Japanese equities had a rough session in overnight trading, some of which is attributed to the poor performance of US stocks yesterday. The Japanese TOPIX (INDEXTYO:TOPIX) lost 2.13% and 95% of the index's components fell. It is important to note that yesterday Bank of Japan Governor Kuroda stated that the central bank stood ready to increase its stimulus measures if its 2% inflation target was at risk. If investors continue to sell Japanese stocks in spite of his comments, it will represent a change in attitude by the market toward the government's policies.
US equities got off to a rough start with the combination of weakness in copper and continued tensions in Ukraine. The S&P 500 (INDEXSP:.INX) traded as low as -0.71% before closing the day flat. Industrial and financial stocks lagged today while utilities led.
The Russian Foreign Ministry stated that if the US provided financial aid to the new Ukraine government, it would be in breach of its own laws that prohibit any aid to regimes that take control by force. Russia believes the new Ukraine government was obtained through a coup. Additionally, Russian news agency Interfax reported that the Chairman of the Joint Chiefs had stated the US was ready to respond militarily in defense of its NATO allies if Russia continued to occupy more of Ukraine. The new Ukraine prime minister Arseniy Yatsenyuk is scheduled to meet with President Obama in New York today. It was reported earlier today that Russia had sent armored personnel carriers and rocket launchers into Ukraine.
The Treasury reopened $21 billion of 10-year notes at a high yield of 2.729% thanks to strong market demand. The 10-year Treasury yield declined by five basis points today to 2.719%. Many investors were purchasing these bonds on concerns of geopolitical crisis in Ukraine or signs of a global growth slowdown emanating from China.
Tomorrow's Financial Outlook
Tomorrow morning, February advance retail sales will be reported. Due to harsh weather during the month, same-store sales only rose 1.43% from a year ago in the month, according to ICSC. Economists expect sales to rise 0.2% from the month prior after declining by 0.4% in January. Auto sales rose to a seasonally adjusted annual rate of 15.27 million in February from 15.16 million in January. Also scheduled to be reported are weekly jobless claims and January private business inventories.
Due to the extremely weak Chinese export growth for February that was reported last week, tonight's industrial production release will be closely watched. Also scheduled to be reported for China is capital investment and retail sales. Australia will report its employment change for February; this report will have close attention paid to it because of the RBA's decision to moderate its easing bias over the last three months.
Tomorrow will be the busiest day of the week for US company earnings. Notable companies scheduled to report include Dollar General (NYSE:DG), Horizon Pharma (NASDAQ:HZNP), Ulta Salon (NASDAQ:ULTA), Seaworld Entertainment (NYSE:SEAS), Plug Power (NASDAQ:PLUG), and Aeropostale (NYSE:ARO).
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