.
• Asian stocks today closed mostly lower with Japan down -1.04%, China -1.06%, Australia -0.48%, South Korea -1.72%, India +1.24%. Japan's Nikkei Stock Index fell to a 5-1/4 month low as exporters declined after the yen climbed to a record high of 75.95 per dollar last Friday. The yen did fall back today however, after Japanese Finance Minister Noda said the government will take decisive action if needed in foreign-exchange markets as he has become "more concerned" about the yen's appreciation. China's Shanghai Stock Index closed lower on concern the government will further tighten monetary policy even as the global economic slowdown threatens to curb Chinese exports. China's money-market rates rose, with the 7-day repurchase rate climbing to a 3-week high of 5.0%, after the PBOC raised yields at bill auctions, fueling speculation of further monetary tightening. Another negative for Chinese stocks was an article in the China Financial News, which is controlled by the PBOC that said China should raise deposit rates and banks' reserve-requirement ratios.

Overnight U.S. Stock News

• September S&Ps this morning are trading up +13.40 points on speculation the Fed will implement a QE3 quantitative easing program. The US stock market last Friday extended Thursday?s sharp sell-off and closed with fairly sharp losses again: Dow Jones -1.57%, S&P 500 -1.50%, Nasdaq Composite -1.26%. Bearish factors included (1) ongoing concerns about weak U.S. economic growth, and (2) the European debt crisis as the Euribor-OIS spread last Friday remained high at 67 bp, just 3 bp below the recent peak. The main bullish factor was NY Fed President William Dudley's comment that the U.S. economic data is ?at worst, mixed,? stressing that there is offsetting positive news including easier credit, firmer retail sales, and stronger bank balance sheets.
• Barrick Gold (ABX) rose 2.9% in European trading after gold prices climbed to a record high in overnight trading.
• Schlumberger (SLB) climbed 1.3% in European trading on speculation that the overthrow of the Qaddafi regime and an end to Libya's civil war will allow oil producers to restart the country's oil fields.

Today's Market Focus

• September 10-year T-notes this morning are down -15.5 ticks as U.S. and European stocks rally. T-note prices last Friday closed mixed: TYU11 +0.5, FVU11 unch, EDZ11 -4.0. Bullish factors included the continued sell-off in the stock market and the prospects for weak economic growth. Bearish factors centered on some pre-weekend long liquidation pressure after the sharp recent rally.
• The dollar index this morning is weaker with the dollar/yen up +0.24 yen and the euro/dollar +0.29 cents. The dollar index last Friday closed mildly lower: Dollar Index -0.255, USDJPY -0.03, EURUSD +0.0064. USDJPY on Friday hit a record low of 75.95 yen. Bearish factors for the dollar centered on underlying bearishness from the weak U.S. economic data and the Fed's promise to keep rates low until mid-2013. USDJPY last Friday hit a new low despite threats by Japanese officials about another round of intervention.
• Sep crude oil prices this morning are up +90 cents a barrel and Sep gasoline is -3.43 cents per gallon. Crude oil last Friday closed lower on continued weakness in stocks, while gasoline saw some short-covering. CLU11 -$0.12, RBU11 +5.80. Crude oil also saw some weakness as the Libyan rebels entered Tripoli, raising the prospects for the possible near-term fall of the Qaddafi regime and the eventual resumption of Libyan crude oil exports.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): FMCN-Focus Media (BEST earnings consensus $0.37), PWRD-Perfect World (0.66), STP-Suntech (0.20).
Global Financial Calendar

Monday 8/22/11
United States
0830 ET	Jul Chicago Fed national activity index expected -0.02 to -0.48, Jun +0.09 to -0.46.
1100 ET	USDA weekly grain export inspections.
1130 ET	Weekly 3-mo and 6-mo and monthly 1-year T-bill auctions.
1700 ET	USDA weekly crop progress report for week ended Aug 21.
CHI
2230 ET	Aug HSBC flash China manufacturing PMI, Jul -1.2 to 48.9.

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