Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.09% and Jun S&Ps down -1.00 point. The dollar index fell back from a 1-1/2 month high and commodities were mixed as Euro-Zone finance ministers meet in Brussels to sign off on a 130 billion-euro second bailout package for Greece after bondholders agreed to take a haircut on their holdings of Greek debt. The euro slid to a 3-week low against the dollar on concern that other indebted European countries may take the same path as Greece and force bondholders to take losses on their sovereign-debt holdings. The main bearish factor for stock prices was the weaker-than-expected Feb China exports, which raises concern that growth in the world's second-largest economy may be slowing. On the positive side, Peugeot, Europe's second-largest carmaker, rose 2.8% and Fiat climbed 2.2% after Milano Finanza reported that Fiat favors an alliance with Peugeot to make commercial vehicles.
- Asian stocks today closed mostly lower with Japan down -0.40%, China -0.37%, Australia -0.36%, South Korea -0.71%, India +0.48%. Asian stocks weakened after Feb China exports grew at a slower-than-estimated pace, which overshadowed a rebound in Jan Japan machinery orders and better-than-expected U.S. jobs data. Feb China exports rose +18.4% y/y, weaker than expectations of +31.1% y/y as China posted a trade deficit in Feb of -$31.48 billion, larger than expectations of -$5.35 billion and the widest in 22 years. Chinese rail and train builders also closed lower after a 1,000 foot section of an unopened high-speed railway collapsed in central China's Hubei province following heavy rains. Japanese stocks finished lower despite a larger-than-expected increase in Jan Japan machine orders which rose +3.4% m/m and +5.7% y/y, stronger than expectations of +2.3% m/m and +4.4% y/y.
- June S&Ps this morning are trading down -1.00 point. The U.S. stock market Friday settled higher for a third day after Feb U.S. payrolls increased more than forecast along with reduced European sovereign-debt concerns after Greece received bailout funds from the EU to avoid default: Dow Jones +0.11%, S&P 500 +0.36%, Nasdaq Composite +0.60%. The S&P 500 posted a 1-week high and the Nasdaq rose to an 11-year high. Bullish factors Friday included (1) strength in the U.S. labor market after the larger-than-expected increase in Feb U.S. non-farm payrolls along with the upward revision to Jan (Feb +227,000 versus expectations of +210,000, and Jan revised up to +284,000 from the originally reported +243,000), (2) reduced European sovereign-debt concerns after EU finance ministers freed 35.5 billion euros of aid for Greece and backed the country's debt swap with private creditors, (3) strength in homebuilding stocks after Credit Suisse upgraded the sector to a buy, and (4) speculation China may have more room for additional stimulus measures after Feb China CPI rose +3.2% y/y, weaker than expectations of +3.4% y/y and its smallest increase in 20 months.
- Bearish factors Friday included (1) the Jan U.S. trade balance of -$52.6 billion, wider than expectations of -$49.0 billion and the most in 3-1/4 years, which is negative for Q1 U.S. GDP and (2) slack wage growth that may curtail consumer spending after Feb U.S. average hourly earnings rose +0.1% m/m and +1.9% y/y, weaker than expectations of +0.2% m/m and +2.0% y/y.
- Oracle (ORCL) fell 1.5% in pre-market trading after Jeffries Group cut its recommendation on the stock to "hold" from "buy."
- June 10-year T-notes this morning are up +6 ticks. T-note prices Friday settled lower for a third day after Feb U.S. payrolls rose more than expected along with reduced safe-haven demand for Treasuries as Greece received bailout funds needed to avoid default: TYM2 -6.0, FVM2 -4.0, EDU2 -2.0. Bearish factors Friday included (1) the larger-than-expected increase in Feb U.S. non-farm payrolls along with the upward revision to Jan (Feb +227,000 versus expectations of +210,000, while Jan was revised up to an increase of +284,000 from the originally reported +243,000), (2) decreased safe-haven demand for Treasuries after Greece received 35.5 billion euros of bailout funds from EU finance ministers after it successfully completed its debt swap plan, which slashes the prospects of a Greek default, and (3) supply pressures ahead of the Treasury's $32 billion auction of 3-year T-notes on Monday. Bullish factors included (1) the Jan U.S. trade balance of -$52.6 billion, wider than expectations of -$49.0 billion and the most in 3-1/4 years, which is negative for Q1 U.S. GDP and (2) a lack of wage pressures after Feb U.S. average hourly earnings rose +0.1% m/m and +1.9% y/y, weaker than expectations of +0.2% m/m and +2.0% y/y.
- The dollar index this morning is weaker with the dollar/yen -0.24 yen and the euro/dollar -0.15 cents. The dollar index Friday shook off early weakness and rallied up to a 3-week high and settled higher after stronger-than-expected U.S. job growth diminished the outlook for additional Fed easing along with weakness in the yen which plunged to a 10-1/2 month low against the dollar: Dollar Index +0.902, USD/JPY +0.894, EUR/USD -0.01513. Bullish factors included (1) the stronger-than-expected increase in Feb U.S. non-farm payrolls, which reduces the chance the Fed will implement additional dollar negative stimulus measures, and (2) weakness in the yen on speculation the BOJ may need to boost its yen-negative stimulus measures to shore up the Japanese economy. Bearish factors included (1) the wider-than-expected Jan U.S. trade balance of -$52.6 billion, the most in 3-1/4 years, (2) reduced safe-haven demand for the dollar after EU finance ministers freed 35.5 billion euros of aid for Greece when it reached its target for its debt swap, and (3) the larger-than-expected increase in Jan German exports, which is EUR/USD positive.
- Apr crude oil prices this morning are down -$1.05 a barrel and Apr gasoline is -1.93 cents per gallon. Crude oil and gasoline prices Friday settled higher for a third day after Greece met its target for its debt swap, which reduces default concerns, along with the stronger-than-expected gain in Feb U.S. non-farm payrolls, a sign of economic strength: CLJ12 +$0.82, RBJ +1.84. Apr gasoline rose to a 1-week high. Bullish factors included (1) reduced chances of Greek default after EU finance ministers freed 35.5 billion euros of aid for Greece after it reached its target for its debt swap, (2) the larger-than-expected increase in Feb U.S. non-farm payrolls, which bolsters confidence in the U.S. economic outlook and energy demand, and (3) strong fuel demand in China after Chinese crude processing rose to 9.38 million barrels a day in Jan and was 9.32 million barrels a day in Feb, both above the previous record in Dec of 9.28 million barrels a day. Bearish factors included (1) the rally in the dollar index to a 3-week high, which dampens investment demand for most commodities and (2) the action by OPEC to cut its 2012 global oil demand forecast by -130,000 barrels a day to 88.63 million barrels saying "risks remain on the downside as the economic outlook for the remainder of the year is still uncertain and retail oil prices are in the upper band."
Global Financial Calendar
| Monday 3/12/12 | |
|---|---|
| United States | |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1300 ET | Treasury auctions $32 billion 3-year T-notes. |
| 1400 ET | Feb monthly budget statement expected -$229.4 billion, Jan -$27.412 billion. |
| Japan | |
| 0100 ET | Feb Japan consumer confidence expected +0.5 to 40.5, Jan +1.1 to 40.0. |
| 1950 ET | Jan Japan tertiary industry index expected +0.2% m/m, Dec +1.4% m/m. |
| Germany | |
| 0300 ET | Feb German wholesale price index expected +1.0% m/m and +2.6% y/y, Jan +1.2% m/m and +3.0% y/y. |
| Euro-Zone | |
| 1200 ET | Euro-Zone finance ministers meet in Brussels. |
| United Kingdom | |
| 2001 ET | Feb U.K. RICS house price balance expected -14%, Jan -16%. |
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