Stocks exploded today sending the benchmark US indexes to their highest levels since May. The DJIA ended up +274.66 to 10018 and the S&P closed higher +32.21 at 1060. Retailers advanced on the International Council of Shopping Centers comments that sales were growing at the fastest pace since 2006. Financials rose on State Street Corp’s Q2 operating profit beating estimates. Concerns that consumer confidence would undermine the economic recovery were put to rest as risk appetite returned with a vengeance across all risk assets. Gold closed up +$10 at $1203, crude oil ended up +2.82 to $74.78, and US bond markets ended lower as 2 and 10 year yields rose 1 bp and 5 bp respectively.
With risk being put back on the table, the US dollar was weaker across the board. EURUSD tested its recent correction high around 1.2665 but closed down under 1.2650. AUDUSD surged above the .8500 level to close near its 55 day SMA around .8646. Reports of Eurozone bank stress tests designed to gauge banks' strength assuming a haircut of 17% on Greek debt may have given confidence to the market. This may be a false confidence, given that credit markets are pricing in losses of 60% via recovery swap trades. It seems the stress tests for European banks may not be rigorous enough but market reaction to date has been muted. The next major market events are the ECB and BOE meetings on Thursday for which no policy changes are expected.
Upcoming data releases out of Asia Pacific sees June Australian jobs reports at 21:30 GMT. Japanese data sees June Machine Orders (MoM) and Machine Orders YoY% along with the June Current Account to be released in the Tokyo session.
No comments:
Post a Comment