Stocks are slowly drifting deeper into negative territory. They now trade only narrowly above session lows.
Action this afternoon comes in stark contrast to what was exhibited this morning, when more than 90% of the names in the S&P 500 had advanced to give the stock market a gain of more than 1%. Although it may now be a moot point, the move had more than offset the prior session's loss.
The dollar fell versus a basket of currencies of major U.S. trading partners as investors sought higher-yielding assets.
The franc briefly fell against the dollar and euro before a government briefing in Bern, then rallied as Finance Minister Eveline Widmer-Schlumpf said any decision on a target for the currency is up to the Swiss National Bank, not politicians. The franc surged earlier after the central bank refrained from pegging it to the euro or adopting a target.
Swiss Economy Minister Johann Schneider-Ammann said the government will use 2 billion francs ($2.5 billion) to boost the economy in the face of the currency’s strength. He and Widmer- Schlumpf spoke at the briefing in Bern.
The Swiss central bank said earlier it will raise banks’ sight deposits, cash available for immediate withdrawal, to 200 billion francs from 120 billion francs, continue to repurchase outstanding SNB bills and use foreign-exchange swap transactions, it said in an e-mailed statement from Zurich.
The Thomson Reuters/Jefferies CRB Index of raw materials climbed 1 percent. The Standard & Poor’s 500 Index rose as much as 1.3 percent before erasing gains.
“The cautious action by the SNB compared to market expectations of bold intervention suggests wariness to another negative PR initiative that could be branded as an expensive failure,” said Lena Komileva, Group-of-10 strategy head at Brown Brothers Harriman & Co. in London.
The dollar sell-off comes after foreign-exchange traders had reduced bets against the dollar in the week ended Aug. 9 by the most on record as global growth concerns sent demand for U.S. Treasuries soaring.
“The basic position was long risk-correlated currencies, short dollars, and that position was cut substantially -- and now they are tentatively getting bought back,” Citigroup’s Englander said.
Trade has turned choppy since the stock market entered negative territory. That has made it difficult for stocks to stabilize. In turn, stocks are being gradually grinded down to new session lows.
Telecom and utilities continue to do an impressive job of fighting off sellers. The two sectors are up 1.2% and 0.9%, respectively, as investors show a preference for the stable business models and relatively rich dividend yields offered by the traditional safe havens.
After a pause at the flat line, both the S&P 500 and the Dow have dipped into negative territory. The pair has managed to limit losses, however.
Tech stocks continue to lead the move lower. The sector has slumped to a loss of 1.1%, which makes it today's worst performing group.
Consumer discretionary stocks and industrials make up the only other sectors that have fallen to losses. They are down 0.6% and 0.4%. Consumer discretionary stocks have been hurt by apparel retailers following a negative reaction to the latest quarterly report from Abercrombie & Fitch (ANF 65.57, -5.45). Deere & Co. (DE 74.40, -0.76) has been a primary drag on the industrial space, despite the company's upside earnings surprise and improved earnings outlook.
Stocks have been paring early gains so that the S&P 500 is now back near the 1200 line, which appears to be offering some support. The broad market is also getting help from the energy sector and financial sector, both of which are still up in excess of 1%. While the energy sector's climb marks an extension from the prior session, financial's advance marks a rebound from the near 2% tumble that it suffered yesterday.
EUR/USD: $1.4200, $1.4250, $1.4350, $1.4390
USD/JPY: Y76.00, Y76.80, Y77.00, Y77.80, Y79.00
EUR/JPY: Y110.00
GBP/USD: $1.6350, $1.6225
AUD/USD: $1.0525, $1.0315, $1.0260
AUD/JPY: Y79.50
AUD/CAD: C$1.0365
Data:
Oil rose as investors bet that shrinking fuel stockpiles in the U.S. indicate demand will increase in the world’s biggest crude- consuming nation.
EUR/USD: $1.4200, $1.4250, $1.4350, $1.4390
USD/JPY: Y76.00, Y76.80, Y77.00, Y77.80, Y79.00
EUR/JPY: Y110.00
GBP/USD: $1.6350, $1.6225
AUD/USD: $1.0525, $1.0315, $1.0260
AUD/JPY: Y79.50
AUD/CAD: C$1.0365
EUR/USD recovers after it earlier rallied from Y109.80 to Y110.65. Offers seen at Y111.00/10 and Y111.70/80. Reported bids on the downside at Y109.90/80 ahead of Y109.20/10. The rate is currently Y110.25 in light dealings.
Data released:
00:30 Australia, Westpac Leading Index (MoM) 0.1% -0.1%
The euro weakened for a second day against the yen after the leaders of Germany and France rejected calls for a joint-bond plan to stem the region’s debt crisis and amid signs growth is slowing.
The 17-nation currency extended yesterday’s decline against the dollar before a report today that economists said will show European inflation slowed in July.
The Swiss franc appreciated against all its major counterparts even as the central bank said it will take further measures if needed to combat the currency’s strength.
German Chancellor Angela Merkel and French President Nicolas Sarkozy rebuffed a proposed euro-area bond plan as well as an expansion of the region’s 440 billion-euro ($632 billion) rescue fund. A plan to resubmit a proposal for a financial- transaction tax, which the European Union rejected in 2010, sent U.S. stocks lower yesterday.
EUR/USD initially rose to $1.4420, but failed to hold above the figure and fell to a new session lows around $1.4320.
GBP/USD recovered from lows around $1.6408 to highs on $1.6456.
USD/JPY fell from Y76.80 to Y76.55/60.
In Europe attention will be on UK labor market data (08:30 GMT), BoE MPC minutes (08:30 GMT) and EMU HICP (09:00 GMT).
US PPI report will be in focus at 12:30 GMT.
EIA releases its oil stocks data at 14:30 GMT.
EUR/USD
Offers: $1.4420/30, $1.4445/50, $1.4470/80
Bids: $1.4350
GBP/USD
Bids: $1.6400, $1.6385/80, $1.6350/40
USD/JPY
Offers: Y76.95/00, Y77.10
Bids: Y76.50/60, Y76.25, Y76.00
AUD/USD
Offers: $1.0500
EUR/GBP
Bids: stg0.8725/20, stg0.8700
EUR/USD: $1.4200, $1.4250, $1.4350, $1.4390
USD/JPY: Y76.00, Y76.80, Y77.00, Y77.80, Y79.00
EUR/JPY: Y110.00
GBP/USD: $1.6350, $1.6225
AUD/USD: $1.0525, $1.0315, $1.0260
AUD/JPY: Y79.50
AUD/CAD: C$1.0365
Majors close
Nikkei 225 +21.02 +0.23% 9,107.43
FTSE 100 +7.05 +0.13% 5,357.63
CAC 40 -8.16 -0.25% 3,230.90
DAX -27.34 -0.45% 5,994.90
Dow -76.97 -0.67% 11,405.93
Nasdaq -31.75 -1.24% 2,523.45
S&P 500 -11.73 -0.97% 1,192.76
10 Year Yield 2.21% -0.07 --
Oil $87.03 +0.38 +0.44%
Gold $1,788.00 +3.00 +0.17%
Japanese stocks rose for a second day after the biggest three-day rally on the Standard & Poor’s 500 Index since 2009 boosted investor confidence following three weeks of losses.
Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, advanced 0.4 percent.
Mitsubishi Corp. (8058), the country’s largest trading house by market value, gained 0.7 percent as oil traded near its highest in two weeks.
Tokyo Electric Power Co. led declines among power companies after Goldman Sachs Group Inc. said uncertainty surrounding government policy makes utilities a poor long-term investment.
The Topix lost 7.4 percent this month amid concern Europe’s debt crisis will damage the banking system and damp demand in one of Japan’s biggest export markets. Japanese stocks also fell after Standard & Poor’s on Aug. 5 cut its rating on U.S. government debt.
Most European stocks fell, with the Stoxx Europe 600 Index snapping its biggest three-day rally since May 2010, as the economies of the euro area and Germany grew at a slower-than-estimated pace.
Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, when it increased 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement today. That’s the worst performance since the euro region emerged from a recession in late 2009. Economists had forecast the economy to expand 0.3 percent.
Germany’s economy, Europe’s largest, almost stalled in the second quarter. Gross domestic product, adjusted for seasonal effects, climbed 0.1 percent from the first quarter, when it jumped a revised 1.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists had predicted growth of 0.5 percent.
Terna Rete Elettrica Nazionale SpA (TRN) retreated 14 percent as investors speculated that taxes will lessen the Italian power- grid operator’s earnings. Enel SpA (ENEL), Italy’s largest power producer, decreased 4.3 percent. Severn Trent Plc (SVT), Pennon Group Plc (PNN) and United Utilities Group Plc (UU/) declined more than 1 percent as Goldman Sachs Group Inc. recommended selling the shares of the U.K. utilities.
Stocks recouped some losses as Fitch Ratings affirmed its AAA credit rating on the U.S. and industrial production in the world’s largest economy climbed in July by the most this year
U.S. stocks fell, following the biggest three-day rally for the Standard & Poor’s 500 Index since 2009, as slower-than-estimated growth in Europe offset the strongest gain this year for American industrial production.
Caterpillar Inc. (CAT), Ford Motor Co. (F) and 3M Co. (MMM) dropped at least 1.7 percent, pacing losses in companies most-tied to the economy. Alcoa Inc. (AA) and Freeport-McMoRan Copper & Gold Inc. (FCX) declined more than 1.6 percent as commodity prices sank. Citigroup Inc. (C) and Bank of America Corp. (BAC) retreated at least 3.2 percent after billionaire John Paulson reduced his positions in both lenders last quarter as financial shares slumped.
The S&P 500 has fallen as much as 18 percent since April 29 on concern about Europe’s debt crisis, S&P’s downgrade of the U.S. credit rating and as reports on manufacturing and consumer spending showed the world’s largest economy is slowing. The index rallied 7.5 percent over the last three days amid a decline in jobless claims, an increase in retail sales and corporate takeovers.
Data released:
06:00 Germany GDP (Q2) flash 0.1% 0.6% 1.3 (1.5)%
06:00 Germany GDP (Q2) flash Y/Y 2.7% 3.1% 4.7 (4.9)%
08:30 UK HICP (July) 0.0% -0.2% -0.1%
08:30 UK HICP (July) Y/Y 4.4% 4.3% 4.2%
08:30 UK HICP ex EFAT (July) Y/Y 3.1% 3.0% 2.8%
08:30 UK Retail prices (July) -0.2% -0.2% 0.0%
08:30 UK Retail prices (July) Y/Y 5.0% 5.0% 5.0%
08:30 UK RPI-X (July) Y/Y 5.0% 5.1% 5.0%
09:00 EU(17) GDP (Q2) flash 0.2% 0.4% 0.8%
09:00 EU(17) GDP (Q2) flash Y/Y 1.7% 1.8% 2.5%
09:00 EU(17) Trade balance (June) unadjusted, bln 0.9 - 0.0
09:00 EU(17) Trade balance (June) adjusted, bln -1.6 0.2 -0.8 (-0.6)
12:30 USA Housing starts (July), mln 0.604 0.600 0.613 (0.629)
12:30 USA Building permits (July), mln 0.597 0.604 0.624
12:30 USA Import prices (July) 0.3% -0.2% -0.6 (-0.5)%
12:30 USA Export prices (July) -0.4% - 0.1%
12:55 USA Redbook (13.08)
13:15 USA Industrial production (July) 0.9% 0.3% 0.4 (0.2)%
13:15 USA Capacity utilisation (July) 77.5 76.9 76.9 (76.7)
23:01 UK Nationwide consumer confidence (July) - 51
The euro weakened after German and French leaders refrained from introducing a mechanism for the region to jointly issue debt to contain its sovereign-debt crisis. A press conference between German Chancellor Merkel and French President Sarkozy featured a proposal to establish a eurozone economic council and a common government that would feature a president who would serve a term of two and a half years.
The 17-nation currency briefly pared losses after French President Nicolas Sarkozy said after a meeting with German Chancellor Angela Merkel that France and Germany are working on “ambitious” joint proposals to defend it.
The Swiss franc erased gains against the dollar and euro after U.S. industrial production climbed in July, curbing the currency’s haven appeal.
The pound rose versus the dollar after data showed U.K. inflation accelerated more than forecast.
Resistance 3: Y78.20
Resistance 2: Y77.80
Resistance 1: Y77.20
Current price: Y76.65
Support 1:Y76.30
Support 2:Y75.00
Support 3:Y74.60
Comments: Rate holds weak within tha yesterday's range. Strong support/resistance come at Y76.30/Y77.20 respectively. Further support is around key level Y75.00 and then - at Y74.60 (channel line from Dec'2008). Break above Y77.20 points for a further rise to Y77.80 and Y78.20/25.
Resistance 3: Chf0.8360
Resistance 2: Chf0.8180
Resistance 1: Chf0.8010/15
Current price: Chf0.8005
Support 1: Chf0.7770
Support 2: Chf0.7540
Support 3: Chf0.7070
Japanese shares are down slightly with cement manufacturing and machinery weighing.
Taiheiyo Cement Corp. (5233) is down 2.65% and Hitachi Ltd. (6501) is down 2.32%.
Aluminum manufacturing is providing support, with Nippon Light Metal Co. (5701) up 2.82%.
The Nikkei is down 0.44% at 9068.39.
Nikkei 225 +21.02 +0.23% 9,107.43
FTSE 100 +7.05 +0.13% 5,357.63
CAC 40 -8.16 -0.25% 3,230.90
DAX -27.34 -0.45% 5,994.90
Dow -76.97 -0.67% 11,405.93
Nasdaq -31.75 -1.24% 2,523.45
S&P 500 -11.73 -0.97% 1,192.76
10 Year Yield 2.21% -0.07 --
Oil $87.03 +0.38 +0.44%
Gold $1,788.00 +3.00 +0.17%
Resistance 3:$1.6600
Resistance 2:$1.6550
Resistance 1: $1.6480
Current price: $1.6425
Support 1: $1.6400
Support 2: $1.6320
Support 3: $1.6250
Comments: despite some retreat rate tries to look optimistic. Strong resistance remains at yesterday's highs on $1.6480 (also Aug 01 and 08 highs). Further target comes at $1.6550 and $1.6600. Support is around $1.6400/90 (23.6% of the rise from $1.6110). Below - at $1.6320 (local Tuesday lows) and $1.6250 (61.8%).
Resistance 3: $1.4580
Resistance 2: $1.4540
Resistance 1: $1.4460/80
Current price: $1.4403
Support 1: $1.4350
Support 2: $1.4300
Support 3: $1.4260
08:00 EU(17) Current account (June) unadjusted, bln 0.0 -18.3
08:00 EU(17) Current account (June) adjusted, bln -3.8 -5.2
08:30 UK Claimant count (July) 18500 24500
08:30 UK Claimant count rate (July) 4.7% 4.7%
08:30 UK Average earnings (3 months to June) Y/Y 2.3% 2.3%
08:30 UK Average earnings ex bonuses (3 months to June) Y/Y - 2.1%
08:30 UK ILO Jobless rate (June) 7.7% 7.7%
08:30 UK BoE meeting minutes (03-04.08)
09:00 EU(17) Harmonized CPI (July) final -0.6% 0.0%
09:00 EU(17) Harmonized CPI (July) final Y/Y 2.7% 2.7%
09:00 EU(17) Harmonized CPI ex EFAT (July) Y/Y 1.6% 1.6%
12:30 USA PPI (July) 0.0% -0.4%
12:30 USA PPI (July) Y/Y - 7.0%
12:30 USA PPI excluding food and energy (July) 0.2% 0.3%
12:30 USA PPI excluding food and energy (July) Y/Y - 2.4%
23:50 Japan Trade balance (July) unadjusted, trln 0.069 0.070
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