Market update - 18 July 2012

·      The main event last night was the semi annual testimony of Fed chief Ben Bernanke. He admitted that economic data had been disappointing and that job creation was “likely to remain frustratingly slow”, reiterating that the committee is prepared to take further action as appropriate.

 

·      He discussed buying treasuries, buying MBS, cutting interest paid on excess reserves and communication as potential tools but failed to commit to any of them.

 

·      Stay put for more from Ben tonight!

 

·      I would say it’s a very flat night but market at least in the FX space seems a little risk on with USDMYR opening lower at 3.1550-3.1610 and AUDUSD rallied to 1.0350 while EUR if off it’s 2 year low at 1.2300

 

·      Stocks reacted poorly initially, the S&P fell 1.3% top to bottom and treasury yields fell 3 bps in yields however both recovered all of their losses and more by the close.

 

·      At closing, S&P added 0.74% and the DOW was up 0.62%, while treasury yields added 3.5bps to 1.508%.

 

·      Equities in Europe were mixed but overall flat again with the FTSE and the FTSE MIB faring the worst as UK inflation fell more than forecast and Italy reeled from Moody’s downgraded before the bell.

 

·      Gold was resilient too, it closed down only $6 on the night at $1583 while oil had another win (up 0.89%) and soft commodities were flat. The US dollar tried to rally, most notably against the Euro where it gained over a big figure before giving it all back.

 

·      As earnings season rolls on in the US, Yahoo!, INTEL, Johnson & Johnson and Coca Cola all beat estimates by a small amount, while Goldman Sachs surprised by a healthy margin ($1.78 vs 1.18 est), however the stock was only up 0.3% after rising 2.6% earlier.

 

·      Mario Monti, the Italian PM, expressed concern overnight that the Sicily region may default while in Syria, fierce fighting has been reported in the capital Damascus for a third day while Western countries are still staunchly refusing to aid the rebels. Obama was reported on Monday to have said America cannot help until after the Presidential election in November.

 

·      The Bank of Canada also left its benchmark overnight rate unchanged at 1%.