<img src=http://media.barchart.com/cm/authors/bceconomist_new.gif>Overnight Developments -- Newtron23/11/20106/12/2010Canberra Zimbabwe368

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Date Posted: Tuesday, November 30, 12:22:53am
Author: Barchart U.S. Morning Call=Monday, November 29, 2010
Subject:

Overnight Developments

Barchart U.S. Morning Call
Monday, November 29, 2010

by Barchart Research Team of Barchart.com

Overnight Developments
•European stocks are trading lower with the European DJ Stoxx 50 down -0.33%. However, Dec S&Ps are trading mildly higher by 2.60 points (+0.22%). Eurozone finance ministers on Sunday approved an 85 billion euro bailout package for Ireland that did not force senior bondholders of major Irish banks to take a write-down. Eurozone finance ministers also gave Greece an extra 4-1/2 years to repay its bailout package, extending the term to 7 years in order to match the loan length in the new Irish bailout package. Eurozone finance ministers also agreed that the post-2013 bailout facility will not force automatic losses on sovereign bondholders and that instead the IMF will have the power to determine bondholder losses on a case-by-base basis, which was a defeat for German Chancellor Angela Merkel's hardline position for automatic losses that helped cause of the latest phase of the European debt crisis. The question now is whether Sunday's agreements will relieve the pressure in the markets, or whether the markets are going to keep pushing Portuguese and Spanish risk measures higher and force a near-term bailout of at least Portugal and perhaps Spain. The markets have thus far been unimpressed with Sunday's agreements. The euro is down by 0.72% and credit default swap prices today have risen by 23 bp for Spain and by 40 bp for Portugal. However, CDS prices today are down by 20 bp for Ireland and by 21 bp for Greece. The European Commission today in its latest GDP forecasts said that Eurozone GDP growth will weaker to +1.5% in 2011 from +1.7% in 2010. The report forecast 2.2% GDP growth for Germany in 2011 but only 1.6% growth for French GDP growth and 1.1% for Italian GDP growth. The report forecast contractions for Greece and Portugal but +0.9% growth for Ireland. The European Commission reported today that Eurozone Nov confidence rose to 105.3 from 103.8 in October, which was stronger than expectations of 105.0 and was the highest level in 3 years.

•The Asian markets today closed mostly higher: Japan +0.86%, Hong Kong +1.26%, China -0.15%, Taiwan +0.66%, Australia +0.44%, Singapore unchanged, South Korea -0.16%, and India +1.40%. Asia stocks were supported today by Nomura's upgrade for Sony to a "buy."

Overnight U.S. Stock News
•Dec S&Ps this morning are trading up 2.60 points on continued optimism about stronger US economic growth and the overnight rally in Asian stocks, although this morning's lackluster reaction in Europe to Sunday's bailout measures is a negative factor. The stock market last Friday moved lower due to tensions on the Korean peninsula and heightened European debt risks and finished the holiday-shortened session with moderate losses: Dow -0.85%, S&P 500 -0.75%, Nasdaq Composite -0.34%. Bearish factors included (1) carry-over weakness from a plunge in European stocks on concern the European sovereign-debt crisis is worsening after credit-default swaps on the government debts of Ireland, Portugal and Spain all surged to record highs, (2) heightened tension in Korea which undercuts global economic confidence after North Korea said that planned naval exercises by South Korea and the US moved the Korean peninsula "closer to the brink of war," (3) a drop in bank stocks after European bank stocks fell when Standard & Poor's Ratings Service cut Anglo Irish Bank's credit rating to below investment grade, which reinforces concern about financial stress within the Euro-Zone, and (4) weakness in raw material and energy producers after a rally in the dollar to a 2-month high prompted declines in most commodities.

•Bullish factors included (1) increased M&A activity when Del Monte rallied after Vestal Capital Partners and Centerview Partners announced a possible takeover of the food company, and (2) strength in US automakers led by gains in Ford after the automaker said it opened 40 dealerships in China and has plans to add anther 26 by year-end as it aims for record sales in the world's largest auto market.

Today's Market Focus
•December 10-year T-notes this morning are trading down 1.5 ticks on the slightly higher trade in Dec S&Ps. T-note prices last Friday traded with moderate gains throughout the day and finished higher on increased safe-haven demand due to the escalating Korean conflict and concern the European debt crisis is worsening: TYZ10 +10, FVZ10 +5.5, EDH11 -4.0. Bullish factors included (1) increased tension on the Korean peninsula after North Korea said that joint military exercises between South Korea and the US will bring the region to the "brink of war," (2) concern the European sovereign-debt crisis is worsening after credit-default swaps on the government debts of Ireland, Portugal and Spain all surged to record highs, and (3) the action by Standard & Poor's Ratings Service to cut Anglo Irish Bank's credit rating to below investment grade, which reinforces concern about financial stress within the Euro-Zone.

•The dollar index this morning is mildly higher by +0.26 points with the dollar/yen up 0.09 yen and the euro/dollar down 0.91 cents. The dollar continues to see support from technical buying and optimism about the improvement in US economic data. The dollar index last Friday rallied to a 2-month high on tensions over South Korea and the European debt crisis: Dollar Index +0.490, USDJPY +0.580, EURUSD -0.0094. Bullish factors for the dollar included (1) increased safe-haven demand for the dollar after North Korea's state-run news agency said planned naval exercises by South Korea and the US moved the Korean peninsula "closer to the brink of war," (2) the slump in the euro to a 2-month low against the dollar on concern the European debt crisis is worsening after credit-default swaps to insure Spain's, Portugal's and Ireland's government debt rose to record highs, (3) euro negative comments from ECB Council member Liikanen who said that the ECB might keep emergency liquidity measures in place for longer "if required," and (4) the weaker-than-expected Oct French consumer spending.

•January crude oil prices this morning are up 77 cents a barrel and January gasoline is up 1.96 cents per gallon on cold weather in Europe, today's 3-year high in Eurozone economic confidence, and continued optimism about stronger economic data in the US. Crude oil and gasoline prices last Friday moved lower in quiet trade due to a stronger dollar and concern that global economic growth will slow as the European credit crisis spreads: CLF11 -$0.10, RBF11 -0.34. Jan crude posted a 1-1/2 week high in overnight trade but erased its gains and finished lower. Bearish factors included (1) the rally in the dollar index to a 2-month high, which reduces the investment demand for commodities, (2) concern the European sovereign-debt crisis will spread and slow global economic growth and energy demand, and (3) concerns that China will continue to limit loan growth which may slow its economy and energy demand after the Shanghai Securities News reported that the Chinese government may cut the target for new lending next year.

Today's U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) NRGY-Inergy LP (BEST earnings consensus -$0.62), BECN-Beacon Roofing Supply (0.51), BH-Biglari Holdings (4.41).

Global Financial Calendar

Monday 11/29/10
United States
1030 ET Nov Dallas Fed manufacturing activity index, Oct 2.6.
1130 ET Weekly 3-mo and 6-mo T-bill auctions.
1600 ET USDA Crop Progress report.
United Kingdom
0430 ET Oct UK net consumer credit expected +0.2 billion pounds, Sep +0.3 billion pounds.
0430 ET Oct UK mortgage approvals expected +47,000, Sep +47,500.
0430 ET Oct UK M4 money supply, Sep -0.2% m/m and +1.0% y/y.
1901 ET Nov UK GfK consumer confidence survey expected unchanged at -19, Oct +1 to -19.
Euro-Zone
0500 ET Nov Euro-Zone business climate indicator expected +0.07 to 1.05, Oct +0.22 to 0.98.
0500 ET Nov Euro-Zone economic confidence expected +0.9 to 105.0, Oct +0.9 to 104.1.
0545 ET European Commission releases economic growth forecasts.
Canada
0830 ET Oct Canada industrial product prices expected +0.2% m/m, Sep +0.2% m/m.
0830 ET Oct Canada raw materials price index expected +1.0% m/m, Sep -0.4% m/m.
Japan
1815 ET Nov Japan Nomura/JMMA manufacturing PMI, Oct -2.3 to 47.2.
1830 ET Oct Japan overall household spending, Sep unchanged y/y.
1830 ET Oct Japan jobless rate expected unchanged at 5.0%, Sep -0.1 to 5.0%. Oct job-to-applicant ratio expected 0.56, Sep 0.55.
1850 ET Preliminary Oct Japan industrial production expected -3.2% m/m and +3.1% y/y, Sep -1.6% m/m and +11.5% y/y.
2030 ET Oct Japan labor cash earnings expected +0.7% y/y, Sep +0.9% y/y.
2300 ET Oct Japan vehicle production, Sep +11.4% y/y.

Morning Quote Board

Morning Quotes (ET) Last Chg %chg Updated
US Stock Futures
S&P (Globex) (Z0) 1185.80 2.60 0.22% 07:09:14
DJIA (CBOT) (Z0) 11053 23 0.21% 07:06:39

European Stocks
Europe DJ Stoxx 50 2517.46 -8.23 -0.33% 07:04:15
London UK FTSE Index 5636.43 -32.27 -0.57% 07:04:23
German Dax Index 6801.12 -47.86 -0.70% 07:04:23
French CAC 40 Index 3695.51 -33.14 -0.89% 07:04:15

Asian-Pacific Stocks
Japan Nikkei Index 10126 86 0.86% 01:28:01
Hong Kong Hang Seng 23166 289 1.26% 03:01:30
China CSI 300 Index 3190 -5 -0.15% 02:01:30
Taiwan TAIEX Index 8367 55 0.66% 00:46:01
Australian S&P 200 4618.5 20.2 0.44% 00:37:05
Singapore Str. Times 3158.21 0.13 0.00% 04:10:01
South Korea KOSPI 200 248.92 -0.39 -0.16% 04:03:27
Bombay Sensex 30 19405 268.49 1.40% 05:29:59
Karachi KSE-100 11163 18 0.17% 05:54:58

US Interest Rates
10yr T-notes (CBT)(Z0) 124.170 -0.015 -0.05% 07:09:20
Cash 10yr T-note Price 97.300 0.005 0.02% 07:18:30
Cash 10yr T-note Yield 2.864 -0.002 -0.06% 07:18
5yr T-note (CBT)(Z0) 120.070 -0.030 -0.08% 07:09:19
Cash 5yr T-note Price 99.065 -0.020 -0.06% 07:17:00
Cash 5yr T-note Yield 1.541 0.013 0.86% 07:16
30-yr T-bond (CBT)(Z0) 127.08 -0.09 -0.22% 07:08:46
Cash 30yr T-bond Price 100.180 -0.040 -0.12% 07:13:30
Cash 30yr T-bond Yield 4.217 0.007 0.17% 07:13
Eurodollars (CME)(Z0) 99.653 0.035 0.04% 07:08:54
Eurodollars (CME)(H1) 99.485 0.030 0.03% 07:09:15

Asian & European Rates
10-yr JGBs (TSE) (Z0) 140.85 0.28 0.20% 01:00:00
EuroyenTibor(SGX)(Z0) 99.660 0.000 0.00% 11/29/2010
Bunds (Eurex) (Z0) 127.27 -0.08 -0.06% 07:04:11
Euribor (Eurex) (Z0) 98.95 0.01 0.01% 03:15:35
UK Gilts (Liffe) (Z0) 121.09 0.01 0.01% 07:03:55
Short Stlg (Liffe) Z0) 99.23 0.01 0.01% 07:01:32

Forex
U.S. Dollar Index 80.64 0.26 0.32% 07:09:21
US Dollar-Japanese Yen 84.20 0.09 0.11% 07:19:23
EuroFX-US Dollar 1.3151 -0.0091 -0.72% 07:19:24
US Dollar-Swiss Franc 1.0027 -0.0009 -0.09% 07:19:24
British Pound-US$ 1.5584 -0.0008 -0.08% 07:19:24
US$-Canadian Dlr 1.0215 0.0002 0.02% 07:19:24
Yen (Globex) (Z0) 1.1884 -0.002 -0.20% 07:09:22
Euro FX (Globex) (Z0) 1.3169 -0.0073 -0.55% 07:09:15
SwissFranc (Globex)(Z0) 0.9976 0.0001 0.01% 07:09:23
British Pound(Glbx)(Z0) 1.5588 -0.0019 -0.12% 07:09:16
Canadian$ (Globex)(Z0) 0.9798 -0.0008 -0.08% 07:09:13

Commodities
Gold (Comex) (Z0) 1358.7 -3.7 -0.27% 07:09:21
Silver (Comex) (Z0) 26.685 -0.014 -0.05% 07:09:11
Copper (Comex) (Z0) 375.5 0.4 0.09% 07:07:55
Crude Oil (Nymex) (F1) 84.53 0.77 0.92% 07:09:23
Gasoline (Nymex) (F1) 217.8 1.96 0.91% 07:05:09
Heating Oil(Nymex) (F1) 235.55 2.25 0.96% 07:08:51
NaturalGas(Nymex)(F1) 4.453 0.054 1.23% 07:09:16
Corn (CBOT) (Z0) 541.75 3.50 0.65% 07:08:37
Soybeans (CBOT) (F1) 1243.00 4.50 0.36% 07:08:05
Wheat (CBOT) (Z0) 653.75 5.50 0.85% 07:05:08

Recent articles from this author

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