Posted on July - 11 - 2011

Negative Sentiment To Linger As Concerns Persists

– The major U.S. index futures are pointing to a lower opening on Tuesday, although they have come off their lows. The euro zone debt crisis is likely to remain an overhang on the markets, even as the oversold levels may bring in some bargain hunters in to the markets. A report released earlier in the day showed that the trade deficit unexpectedly widened in May. The FOMC minutes also could give some direction to the markets.

A host of concerns pertaining to the course of the economic recovery heavily plagued the markets on Monday. The downbeat job report released last Friday, the Chinese inflation data released over the weekend and apprehension concerning the second quarter reporting season all worked towards generating negative sentiment.

The major averages opened notably lower and declined steadily over the course of the session before closing firmly in negative territory. The Dow Industrials ended the day down 151.44 points or 1.20 percent at 12,506 and the S&P 500 Index lost 24.31 points or 1.81 percent before closing at 1,320. Meanwhile the Nasdaq Composite ended at 2,803, down 57.19 points or 2 percent.

All thirty of the Dow components closed lower, with JP Morgan Chase (JPM), Hewlett-Packard (HPQ), Caterpillar (CAT), Bank of America (BAC), Boeing (BA) and Alcoa (AA) among the worst decliners.

Currency, Commodity Markets

Crude oil futures are receding $0.56 to $94.59 after declining $1.05 to $95.15 a barrel on Monday. Gold futures are currently rising $2.20 to $1,51.40 an ounce. In the previous session, the precious metal advanced $7.60 to $1,549.20 an ounce.

Among currencies, the U.S. dollar is trading at 79.692 yen compared to the 80.2630 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.4004 compared to yesterday’s $1.4029 yen.

Asia

The major Asian markets succumbed to a round of steep sell-offs as the averages in the region fell between 1 and 3 percent. Hong Kong’s Hang Seng Index led the way lower with a drop of more than 3 percent. Japan’s Nikkei ended down 1.43 percent.

At the conclusion of a 2-day monetary policy meeting, the Bank of Japan left its uncollateralized overnight call rate unchanged at a range of 0 to 0.1 percent. Meanwhile, the central bank upgraded its assessment of the economic outlook by saying that the Japanese economy is picking up, as supply constraints from the earthquake ease.

Europe

In Europe, stocks are lower, although they have come of their lows. The French CAC 40, the German DAX Index and the U.K.’s FTSE 100 Index are all receding modestly.

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