Stocks have extended their sideways drift into the last hour of the second quarter. As things currently stand, the S&P 500 will book a quarterly loss of about 0.5%. That slip has been minimized by four consecutive sessions of strong gains, which have the stock market up about 4% week to date.
Stocks are drifting off of their session highs, but overall gains remain solid and broad as all 10 major sectors continue to trade in positive territory.
With stocks easing off of their best levels, Treasuries have managed to pare their losses. That has the yield on the benchmark 10-year Note down a couple of basis points to 3.15%.
The euro climbed to the highest in almost three weeks against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation and as European ministers are set to approve the next aid payment due to Greece.
Riskier assets advanced against the Swiss franc and the dollar after German financial firms agreed to roll over Greek debt holdings. Greek Prime Minister George Papandreou won approval of a second bill to authorize his 78 billion-euro ($113 billion) package of budget cuts and asset sales, a key to receiving further international financial aid.
“It looks like a risk-on day with equities continuing to perform even with QE2 wrapping up,” said John Doyle, a strategist in Washington at currency-trading firm Tempus Consulting Inc. “The euro retraced all of its losses from the week prior. German banks reaching a deal on Greek debt and the hawkish comments out of ECB President Jean-Claude Trichet cements the fact that they’re going to raise interest rates next week.”
German banks have agreed to roll over about 2 billion euros in the Greek bonds they’re holding that mature through 2014, German Finance Minister Wolfgang Schaeuble said today. Papandreou garnered the support from 155 lawmakers in the 300- strong chamber, with 136 voting against, Deputy Parliament Speaker Grigoris Niotis said in remarks carried live on state- run Vouli TV today.
ECB President Trichet today repeated that policy makers are in a state of “strong vigilance” ahead of the July 7 meeting, a phrase he has used before tightening monetary policy in the past.
Investors anticipate the ECB will add 70 additional basis points to its benchmark interest rate in the next 12 months, according to a Credit Suisse Group AG index based on swaps. That compares with 46 basis points yesterday.
The yen pared gains against the dollar after the Institute for Supply Management-Chicago Inc. said today its business barometer unexpectedly rose to 61.1 in June from 56.6 a month earlier. Figures greater than 50 signal expansion.
“Chicago PMI massive surprise top side, new orders sharply up inventories down,” said Sebastien Galy, a senior foreign- exchange strategist at Societe Generale SA in London. “That would confirm the manufacturing shock thesis. It’s risk on, U.S. dollar down and dollar-yen tempted to drift higher with U.S. Treasury yields.”
Stocks continue to sit at session highs with gains of about 1% or more. The move puts the broad market on pace for its fourth straight substantial gain and gives the stock market a week-to-date gain of about 4%. Despite that, the S&P 500 is still down fractionally for the quarter.
Strength among stocks continues to drag down Treasuries. In turn, the yield on the benchmark 10-year Note has climbed to a one-month high near 3.20%. Earlier this week the Note's yield set a 2011 low of about 2.85%
Analysts at HFE says Jun Chicago PMI jumped to 61.1, "in sharp contrast to the Philly Fed and Empire State surveys for June" and it's likely
"reflects a recovery in auto production, though we can't be sure." They still forecast the national mfg ISM to drop, "because it is much less sensitive to the auto sector than Chicago PMI."
Majors opened with a modest gain and extended an early advance amid surprisingly strong Chicago PMI report. However, stocks have started to lose momentum. Still, overall gains remain impressive.
Financials were able to come into a plus, showing now a 0.2% gain after the PMI report. Prior to that, the sector had been down about 0.3%.
As for energy and tech, the two sectors are still early leaders. In fact, both sectors are now up 1%.
EUR/GBP is close to resistance on stg0.9050, recovering from recent lows around stg0.9020. Cross currently trades around stg0.9041. A break of stg0.9050 to open a move toward stg0.9070. Next band of resistance is between stg0.9100/10. Support remains at stg0.9020.
GBP/USD holds back under $1.6000, with EUR/GBP trades around stg0.9045, up from pullback lows at stg0.9020. Cable support remains in place toward $1.5970.
EUR/USD $1.4500, $1.4400, $1.4380, $1.4375, $1.4350, $1.4300
USD/JPY Y79.95, Y80.65, Y80.80, Y81.00
EUR/JPY Y114.00, Y115.00, Y117.40, Y118.30
GBP/USD $1.6120
EUR/GBP stg0.8910
EUR/CHF Chf1.2300
AUD/USD $1.0600
EUR/CHF rallies after triggering stops on the break of Chf1.2100. Cross printed session high on Chf1.2130 and currently trades around Chf1.2125. Next resistance seen into Chf1.2150, more between Chf1.2190/00.
U.S. stocks were headed for a fourth day of gains Thursday amid Greece's steps toward securing an aid package. But as anti-government protests only worsen, some worry that Greece's problems are far from over.
A weekly report on jobless claims, which showed that fewer Americans filed for first-time unemployment benefits last week, could help set the tone.
Economy: The Labor Department reported that weekly jobless claims edged down by 1,000 to 428,000 - down from 429,000 in the previous week. But that was still higher than expected. Economists had forecast claims to fall 9,000 to 420,000.
Also out Thursday is the Chicago purchasing managers' index at 13:45 GMT, which is expected to slip to 54 for June.
Companies: Shares of eBay (EBAY, Fortune 500), jumped more than 4% in premarket trading.
Shares of Visa (V, Fortune 500) and MasterCard (MA, Fortune 500) were also edging higher in premarket trading.
Apollo Group (APOL, Fortune 500), reports after the closing bell on Thursday.
Other names reporting include Constellation Brands (STZ) and dining chain owner Darden Restaurants (DRI, Fortune 500).
USD/CHF continues to test channel resistance line from Jun 16 at Chf0.8350. Strong support is near Chf0.8300 (Asian lows), with a break under widens losses to Chf0.8270 (Jun 28 lows). Stronger level - at Chf0.8220 (channel support line). Break above Chf0.8350 opens the way up to Chf0.8370 (Jun 29 high).
European stocks pared gains, after the Stoxx Europe 600 Index yesterday posted the biggest rally in three months, as carmakers retreated. Lloyds Banking Group Plc surged 8.3% after the U.K.’s biggest mortgage lender said it will make savings of 1.5 billion pounds ($2.4 billion) by 2014.
BG Group Plc surged 4.4%.
Data released:
06:00 Germany Retail sales (May) real adjusted -2.8% - 0.6%
06:00 Germany Retail sales (May) real unadjusted Y/Y 2.2% - 3.6%
06:00 UK Nationwide house price index (June) 0.0% 0.2% 0.3%
06:00 UK Nationwide house price index (June) Y/Y -1.1% -1.3% -1.2%
06:45 France PPI (May) -0.5% 0.4% 0.8%
06:45 France PPI (May) Y/Y 6.0% 6.5% 6.4%
06:45 France Consumer spending (May) -0.8% 0.6% -1.8%
06:45 France Consumer spending (May) Y/Y -1.8% - -0.1%
07:55 Germany Unemployment (June) seasonally adjusted -8K -16K -8K
07:55 Germany Unemployment (June) seasonally adjusted, mln 2.967 - 2.975 (2.974)
07:55 Germany Unemployment rate (June) seasonally adjusted 7.0% 7.0% 7.0%
07:55 Germany Unemployment (June) seasonally unadjusted, mln 2.893 - 2.960
07:55 Germany Unemployment rate (June) seasonally unadjusted 6.9% - 7.0%
08:00 EU(17) M3 money supply (May) adjusted Y/Y 2.4% 2.2% 2.0%
08:00 EU(17) M3 money supply (3 months to May) adjusted Y/Y 2.2% 2.1% 2.1%
09:00 EU(17) Harmonized CPI (June) Y/Y preliminary 2.7% 2.8% 2.7%
09:00 Italy CPI (June) preliminary 0.1% 0.1% 0.1%
09:00 Italy CPI (June) preliminary Y/Y 2.7% 2.7% 2.6%
09:00 Italy HICP (June) preliminary Y/Y 3.0% 3.0% 3.0%
The euro climbed to the highest in almost three weeks against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation while the risk of an immediate Greek default subsides.
“The euro has been squeezed higher, and that was inevitable, because many people were short going into this,” said Neil Mellor, a currency strategist at Bank of New York Mellon Corp..
ECB President Jean-Claude Trichet today repeated that policy makers are in a state of “strong vigilance” ahead of the July 7 meeting, a phrase he has used before tightening monetary policy in the past.
The case for higher rates was strengthened as data showed European consumer-price growth was above the ECB’s 2% target for a seventh month. The inflation rate remained at an initially estimated 2.7% for a second month in June, statistics showed today.
A separate report showed German unemployment declined for a 24th straight month in June.
“The ECB has entered a cycle of raising interest rates,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co.. “I expect the euro to strengthen.”
EUR/USD printed highs around $1.4520/25 before it slowly retreated to $1.4458.
GBP/USD fell from $1.6110 to $1.5970 before it was back to $1.6012.
USD/JPY held within the range, limited by Y80.30/46.
The US calendar starts at 1230GMT, with the weekly Jobless Claims data. Claims are expected to fall 9,000 to 420,000 in the June 25 employment survey week.
Also at 1230GMT, the ISM-NY Business Index data is released.
At 1345GMT the June Chicago Purchasers Index data is released. The Chicago PMI is expected to fall to a reading of 53.0 in June after falling more than 10 points in May.
EUR/JPY holds within the narrow range with the focus still at Greece. Cross holds at Y116.41, above the 100 day MA is Y116.23 with support sits at Y116.10. Demand placed at Y115.60/55. Resistance at Y116.90/00 a break here to open Y117.45/50 ahead of Y117.85/90.
EUR/GBP printed session high above the resistance at stg0.9050 - on stg0.9066. But cross retreated to current stg0.9048. Tech resistance remains at stg0.9065/70.
The pound slid to the least in more than 15 months against the euro as reports showed U.K. consumer confidence fell this month. Moreover, the house prices were little changed, limiting the scope for interest-rate increases.
The average cost of a home was 168,205 pounds ($270,255), compared with 167,208 pounds in May, when it rose 0.3%.
Consumer confidence fell to minus 25 from minus 21 last month, GfK NOP said in a separate report, below the minus 24 median estimate.
The pound has fallen 9% in the past 12 months.
Bank of England policy maker Adam Posen on June 27 dismissed a call by the Bank for International Settlements for tighter monetary policy worldwide to curb inflation as “nonsense”.
The Bank of England will probably leave the benchmark interest rate on hold at a record low of 0.5% until after Governor Mervyn King retires in 2013, Gerard Lyons, chief economist at Standard Chartered Plc, said yesterday.
Worsening economic data has prompted investors to push back bets on when the central bank will begin raising borrowing costs to May 2012.
Also pound fell after BOE'Fisher said that UK financial markets faced to significant risks. Also he noted in case of stress-tests the markets may be surprised by results.
EUR/USD challenging support at $1.4480 amid weak talk around suggesting that this afternoon's Greek vote on the austerity implementation has been delayed until Friday. There is no confirmation for this. A break of $1.4480 to open a deeper move toward $1.4450/40.
EUR/USD $1.4500, $1.4400, $1.4380, $1.4375, $1.4350, $1.4300
USD/JPY Y79.95, Y80.65, Y80.80, Y81.00
EUR/JPY Y114.00, Y115.00, Y117.40, Y118.30
GBP/USD $1.6120
EUR/GBP stg0.8910
EUR/CHF Chf1.2300
AUD/USD $1.0600
The euro rose to a three-week high against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation and as the immediate risk of default by Greece subsided.
The euro reached two-week high against the dollar as investors raised bets the European Central Bank will increase interest rates next week after the passage of austerity measures by Greek lawmakers.
The 17-nation currency also gained after Greek Prime Minister George Papandreou won with his 78 billion euro ($112 billion) package of budget cuts and state asset sales.
Canada’s dollar rose as consumer prices in Canada advanced 0.7% in May after a 0.3% gain in the previous month, Statistics Canada said today, making it more likely that the central bank will resume boosting borrowing costs.
The Bank of Canada kept its benchmark overnight lending rate at 1% on May 31, where it has been since September.
The franc slipped versus all of its major peers after the nation’s economic barometer fell in June, adding to signs the franc’s ascent and a faltering euro-region economy may hurt economic growth.
The monthly gauge that aims to predict the economy’s direction about six months ahead dropped to 2.23 from 2.30 in May, the KOF Swiss Economic Institute in Zurich said.
Japanese stocks advanced, pushing the Nikkei 225 Stock Average to its highest level in seven weeks, after commodity prices gained and amid increasing confidence Greece may avoid a default, reducing the risk to bank earnings.
Canon Inc. (7751), which counts Europe as its largest market, rose 2.1 percent.
Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-largest publicly traded bank, climbed 1.2 percent.
Mizuho Financial Group Inc. (8411), Japan’s third-biggest lender by market value, advanced 2.3 percent to 131 yen.
Mitsui & Co., the country’s No. 2 trading company, increased 2.1 percent.
Mitsubishi Corp. (8058), Japan’s largest commodities trader, rose 0.9 percent to 1,990 yen.
Inpex Corp. (1605), the country’s biggest energy explorer, increased 2.1 percent to 589,000 yen.
Tokyo Electric Power Co., operator of the crippled Fukushima Dai-Ichi power station, advanced 2.9 percent after shareholders voted not to abandon the nuclear power business.
Toyota Motor Corp. (7203) advanced 1.7 percent to 3,270 yen after the industrial production report. The carmaker’s U.S. sales plunged by a third because of supply-chain disruptions following Japan’s March 11 disaster. Aisin Seiki Co., a supplier of parts to Toyota, climbed 2.5 percent to 3,085 yen.
European stocks rallied the most in three months as Greek lawmakers passed a package of austerity measures needed to secure the next tranche of European Union financial aid.
Greek Prime Minister George Papandreou clinched enough votes today to pass the first part of an austerity plan aimed at meeting EU aid requirements and staving off default for his debt-laden nation.
Charter International Plc (CHTR) soared 28 percent as Melrose Plc (MRO) said it made a preliminary approach about a possible takeover offer for the engineering company.
Salvatore Ferragamo SpA surged 11 percent on its first day of trading.
ITV Plc (ITV) and ICAP Plc (IAP) surged more than 6 percent amid speculation they may become bid targets.
Allianz SE (ALV), Europe’s biggest insurer, increased 3.1 percent to 94.91 euros as the stock was upgraded to “overweight” from “equal weight” at Morgan Stanley.
Nobel Biocare AG, the second-largest maker of dental implants by sales, climbed 2.4 percent to 16.91 francs and Wacker Chemie AG (WCH) advanced 3 percent to 149.05 euros as UBS AG upgraded both companies to “buy” from “neutral.”
Senior Plc (SNR), a U.K. maker of air ducts for Boeing Co. and Airbus SAS planes, jumped 8.3 percent to 176 pence after saying pretax profit this year will exceed its forecasts.
U.S. stocks closed higher for a third day on Wednesday, as bank shares boosted the broader market following Bank of America's $8.5 billion settlement over mortgage securities claims.
Investors also cheered Greece's approval of austerity measures on Wednesday, which are meant keep the country from defaulting.
Economy: The National Association of Realtors said that pending home sales rose a better-than-expected 8.2% in May, recovering in part from April's dismal 11.6% decline.
Companies: US Steel (X, Fortune 500) was among the top performers on the S&P 500, rising 6%, after the company was upgraded to "buy" by Deutsche Bank analysts. Competitor AK Steel (AKS, Fortune 500) also closed sharply higher.
KB Home (KBH) shares sank 15%, after the homebuilder reported a second quarter loss.
Monsanto (MON, Fortune 500)'s earnings widely beat expectations, which the company attributed to strength in its seeds business. Shares of Monsanto rose 5%.
Shares of Visa (V, Fortune 500) and Mastercard (MA, Fortune 500) were the top performers on the S&P 500, shooting up more than 10%
Resistance 3: Y81.30 (Jun 28 high)
Resistance 3: Chf0.8400 (area of Jun 24 high)
Resistance 3: $ 1.6260 (area of Jun 21-22 high)
Resistance 3: $ 1.4650 (Jun 9 high)
05:00 Japan Housing starts (May) Y/Y 3.1% 0.3%
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