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Yen Strength Weighs on European and US Stocks
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

Global equity markets opened lower this morning. The primary catalyst overnight was the World Bank's downgrade of global growth prospects for this year. Global growth was downgraded to 2.8% for 2014 from the bank's January forecast of 3.2%, while the 2015 forecast for 3.5% growth was unchanged. Current-year growth forecasts were also lowered; the US forecast was reduced to 2.1% from 2.8%, China's to 7.6% from 7.7%, and India's to 5.5% from 6.2%. Notably, the US number is now below the 2.5% consensus forecast by economists for 2014. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the worst performer in European stocks today, down 1.24%.

In Japan, Yasuhiro Yonezawa, head of the country's public investment committee, said plans were underway for Japan's $1.3 trillion Government Pension Investment Fund (GPIF) to reduce its domestic government bond holdings by 20%, to 40% of its total allocation. Those holdings would then be rotated into investments in foreign equities, bonds, and domestic equities. Investors had already begun preparing for this eventuality, but nevertheless it caused pressure on two major currency crosses, the USDJPY and EURJPY.

Tensions continued to escalate in Iraq. After yesterday's capture of Mosul, the country's second largest city, by rebels, Tikrit was overrun without opposition. Middle Eastern stock markets continued to be under pressure, the most notable being Turkey, which was down 2.24%.

US stocks continued to follow Europe's lead and were lower across the board today. The S&P 500 (INDEXSP:.INX) opened the day lower and didn't gather any significant momentum to the upside, mostly trading in a range between 1942 and 1946. Many traders are eyeing a continued selloff towards the 1925 area. Tech stocks, namely large caps, continued to show relative outperformance. Utilities stocks remained weak.

Tomorrow's Financial Outlook

A big economic report will be released tomorrow morning: May retail sales. Economists are expecting an increase of 0.6%, up from a 0.1% gain in the month prior. Last month's auto and chain store sales showed a similar level of strength, implying that the economists' forecast is not off the mark. The auto sales category is the largest contributor to top line growth. Markets, particularly interest rates, have become increasingly sensitive to this report. The retail sales report now causes a high amount of volatility in the markets -- only the government payrolls report and FOMC rate decisions wreak more havoc. 

The New Zealand central bank decision tonight should have a significant effect on Asian markets. The market is already priced for a 25bps increase in the bank's policy rate, so any response to tonight's news will likely be a reaction to the accompanying commentary. The New Zealand kiwi has sold off recently, since recent milk auctions have shown increasing inflation in the country. Also scheduled for release is Australia's unemployment rate and eurozone industrial production.

The only earnings report scheduled for tomorrow is Finisar (NASDAQ:FNSR).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Yen Strength Weighs on European and US Stocks
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

Global equity markets opened lower this morning. The primary catalyst overnight was the World Bank's downgrade of global growth prospects for this year. Global growth was downgraded to 2.8% for 2014 from the bank's January forecast of 3.2%, while the 2015 forecast for 3.5% growth was unchanged. Current-year growth forecasts were also lowered; the US forecast was reduced to 2.1% from 2.8%, China's to 7.6% from 7.7%, and India's to 5.5% from 6.2%. Notably, the US number is now below the 2.5% consensus forecast by economists for 2014. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the worst performer in European stocks today, down 1.24%.

In Japan, Yasuhiro Yonezawa, head of the country's public investment committee, said plans were underway for Japan's $1.3 trillion Government Pension Investment Fund (GPIF) to reduce its domestic government bond holdings by 20%, to 40% of its total allocation. Those holdings would then be rotated into investments in foreign equities, bonds, and domestic equities. Investors had already begun preparing for this eventuality, but nevertheless it caused pressure on two major currency crosses, the USDJPY and EURJPY.

Tensions continued to escalate in Iraq. After yesterday's capture of Mosul, the country's second largest city, by rebels, Tikrit was overrun without opposition. Middle Eastern stock markets continued to be under pressure, the most notable being Turkey, which was down 2.24%.

US stocks continued to follow Europe's lead and were lower across the board today. The S&P 500 (INDEXSP:.INX) opened the day lower and didn't gather any significant momentum to the upside, mostly trading in a range between 1942 and 1946. Many traders are eyeing a continued selloff towards the 1925 area. Tech stocks, namely large caps, continued to show relative outperformance. Utilities stocks remained weak.

Tomorrow's Financial Outlook

A big economic report will be released tomorrow morning: May retail sales. Economists are expecting an increase of 0.6%, up from a 0.1% gain in the month prior. Last month's auto and chain store sales showed a similar level of strength, implying that the economists' forecast is not off the mark. The auto sales category is the largest contributor to top line growth. Markets, particularly interest rates, have become increasingly sensitive to this report. The retail sales report now causes a high amount of volatility in the markets -- only the government payrolls report and FOMC rate decisions wreak more havoc. 

The New Zealand central bank decision tonight should have a significant effect on Asian markets. The market is already priced for a 25bps increase in the bank's policy rate, so any response to tonight's news will likely be a reaction to the accompanying commentary. The New Zealand kiwi has sold off recently, since recent milk auctions have shown increasing inflation in the country. Also scheduled for release is Australia's unemployment rate and eurozone industrial production.

The only earnings report scheduled for tomorrow is Finisar (NASDAQ:FNSR).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

More From Minyanville Staff
Yen Strength Weighs on European and US Stocks
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

Global equity markets opened lower this morning. The primary catalyst overnight was the World Bank's downgrade of global growth prospects for this year. Global growth was downgraded to 2.8% for 2014 from the bank's January forecast of 3.2%, while the 2015 forecast for 3.5% growth was unchanged. Current-year growth forecasts were also lowered; the US forecast was reduced to 2.1% from 2.8%, China's to 7.6% from 7.7%, and India's to 5.5% from 6.2%. Notably, the US number is now below the 2.5% consensus forecast by economists for 2014. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the worst performer in European stocks today, down 1.24%.

In Japan, Yasuhiro Yonezawa, head of the country's public investment committee, said plans were underway for Japan's $1.3 trillion Government Pension Investment Fund (GPIF) to reduce its domestic government bond holdings by 20%, to 40% of its total allocation. Those holdings would then be rotated into investments in foreign equities, bonds, and domestic equities. Investors had already begun preparing for this eventuality, but nevertheless it caused pressure on two major currency crosses, the USDJPY and EURJPY.

Tensions continued to escalate in Iraq. After yesterday's capture of Mosul, the country's second largest city, by rebels, Tikrit was overrun without opposition. Middle Eastern stock markets continued to be under pressure, the most notable being Turkey, which was down 2.24%.

US stocks continued to follow Europe's lead and were lower across the board today. The S&P 500 (INDEXSP:.INX) opened the day lower and didn't gather any significant momentum to the upside, mostly trading in a range between 1942 and 1946. Many traders are eyeing a continued selloff towards the 1925 area. Tech stocks, namely large caps, continued to show relative outperformance. Utilities stocks remained weak.

Tomorrow's Financial Outlook

A big economic report will be released tomorrow morning: May retail sales. Economists are expecting an increase of 0.6%, up from a 0.1% gain in the month prior. Last month's auto and chain store sales showed a similar level of strength, implying that the economists' forecast is not off the mark. The auto sales category is the largest contributor to top line growth. Markets, particularly interest rates, have become increasingly sensitive to this report. The retail sales report now causes a high amount of volatility in the markets -- only the government payrolls report and FOMC rate decisions wreak more havoc. 

The New Zealand central bank decision tonight should have a significant effect on Asian markets. The market is already priced for a 25bps increase in the bank's policy rate, so any response to tonight's news will likely be a reaction to the accompanying commentary. The New Zealand kiwi has sold off recently, since recent milk auctions have shown increasing inflation in the country. Also scheduled for release is Australia's unemployment rate and eurozone industrial production.

The only earnings report scheduled for tomorrow is Finisar (NASDAQ:FNSR).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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