June 26, 2012 Financial Market Summary

DJIA slipped 1.1% to end at 12,502.7. NASDAQ tumbled 1.9% to settle at 2,836.2. S&P 500 shed 1.6% to close at 1,313.7.

Nikkei 225 index is trading 0.5% lower at 8,690.9.

FTSE 100 dropped 1.1% to settle at 5,450.7.

FTSEurofirst 300 index lost 1.5% to end at 986.4.

In Asia, crude oil for August delivery is trading 0.1% or $0.10 lower at $79.11 per barrel.

At 0400 BST today, the GBP is trading 0.1% higher against the USD at $1.5580, marginally down against the EUR at €1.2449, and 0.2% higher against the JPY at ¥124.19.

US Market Snapshot

US markets fell sharply yesterday, amid pessimism over the result of a key summit of European Union leaders slated later this week. Stocks also declined after German Chancellor Angela Merkel rejected euro area debt sharing and Cyprus officially requested for a bailout. Financial sector stocks, BlackRock, Prudential Financial, SunTrust Banks, Hartford Financial Services and Fifth Third Bancorp declined between 3.0% and 4.1%, as news that Spain had officially requested EU loans to help bailout the nation's banks weighed on investor sentiment. Morgan Stanley lost 4.7%, as its head of German operations stepped aside, amid questions over a deal that caused a political scandal. Pfizer and Bristol-Myers Squibb dropped 1.1% and 3.5%, respectively, after the US FDA blocked an application to market their new anti-clotting drug.

DJIA slipped 1.1% to end at 12,502.7. NASDAQ tumbled 1.9% to settle at 2,836.2. S&P 500 shed 1.6% to close at 1,313.7.

Asian Market Snapshot

Asian markets are trading lower this morning, amid fading hopes that the European summit this week would deliver a solution to contain the region’s debt crisis. Moreover, a downgrade of China’s economic outlook by HSBC Holdings and a drop in South Korean consumer confidence also weighed on market sentiment. In Japan, Honda Motor traded lower, following report that the Chinese government has no imminent plans to subsidize car purchases. Nippon Electric lost value, after it trimmed its first quarter profit outlook. In Hong Kong, China Taiping Insurance Holding traded higher, after Fitch Ratings affirmed its Issuer Default Rating (IDR) at “BBB+”. In South Korea, exporters, Kia Motors and LG Electronics traded lower, amid concerns weak macroeconomic conditions would hamper demand.

Nikkei 225 index is trading 0.5% lower at 8,690.9. Hang Seng index is trading 0.2% higher at 18,927.6, while the Kospi index is trading 0.1% lower, at 1,816.0.

UK Market Snapshot

UK markets extended last week’s drop, declining sharply yesterday, as investors remained apprehensive about the outcome of the European summit later this week, amid fragile global growth and worries over the ongoing debt crisis. Shire plunged 11.3%, after the US-FDA approved a generic version of its second-biggest selling drug. Essar Energy fell 7.8%, despite reporting 15-month results that were broadly in line with market expectations. Evraz, Rio Tinto and Vedanta Resources dropped between 2.9% and 5.0%, amid continued global macroeconomic uncertainty. WM Morrison lost 1.3%, after its finance director, Richard Pennycook intended to step down at the end of June 2013. SABMiller fell 1.7%, as a broker cut its rating on the stock to “Sell” from “Hold”, while BT Group lost 2.0%, after Citigroup downgraded its rating to “Neutral” from “Buy”.

FTSE 100 dropped 1.1% to settle at 5,450.7, while FTSE 250 fell 1.4% to close at 10,671.4.

European Market Snapshot

Other European markets closed sharply lower yesterday, amid speculation that a summit of the eurozone policymakers this week would fail to yield concrete solutions to tackle the eurozone debt crisis. Unicredit and Intesa Sanpaolo sank 8.4% and 6.5%, respectively, after Exane BNP Paribas trimmed its 2013 earnings estimate for Italian banks by an average of 13.0%, while Deutsche Bank lost 4.4%, after a broker downgraded the stock to “Sector perform” from “Outperform”. ThyssenKrupp fell 4.3%, after JPMorgan trimmed its price estimate on the stock. Utilities, EON and RWE, lost 3.2% and 2.9%, respectively, on news that the companies might outsource nuclear disposals to Areva. ABB declined 2.8%, after JP Morgan Cazenove downgraded the stock to “Underweight” from “Neutral”.

FTSEurofirst 300 index lost 1.5% to end at 986.4. German DAX Xetra 30 dropped 2.1% to 6,132.4. French CAC-40 closed 2.2% lower at 3,021.6.

Commodities

In Asia, crude oil for August delivery is trading 0.1% or $0.10 lower at $79.11 per barrel. Yesterday, crude oil for August delivery declined 0.7% or 55 cents to end at $79.21 per barrel, on news that Saudi Arabia would not cut oil production this summer and after possibility of a tropical storm in the Gulf of Mexico was cast aside. Crude oil also lost value, amid continued concerns about the eurozone debt crisis ahead of a crucial meeting of European Union lawmakers this week.

Gold for immediate delivery is trading 0.1% lower today, at $1,584.45 per ounce. Gold for August delivery gained 1.4% or $21.50 at $1,588.40 per ounce yesterday, as scepticism that the European summit would result in concrete measures and signs of worsening debt crisis in the euro area, increased demand for the precious metal as an alternative investment. Reports that Cyprus had sought a bailout and Germany’s Chancellor Angela Merkel had hardened her resistance to euro-area debt sharing also boosted the demand for the safe haven metal.

Currencies

At 0400 BST today, the GBP is trading 0.1% higher against the USD at $1.5580, marginally down against the EUR at €1.2449, and 0.2% higher against the JPY at ¥124.19.

The EUR is trading 0.1% higher against the USD at $1.2513. The EUR is trading 0.1% higher against the JPY at ¥99.75.

The EUR is trading higher against the USD and the JPY. Earlier the currency was trading lower, as Moody’s Investors Service downgraded 28 Spanish banks yesterday and before Spain and Italy sell bonds today.

The JPY is trading lower against most of its major peers, as Japanese lower house lawmakers prepare to vote on a bill to double the consumption tax, later today.

The AUD is trading higher against most of its major peers, ahead of the Reserve Bank of Australia’s next week policy meeting, on hopes that the country’s economy is strong enough to weather effects of Europe’s debt crisis.

Yesterday, the EUR closed lower against the USD, amid mounting speculation that the European sovereign debt crisis would spread to bigger economies. The currency was also weighed down on report that Cyprus had officially requested a bailout and as Spanish bond yields surged.  The USD finished higher against the GBP, after US new home sales rose more-than-expected in May and the Federal Reserve Bank (Fed) of Dallas reported that, its manufacturing business activity index rose to a reading of 5.8 in June from a reading of -5.1 in May. The EUR closed lower against the GBP, amid continued concerns over the sovereign debt crisis in the euro area, but speculation of more easing by the Bank of England helped support the currency.