Markets and money – July 10

First, to the equities:


Both the Dow and the S&P 500 are negative given earnings worries, particularly after Chevron has issued a statement saying they might miss earnings.  The energy stocks have already been leading the markets towards its trading direction and today is no difference.  Another driver is the fall in crude prices, today once again declining.  Oil has now fallen below $60 a barrel, an 18% drop just within a week from its $73 highs for the summer.  This comes amid a couple of what may be seen as good news, with GM emerging from bankruptcy and the trade gap narrowing, with exports going up and imports coming down.

The European markets are set to drop for another week after resource and energy stocks drag down the broader markets in today’s trading session.  This is also pinned to the dimming hopes of a faster economic recovery, one that was expected by some after the sharp rally this summer and some improved numbers.  Automakers are also contributing to the fall for the last day of the week.  This comes after Renault CEO said he doesn’t see improvement in the auto market until next year.  The drop in FTSE is taking it to its two-month lows.  Currently, the FTSE is down half a percent, the CAC by 1.18% and the DAX by 0.87%.

Most Asian markets are also down with Korea’s Kospi lower by 0.2%, the Hang Seng with 0.5% decline and the Shanghai Composite Index falling 0.3%. India’s Sensex was the biggest loser with 1.8% drop while Singapore ended flat. Only Australia’s S&P/ASX 200 ended positive closing 0.8% higher, helped by its mining and energy stocks.  Taiwan’s main index was also up by 0.3%.  Nikkei was another that ended almost flat after new lower shipping rates brought its shipping stocks to the downside.

From WSJ:

Japanese shipping stocks fell after a report in the Nikkei that rates on container ships from Asia to North America had been dropped for the first time in three years, reaching six-year lows. The paper said in just-ended negotiations with businesses, shippers had agreed to reduce rates by 20% to 40% for the fiscal year ending May 2010.


On to the currencies front, the dollar and the yen are stronger as risk aversion continues to push people to seek for safe havens.  FT reports the following movements in the currencies: The dollar rose 1 per cent to $1.3887 against the euro, climbed 0.6 per cent to $1.6246 against the pound and gained 1 per cent to $0.7760 against the Australian dollar. However, the yen’s display was better. The yen fared even better, rising 0.3 per cent Y92.63 against the dollar, climbing 1.3 per cent to Y128.67 against the euro and gaining 1 per cent to Y150.26 against the pound.

Euro’s weakening was due in part to worries about European banks’ profitability and the effects of Eastern European countries’ woes to them.  Another concern involves those fleeing to German bonds as an alternative to the Treasuries.

The Swiss franc however dropped 1.3 per cent to SFr1.0921 against the dollar and eased 0.2 per cent to SFr1.5157 against the euro after Jean-Pierre Roth, chairman of the Swiss National Bank, re-affirmed the need for the central bank’s intervention in the currency markets to prevent its appreciation.


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