July 06, 2012 Financial Market Summary

DJIA slid 0.4% to end at 12,896.7. NASDAQ closed unchanged at 2,976.1. S&P 500 shed 0.5% to close at 1,367.6.

Nikkei 225 index is trading 0.4% lower at 9,047.5.

FTSE 100 edged up 0.1% to settle at 5,692.6. FTSEurofirst 300 index eased 0.1% to 1,044.5.

In Asia, crude oil for August delivery is trading 1.1% or $0.98 lower at $86.24 per barrel.

At 0400 BST today, the GBP is trading marginally lower against the USD at $1.5525, 0.1% higher against the EUR at €1.2537, and 0.1% higher against the JPY at ¥124.10.

US Market Snapshot

US markets slipped yesterday, after data showed that the US services sector slowed to a two-and-half year low in June and amid speculation that the cut in interest rate by the ECB would have limited impact on the eurozone economy. Positive US private-sector payrolls and weekly jobless claims data failed to cheer investors as they remained cautious ahead of the US jobs report on Friday. Goldman Sachs, Citigroup, Bank of America, Morgan Stanley and JPMorgan Chase dropped between 2.7% and 4.2%, amid broader economic and regulatory uncertainty. A broker’s downgrade to “Hold” from “Outperform” also weighed on JP Morgan. Among retailers, Buckle and Fred's lost 3.0% and 4.4% respectively, after reporting disappointing June same-store sales data.

DJIA slid 0.4% to end at 12,896.7. NASDAQ closed unchanged at 2,976.1. S&P 500 shed 0.5% to 1,367.6

Asian Market Snapshot

Asian markets are trading lower this morning, taking cues from overnight losses on Wall Street, as interest-rate cuts in Europe and China failed to cheer investors. Investors also remain cautious ahead of the US jobs report today. In Japan, Nomura Holdings and Daiwa Securities traded lower, on news that Japanese regulators are investigating the possibility of insider trading at major brokerages. In Hong Kong, Bank of China, Bank of Communications and HSBC Holdings paced declines, amid concerns they would face margin pressure as China eased policy. In South Korea, Samsung Electronics paced lower, as investors booked profits, after the company forecasted record quarterly earnings. Kumho Petro Chemical dropped after analysts forecasted company’s second-quarter operating profit to fall short of estimates.

Nikkei 225 index is trading 0.4% lower at 9,047.5. Hang Seng index is trading 0.4% lower, at 19,731.8, while the Kospi index is trading 0.8% lower, at 1,860.6.

UK Market Snapshot

UK markets ended on a mixed note yesterday, with the FTSE 100 index eking out modest gains, after the Bank of England augmented the size of its quantitative-easing program, while the ECB and the POBC trimmed their interest rates, offsetting continued concerns about the euro-area. Engineering group, GKN surged 13.1%, leading the gainers on the FTSE 100 index, as it acquired the aero engine division of AB Volvo for £633million. Xstrata gained 3.1%, as it postponed a shareholder meeting due July 12 to approve its merger with Glencore International. Tate & Lyle rose 1.6%, after Exane BNP Paribas raised its recommendation on the shares to “Outperform” from “Neutral”. Man Group slipped declined 6.4%, amid worries over its second-quarter performance. Hays and Michael Page International dropped 3.5% and 4.5%, respectively, weighed down by a disappointing trading update from its sector peer Robert Walters.

FTSE 100 edged up 0.1% to settle at 5,692.6, while FTSE 250 ticked down 0.3% to close at 11,130.9.

European Market Snapshot

Other European markets slid yesterday, after European Central Bank President Mario Draghi warned about downside risks to the eurozone economies, overshadowing interest-rate cuts in Europe and China and Bank of England’s decision to increase its asset purchase program. A rise in Spanish and Italian bond yields at an auction also weighed on market sentiment.  UniCredit, Commerzbank and Banco Santander sank between 1.7% and 5.1%, as a rise in Italian and Spanish borrowing weighed on investor sentiment. Merck slid 2.3%, after its Erbitux cancer drug failed to show any benefit to patients in phase III clinical trials. Total fell 1.1%, tracking lower crude oil prices. However, Volkswagen rallied 6.1%, after it agreed to acquire the controlling stake in Porsche’s automotive business.

FTSEurofirst 300 index eased 0.1% to 1,044.5. German DAX Xetra 30 declined 0.4% to close at 6,535.6. French CAC-40 closed 1.2% lower at 3,229.4.

Commodities

In Asia, crude oil for August delivery is trading 1.1% or $0.98 lower at $86.24 per barrel. Yesterday, crude oil for August delivery dropped 0.5% or 44 cents, to settle at $87.22, as the dollar appreciated against the euro and as investors speculated monetary easing by the European Central Bank, the Bank of England, and the People's Bank of China signals global concerns of an economic slowdown. However, declines were limited after the Energy Information Administration reported higher-than-expected decline in the US crude oil inventories for the week ended June 29.

Gold for immediate delivery is trading 0.1% lower today, at $1,605.82 per ounce. Gold for August delivery declined 0.8% or $12.40 to settle at $1,609.40 per ounce yesterday, as the dollar rose against the major currencies and as investors speculated that the US Federal Reserve might refrain from further US stimulus measures.

Currencies

At 0400 BST today, the GBP is trading marginally lower against the USD at $1.5525, 0.1% higher against the EUR at €1.2537, and 0.1% higher against the JPY at ¥124.10.

The EUR is trading 0.1% lower against the USD at $1.2382, and marginally lower against the JPY at ¥98.98, ahead of a report due to be released today, that might show industrial production in Germany and Spain declined.

Yesterday, the EUR closed lower against the USD, after the ECB President, Mario Draghi, warned that a further interest rate cut has increased the downside risk of eurozone economy and following a rise in Italian and Spanish borrowing costs at debt auctions.

The EUR finished lower against the AUD and the NZD, after the European Central Bank lowered its benchmark interest rate to a record 0.75%.

The GBP closed lower against the GBP, after the Bank of England increased its asset purchases by £50.0 billion, bringing the total size of the program to £375.0 billion.

The NZD ended higher against the USD, after New Zealand’s government stated that the country’s budget deficit was narrower-than-forecast in the 11 months through May.

The USD closed lower against the USD, after the Institute for Supply Management (ISM) reported that US service sector index fell more-than-expected in June, and US MBA mortgage applications dropped in the week ended 29 June 2012.