European Markets Retreat - Tread Water Waiting for US Market News

Market Update
Tuesday, August 3, 2010

Asian and European markets retreat from 3-month high; miners down, banks down, as investors face a tsunami of U.S. economic reports this week. US market news and earnings reports are about to be announced. US Dollar further declines, oil moving up prior to market open.

Monday Market Summary:

U.S. stock investors poured into riskier assets at the start of the month, encouraged by better-than-expected manufacturing and construction spending data, as well as encouraging signs from European bank earnings and global manufacturing. The strong start to August adds to a July that saw the Dow climb 7.1%, its biggest monthly gain since July 2009. Stocks were helped by a
better-than-expected July reading of the Institute for Supply Management's manufacturing index and an unexpected climb in June construction spending.

Treasurys:

Treasury prices fell as positive global manufacturing data and a string of stronger-than-expected corporate earnings reports sparked a push into riskier assets and away from traditionally safer, but lower yielding, U.S. government debt. The moves come after weeks of less-than-encouraging economic data plagued investors' appetite for risk with many fearing another dip in economic activity. "Investor optimism is growing," said Kevin Giddis,head of fixed-income sales, trading and research at Morgan Keegan.


Forex:

The euro jumped to a three-month high against the dollar Monday, while the U.K. pound strengthened to its best level in six months after global manufacturing data led to growing confidence in an economic recovery. Investors more confident about the global economy fled the low-yielding dollar, which fell to the lowest level since April against a trade-weighted basket of competitors.

"The initial momentum coming into this recovery has waned, but by the same token, we don't feel we are seeing evidence consistent with a double-dip recession," said Mike Moran, senior foreign exchange strategist at Standard Chartered Bank.



Dow Jones 10,674.38 +208.44 + 1.99%
S&P 500 1,125.86 +24.26 + 2.20%
Nasdaq 2,295.36 +40.66 + 1.80%
Crude Oil 81.48 + 0.17%
Natural Gas 4.71 + 0.21%
Gasoline 2.17 + 0.30%
Heating Oil 2.16 + 0.40%
Gold 1181.92 - 0.04%
Silver 18.36 + 1.94%
Copper 3.38 + 2.36%

World markets

Shanghai 2,672.52 +35.01 (1.33%)
Nikkei 225 9,570.31 +33.01 (0.35%)
Hang Seng Index 21,412.79 +382.98 (1.82%)
TSEC 7,911.68 +151.05 (1.95%)
FTSE 100 5,397.11 +139.09 (2.65%)
CAC 40 3,752.03 +108.89 (2.99%)
S&P TSX 11,713.43 -15.21 (-0.13%)
S&P/ASX 200 4,541.60 +48.10 (1.07%)
BSE Sensex 18,081.21 +212.92 (1.19%)


Tuesday's Calendar:

7:45 a.m.
July 31 ICSC-Goldman Sachs Chain Store Sales Index - WoW (previous +0.6%), YoY (previous +3.8%)

8:30 a.m.
June Personal Income & Outlays Personal Income (expected +0.1%), Personal Spending expected +0.1%), PCE Price Index Monthly (previous 0), Yearly (previous +1.9%), PCE Core Price Index Monthly (expected +0.2%), Yearly (previous +1.3%)

8:55 a.m.
Johnson Redbook Retail Sales Index MoM % Change (previous -0.7%), 12 Mon Chg Pct (previous +2.8%), 52WkChgPct (previous +2.7%)

10:00 a.m.
August Pending Home Sales Index Current (previous 77.6), MoM Pct Change (Current Period) (expected -4%), YoY Pct Change (Current Period) (previous -15.9%)

10:00 a.m.
June Manufacturers' Shipments, Inventories & Orders (M3) Total Orders (expected -0.5%), Orders, Ex-Defense (previous -1.4%), Orders, Ex-Transportation (previous -0.6%), Durable Goods 1st Est (previous -1.1%), Durable Goods Revised (previous -0.6%)

4:30 p.m.
July 30 API Weekly Statistical Bulletin Crude Stocks (Net Change) (previous +3.08M), Gasoline Stocks (Net Change) (previous +0.88M), Distillate Stocks (Net Change) (previous +0.41M), Refinery Runs (previous 87.4%)

5:00 p.m.
August 1 ABC News Consumer Confidence Index (previous -48)