Monday, July 23, 2012



In another veritable equity bloodbath, Friday saw European equities crashing lower, led by the -5.82% drop in the Spanish IBEX. The Italian MIB was also notably weaker, plunging -4.38% while the fall in the Euro Stoxx 50 was a more moderated -2.83%. The Spanish 10-year yield ripped back above 7% to a brand new record high of 7.267% while the Italian 10-year bond yield rose to 6.166%. Greek exit talks have made the way back to headlines as the Troika arrives to see the progress of the nation in meeting the deficit targets. Greece is again forecast to miss estimates raising the specter of a default ahead of next month's €3.1 billion bond repayment. The Euro continues to ebb near lows, falling to a 12-year low against a basket of currencies. EURUSD is flirting meanwhile with the 1.21 handle, trading at 1.2112. 

China over the weekend was rocked by speculation that the bottoming in the Chinese economy is still a ways off. People's Bank of China Advisor Song Guoqing expects GDP to slow to 7.4% highlighting specifically slowing exports. Changes in the CPI and PPI are also preventing producers from expanding reducing the attractiveness of foreign investment. The Hang Seng Index is the worst performing of the major Asian peers, falling -2.42% while the Nikkei has tumbled -1.47%. The Australian ASX is also lower, losing so far -1.40% as fears stemming from Europe reduces appeal of riskier assets. Currencies have also been weaker, led by the -0.78% decline in NZDUSD trailed by a -0.66% fall in AUDUSD. The yen meanwhile is strengthening against major peers as USDJPY drops -0.40% to 78.170. 

Even with the end of the week equity rout from mounting European fears, the U.S. indices were able to post a second-straight week of gains as 73% of corporate earnings announcements have beat analyst expectations. Stocks were weaker into the weekend as traders pared risk ahead of the Troika's visit to Greece. The Nasdaq declined -1.37% as the S&P 500 and Dow Jones remained weaker, falling -1.01% and -0.93% respectively. Earlier the U.S. 10-year note hit a new record low yield of 1.44% as investors flee to safety instruments and aiding the 0.26% rally in the dollar index to 83.693. Agricultural commodities including corn hit highs last week and weather expectations include forecasts of another dry and hot week ahead. WTI crude for August delivery slid -1.44% to $90.51 per barrel.

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us
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