Overseas markets remained relatively unchanged yesterday while US markets were closed for the Independence Day holiday. Asian markets are slightly negative in early trading, with the MSCI Asia Pacific down 0.3% after Moody’s Investor Service report said the outlook on Chinese banks could decline as souring loans to local governments increase. The Stoxx Europe 600 is flat, potentially ending six straight days of gains as European debt concerns persist.
Although the passing of Greek vote on the austerity budget sent markets around the globe soaring last week. However, over the weekend Standard & Poors and Fitch, said the current ECB plan to rollover Greek debt would still result in a default. The news caused protection of euro debt to rise again. On Monday, the rating agencies said the default maybe temporary, similar to the Uruguay situation of a decade ago. The markets are hoping this could provide Jean-Claude Trichet and ECB the wiggle room it needs to prevent a real Greek default.
The US dollar and treasuries are positive in early trading ahead of a May factory orders report, as investors still maintain concern over the global growth outlook. Commodities remain positive despite US dollar strength, led by wheat, corn and silver all up over 3% in early trading. Traders will be watching the iShares Silver Trust (SLV) and SPDR GLD Trust (GLD) to see if they can find support.
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Google (GOOG) is up 1% in pre-market trading on an upgrade to ‘overweight’ at Evercore Partners. SanDisk (SNDK) was also upgraded by Deutsche Bank AG from ‘hold’ to ‘buy.’ Apple Inc. (AAPL) is down slightly, after violating two patents covering a type of chip used to play video games on mobile devices, a U.S. International Trade Commission judge said on July 1. The company was found not to have infringed two others in a case brought by closely held S3 Graphics Co. Amazon (AMZN) and Netflix (NFLX) remain leaders in the market, with both trading at or above 52-week highs.
Chinese internet stocks Sina (SINA), Baidu.com (BIDU), Sohu.com (SOHU) and Youku.com (YOKU) all saw big gains last week, but traders may be looking to take profits as they approach technical resistance levels and moving averages.
Earth moving stocks Caterpillar (CAT) and Joy Global (JOYG), as well as leisure stocks Priceline.com (PCLN) and Wynn Resorts (WYNN) were all big gainers last week and may need a few days to consolidate before pushing higher. Meanwhile the 50-day moving average becomes a focus point for Acme Packet and Walter Energy (WLT), as the closed just below those technical resistance levels.
Disclosure: Scott Redler is long BORN, WFC, JPM, AXTI and short BIDU, QQQ, SPY, OIH