August 2010

U.S. Equities Mixed as Fed Minutes Signal No Large-Scale Asset Purchases

U.S. Session Key Developments

•    August Consumer Confidence Rises, Chicago Purchasing Index Disappoints
•    Crude Oil Posts Largest One-Day Decline Since June, Gold Rallies on Safe-Haven Appeal
•    Greenback Gains on Commodity Currencies, Slips Versus Euro

U.S. stocks declined were mixed following yesterday’s slump, as today’s Fed minutes showed no plans for large-scale asset purchases in the near-term.  The S&P 500 has dropped over 7 percent since its first day of trading this month, while the Dow Jones Industrial Average has declined over 6 percent.  During today’s session, equity trading was quite volatile, as economic data releases sent mixed signals to market participants.  Encouraging the bullish case was the backwards-looking S&P/CaseShiller Home Price Index, which showed a better-than-expected housing market in the month of June, as well as the U.S. consumer confidence report, which unexpectedly rose from a revised 51.0 reading to 53.5 in August.  Offsetting this positive data, however, was a disappointing August Chicago Purchasing Index reading of 56.7, its lowest reading since 2009, as well as a worse-than-expected NAPM-Milwaukee release.  The most important release of the day came during afternoon trading, however, as the Federal Open Market Committee released the minutes from its August meeting.  Many traders looked for further dovish commentary from Fed officials regarding asset purchasing plans, but committee rhetoric did not call for further asset purchases in the near-term.  In fact, some officials showed concern that a decision to keep securities holdings unchanged could incorrectly send signals to the markets that the central bank intends to resume large-scale asset purchases, which is currently not the case.  As for the economic outlook, policy makers saw more modest second-half growth than previously expected, with low rates of inflation and a small possibility of deflationary pressures.

DJIA 30 / 10014.72 / +4.99 / +0.05%
The Dow Jones Industrial Average posted the largest gain among major U.S. indices as sixteen of its 30 blue-chip stocks closed trading in the black.  JPMorgan Chase had a strong day, rising over 1.4 percent, after announcing that it will begin to shut down its proprietary trading operations to comply with new investment bank regulations.  Other stocks performing well included AT&T, which rose 1.5 percent, as well as Merck and Caterpillar, which each gained over 1 percent.

S&P 500 / 1049.33 / +0.41 / +0.04%
The broad-based S&P 500 gained for the first time this week as telecommunications and basic materials shares rallied over 1 percent on the day.  The telecom sector was led by a 4.6 percent increase in Sprint Nextel, after the firm announced it would expand its Colorado operation and add jobs to a plant there.  Basic materials were led by a 3.6 percent gain for Cliffs Natural Resources as well as bullish trading in Newport Mining and Freeport McMoRan.  Mining firms have benefited from rising metals prices, including gold and copper, which rose 0.8 percent and 2.1 percent respectively.

NASDAQ / 2114.03 / -5.94 / -0.28%
The tech-heavy Nasdaq declined for a third session in four days as the index now sits 6.8 percent lower on the year.  Technology shares were especially weak today, falling nearly 0.7 percent as shares of Research in Motion and Broadcom fell over 5 percent each.

Written by James Russell, DailyFX Research

Please send any questions or comments to JRussell@fxcm.com

BoJ’s Promise to Inject Capital in Banks not a Big Enough Effort, Overnight Losses on Wall Street Also Weigh on Asian Equities

Asia Session Key Developments

• Investors in Japan See Bank of Japan’s 920 Billion Yen Effort Inadequate, Yen Continues Rise
• Hong Kong Shares Down on Poor Reporting
• Australian Market Posts Early Gains, Retreats on Losses Abroad

Monday’s promise by the Bank of Japan was intended to instill confidence that the government is taking action to influence the economy – however, investors don’t see the effort as analysts think the amount is not nearly enough. The Japanese equity market hit a 16-month low following the BoJ’s announcement as the yen continued to appreciate and hurt exporters – furthermore, as consumer prices keep falling in Japan (as they have been for the past 17 months) the country has become increasingly reliant on exports. The Hang Seng was weighed down by big losses at Foxconn, the world’s largest mobile-phone maker, as the company has been dealing with falling prices of mobile phones as well as increased depreciation costs. Shares in Australia were weighed down by overnight losses on Wall Street after posting modest gains midday continuing the rise off yesterday’s 6-day high. As global markets remain uncertain, investors have been pouring money into gold, which may reach $1,500 by year end according to analysts at CitiGroup, as the commodity has been a safe-haven to place money.

Nikkei 225                          8824.06

Shares in Japan plummeted 325.20 points (3.55%) to a 16-month low and on worries over a strengthening yen as yesterday’s decision by the Bank of Japan to increase lending has been deemed as a “tokenistic” gesture to appease the government and not actually going to provide stimulus to the economy or devalue the yen. All 10 components were down on the day with Technology and Industrials dropping most at 4.34% (0% positive) and 4.04% (0% positive), respectively – stocks were down across the board as none posted gains. Though Japan’s Ministry of Finance revealed that its preliminary read on Industrial Production showed an increase of 0.3% in July – the first increase in 3 months – the strengthened yen continued to hurt exporters. The Nikkei 225 lost 7.5% of its value in the month of August, the worst of all major Asian indices. Canon lost 4.5% to 3,425 yen, Toshiba shed 4.4% to 395 yen, Sharp dropped 5.1% to 804 yen and Sony dropped 3.7% to 2,368 yen after Sony stated that it would likely back out of a plan to raise its stake in one of Sharp’s liquid-crystal-display units.

Hang Seng                          20536.49

Shares in Hong Kong were were down 200.73 points (0.97%) to close down for the first month in three as Foxconn’s first-half loss widened and developers slid before a government land auction.  8 out of the 9 components were down with Consumer Goods being the sole gainer on the day rising 2.47% (100% positive) while Telecommunications and Technology fell most at 1.68% and 1.31% (both 0% positive), respectively. Foxconn, the world’s biggest contract maker of mobile-phones, dropped 7% to HK$5.17 after reporting that first-half losses widened to $142.6 million from $18.7 million after the company increased R&D spending to attract orders, and average selling prices declined. Ferry operator and property developer Shun Tak Holdings Ltd. retreated 4.7% to HK$4.47 after it reported a first-half profit of HK$266 million, down from HK$1.69 billion a year earlier. Galaxy Entertainment Group Ltd., casino operator part-owned by Permira Advisers LLP, declined 3.2% to HK$6.00 as the company reported first-half profit fell 55% to HK$475 million from a year earlier because bond buybacks led to a loss. Almost 3 stocks fell for each one that rose on the Hang Seng index while futures on the gauge declined 1.7% to 20,317.

S&P/ASX 200 Index           4404.20

The Australian market retreated on Tuesday dropping 48.50 points (1.09%) following overnight losses on Wall Street. 9 out of the 10 components were down with Health Care being the sole gainer at a 0.70% (33% positive) increase while Technology took the biggest hit dropping 3.72% (0% positive). Shares in Australia were up midday after strong reporting as retail sales rose 0.7% in July beating expectation of 0.4% while building approvals rose 2.3% beating expectations of a 1.0% drop; however, the index gave up most of Monday’s rise to a six-day high as the U.S. economy continued to show signs of weakness overnight. In the financial sector, major banks fell 0.5% to 2.8% while Macquarie Equities fell 1.0% to A$37.46. In resources, BHP fell 2.2% to A$37.05 and Rio Tinto fell 1.3% to A$70.09.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
AUS	23:30	AUD AiG Performance of Manufacturing Index (AUG)		54.4
AUS	01:30(Wed)	AUD Gross Domestic Product (QoQ) (2Q)	0.9%	0.5%
AUS	01:30(Wed)	AUD Gross Domestic Product (YoY) (2Q)	2.8%	2.7%

Written by Alex Rodriguez, DailyFX Research Team

For questions or comments about this article, please e-mail arodriguez@fxcm.com

Asian Shares Post Gains on BOJ Announcement, Wall Street Rally

Asia Session Key Developments

• Bank of Japan Expands Bank-Loan Program amid Pressure from Government
• Hong Kong Equities Up on Strong HSBC Earnings, Wall Street Gains
• Australian Market Sees Biggest One-Day Rise in 5 Weeks after Wall Street Rallies on Bernanke’s Comments

Asian Equities rebounded after a week’s losses after strong gains on Wall Street overnight followed by the BOJ’s decision to extend 6-month loans. The Japanese market was disappointed by the Bank of Japan’s measures, however, because there was no direction (no official policy) provided by Japanese Prime Minister Kan Naoto as the yen continued to appreciate. Shares in Hong Kong and Australia benefited from overnight gains on Wall Street as well as news that Federal Reserve Chairman Ben Bernanke pledged to take any necessary measures to stimulate the U.S. economy. The Australian market seems to have already priced in the struggling U.S. economy and China’s slowing growth as investors turn bullish in the short-term.

Nikkei 225                          9149.26

Shares in Japan posted gains following last week’s losses rising 158.20 points (1.76%) though the Nikkei did pare gains of 3.2% after the Bank of Japan failed to stay ahead of market speculation on its decision to extend 6-month loans. 10 out of the 11 sectors were up with Oil & Gas being the sole loser slumping 0.24% (67% positive) while Technology and Industrials led gains at 2.64% (100% positive) and 1.94% (97% positive), respectively. The yen weakened early on speculation that the BOJ’s decision would provide more financial stimulus but the currency rebounded against the dollar after the BOJ’s announcement was what the market expected; subsequently, the Nikkei 225 pared early gains as it was at one point up 3.2% but closed up just 1.8%. Exporters were still up on the day as Honda Motor Co. was up 1.6% to 2,855 yen, Canon Inc. (the world’s biggest camera maker who makes 80% of earnings overseas) climped 2.4% to 3,485 yen while Sony Corp. gained 0.8% to 2,458 yen though the company did pare an earlier advance of 2.9%.

Hang Seng 20,737.22

Shares in Hong Kong were up for the first time in 6 sessions rising 139.87 points (0.68%) following the Federal Reserve’s pledge to safeguard the U.S. economic recovery. 8 out of the 9 components were up with telecommunications the only sector down at 9.83% (50% positive) while Basic Materials and Technology led gains rising 1.71% (100% positive) and 1.51% (50% positive), respectively. Also helping the index were higher earnings reports such as China Resources Land Ltd. who gained 2% to HK$15.14 after stating that first-half net income rose 169% on residential housing sales more than quadrupling. Dongfeng Motor surged 5.3% to HK$11.98 after reporting that first-half profit more than doubled as economic growth increased demand for cars. China Mobile Ltd., the world’s biggest phone carrier by subscribers, dropped 1.2% to HK$80.65 on Vodafone Group Plc preparing to sell its stake in China Mobile to raise more than 4 billion pounds ($6.2 billion).

S&P/ASX 200 Index           4452.70

Australian shares posted gains on Monday rising 82.60 points (1.89%) following a rally on Wall Street overnight and increased materials prices. All 10 components were up on the day with Financials leading the way rising 2.22% (90% positive) while Oil & Gas and Technology posted gains of 1.65% and 1.59%, respectively (both 100% positive).  The strong rise in the index turned the short-term outlook to bullish from bearish, as some traders expect the strength to continue amid signs that investors are switching from U.S. Treasury bonds to equities. In financials, major banks rose 2.2%-2.7% while Macquarie Group rose 3.7% to A$37.84. In materials, BHP Billiton rose 1.5% to A$37.87 and rival Rio Tinto rose 2.5% to A$71.01 while OZ Minerals jumped 5.4% to A$1.27 and Lynas Corp rose 7.2% to A$1.04.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
NZ	22:45	NZD Building Permits (MoM) (JUL)	2.0%	3.5%
JPN	23:15	Nomura/JMMA Manufacturing Purchasing Manager Index(AUG		52.8
JPN	23:50	JPY Industrial Production (MoM) (JUL P)	-0.2%	-1.1%
JPN	23:50	JPY Industrial Production (YoY) (JUL P)	14.3%	17.3%
JPN	23:50	JPY Larger Retailer’s Sale (JUL)	-1.3%	-3.0%
JPN	23:50	JPY Retail Trade (YoY) (JUL)	3.5%	3.2%
JPN	23:50	JPY Retail Trade s.a. (MoM) (JUL)	0.5%	0.4%
AUS	01:30(Tu)	AUD Current Account Balance (Australian Dollar) (2Q)	-6500M	-16551M
AUS	01:30(Tu)	AUD Private Sector Credit (MoM) (JUL)	0.3%	0.2%
AUS	01:30(Tu)	AUD Private Sector Credit (YoY)(JUL)	3.0%	2.8%
AUS	01:30(Tu)	AUD Retail Sales s.a. (MoM) (JUL)	0.4%	0.2%
JPN	01:30(Tu)	JPY Labor Cash Earnings (YoY) (JUL)		1.5%

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

Asian Shares Close Mostly Higher on Global Market Uncertainty, Weakened Yen

Asia Session Key Developments

• Yen Retreats, Bargain Hunting in Japan Brings Shares Higher
• Gains in the U.S. and China Don’t Impress Traders In Hong Kong, Index Closes Down
• Australian Market Closes Up Following Gains on Wall Street

There is currently a widespread view that shares in general are undervalued because of the recent decline in global equity markets, so modest gains (and a break from the week’s losses) in the U.S. was enough to lift some anxiety off Asian markets. Also, the yen’s value retreated on Thursday as Japanese exporters were mostly up, especially in the Technology sector. Investors in Japan remained cautious, however, as Ichiro Ozawa, former secretary-general of ruling Democratic Party of Japan, expressed his intention to run in the September 14^th elections to pick the party president – the party’s president is likely to become Japan’s prime minister. Shares in Australia recovered slightly from the week’s losses but gains were tempered by losses in the resources sector because of cautious outlook statements from BHP Billiton. The Hang Seng in Hong Kong closed flat as trade volume remained lower than the day before, despite earnings in the U.S. and China.

Nikkei 225                          8906.48

Japanese shares rebounded slightly gaining 61.09 points (0.69%) as investors looked for bargain deals on riskier assets.. All 10 sectors were up with Telecommunications rebounding most rising 1.95% (100% positive) after losing all week while Industrials followed gaining 0.90% (54% positive). Japanese exporters gained as the yen retreated against the dollar because of growing speculation that the Prime Minister will take measures to decrease the value of the currency. Car companies, which benefit directly from a weakened yen when they repatriate their earnings overseas, mostly gained on the day as Honda leaped 1.8%to 2,766 yen while Toyota and Nissan were both up 0.6% to 2,918 yen and 631 yen, respectively. A drop in cargo rates sent shares in shipping companies lower; Nippon Yusen Kabushiki Kaisha tumbled 1.2%, to 331 yen, Mitsui OSK Lines sank 1.1% to 536 yen and Kawasaki Kisen Kaisha fell 0.9% to 323 yen.

Hang Seng 20,612.06

Shares in Hong Kong dropped for the fifth session in a row dropping 22.92 points (0.1%) after trading between 20,567.33 and 20,664.76 during the day’s trading. 6 out of the 9 components were down on the day with Industrials slumping 0.57% (43% positive) while Consumer Goods led gains rising 1.32% (100%). China Life Insurance, China’s largest life insurer by premiums, fell 6.3% to HK$30.65 dragging the Hang Seng index down 60.59 points after reporting disappointing first half results – the stock was one of just a few which gained or fell by more than 1.0% on the day. Air China fell 0.8% to HK$8.45 although it reported first-half net profit rose 60% from a year earlier as investors have already priced in a strong result given the stock’s over 40% year-to-date rise on Wednesday. Also weighing on China’s airline industry recovery is the government’s plan to double its high-speed railway network by 2012, perhaps causing as many as 30% of domestic flight passengers to switch to rail travel, by some analysts estimates. Shangri-La Asia, luxury hotel operator, finished 1.9% higher at HK$17.06

S&P/ASX 200 Index           4356.00

Australian shares bounced back after 4 days of losses rising 35.90 points (0.83%) on U.S. gains and positive earnings reports. 9 out of the 10 components were up on the day with Consumer Services leading gains rising 1.84% (70% positive) while Technology was the sole loser dropping 1.90% (0% positive) on the day. While most stocks were up, miners were mixed on uncertainty of the global market with BHP Billiton Ltd. dropping 0.1% to A$37.39 while rival Fortescue Metals surged 3.7% to A$4.50. Woolworths closed up 2.4% to A$27.54 on news of an A$700 million off-market buyback. Australian shares fought a 4-day losing streak after the U.S. managed to post slight gains following weak U.S. economic data in the housing sector.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
JPN	23:30	JPY Jobless Rate (JUL)	5.3%	5.3%
JPN	23:30	JPY National Consumer Price Index Ex-Fresh Food (YoY)(JUL)	-1.1%	-1.0%
JPN	23:30	JPY National Consumer Price Index Ex Food, Energy(YoY(JUL	-1.5%	-1.5%
JPN	23:30	JPY National Consumer Price Index (YoY)(JUL)	-0.9%	-0.7%

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

Asian Shares Extend the Week’s Losses as Investors Continue Risk-Averse Trading

Asia Session Key Developments

• Japan Export Growth Slows for 5^th Straight Month
• Hong Kong Shares may Lower to 20,500 Support Level in Short-term
• Australian Market Feeling Effects of Slowing Global Economic Recovery

Investors continue to be risk-averse on concerns over the gloomy global economic outlook for the second-half of the year. The Nikkei 225 index fell to a 16-month low as the yen continues trading near a 15-year high but Japan’s Finance Minister hinted that the Ministry may move to stem the rise in the yen. Shares in Hong Kong were down as exporters weighed down the market on concerns that the cooling global recovery with sap demand overseas; though compared to other leading indices, the Hang Seng reported a modest decline. Shares in Sydney declined amid the political stalemate as elections have been extended to the upcoming weekend – also weighing down the market were losses in other Asian markets as well as extended losses on Wall Street. Hopes that a potential mining tax is going to get abolished have not provided the momentum expected on the mining sector as heavy hitters BHP Billiton and Rio Tinto have not gained on the week and actually have been losing. As things have been going during this reporting season, expect more lone stars to beat expectations but also prepare for the Asian markets to continue treading along as market conditions have become increasingly uncertain.

Nikkei 225                          8845.39

The Japanese market continued its skid this week dropping 149.75 points (1.66%) on Wednesday to its lowest level since April 30^th, 2009 passing a threshold of a 20% decline that analysts regard as the entry of a so-called bear market. Adding to the woes Japan’s export growth slowed for a fifth month in July, thanks in no small part to the yen’s advanced value, which is on course for its strongest annual average level since currencies began trading freely in 1971. All 10 sectors were down in the Nikkei 225 index, with Oil & Gas slumping most at 2.39% (0% positive) while Basic Materials also slumped 1.93% (6% positive) as concerns over a weakening U.S. economy drove commodity prices lower. Honda Motor fell 1.4% to 2,765 yen. Toyota declined 1.5% to 2,934 yen, and Canon, the world’s largest camera maker, lost 2% to 3,450 yen, the second-biggest contributor to the Nikkei 225′s decline.

Hang Seng 20,634.98

Shares in Hong Kong closed slightly down dropping 23.73 points (0.11%) on concerns over a global economic recovery as the Hang Seng is now down 2.1% over the last four sessions. 8 out of the 9 sectors fell on the day with Technology taking the biggest hit dropping 2.02% (0% positive) while Financials was the sole gainer on the day rising just 0.15% (53% positive). Analysts expect the index to drop below the 20,500 support level in the near-term as concerns rise about an extended slowdown in global economic growth in the second half. Exporters led declines on Wednesday as demand overseas wanes with shoe maker Yue Yuen falling 1% to HK$25.45 and electronics contract manufacturer Foxconn International dropped 0.9% to HK$HK5.67. HK & China Gas ended down 0.6% at HK$18.56 after its first-half net profit fell 1% to HK$2.97 billion from HK$3.00 billion a year earlier as declining property sales offset strong growth in its China business.

S&P/ASX 200 Index           4320.10

Australian shares closed down for a fourth day in a row dropping 61.20 points (1.40%) on overnight losses on Wall Street as a double-dip U.S. recession is back on the radar for investors, who have reacted by selling equities all over the world. Healthcare was the sole positive sector advancing slightly at 0.06% (33% positive) as the remaining 9 were all down with Technology being the loss leader dropping 3.02% (0% positive) with Oil & Gas following at a 2.30% (7% positive) decline. Suncorp-Metway managed to buck the bearish trend of the market as it advanced 2.4% to A$7.97 after analysts attributed poor results for its banking division to the market. BHP Billiton closed down 0.3% to A$37.44 after recovering from a day low of A$37.05 as the company anticipates a strong full-year result – analysts expect an underlying net profit of A$12.6Billion, according to BHP. Rio Tinto fell 2.3% to A$69.45. Pacific Brands rose 12% to 99.5 cents after the retailer swung an A$52.7 million profit.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
AUS	00:00(Thur)	AUD Conference Board Leading Index (JUN)		0.3%

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

Japan Enters Bear Market, Uncertainty on Global Markets Weighing Down Asian Shares

Asia Session Key Developments

• Yen Reaches 15-Year High Against Dollar, Nikkei 225 Closes at a Near 16-Month Low
• Hong Kong Shares Close Lower on Global Economic Outlook Despite Gains in Chinese Market
• Australian Market Lacking Direction Ahead of Saturday’s Elections

Asian Shares Weighed Down by Japan Market Slide, Weak Offshore Markets

Nikkei 225                          8995.14

Japan fell into a bear market, breaking the important 9000 point line dropping 121.55 points (1.33%) as the yen continues strengthening. 8 out of the 10 sectors were down on the day with Industrials falling most at 1.92% (6% positive) while Technology also continued to fall dropping 1.76% (8% positive). Fears of a double-dip recession in the U.S. combined with a rising yen drove the Nikkei 225 into bear market territory, as U.S. home sales are faltering, rather than improving – if there are fewer families buying houses, there are fewer families buying flat screens and appliances to fill new residences. Japanese electronics exporters felt the pain as Sony tumbled 3.7% to 2,406 yen, Hitachi plunged 2.8% to 341 yen, Casio Computer dropped 3.4% to 572 yen and Pioneer fell 2.6% to 262 yen. Canon Inc., which receives 82% of its revenue from outside Japan, slipped 0.9% to 3,520 yen. The yen remains the biggest worry for Japan, however, as it stand at a 15-year high. One can expect stocks to continue slipping if there are no policies in the strengthening yen.

Hang Seng 20,658.71

Shares in Hong Kong dropped for the second day falling 230.30 points (1.10%) reflecting Japan’s bear market dragging the world economy down. 8 out of the 9 sectors were down on the day with Technology losing most dropping 4.21% (0% positive) while Telecommunications was also down 1.73% (50% positive).  The Hong Kong market regressed despite advances on the mainland as worries about the strength of the U.S. economic recovery continued to weigh in on the index. However, some analysts suggest that the index is nearing bottom, and that it will trade in the range of 20,600 to 21,500 points for the rest of the month before continuing to climb. HSBC’s 1.6% drop to HK$75.90 accounted for 52.39 points of the benchmark index’s fall despite news this week that Europe’s largest bank has proposed a deal to buy majority control of South African lender Nedbank Group Ltd. – the deal could help the Hong Kong-listed bank take advantage of commodity hungry China’s growing interest in Africa. PCCW fell 9.8% to HK$2.59 on news it plans to raise HK$1.3 billion from a share sale to repay existing debt. PCCW plans to sell 500 million new shares at HK$2.60 each. Aluminum Corp. of China was among the Hang Seng Index’s worst performers, falling 4.4% to HK$6.26 even after it said after the market closed Monday it swung to a first-half net profit from a year earlier due to higher aluminum prices.

S&P/ASX 200 Index           4381.30

Australian shares closed down for a second day in a row dropping 47.70 points (1.08%) as weaker offshore markets and hawkish comments from the Reserve Bank of Australia outweighed a positive trading update from ANZ Bank. 8 out of the 10 sectors were down with Consumer goods paring gains from yesterday dropping 2.03% (60% positive) while Telecommunications rebounded a bit from yesterday gaining 0.84% (67% positive). Australia’s market was more vulnerable to weaker offshore markets like Japan and the U.S. because of an uncertain political requirement as well as cautious outlook statements that keep coming out with earnings reports.  Wesfarmers went ex-dividend, falling 3.4% to A$30.63, while Foster’s fell 4.3% to A$5.99 as it met full-year earnings expectations, ex-writedowns, but failed to pay a final dividend. In resources, BHP Billiton fell 1.5% at A$37.54, Fortescue Metals fell 3.0% to A$4.50 and Rio Tinto fell 1.6% to A$71.07.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
JPN	23:50	JPY Adjusted Merchandise Trade Balance (JUL) (JUL)		¥456.0B
JPN	23:50	JPY Corporate Service Price (YoY) (JUL)	-1.0%	-1.0%
JPN	23:50	JPY Merchandise Trade Balance Total (Yen) (JUL)	¥466.3B	¥686.4B
JPN	23:50	JPY Merchandise Trade Exports (YoY) (JUL)	21.8	27.7
JPN	23:50	JPY Merchandise Trade Imports (YoY) (JUL)	19.8	26.1
AUS	00:00(Wed)	AUD Conference Board Leading Index (JUN)		0.3%
AUS	01:30(Wed)	AUD Construction Work Done (2Q)	3.0%	1.9%

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

European Equities Halt Decline as Consumer Confidence Rebounds

Europe Session Key Developments

• French Manufacturing Data Beats Expectations for August
• Euro-Zone Consumer Confidence Unexpectedly Rises
• Euro Currency Declines Against Greenback for Fourth Day

European stocks rallied for the first time in four days as French manufacturing data beat expectations and Euro-Zone consumer confidence rose to its highest level since January 2008.  The bullish data boosted stocks, pushing the Stoxx Europe 600 Index higher by 0.6 percent to 253.76.  The main driver behind today’s improved sentiment was the economic docket, which showed that French PMI manufacturing increased in August from 53.9 to 54.7, soundly beating expectations for a decline to 53.4.  Furthering the bulls’ case was the Euro-Zone consumer confidence report, which showed that confidence unexpectedly improved in August from -14 to -12, its highest reading in over 30 months.  Despite this positive report, however, consumer spending may remain dampened as governments take austerity measures to cut deficits and unemployment remains high.  Therefore, significant downside risk remains to European investors.

On the commodities front, NYMEX WTI crude oil fell over 1.1 percent to $72.97 as investors continue to fear lacking demand and ample supply within the market.  Precious metals also declined, with COMEX gold dipping 0.1 percent lower to $1227.40 and silver falling 0.1 percent to $18.025.  Despite small losses over the past two days, gold remains a strong performer, having increased by over 6 percent since late July.  As for currencies, the Euro fell against the U.S. dollar for a fourth consecutive day, dropping 0.3 percent to $1.2675.

FTSE 100 / 5234.84 / +39.56 / +0.76%
Equity trading in London led to the FTSE’s first gain in four days, after Old Mutual said it may sell a controlling stake in its Nedbank Group unit to HSBC Holdings.  Today’s gains for the London index extended its rise off July 1 lows to 8.9 percent.

CAC 40 / 3553.23 / +27.11 / +0.77%

The major French index rallied nearly 0.8 percent today as three shares rose for each that fell.  Health care was the strongest sector, gaining 1.6 percent, while telecommunications rose 1.5 percent and industrials gained 1.1 percent.  Technology shares were one of three lagging sectors on the index, declining 0.4 percent.

DAX 30 / 6010.91 / +5.75 / +0.10%
German stocks rebounded from a one-month low, as Merck, Sky Deutschland, and Deutsche Bank posted impressive gains.  Investors were encouraged by Germany’s PMI data, which showed that services rose more than expected in August, although manufacturing ticked slightly lower during the month.  All eyes will now turn towards the country’s GDP release tomorrow.

IBEX 35 / 10221.20 / +126.90 / +1.26%
Spain’s IBEX 35 posted the largest gain among major European indices, rallying over 1 percent on the day.  The financial sector was the largest source of strength, gaining 1.9 percent as Banco Santander rallied 2.3 percent and BBVA rose 1.6 percent.

FTSE MIB / 20010.34 / +139.88 / +0.70%

Written by James Russell, CFD Trading Research

Asian Stocks Fall on Global Economic Growth Outlook, Hung Parliament in Australia

Asia Session Key Developments

• Stronger Yen Hurts Japan’s Exporters
• Hong Kong Shares Close Lower on Economic Outlook
• Australian Market Shows Resilience after Early Losses

Asian Shares Weighed Down by Pessimistic Global Economic Outlook, Growth Concerns

Asian stocks continued last week’s descent on concerns over a weaker economic outlook in the U.S., the world’s largest economy, though Utilities climbed. Australia’s S&P/ASX 200 Index closed flat after the nation’s federal election failed to deliver a majority government for the first time in 70 years though miners advanced on speculation that since the Australian Labor party failed to win a majority a proposed mining tax will be scrapped or watered down. The Nikkei 225 is approaching a bear market after the index fell to a year-low as the stronger yen, average trading this year against the USD at 91 (highest since currency’s started trading against each other freely in 1971), continues to weigh down on the export-heavy Japanese economy. The Hang Seng index also fell to a 4-week low, with market volume hitting HK$46.39 billion, down from HK$56.08 billion Friday, reflecting the market’s weak performance. The optimism on strong corporate earnings seems to have faded a bit in the Asian markets as investors wait for fresh leads to support a rebound in the markets.

Nikkei 225                        9116.69

Japanese shares continue to fall dropping 62.69 points (0.68%) as tempered international demand keeps hurting exporters. 8 out of the 10 sectors were down on the day with Telecommunications falling most at 1.63% (50% positive) while Technology also fell 1.41% (0% positive) paring gains from last week. The Nikkei 225 hit a 9-month low with support holding below 9,100 points. Investors were disappointed when Prime Minister Naoto Kan and Bank of Japan’s Governor Masaaki Shirakawa spoke only over the phone instead of holding an anticipated meeting – the conversation produced no immediate yields, as the two just talked about currencies and the economy while agreeing to work more closely. Governments around the world are letting their currencies weaken, so if Japan doesn’t get on board, the appreciating yen will continue putting pressure on Japanese stocks – further denting a Japanese economic recovery. Export-reliant shares fell as Canon Inc. fell 1.4% to 3,550 yen, Sony Corp. lost 1.5% to 2,499 yen, and Sharp Corp. lost 2.5% to close at 832 yen. Honda Motor Co. lost 0.5% to 2,805 yen.

Hang Seng                        20889.01

Shares in Hong Kong fell 92.81 points (0.44%) on Monday reflecting muted sentiment about the Chinese and global economies. 7 out of the 9 sectors were down on the day with Basic Materials being the loss leader dropping 1.26% (0% positive) while Telecommunications was also down 0.97% (0% positive).  Concerns over the global economic recovery paired with declines in energy companies led the Hang Seng index lower as Chinese battery and car maker BYD slid 3.8% to HK$44.65 after the company warned of a slowdown in China’s auto market in the second half of the year. Sinopec, Asia’s largest refiner by capacity, fell 1.6% to HK$6.26, even though the company reported a 6.7% rise in first-half net profit to CNY35.46 billion, slightly above analyst expectations, due to poor performance by the firm’s refining and chemical divisions. Cathay Pacific Airways Ltd., the city’s biggest carrier, rose 1.5% to HK$19.74 as the company’s Hong Kong Dragon Airlines Ltd. unit reached an agreement with cabin crew that avoided a strike.

S&P/ASX 200 Index         4429.00

Australian shares closed flat dropping 1.90 points (0.04%) but managed to bounce back from losses in early trading. 7 out of the 10 sectors were up with Consumer goods rising most at 3.19% (50% positive) while Telecommunications took a hit dropping 5.56% (33% positive). Stocks in mining shares advanced after hopes are high that a new mining tax will not be enacted because of the failure of Australia’s Labor party to gain a majority in the weekend’s elections – Rio Tinto climbed 0.9% to A$72.20 while BHP Billiton Ltd., the world’s biggest mining company, gained 0.6 percent to A$38.11. Wall Street weighed down on Australian shares as the DJIA was down 0.9% overnight but the biggest drag on the S&P/ASX 200 is the hung parliament – first time since World War II – adding to the uncertainty in the market in the short term.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
NZD	3:00(Tues)	NZD RBNZ 2Yr Inflation Expectation (3Q) (2Q F)		2.8%

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

Gloom of International Economic Recovery Looms Over Asian Shares

Asia Session Key Developments

• Japanese Shares Retreat on Pessimistic Outlook on Foreign Demand
• Financials Weigh Down the Hong Kong Market
• Australian Stocks Fall on Weaker Offshore Markets

Disappointing Figures in the U.S. Followed by Losses on Wall Street Fuel Losses in Asia

The U.S. reported jobless claims were in fact up to a nine-month high, missing forecasts of a small decrease – this data fueled concerns about the recovery in the world’s biggest economy amid fears of a double-dip recession as well as data from the Philadelphia Federal Reserve reporting that manufacturing activity in the mid-Atlantic region dropped in August. Japan’s export-heavy economy also continues to get hit by a stubbornly strong yen, while currency dealers anxiously wait for measures by the government to halt the yen’s rise and give a much a much needed jump to the economy. Chinese shares were dragged lower following the Ministry of Land and Resources saying that it will reinforce its efforts to crack down property hoarding and misuse by property developers as well as ramping up investigations into land misuse by the end of October. In Sydney, the Reserve Bank of Australia’s Deputy Governor Ric Battellino provided hawkish comments signaling that more interest rate hikes may be on the horizon affecting sentiment in the Australian market.

Nikkei 225                        9179.38

Japanese shares experienced a sharp decline dropping 183.30 points (1.96%) amid growing concern that international demand is slowing as the reporting season continues. 9 out of the 10 sectors were down on the day with Oil & Gas falling most at 2.70% (0% positive) while Basic Materials also fell 2.66% (0% positive) paring gains from earlier in the week. Japans exporters have been hurting for weeks now that the yen is strengthened against the dollar with some companies having to take substantial measures to combat falling margins like Sharp (dropping 2.7% to 853 yen) reporting that it will slash LCD panel production until November as Retailers maintain stockpiles of televisions as consumers steer away from large purchases. Japanese auto makers suffered as well with Nissan plunging 2.4% to 659 yen, Toyota sliding 1.8% to 3,030 yen and Honda slumping 1.6% to 2820 yen.

Hang Seng                        20981.82

Shares in Hong Kong fell 90.64 points (0.43%) on Friday erasing gains made on Thursday as Chinese banks fell after reports came out saying they may need to take a 600 billion yuan provision on bad local government loans. 5 out of the 9 sectors were down on the day with Financials being the loss leader dropping 0.91% (0% positive) while Telecommunications and Consumer Goods were both up 0.96% (50% positive) and 0.66% (100% positive), respectively.  Analysts warn that the Hong Kong market may face further losses next week as Beijing may step up tightening measures in the properties and banking sectors. Heavyweight HSBC led declines falling 1.6% to HK$77.35 over concerns of the health of the global economy, representing 52 points of the index’s decline. China Overseas dropped 1.5% to HK$16.02 while China Mobile bucked the downward trend, rising 1.3% to HK$82.80 probably due to bargain-hunting after yesterday’s 3% decline.

S&P/ASX 200 Index         4430.90

Australian shares followed the last two days of flat trading with a 48.10 point drop (1.07%) as overnight losses on Wall Street weighed in on the market. All 10 sectors were down with Telecommunications dropping most at 2.06% (33% positive) followed by Technology at a 1.48% (0% positive) decrease. The Australian market hit a 4-day low on the eve of a Federal election as weak data from offshore markets outweighed ANZ Bank’s trading update that beat expectations. In resources, BHP Billiton fell 1.0% to A$37.90 and Rio Tinto fell 2.2% to A$71.58, while Newcrest Mining rose 1.2% to A$35.78 after spot gold rose overnight. Financials mostly fell Friday, with National Australia Bank falling 2.1% to A$23.88 and QBE Insurance down 1.2% to A$16.91. But ANZ rose 1.7% to A$22.78 its trading update pointed to a raised consensus second-half earnings for the bank.

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

Asian Shares Mostly Up on Positive Earnings, Further Potential Monetary-Easing in Japan

Asia Session Key Developments

• Japanese Shares Continue Rising on Speculation Policy Makers Will Stimulate Economy
• Hong Kong Shares Up, Late Losses Limit Market Gains
• Australian Stocks Marginally Up on Mixed Company Earnings

Most Asian Stocks Trade Higher on Thursday on Hopes for Further Monetary Easing in Japan

Japanese Stocks were the beneficiaries of reports that the Bank of Japan will take additional measures to cope with a rising yen and falling share prices. Speculation is strong that the BOJ may hold an emergency gathering before a reported meeting between Prime Minister Naoto Kan and BOJ Governor Masaaki Shirakawa on Monday – given Japan’s recently reported weak GDP growth and additional action by the government to stimulate the economy, the BOJ may have no choice but to cooperate with the government efforts. Shares in Sydney continue to be weighed down by the market giant BHP Billiton on uncertainty over its hostile $38.6 billion bid for Potash Corp. of Saskatchewan, which the Canadian company’s board rejected as too low. Earnings reports in Australia were also a key market driver as companies that beat expectations surged while others declined following disappointing figures. Stocks in Hong Kong finished up on the day because of a rally in the resources sector although late losses by China Mobile threatened to wipe out gains. Asian markets benefited from gains in the U.S. after positive retailer earnings reports, providing investors with some support in the absence of any major economic data releases.

Nikkei 225                        9362.68

The Nikkei 225 index is up for the second day in a row rising 122.14 points (1.32%) amid speculation that next Monday’s monetary policy meeting will yield favorable results for the economy. 9 out of the 10 components were up on the day with Technology rising most at 2.87% (92% positive) while Utilities was the sole laggard dropping 0.71% (0% positive). Technology rose on speculation that demand for chip-making equipment is increasing as Tokyo Electron, the world’s second-largest maker of equipment to manufacture chips, climbed 5.3% to Y4,370 after larger U.S. rival Applied Materials Inc. projected higher-than-expected profits. Mitsui Fudosan and Mitsubishi Estate closed up 3.1% at Y1,442 and up 3.4% at Y1,323, respectively, on reports that the government plans to extend its stimulus package for low-interest, fixed-rate housing loans, to sustain the economy. Consumer lender Takefuji soared 8.1% to Y214 on heavy volume as increased BOJ easing prospects raised hopes that capital-raising costs may fall.

Hang Seng                        21072.46

Hong Kong shares rebounded from yesterday’s losses rising 49.73 points (0.24%) as companies reported higher-than-forecast earnings and speculation that more companies will announce earnings that will beat expectations – however, the index was poised to gain over 150 points on the day following a positive open and a surge early in the day before an abrupt drop towards close. 6 out of the 9 components were up with Basic Materials up most at 4.61% (100% positive) while Telecommunications slumped most dropping 2.75% (0% positive).  Gains were led by China Shenhua Energy Co. up 4.94% to HK$ 29.75, China Petroleum & Chemical Corp. up 3.92% to HK$6.37, China Resources Enterprise Ltd. up 3.66% to HK$31.150 and Aluminum Corp of China Ltd. up 3.37% to HK$6.74. China Mobile Ltd. fell 3% to HK$81.75 erasing much of the Hang Seng index’s gains in the latter half of Thursday’s session as the company reported a lackluster outlook.

S&P/ASX 200 Index         4479.00

The Australian S&P/ASX 200 index closed marginally up on the day rising 4.10 points (0.09%) amid mixed company earnings reports and the stalled takeover of Potash by BHP Billiton. 7 out of the 10 components were up on the day with Telecommunications up most at 1.99% (100% positive) while Financials dipped 0.30% (55% positive) as three of four major banks lost ground.  The share market consolidated in quiet trading Thursday as investors focus on earnings reports while also waiting on clear indicators on what direction offshore markets are heading. The market remains strained by BHP Billiton due to the uncertainty of the outcome over the takeover bid put out on Canada’s Potash Corp. as BHP closed down 0.3% at A$38.30. AMP was the biggest loser on the market, falling 4.3% to A$5.09 after its first-half profit rose to A$383 million but missed market expectations while QBE Insurance rose 1.1% to A$17.11 after it reported that the company is weighing options on US$6 Billion worth of acquisition opportunities. Analysts say investors haven’t decided whether to expect a double-dip recession in the U.S. or to capitalize on buying opportunities amid a shallow recovery.

Notable Asian Session Event Risk / Economic Releases

Country	GMT	Release / Event	Forecast	Previous
NZ	22:45	NZD New Zealand Net Migration s.a. (JUL)		70
NZ	03:00(Fri)	NZD Credit Card Spending SA (MoM) (JUL)		1.0%
NZ	03:00(Fri)	NZD Credit Card Spending (YoY) (JUL)		4.5%

Written by Alex Rodriguez, DailyFX Research Team
For questions or comments about this article, please e-mail arodriguez@fxcm.com

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