New leaders were appointed in Italy and Greece over the weekend, lifting Asian stocks. The Nikkei climbed 1.1% to 8604, the Kospi jumped 2.1%, while the ASX 200 ticked up .2%. China’s markets rallied strongly, as the Shanghai Composite and Hang Seng both gained 1.9%.
The mood shifted in Europe, pushing the major indexes lower. The CAC40 dropped 1.3%, the DAX sank 1.2% and the FTSE slipped .5%. Debt fears were stoked by an auction of 5-year Italian bonds, which yielded a record high 6.2%, up nearly 1% from last month. Credit Suisse was placed under review by Moody’s, sending the shares down 3.4%.
US markets ended lower, with financials leading the declines. The Dow fell 75 points to 12079, the S&P 500 lost 1%, and the Nasdaq shed .8%.
S&P 500 Drops 1%
Salesforce.com closed up 2.8% after Citigroup upgraded the company to “buy”.
In earnings news, JC Penney shares dropped 2.8% after reporting a loss and a weak outlook. Lowe’s shares gained 1.7% after beating analyst forecasts and lifting its outlook.
Currencies
European currencies retreated against the Dollar. The Pound fell 1% to 1.5910, the Euro shed .9% to 1.3626, and the Swiss Franc declined .7% to 1.1020. The Australian Dollar dropped .8%, while the Yen inched up .1% to 77.11.
Economic Outlook
Tuesday’s reports will include PPI, retails sales, the Empire State manufacturing survey, and business inventories.
Upbeat Economic Data Lifts US Markets
Equities
Selling pressure hit Asian markets, as rising interest rates in Italy and Spain triggered nervous selling. The Nikkei dropped .7% to 8542, the Kospi declined .9%, and the ASX 200 skidded .4%. Hong Kong’s Hang Seng fell .8%, while the Shanghai Composite bucked the downtrend, closing up fractionally.
European markets closed lower in a volatile session, as a spike in French interest rates hurt financial shares. The CAC40 slumped 1.9%, as BNP Paribas and Societe Generale both tumbled more than 5%. The DAX declined .9% and the FTSE closed down fractionally, recovering from a sizable loss earlier in the day. Italy’s new prime minister, Mario Monti succeeded in forming a government, helping stocks pare their early losses.
Afternoon Rally Helps FTSE Pare Losses
In the US, stocks gained, led by the Nasdaq, which rallied 1.1%. The Dow closed up 17 points to 12096, and the S&P 500 rose .5% to 1258.
Currencies
The Dollar advanced for a second day. The Euro fell .6% to 1.3535, the Pound declined .5% to 1.5814, and the Swiss Franc slumped .8% to 1.0924. The Canadian Dollar fell .4% to 1.0212, while the Yen inched up .1% to 77.06.
Economic Outlook
Tuesday’s economic data projected a healthy outlook for the US economy. Retails sales rose by.6%, more than forecast, and the Empire State manufacturing survey unexpectedly climbed, snapping a 5-month losing streak. PPI unexpectedly fell thanks to a drop in commodity prices.
European Debt Fears Hit Equities
Equities
Asian markets ended lower as investors focused on debt troubles in Europe. China’s markets led the declines, as the Shanghai Composite shed 2.5%, and the Hang Seng skidded 2%, following a report from the IMF that China’s banks face systemic risks. The Nikkei fell.9% to 8463, while Olympus shares surged 15%, amid growing expectations that the company will not be delisted. The Kospi dropped 1.6%, and the ASX 200 slid .9%.
In Europe, news that the ECB was buying bonds helped stabilize the markets. The major indexes closed mixed, with the CAC40 up .7%, while the DAX slipped .2% and the FTSE eased .1%. Despite the ECB’s efforts, Italian 10-year notes settled above the 7%.
Heavy selling hit US stocks in the last hour of the day, as investors were spooked by a report from Fitch which discusses US bank exposure to European debt. The Dow dropped 191 points to 11906, and the S&P 500 and Nasdaq both fell 1.7%.
Currencies
The Australian Dollar tumbled 1.1% to 1.0081, as risk aversion hit the market. The Euro and Pound both lost .5% to 1.3463 and 1.5730 respectively, and the Canadia n Dollar eased .3% to 1.0236.
Economic Outlook
Wednesday’s reports were upbeat, suggesting the economic recovery is picking up. The housing market index jumped to 20 from 17, its highest level in 18 months. Industrial production rose .7%, more than forecast. CPI data showed a drop of .1% in prices, but core CPI, which excludes food and energy, rose .1%.
Stocks Tumble as European Bond Yields Surge
Equities
Asian markets closed mixed, as the major indexes pared early losses. The Nikkei rose .2% to 8480, the Kospi rallied 1.1%, and the ASX 200 ticked up .3%. China’s markets closed lower, as the Shanghai Composite eased .2%, and the Hang Seng dropped .8%, weighed down by real estate companies.
European markets sank, as rising bond prices reinforced fears of contagion. The CAC40 tumbled 1.8%, the DAX fell 1.1%, and the FTSE slumped 1.6%. Spanish bond prices continued to drop, pushing yields on 10-year Spanish notes up to 6.975% in a government auction, with a weak bid-to cover ratio of 1.54.
Currencies
The Australian Dollar fell below the 1.000 parity level, closing down .8% to .9997, and the Yen rose .1% to settle below 77 at 76.98. The Canadian Dollar skidded .5% to 1.0289. The Euro closed up fractionally surrendering early gains, and the Pound gained .2% to 1.5754.
Economic Outlook
Thursday’s economic data was mostly positive. Weekly jobless claims dropped to their lowest level in 7-weeks at 388K, better than forecast. Building permits were higher than expected, while housing starts were in line with analyst expectations. On a weaker note, the Philly Fed manufacturing index unexpectedly dropped to 3.6 from 8.7.
Asian and European Equities Drop, US ends Mixed
Equities
Asian markets skidded on Friday, as Europe’s debt troubles remained in focus. The Nikkei fell 1.2% to 8375, the Kospi sank 2%, and the ASX 200 slumped 1.9%. China’s Shanghai Composite dropped 1.9%, and Hong Kong’s Hang Seng, declined 1.7%.
European markets continued to drop. Comments by German’s chancellor Merkel, that the ECB “cannot pretend to have powers they don’t have” cast doubt on plans for the ECB to lend money to the IMF to purchase sovereign bonds. The ECB cannot buy bonds directly. The FTSE fell 1.1%, the CAC40 dropped .4%, and the DAX closed down .9%.
FTSE slumps more than 1%
In the US, the Dow gained 26 points to 11796, while the Nasdaq fell .6% and the S&P 500 closed flat.
Currencies
The Dollar traded modestly lower against the major currencies. The Euro rose .4% to 1.3524, the Pound advanced .3%, and the Australian Dollar ticked up .1% to 1.0010. The Swiss Franc gained .5% to 1.0908.
Economic Outlook
Leading indicators gained by .9% last month, beating analyst forecasts.