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Daily Analysis – Asia Tumbles, Western Markets Calm

 November 11, 2011 09:08 AM


Following Wednesday's  selloff in Western markets, Asian markets closed sharply lower.  The Nikkei fell 2.9%, the Kospi tumbled 4.9%, and the ASX 200 dropped 2.4% as fears over Italy's debt burden triggered a broad selloff.  In China, the Shanghai Composite shed 1.8%, and the Hang Seng plunged 5.3%, as heavyweight HSBC sank more than 9%.

Asian Markets Tumble on European Debt Fears

European markets ended mixed, as the CAC40 and FTSE both fell .3%, while the DAX gained .7%. Italy's MIB index rallied 1%, as hopes for a new government helped push yields below 7%.  News that that the ECB was buying Italian and Spanish bonds helped calm the markets.

[Related -How Worried Should We be About a China Slowdown?]

The Dow climbed 113 points to 11893 and the S&P 500 gained .9% as investors went bargain hunting after Wednesday's slide.  The Nasdaq posted a much slimmer .1% gain.

Cisco shares jumped 5.7% after beating analyst forecasts. GreenMountainplunged 39% as weak revenue data sent investors running.


Treasuries and Commodities

Bonds fell, as the market calmed.  10-year notes shed 18/32 to yield 2.06%, and 30-year notes dropped 1 23/32 to yield 3.11%.

A $16 billion auction in 30-year notes had a high yield of 3.199% and a low bid-to-cover ratio of 2.4.

[Related -The Demise of the BRICs?]

Crude oil rallied 2% to 97.69, while gasoline lost .5% to 2.63.  Metals traded lower, led by copper, which declined 2% to 3.372.  Gold sank 1.8% to 1760, and silver slipped .9% to 34.05.

Agricultural futures ended mixed, as wheat dropped 3.6%, while cotton gained 2.4%.



The US Dollar surrendered some of its gains from the previous session, dropping against all major currencies.  The Euro gained .6% to 1.3606, and the Pound rose by .2% to 1.5937.  The biggest gainer was the Canadian Dollar, which climbed .7% to 1.0172.  The Yen ticked up .2% to 77.63, as the market slowly challenges the Bank of Japan's intervention efforts.


Economic Outlook

Weekly jobless claims fell to 390K, the best reading since April, and significantly better than  the 400K forecast.  The budget deficit unexpectedly dropped to $43.1 billion.

Friday's sole report is the University of Michigan's Consumer Sentiment report.  Friday is Veteran's Day, so banks will be closed, but the market is open.


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