Daily News Report

Markets in a Flash

• Asian equity markets continued their rise last night. The Nikkei finished up +1.29%, while the Hang Seng finished up +0.21%.
• European equity markets are slightly down this morning. This is after yesterday strong rise took them to new recent highs.
• Commodities are looking strong today and are pushing to fresh 3 month highs. Oil is trading above the $81.00 level. Wheat prices fell after their recent gains as Russia calmed fears of export problems.
• The USD/JPY has broken its Nov 2009 low and is now trading below 86.00.
• The GBP and EUR are continuing to push higher against the USD and are trading in line with their trends from the past couple of months.
• US equity futures are slightly lower this morning suggesting a slight drop at the open retracing the rises of yesterday.

News Focus

More Stimulus may be avoided as economic recovery continues

Ben Bernanke, Chairman of the Federal Reserve, expects that consumer spending will pick up as a moderate recovery continues. He said this is likely to happen while talking to lawmakers in South Carolina yesterday. It is expected that Federal Reserve policy makers will pass on providing more economic stimulus at their August 10th meeting. They are expected to wait and see if the recovery in the US economy continues unassisted.

Just Released

0830ET – Personal Income and Outlays

Personal Income - M/M change
Previous 0.4 % Consensus Range -0.1 % to 0.3 %
Consensus 0.1 % Actual 0.0 %

Consumer Spending - M/M change
Previous 0.2 % Consensus Range -0.3 % to 0.3 %
Consensus 0.1 % Actual 0.0 %

After personal income posted a 0.4% and a 0.5% increase in the past 2 months a figure of 0.0% has been reported for June. These under consensus figures should be bearish on the markets as it shows worse than expected economic data. This suggests that people are earning and spending less that was initially expected.

Coming up Today

1000ET – Factory Orders

Previous -1.4 % Consensus -0.5 %
Consensus Range -1.0 % to 0.1 %

The figure released today is expected to show that factory orders fell in June, this follows the -1.4% drop in May. This expectation that factory orders has reduced correlates with the economic data of recent times which suggests that economic growth is slowing.

1000ET – Pending Home Sales Index

The pending home sales index is a leading indicator of sales of existing homes. The index shows the health of the housing market, and also gives an indication to the health of the wider economy. A higher than consensus figure will be a bullish sigh for the economy and the markets. An increase in health of the housing market will suggest an increase in spending in other areas of the economy. This is an important figure and has the potential to move the markets.