Market Commentary
US Equities: U.S. equities edged down as economic stimulus measures by major central banks failed to excite investors before a U.S. jobs report on Friday which is expected to show lukewarm growth. U.S. service sector slowed to a 2 1/2-year low in June which was in line with investor worries that the euro zone debt crisis was affecting global growth. Financial equities weighed on Wall Street, with Dow component JPMorgan Chase declining 4.2% and Bank of America Corp dropping 3%. Approximately 54% of companies traded on the NYSE closed lower while on the Nasdaq about 52% of stocks closed in negative territory.
European Equities: European stocks dropped from two-month peak to finish lower as a raft of largely expected measures by central banks to bolster growth prompted investors to book profits. Euro zone banks bore the brunt of the sell-off, with the sector index declining 3.3%. Mining equities in UK ended slightly higher after China surprised the market by reducing interest rates for the second time in two months. Pharmaceuticals, telecoms and other defensives were among the top gainers of FTSE 100 as attention reverted back to softening global growth.
Asian Equities: Hong Kong stocks reached their highest close since May 15 but gains came in this year's second-lowest turnover, indicating investors remained concerned about the Chinese economy and cautious ahead of a European Central Bank meeting. Chinese sportswear brand Li Ning advanced 7.3% after the company made senior management changes. Nikkei share average edged lower, with traders saying they believed a one-month rally that had taken the benchmark to a 2-month peak and close to resistance at its 75-day moving average was running out of momentum. Japanese exporters' profits could be eroded if the euro falls further versus the yen. Singapore's Straits Times Index advanced 0.8%, marking its seventh consecutive day of gains and its longest winning streak in one year.
Interest Rates: Spanish and Italian bond yields rallied after European Central Bank President Mario Draghi failed to deliver any indication that bolder monetary easing steps were on the way after the bank reduce rates earlier in the day. British government bonds soared, paring a temporary decline and following an upswing in Bunds, after both the Bank of England and the European Central bank loosened monetary policy.
Currencies: The euro struggled at five-week trough on the U.S dollar and life-time lows versus commodity currencies like the Australian dollar as markets were underwhelmed by the European Central Bank's latest attempt to boost the eurozone economy.
Key events/data to look out for:
US: Non-Farm Employment Change, Unemployment Rate
UK: PPI Input
