Euro, dollar fall after US factory data
The euro fell against the U.S. dollar on Monday while the greenback fell versus the yen as risk aversion increased after data showing U.S. manufacturing contracted in June for the first time since July 2009.
The data was another sign the U.S. economic recovery is slowing.
Uncertainty over the outlook for a deal to stabilize euro zone debt markets also troubled investors. Finland and the Netherlands opposed the use of the euro zone's permanent bailout fund to buy government bonds in the secondary markets.
The stance of the two countries countered positive sentiment from last week's summit deal in which European leaders decided that rescue funds would be available to stabilize bond markets.
Setting the tone for early trading was the Finnish government's position that the rescue fund's bond buying in secondary markets would require unanimous support from member states. Finland and the Netherlands opposed such a move, casting doubt on prospects for the plan.
Wall St shakes off factory data; S&P, Nasdaq rise
U.S. stocks edged higher on Monday, shaking off a surprise contraction in U.S. manufacturing, which some investors took as a signal the Federal Reserve will take more forceful actions to boost the economy.
The Institute for Supply Management's manufacturing index came in at a lower reading than expected in June, registering a contraction in the sector for the first time since July 2009.
The weak data supported the view that conditions were worsening, and investors said it made the Fed more likely to adopt additional easy money policies, like a third round of quantitative easing.
The Dow Jones industrial average <.DJI> was down 8.70 points, or 0.07 percent, at 12,871.39. The Standard & Poor's 500 Index <.SPX> was up 3.35 points, or 0.25 percent, at 1,365.51. The Nasdaq Composite Index <.IXIC> was up 16.18 points, or 0.55 percent, at 2,951.23.
Gold inches up after weak U.S. manufacturing data
Spot gold edged up Monday, though futures settled easier, after a report showing an unexpected decline in U.S. manufacturing activity increased bullion's investment appeal.
The metal, which fell in the morning on profit-taking, gained ground after the Institute for Supply Management said U.S. manufacturing sector shrank in June for the first time in nearly three years as new orders tumbled.
Gold prices have been sensitive to signs of economic weakness, which tend to increase the likelihood of monetary easing by the Federal Reserve.
Technical momentum in gold built after Friday's rally on a European deal to shore up banks and cut borrowing costs.
U.S. gold futures for August delivery <GCQ2> settled down $6.50 at $1,597.70 an ounce, having closed earlier and higher than bullion on Friday.
Oil Drops as U.S. Manufacturing Shrinks in June
Oil fell after manufacturing in the U.S. unexpectedly shrank in June for the first time in almost three years.
Prices dropped 1.4 percent as the Institute for Supply Management’s U.S. factory index fell to 49.7 in June from 53.5 a month earlier. Euro-area unemployment reached the highest level on record in May, the European Union’s statistics office said today. Oil’s decline followed a 9.4 percent jump June 29.
“The ISM number strongly suggests that we’ve got a long haul before we see improvement in the economy and oil demand,†said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Economic data combined with the spike on Friday are going to convince people to get out of the market.â€
Crude for August delivery decreased $1.21 to settle at $83.75 a barrel on the New York Mercantile Exchange. Prices climbed $7.27 on June 29 to $84.96. The percentage gain was the biggest since March 12, 2009. Oil is down 15 percent this year.
Nikkei seen capped by disappointment U.S. data
Japan's Nikkei share average is likely to be capped on Tuesday after surprise weakness in U.S. manufacturing data, although renewed speculation the U.S. Federal Reserve may step in to boost growth could offer support.
U.S. manufacturing shrank in June for the first time in nearly three years as new orders plummeted, with the Institute for Supply Management index of national factory activity falling to 49.7 from 53.5 the month before, missing expectations of 52.0.
Nikkei futures in Chicago <0#NIY:> closed at 9,040, up slightly from the close in Osaka <JNIc1> of 9,030.
Trading on Tuesday was likely to capped at around 9,100, which should draw selling, including from Japanese retail investors, market players said.
Seoul shares seen in a range as soft data offset by QE3 hopes
Seoul shares are seen caught in a range on Tuesday as concerns about signs of flagging global
economic growth are offset by hopes the U.S. Federal Reserve may be spurred into providing additional stimulus measures.
Europe's debt crisis slammed into the world's factories last month, with U.S. manufacturing contracting for the first time in nearly three years, in the wake of similar data from China and Japan sinking to respective seven-month lows.
But U.S. stocks ended higher on Monday as investors shook off the weaker-than-expected data, taking it as a signal that the Federal Reserve will again step in to prop up the economy.
Market players are eyeing a European Central Bank policy meeting scheduled for Thursday, where the majority of economists polled by Reuters are expecting a rate cut.
The Korea Composite Stock Price Index (KOSPI) <.KS11> edged 0.13 percent lower to close at 1,851.65 points on Monday.
Hong Kong shares set to gain after long weekend
Hong Kong shares are poised to open higher on Tuesday as local markets reopen and play catch-up with overseas bourses, spurred by hopes of more monetary easing from global central banks.
The Hang Seng Index <.HSI> was set to start up 1.67 percent at 19,765.41. The China Enterprises index <.HSCE> of top locally listed mainland companies was indicated to open up 0.98 percent.
Source : Reuters
