Barchart.com Morning Call for Monday, April 30, 2012
Overnight Developments
• Global stock and commodity prices are mixed with June E-mini S&Ps down -0.75 of a point and the Euro Stoxx 50 down -0.25%. The dollar index recovered from a 3-1/2 week low and moved higher and most stocks and commodities weakened after Spain entered its second recession since 2009. Q1 Spain GDP contracted -0.3% q/q and -0.4% y/y, slightly better than expectations of -0.4% q/q and -0.6% y/y. Other negatives for stocks were the Mar German retail sales which rose +0.8% m/m, weaker than expectations of +1/0% m/m, while European bank stocks declined after S&P cut its credit ratings on 11 Spanish lenders. On the positive side, European inflation risks subsided after the Apr Euro-Zone CPI estimate fell to a gain of +2.6% y/y from a +2.7% y/y increase in Mar, while increased M&A activity boosted stocks after Energy Transfer Partners LP agreed to buy Sunoco for $5.3 billion in cash and stock and Hologic agreed to by Gen-Probe for $3.7 billion in cash.
• Asian stocks today closed mostly higher with Japan and China closed for holiday, Australia up +0.79%, South Korea +0.35% and India +0.76%. Asian stocks closed mostly higher on expectations that Australia's central bank will cut interest rates tomorrow along with increased confidence in South Korean manufacturers. The yen rose to a 2-month high against the dollar on an increase in flight-to-safety demand from the European debt crisis, while the Australian dollar retreated and stocks settled higher ahead of Tuesday's RBA monetary policy meeting in which expectations are for the RBA to cut its overnight cash target rate by 25 bp to 4.00%, with a 34% chance of a 50 bp cut, according to swaps price data. South Korean stocks closed higher after May South Korea manufacturers' confidence rose +5 to 90, a 9-month high.