Day Traders Diary


U.S. equity futures trade in the red with the S&P 500 futures down 0.5%. The overnight weakness follows developments in Portugal where two key government figures (finance minister and foreign minister) have submitted their resignations. In addition, reports indicate two more ministers (agriculture and social security) are set to resign. Prime Minister Pedro Passos Coelho is scheduled to meet with the country's president tomorrow. The country's benchmark 10-yr yield has spiked 133 basis points to 7.79%. In addition Portugal's PSI index trades lower by 5.4%.

Looking at overnight developments:

Asian markets ended on a lower note. Japan's Nikkei shed 0.3%, China's Shanghai Composite dropped 0.6%, and Hong Kong's Hang Seng fell 2.5%.

In regional economic data:

China's Non-Manufacturing PMI declined to 53.90 from 54.30. Meanwhile, the HSBC Services PMI ticked up to 51.3 from 51.2.

Australia reported a trade surplus of $670 million ($50 million expected, $170 million prior). In addition, the country's retail sales declined 0.1% month-over-month (0.3% expected, -0.1% prior) while HIA New Home Sales rose 1.6% month-over-month (3.9% previous). Lastly, the AIG Services Index ticked up to 41.5 from 40.6.

Looking at news:

In China, the Shanghai Interbank Offered Rate (SHIBOR) continued its retreat from recent highs with the overnight rate falling nearly 39 basis points to 3.40%.

European indices trade near their session lows. France's CAC, Germany's DAX, and Great Britain's FTSE are all down near 1.7%. Elsewhere, Italy's MIB and Spain's IBEX sport respective losses of 1.8% and 2.9% while Portugal's PSI is lower by 5.4%.

Investors received several economic data points:

Eurozone Services PMI declined to 48.3 from 48.6 (48.6 consensus) while retail sales climbed 1.0% month-over-month (0.2% expected, -0.2% prior).

Germany's Services PMI fell to 50.4 from 51.3 (51.3 expected).

Great Britain's Services PMI rose to 56.9 from 54.9 (54.5 forecast).

French Services PMI ticked up to 47.2 from 46.5 (46.5 expected).

Italian Services PMI fell to 45.8 from 46.5 (47.0 consensus).

Spanish Services PMI rose to 47.8 from 47.3 (47.5 expected).

In news:

As mentioned earlier, Portugal has made the headlines after key ministers resigned from government. The concerns regarding the country's future have spilled over to other peripheral economies. Italy's 10-yr yield is higher by 16 basis points at 4.56% while Spain's benchmark 10-yr yield has climbed 19 basis points to 4.76%.

In U.S. corporate news:

Alcoa (AA 7.61, -0.19) trades lower by 2.4% after JPMorgan downgraded the stock to 'Neutral' from 'Overweight.'

The weekly MBA Mortgage Index fell 11.7% to follow last week's decline of 3.0%.

June Challenger Job Cuts rose 4.8% year-over-year to follow the prior month's decline of 41.2%.

ADP Employment Change will be reported at 8:15 ET while weekly initial claims and the May trade balance will cross the wires at 8:30 ET. Finally, the June ISM Services Index will be announced at 10:00 ET.

Also of note, today's session will come to an early close at 13:00 ET. Tomorrow, bond and equity markets will be closed for Independence Day.

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