Overnight Sentiment: Clutching At Straws

Tyler Durden's picture

After plunging by 19 points in the overnight session, and just touching the 100 DMA, ES has managed to score a recovery, one which has so far clutched at straws, namely stronger than expected German factory orders (+2.2% vs Exp. 0.5%) despite German GDP due in a week which may well push the core European country into the same double dip tsunami which has swept the resto of Europe, if it prints even a slightly negative GDP print. News from Spain that the "bad bank" bailout has started, with Bankia as the first casualty is also lifting spirits as it means that more taxpayer cash will be used to support risk assets. How long this micro euphoria of "bad news is good news" lasts is anyone's guess, but mostly that of the BIS which after failing to defend the 1.3000 EURUSD, has again managed to get the all important pair over the critical support area. 

Below is a complete summary of the overnight action from BofA:

Market action

Most Asian equity markets nose dived overnight as the Greek and French elections sparked new Euro area jitters. The primary fear of investors is that the new governments would reject or weaken austerity measures. The biggest risk is the political paralysis in Greece leads to the country exiting the Euro area. Our FX Strategist believe Greece's survival in the Eurozone could be at risk, with negative implications for the still fragile periphery.

Looking at the individual markets the Japanese Nikkei shed 2.8%, the Hang Seng fell 2.6% and the Korean Kospi lost 1.6%. The Shanghai Composite managed to finish flat while the Indian Sensex closed 0.5% higher.

In Europe, equities have recovered some of their initial losses and now are only trading down 0.1% in the aggregate. Blue chips are fairing worse than the broader market down 0.3% while in Germany shares are down 0.9% and in France equities are 0.2% lower. The London markets are closed for a bank holiday.

At home, futures are pointing to a 0.5% lower opening for the S&P 500 as European fears add to the downbeat mood following last Friday's weaker than expected payroll report.

In bondland, Treasuries are bid across the curve as investors continuing to take risk off the table. The ten year note is 3bp lower at 1.85% and the long bond is also trading 3bp lower at 3.04%.

The risk off trade is also benefiting the US dollar the DXY index is 0.3% stronger. On the back of the stronger dollar commodities are selling off marginally. WTI crude oil is down 68 cents to $97.81 and gold is $3.48 an ounce cheaper at $1,638.93.

Overseas data wrap-up

On Sunday, France elected Francois Hollande as the country's next President. Mr. Hollande's victory was in line with the polls and so expected by the financial markets. Judging by his speech after winning the election his agenda will likely be focused on European matters as they unfold over the course of the next several months. To read more take a look at: French Election Implications.

In the short term, the results of the Greek elections will likely be the greatest worry for the markets. The latest results show New Democracy and PASOK having only 149 parliamentarians out of 300. The very large number of small parties just below the 3% threshold required to elect parliamentarians has reduced the required threshold for any coalition government that includes the leading party (New Democracy) to well below earlier estimates. We expect very challenging negotiations this week. All scenarios are open in our view. A government in support of the new adjustment program cannot be taken for granted. Our FX Strategist believe Greece's survival in the Eurozone could be at risk, with negative implications for the still fragile periphery. To read more about the risks from the Greek elections see: FX Viewpoint, 01 May 2012.

The Indonesian economy grew 6.3% in the first quarter from a year earlier, compared with a 6.5% yoy pace in the fourth quarter of last year as domestic consumption and rising investment helped to counter a global slowdown that has damped exports.

Inflation in Taiwan accelerated from the 1.3% yoy pace recorded in March to 1.4% yoy in April. Most of the rise in the inflation rate can be contributed to higher vegetable and food prices.

The week's events

Initial jobless claims are expected to rise to 370,000, with recent volatility attributable to seasonal factors. The data highlight of the week is March's trade balance, which we expect to widen to -$51.0b after the sharp narrowing in February. It is fairly quiet on the Fed speaking circuit. Minneapolis Fed President Kocherlakota (non-voter) speaks on monetary policy on Thursday. Bernanke speaks as well, but it will be on bank regulation.

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LongSoupLine's picture

Just another global ponzi and propaganda coordination day, because we all know the "market" is NOT allowed to print red.

It all stinks like a huge pile of farm shit in a heatwave.

slaughterer's picture

BIS/NYFED: a bottom-feeding BTD bulls best friend.  

GetZeeGold's picture



The BIS/NYFED can have the straw.....I'll take the gold....unless they've found a way to print that too.


rocker's picture

The POMO Group and Banking Cartel are hard at work to maintain the ponzi.

(sarc)=  BTFD.  Remember that? In case you forgot.  "Buy the Fukn Dip".

CIABS's picture

Dear Tyler and esteemed zerohedge readers:  I'd be interested to see more details on the argument that the BIS is trying to keep the EURUSD above 1.3000.  What are their motives?  What would be the consequences of failure?  Thanks very much in advance.

PontifexMaximus's picture

french elections = no brainer. EURUSD heading 1.32, UK HF breed off, covering shorts.


Boilermaker's picture

In other words, it's a fucking sham and the FED can and will do whatever the fuck it wants.

Look at the non-stop ramp job straight up.  What other evidence do you need?  This shit happens literally every night.

GetZeeGold's picture



....at least you know what's coming.


rebelscum1967's picture

same shit every week. no meltdown will ever take place. ever. data matters not. facts matter not. futures gap down 1%? big fu*king deal buy buy buy boo-yah! Eurocalypse on the way? big fu*king deal France in the green now. Fukishima ready to kill off a couple billion? fu*k yeah it's bullish!

rocker's picture

It will break. That said. The "Banking Cartel", (The FED ran by Goldman Inc), will decide how far and when.

They, (Primary Dealers and Central Bankers), need to be in position first to drain as much as they can out before it happens.

All shorts must be gone first.

Only the Cartel can profit from the scam. Commodity prices are a tell that it is truly a broken market.

Quinvarius's picture

I wouldn't expect the Euro to do much.  Exchange rates are fixed by central bankers as policy.  The Euro is the Dollar as long as all the central bankers co-operate and buy/sell each others currencies to maintain fake rates..  All fiat will die together for this reason.

Boilermaker's picture

ES -3 now...

LMFAO.  We have a new all time low for shameless futures pumping.  This is the blue ribbon.

MFL8240's picture

The Wall Street created disaster continues to play on.

Zero Govt's picture

prepare for the 'Blankfein PR Offensive' on telling us how valuable banking is to the nation

...replace your popcorn with sick bags for this one

midgetrannyporn's picture

Ooh, look at the glowy numbers on the big board getting bigger! So pretty! I am convinced and have so much confidence now! [/sarc]

paddy0761's picture

ES green shortly. Time for the PM whack.

q99x2's picture

Which is harder: BLS the German GDP or riot in the streets. Warren says BTD. And they do print gold (paper gold for price fixing purposes) as well as fiat.