July 05, 2012 Financial Market Summary

US markets were closed yesterday on account of the Independence Day holiday.

Nikkei 225 index is trading 0.1% lower at 9,096.6.

FTSE 100 edged down 0.1% to settle at 5,684.5.

FTSEurofirst 300 index eased 0.1% to 1,045.6.

In Asia, crude oil for August delivery is trading 0.7% or $0.64 lower at $87.02 per barrel.

At 0400 BST today, the GBP is trading 0.1% higher against the USD at $1.5591, 0.1% lower against the EUR at €1.2442, and marginally higher against the JPY at ¥124.6.

US Market Snapshot

US markets were closed yesterday on account of the Independence Day holiday.

Asian Market Snapshot

Asian markets are trading lower this morning, as service sector data in Germany and the UK came in below expectations and ahead of the European Central Bank and the Bank of England policy meetings. In Japan, GS Yuasa traded lower, after Goldman Sachs Group trimmed its price target on the stock. Tokyo Electron lost value, after a Nikkei news report stated that the company would take a tax charge for the April-June quarter. In Hong Kong, Evergrande Real Estate paced lower after it filed a police report related to a short-seller that accused the company of fraud, bribery and financial irregularity. In South Korea, Lotte Shopping lost value as both Fitch and Moody's placed the company on negative credit watch after the company acquired a majority stake in Hi-mart. However, Halla Climate Control surged after Visteon Corp offered to buy out Halla's remaining stake to take full ownership of the company.

Nikkei 225 index is trading 0.1% lower at 9,096.6. Hong Kong index is trading 0.4% lower, at 19,627.9, while the Kospi index is trading 0.1% lower, at 1,872.1.

UK Market Snapshot

UK markets edged lower yesterday, after domestic service sector growth fell to an eight month low and on some profit-booking by investors following the recent rally. Markets awaited the outcome of the European Central Bank and the Bank of England policy meetings, the next day. Barclays lost 0.6%, as its former Chief Executive testified before a UK parliamentary panel, while HSBC Holdings, Lloyds Banking Group and ICAP declined between 0.5% and 1.1%, as investors feared that the LIBOR-scandal might implicate more firms. Tullow Oil fell 1.9%, after the company suspended drilling at a well in Kenya. Supermarket operator, Tesco dropped 1.2%, as ING downgraded its rating on the stock from “Hold” to “Sell” and slashed its target price, while WM Morrison Supermarkets lost 0.8%, as the same broker reduced its stance on the stock to “Hold” from “Buy”.

FTSE 100 edged down 0.1% to settle at 5,684.5, while FTSE 250 fell 0.3% to close at 11,161.2.

European Market Snapshot

Other European markets closed in the negative territory yesterday, a day ahead of the European Central Bank meeting, as the purchasing managers’ index for services in the UK and Germany came in weaker than expected and as Italy’s budget deficit rose in the first-quarter on an annual basis. Financial sector stocks, Banco Populare, Commerzbank and Banco Santander, lost between 0.3% and 3.1%, on news that European aid of up to €100 billion to Spanish banks could be delayed until 20 July. Utility sector stock, EON declined 1.6%, after both JPMorgan and Citigroup cut their recommendations on the stock. Chemical sector stock, Linde fell 1.3%, after Credit Suisse downgraded the stock to “Neutral” from “Outperform”. However, Societe Television Francaise 1 climbed 3.5%, after UBS advised a “Buy” on the stock, citing current valuation parameters.

FTSEurofirst 300 index eased 0.1% to 1,045.6. German DAX Xetra 30 dropped 0.2% to 6,564.8. French CAC-40 closed 0.1% lower at 3,267.8.

Commodities

In Asia, crude oil for August delivery is trading 0.7% or $0.64 lower at $87.02 per barrel. Yesterday, crude oil for August delivery dropped 0.7% or 61 cents to $87.05 per barrel in electronic trading, as signs of a slowdown in private Chinese service-sector activity and a contraction in Germany's service sector PMI weighed on investor sentiment. However, an American Petroleum Institute report indicating a sharp weekly drop in US crude oil inventories by 3 million barrels and simmering concerns about Iran kept losses under check. Floor trading was closed for the US Independence Day holiday.

Gold for immediate delivery is trading 0.1% lower today, at $1,617.98 per ounce. Gold futures for August delivery retreated 0.4% to close at $1,616.20 per ounce yesterday in electronic trading, as the dollar rose against the major currencies, decreasing the demand for the precious metal as a hedge against inflation. Floor trading was closed for the US Independence Day holiday.

Currencies

At 0400 BST today, the GBP is trading 0.1% higher against the USD at $1.5591, 0.1% lower against the EUR at €1.2442, and marginally higher against the JPY at ¥124.62. The GBP is trading lower the EUR, amid growing speculation that the Bank of England would increase its target for bond purchases to £375 billion in today’s meeting.

The EUR is trading 0.1% higher against the USD at $1.2531. The EUR is trading 0.1% higher against the JPY at ¥100.16.

Earlier, the EUR was trading lower against most of its 16 major counterparts amid speculation a report would show German factory orders dropped in May. The European Central Bank is expected to cut interest rate at its policy meeting today to stimulate the euro-area’s economy. Spain is scheduled to auction 3-, 4- and 10-year bonds today, while France would auction 10-year bonds.

The JPY is trading lower against most of its major peers, amid speculation that additional monetary stimulus from central banks would boost global economic growth, decreasing the demand for safe-haven currencies.

The AUD is trading lower against the USD, after Australia’s trade deficit widened in May for a fifth month.

Yesterday, the GBP closed lower against the USD, after a report revealed that the purchasing managers' index for the service sector in the UK dropped to a reading of 51.3 in June, marking its lowest reading since October 2011.

The EUR ended lower against the USD, after a report showed that German services PMI declined in June.