Stocks And Metals Drop As China Cuts Growth Outlook

Asian markets traded lower on Monday, as disappointing growth forecasts from China weighed on the region. China expects its GDP to grow by 7.5% in the coming year, its lowest level in 8 years. The Nikkei declined .8% to 9697, the Kospi fell .9%, and the ASX 200 eased .2%. In greater China, the Hang Seng slumped 1.4% to 21265, and the Shanghai Composite lost .6% to 2445.

Greece warned the country would trigger collective action clauses (CACs) if private debt holders do not accept the latest 53.5% haircut on their debt. The move would be considered a default by Greece, and could have significant impact on the credit markets. European markets slipped, as the DAX fell .8%, the FTSE dropped .6%, and the CAC40 declined .4%.

US stocks managed to erase most of their losses, but still closed down. The Dow ticked down 15 points to 12963, the Nasdaq sank .9% to 2950, and the S&P 500 dropped .4% to 1364.

Currencies

The dollar closed mixed in Monday’s currency trading. European currencies rose, as the pound, euro and Swiss franc all gained .2%. The Australian dollar dropped .6% to 1.0670, and the Canadian dollar fell .5% to .9940. The yen advanced .4% to 81.46.

Economic Outlook

The services sector grew more than expected, as the ISM non-manufacturing PMI rose to 57.3 from 56.8. Factory orders fell by 1%, but the drop was smaller than forecast.

Fear Hits Markets, Dow Drops More Than 200 Points

Equities

Asian markets extended their losses as concern over a slowdown in China weighed on the region. The Hang Seng tumbled 2.2% to 20806, and the Shanghai Composite sank 1.4%, as auto-maker BYD plunged 9.9%. The Nikkei shed .6% to 9638, the Kospi dropped .8% to 2000, and the ASX 200 fell 1.4%, as materials stocks sold off.

European markets plunged, amid escalating fears of a Greek default. The CAC40 tanked 3.6%, the DAX sank 3.4%, and te FTSE lost 1.9% as broad selling gripped the market. Banking shares were particularly hard-hit, as the sector skidded 5.3%, while auto-makers dropped 4.9%.

The selloff continued in the US. The Dow lost 204 points, to 12759, recording its biggest drop in 2012. The S&P 500 fell 1.5%, and the Nasdaq declined 1.4%. Materials and banking shares ld the declines amid concerns over global growth and fallout risk from Greece.

Dow Falls 203 Points, Its Largest Drop In 2012

Currencies

Traders dumped foreign currencies for US dollars as the market shifted to “risk off” mode. The Australian dollar lost 1.1% to 1.0552, pressured by losses in metals. Amongst European currencies, the pound fell .9% to 1.5720, the euro dropped .8% to 1.3114, and the Swiss franc declined .7% to 1.0886. The yen benefited from the shift in risk, gaining .8% to 80.86.

Economic Outlook

Wednesday’s reports will include the ADP employment report, the Challenger job-cut report, productivity & labor costs, consumer credit, weekly oil inventories, and weekly mortgage applications.

Stocks Climb As Bondholders Approve Greek Debt Swap

Equities

Markets rallied on Thursday in anticipation of a successful conclusion to Greece’s debt swap. The Nikkei snapped a 3-day losing streak, jumping 2% to 9769, the Kospi advanced .9% to 2001, and the ASX 200 pushed up .7% to 4171. In China, the Shanghai Composite gained 1.1% to 2420, and the Hang Seng climbed 1.3%.

European markets soared, with the DAX and CAC40 surging 2.5%, and the FTSE rising 1.2%. Car-maker, Renault, jumped 6.4% after UBS upgraded the stock to “buy” from “neutral”, lifting the auto sector 3.8%. The ECB and Bank of England both left interest rates unchanged.

US stocks rose as well, but the gains were more modest. The Nasdaq rallied 1.2%, the S&P 500 climbed 1% to 1366, and the Dow tacked on 71 points to 12908. The VIX fell 6% to 17.95, after spiking past 21 on Tuesday.

VIX Falls Back Below 18

AIG shares fell 3.9% to 28.31 after the Treasury said it would sell $6 billion worth of stock. Coach shares jumped 4.6% after the CEO said business is “trending extremely well”.

Currencies

The euro and Swiss franc pushed up 1% to 1.3284 and 1.1020 respectively, as the Greece debt exchange was approved by bond holders. The Canadian dollar and Australian dollar both climbed .8%, and the pound rose .6% to 1.5831. The yen fell .5% to 81.63.

Economic Outlook

Weekly unemployment claims unexpectedly rose by 8000 to 362K, 10K more than expected.

US Jobs Data Beats Forecasts, Lifting Dollar and Stocks

Equities

The Nikkei surged 1.7% to 9930, after rising as high as 10008, as approval of a debt swap by Greece’s private debt holders helped relieve investor anxiety. Exporters led the gains as the yen fell to a 9-month low, with Sony and Mazda each up more than 4%. The Kospi climbed .9%, and the ASX 200 gained 1%. In China, weaker than expected inflation data lifted stocks, with the Shanghai Composite settling up .8%, and the Hang Seng up .9%.

European markets gained moderately, lifted in the afternoon by upbeat US jobs data. The DAX advanced .7%, the FTSE climbed .5%, and the CAC40 rose .3%.

US stocks edged up, but concerns over a Greek “credit event” limited gains. The Dow tacked on 14 points to 12922, the Nasdaq gained .6% to 2988, and the S&P 500 rose .4% to 1371. Small cap stocks outperformed, as the Russell 2000 jumped 1.3% to 817. Greece forced all bond holders to accept the debt haircut, triggering payments on credit default swaps, but the event was largely expected.

Currencies

The dollar powered higher against most global currencies. In Europe, the Swiss franc sank 1.2% to 1.0886, the euro slumped 1.1% to 1.3122, and the pound fell 1% to 1.5676. The yen dropped 1.1% to 82.45, while the Australian dollar slipped .7% to 1.0575. Bucking the trend, the Canadian dollar traded flat, settling at .9906.

Euro Tumbles 1.1% In Afternoon Slide

Economic Outlook

The US trade deficit hit $52.6 billion last month, significantly larger than the $48.9 billion forecast. Wholesale inventories rose a mere .4%, below expectations.

Stocks Trade Mixed

Equities

Asian markets started the week on a down note, despite Friday’s upbeat jobs data from the US, as Chinese trade deficit data pointed to a slowdown in China. The Nikkei slid .4% to 9890, the Kospi skidded .8% to 2003, and the ASX 200 declined .4%. In China, the Shanghai Composite eased .2%, while the Hang Seng rose .2% to 21134, as China Mobile rallied 3.9% due to an upgrade by HSBC.

European markets managed slight gains with the CAC40 and FTSE edging up nearly .1% and the DAX rising .3%. Spain’s IBEX dropped 1.2% as investors dumped Spanish banks on debt concerns.

In the US, stocks closed mixed, while the VIX tumbled 8.6% to 15.64 indicating a sharp drop in investor anxiety. The Dow added 38 points to 12960, the S&P traded flat, and the Nasdaq slipped .2%.

VIX Drops More Than 8%

Tranzyme Pharma tumbled 43% after reporting that a recent trial of its GI drug was a failure.

Currencies

The dollar traded mixed on Monday. The euro and Swiss franc both gained .2%, while the pound fell .2% to 1.5638. The Australian dollar dropped .6% to 1.0512 as metals fell. The Canadian dollar declined .2% to .9930, while the yen rose .2% to 82.30.

Economic Outlook

On Tuesday, retail sales data is due in the morning, and the Fed will issue its rate decision and a statement in the afternoon. The Fed’s recent commitment not to raise rates for 2 years minimizes the impact of the rate decision, but the statement could be significant.