On Tuesday, the FTSEurofirst 300 index of leading European sharesfell 0.4 percent to 1,061.79 points. A four-day winning streak came to an end with the Dow down 107 points at 10,341,  Nasdaq down 25 at 2,208 and the S&P 500 12 lower at 1,091

Investor worries over the Eurozone have deepened, hitting the markets of the single currency’s weaker economies and sparking a flight to the safety of US Treasuries, German bunds, the yen and the Swiss franc. Global equities lost ground and the euro weakened on Tuesday, while European bank stocks came under pressure as doubts over the continent’s financial system resurfaced. George Soros, the billionaire financier, is giving $100m (£65m) to a human rights organisation in one of the largest acts of philanthropy so far this year. Famous for betting against the pound when Britain was forced to withdraw from the Exchange Rate Mechanism in 1992. DUBAI Holding’s main unit will delay repayment on a $555m (£361.4m) loan until 30 November, the company said yesterday, the second time it has failed to meet a repayment deadline.DHCOG, a unit of the conglomerate owned by the Gulf Arab emirate’s ruler, took a big hit on its exposure to Dubai’s property crash.The company said in June it may resort to asset sales to deal with its debt after posting a $6.2bn loss for 2009. Its assets include Jumeirah hotel group and business parks. DHCOG was due to repay the $555m loan yesterday, having already extended it for two months in July. Market participants had expected the move.

Due for release today is the AUD Home Loans m/m, GBP Halifax HPI m/m, GBP Manufacturing Production m/m, CAD Builsing Permits m/m, CAD BOC Rate Statement, CAD Overnight Rate and CAD Ivey PMI.

FTSEurofirst 300 index dropped 0.1% to close at 1,054.9. German DAX Xetra 30 edged down marginally to 6,083.9. French CAC-40 rose 0.1% to settle at 5,371.0. DJIA gained 0.5% to 10,320.1. NASDAQ climbed 1.1% to 2,200.0. S&P 500 index closed 0.9% higher, at 1,090.1. Nikkei 225 index is trading 0.2% higher, at 9,081.9. Hang Seng index is up at, 20,877.1, while the Kospi index is trading 0.1% higher, at 1,778.0.
 
Yesterday, other European markets finished mixed as gains were almost pared after investors decided to wait on the sidelines, ahead of release of the US nonfarm payrolls data for August. Construction stocks, Lafarge, CRH and Saint-Gobain, increased between 0.7% and 1.0%, after US pending home sales for July rose 5.2%. Carmakers, Renault and BMW, added 1.2% and 1.6% respectively, after Ziarul Financiar reported that Dacia unit of the former has planned to sell its Duster sport-utility vehicle in Britain, Russia, Brazil and India, while the latter rose after its namesake brand’s August US sales gained 1.6%. On the otherhand, German industrial stocks, Siemens and Schneider Electric, fell 0.3% and 1.1%, after Deutsche Bank downgraded both the stocks due to declining industrial activity in Europe. Deutsche Bank dropped 3.2%, after Bank of America Merrill Lynch added it to its list of “least preferred” stocks. Yesterday, US markets closed higher due to concerns of a slowdown in global economy eased, after US reported upbeat economic data. Housing related stocks, DR Horton, Home Depot and Lowe’s, increased between 2.5% and 3.3%, due to pending July home sales unexpectedly rising to 5.2%. Technology stocks, Hewlett-Packard and Dell, gained 1.2% and 2.0% respectively, after the former raised its bid for 3Par to $33 per share, while the latter stepped back from the bid.

Burger King jumped 25%, after agreeing for the acquisition by 3G Capital. Anadarko Petroleum rose 3.0%, after an Australian newspaper reported that BHP Billiton might acquire the company. Asian markets are trading higher this morning, taking hint from overnight gains on the Wall Street. In Japan, auto makers, Toyota Motor and Mazda Motor paced gains, after the former posted a rise in August car sales in China. Exporters, Elpida Memory and Canon rose, as the yen weakened against the dollar. In Hong Kong, Jiangxi Copper rose, due to commodity prices advancing. Ping An Insurance climbed, after declaring it would merge its bank unit into Shenzhen Development Bank. In South Korea, technology stocks, LG Electronics, Hynix Semiconductor and LG Display gained values, tracking gains in their US peers.

Due for release today is the GBP Services PMI, USD Non-Farm Employment Change, USD Unemployment Rate and ISM Non-Manufacturing PMI.

The benchmark Nikkei dropped 277.40 points to close at 8,871.86, the Topix lost 2.6% to close at 807.46. The Dow Jones was 164 points higher at 10,150, whilst the Nasdaq gained 34 points to 2,153. The S&P 500 added 17 points at 1,064.

Yesterday, the BOJ boosted its cheap loan scheme, bowing to government pressure for action to protect a fragile recovery by curbing the yen’s rise, on the other hand cabinet ministers signaled they may intervene to weaken the currency. The yen surged more than 1% against the dollar after the central bank beefed up the supply of fixed-rate loans to banks, a move investors saw as a symbolic gesture that will do little to halt a climb in the currency. Government officials who were increasingly alarmed by the yen’s rise that took it to a 15-year high against the dollar last week, have tried to talk down the currency while leaning on the central bank to help by further easing its policy. Yesterday, US stocks accelerated declines after comments from US President Barack Obama did little to soothe investors anxious over the slowing pace of the recovery. Obama has stated that he and his economic team discussed additional steps to promote economic growth, including looking at tax cuts for businesses. Stocks had been trading lower prior to the comments and the losses picked up steam.

The Dow Jones industrial average dropped 140.92 points, or 1.39 per cent, to around 10,009.73. The American president also said the US economy was not expanding quickly enough and there was no magic solution to fix its problems. Gloomy reports on GDP and housing have raised fears the fragile economy could slip back into a recession or face a lengthy period of growth that is too slow to make significant a dent in the 9.5% unemployment rate.

Due for release today is the AUD Building Approvals m/m, AUD Retail Sales M/m, CAD GDP m/m, USD CB Consumer Confidence and USD FOMC Meeting Minutes.

The Nikkei has risen 95 points or 1.03% to around the 9,335.54 level. The Dow Jones gained 9 points to close at 10,415. The Nasdaq Composite was up 6 points at 2,215 and the S&P 500 rose 1 point to close at 1,094.

Germany’s export economy is presenting the country’s policy makers with a new concern, a growing reliance on China. In Q2, Germany’s economy expanded at an annualized 9%  rate; which is its strongest pace in more than 25 years. Leading that growth was demand for German exports, especially from China. But many economists say the cooldown in China could have an outsize effect on Germany.

According to the Federal Statistics Office, Germans spent more in the first half of the year than had previously been estimated.  The official figures now show that retail sales rose by a real 0.9% during the first six months of the year on the same period of 2009 compared to the previous estimate of a 0.4% fall.  Sales of food, drink and tobacco fell 0.1% in real terms while non-food sales rose 1.9%.  In Q2 the strong retail sales figures help to explain Germany’s exceptionally strong 2.2% GDP growth, which has been helped by private consumption.

Due for release today is the GBP Retail Sales m/m, USD Unemployment Claims and USD Philly Fed Manufacturing Index.

The Nikkei gained 37.89 points to close at 9,199.57. The Topix rose 0.6% to close at 831.73. The Dow Jones closed up 103 points at 10,405, the Nasdaq Composite closed 27points higher at 2,209, on the other hand the broad-based S&P 500 was 13 points better at 1,092.

In August German investor morale fell to its lowest level since April 2009, pointing to a slowdown in Europe’s largest economy. Yesterday, the ZEW think tank said that its monthly poll of economic sentiment fell to 14 from 21.2 in July, declining for the fourth month in a row.  The reading, which was well below the consensus forecast for a drop to 21, followed news that the economy grew by 2.2% in Q2. Reflecting the economy’s strength after the record Q2, a separate ZEW gauge of current conditions rose to 44.3 from 14.6 in July. The ZEW said the increase was the strongest in the history of the indicator. Japan’s government will consider further stimulus steps. However, additional stimulus is expected to be relatively modest and is likely to involve reallocating funds as opposed to new spending.

On Friday, the government will start to debate stimulus steps on Friday, economics minister Satoshi Arai was quoted as saying by Jiji news agency yesterday. The government debate may precede a meeting between Prime Minister Naoto Kan and Bank of Japan governor Masaaki Shirakawa, which a government source said is expected to be held next Monday.

Due for release today is the GBP MPC Meeting Minutes and the NZD PPI Input q/q.

On Monday, Japan’s Nikkei average dropped 1.1%, after weaker-than-expected U.S. employment data signaled the economic recovery was losing traction. The Dow Jones industrial average dropped 21.42 points; (or 0.20%) to close at around 10,653.56. The Standard & Poor’s Index dropped 4.17 points, or 0.37%, to 1,121.64. The Nasdaq Composite Index lost 4.59 points, or 0.20 percent, to 2,288.47

The US Labour Department reported that the economy has cut jobs for a second month in a row. In July overall employment fell by 131,000. On the other hand, private sector employment rose by less than expected with 71,000 jobs created. The unemployment rate remained at 9.5%, lower than the market’s expectations of 9.6%. Some experts have warned that continued high unemployment is hampering growth. The Bank of Spain has announced that the Spanish economy has grown for a second quarter in a row. Growth accelerated with a 0.2% rise in GDP from Q1 of 2009 when it rose by 0.1%. Spain had been in its worst recession for 60 years, with GDP falling for six consecutive quarters and the economy remaining 0.2% lower than it was at the same period a year ago. Although government austerity measures totaling €15bn (£12.4bn) in spending cuts and labour market reforms are shrinking the deficit and have led the risk premium on Spanish debt to fall by a third since 16th June, they pose a threat to future growth. The EU believes Spain’s economy may register negative growth in the third quarter of 2010.

Fears of a double-dip recession grew as economic growth in parts of the US is reportedly at risk of grinding to a halt. The Federal Reserve’s latest Beige Book survey tracking 12 regions showed growth in Atlanta and Chicago had slowed and Cleveland and Kansas City had held steady. Other regions were described as having “modest” growth in economic activity. While most areas saw some increases in manufacturing, half reported a slowing in activity. Car sales in most regions declined and the housing market continued to struggle. The staggered road to recovery has been blamed on high unemployment and low consumer confidence.

Due for release today
GBP Nationwide HPI m/m 7.00am
USD Unemployment Claims 1.30pm

In Asia the benchmark Nikkei gained 117.62 points to 9,614.47, the broader Topix added 1.2 percent to 855.88. The Australian ASX All Ords was up 28.2 points to 4542.10 late in the trading day. In the US the Dow Jones industrial average added 12.26 points to 10,537.69. The Standard & Poor’s 500 Index dipped 1.17 points to 1,113.84. The Nasdaq Composite Index shed 8.18 point to close at 2,288.25.

AUSTRALIA
For the first time in three years core inflation has slowed to within the RBA’s target range of 2-3 percent, supporting views that official interest rates will be held steady next week. The pace of core, or underlying inflation, slowed to 0.5 per cent in the June quarter, compared with 0.8 per cent in the previous three-month period, data showed today. That eased the speed of annual core inflation, which strips out volatile changes in prices, to 2.7 per cent, from 3 per cent in the previous quarter. The headline Consumer Price Index rose 0.6 per cent on-quarter and 3.1 per cent over the year, the Australian Bureau of Statistics said today. The pace of CPI was slower than market forecasts of 1 per cent on-quarter and 3.4 per cent over the year

Asian indices edged up yesterday lead by the benchmark Nikkei up 0.3 percent or 21.19 points to 9,321.65, while the broader Topix edged up 0.1 percent to 833.43.
In America the Dow Jones industrial average rose 75.53 points, or 0.74 percent, to 10,229.96. The Standard & Poor’s 500 Index .SPX gained 12.23 points, or 1.14 percent, to 1,083.48. The Nasdaq Composite Index added 24.26 points, or 1.10 percent, to 2,222.49.

The German bank Hypo Real Estate nationalised during the financial crisis, is set to become the first bank to fail a European stress test. To pass HRE, which is already being propped up with €100bn (£84bn) of public funds, is likely to need more capital from the German government. Europe is testing how banks across 20 countries would cope with another economic downturn and losses on sovereign debt holdings, in an effort to restore confidence after the Greek crisis hit markets and sparked fears the Eurozone could unravel. Major listed banks are expected to pass.

Last night Apple stunned investors after posting better than expected third quarter results, bolstered by hearty Mac computer sales. Revenue climbed by 61 per cent to $15.7bn (£10.2bn) For the period ended 26 June, while net quarterly profit almost doubled on the same period last year and came to $3.25bn.
The California based group tied the strong results to record-breaking Mac sales, which rose 33 per cent to 3.47m. Apple has also sold 3.27m iPads since the April launch.

Due for release today
GBP MPC Meeting Minutes 9.30am
USD Fed Chairman Bernanke Testifies 7.00pm

Last Night US lawmakers passed a landmark financial reform bill allowing the broadest overhaul of rules governing America’s largest financial institutions since the 1930s. The Senate approved the bill by a 60 to 39 vote and will now send it to President Barack Obama to sign into law next week.

The bill, which ushers in a raft of restrictions on banks, is intended to avert a repeat of the 2008 crisis that brought the world economy to the brink of collapse. Banking Giants will be barred from proprietary trading and only allowed to make minimum investments in private equity and hedge funds.

Goldman pays SEC $550m to kill fraud case

GOLDMAN SACHS has ended months of negotiations and agreed to pay $550m (£356m) to settle civil fraud charges over how it marketed a subprime mortgage product. It is the largest-ever penalty by a Wall Street firm to the Securities and Exchange Commission (SEC).

Goldman did not admit or deny the allegations but acknowledged as part of the settlement that its marketing materials were incomplete. The settlement appears to only
resolve the issue of this transaction in particular.

The settlement is subject to approval by a federal judge.