U.S. equities managed to follow the lead of overseas markets and go green after a volatile week of downside action.

The DOW remains in negative territory, but not by much as $IBM weighs on the index. The NASDAQ and S&P show the bounce back with upside by as much as 1%.

Volume is low, gold and oil are rebounding along with equities.

Currently leading the market higher are conglomerates, consumer cyclicals, healthcare, transportation, and capital goods. Financials are doing alright while technology remains weak.

Leading the downside are the miners and ag stocks.

Europe managed to close higher than earlier unchanged trade action.

Market update

[youtube://http://www.youtube.com/watch?v=NIylUcGDi-Y 450 300]

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“European stocks advanced for the first time this week as the region’s commodity producers rebounded from a 3 1/2-year low. U.S. index futures and Asian shares also climbed.

Anglo American Plc rose 1.4 percent as the mining company reported increased iron-ore production. L’Oreal SA (OR) gained 3.5 percent after revenue exceeded analysts’ estimates. SAP AG lost 3.1 percent after the largest maker of business-management software reported sales that trailed forecasts.

The Stoxx Europe 600 Index (SXXP) added 0.9 percent to 286.33 at 11:19 a.m. in London. The gauge has slipped 2.1 percent so far this week, its biggest drop in two weeks, as commodities fell amid worst-than-forecast economic data from China and the U.S.

“I believe in the growth story,” said Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about $6.1 billion. “I have been adding some cyclicality to my portfolio. We reached all-times highs in the U.S. equity market at a time when some of the economic data has been slightly disappointing, so it’s not surprising that the market has taken a breather this week.”

Standard & Poor’s 500 Index futures rose 0.7 percent today, while the MSCI Asia Pacific Index climbed 0.4 percent after China’s State Information Center said the economy will probably grow at a faster pace in the second and third quarters. In the U.S., 13 S&P 500-listed stocks, including General Electric Co. and McDonald’s Corp., release results today.

Anglo American…”

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“China’s stocks rose the most in a month after companies from Qingdao Haier Co. (600690) to Northeast Securities Co. reported higher profit and a government economist forecast growth will rebound this year.

Qingdao Haier, China’s biggest refrigerator maker, advanced 1.9 percent. Northeast Securities capped its biggest weekly gain in two months. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111), the largest producer of the metal, paced a rebound for material stocks before the release of earnings today. China Southern Airlines Co., whose profit gets a boost from a stronger yuan, added 2 percent on speculation the currency will gain after the central bank signaled plans to widen a trading band.

“Listed companies will achieve profit growth in the first quarter and that’ll provide support,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “The slowdown in the economy and expectations about tightening liquidity have already pretty much been priced into stocks.”

The Shanghai Composite Index (SHCOMP) climbed 2.1 percent to 2,244.64 at the close, capping its biggest gain since March 20. It rose 1.7 percent this week. The CSI 300 added 2.8 percent to 2,533.83. The Hang Seng China Enterprises Index (HSCEI) advanced 2.4 percent.

Still, the Shanghai Composite has dropped 7.8 percent from a Feb. 6 high, with losses triggered by concern measures to cool property prices will hurt economic growth. Valuations on the Shanghai gauge are 9.2 times projected 12-month earnings, compared with the seven-year average of 15.8, data compiled by Bloomberg show….”

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“Since bottoming in October 2012, inventory levels of copper have risen 190% in warehouses operated by the London Metals Exchange.  That’s a huge and rapid increase, and it conveys a powerful message about the future for copper prices.

Back in September 2012, spot copper prices topped out at $3.81/pound, and they have now fallen 18%.  In terms of big drops in copper prices, this one does not rank very high among the big drops in copper prices over the past few years.  But it is producing a huge and rapid rise in copper inventories.

It is normal for prices and inventory levels to generally move in opposite directions.  When copper producers don’t like the market price and think that they can get a better one by waiting, they put their production into warehouse storage and wait for better times.  When prices rise up to or above a price level that the producers like, copper starts coming back out of inventory and onto the market.  So watching copper inventory levels can give us insights about where the producers think a fair price is.

It was understandable that copper inventories would rise back in 2008, when the economy was grinding to a halt, and when copper prices plummetted from above $4/pound in July 2008 to $1.25/pound in December 2008.  And shortly after copper bottomed at the end of December 2008, copper inventory levels started coming back down again.

Now we are seeing an even more rapid rise in inventory levels, and it comes on just a small amount of drop in copper prices.  The first message to take from this is that copper producers don’t think that $3.60 is a fair price.

That’s where copper was hovering just as the big run up started in inventory levels.  The inventory rise makes a pretty emphatic statement that the producers think they can get a better price by waiting.

 

This does not mean that they have to be right.  But producers spend their time dealing with copper prices, figuring out how much to produce and when to sell.  So they are in perhaps a better position than some others are to know what a fair price is, and so the opinion that they are conveying with their inventory behavior is at least worth listening to…..”

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“………….The chart below shows the damage:

 

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“European stocks rose after the biggest four-day selloff since July as Italian and Spanish bonds gained. Copper fell for a second day, poised to enter a bear market.

The Stoxx Europe 600 Index advanced 0.6 percent at 10:40 a.m. in London, while Standard & Poor’s 500 Index futures added 0.4 percent. Italy’s 10-year bond yield fell four basis points to 4.21 percent and Spain’s dropped six basis points to 4.62 percent. The euro strengthened 0.2 percent to $1.3055. Copper slumped 1.4 percent.

More than $1 trillion has been erased from the value of equities worldwide this week as concern deepened the global recovery was weakening and companies from Bank of America Corp. to Textron Inc. reported disappointing results. Finance ministers from around the world prepared to gather in Washington to discuss policies to support the economy and strengthen financial systems. Spain sold 4.71 billion euros ($6.14 billion) of bonds, more than its maximum target of 4.5 billion euros.

“It’s an important earnings season, with market participants trying to see if corporate earnings and forecasts are going to be in line with the weakening global macro data,” Serge Berger, a Zurich-based trader at Blue Oak Advisors LLC, said in a phone interview.

Three shares gained for each one that fell in the Stoxx 600 (SXXP), as the gauge rebounded from the lowest close this year. The index tumbled 3.8 percent in the previous four days, the most since a 4.4 percent slump ended July 25….”

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“Japan’s swap market is already starting to anticipate central bank Governor Haruhiko Kuroda’s endgame even as he makes his first monetary easing moves.

Two-year overnight-index swap rates that reflect investor expectations for the Bank of Japan’s benchmark rate are set for the biggest monthly jump since November 2010 and reached 0.095 percent this week, according to data compiled by Bloomberg. The contract has climbed from a low of 0.039 percent in January to the highest since July 2011, approaching the 0.1 percent upper range of the Bank of Japan’s benchmark rate target. The comparative swap rate in the U.S. was at 0.163 percent…”

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“Asian stocks fell, with the regional benchmark index set for its biggest drop in a month, led by mining companies as commodities slumped on concern weaker global economic growth will crimp demand for raw materials.

BHP Billiton Ltd. (BHP), the world’s biggest miner, sank 4.3 percent in Sydney. LG Display Co., which supplies touch screens for Apple Inc., dropped 4.8 percent in Seoul after audio-chip maker Cirrus Logic Inc. reported an inventory glut that suggests iPhone sales may fall short of expectations. Softbank Corp., Japan’s third-largest wireless carrier, lost 1.6 percent as a rival’s bid for Sprint Nextel Corp. gained shareholder support.

The MSCI Asia Pacific Index slipped 1.1 percent to 135.89 as of 5:08 p.m. in Tokyo, heading for its biggest drop since March 18. All 10 industry groups fell on the gauge, which is set for its third decline in four days after China’s economy expanded less than economists estimated. The International Monetary Fund this week cut its global growth forecast as Europe sinks deeper into recession.

“Weak corporate earnings results and renewed concerns about the global economy saw traders switch to a risk-off mode,” said Matthew Sherwood, Sydney-based head of markets research at Perpetual Investments, which manages about $25 billion.

The MSCI Asia Pacific Index (MXAP) advanced 6.2 percent this year through yesterday amid signs the U.S. economy is recovering and as Japanese shares rallied on optimism theBank of Japan will step up efforts to stimulate the economy. Shares on the gauge traded at 13.8 times average estimated earnings compared with 14 for the Standard & Poor’s 500 Index and 12.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg…..”

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Commodities began a sell off in Asia last night paring most of the gains had in early trade. That sell off along with worries of a downgrade for France and Germany spooked investors in Europe. All of which spilled into U.S. futures. Then we had some not so good earnings out of $BAC and $LLTC which helped to take U.S. equities down hard thus far.

Miners across the board are hitting fresh 52 week lows and the S&P has broken crucial support between 1550 -1557. Currently we have popped back above 1550. Closing prices will spell the extent of the damage….or not. We shall see.

Market update

[youtube://http://www.youtube.com/watch?v=mzJj5-lubeM 450 300]

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“NEW YORK (Reuters) – Stock index futures fell on Wednesday, indicating the S&P 500 will retreat from its second-best daily performance of the year as commodities fell and after earnings reports from Yahoo and Intel.

Brent crude slid towards $99 per barrel and copper dropped 1.8 percent to $7,167 a ton as softer-than-expected data in the U.S. and China has heightened worry over demand. U.S. listed shares of BHP Billiton lost 2.7 percent to $64.84 in premarket.

Yahoo Inc shed 1.2 percent to $23.50 in premarket trade after the Internet company’s first quarter revenue fell shy of expectations as declining traffic to its Web properties and falling display advertising sales continue to weigh on the company.

Intel Corp slipped 0.5 percent to $21.81 before the opening bell after the chipmaker said its current-quarter revenue would decline as much as 8 percent and trimmed its 2013 capital spending plans.

Bank of America Corp declined 3.3 percent to $11.87 after reporting first-quarter results.

S&P 500 futures fell 11.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 96 points, and Nasdaq 100 futures dropped 23.5 points.

According to Thomson Reuters data through Tuesday morning, of the 42 companies in the S&P 500 that have reported earnings to date for the first quarter of 2013, 66.7 percent have reported earnings above analyst expectations. Over the past four quarters, 67 percent of companies beat estimates while the average since 1994 is a 63 percent beat rate….”

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“European stocks declined for a fourth day, the longest losing streak in three months, with a gauge of commodity producers sinking to an 18-month low. U.S. index futures dropped, while Asian shares climbed.

BHP Billiton Ltd. (BHP) retreated to a seven-month low after the world’s largest mining company said third-quarter iron ore production rose less than expected. Tesco Plc (TSCO) sank 3.3 percent after reporting the first annual profit drop in almost 20 years and saying it will exit the U.S. ASML Holding NV rose the most since July after posting first-quarter sales that topped analysts’ estimates and announcing a share buyback program.

The Stoxx Europe 600 Index (SXXP) fell 0.9 percent to 285.63 at 11:26 a.m. in London. The gauge earlier slid as much as 1.4 percent amid speculation Germany’s credit rating could be downgraded, before recovering some of the losses within 15 minutes. Some 14,000 DAX Index futures contracts expiring in June changed hands in a five-minute period about 9:50 a.m. inFrankfurt today, more than 15 times the 20-day average volume for that time of day, according to data compiled by Bloomberg.

“Investors are worried that Germany’s economy isn’t holding up so strongly anymore, and German downgrade rumors are spreading more fear in the markets today,” said John Plassard, who helps oversee $28 billion as vice president at Mirabaud Securities LLP in Geneva. “Coupled with the disappointing Chinese GDP numbers from earlier this week and the plunging gold prices, we’re in the middle of a phase of uncertainty and possibly a correction — the last thing market participants want to hear in such a period are downgrade rumors.”

The Stoxx 600 has still gained 2.1 percent this year as U.S. lawmakers agreed on a compromise budget and central banks maintained stimulus measures. Futures contracts on the Standard & Poor’s 500 Index lost 0.5 percent today, while the MSCI Asia Pacific Index rose 0.7 percent.

China, Commodities

“In the shorter term, we have seen a bit of nervousness linked to the poor figures out of China and the selloff in commodities — and we’re seeing mining stocks also weighing today,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities…..”

 

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“Emerging-market stocks erased earlier gains as lower commodity prices dragged down Russian and Polish equities.

KGHM (KGH) Polska Miedz SA tumbled 6 percent in Warsaw after copper retreated, helping send Poland’s WIG20 Index (WIG20) to a seven- month low. OAO Gazprom, Russia’s biggest natural-gas producer and the parent of crude producer OAO Gazprom Neft, slid to the lowest level since March 2009 in Moscow, dragging the Micex Index (INDEXCF) toward its lowest close since June 25. Chinese banks led a 1.2 percent drop in the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong.

The MSCI Emerging Markets Index (MXEF) fell 0.3 percent to 1,006.41 as of 12:39 p.m. in London. The gauge earlier gained as much as 0.4 percent. Copper led declines in industrial metals after the International Monetary Fund cut its forecast to China’s economic growth yesterday, while oil traded near the lowest level in four months. The rand weakened 0.5 percent versus the dollar and South African bonds gained, as March inflation was slower than predicted by analysts.

“Russia is down on commodity prices, central and eastern Europe on weak Europe,” Martial Godet, head of emerging-markets strategy at BNP Paribas SA in London, said by e-mail. “Only the markets with low commodity exposure and strong domestic stories like India, ASEAN,Turkey, are somewhat immune.”…”

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“Asian stocks advanced for the first time in three days as new-home construction in the U.S. jumped more than forecast, the International Monetary Fund raised its forecast for Japanese growth and the yen weakened

Toyota Motor Corp., the world’s largest carmaker, advanced 1.8 percent as a weakening yen boosted the earnings outlook for exporters. Advantest Corp. paced increases in Tokyo among makers of semiconductor equipment after Intel Corp. (INTC) forecast second- quarter sales that would exceed some analysts’ estimates. Cathay Pacific Airways Ltd., Asia’s biggest international carrier by passenger revenue, climbed 2.9 percent in Hong Kong after Deutsche Bank AG raised its rating to buy.

The MSCI Asia Pacific Index gained 0.6 percent to 137.21 as of 6:08 p.m. in Tokyo. Three shares advanced for every two that fell, with eight of the 10 industry groups on the gauge climbing. The benchmark rose 5.5 percent this year through yesterday amid signs the U.S. economy is recovering and as Japanese stocks rallied on speculation the Bank of Japan will boost stimulus.

“U.S. housing starts showed a bright spot and confirmed the view that the economy is on the mend,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The yen will stay in a downtrend given the bold monetary easing by the Bank of Japan, and that leads to optimism exporters’ earnings will outperform.”

Plans for fiscal stimulus and record monetary-policy easing by the Bank of Japan were reflected in the IMF’s increased growth estimates for the world’s third-biggest economy, which were raised to 1.6 percent this year from 1.2 percent and to 1.4 percent in 2014 from 0.7 percent. IMF Chief Economist Olivier Blanchard said the BOJ’s action was “appropriate” and its impact on the yen “a logical consequence.”

Exporters Rise

Japanese exporters rallied. Toyota Motor gained 1.8 percent to 5,550 yen, Nissan Motor Co. advanced 3.3 percent to 1,024 yen and Ricoh Co., an imaging equipment maker that gets more than half of sales outside Japan, added 3.8 percent to 1,197 yen. The yen fell to 98.34 per dollar….”

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“European stocks slid for a third day as German investor confidence declined more than forecast. Asian shares retreated while U.S. index futures indicated a rebound from the biggest drop in five months.

Michael Page International Plc (MPI) slumped the most in three months after the U.K. recruiter reported lower profit. LVMH Moet Hennessy Louis Vuitton SA (MC) retreated to the lowest price in more than four months as revenue growth slowed. Danone (BN) rallied to a five-year high as the food company posted first-quarter sales growth that beat analysts’ estimates.

The Stoxx Europe 600 Index (SXXP) fell 0.6 percent to 288.61 at 11:06 a.m. in London, extending the decline over the past three days to 2.2 percent. The benchmark measure has still gained 3.2 percent this year as U.S. lawmakers agreed on a compromise budget and central banks maintained stimulus measures.

“The ZEW and other data shows that Germany is facing a slowdown,” Soeren Steinert, who helps manage about $24 billion as associate director for equities trading at Quoniam Asset Management GmbH inFrankfurt, wrote in an e-mail. “That will affect Europe for sure.”

The MSCI Asia Pacific Index lost 0.4 percent today, a second day of losses. Standard & Poor’s 500 Index futures rose 0.6 percent after the U.S. gauge sank 2.3 percent. American equities extended losses yesterday as explosions near the finish line of the Boston Marathon killed three people…..”

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“China’s stocks rebounded from a three-month low, as property shares jumped on speculation the government won’t impose any more real-estate curbs as economic growth slows and lower oil boosted auto companies and airlines.

China Vanke Co. (000002) and Poly Real Estate Group Co. led a gauge of developers to its biggest gain since February. SAIC Motor Corp. (600104) and China Eastern Airlines Co. rose at least 3.6 percent after Brent crude fell below $100 a barrel for the first time since July. China Life Insurance Co. and Ping An Insurance (Group) Co. gained after the government said it will allow shareholders to take bigger stakes in insurers.

“There was bargain hunting as investors took advantage of the earlier slump and the policy risk of property stocks has almost faded,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Concern about economic growth lingers and will weigh on sentiment.”

The Shanghai Composite Index (SHCOMP) rose 0.6 percent to 2,194.85 at the close, erasing a loss of as much as 0.7 percent. The CSI 300 Index added 0.9 percent to 2,459.59. The Hang Seng China Enterprises Index (HSCEI) gained 0.3 percent.

The Shanghai index has fallen 9.8 percent from a Feb. 6 high amid concern steps to coolproperty prices will drag on growth. The Bloomberg China-US 55 Index (CH55BN) slid 3.3 percent yesterday and the Standard & Poor’s 500 Index fell 2.3 percent. U.S. stocks extended losses after explosions rocked the finish line area of the Boston Marathon. Three people were killed and at least 128 people were hospitalized, officials said…..”

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