Today's Morning Report

U.S. Overnight Market Commentary 

U.S. stocks rose, with benchmark indexes turning positive for the year, as a late-day technology- share rally helped the market overcome an early slump spurred by economic reports casting doubts on the strength of the recovery. Apple Inc. rose 1.7% to a record price to pace gains in computer companies on optimism over the new version of its iPhone. First Solar Inc., the world’s largest maker of thin-film solar power modules, rallied 3.9% to lead industrial companies higher on Credit Suisse Group AG’s advice to buy the shares. Benchmark indexes recovered as the euro climbed to near its highest level of the day against the dollar, signalling growing confidence the European debt crisis is contained. The Standard & Poor’s 500 Index increased 0.1% to 1,116.04 as of 4 p.m. in New York and remained above its 200-day average for a third day. The Dow Jones Industrial Average gained 24.71 points, or 0.2%, to 10,434.17, erasing a drop of as much as 90 points. Both gauges did not turn higher until the final minutes of trading. “The market over the past two days -- given the economic data we’ve gotten -- it’s actually held up,” said Walter Todd, who helps manage about US$800 million at Greenwood Capital in Greenwood, South Carolina. “It’s been able to stay above that 200-day level and that’s good.” The S&P 500 has closed above its average over the past 200 days since June 15 after sinking below it for almost a month. The 2.4% rally on June 15 sent the index about 6.5 points above the level, a move considered significant by investors who base trading decisions on chart patterns. Earlier declines sent the S&P 500 down as much as 0.8% after the Federal Reserve Bank of Philadelphia’s general economic index slumped to 8 in June from 21.4 the previous month, below the average economist forecast of 20 in a Bloomberg News survey. Futures of the major indexes had retreated from their highs in pre-market trading after a government report showed an increase in first-time unemployment claims. “The entire tape is being driven by momentum and day traders,” said Jason Weisberg, director of institutional trading at Seaport Securities in New York. “Long-term players will not return until Europe is fully contained and bottomed.” The S&P 500 tumbled 14% from a 19-month high on April 23 through June 7 as concern grew that Europe’s debt crisis will derail the economic recovery and BP Plc’s leaking well triggered the worst oil spill in U.S. history.

Europe’s Overnight Market Commentary

European shares extended a rally to a seventh day on Thursday, as robust demand in a Spanish bond auction boosted investor confidence in the euro zone economic outlook, and BP rose sharply. The market's gains were capped, however, by U.S. data that cast doubt on the strength of the economic recovery. The FTSEurofirst 300 index of top European shares rose 0.3% to 1,041.84 points, the highest close since May 13. The index has gained 6.3% in a seven-day rally, the longest winning streak in 11 months, but it is still down 0.4% in 2010. New U.S. claims for jobless aid rose last week while consumer prices notched their largest decline in nearly 1-1/2 years in May. A report showed factory activity in the country's Mid-Atlantic region braked to its slowest pace in 10 months in June. "The inflation data is significant as it confirms the disinflationary environment, which European economies are also in," said Jeremy Batstone-Carr, strategist at Charles Stanley. "It's significant that while equities have tried to stage something of a rebound, there's been just as much demand for treasuries as well. "There are plenty of investors taking a pessimistic view equities could end the year much lower." BP was the standout gainer, up 6.7% after it agreed to set up a US$20 billion damage claim fund from its Gulf of Mexico oil spill and suspended dividend payments, removing uncertainty over the dividend and size of the fund. BP shares are still down more than 45% from a mid-April peak. UK banks were among the biggest gainers, with Barclays, Lloyds, and Royal Bank of Scotland, up between 2.6% and 3.4%. Britain's new finance minister unveiled the biggest shake-up of the regulatory landscape in 13 years late on Wednesday, giving the Bank of England more control, scrapping the Financial Services Authority and appointing an independent committee to look at whether retail and investment banking should be split. The proposals had been broadly trailed and key details on a bank levy will not come until the Budget on June 22. Other banks to rise included Banco Santander, up 1.6% after its deputy chairman said most Spanish banks would pass a stress test. Several miners fell, as copper prices slipped, hurt by the weak economic data. Antofagasta, Eurasian Natural Resources Corp., Fresnillo, Kazakhmys and Xstrata fell between 1% and 2.8%. Drug makers, attractive to investors when markets are falling due to their defensive qualities, slipped. GlaxoSmithKline and Novartis fell 0.7% and 1.3% respectively. Earlier in the session, the benchmark index for European shares went into positive territory for 2010. Spain drew strong demand for 10- and 30-year bond issues on Thursday, selling €3.5 billion (US$4.3 billion) at the top of its target range, although it paid a hefty premium compared with previous issues of the same paper. The euro hit a three-week high versus the dollar. Also helping sentiment, Germany finally backed the release of bank "stress tests", detailing the health of its lenders, dropping previous objections to the move after both France and Spain came out in favour of it.

---

Hanuman Investments Pty Limited trading as Hanuman Private Wealth - AFSL No. 313416

Please consider the environment before printing this document.

NOTICE TO RECIPIENTS: The information contained in and accompanying this communication may be confidential, subject to legal privilege, or otherwise protected from disclosure, and is intended solely for the use of the intended recipient(s). If you are not the intended recipient of this communication, please delete and destroy all copies in your possession, notify the sender that you have received this communication in error, and note that any review or dissemination of, or the taking of any action in reliance on, this communication is expressly prohibited. E-mail messages may contain computer viruses or other defects, may not be accurately replicated on other systems, or may be intercepted, deleted or interfered with without the knowledge of the sender or the intended recipient. To the extent permitted by law Hanuman Private Wealth makes no warranties, and expressly disclaims any liability, in relation to the contents of this message. Hanuman Private Wealth reserves the right to intercept and monitor the content of e-mail messages to and from its systems.