U.S. equities closed at lower levels for a fourth consecutive day, but they managed to pare the majority of their early day losses. After the European Central Bank’s president Mario Draghi did not announce any immediate measures, aimed at stabilizing the Eurozone. While, Mr. Draghi said that the ECB is standing ready to step up if the economic situation takes a turn to the worse, market participants were expecting more concrete stimuli. The Dow Jones Industrial Average, S&P 500 and NASDAQ all finished in red territory, bouncing off of the lows they posted earlier in the session. The Dow was trading with a loss of 192 points at its lowest level for the day. But the U.S. blue chip index, moved higher towards the end of the day, closing at 92.18 points, or 0.71%, lower at 12878.88. The S&P 500 slipped 10.14 points, or 0.74%, to finish at 1365.00. The tech heavy NASDAQ index dipped 10.44 points, or 0.36%, to close at 2909.77. Alcoa and JPMorgan were among the biggest losers of the blue-chip companies, while, Wal-Mart was the biggest gainer. Energy and materials underperformed the rest of the S&P sectors, while consumer discretionary advanced. The CBOE Volatility Index, considered by many as the best indicator of fear in the market, slipped below 18. On the economic front, factory orders for the month of June declined 0.5%, while, analysts were expecting an increase of 0.5%. At the same time, the initial jobless claims for the week ending July 28 increased to 365,000 from the 357,000. Economists were projecting a much steeper rise to 370,000. Employers said they intend to cut 36,855 jobs in July, down from the 1.9% we saw in June. After a software malfunction at the brokerage company Knight Capital Group sparked volatile trading in around 140 stocks, the firm announced yesterday that its pre-tax loss will be approximately $440 million. Retailers announced monthly same-store sales that turned out to be quite strong as warm weather and discounts attracted customers. Gap released better-than-expected July sales and said it expects second-quarter results north of what analysts are projecting. In earnings news, General Motors profits came in at 90 cents per share for the second quarter, 16 cents above market expectations, but revenue dropped sharply. Today Procter & Gamble, Toyota Motors and Viacom are scheduled to announce their results.
Asian equities slipped on Friday, as the European Central Bank declared its willingness to support the Eurozone. However, did not announce any concrete measures for doing this. Market participants were also cautious ahead of the employment data for the U.S. economy, which is scheduled to be released later today. Traders are hoping that if the data comes in worse-than-expected the pressure on the Federal Reserve to use more stimuli on the economy will grow. The FTSE CNBC Asia 100 Index, which tracks the performance of markets across Asia, dipped 1%. Japan’s Nikkei average dropped on the ECB press conference and on the worse-than-expected quarterly results from Sharp and Sony. The Japanese benchmark declined by 1.1% to 8,555.11, pushing below 8,581.97. Where the 61.8% retracement of the index’s rally from June 4th to July 4th stands. The broader Topix dipped 1.2% to 723.94, and is now trading with a loss of 0.6% for the year. South Korean equities declined after traders shed their holdings in risky assets in a response to the ECB and Fed’s decisions not to intervene in the markets at this point. The Korea Composite Stock Price Index (KOSPI) moved 1.1% lower to finish at 1,848.68 points, remaining above the support level at the 60-day moving average of 1,841.91 points. Australian stocks dipped 1.1%, paring all the gains they posted earlier in the week as commodities’ prices fell. The benchmark S&P/ASX 200 index declined by 48.0 points to 4,221.5, after touching a ten-week high on Thursday. In New Zealand, the benchmark NZX 50 index slid 0.5% to 3,548.0. Shanghai stocks outperformed their Asian peers, posting their best day in more than a month as property developers rose on the announcement that the government doesn’t intend to impose more restrictions on the companies, operating in that sector. The Shanghai Composite advanced 1% for the day and 0.2% for week, closing at 2,132.8. The CSI300 Index of the largest Shanghai and Shenzhen companies advanced 0.8% of Friday, locking a gain of 0.2% for the week. Hong Kong stocks pushed below a key technical support level on the lack of monetary stimulus measures from Europe and the U.S. The Hang Seng Index slipped 1% to 19,499.8 in Friday afternoon, penetrating its 200-day moving average at 19,681, a technical support level it has moved along since mid-May. In India, the benchmark BSE Index and the 50-share NSE Index both declined, both erasing 1%. In Southeast Asia, Singapore’s Straits Times Index added 0.2%, while Malaysia’s benchmark KL Composite slipped 0.3%.
European equities moved slightly higher in the early trading hours of Friday, paring some of the losses they posted in the previous session as investors are waiting for the employment data for the U.S. economy, which is scheduled to be released later today. The FTSEurofirst 300 index of best European companies gained 0.1% to 1,056.55 points. The benchmark index erased 1.2% on Thursday after posting very decent gains in the previous couple of trading days. Eurozone banks were among the biggest gainers after on Thursday they were put under serious pressure. BNP Paribas added 1%, while the industrial giant Siemens gained 3.2% after the company announced it had started a repurchasing program of its own stock, which will be for 3 billion euros. The Stoxx Europe 600 index advanced 0.5% to 260.49, firmly on its track to close the week with a gain of 0.3%. Yesterday the index plunged 1.3% on Mr. Draghi’s remarks for the future monetary policy of the central bank. Among country-specific indices, the German DAX 30 index rose 0.9% to 6,665.73. German banks, which suffered a heavy blow on Thursday, regained some of their strength, with Deutsche Bank AG adding 3.3% and Commerzbank AG moving 2.3% higher. Insurance giant Allianz SE advanced 1.5%, after the company’s profits rose 23% for the second-quarter profit. Banks also advanced in France, outperforming the rest of the market. Société Générale SA gained 3.9%, Credit Agricole SA added 3.3% and BNP Paribas SA climbed 3.1%. The CAC 40 index moved 0.9% higher to 3,260.19. In the U.K., resource firms and banks pulled the FTSE 100 index into green territory, sending it 0.5% higher to 5.692.54. Miner BHP Billiton PLC added 1%, Anglo American PLC gained 1.4%, while oil group BP PLC rose 0.6%. Royal Bank of Scotland Group PLC climbed 3%, despite posting a loss for the first quarter. Heavyweight HSBC Holdings PLC added 1%.
Dow Jones Industrial Average
As it was mentioned above, the Dow finished lower yesterday, but the index managed to recoup more than half of its early losses in the second part of the day. The blue-chip index traded as low as 12,780.92 at one point during the session, but the bulls became active around the benchmark’s 50-period moving average and sent in higher to its closing rate of 12,878.88. Today the futures are pointing to a higher open as investors renewed their demand for risky assets ahead of the employment reports, which are scheduled to be released later in the day. Support in the index is provided by the 50-period moving average around 12,8282.13, while resistance, on the other hand, stands at the highs we reached earlier in the week around 13,100. Oscillators are in mid-range with the relative strength index at 47 and the stochastic just entering oversold territory, standing at 21. The MACD is issuing sell signals, currently retracting from the highs it touched on Tuesday.
Gold
Gold was hovering around the psychologically important 1600 level in the early hours of yesterday’s session, but when Mr. Draghi announced his intensions for fighting the debt crisis in Europe the precious metal plunged. The bullion touched lows of 1584 for the session, but the bulls returned the market towards the end of the session and pushed gold back up to its 200-period moving average, which it had broken below earlier on. Today we are moving higher with gold currently changing hands at 1594.31 dollars per troy ounce, just off of the highs of 1595.64 for the day. Support in the precious metal is provided by the 200-period moving average around 1590, while resistance stands at the 1600 level. Oscillators are trending lower with the relative strength index at 39 and the stochastic at 23, just a whisker above the lower band of its range. The MACD has just pushed below the key 0 level and is currently standing at the lows we touched in the first half of last month.
USD/JPY
Yesterday, USD/JPY tried to extend the rally it had started the previous day, but Mr.Draghi’s comments sent the currency pair back down to the support that seems to have formed around its 25-period and the 50-period moving averages. The yen even approached the psychologically important 78.00 at one point, but then bears lost their momentum and bulls resumed the market. The latter managed to push the currency pair back up, but the broken support at the moving averages we mentioned, acted as a resistance, which we were not able to close above. Today we are having a choppy session, during which we moved in a tight range. Currently the dollar is changing hands at 78.26 yens after touching highs of 78.31 for the session. Oscillators are moving in mid-range with the relative strength index at 51 and the stochastic at 52. The MACD is just a whisker below the key 0 level, continuing to move in a very close range.
Disclaimer:
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.
