U.S stocks dip on Fed woes, China corrections; Dow loses 0.94%

U.S. stocks fell on Monday amid a global selloff on concerns the Federal Reserve will begin scaling back stimulus programs in the coming months.

Stimulus programs tend to push up stocks as a side effect, and talk of their dismantling can send equities prices dropping.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.94%, the S&P 500 index ended down 1.21%, while the Nasdaq Composite index fell 1.09%.

On Thursday, the Federal Reserve Bank of Philadelphia said that its manufacturing index rose to 12.5 in June from -5.2 in May, well above expectations for a -2.0 reading.

A separate report showed that U.S. existing home sales climbed 4.2% to 5.18 million units in May from April’s total of 4.97 million, far surpassing market calls for a 0.6% increase.

Federal Reserve stimulus tools such as a monthly USD85 billion bond-buying program have pushed up stock prices in recent years, and the end of such liquidity injections could prompt investors to park their money elsewhere at least for a while.

Meanwhile, Chinese equities fell on concerns the world's second-largest economy may be cooling, which brought U.S. stocks down even lower.

Leading Dow Jones Industrial Average performers included Johnson & Johnson, up 1.69%, Microsoft, up 1.35%, and UnitedHealth Group, up 1.17%.

The Dow Jones Industrial Average's worst performers included Bank of America, down 3.07%, Hewlett-Packard, down 3.00%, and Intel, down 2.54%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 1.48%, France's CAC 40 fell 1.71%, while Germany's DAX 30 finished down 1.24%. Meanwhile, in the U.K. the FTSE 100 finished down 1.42%.

On Tuesday, the U.S. is to publish official data on durable goods orders, a leading indicator of production, as well as closely watched reports on consumer confidence and new home sales.

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Forex - GBP/USD steady near 3-week lows

FTS- Forex Trading: The pound was steady close to three-week lows against the dollar on Monday as demand for the dollar continued to be underpinned by expectations that the Federal Reserve will soon start to taper bond purchases.

GBP/USD hit 1.5344 during European afternoon trade, the pair’s lowest since June 5; the pair subsequently consolidated at 1.5368, shedding 0.34%.

Cable was likely to find support at 1.5290, the low of June 5 and resistance at 1.5398, the session high.

The dollar remained broadly stronger after Fed Chairman Ben Bernanke said Wednesday the bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy continues to pick up.

Sterling slipped lower against the euro, with EUR/GBP easing up 0.11% to 0.8517.

Sentiment on the euro remained fragile as peripheral euro zone bond yields continued to grind higher amid concerns over the prospect of an end to the Fed’s stimulus program.

The yield on Spanish 10-year bonds rose to 5% for the first time since early April on Monday, up from 4.88% on Friday. Meanwhile, the yield on Italian 10-year bonds climbed to 4.71% from 4.58% on Friday.

Separately, a report showed that German business confidence strengthened modestly in June.

The German research institute, Ifo said its Business Climate Index rose to a seasonally adjusted 105.9 in June from a reading of 105.7 in May, in line with market expectations.

Also Monday, Greek political leaders were holding talks to discuss a cabinet reshuffle after the Democratic Left party withdrew from the coalition government on Friday in protest over its decision to shut down the state broadcaster, leaving the government with only a slim majority in parliament.

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Forex - Euro remains weaker vs. firm dollar

The dollar remained stronger against the euro on Monday after the Federal Reserve indicated last week that it is prepared to start rolling back its asset purchase program this year.

EUR/USD hit 1.3077 during European afternoon trade, the pair’s lowest since June 6; the pair subsequently consolidated at 1.3098, sliding 0.19%.

The pair was likely to find support at 1.3041, the low of June 4 and resistance at 1.3150.

The dollar strengthened across the board after Fed Chairman Ben Bernanke said last Wednesday that the bank could begin tapering bond buying by the end of 2013 if the economy continues to pick up.

Sentiment on the euro remained fragile as peripheral euro zone bond yields continued to grind higher amid concerns over the prospect of an end to the Fed’s stimulus program.

The yield on Spanish 10-year bonds rose above 5% for the first time since early April on Monday, up from 4.88% on Friday. Meanwhile, the yield on Italian 10-year bonds climbed to 4.7% from 4.58% on Friday.

The single currency showed little reaction after a report showed that the Ifo index of German business climate improved to 105.9 in June from 105.7 in May, in line with market expectations.

Elsewhere, the euro was higher against the pound and the yen, withEUR/GBP rising 0.24% to 0.8528 and EUR/JPY climbing 0.25% to 128.69.

Also Monday, Greek political leaders were holding talks to discuss a cabinet reshuffle after the Democratic Left party withdrew from the coalition government on Friday in protest over its decision to shut down the state broadcaster, leaving the government with only a slim majority in parliament.

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European stocks turn sharply lower despite Ifo data; Dax down 1.17%

European stocks turned sharply lower on Monday, despite positive German business climate data, as expectations for the Federal Reserve to scale back its stimulus program continued to weigh. 

During European morning trade, the EURO STOXX 50 plunged 1.76%, France’s CAC 40 plummeted 1.89% lower, while Germany’s DAX 30 tumbled 1.17%. 

Earlier Monday, a report showed that the Ifo index of German business climate improved to 105.9 in June from 105.7 in May, in line with market expectations. 

But stocks remained under pressure after Fed Chairman Ben Bernanke said last Wednesday that the bank could begin tapering asset purchases by the end of 2013 if the economy continues to pick up. 

Investors were also cautious after the International Monetary Fund on Friday said it would not suspend Greek funding and said Athens has until July to come up with an agreement on its bailout program.

The comments came amid concerns over recent delays in the privatization plan Greece agreed to last year, which could threaten the country’s performance on economic reforms needed to secure bailout funding. 

Financial stocks remained broadly lower, as French lenders BNP Paribas and Societe Generale plummeted 1.69% and 2.37%, while Germany's Deutsche Bank tumbled 2.07%. 

Among peripheral lenders, Spanish banks BBVA and Banco Santander retreated 0.63% and 1.61% respectively, while Italy's Unicredit and Intesa Sanpaolo continued to trend higher, gaining 0.22% and 0.44%. 

Elsewhere, Kabel Deutschland rallied 1.90% after Vodafone raised its bid for the company to EUR87 a share from the initial EUR80. 

In London, FTSE 100 dropped 1.14%, as U.K. lenders tracked their European counterparts lower. 

Shares in the Royal Bank of Scotland declined 0.44% and Lloyds Banking tumbled 1.23%, while HSBC Holdings and Barclays plummeted 1.15% and 1.28%. 

Meanwhile, mining stocks remained broadly lower. BHP Billiton and Rio Tinto saw shares slump 0.69% and 1.24% respectively,while Evraz and Vedanta Resources plunged 3.15% and 4.42%. 

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.75% decline, S&P 500 futures signaled a 0.84% drop, while the Nasdaq 100 futures indicated a 0.61% loss. 

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U.S. futures lower amid Fed worries; Dow Jones down 0.78%

U.S. stock futures pointed to a lower open on Monday, as last week's comments by Federal Reserve Chairman Ben Bernanke saying that the bank could scale down its stimulus program before the year end continued to weigh. 

Ahead of the open, the Dow Jones Industrial Average futures pointed to a 0.78% decline, S&P 500 futures signaled a 0.82% drop, while the Nasdaq 100 futures indicated a 0.60% loss. 

Stocks came under pressure after Fed Chairman Ben Bernanke said last Wednesday that the bank could begin tapering asset purchases by the end of 2013 if the economy continues to pick up. 

Investors were also cautious after the International Monetary Fund on Friday said it would not suspend Greek funding and said Athens has until July to come up with an agreement on its bailout program.

The comments came amid concerns over recent delays in the privatization plan Greece agreed to last year, which could threaten the country’s performance on economic reforms needed to secure bailout funding. 

Tech stocks were expected to be active, after Apple announced late Friday that it had changed the way senior executives, including CEO Tim Cook, will receive stock awards, sending shares down 0.85% in pre-market trade. 

Separately, Oracle was slated to move after shares plunged over 9% on Friday as the tech giant missed expectations for software sales and subscriptions for a second straight quarter. 

The financial sector was also likely to be in focus, as Citigroup was expected to announce on Monday that it will open an office in Baghdad, becoming the first U.S. bank to move into Iraq. 

Elsewhere, Allergan tumbled 1.08% in early trading, after Deutsche Bank downgraded the maker of the Botox wrinkle treatment to "hold" from "buy" and Leerink Swann LLC trimmed its recommendation to "market perform" from "outperform". 

In addition, Deere retreated 1.78% pre-market as JPMorgan cut its rating on the world’s largest agricultural-equipment maker to "underweight" from "neutral". 

Across the Atlantic, European stock markets were sharply lower. The EURO STOXX 50 tumbled 1.22%, France’s CAC 40 plummeted 1.39%, Germany's DAX retreated 0.84%, while Britain's FTSE 100 declined 0.78%. 

During the Asian trading session, Hong Kong's Hang Seng Index plunged 2.22%, while Japan’s Nikkei 225 Index tumbled 1.26%.

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Forex - Pound near 3-week lows vs. firmer dollar

The pound was trading close to three-week lows against the stronger dollar on Monday after the Federal Reserve said last week that it could start tapering its asset purchase program this year.

GBP/USD hit 1.5366 during European morning trade, the pair’s lowest since June 5; the pair subsequently consolidated at 1.5369, shedding 0.33%.

Cable was likely to find support at 1.5290, the low of June 5 and resistance at 1.5398, the session high.

Demand for the dollar continued to be underpinned after Fed Chairman Ben Bernanke said Wednesday the bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy picks up as the central bank expects.

Sterling was lower against the euro, with EUR/GBP easing up 0.16% to 0.8522.

Sentiment on the euro remained fragile as peripheral euro zone bond yields continued to grind higher amid concerns over the prospect of an end to the Fed’s stimulus program.

The yield on Spanish 10-year bonds rose to 5% for the first time since early April on Monday, up from 4.88% on Friday. Meanwhile, the yield on Italian 10-year bonds climbed to 4.71% from 4.58% on Friday.

Separately, a report showed that German business confidence strengthened modestly in June.

The German research institute, Ifo said its Business Climate Index rose to a seasonally adjusted 105.9 in June from a reading of 105.7 in May, in line with market expectations.

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Crude oil drops to 3-week low on China growth concerns, Fed outlook

Crude oil futures fell to hit a three-week low on Monday, as a combination of concerns over a deepening slowdown in China and fears over an end to the Federal Reserve’s asset purchase program weighed. 

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD93.30 a barrel during European morning trade, down 0.4% on the day.

New York-traded oil prices fell by as much as 1% earlier in the day to hit a session low of USD92.74 a barrel, the weakest level since June 4.

Wall Street lender Goldman Sachs slashed its estimate for China’s gross domestic product in 2013 to 7.4% from 7.8%, citing weaker economic indicators and tightening of financial conditions

Meanwhile, fears over a cash crunch in the Chinese financial system lingered after interbank lending rates surged to a record last week.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Oil prices also struggled due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 82.80, the strongest level since June 4.

Demand for the dollar continued to be underpinned after Fed Chair Ben Bernanke said last Wednesday that the central bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy picks up as the central bank expects.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery fell 0.5% to trade at USD100.40 a barrel, with the spread between the Brent and crude contracts standing at USD7.10 a barrel.

London-traded Brent futures fell to a session low of USD99.83 a barrel earlier in the day, the weakest level since June 3.

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European stocks mixed on Fed jitters, German data ahead; Dax up 0.23%

European stocks were mixed on Monday, as expectations for the Federal Reserve to scale back its stimulus program continued to weigh, as well as concerns over Greece's bailout program. 

During European morning trade, the EURO STOXX 50 dipped 0.04%, France’s CAC 40 inched 0.05% lower, while Germany’s DAX 30 added 0.23%. 

Stocks remained under pressure after Fed Chairman Ben Bernanke said last Wednesday that the bank could begin tapering asset purchases by the end of 2013 if the economy continues to pick up. 

Meanwhile, investors remained cautious after the International Monetary Fund on Friday said it would not suspend Greek funding and said Athens has until July to come up with an agreement on its bailout program.

The comments came amid concerns over recent delays in the privatization plan Greece agreed to last year, which could threaten the country’s performance on economic reforms needed to secure bailout funding. 

Financial stocks were broadly lower, as French lenders BNP Paribas and Societe Generale declined 0.58% and 0.07%, while Germany's Deutsche Bank retreated 0.38%. 

Among peripheral lenders, Spanish bank Banco Santander dropped 0.40%, while Italy's Intesa Sanpaolo and Unicredit surged 1.07% and 1.54%. 

Adding to gains, Kabel Deutschland rallied 2.04% after Vodafone raised its bid for the company to EUR87 a share from the initial EUR80. 

In London, FTSE 100 added 0.20%, supported by gains in financial stocks. 

Shares in Barclays climbed 0.44% and the Royal Bank of Scotland gained 0.49%, while Lloyds Banking and HSBC Holdings advanced 0.79% and 0.53%. 

Meanwhile, mining stocks were broadly lower. BHP Billiton and Rio Tinto saw shares drop 0.35% and 0.89% respectively, Eurasian Natural Resources and Vedanta Resources plummeted 2.46% and 3.05%. 

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.23% fall, S&P 500 futures signaled a 0.27% decline, while the Nasdaq 100 futures indicated a 0.15% loss. 

Later in the day, the Ifo institute was to release a report on German business climate.

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Gold futures hold near 3-year lows as stronger dollar weighs

Gold futures were under pressure on Monday, holding near the lowest level since September 2010 as the U.S. dollar was boosted amid expectations the Federal Reserve will begin to taper off its bond-buying program by the end of this year.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,283.05 a troy ounce during European morning hours, down 0.7% on the day.

Comex gold prices fell by as much as 1.1% earlier in the session to hit a daily low of USD1,277.65 a troy ounce.

Gold future prices plunged to USD1,268.75 a troy ounce on Friday, the weakest level since September 16, 2010.

Gold futures were likely to find support at USD1,246.20 a troy ounce, the low from September 14, 2010 and near-term resistance at USD1,310.10, the high from September 28, 2010.

Comex gold lost 6.8% last week, the worst weekly decline since September 2011, after Fed Chairman Ben Bernanke said last Wednesday that the bank could begin tapering asset purchases by the end of 2013 if the economy continues to pick up.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its bond-buying program sooner-than-expected.

An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies. 

Indications the Fed will begin to taper asset purchases sent the U.S. dollar higher across the board. 

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 82.80, the strongest level since June 4.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Elsewhere on the Comex, silver for September delivery tumbled 1.75% to trade at USD19.65 a troy ounce, while copper for September delivery plunged 2.6% to trade at USD3.020 a pound, the weakest level since July 2010.

Copper prices came under heavy selling pressure amid concerns about a cash crunch in the Chinese financial system and slowing global economic growth.

Wall Street lender Goldman Sachs slashed its estimate for Chinese gross domestic product in 2013 to 7.4% percent from 7.8%, citing weaker economic indicators and tightening of financial conditions

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

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Forex - Dollar gains ground vs. yen

The dollar rose to two-week highs against the yen on Monday after Federal Reserve Chairman Ben Bernanke said last week that the bank could start to unwind its asset purchase program this year.

USD/JPY hit 98.71 during late Asian trade, the pair’s highest since June 11; the pair subsequently consolidated at 98.47, gaining 0.65%.

The pair was likely to find support at 97.88, the session low and resistance at 99.45, the high of June 6.

Demand for the dollar continued to be underpinned after Ben Bernanke said Wednesday the bank could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014 if the economy picks up as the central bank expects.

The yen also came under pressure after Japan’s ruling party, led by Prime Minister Shinzo Abe won in majority in a Tokyo assembly election, indicating support for the government.

The yen was lower against the euro, with EUR/JPY rising 0.35% to 1.28.84.

The Ifo institute was to release a report on German business climate later in the trading day.

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Forex - NZD/USD slips lower in cautious trade

The New Zealand dollar slipped lower against its U.S. counterpart on Monday, as the greenback remained supported by expectations for the Federal Reserve to scale back its bond-buying program before the year end. 

NZD/USD hit 0.7714 during late Asian trade, the session low; the pair subsequently consolidated at 0.7725, falling 0.21%. 

The pair was likely to find support at 0.7700, the low of June 21 and a multi-month low and resistance at 0.7807, the high if June 21. 

The greenback strengthened broadly after Fed Chairman Ben Bernanke said last Wednesday that the bank could begin tapering asset purchases by the end of 2013 if the economy continues to pick up. 

Meanwhile, investors remained cautious after the International Monetary Fund on Friday said it would not suspend Greek funding and said Athens has until July to come up with an agreement on its bailout program.

The comments came amid concerns over recent delays in the privatization plan Greece agreed to last year, which could threaten the country’s performance on economic reforms needed to secure bailout funding. 

The kiwi was higher against the Australian dollar with AUD/NZD sliding 0.32%, to hit 1.1864. 

Later in the day, the Ifo institute was to release a report on German business climate.

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