US SUMMARY: Markets Focus On Corporate Forecasts
DJIA 11090.37 loss 134.63 dn 1.2%
NASDAQ 2130.06 loss 25.03 dn 1.2%
S&P 500 1265.48 loss 8.60 dn 0.7%
Dow Future 11178.00 gain 19.00 up 0.2%
NASDAQ Future 1553.50 gain 3.25 up 0.2%
S&P Future 1276.50 gain 1.50 up 0.1%
Euro-USD 1.2795 loss 0.0020 dn 0.2%
10-Yr US Treasury: 5.14% down 0.04
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Stocks plunged Friday as investors were chilled by June's employment report and shaken by warnings from 3M and Advanced Micro Devices. Treasury markets were buoyed by the strong economic data.
STOCKS: The second-quarter earnings season has arrived, giving Wall Street something else to think about besides economic reports and interest rates. Investors expect yet another round of outstanding profit reports.
"One thing we know about this economy is that the corporate sector is in great shape," said Brian Gendreau, investment strategist for ING Investment Management.
With little economic data this week to offer guidance on the Federal Reserve's plan for interest rates, favorable earnings reports will support stocks but may not be enough to push them higher.
"I think the bigger surprise would be results to the downside," Gendreau said. "Earnings growth has been in the double-digit range for so long now."
The University of Michigan on Friday releases the preliminary reading of its July consumer sentiment index, forecast to rise a slight 0.4 point to 85.3. Consumer data will be of particular interest following last week's round of weak retail sales reports: Analysts have been expecting high energy costs and lending rates to strain spending and slow the economy.
Also Friday, the Labor Department's report on import and export prices could add to the inflation outlook as Wall Street assesses how much Americans paid for foreign-made goods. In May, prices for imported goods excluding oil grew 0.6 percent; exported items also rose 0.6 percent.
Broad-based 3M, seen as something of a barometer for the economy, cut its second-quarter and 2006 profit forecasts Friday due to lower-than-expected sales, and its stock tumbled 9 percent. Other companies added to the dour mood with more warnings of sales shortfalls. Advanced Micro Devices Inc. and Intel both fell.
FOREX: The dollar opens lower against the yen but higher against the euro, after tumbling Friday, knocked hard by the U.S. employment report for June that came in well below market expectations.
BONDS: After an end-of-week lift from the non-farm payrolls data Friday, Treasury markets look set for some calm this week, as investors await fresh clues to what the Federal Reserve will do next.
With a light U.S. data calendar and only one Fed speaker scheduled, investors may well stick to the sidelines ahead of inflation data and congressional testimony from Fed Chairman Ben Bernanke next week, analysts said.
"I think that we'll probably see some consolidation," said Alex Li, fixed-income strategist at Credit Suisse in New York. "Some investors may look to square their positions heading into" Bernanke's appearance, but generally, Treasury prices should remain around current levels.
ASIAN SUMMARY: Shares Recover On Technical Bounce
USD-Yen 113.64 loss 0.36 dn 0.3%
AUD-USD 0.7513 loss 0.0002 dn 0.03%
Nikkei 225 15428.98 gain 121.30 up 0.8%
Hang Seng 16527.76 gain 67.98 up 0.4%
S&P/ASX 200 5088.40 loss 8.10 dn 0.2%
Taiwan Index 6688.56 gain 27.95 up 0.4%
S.Korea Kospi 1289.92 gain 15.99 up 1.3%
JGB Yield 1.9700% up 0.0200
STOCKS: Regional shares were mostly higher Monday, shaking off earlier losses as technical supports appeared. But traders remain cautious. "I don't think there is a mood or an agenda for the week, there just several little things that appear to be worrying people," said Andrew Clarke, a sales trader with Societe Generale in Hong Kong. "If I was a fund manager, I would be lightening positions because I think things could get a little bit more nasty in terms of what the North Koreans are doing, and I think the price of oil could really cause a bit of a shakeout, because I don't think the price is finished by a long way," he added.
BONDS: Prices of Japanese government debt fell on lingering concern about the Bank of Japan's policy decision due Friday. Dealers said some selling stemmed from setting up positions ahead of auctions this week.
FOREX: The dollar fell against the yen on stop loss orders below Y113.78, traders said. Players are betting on a Bank of Japan rate hike Friday that could sink the dollar to Y112.00.
OIL: Futures retreated by 39 cents to $73.70 Monday as traders took profit following recent gains, and as worries over the Iranian nuclear dispute eased slightly with Tehran's top nuclear negotiator expressing optimism the standoff can be resolved peacefully.
METALS: Basic metals were little changed from London's Friday close, with gold trading around $630.85.
OTHER NEWS: Japan's top government spokesman said Monday that it is regrettable that South Korea is accusing Japan of making a "fuss" over North Korean missile launches.
The U.S. pressed Beijing to push Pyongyang back to six-party disarmament talks. North Korea's barrage of missile tests has called into question China's policy of patient diplomacy and economic support.
EUROPEAN OUTLOOK: Rate Worry To Knock Shares
Euro-USD 1.2794 loss 0.0020 dn 0.2%
Stlg-USD 1.8495 loss 0.0010 dn 0.06%
USD-Franc 1.2238 gain 0.0010 up 0.09%
(All values as of 0450 GMT)
European shares face moderate opening losses, with government debt starting higher and the euro a touch lower.
STOCKS: Interest rate worries are continuing to haunt markets and added to Wall Street's significant loss Friday, prospects for stocks in Europe Monday look fairly bleak.
U.K. spreadbettor Cantor Index is calling the FTSE down 20 points at 5868, the DAX down 40 at 5641 and the CAC down 21 at 4932.
Markets have recently been under pressure due to uncertainty about what's in store for rates. "We believe this macro uncertainty will continue to keep the focus distracted from the highly attractive corporate fundamentals," said European equity strategists at Deutsche Bank.
European shares ended mildly lower Friday, with technology issues under pressure after Advanced Micro Devices of the U.S. and France's Business Objects lowered financial forecasts.
FOREX: The euro is slightly lower against the dollar, as selling of euros against the yen continued. EUR/JPY was last at 145.46, now targeting 145.15. The euro has good support at $1.2780, traders say.
BONDS: Government debt prices should gain this week, although investors still have inflation in the back of their minds.
The euro area's four largest economies report on consumer prices this week, and all are expected to harbor inflation at or above the European Central Bank's 2% ceiling. Final figures for June will come from Germany, Spain and Italy. France will release its first estimate Thursday, and economists on average forecast a gentle slowing to 2.0%, on easing energy costs.
"Energy prices may have finally dropped, albeit to a moderate extent, reflecting the previous cooling off in the oil market," Lehman Brothers noted Friday.
Analysts said evidence of a slowdown in the U.S., the world's largest economy, may fail to stop the European Central bank or Bank of England from raising rates, but it might reduce their peak and thereby help support bunds and gilts.
European government bond prices rose Friday, with bunds and gilts spiking higher after weaker-than-expected U.S. labor market data appeared to ease the pressure on the Federal Reserve to raise interest rates, analysts said.
CALENDAR: Monday, July 10: UK PPI, House Prices; Trichet
GMT Expected Previous
0600 GER May Foreign Trade 10.7B 11.2B
0600 GER May Current Account 5.9B 7.0B
0645 FRA May Mfg Production 1.0%MM -0.7%MM
0645 FRA May Indus Production Index 1.6%MM -1.4%MM
0830 UK June PPI Output +0.2%MM +0.3%MM
0830 UK June PPI Input -0.2%MM -0.5%MM
0830 UK Jun PPI Core Output +0.3%MM +0.2%MM
0830 UK May ODPM UK House Prices
1330 EU ECB Pres Trichet speaks at launch of
short-term European paper program, Frankfurt
1400 US May Wholesale Trade +0.5% +0.9%
1800 US Tsy Undersecy Quarles participates in
panel discussion on U.S. corporate
governance requirements in Washington
1900 US May Consumer Credit +$2.5B +$10.6B
Axis (AXIS.SK): 2Q Earnings
Medivir (MVIR-B.SK): 1H Earnings
SEZ Holding (SEZN.EB): 1H Sales
Standard Life Assurance Co (SLA.YY): Debuts In London
Taylor Woodrow (TWOD.LN): Trading Update
Digigram (3578.FR): Full year 2005 dividend payment date
Fomento de Construcciones y Contratas (FCC.MC): Full year 2005 dividend payment
Neopost (12056.FR): Full year 2005 dividend payment date
Neopost (12056.FR): Special dividend payment date
Tubos Reunidos (TRG.MC): Full year 2005 dividend payment date
Tubos Reunidos (TRG.MC): Special dividend payment date
Trevi-Finanziaria Industriale (TFI.MI): Full year 2005 ex-dividend date
(END) Dow Jones Newswires