Asian markets traded mixed, following Monday’s sharp drop. The Nikkei returned from a holiday to close down 1.6% as it caught up with the region’s losses from Monday. The Kospi rose .9%, while the ASX 200 slid 1%, weighed down by miners. China’s markets advanced, with the Shanghai Composite gaining .4% and the Hang Seng rising .5%.
European shares managed to rally, shrugging off a negative report by the IMF. Germany’s DAX surged 2.9% to 5572, the CAC40 rose 1.5%, and the FTSE climbed 2%. The IMF lowered its expectations for US, UK, and Eurozone growth for both 2011 and 2012. On the sovereign debt front, S&P cut its rating on Italy’s debt by one notch.
US markets reversed from early gains, to end mixed. The Dow had been up 150 points for much of the day, but afternoon selling left it up just 8 points at 11409. The Nasdaq fell .9% and the S&P 500 eased .2%.
Currencies
The Euro shook off early losses to close flat at 1.3683, while the Dollar traded mostly lower. The Pound rose .3% to 1.5732, the Australian Dollar rallied .7% to 1.0250, and the Yen inched up .2% to 76.39. Speculation that the Swiss National Bank might push the EURCHF exchange rate even higher than 1.20 pressure the Swiss Franc, which dropped .7% to .8884 against the Dollar and climbed to 1.22 against the Euro.
Economic Outlook
Housing starts came in slightly below expectations, but building permits were modestly above forecast, painting a mixed picture.
Wednesday’s focus will be the Fed’s FOMC statement in the mid-afternoon. Also due on Wednesday are existing home sales, weekly mortgage applications, and weekly oil inventories,.