Good morning. Equity and Commodity markets finished on Friday in the red, with traders moving away from risk assets. Disappointing Existing Home Sales data on Thursday coupled with debt restructuring concerns in Europe, led to a equity wide selloff. Middle East tensions also plagued the headlines, with Syrian officials receiving little support from the West. The US government announced that assets held by the ruling party in the US would be frozen. This comes after reports of heavy civilian causalities. Key economic data released this week includes New Home Sales (market expects 300,000) on Tuesday, Durable Orders (market expects -2%) and Crude Inventories on Wednesday, GDP (market expects 2.0%), Initial Claims (market expects 400,000) and Continuing Claims (3.7m) on Thursday and Personal Income (market expects 0.4%), Personal Spending (market expects 0.5%), and Pending Home Sales (market expects -1.8%) on Friday.
On the equity market front, the S&P500 closed Friday’s session 0.77% lower. Safe haven buying pushed consumer staples and discretionary companies Kraft and Disney higher on Friday. Both companies bucked the overall negative trend for the day. Key corporate earnings released this week includes Campbell Soup and Krispy Kreme, with both companies expected to fall in line with estimates.
On the currency front, the Japanese Yen continued to trade in a range on Friday, with the currency touching 81.67. With no major economic data released during the session, traders moved away from the yen and traded the higher risk currencies of the Euro and Pound. According to reuters reports, the Japanese budget contraction is expects to hit almost 10 trillion yen leading up to the years 2010-2015. Traders also eyed the potential for intervention from the BOJ in light of recent movements in the pair. Aussie dollar followed the yen during the session, with little or no movement recorded. Trading in a band, the currency pair touched 1.0671, before weakening. Awaiting next weeks’ key policy announcement, the market is factoring in the potential for further support in the resources sector. Recent weakness has spurred a sudden and knee jerk attention to buying. The AUDUSD traded at 1.0671, with a sharp rebound in afternoon trade recorded. Euro weakened considerably against the greenback with news that Greek would be downgraded by fitch. Announcing a B+ rating, the agency cited continued pressure from borrowing costs and economic instability. With both Greece and Portugal experiencing significant monetary loss, the market cautiously watched for further debt contagion commentary. The disappointing announcement from Fitch during the session spurred on a rise in demand for the safe haven currencies, like the Swiss Franc and Japanese Yen.