Negative PMI data from China pressured Asian shares, as factory growth fell to its lowest level in nearly 3 years. In China, the Shanghai Composite fell .7%, and the Hang Seng slumped 2.1%. Australia’s ASX 200 declined 1.7%, as materials stocks sank on the Chinese news, and the Kospi dropped 2.4%. Japanese markets were closed for a holiday.
European markets continued to drop, and a weak German bond auction spooked investors. The auction had an incredibly low bid-to-cover ratio of .65, as the government failed to sell the entire amount planned. The DAX fell 1.4%, the CAC40 lost 1.7%, and the FTSE shed 1.3%.
Selling pressure mounted in the US, with the Dow closing down 236 points to 11258. The Nasdaq fell 2.4% and the S&P 500 lost 2.2%. Financials fell after the Federal Reserve said it would conduct stress tests on the 6 largest US financial companies to weigh the risk of a worsening European debt crisis. The 6 banks all fell more than 3% on the news.
US Markets Continue to Fall
Deere rallied 2.9% after raising its guidance for 2012 and reporting strong earnings. Pandora Media shares tumbled 11.3% after issuing a weaker than expected outlook.
Currencies
The Dollar rallied strongly against the major currencies, as the Euro closed down 1.3% to 1.3335, and the Australian Dollar tumbled 1.6% to .9687. The Pound fell .8% to 1.5515, and the Canadian Dollar lost .9% to 1.0478. The Yen fell .5% to 77.35, and the Swiss Franc dropped .7% to 1.0867.
Economic Outlook
The reality that even Germany is having trouble raising money is a strong warning sign for the markets, although Germany’s bond yields are close to record lows.
Wednesday’s extensive US data was mixed. Consumer Sentiment came in slightly below estimates, and weekly unemployment claims rose to 393K from last weeks 391K reading, worse than forecast. Personal spending rose by just .1%, much less than last month’s .7% jump.
Nikkei Drops to 2 1/2 Year Low
Equities
Asian markets ended mixed following Wednesday’s sharp slide on Wall Street. The Nikkei returned from a holiday, dropping 1.8% to 8165, its lowest close since early 2009. Korea’s Kospi gained .7%, shaking off opening weakness, while the ASX 200 eased .2%. The Hang Seng rose .4% and the Shanghai Composite inched up .1% amid rumors of monetary easing in China.
Nikkei Falls Below March's Quake Low
In Europe, the major indexes closed lower, surrendering early gains. The DAX fell .5%, the FTSE slipped .2%, and the CAC40 ended flat, following remarks by German Chancellor Merkel which reiterated her opposition to changes in the ECB.
Currencies
The currency market experience very narrow trading ranges thanks to the closure of US banks. The Euro, Swiss Franc and Canadian Dollar all ended within a few pips of their opening prices. The Pound slipped .2% to 1.5494, while the Australian Dollar gained .4% to .9726.
Economic Outlook
US markets close early on Friday, and volume is expected to be light.
European Equities Rally Despite Soaring Yields
Equities
Stocks closed lower in Asia, as a deadlock in Euro zone negotiations raised investor fear. The Nikkei eased .1% to 8160, the Kospi slumped 1%, and the ASX 200 dropped 1.5%. Hong Kong’s, Hang Seng, declined 1.4%, weighed down by HSBC’s 1.7% loss, and the Shanghai Composite shed .7%.
European markets rallied, as the DAX and CAC40 gained 1.2%, and the FTSE rose .7%. Nonetheless, the DAX fell 5% for the week, and the CAC40 shed 4.5%. S&P downgraded Belgium’s debt one notch to AA. An auction for 6-month debt in Italy had an astonishing yield of 6.5%, up from 3.5% last month.
DAX Bounces Feebly Following Recent Slide
US markets closed lower on light volume. The Dow eased 26 points to 11232, the Nasdaq slumped .8%, and the S&P 500 fell .3%.
Currencies
The Dollar climbed against most currencies, as growing uncertainty fueled a return to safety. The Euro dropped .9% to 1.3230, and the Yen sank .8% to 77.75. Rumors that the Swiss National Bank would raise the exchange floor for the EURCHF hurt the Swiss Franc, which closed down 1.1% to 1.0750. The British Pound slipped .3% and the Australian Dollar edged down .2% to .9714.
Economic Outlook
Monday’s reports will include new home sales and the Dallas Fed manufacturing survey.
Global markets rallied on renewed hopes that Europe will succeed
Equities
Global markets rallied on renewed hopes that Europe will succeed in improving its bailout plan. In Asia, the Nikkei jumped 1.6% to 8287, the Kospi rallied 2.2%, and Australia’s ASX 200 climbed 1.9%. Hong Kong’s Hang Seng gained 2% to 18037, while the Shanghai Composite lagged the region, edging up a mere .1%.
European markets soared, with the CAC40 leading the advance, gaining 5.5% to 3013. The DAX jumped 4.6% and the FTSE advanced 2.9%. The Stoxx European banking index posted gains of 5.7%, as financials bounced strongly.
The rally continued in the US, with the Dow gaining 291 points to 11523. The Nasdaq and S&P 500 both snapped a 7-day losing streak, climbing 3.5% and 2.9% respectively.
Currencies
The US Dollar declined as a spike in optimism encouraged risk taking, but settled well of its lows. The Australian Dollar soared 1.9% to .9898 after trading as high as .9976, and the Canadian Dollar jumped 1.1% to 1.0354. The Euro gained .6% to 1.3312, the Swiss Franc rose .8% to 1.0834, and the British Pound closed up .4% to 1.5505. The Japanese Yen declined .3% to 77.95, bucking the trend.
Economic Outlook
New home sales rose by 4000 to 307K, but were below expectations of 313K.
Equities Continue to Rise on European Bailout Hopes
Equities
Asian markets rallied, encouraged by a strong rally in Western shares on Monday. The Nikkei soared 2.3% to 8488, the Kospi advanced 2.3%, and the ASX gained 1.1%. Both the Hang Seg and the Shanghai Composite rose 1.2%.
In Europe, markets rose moderately, lifted by a jump in consumer confidence in the US. The DAX gained 1% to 5800, while the CAC40 and FTSE closed up .5%. Policymakers approved a $10.7 billion bailout payment to Greece in an effort to slow the spiraling debt crisis.
Back in the US, the major indexes closed mixed, as the Nasdaq skidded .5%, while the Dow gained 33 points to 11556 and the S&P 500 rose .2%.
Nasdaq Closes Down .5% Continuing the Recent Slide
American Airlines parent, AMR, filed for bankruptcy, sending shares plunging 84% to .26. The company cited high labor costs and rising fuel prices as causes for the company’s cash shortage.
Currencies
The Australian Dollar soared for a second day, jumping 1.2% to 1.0026 as investors slowly recovered their risk appetite. The Pound gained .7% to 1.5609, and the Euro inched up .1% to 1.3328. The Canadian Dollar rose .4% to 1.0302, and the Swiss Franc settled up .3% at 1.0872.
Economic Outlook
Tuesday’s economic data was a mixed bag. Consumer confidence soared to 56 from 40.9, blowing past analyst forecasts. The Case-Shiller home price index dropped 3.6%, more than expected, but the FHFA house price index rose .9%, painting a mixed picture of the housing market.