Today's Morning Report

U.S. Overnight Market Commentary 

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for the fifth time in six days, as declines in oil and metal prices dragged down commodity producers. Exxon Mobil Corp. lost 1.1% as oil slid from a seven-week high. Freeport-McMoRan Copper & Gold Inc. sank 2.9%. Altria Group Inc. rallied 3.3% as the Supreme Court rejected a White House appeal of a racketeering case against tobacco companies. Sprint Nextel Corp. climbed 6.2% on President Barack Obama’s plan to increase airwaves available for smartphones, laptops and new wireless devices. The S&P 500 decreased 0.2% to 1,074.57 as of 4 p.m. in New York after gaining as much as 0.5%. The Dow Jones Industrial Average slipped 5.29 points, or 0.1%, to 10,138.52. About three stocks retreated for every two that rose on U.S. exchanges. “There’s not a great deal of conviction in this market,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees more than US$800 million and whose flagship fund beat 97% of peers over the last year. “In general there seems to be a lack of buyers in the equity market and I think that’ll stay in place through the end of the quarter.” The S&P 500 is poised for an 8.1% second-quarter retreat, snapping a four-quarter streak of gains. The index rallied 9.2% from the end of 2009 through this year’s high on April 23 amid signs of improvement in the global economy. The gauge then tumbled 14% through June 7 on concern Europe’s debt crisis may derail the economic recovery. The measure remains 3.6% lower in 2010, trimming its valuation to less than 16 times the reported earnings of its companies, near the lowest level in almost a year. Benchmark indexes opened higher following a report showing consumer purchases rose 0.2% after little change the prior month, Commerce Department figures showed. Incomes climbed 0.4 and the savings rate increased to the highest level in eight months. Exxon Mobil, the largest U.S. energy company, retreated 1.1% to US$58.47. Energy shares in the S&P 500 lost 1.3% as a group, the biggest decline among 10 industries. Oil retreated on speculation that production in the Gulf of Mexico will be unaffected by a tropical storm in the region. Oil for August delivery fell 61 cents, or 0.8%, to US$78.25 a barrel in New York. Futures have dropped 6.6% in the quarter and 1.4% this year.

 

Europe’s Overnight Market Commentary

European shares snapped four sessions of losses to close higher on Monday, buoyed by bank shares and upbeat U.S. consumer spending data, but they failed to climb beyond a key technical level. The pan-European FTSEurofirst 300 index of top shares closed 1.3% higher at 1,026.68 points, while the Euro STOXX 50 rose 1.5% to 2,668.67 points. Barclays, Deutsche Bank and BNP Paribas gained 1.5% to 3.6%, benefiting from the G20's decision to adopt a more flexible timetable for lenders to implement new capital rules. Standard Chartered bucked the trend, however, slipping 1.8% after the lender said recent economic uncertainty had hurt business, taking the shine off a strong first-half performance. Data showed U.S. consumer spending rose slightly more than expected in May even as savings touched their highest level in eight months, pointing to a recovery that remains on solid ground. "This week could be a pretty good one after the retreat we saw last week. People will continue to focus on data, particularly the Standard & Poor's/Case Shiller home price indexes tomorrow and U.S. non-farm payrolls on Friday," said Heino Ruland, strategist at Ruland Research. But the Euro STOXX 50 failed to close above a key 38.2% retracement of the fall from its April high of 3,027.14 points to its May low of 2,448.10, a sign that stocks could soon resume their recent retreat. "We are still trading below the 200-day moving average (on the Euro STOXX 50), reflecting weakness in the rebound. If the market goes through it, the momentum in the market would look more solid," said Mike Lenhoff, chief strategist at Brewin Dolphin. The FTSEurofirst 300 is down 7.7% from its peak in April, when worries intensified that the euro zone debt crisis could erode economic growth in the region.Among individual gainers, Telenor added 4.9% after BofA Merril Lynch upgraded its recommendation on the telecommunications firm to "buy" from "neutral", saying the stock is exposed to the best trends in the sector. Food producers were also higher, with Danone, Nestle and Unilever up 0.4% to 2.4%. Oil majors gained, led by a 1.2% rise in BP which bounced back after dropping to a 14 year low on Friday. On the economic front, the Bank for International Settlements said governments must slash budget deficits decisively and central banks should not wait too long to raise borrowing costs as side effects from measures prescribed to tackle the global recession may create the next crisis.

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

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