Asian Morning Briefing: U.S. Stocks End Slightly Lower

 
                       LAST    CHANGE   % CHG 
DJIA                 17730.11    -27.8  -0.16% 
Nasdaq                5009.21    -3.91  -0.08% 
S&P 500               2076.78    -0.64  -0.03% 
Japan: Nikkei 225     20522.5   193.18   0.95% 
Hang Seng            26282.32    32.29   0.12% 
Shanghai Composite    3912.77  -140.93  -3.48% 
S&P BSE Sensex        27945.8   -75.07  -0.27% 
Australia: S&P/ASX     5599.8     84.1   1.52% 
UK: FTSE 100          6630.47    21.88   0.33% 
 
 
                    PRICE CHG  YIELD 
U.S. 2 Year              4/32  0.633 
U.S. 5 Year             11/32  1.631 
U.S. 10 Year            10/32  2.387 
Australia 10 Year      -27/32  3.123 
China 10 Year           -5/32   3.68 
India 10 Year           -1/32   7.98 
Japan 10 Year          -11/32  0.516 
German 10 Year         -10/32  0.848 
 
 
                          LAST(MID)  CHANGE 
Australia $ (AUD/USD)        0.7632  -0.0014 
Yen (USD/JPY)                123.07     -0.1 
S. Korean Won (USD/KRW)     1123.43    -1.78 
Chinese Yuan (USD/CNY)       6.2034   0.0029 
Euro (EUR/USD)               1.1083    0.003 
WSJ Dollar Index              87.04    -0.15 
 
 
               LAST   CHANGE  % CHG 
Crude Oil      56.53   -0.43  -0.75% 
Brent Crude    62.33   -0.14  -0.22% 
Gold          1165.5    -3.8  -0.32% 
 

        MARKETS AT A GLANCE
        (Data as of approximately 5 p.m. ET)
        SNAPSHOT:
        Stocks ended slightly lower, Treasurys rallied and the dollar stumbled Thursday, after the U.S. jobs report reaffirmed investors' belief that the Federal Reserve would be patient in raising interest rates. Gold prices fell to the lowest level in more than three months. U.S. oil prices retreated after the oil-rig count rose for the first time in seven months.
        OPENING CALL:
        Once again, investors are eyeing China nervously. Chinese stocks kept falling Thursday, notwithstanding Beijing's efforts to shore up investor sentiment by loosening margin restrictions. Could it be that China is starting to see diminishing returns from ever larger dollops of credit? In which case the whole economy runs the risk of a serious wobble.
        EQUITIES:
        Stocks ended slightly lower Thursday as an early rally ran out of steam, even after the U.S. jobs report reaffirmed investors' belief that the Federal Reserve would be patient in raising interest rates.
        The Dow Jones Industrial Average fell 27.80, or 0.2%, to 17730.11, reversing a gain of as much as 68 points earlier in the session. The S&P 500 index lost 0.64 point, less than 0.1%, to 2076.78. The Nasdaq Composite Index declined 3.91, or 0.1%, to 5009.21.
        The Labor Department said 223,000 jobs were added to the U.S. economy in June, while the unemployment rate fell to 5.3% from 5.5%. The number of new jobs created came in just below expectations for 233,000, while wages remained flat.
        Still, the report marks the 14th out of the last 16 months in which the economy added more than 200,000 jobs. Investors closely track the monthly jobs report, which is also taken into consideration by the Federal Reserve as it determines its course on interest rates.
        "It's a solid report, not overly strong, but exactly what the Fed will need to continue to justify the case for liftoff later this year," said Darrell Cronk, president of Wells Fargo Investment Institute.
        In corporate news, shares of Tesla Motors rose 4% after the electric car maker said it delivered 11,507 Model S sedans in the second quarter of the year, a 52% increase over the prior-year period and a company record.
        Chinese shares plunged Thursday, even as Beijing grasps for solutions to stem the selling, including relaxing rules on the use of borrowed funds to invest in stocks. That effort comes as a surprise given concerns that margin lending fueled a too-hot rally over the past year.
        FOREX:
        The dollar stumbled against the euro and the yen after U.S. data indicated the labor market's gains remain uneven, further denting investors' expectations for higher interest rates by September.
        The dollar weakened 0.3% against the common currency, with one euro buying $1.1084 in late-afternoon trade. The U.S. currency fell against the Japanese currency to Y123.10, now 0.1% lower for the day.
        Still, the dollar made small gains over the course of the week. The Wall Street Journal Dollar Index, which compares the dollar against 16 other currencies, rose just 0.5% for the week.
        The dollar's shallow trajectory over the U.S.-holiday-shortened week highlighted investors' reticence in the face of uncertainty surrounding the Federal Reserve's intentions for U.S. interest rates and the escalating Greek debt crisis. Many money managers predict the dollar will resume its rise from earlier this year once U.S. economic data improve sufficiently to persuade the Fed to increase borrowing costs for the first time in nine years.
        The latest U.S. data suggests dollar bulls could have longer to wait. The U.S. added 223,000 jobs last month, from a downwardly revised 254,000 in May, the Labor Department said. Economists had forecast 233,000 jobs would be created in June. Hourly earnings, a metric the Federal Reserve has said must rise at a faster pace, held steady in June. Economists had expected a 0.2% increase in wages from May.
        "When we see that, that lessens the likelihood that Fed hikes rates in September," Jim Caron, portfolio manager on the global fixed income team at Morgan Stanley Investment Management, said of the June report's numbers. "That's a negative for the dollar in the longer run."
        BONDS:
        U.S. Treasury bonds rallied as a flat reading in U.S. wage inflation bolstered expectations that the Federal Reserve would remain patient in raising interest rates.
        Investors also dialed back risks and parked cash into the haven debt market ahead of a referendum this Sunday in Greece on fresh bailout funding.
        Greece's debt crisis has generated wild swings in financial markets over the past few weeks amid concerns over potential knock-on effects on the stability of the eurozone's financial system and the global economic outlook.
        Fed officials have been cautious in shifting into higher interest rates. Inflation indicators have been running below their 2% target. Global growth outlook remains uneven. The uncertainty over Greece's debt crisis is complicating the Fed's deliberations.
        The odds are "rising for the Fed to wait after September to raise rates, " said Erik Weisman, portfolio manager at MFS Investment Management, which has $450.4 billion under management at the end of May. "You had better keep your position close to home due to the uncertainty" in Greece as its debt crisis saga is now "in uncharted territory."
        The price rally sent the yield on the benchmark 10-year Treasury note to as low as 2.368% during Friday's trading from 2.47% right before the report. Bond yields fall as prices rise.
        The yield settled at 2.393%, compared with 2.416% Wednesday.
        COMMODITIES:
        The amount of rigs drilling for oil in the U.S. rose for the first time in seven months, triggering a slump in crude oil prices to their lowest settlement in two months.
        U.S. oil producers added 12 rigs last week, breaking 29 straight weeks of cuts, in response to prices that have rebound to- and stayed at $60 a barrel since late April. That convinced producers to end months of massive cutbacks that started after the U.S. shale drilling boom flooded the market and sent prices crashing.
        But the increase in rigs is scaring investors and analysts who have warned that oil could be on the verge of another sharp fall. Production has kept making small gains even as drilling has declined and stockpiles have hit historic levels around the world. If rigs get back to work, that could keep the market flooded with oil, a concern that built strong momentum this week.
        On Wednesday, the U.S. benchmark price broke below a $4 range it had traded in for two months. That jolt came after the U.S. Energy Information Administration reported domestic oil stockpiles unexpectedly rose for the first time in nine weeks.
        Those drilling-rig cuts have slowed dramatically in recent weeks, and last week's increase is a sign the market may stay oversupplied and head for a "replay" of the past year's steep fall in prices, said John Kilduff, founding partner of Again Capital in New York, which invests in energy commodities.
        "It seems to be a definitive break in the trend and it's definitely registering in the market," he added. "The rig count's going up, but the production, after all the past cuts, isn't going down either. This is a week of very bearish news for the oil market."
        On Thursday, the U.S. benchmark price fell 3 cents, or 0.1%, to $56.93 a barrel on the New York Mercantile Exchange. The losses are small, but came after crude rose as high as $57.97 late Thursday morning.
        U.S. oil lost 4.5% on the week, its largest one-week decline since early March. Its settlement was the lowest since April 22.
        Brent, the global benchmark also pared Thursday's gains back to 6 cents, or 0.1%, to $62.07a barrel on ICE Futures Europe.
        TODAY'S HEADLINES:
        BP to Pay $18.7 Billion to Settle Deepwater Horizon Spill Claims
        BP has agreed to pay $18.7 billion over 18 years to settle all federal and state claims arising from the Deepwater Horizon oil spill in what the U.S. government called its largest legal settlement with a corporation.
        Anthem, Cigna Rekindle Merger Talks
        Health insurers Anthem and Cigna are in talks to combine after Cigna last month spurned a $47.5 billion takeover from Anthem.
        Jobs Market Continues Its Fitful Recovery
        After six years of fitful growth, a mixed jobs report for June illustrated how underlying softness continues to beset the U.S. economy. Employers added 223,000 jobs and unemployment fell to 5.3%, but wage growth remains slow and labor-force participation shrank.
        Officials Battle to Sway Greek Voters
        (MORE TO FOLLOW) Dow Jones Newswires

        July 02, 2015 17:30 ET (21:30 GMT)

        Officials were battling it out for the minds of Greek voters ahead of a crucial vote on its creditors' demands that could decide whether the country leaves the euro or buckles down for further difficult negotiations.
        Auto-Safety Regulator Expects to Soon Penalize Chrysler
        Federal regulators are likely to take action before summer's end against Fiat Chrysler Automobiles over lapses in handling older Jeeps tied to fiery rear-end crashes and millions of other recalled vehicles, the head of the National Highway Traffic Safety Administration said.
        Iran's Super Tankers Eye Western Waters
        Iran's biggest oil shipping company has amassed the world's largest fleet of super tankers and is in talks to sail back into Western waters should a nuclear deal be struck.
        U.S. Jobless Claims Rise to 281,000
        The number of Americans filing new claims for jobless benefits rose last week, but the level remains historically low.
        Dollar Tree-Family Dollar Deal Gets FTC Approval
        Dollar Tree and Family Dollar received FTC clearance for their merger and expect the deal to be completed July 6.
        Germany's K+S Rebuffs Potash Takeover
        German salt and fertilizer company K+S AG rejected a takeover approach worth $8.75 billion by rival Potash Corp. of Saskatchewan, saying the proposal undervalued the company.
        Hyundai Stalls In Bid To Lift Profit
        Hyundai Motor's drop in first half sales calls into question its ability to meet its full-year target, and underscores the challenges the world's fifth-biggest auto maker faces in braking its profit slide.
        RECENT DJ EXCLUSIVES:
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        AIG a Wallflower at Insurer-Merger Dance -- Heard on the Street
        Activism-Defense Specialist Anderson Leaving Goldman Sachs
        Meager Offerings on Tap -- Data Week Ahead
        Airlines: A Justifiable Bet -- Heard on the Street
        TODAY'S CALENDAR
        (Times in GMT, followed by country and event)
        2100 SKA Jun International Reserves
        2330 AUS Jun Australian PSI
        0130 AUS May Retail Trade
        0135 JPN Jun Japan Services PMI
        0145 CHN Jun China Services PMI
        0200 AUS Jun VFACTS vehicle sales
        0401 MAL May External Trade
        0500 IND Jun India Services PMI
        0730 THA Weekly International Reserves
        0745 ITA Jun Italy Services PMI
        0750 FRA Jun France Services PMI
        0755 GER Jun Germany Services PMI
        0800 EU Jun Eurozone Services PMI
        0830 UK Jun CIPS / Markit Services PMI
        1130 IND Weekly foreign exchange reserves
        2301 UK Jun CBI Growth Indicator Survey
        (END) Dow Jones Newswires

        July 02, 2015 17:30 ET (21:30 GMT)

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