Barchart Morning Call 1/4

Barchart Morning Call

Barchart.com - 4 mins ago

Overnight Developments

• Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.25% and Mar S&Ps down -2.00 points. The dollar and Treasuries strengthened as European bank stocks fell after UniCredit slumped to its lowest level in nearly 3 years when it said it will sell new shares in a 7.5 billion euro offer, fueling concern other banks will need to raise more capital. The euro declined against the dollar on mounting sovereign debt concerns after Euro-Zone banks parked 453.2 billion euros with the ECB on Tuesday, the most since the euro's introduction in 1999 as banks rather park their excess cash with the ECB at the overnight rate of 0.25% and incur a loss rather than lend it for more elsewhere. European stocks were also pressured by comments from Jean-Claude Juncker, head of the Euro-Zone finance ministers, who said "Europe is facing a recession of unknown scope." On the positive side, the Dec Euro-Zone PMI composite was revised up to 48.3 from the originally reported 47.9, while the Dec Euro-Zone CPI estimate fell to +2.8% y/y from +3.0% y/y as expected.
• Asian stocks today closed mixed with Japan up +1.24%, China -2.00%, Australia +2.11%, South Korea -0.64%, India -0.36%. Japanese exporters rallied and led the broader market higher on earnings optimism after manufacturing activity in the U.S. grew at the fastest pace in 6 months in Dec and China?s manufacturing activity also expanded in Dec. Chinese stocks finished down as they erased an early rally and closed lower after Premier Wen Jiabao said business conditions may be "relatively difficult" this quarter as inflation stays "elevated" and overseas demand weakens. Losses in homebuilders and property developers also helped to drag the overall market lower after Dec Chinese home prices fell for a fourth month when they dropped -0.25% m/m, according to SouFun Holdings Ltd., China's biggest real estate website owner.

Overnight U.S. Stock News

• March S&Ps this morning are trading down -2.00 points. The US stock market on Tuesday started off the year with a bang: Dow Jones +1.47%, S&P 500 +1.55%, Nasdaq Composite +1.67%. Bullish factors on Tuesday included (1) the stronger-than-expected U.S. Dec ISM manufacturing index report of +1.2 to 53.9 (versus expectations of +0.8 to 53.5), (2) the stronger-than-expected Nov construction spending report of +1.2% (although Oct was revised lower to -0.2% from +0.8%), (3) China's report on Sunday that its Dec manufacturing purchasing managers index rose by 1.3 points to 50.3 from 49.0 in November, returning to expansion territory above 50.0, and (4) buying by investment managers on the first day of the New Year.

Today's Market Focus

• March 10-year T-notes this morning are down -1.5 ticks. T-note prices on Tuesday sold off fairly sharply: TYH2 -18.5, FVH2 -6.5, EDM2 -1.5. Bearish factors included (1) the rally in global stocks, which caused reduced safe-haven demand for Treasury securities, (2) the stronger-than-expected U.S. and global economic data, and (3) some technical selling after last week's rally.
• The dollar index this morning is stronger with the dollar/yen -0.05 yen and the euro/dollar -0.61 cents. The dollar on Tuesday closed lower: dollar Index -0.667, USDJPY -0.16, EURUSD +0.0116. Bearish factors included (1) reduced safe-haven demand with the rally in global stocks, (2) the lack of any fresh bearish news on the European debt crisis, and (3) long liquidation pressure after the sharp dollar rally seen during November and early-December. The main bullish factor for the dollar was the stronger-than-expected U.S. ISM manufacturing index and construction spending data.
• Feb crude oil prices this morning are down -74 cents a barrel and Feb gasoline is -1.33 cents per gallon. Crude oil prices rallied sharply on Tuesday: CLG12 +$4.13, RBG12 +0.912. Bullish factors included (1) Iran's continued belligerent statements and Iran's claim that it produced its first nuclear fuel rod, (2) investor buying on the first day of the New Year, (3) the strength in global stocks, (4) the positive economic data, which suggested an improved outlook for fuel demand, and (5) yesterday's sell-off in the dollar, which gave commodity prices in general a boost.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): MOS-Mosaic (BEST earnings consensus $1.30).
Global Financial Calendar

Wednesday 1/4/12
United States
0700 ET	Weekly MBA mortgage applications, previous -2.6% with purchase mortgage sub-index -4.9% and refinancing sub-index -1.6%.
0745 ET	ICSC (Int?l Council of Shopping Centers) weekly retailer sales.
0855 ET	Redbook weekly retailer sales.
1000 ET	Nov factory orders expected +2.0%, Oct -0.4%.
1130 ET	Weekly 4-week T-bill auction.
1700 ET	Dec total vehicle sales expected 13.50 million, Nov 13.59 million. Dec domestic vehicle sales expected 10.35 million, Nov 10.53 million.
France
0245 ET	Nov French consumer spending expected +0.3% m/m and -1.8% y/y, Oct unchanged m/m and -0.9% y/y.
Euro-Zone
0400 ET	Revised Dec Euro-Zone PMI composite expected no change at 47.9.
0500 ET	Dec Euro-Zone CPI estimate expected +2.8% y/y, Nov +3.0% y/y.
United Kingdom
0430 ET	Dec U.K. PMI construction expected -0.3 to 52.0, Nov -1.6 to 52.3.
0430 ET	Nov U.K. net consumer credit expected +0.3 billion pounds, Oct unchanged.
0430 ET	Nov U.K. mortgage approvals expected 52,800, Oct 52,700.
0430 ET	Nov U.K. M4 money supply, Oct -0.3% m/m and -2.7% y/y.
CHI
2130 ET	Dec China HSBC services PMI, Nov 52.5.

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