Daily News Report

Markets in a Flash
• Asian equity markets performed poorly overnight and closed down. Shanghai was down over 1.5% at the close.
• European equity markets are seeing a bullish day. European indices are up around 1.5%.
• Commodities futures are all showing gains today. Oil is up 0.5% while gold is up 0.7%
• The GBP is looking strong today, as it strengthens against the USD, JPY and EUR.
• The USD looks slightly weak as investors move away from safety and accept more risk.
• The EUR looks weak in response to the Downgrade of Portugal.
• US equity futures are showing rises suggesting a rise in the equity markets at 0930ET.
News Focus
The ratings Moody’s has downgraded Portugal’s debt rating from Aa2 to A1. This is a downgrade of two levels. Concerns over the Eurozone Country’s Debt to GDP and revenue ratios are cited as reasons for the cut. This follows the trend from the US ratings agencies in downgrading Mediterranean countries after Greece and Spain have already been cut. Portugal is expected to be running a debt to GDP ratio of 90% within the next couple of years and a debt to revenue ratio of over 200%.
Alcoa reported its Q2 earning last night and they came in ahead of consensus. This Q2 earnings figure sees America’s largest aluminium producer return to profit. Q2 profit was reported at $136M compared with a loss of $201M in Q1 of this year. As this is the start of the earnings season and Alcoa is the first to report it is seen as a barometer for the rest of the economy, this better than expected figure should be bullish for the markets when they open.
A complete ban on the export of iron ore in India has been proposed by the secretary in the ministry of steel. This is proposed to protect the natural resources that India has. India is the world’s fourth largest producer of Iron ore and supplies 220M tonnes to China each year.
Just Released
0830ET – International Trade
Previous $-40.3 B Consensus $-39.0 B
Consensus Range $-41.0 B to $-38.0 B Actual $-42.3 B
The international trade report shows the US’s trade gap. A negative figure shows that more money is leaving the country than is coming in. Today’s figure shows data for May. April’s data released last month showed a worsening of the trade gap from -$40.0B to -$40.3B. Today’s report shows that the trade gap has no improved over last month’s figure and has come in worse than consensus. This should prove bearish for the US markets when they open.
Coming up Today
1400ET – Treasury Budget
Previous $-135.9 B Consensus $-70.0 B
Consensus Range $-90.0 B to $-69.0 B
The monthly report shows the federal government’s fiscal deficit or surplus. This gives an indicator of how government spending is compared with government revenues. The result for June, released today, is expected to show that the fiscal deficit is being reduced. A figure below consensus will show that tax revenues are not as high as expected or spending is higher than expected, this would be bearish for the markets.