Equity Markets Struggle To Move On Weak Momentum

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Current Futures: Dow -11.00, S&P -2.00, NASDAQ -1.75

Asian markets are trading on weak momentum, following the U.S. and the European markets, which barely closed above the break-even line. 

The biggest gainers in the Asian markets were the electronic makers, as it seems the global economy is on its way towards recovery. Helped by tonight’s small gains, Asian markets advanced for the fourth consecutive day. Additional positive momentum came during the Asian session after a report showed that the Australian economy expanded 0.4% in the first quarter, being the only major economy that grew in the first three months of the year. 

Almost every industrial sector in the U.S. market saw limited movement on Tuesday. The only exception was the healthcare industry, which advanced as Mr. Obama plans to reorganize the whole industry. The government is set to expand its role in the healthcare program, providing a wider social-net for the first time in the last five decades. 

The biggest declines were seen in the financial sector on Tuesday, after JP Morgan and American Express tapped the equity market’s shoulder for additional cash. JP Morgan lost 4.5%, after it sold $5 billion worth of new shares, while American Express tumbled 4.9%, the most in the Dow Jones Index, as it sold $500 million in new shares. TheLFB-Forex.com Trade Team notes that other banks may be forced to take a similar stance and raise money from the equity markets in order to meet the stress-test targets even though it dilutes the current shareholder’s percentage. 

The real estate sector also declined, even though a release showed that pending home sales jumped the most in the last 7 years in April, adding further evidence that the worst may be behind. The iShares Dow Jones US Real Estate Index Fund, which tracks the performance of the most representative shares in the industry, declined 1.48% on Tuesday. TheLFB-Forex.com said that the rising number of foreclosures together with the high level of inventories might still be a big drag for the industry. 

Overnight, the Japanese Nikkei added 30.41 points (0.31%) to 9,734.72. The Australian S&P/Asx rose 30.80 points (0.78%) to 3,986.10. 

Crude oil for July delivery was recently trading at $68.20 per barrel, lower by $0.30.

Gold for July delivery was recently trading higher by $0.80 to $985.30.

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