April 2010

Asia/Pacific Shares Rally on Friday Amid Optimism For Global Growth

Asia Session Key Developments

• Crude Oil Rises for the Third Straight Day
• Australia’s Private Sector Credit Rises for the Fifth Straight Month
• BOJ Keeps Rates Unchanged, Sees 2011 CPI at 0.1%

Asian stocks rebounded at the end of the week amid growing hopes for a bailout of debt-ridden Greece, leading investors to hold an improved outlook for the global economy. Meanwhile, the economic docket in Japan showed housing starts extended an annualized 15^th month decline in March, while the region’s vehicle production jumped 71.2% in March from a year ago. In Australia, private sector credit advanced for the fifth straight month, while a separate report illustrated that Australian HIA new home sales in March rose for the third time in the past five months. Nevertheless, the Bank of Japan kept their key overnight rate at 0.10% and went say that they see the 2011 fiscal year inflation rate at 0.1% versus January’s forecast of -0.2%. Furthermore, central bank Governor Shirakawa said the board will take the most appropriate steps as needed, and went onto add that BoJ’s 1998 steps may be reference for new steps.

Nikkei 225                          10,924.79

Stocks in Japan pared Wednesday’s decline after being closed yesterday in observance of Showa Day, leading the Nikkei 225 to rally 132.61 points (1.21%) and close at 11,057.40. Eight out of the ten components pushed higher on the day, with financials leading the way, climbing 1.59%, while oil & gas slid 0.54% to taper the advance. Shares of Japan Tobacco, the world’s third-largest publicly traded cigarette maker leapt 5.14% after saying it plans to raise prices in October to offset higher taxes, while Nisshinbo Holdings jumped 7.48% after stating that its preliminary full-year net income was 90% above forecasts. In addition, Takeda Pharmaceutical added 3.32% as JP Morgan raised the company’s stock rating from “underweight” to “neutral,” while Hino Motors rallied 5.97%, marking its highest level since September 2008 as the company plans to sell three times more large trucks in China than it did in the previous year.

Hang Seng                        2,108.59

The Hong Kong equity market pared the previous day’s decline, leading the benchmark equity index to advance 329.67 points (1.59%) and close at 21,108.59.Six out of the nine components pushed higher on the day, with basic materials leading the way, adding 2.61%, while consumer goods dropped 0.78%. Shares of Bank of Communications rose 1.80% as the company was raised from “add” to “buy” at Chang Jiang, while Aluminum Corporation of China increased 2.79% on the back of higher metal prices. Moreover, Hang Seng Bank edged 0.09% higher following BNP Paribus Securities raising the company’s stock rating from “hold” to “buy,” while Industrial & Commercial Bank of China added 1.94% after recording an 18% rise in first-quarter profits.

S&P/ASX 200 Index           4,807.40

Shares in Australia pared yesterday’s decline, leading the S&P/ASX 200 to advance 21.80 points (0.46%) and close at 4,807.40. Half of the ten components pushed higher on the day, with utilities leading the way, adding 1.30%, which was followed by a 0.93% gain in financials. Shares of BHP Billiton added 0.62% as crude oil prices rose for a third straight day, while Macquarie Group advanced 4.01% as the firm posted second-half profits more than doubled, with the investment bank holding an improved outlook for future earnings. Moreover, Aquarius Platinum, the fourth largest producer of platinum increased 2.01% as profits more than tripled on higher output and prices, while MAP Group climbed 0.96% after reporting proportionate earnings per stapled security of 5.4 Australian cents which was up 20% from the corresponding period.

Notable Asian Session Event Risk / Economic Releases

Treasuries Continue Northern Journey, German Bunds Weaken

Treasury 10 year notes pared yesterday’s decline ahead of a report that will show U.S. economic growth moderated and inflation advanced at the slowest pace on record.

U.S. Equities Rally on Strong Earnings Reports

U.S. Session Key Developments

•    Strong Earnings Reported from Starwood Hotels, Motorola, and Akamai Technolgies
•    Chicago Fed Activity Index Higher Than Expected For March
•    Crude Oil Rallies to Two-Week High on Economic Outlook, Dollar Weakness

U.S. stocks rallied for a second straight day on strong earnings reports from numerous companies including Starwood Hotels, Motorola, and Akamai Technologies.  The news was further evidence of a strengthening economic recovery and continued the strong earnings trends of the first quarter.  Motorola, the largest U.S. mobile-phone maker, rallied over 3 percent following the company’s release, while Starwood Hotels gained 5.6 percent.  Shares of Akamai Technologies, an online content delivery company, rose over 19 percent after the company announced that its first-quarter profit climbed 10 percent.  Furthering bullish sentiment was the Chicago Fed Activity Index, that beat expectations and rose to -0.07 in March, on improvements in production- and employment-related indicators.  The index once again approached positive territory, a feat the index has only achieved once since mid-2007.  Overall, the S&P 500 Index posted its strongest one day gain since early March, closing above 1200 for the day.

On the commodities front, crude oil rallied to its highest level in two-weeks, closing above $85 a barrel on strong economic sentiment and weakness in the U.S. dollar.  Investors felt less inclined to hold the greenback for its “safe” qualities, causing the U.S. Dollar Index the fall below the 82 level.  Despite the currency’s weakness,  COMEX gold futures ticked slightly lower to $1168, but COMEX silver futures rallied over 2.4 percent to $18.57.

DJIA 30                     11,167.32                      +122.05                       +1.11%
The Dow Jones Industrial Average posted its largest one-day gain since early March as 27 of the 30 Dow stocks closed in the black.  American Express posted the largest gain on the index, adding 3.3 percent just one day after launching an express mobile application for the Apple iPhone.  Other strong shares on the index were DuPont, Caterpillar, and Disney which each added over 2.5 percent.  On the downside, Procter & Gamble fell 1.5 percent, while Exxon Mobil and Hewlett Packard dropped 0.7 percent each.

S&P 500                       1,206.78                           +15.42                       +1.29%
The broad-based S&P 500 rallied for a second day as financials gained 2.3 percent and industrials added 1.9 percent.  Financial shares were generally higher after yesterday’s FOMC announcement that policy makers would maintain a near-zero percent Fed Funds rate for the foreseeable future.  Banking giants Wells Fargo, Citigroup, Goldman Sachs, and Bank of America each rose over 2 percent on the news.  As for industrials, Honeywell added 3.1 percent on the session, while General Electric gained 2.8 percent on the day.

NASDAQ                     2,511.92                         +40.19                       +1.63%
Shares on the tech-heavy Nasdaq posted the biggest gain among major U.S. indices as technology shares rallied over 1 percent.  Shares of Chinese search engine Baidu rallied over 14 percent on strong first quarter earnings, while Apple and Cognizant gained at least 2 percent each.  Yahoo!, Cisco, and Applied Material gained 1 percent on the day.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Asia/Pacific Shares Slump as Global Uncertainties Intensify

Asia Session Key Developments

• New Zealand Trade Surplus Widens Most on Record
• Australia’s Conference Board Leading Index Falls in February.

Asia/Pacific shares pushed lower on Thursday and may continue its downward course going into the end of the week as concern regarding Europe’s deficit crisis deepen, with investors fearing that the region’s debt woes will potentially derail the global recovery. Meanwhile, the economic docket in New Zealand showed that the economy’s trade surplus widened on record exports, while inflation expectations increased to an annualized pace of 3.4% in April from 2.2% in the previous month.  In Australia, the Conference Board’s leading index slid 0.3% as building approvals and demands for rural goods pushed lower in February after contracting 0.2% in the previous month. Nevertheless, the Japanese stock market was closed for today in observance of Showa day.

Nikkei 225                          10,924.79

Closed in Observance of Showa Day.

Hang Seng                        20,778.92

The Hong Kong equity market pushed lower for the third successive day, leading the benchmark equity index to plunge 170.48 points (0.81%) and close at 20,778.92. Eight out of the nine components fell on the day, with consumer services leading the way, falling 2.65%, which was followed by a 1.96% pull back in basic materials. Shares of CLP tipped 0.81% lower as the company said it will hire 18 banks for a HK$6 billion loan refinance maturing debt, while Aluminum Corporation of China slipped 1.57% on the back of lower metal prices. At the same time, China Resources Land added 0.85% as the company was raised from “hold” to “buy,” while China Construction Bank declined 0.96% after the government cancelled the land auction in Beijing after bidding exceeded a price ceiling set for the lot.

S&P/ASX 200 Index           4,785.60

Shares in Australia tumbled for the third consecutive session on Thursday, leading the S&P/ASX 200 to shed 37.20 points (0.77%) and close at 4,785.60. Seven out of the ten components pushed lower on the day, with basic materials leading the way, falling 1.46%, while industrials added 0.28% to taper the decline. Shares of Fortescue Metals Group, Australia’s third-largest producer of iron ore dropped 2.27% after it was ordered to pay $78 million to shipping contractor Zodiac Maritime Agencies after losing a court case in the U.K., while BHP Billiton lost 1.39% on the back of lower energy prices.  At the same time, Lihir Gold retreated 1.53% as advisers have considered splitting the company’s assets to encourage a joint bid to compete with Newcrest Mining, while Biota Holdings sank 22.98%, marking its largest decline since 2005 as third quarter royalties from the flu drug, Relenz, tumbled 70%.

Notable Asian Session Event Risk / Economic Releases

Persistent Financial Crisis Concerns and Another Jump in Inventory Keeps Crude Grounded

North American Commodity Update

Commodities – Energy

Persistent Financial Crisis Concerns and Another Jump in Inventory Keeps Crude Grounded

Crude Oil (LS NYMEX) -  $82.50   //  $0.06   //  0.7%

Through the early morning (Asian and European sessions) of trading Wednesday, risk appetite was recovering from yesterday’s big hit. The capital markets and all assets with a connection to economic activity were racked Tuesday after rating agency Standard & Poor’s downgraded Greece’s sovereign credit rating to ‘junk’ status and stoked fears that troubles were spreading by further lowering Portugal’s own rating. Conditions in the European area are deteriorating; and officials’ sluggish response to providing only worsens the situation as the potential costs seem to outgrow the promises for aid. However, there is a sense of normalcy in this situation that has helped to prevent panic from spreading. While the problems in the European Union have certainly worsened, market participants have nonetheless grown used to the pain from Greece and officials’ efforts to put out the fire. This is a dangerous act of discounting a problem that could balloon into a global crisis; and crude as a speculative asset is not immune to this potential hazard. And, reminding traders that this situation is certainly progressing, the S&P announced in the early morning hours of the US session that Spain’s rating was downgraded. This had a prominent impact on the assets in Spain, Greece, Portugal, Ireland and all those EU members that are considered at risk; but the more traditional speculative assets (like crude) would either hold steady or recover lost ground. For the active NYMEX crude futures contract, congestion developed around the floor of a very prominent technical formation. With the US dollar (the pricing standard for the energy product) working to new yearly highs, there was an additional hurdle for a reversal.

Looking beyond the confusing sentiment scenario for the day, fundamentals would also provide a relatively mixed picture of supply-and-demand for the crude. At the top of energy traders’ calendar was the US Department of Energy’s inventory figures for the week ending April 23rd. Following the unexpected 5.34 million barrel surge in stockpiles reported by the American Petroleum Institute yesterday; the DoE’s bigger than expected 1.96 million barrel jump seemed relatively tame. Nonetheless, this was the 12th increase in 13 weeks and it would bring net holdings to a June high of 357.8 million barrels. Supply, at these levels, does not look like it will contribute to a push to $90 any time soon – even if refineries are operating at 89 percent capacity (its highest level since July 2008). What’s more, for the NYMEX’s benchmark West Texas Intermediate grade, the additional 1.3 percent increase in stockpiles in Cushing, Oklahoma (where it is generally stored) will further keep the American market’s depressed – leading to the now $3.00 premium for UK-based Brent over is US counterpart. On the other side of the equation, the spread of financial uncertainty threatens a still-nascent economic recovery. With the advanced reading of the United States’ first quarter GDP reading expected to cool from a 5.6 percent to 3.3 percent annualized pace on Friday and China actively working to cool its booming growth, there is a clear threat to the potential for expansion that can limit speculation’s influence.

Commodities – Metals

Safe Haven Capital Flows into Gold Taper as the Speculative Spirit Refuses to Yield

Spot Gold -  $1,172.65  //  $4.80  //  0.41%

The active gold futures contract on the COMEX was putting in for its fourth consecutive daily advance Wednesday – the most consistent advance from this particular asset since the period through December 3rd. The commodity’s strength was notable constrained by the correction in risk-based instruments following yesterday’s aggressive selloff; but the favored safe-haven would nonetheless keep its head above water. This buoyancy can be attributed to the metal’s role as a hedge not to specific region’s but rather government debt and currencies as a whole. Switching between Greek and German debt is a necessary evil when seeking safety and return; but even in an effort to isolate risk during another tremor in the Euro-area markets, there is still a clear impact on bund’s volatility. Looking to avoid inevitable troubles with government debt loads and currency volatility in the future, the precious metal is one of the few alternative stores of wealth that has a history of providing a haven. Today, another quake with an epicenter in the European region was felt when Standard & Poor’s kept the pressure on with a downgrade to Spain. While this particular member’s rating may be far from that of Greece’s, it is far larger and its weakness can have a far greater impact on the region. Going forward, the EU and IMF are likely to pass its 45 billion euro rescue package (perhaps even with an increase); and gold will likely lose some ground. However, it will only be a temporary reprieve for a much larger issues.

Spot Silver  -  $18.11   //  -$0.07  //  -0.36%

With the back in forth in underlying risk appetite trends and the US dollar, silver would find itself jostled by its fundamental moors. Through the early morning session, when risk appetite was trying to find its footing and the dollar was pulling back, the metal was holding stationary. However, by the time the dollar found its footing again and the risk-sensitive assets pulled back once again, silver would tumble. The Spain news would draw a sympathy bounce from Gold; but ultimately, this cheaper metal would end the day with its third bearish day.

Discuss gold and oil trading with other traders in the DailyFX Forum

Written by John Kicklighter, Strategist
Questions or Comments about this article? Send them to jkicklighter@dailyfx.com

Dow Turned Away By Fibo Resistance

The Dow stumbled after failing to break above resistance at 11,240-61.8% Fibo of 14,167-6,470; the technical level is near pre-Lehman levels which may require further evidence of a sustainable recovery before an ultimate break above. . A break below the rising support line has now opened the door for an extended move lower.

The S&P 500 has turned lower before testing major resistance at 1,228-61.8% of 1,576-666. The current break below trend line support could be a sign that downside risks are increasing.

The NASDAQ’s like its counterparts has failed to threaten major resistance at 2,549- the June 5, 2008 high. The tech laden index has erased the majority of it’s loses from the credit crisis which could make it more susceptible to a large reversal. Support could come at 2,400 where we saw brief consolidation.

Asia/Pacific Shares Head South as S&P Downgrades Greece and Portugal

Asia Session Key Developments

• Australian Inflation Almost Doubles in the First Quarter
• Japan’s Retail Trade Advanced for the Third Straight Month
• New Zealand Business Confidence Rises to the Highest Level in Almost 11 Years

Asia/Pacific Shares Head South as S&P Downgrades Greece and Portugal

Asian stocks plunged during mid week trading as a global market sell-off had spread into Asia amid fears that the European debt crisis is deepening. Concerns about Europe intensified following the Standard & Poor’s downgrading Greece’s debt to junk status, while the credit agency slashed Portugal’s credit rating by two notches. This in turn has lead to an increased fear that not only will these two countries find it relatively difficult to pay down their debts and raise money to fund their budgets, but also disrupt the global economic recovery. Meanwhile, the economic docket during the Asia trade was fully loaded, starting out with Japan’s retail trade climbing an annualized 4.7%, leading the reading to advance for the third consecutive month, while large retailer’s sales extended a twenty three month decline. In Australia, inflation almost doubled in the first quarter from the three months through December, making it more likely that RBA will continue to raise borrowing costs. Nevertheless, New Zealand’s business confidence rose to the highest level in almost 11 years.

Nikkei 225                          10,924.79

Stocks in Japan pared yesterday’s advance, leading the Nikkei 225 to shed 287.87 points (2.57%) and close at 10,924.79 as all ten components pushed lower on the day. Shares of Toyota Motor retreated 1.62%, leading carmakers lower after the yen gained against most major currencies, while UNY dropped 3.21% as Japan’s seasonally adjusted total store sales dived 4.5% after falling 2.6% in February. In addition, Mitsui Mining & Smelting sank 4.14% after Japan’s largest refined-zinc producer was cut to “neutral” from “buy” by Goldman Sachs Group, while Nissan Chemical Industries decreased 3.58% on the back of lower commodity prices.

Hang Seng                        20,949.40

The Hong Kong equity market extended yesterday’s decline, leading the benchmark equity index to slump 312.39 points (1.47%) and close at 20,949.40 as all nine components traded lower on the day. Shares of CNOOC fell 1.75% on the back of lower commodity prices, while CLP Holdings dropped 2.21% as Hong Kong’s largest power producer is likely to list on the Bombay Stock Exchange to expand its presence in the Indian market. Moreover, Aluminum Corporation of China lost 2.80% as steel stockpiles in China slid 9%.

S&P/ASX 200 Index           4,822.80

Shares in Australia extended yesterday’s decline, leading the S&P/ASX 200 to retreat 57.20 points (1.17%) and close at 4,822.80. Nine out of the ten components pushed lower on the day, with technology leading the way, falling 2.76%, and was followed by a 2.06% decline in basic materials. Shares of Newcrest Mining tipped 0.84% as Citigroup says the possibility of introducing a 40% resources tax may make Australia the most highly-taxed mining nation, while CSL added 1.78% as Australia’s drug regulator widened an investigation into the company’s seasonal flu vaccine. At the same time, Murchison Metals dived 9.59% on the back of lower metal prices, while Lend Lease Group fell 0.93% as UBS AG cut the company’s stock rating from “neutral” to “buy.”

Notable Asian Session Event Risk / Economic Releases

Written by Michael Wright, DailyFX Research
Questions? Comments? Email me at mwright@fxcm.com

The Blossoming of Another Possible Financial Crisis Unnerves Crude Oil Speculators

North American Commodity Update

Commodities – Energy

The Blossoming of Another Possible Financial Crisis Unnerves Crude Oil Speculators

Crude Oil (LS NYMEX) -  $82.15   //  -$2.05   //  -2.43%

There should be no doubt that the oil markets are not simply populated by those looking to hedge their exposure to physical supply and demand. This market – like most others – is heavily influenced by speculative interests. Today, those speculative ties would lead the benchmark NYMEX crude oil contract to its biggest drop since April 16th. And, for an objective view for those pointing to the unique influence that the Cushing Oklahoma inventory build may have, the active Brent futures contract would suffer its biggest slide in six active sessions (though there was a notable difference in the severity of losses between the two that does speak to the building premium between the two). Looking for the catalyst for Tuesday’s rebound in volatility, it was hard to miss the influence the Standard & Poor’s downgrades to both Greece and Portugal had on the international markets. For the Euro-area, the ‘junk’ status for the former is another step in the nation’s ever-deteriorating financial position. At this stage in the game, it is highly unlikely that even if the EU/IMF finally do agree on the conditions of the 45 billion euro rescue package that such a figure would stem the bleeding. However, it may be Portugal’s two-step downgrade that is most disconcerting. While Greece is the more troubled European Union member, Portugal’s descent suggests credit troubles and investor fear is spreading across the continent. It will be difficult enough for policy makers to craft a rescue for one economy, bailing out two or more would be nearly impossible.

However, mere panic selling isn’t the extent of the oil market’s exposure to this financial disruption. The true fundamental impact from this event could lead to a medium-term slump in demand. The global economy’s economic recovery is still young. Another period of distress in a system that is already fragile and highly leveraged with government assistance could stress nations and markets far more than they were in the original decline. Following the line reasoning to crude demand, the spread of financial troubles across Europe could easily sap liquidity and credit availability across the globe. In turn, investment would dry up and consumer loans disappear with a very real impact on economic activity. Long-term concerns like these that temper growth forecasts have been around for some time; but it takes an immediate jolt to bring such concerns to the forefront. In the meantime, other economic news was relatively supportive of growth and demand. A consumer confidence survey for the US reported the highest level of optimism since September of 2008. Whether this actually translates into pull through demand for raw crude (which is refined into gasoline and heating oil as well as in the production of other goods) remains to be seen. Perhaps the supply side of the balance can readjust the equilibrium. Tomorrow, the US Department of Energy will release its inventory report for the week ending April 23rd. Far from a bullish bearing heading into the release, stockpiles of oil are expected to have grown another 1.05 million barrels for the 12th increase in 13 weeks.

Commodities – Metals

It’s a Battle between Gold and the Dollar for the Role of Top Safe Haven

Spot Gold -  $1,167.30  //  $13.80  //  1.20%

Whether gold is playing the role of a safe or speculative asset at any one time depends on both the primary fundamental concern behind the market and the intensity this particular driver may retain. News today that both Greece and Portugal were downgraded by Standard & Poor’s has triggered a demand for safety and encouraged investors to diversify away from high-risk speculative positions. So, while the precious metal maintains its appeal as a speculative commodity that trades not far from a record high; it is the asset’s value as an alternative to government debt and currencies that truly drives the market. Acting as a catalyst for the spread of uncertainty, Greece’s national credit rating was cut to junk status – preventing the nation from using its debt as collateral for vital ECB loans and leveraging investors’ demand for return for giving the nation capital. This pushes an already troubled economy deeper into a hole. However, it is Portugal’s own downgrade that is the real concern. A deterioration in the credit of one economy already on the way down is to be expected; but a reduction from another EU member points to broader troubles that could infect a region or the entire world. That being the case, investors will try to limit sovereign debt risk in masse and will look for an alternative to both government debt and currencies in general. This explains gold’s advance to record highs in terms of euros, pounds and even the Australian dollar. Yet, the dollar, and the treasuries that support it, is a more recognized safe haven for capital. Therefore, the two week high in gold priced in dollar’s points to particular strength beyond mere speculative interests. That being said, the SPDR Gold Trust (the largest ETF backed by gold) reported a net 6.1 ton increase in assets to a record 1,146.2 tons yesterday.

Spot Silver  -  $18.20   //  -$0.10  //  -0.53%

What would gold’s day look like if it was not considered a benchmark, ‘risk-free’ alternative to the more traditional government debt crowd? For that answer, we look to silver. A metal that does not have the historical appeal as its more expensive alternative as a store of wealth, silver actually fell on the day and would not even come close to the four-month highs set just two weeks ago. Making this commodity’s progress even more troublesome, the US dollar would enjoy its own advance on safe haven flows and further pull silver down.

Discuss gold and oil trading with other traders in the DailyFX Forum

Written by John Kicklighter, Strategist
Questions or Comments about this article? Send them to jkicklighter@dailyfx.com

Global Stocks Plunge Following Greece Downgrade

U.S. Session Key Developments

•    S&P Downgrades Greece Short-Term Debt to Junk
•    Goldman Sachs Current and Former Employees Partake in U.S. Senate Hearing
•    Consumer Confidence Beats Expectations For April

Stocks across the globe tumbled lower today following an announcement from Standard & Poor’s that the ratings agency had downgraded Greek short-term sovereign debt to ‘junk’ status.  European stocks were hit particularly hard as Spain’s IBEX, France’s CAC, and Italy’s FTSE MIB fell over 3 percent each, while the S&P 500 dropped 2.3 percent during U.S. trading hours.  The Greece announcement came in the last hour of European trading and was the main driver of investment sentiment through the rest of the day.  The country’s credit rating was cut three steps to ‘junk’ by S&P, the largest cut of any euro member since the currency started.  Although the move was not completely surprising, investors reacted strongly, driving the country’s 2-year yield up by 219 basis points to 15.26%.  European and U.S. equities both fell on the news, while the Chicago Board Options Exchange Volatility Index jumped by the most since October 2008 to 22.81.  As for commodities, crude oil fell nearly 3 percent as the U.S. Dollar showed strength against its perceived “riskier” counter-currencies.  Gold, on the other hand, posted a $14 gain, rising above $1170 intraday before settling at $1168 per ounce.  Gold, historically a “safe haven” asset, tends to rise in times of perceived inflation or excessive fear.

DJIA 30                     10,991.99                      -213.04                       -1.90%
The Dow Jones Industrial Average had its worst day since February, as shares of Caterpillar and Alcoa fell over 4 percent following the downgrade of Greek sovereign debt.  Shares of Caterpillar led the Dow’s decline, just one day after the firm reported strong first-quarter earnings that beat analyst expectations.  As for Alcoa, shares dropped 4.3 percent on investor concerns that the Greece downgrade could trigger an economic slowdown.  3M was the lone Dow stock to close higher today, rallying 0.6 percent.

S&P 500                       1,183.71                           -28.34                       -2.34%
The broad-based S&P 500 posted the largest decline among U.S. indices as financials and basic materials fell over 3 percent each.  Citigroup shares fell over 5 percent, while Bank of America and JPMorgan shares dropped 3 percent each as employees from competitor Goldman Sachs testified on Capitol Hill regarding practices of its mortgage department leading up to the financial crisis.  As for the basic materials sector, gold and copper miner Freeport McMoRan fell over 5 percent, while Dow Chemical and DuPont shed nearly 4 percent each.

NASDAQ                     2,471.47                         -51.48                       -2.04%
Shares on the tech-heavy Nasdaq declined over 2 percent as the most heavily-weighted thirty tech stocks on the index closed in the red.  Baidu, Cognizant, and Broadcom fell over 3 percent each, while shares of Apple, Yahoo!, and Dell dropped at least 2 percent on the day.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Asia/Pacific Shares Mixed Amid Greek Rescue Plan, Speculation For China Policy

Asia Session Key Developments

• Australia’s Producer Prices Rises the Most in More Than a Year
• Japan’s Small Business Confidence Rises for the 4^th Time in the Past 5 Months

Asia/Pacific shares were mixed on Tuesday amid concern about Greece’s rescue plan paired with speculation about China’s measures to prevent the housing market from overheating. Meanwhile, the economic docket in Australia showed producer prices rose by the most in more than a year during the first quarter, while small business confidence in Japan pushed higher for the fourth time in the past five months. Nevertheless, exports in Hong Kong rose to the highest level since January 2005, with the reading adding 32.1% in March, while import figures for the region rallied 39.8%, marking its highest level since 1992.

Nikkei 225                          11,212.66

Stocks in Japan extended yesterday’s advance, leading the Nikkei 225 to advance 46.87 points (0.42%) and close at 11,212.66. Four out of the ten components pushed higher on the day, with industrials leading the way, climbing 1.72%, while oil & gas tumbled 1.15% to taper the rally. Shares of Hitachi Construction Machinery dived 3.70% after the firm said profit tumbled 78% to 4.02 billion yen for the year ending March 31, while Kao retreated 1.71% as the company forecasts a second straight annual loss.  At the same time, GS Yuasa Corp advanced 2.55% as preliminary earning results showed its full-year net income exceeded expectations by 86%, while Meidensha rallied 2.53% subsequent to the maker of electrical machinery stating that its preliminary earnings statement jumped 30% from the previous fiscal year.

Hang Seng                        21,261.79

The Hong Kong equity market pared yesterday’s advance, leading the benchmark equity index to slump 325.27 points (1.51%) and close at 21,261.79 as all nine components pushed lower on the day. Shares of China Petroleum slid 1.53% on the back of lower commodity prices, while Hang Lung Properties dropped 2.67% as Deputy Director General of the State Council’s Development Research Center Ba Shusong said China’s government may utilize capital requirement for home developers to prevent the property market from overheating during an inverview with Shanghai Securities News. Moreover, Hang Seng Bank tipped over 0.37% as the bank was rated “hold” at UOB, while China Unicom Hong Kong, the country’s second largest provider of mobile-phone service jumped 3.14% after a newspaper reported that the carrier may cut handset prices and call fees to boost demands.

S&P/ASX 200 Index           4,880.00

Shares in Australia fell after being closed in observance of Anzac day on Monday, leading the S&P/ASX 200 to shed 1.50 points (0.03%) and close at 4,880.00.  Four out of the ten components weakened, with health care leading the way, declining 2.67%, which was followed by a 1.60% drop in utilities. Shares of CSL dropped 4.24% after Credit Suisse Group AG cut the company’s stock from “outperform” to “neutral,” while WesFarmers slid 0.63% following the company saying that Curragh coal production was 5.9% percent lower in the first quarter than through the three months prior. At the same time, Origin Energy lost 1.89% on the back of lower commodity prices, while Infigen Energy plunged 14.58% as the company scrapped plans to sell its wind farms in the U.S.

Notable Asian Session Event Risk / Economic Releases

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