Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mixed with the Euro Stoxx 50 down -0.06% and Mar S&Ps down -4.80 points. Treasuries are higher and the dollar index climbed to a 1-week high while stocks and commodities retreated after an unexpected decline in Jan German retail sales stoked concern the Euro-Zone economy is slowing. Jan German retail sales fell -1.6% m/m, weaker than expectations of a +0.5% m/m gain. The euro slipped to a 1-week low against the dollar and pressured stocks as well after Jan Euro-Zone producer prices rose +0.7% m/m and +3.7% y/y, stronger than expectations of +0.5% m/m and +3.5% y/y. Treasuries rose after San Francisco Fed President Williams said late last night in a speech in Honolulu that the Fed should maintain an "extraordinarily supportive policy" to reduce an unemployment rate that will probably exceed 7% for years and "we may need to do more if the recovery falters or if inflation stays below 2%."
- Asian stocks today closed higher with Japan up +0.72%, China +1.77%, Australia +0.41%, South Korea +0.12%, India +0.30%. Japanese stocks finished higher after the yen fell to a 9-month low against the dollar and boosted the earnings prospects of exporters. Weaker-than expected economic data undercut the yen and also bolstered speculation the BOJ will expand its monetary easing measures. Jan Japan overall household spending fell -2.3% y/y, weaker than expectations of -0.9% y/y, while the Jan jobless rate unexpectedly rose +0.1 to 4.6%. Chinese stocks closed higher on speculation the government may introduce policies to support economic growth at a national congress next week. Feb South Korea CPI rose +3.1% y/y, posting a 14-month low and matching expectations, which should prompt the BOK to keep interest rates unchanged for a ninth month when it meets next week.
- March S&Ps this morning are trading down -4.80 points. The U.S. stock market Thursday settled higher after weekly unemployment claims unexpectedly fell to a nearly 4-year low and overseas data point to strength in the global economy: Dow Jones +0.22%, S&P 500 +0.62%, Nasdaq Composite +0.74%. The Nasdaq posted an 11-year high. Bullish factors Thursday included (1) the unexpected decrease in weekly initial U.S. unemployment claims which matched a nearly 4-year low (-2,000 to 351,000 versus expectations of +4,000 to 355,000), (2) strength in retailers after the Feb ICSC monthly store sales rose more than expected and posted their biggest increase in 8 months (+6.7% y/y versus expectations of +3.5% y/y), and (3) optimism that the global expansion can continue after Q4 Japan capital spending excluding software unexpectedly rose +4.9% y/y, its largest gain in 4-3/4 years and Feb China manufacturing PMI rose +0.5 to 51.0, stronger than expectations of +0.3 to 50.8 and its best level in 5 months.
- Bearish factors included (1) concerns over the sustainability of the economic expansion after Jan U.S. personal spending and income rose less than expected (Jan personal spending +0.3% versus expectations of +0.4% and personal income +0.2% versus expectations of +0.4%), (2) the unexpected decrease in the Feb ISM manufacturing index (-1.7 to 52.4 versus expectations of +0.4 to 54.5), (3) the unexpected decline in Jan construction spending (-0.1% versus expectations of +1.0%), and (4) concerns about the European economy after the Jan Euro-Zone unemployment rate unexpectedly rose +0.1 to 10.7%, the highest in 14-1/4 years.
- June 10-year T-notes this morning are up +8 ticks. T-note prices Thursday fell to a 1-week low and settled lower on an unexpected decline in weekly jobless claims along with strength in the stock market: TYM2 -13.5, FVM2 -3.0, EDU2 +2.0. Bearish factors Thursday included (1) the unexpected decrease in weekly initial U.S. unemployment claims which matched a nearly 4-year low (-2,000 to 351,000 versus expectations of +4,000 to 355,000), (2) the larger-than-expected increase in the Feb ISM prices paid sub-index that rose to an 8-month high (+6.0 to 61.5 versus expectations of +2.5 to 58.0), (3) comments from Atlanta Fed President Lockhart who said he is concerned that a new round of asset purchases by the Fed would fuel inflation while failing to spur lending, and (4) reduced safe-haven demand for Treasuries as stocks rallied. Bullish factors included (1) the weaker-than-expected Jan U.S. personal spending and income (Jan personal spending +0.3% versus expectations of +0.4% and personal income +0.2% versus expectations of +0.4%), (2) the unexpected decrease in the Feb ISM manufacturing index (-1.7 to 52.4 versus expectations of +0.4 to 54.5), and (3) the unexpected decline in Jan construction spending (-0.1% versus expectations of +1.0%).
- The dollar index this morning is stronger and posted a 1-week high with the dollar/yen +0.39 yen and the euro/dollar -0.92 cents. The dollar index Thursday settled slightly higher after the euro weakened when the Jan Euro-Zone unemployment rate unexpectedly increased while dollar gains were limited as a rally in stocks undercut the dollar's safe-haven demand: Dollar Index +0.069, USDJPY -0.034, EURUSD -0.00128. Bullish factors included (1) the unexpected increase in the Jan Euro-Zone unemployment rate which rose to a 14-1/4 year high of 10.7% and is euro negative and (2) the unexpected decline in weekly U.S. unemployment claims to their lowest level in nearly 4 years, which signals economic strength and is dollar supportive. Bearish factors included (1) reduced safe-haven demand for the dollar on a rally in stocks over optimism the global economy will continue to grow after the Feb China manufacturing PMI rose more than expected to its best level in 5 months and (2) strength in the euro after Spain's borrowing costs declined when it sold 4.5 billion euros of debt, its maximum target, with the 3-year notes yielding 2.617%, down from 3.332% at a similar auction last month.
- Apr crude oil prices this morning are down -92 cents a barrel and Apr gasoline is -4.48 cents per gallon. Crude oil and gasoline prices Thursday moved higher as Iranian concerns and strong global economic data offset signs of increased Saudi Arabian oil production: CLJ12 +$1.77, RBJ +8.18. Apr gasoline surge to a 9-1/2 month high. Bullish factors included (1) the weaker dollar, which boosts investment demand in commodities, (2) the unexpected decline in weekly initial U.S. unemployment claims that matched their lowest level in nearly 4 years, which signals economic strength that is positive for fuel demand, (3) the larger-than-expected increase in China's Feb manufacturing PMI, which indicates economic strength that may boost energy demand in the world's second-largest crude oil consumer, and (4) heightened geopolitical tensions over Iran after the U.S. Air Force chief of staff said the Joint Chiefs of Staff have prepared military options to strike Iranian nuclear sites in the event of a conflict. Bearish factors included (1) the unexpected increase in the Jan Euro-Zone unemployment rate to a 14-3/4 year high of 10.7%, which may keep European fuel demand constrained and (2) ramped up crude production in Saudi Arabia which increased its uses oil rigs in Jan to 49, the most in 4 years and more than double the 23 oil rigs it used a year earlier.
Global Financial Calendar
| Friday 3/2/12 | |
|---|---|
| United States | |
| 2000 ET | St. Louis Fed President Bullard speaks on the ?U.S. Economy in the Aftermath of the Financial Crisis,? at the BMO Bank of Montreal Lecture. |
| Germany | |
| 0200 ET | Jan German retail sales expected +0.5% m/m and +0.2% y/y, Dec +0.1% m/m and -0.9% y/y. |
| United Kingdom | |
| 0430 ET | Feb U.K. PMI construction expected +0.3 to 51.7, Jan -1.8 to 51.4. |
| Euro-Zone | |
| 0500 ET | Jan Euro-Zone PPI expected +0.5% m/m and +3.5% y/y, Dec -0.2% m/m and +4.3% y/y. |
| Canada | |
| 0830 ET | Dec Canada GDP expected +0.3% m/m and +1.8% y/y, Nov -0.1% m/m and +2.0% y/y. |
| CHI | |
| 2000 ET | Feb China non-manufacturing PMI, Jan -3.1 to 52.9. |
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