July 16, 2012 Financial Market Summary

DJIA soared 1.6% to settle at 12,777.1. NASDAQ jumped 1.5% to close at 2,908.5. S&P 500 surged 1.7% to end at 1,356.8.

Markets in Japan are closed on account of a public holiday.

FTSE 100 soared 1.0% to close at 5,666.1.

FTSEurofirst 300 index rose 1.3% to 1,042.6.

In Asia, crude oil for August delivery is trading 0.3% or $0.22 lower at $86.88 per barrel.

At 0400 BST today, the GBP is trading marginally higher against the USD at $1.5571, slightly higher against the EUR at €1.2723, and 0.2% lower against the JPY at ¥123.19.

US Market Snapshot

US markets rallied on Friday, with the DJIA snapping its six-days losing streak, led by sharp gains in financial sector stocks, as upbeat corporate earnings report and hopes that China would boost stimulus measures to spur economic growth allayed fears about global economic slowdown. Wells Fargo and JPMorgan Chase gained 3.2% and 6.0%, respectively, after they reported better-than-expected second-quarter earnings. Procter & Gamble added 2.2%, after activist investor Bill Ackman of Pershing Square Capital Management acquired a significant stake in the company. Merck & Co gained 1.3%, after it halted trial of a bone drug on favourable results. However, Hewlett-Packard fell 1.9%, after JP Morgan reiterated its “Underweight” rating on the stock.

DJIA rose 1.6% to 12,777.1. NASDAQ jumped 1.5% to close at 2,908.5. S&P 500 surged 1.7% to end at 1,356.8.

Asian Market Snapshot

Asian markets are trading higher this morning, taking cues from gains on Wall Street on Friday following better-than-expected corporate earnings and amid mounting optimism that China’s central bank might cut interest rates to spur economic growth. In Hong Kong, Lenovo Group gained value, amid optimism that the company would overtake Hewlett-Packard in terms of sales in 2012. Cnooc and PetroChina traded higher, tracking a rise in crude oil prices on Friday. In South Korea, Hyundai Motor and Kia Motors paced higher, despite a small-scale labour strike. SK Gas rose following media reports that the company was entering the market for liquefied petroleum gas products. Shinwon surged after it acquired Italian luxury bag maker Romeo Santamaria.

Markets in Japan are closed on account of a public holiday. Hong Kong index is trading 0.1% higher, at 19,119.4, while the Kospi index is trading marginally higher, at 1,813.3.

UK Market Snapshot

UK markets closed higher on Friday, after China’s GDP data fuelled speculation the country would implement additional measures to support growth and after the Bank of England and the British Treasury unveiled the details of ‘Funding for Lending’ scheme. Antofagasta, BHP Billiton, Vedanta Resources and Kazakhmys advanced between 3.0% and 6.1%, tracking higher base metal prices. Kazakhmys also rose, on renewed talk that it could swap its 26% in ENRC for Glencore's 51% stake in Kazzinc. Banks, Standard Chartered and HSBC Holdings gained 2.0% and 0.7%, respectively, following the BOE and British Treasury plan to boost UK lending. Vodafone Group and BT Group added 0.5% and 3.5%, respectively, after Citigroup upgraded the European telecom sector to “Neutral” from “Underweight”. ITV gained 3.7%, amid speculation of receiving bid interest from a private equity and as a broker reiterated its “Overweight” rating on the stock.

FTSE 100 gained 1.0% to close at 5,666.1, while FTSE 250 rose 1.1% to settle at 11,043.8.

European Market Snapshot

Other European markets closed higher on Friday, after data revealed that China’s economic growth came in line with market expectations and as Italy succeeded a bond auction despite a ratings downgrade. Among telecom sector stocks, France Telecom, Telecom Italia and Vivendi climbed between 3.5% and 5.6%, after Citigroup upgraded its rating on the telecom sector to “Neutral” from “Underweight”, while Deutsche Telekom advanced 5.7%, as Credit Suisse lifted its rating on the stock to “Neutral” from “Underperform”. Commodity sector stocks, ThyssenKrupp, ArcelorMittal and Total gained between 1.1% and 2.3%, in line with a rise in commodity prices. Neopost rose 4.8%, after the company stated that it bought customer communication management company GMC Software Technology.

FTSEurofirst 300 index rose 1.3% to 1,042.6. German DAX Xetra 30 advanced 2.1% to 6,557.1. French CAC-40 closed 1.5% higher at 3,180.8.

Commodities

In Asia, crude oil for August delivery is trading 0.3% or $0.22 lower at $86.88 per barrel. On Friday, crude oil for August delivery added 1.2% or $1.02 to end at $87.10 per barrel, after China’s second-quarter GDP data came in line with market expectations, easing concerns about the pace of economic recovery and on reports that the US had announced additional sanctions on Iran, raising concerns about supply disruptions.

Gold for immediate delivery is trading 0.2% lower today, at $1,586.07 per ounce. Gold for August delivery climbed 1.7% or $26.70 to settle at $1,592 per ounce on Friday, as the dollar weakened against the major currencies, increasing demand for the precious metal as an alternative investment.

Currencies

At 0400 BST today, the GBP is trading marginally higher against the USD at $1.5571, slightly higher against the EUR at €1.2723, and 0.2% lower against the JPY at ¥123.19.

The EUR is trading slightly lower against the USD at $1.2240. The EUR is trading 0.2% lower against the JPY at ¥96.83.

The EUR is trading lower against the most of its peers, after German Chancellor, Angela Merkel stated that she has not softened her stance on measures to stem debt contagion. The EUR also fell, ahead of reports which are expected to show that annual rate of inflation in the eurozone stagnated in June and investor confidence in Germany fell in July.

The AUD and NZD are trading higher against the USD, as Asian equity markets rose and on speculation that global central banks would take further steps to boost economic growth.

On Friday, the EUR ended higher against the USD, as Italy managed to sell €3 billion in debt in at an auction, despite a bond rating downgrade by Moody’s. However, earlier in the trading session, the USD traded higher, after a report showed that US producer prices unexpectedly rose in June.

The GBP ended higher against the EUR, after Moody's unexpectedly cut Italy's sovereign rating by two notches to “Baa2” and warned that further cuts could be possible, increasing the demand for the relatively safe British currency.

The USD closed lower against the JPY, after report showed that the consumer sentiment index in the US fell to a reading of 72.0 in May from a reading of 73.2 recorded in April.

The JPY closed higher against the EUR, after the Bank of Japan stated that the economic activity in Japan has started to pick up moderately amid firm domestic demand.