Markets and money – July 16

Bank results helped Europe and Asia, but another problem weighs down the US markets:

mkt716

Even with better than expected results coming from JP Morgan prior to market open as well as lower rise in initial jobless claims, the major indexes in the US are essentially flat as CIT Group continues to struggle finding rescue fund after talks with the government and debtholders have collapsed.  Financials are some of the worst performers for the day after a strong rally yesterday.  As of 1:10 ET, the Dow is down 10.35 points to 8605.86 while the S&P 500 is down 2.86 pts to 929.82.  Only the Nasdaq is up, albeit only slightly, by almost a tenth of a percent.

With the CIT story having less effect on the European markets, the CAC-40 rose 0.9% to 3199.68, while the DAX gained 0.6% to 4957.19.  The FTSE 100 also added some 0.4% to close at 4361.84, all riding on the positive earnings from JP Morgan along with some help from its drug makers. The country’s mining sector however declined after falling victim to some profit taking.  The dismal results that came out from the biggest mobile phone maker Nokia also fell on deaf ears.

Going to the East, most Asian indexes saw gains except for the country that had the best news today, China, falling 0.2% to end at 3183.74 after some investors decided to take some profits after several days of staying on the positive territory. Japan’s Nikkei 225 Average moved up 0.8% to 9344.16, while the Kospi saw a similar 0.8% rise.  Australia’s S&P/ASX 200 was also ecnouraged by the earnings from the US as it gained 1.8%.  Taiwan’s Taiex was up 0.6%, so was the Hang Seng closing at 18361.87.  Singapore’s Straits Times rose a tad less 0.5%, but it’s better than Sensex which closed flat for the day.  New Zealand’s NZX 50 still advanced 1.4% even after an outlook downgrade from Fitch.

It’s another weak day for the dollar:

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With yet some positive news from a bank, the dollar lost some ground fetching less euro as well as the British pound.  The euro bought $1.4125, up from $1.3964 while the pound took $1.6429, up from $1.6316.  Some data from the Philly Fed also contributed to a lower greenback for the day, allowing the Japanese yen to advance against the currency.  From WSJ:

The Philadelphia Federal Reserve Business Index declined to -7.5 in July from -2.2 a month earlier, and the employment portion of the index dropped to -25.3 from -21.8. New orders and inventories also declined.

And the FT: The yen rose 0.6 per cent to Y93.62 against the dollar, climbed 0.8 per cent to Y131.81 against the euro and gained 0.8 per cent to Y153.45 against the pound.

That said, the yen edged up against the european currencies amid worries about that the CIT Group will file for bankruptcy if they secure $3bn in emergency funding.  Crude oil plays Canadian dollar and Mexican peso both fell as the commodity dropped some points today, albeit maintaining its 60-above per barrel price.

Some of the bigger currency news for the day:  New Zealand outlook was downgraded by Fitch from stable to negative, while maintaning credit rating of AA+ citing indebtedness and significant deficit to be the reasons.  From the FT: The New Zealand dollar lost 1 per cent to $0.6419 against the dollar and dropped 1.7 per cent to Y60.13 against the yen.

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