Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mixed higher with the Euro Stoxx 50 up +0.30% and Dec S&Ps down -2.90 points. The dollar and Treasuries were little changed and commodities were mixed, with crude oil climbing to a 3-month high ahead of the Oct U.S. payrolls report. Greece's decision to back down on the call for a referendum on budget cuts imposed by a bailout plan lifted stocks as it reduced concern that it will spiral into disorderly default. Greek Prime Minister Papandreou is struggling to retain power after the largest Greek opposition party rejected his offer to form a national government. Papandreou faces a confidence vote later today, which if he loses, raises the prospect of national elections that may delay aid needed to prevent default. Stock gains were also limited after the Oct Euro-Zone PMI composite index was revised downward to 46.5, a 2-1/3 year low, and after ECB Executive Board member Stark said the economy "might have zero growth" in the final 3 months of this year and that growth will be "very weak" going into 2012. The euro shed early gains after Sep German factory orders unexpectedly plunged -4.3% m/m, the biggest decline in 2-1/2 years.
- Asian stocks today closed higher with Japan up +1.86%, China +0.71%, Australia +2.62%, South Korea +3.38%, India +0.46%. Asian stocks rose after Greece scrapped a plan to hold a referendum on a bailout package and after the ECB unexpectedly cut interest rates, which lifted exporters and reduces concern the debt crisis will spur a credit crunch. China's Shanghai Stock Index inched up to a fresh 2-month high, led by a rally in energy companies, after the China Securities Journal reported the government, which controls fuel prices, would allow oil refiners to independently make "appropriate" price changes. The Aussie dollar fell against the greenback after the RBA cuts its growth forecast for Australia to 4.0% in the 12 months to Jun 30, 2012 from its Aug estimate of 4.5% and cut its CPI estimate to 2.0% over the period from a previous prediction of 2.5%.
- December S&Ps this morning are trading down -2.90 points. The US stock market yesterday settled higher after the ECB unexpectedly cut interest rates, weekly U.S. jobless claims fell to a 1-month low and Greek Prime Minister Papandreou backtracked on his call for a referendum on Greece's rescue package: Dow Jones +1.76%, S&P 500 +1.88%, Nasdaq Composite +2.20%. Bullish factors included (1) the surprise 25 bp interest rate cut by the ECB, which may help maintain the global economic recovery, (2) the larger-than-expected fall in weekly initial U.S. unemployment claims to a 1-month low (-9,000 to 397,000 versus expectations of -2,000 to 400,000), (3) the unexpected increase in Sep factory orders along with the unexpected upward revision to Aug (Sep +0.3% versus expectations of -0.2% and Aug revised up to +0.1% from the originally reported -0.2%), (4) the larger-than-expected increase in Q3 U.S. non-farm productivity along with the larger-than-expected decline in Q3 unit labor costs (Q3 productivity +3.1% versus expectations of +3.0% and Q3 unit labor costs at -2.4%, weaker than expectations of -0.5%), and (5) the action by Greek Prime Minister Papandreou to backtrack on his call for a referendum over Greece's rescue package.
- Bearish factors included (1) concern that Greece may be forced into default and worsen the European debt crisis after Germany and France withheld 8 billion euros of assistance to Greece because of its plans to hold a referendum on its rescue package, (2) comments from ECB President Draghi who said that ?significant? cuts to growth forecasts are likely and that the Euro-Zone is headed for a mild recession, (3) the unexpected decline in the Oct ISM non-manufacturing index (-0.1 to 52.9 versus expectations of +0.5 to 53.5) and (4) the weaker-than-expected ICSC chain store sales, +3.7% y/y versus expectations of 5.3% y/y and the smallest increase in 7 months.
- Starbucks (SBUX) rose 4.3% in European trading after the company late yesterday reported Q4 profit of 37 cents a share, better than analysts' estimates of 36 cents.
- December 10-year T-notes this morning are down -2 ticks. T-note prices yesterday gave up early gains and settled lower as stocks rallied after Greek Prime Minister Papandreou withdrew his calls for a referendum on Greece's rescue package: TYZ11 -8.5, FVZ11 -3.5, EDH12 -1.0. Bearish factors included (1) reduced safe-haven demand for Treasuries as stocks rallied when Greek Prime Minister Papandreou signaled he won't call a referendum over Greece's rescue package and will reach out to the Greek opposition about forming a transitional government, (2) the larger-than-expected fall in weekly initial U.S. unemployment claims to a 1-month low (-9,000 to 397,000 versus expectations of -2,000 to 400,000), and (3) the unexpected increase in Sep factory orders along with the unexpected upward revision to Aug (Sep +0.3% versus expectations of -0.2% and Aug revised up to +0.1% from the originally reported -0.2%). Bullish factors included (1) the unexpected 25 bp rate cut by the ECB along with ECB President Draghi's comments that Europe is headed for a "mild recession," (2) the larger-than-expected increase in Q3 U.S. non-farm productivity along with the larger-than-expected decline in Q3 unit labor costs (Q3 productivity +3.1% versus expectations of +3.0% and Q3 unit labor costs at -2.4%, weaker than expectations of -0.5%), and (3) the unexpected decline in the Oct ISM non-manufacturing index (-0.1 to 52.9 versus expectations of +0.5 to 53.5).
- The dollar index this morning is little changed with the dollar/yen -0.03 yen and the euro/dollar +0.14 cents. The dollar index yesterday fluctuated on either side of unchanged in volatile trade and closed lower after Greek Prime Minister Papandreou backtracked on his pledge to put Greece's rescue package before a referendum: Dollar Index -0.345, USDJPY +0.010, EURUSD +0.00763. Bearish factors included (1) reduced safe-haven demand for the dollar as stocks rallied after Prime Minister Papandreou withdrew his call for a referendum on its rescue package and (2) the unexpected decline in the Oct ISM non-manufacturing index, which signals economic weakness and is dollar negative. Bullish factors included (1) the unexpected 25 bp rate cut in the 2-week refinancing rate to 1.25% by the ECB, which weakened the euro's interest rate differentials, (2) comments from ECB President Draghi who said Europe was heading toward a "mild recession," which is euro negative, and (3) the larger-than-expected decline in weekly U.S. jobless claims to a 1-month low, which signals improvement in the labor market that is dollar supportive.
- Dec crude oil prices this morning are up +35 cents a barrel at a 3-month high and Dec gasoline is +1.76 cents per gallon. Crude oil and gasoline prices yesterday finished higher as the dollar weakened and after the ECB's unexpected rate cut lifted stocks: CLZ11 +$1.56, RBZ11 +1.46. Bullish factors included (1) the weaker dollar, which boosts investment demand in commodities, (2) the unexpected 25 bp interest rate cut by the ECB, which boosted equities and commodities on speculation economic growth and energy demand will be maintained, (3) the larger-than-expected drop in weekly U.S. jobless claims to a 1-month low, which signals improvement in the labor market that may benefit fuel demand, and (4) reduced concern that Greece was headed for default after Greek Prime Minister Papandreou signaled he won't call for a referendum over Greece's rescue package. Bearish factors included (1) comments from ECB President Draghi who said that Europe was heading toward a "mild recession," which could curtail fuel demand, and (2) the unexpected decline in the Oct ISM non-manufacturing index, which signals reduced fuel consumption.
Global Financial Calendar
| Friday 11/4/11 | |
|---|---|
| United States | |
| 0830 ET | Oct non-farm payrolls expected +95,000, Sep +103,000 Oct private payrolls (ex-government) expected +125,000, Sep +137,000. Oct unemployment rate expected unchanged at 9.1%, Sep unchanged at 9.1%. Oct manufacturing payrolls expected +2,000, Sep -13,000. Oct avg hourly earnings all employees expected +0.2% m/m and +1.8% y/y, Sep +0.2% m/m and +1.9% y/y. Oct avg weekly hours all employees expected unchanged at 34.3 hours, Sep +0.1 to 34.3 hours. |
| 1300 ET | Fed Governor Daniel Tarullo speaks on ?The International Agenda for Financial Regulation? in Washington D.C. |
| 1605 ET | San Francisco Fed President John Williams speaks on a panel about jobs, the economy and global competitiveness at a luncheon in Santa Clara, CA. |
| Germany | |
| 0355 ET | Revised Oct German PMI services expected no change at 52.1. |
| 0700 ET | Sep German factory orders expected +0.1% m/m and +7.5% y/y, Aug -1.4% m/m and +3.9% y/y. |
| France | |
| 0450 ET | Revised Oct French PMI services expected no change at 46.0. |
| Euro-Zone | |
| 0500 ET | Revised Oct Euro-Zone PMI composite expected no change at 47.2. |
| 0600 ET | Sep Euro-Zone PPI expected +0.2% m/m and +5.8% y/y, Aug -0.1% m/m and +5.9% y/y. |
| Canada | |
| 0700 ET | Oct Canada net change in employment expected +10,000, Sep +60,900. Oct unemployment rate expected +0.1 to 7.2%, Sep -0.2 to 7.1%. |
| 0830 ET | Sep Canada building permits expected +2.0% m/m, Aug -10.4% m/m. |
| 1000 ET | Oct Ivey purchasing managers index expected -0.5 to 55.2, Sep-0.7 to 55.7. |
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