U.S., Global Markets Calmer and Shift Focus to Greece, Italy

Arthi Gupta
11 Jun, 2012
New York City

U.S. and global indexes rallied after euro zone finance ministers agreed to offer a preemptive Spanish bank bailout ahead of Greek election. Bond yields of peripheral euro zone nations barely budged indicating a lukewarm response. Chinese exports and economic data lifted commodities prices.

[R]9:45 AM New York – U.S. and global indexes rallied after euro zone finance ministers agreed to offer a preemptive Spanish bank bailout ahead of Greek election. Sovereign bond yields of peripheral euro zone nations barely budged indicating a lukewarm response. Chinese exports and economic data lifted commodities prices.[/R]

U.S. stocks advanced in early trading on the expectations that European leaders will soon finalize the details of Spanish bailout.

The weekend announcement of the bank bailout in Spain lifted banks across Europe but bond market yields failed to improve. Investors stayed on the sidelined and awaited the details of the bailout.

Asian markets rallied and reacted first to the news but investors worried that future bailout of Italy may be larger than Spain’s bailout.

European markets in the late afternoon trimmed the market gains after bond yields of Italy and Spain lost most of the early gains. Germany sold €4 billion of six-month treasury bills at average yield of 0.07%, near the record low.

In the absence of merger news on Monday, investors are focusing on economic data expected to release this week. Retail sales, industrial production, the weekly jobless claims and the consumer sentiment index are scheduled this week.

In Asian trading, the Hang Seng index in Hong Kong gained 2.5% to 18,953.63, CSI 300 index in Shanghai added 1.3% after China reported a batch of economic data and the Sensex index in India declined 0.3% to 16,668.01. Market indexes in Thailand surged 3.1% and South Korea advanced 3.1% to 248.30.

The euro gained 1% to $1.261 and oil and copper jumped in international trading.

Over the weekend, China reported a raft of economic data indicating generally slowing economy.

However, exports in May surged 15.3% from a year ago to $181.1 billion after rising at 4.9% in April. Imports in the month rose 12.7% to $162.4 billion and trade surplus increased to $18.7 billion from $18.4 billion in April.

Exports for the year to May increased 8.7% to $774.4 billion and imports gained 6.7% to $736.5 billion according to the data released by the General Administration of Customs.

Separately, the consumer price index rose at a slower pace of 3% annually in May compared to 3.4% in April. Industrial output increased 9.6% in the month and producer prices fell 1.4% in the month, the third monthly decline in a row.

Retail sales were below expectations and rose at 13.8%, slowest in the year excluding the holiday period of January and February.

Indian market turned negative after ratings agency Standard & Poor's warned that the country may be the first BRIC nation to lose its investment grade as economic growth weakens and foreign investment flow declines.

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