U.S stocks inch up on talk Fed stimulus to stay in place; Dow up 0.01%

U.S. stocks ended Monday higher after a lackluster session that saw share prices fall on earnings and soft housing data, though expectations that Federal Reserve stimulus measures will stay in place bolstered prices in the end.

Stimulus programs such as low interest rates and the Fed's monthly purchases of USD85 billion in assets suppress borrowing costs across the economy and make stocks an attractive buy.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.01%, the S&P 500 index rose 0.20%, while the Nasdaq Composite index rose 0.36%.

The National Association of Realtors reported earlier that existing home sales in the U.S. fell 1.2% to 5.08 million units in June, missing market calls for sales to rise 0.6% to 5.25 million units in June.

Sales for May were revised down to 5.14 million from a previously reported 5.18 million. 

The report added sales were up 15.2% from June of last year, while average house prices jumped 13.5% on a year-over-year basis.

While the numbers indicated that recovery continues in the housing sector, markets concluded the figures were soft enough to sway monetary authorities to keep stimulus programs in place for now, which are bullish for equities.

Elsewhere, fast-food giant McDonalds and toymaker Hasbro released second-quarter earnings that missed expectations, though trading remained largely quiet and within a 60-point range. 
Leading Dow Jones Industrial Average performers included Microsoft, up 1.91%, Hewlett-Packard, up 1.51%, and Bank of America, up 1.22%.

The Dow Jones Industrial Average's worst performers included McDonald's, down 2.66%, Intel, down 1.17%, and Walt Disney, down 1.14%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 0.34%, France's CAC 40 rose 0.37%, while Germany's DAX 30 finished down 0.01%. Meanwhile, in the U.K. the FTSE 100 finished down 0.11%.

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U.S. existing home sales fall 1.2% in June to hit 5.08 million units

 U.S. existing home sales fell unexpectedly in June, fuelling concerns over the U.S. housing sector, industry data showed on Monday.

In a report, the National Association of Realtors said that existing home sales fell 1.2% to a seasonally adjusted 5.08 million units in June from May’s revised total of 5.14 million. 

Analysts had expected U.S. existing home sales to rise 0.6% to 5.25 million units in June.

Following the release of the data, the U.S. dollar added to losses against the euro, with EUR/USD rising 0.5% to trade at 1.3204.

Meanwhile, U.S. equity markets were mixed after the open. The Dow Jones Industrial Average lost 0.1%, the S&P 500 index was flat, while the Nasdaq Composite index added 0.1%.  

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U.S. stocks mixed in subdued trade; Dow Jones down 0.12%

U.S. stocks were mixed in subdued trade on Monday, ahead of U.S. data as markets were jittery amid ongoing uncertainty iver whether the Federal Reserve will soon begin scaling back its stimulus program. 

During early U.S. trade, the Dow Jones Industrial Average fell 0.12%, the S&P 500 index inched up 0.02%, while the Nasdaq Composite index added 0.11%. 

Fed Chairman Ben Bernanke said last week that the central bank could scale back its asset purchases by the end of the year if the economy continues to improve, but added that there was no “preset course.”

Bernanke said the economic recovery was continuing at a moderate pace but reiterated that monetary policy will remain accommodative for the foreseeable future. 

Over the weekend, the Group of 20 nations stressed the need for a “careful” shift away from monetary easing so that market volatility does not negatively impact on the global recovery.

Finance ministers and central bankers from the G20 nations said Saturday that future changes to monetary policy should be “carefully calibrated and clearly communicated" and added that tapering should be "calibrated" to economic conditions. 

In earnings news, McDonald's reported quarterly earnings that missed both for bottom-line profit and top-line revenue, sending shares down 3.01%. 

Adding to losses, Yahoo plummeted 2.39% after the Internet company said it has entered into an agreement to repurchase 40 million shares of its common stock beneficially owned by Third Point at USD29.11 a share. 

On the upside, Apple jumped 1.12% even as the company's developer site became unavailable for software engineers after a hacker tried to steal personal information. 

In the same sector, Google and Microsoft regained some ground, climbing 0.72% and 1.21% respectively, after the stocks tumbled on Friday. Both tech giants disappointed last week with quarterly earnings and revenue that fell well below market expectations. 

In addition, at least eight brokerages slashed their price targets on Google, while seven cut their price targets on Microsoft. 

Other stocks expected to be in focus included Halliburton, Hasbro, Kimberly-Clark, Netflix and Texas Instruments, scheduled to post second quarter results later in the day. 

Across the Atlantic, European stock markets were mixed. The EURO STOXX 50 added 0.21%, France’s CAC 40 edged up 0.27%, Germany's DAX slipped 0.16%, while Britain's FTSE 100 fell 0.28%. 

During the Asian trading session, Hong Kong's Hang Seng Index rose 0.25%, while Japan’s Nikkei 225 Index advanced 0.47%. 

Later in the day, the U.S. was to release private sector data on existing home sales.

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Forex - Pound hits 3-week highs vs. dollar

The pound rose to three-week highs against the dollar in thin trading conditions on Monday after the Group of 20 nations said a shift away from monetary easing should be carefully managed so that market volatility does not negatively impact on the global recovery.

GBP/USD hit 1.5341 during European afternoon trade, the highest since June 27; the pair subsequently consolidated at 1.5331, gaining 0.44%.

Cable was likely to find support at 1.5256, the session low and resistance at 1.5400.

Finance ministers and central bankers from the G20 nations said Saturday that future changes to monetary policy should be “carefully calibrated and clearly communicated." 

In recent weeks market sentiment has been hit by uncertainty over when the Federal Reserve will start to pull back its USD85 billion-a-month asset purchase program.

The pound remained supported after last week’s minutes of the Bank of England’s July meeting showed that policymakers voted unanimously to keep the bank’s quantitative easing program unchanged, ahead of a decision next month on whether to provide forward guidance on future interest rates.

Sterling was also higher against the euro, with EUR/GBP sliding 0.19% to 0.8588.

The U.S. was to release private sector data on existing home sales later in the trading day.

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Forex - Euro extends gains vs. dollar

The euro extended gains against the dollar on Monday after Portugal’s Prime Minister Pedro Passos Coelho pledged to stick to the country’s bailout program, following a two-week political crisis.

EUR/USD hit 1.3192 during European afternoon trade, the pair’s highest since July 11; the pair subsequently consolidated at 1.3169, gaining 0.24%.

The pair was likely to find support at 1.3088, Friday’s low and resistance at 1.3205, the high of July 11.

The euro was boosted as the yield on Portuguese 10-year bonds fell to 6.4% from 6.92% at the close of trade on Friday, after political leaders resolved a deadlock that had threatened to derail the country's EUR78 billion bailout program.

Demand for the dollar continued to be supported by expectations that the Federal Reserve will start to unwind its bond purchase program later this year.

Over the weekend, the Group of 20 nations stressed the need for a “careful” shift away from monetary easing so that market volatility does not negatively impact on the global recovery.

Finance ministers and central bankers from the G20 nations said Saturday that future changes to monetary policy should be “carefully calibrated and clearly communicated." 

The euro was lower against the pound and the yen, with EUR/GBP down 0.20% to 0.8587 and EUR/JPY falling 0.41% to 131.64.

The yen was broadly higher following Sunday’s elections in Japan’s upper house, which gave Japanese Prime Minister Shinzo Abe’s ruling coalition a majority in both houses of parliament.

The majority will allow Prime Minister Abe to continue to push through a series of structural reforms aimed at spurring economic growth and fighting deflation.

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Dollar weaker vs. yen after Abe win

The dollar was lower against the yen on Monday after Japanese Prime Minister Shinzo Abe’s ruling coalition won a majority in parliament’s upper house elections on Sunday.

During European late morning trade, the dollar was down against the yen, with USD/JPY falling 0.68% to 99.92, after falling to lows of 99.61 earlier in the session. 

The yen was higher following Sunday’s elections in Japan’s upper house, which gives the ruling coalition a majority in both houses of parliament.

The majority will allow Prime Minister Abe to continue to push through a series of structural reforms aimed at spurring economic growth and fighting deflation.

Demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to unwind its bond purchase program later this year.

Over the weekend, the Group of 20 nations stressed the need for a “careful” shift away from monetary easing so that market volatility does not negatively impact on the global recovery.

Finance ministers and central bankers from the G20 nations said Saturday that future changes to monetary policy should be “carefully calibrated and clearly communicated." 

The dollar was also lower against the euro, with EUR/USD climbing 0.38% to 1.3187.

The euro found support after Portugal’s president ruled out early elections on Sunday despite a lack of consensus between political leaders on how to keep the country’s bailout program on track.

Elsewhere, the dollar was down against the pound and the Swiss franc, with GBP/USD rising 0.38% to 1.5335 and USD/CHF down 0.39% to 0.9378. 

The greenback was mixed against its Australian, New Zealand and Canadian counterparts, with AUD/USD rising 0.24% to 0.9200, NZD/USDdown 0.14% to 0.7919 and USD/CAD losing 0.15% to trade at 1.0350.

The New Zealand dollar remained lower following a magnitude 6.5 earthquake in Wellington on Sunday.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.40% to 82.40. 

The U.S. was to release private sector data on existing home sales later in the trading day.

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Forex - USD/CHF slips lower in subdued trade

The U.S. dollar slipped lower against the Swiss franc in subdued trade on Monday, although growing expectations for the Federal Reserve to soon taper its bond-buying program continued to support demand for the greenback. 

USD/CHF hit 0.9384 during European morning trade, the pair's lowest since July 17; the pair subsequently consolidated at 0.9401, edging down 0.15%. 

The pair was likely to find support at 0.9358, the low of July 17 and resistance at 0.9462, the high of July 19. 

The greenback remained supported after Fed Chairman Ben Bernanke said last week that the central bank could scale back its asset purchases by the end of the year if the economy continues to improve, but added that there was no “preset course.”

Bernanke said the economic recovery was continuing at a moderate pace but reiterated that monetary policy will remain accommodative for the foreseeable future. 

Over the weekend, the Group of 20 nations stressed the need for a “careful” shift away from monetary easing so that market volatility does not negatively impact on the global recovery.

Finance ministers and central bankers from the G20 nations said Saturday that future changes to monetary policy should be “carefully calibrated and clearly communicated" and added that tapering should be "calibrated" to economic conditions. 

The Swissie was steady against the euro with EUR/CHF dipping 0.02%, to hit 1.2366. 

Later in the day, the U.S. was to release private sector data on existing home sales.

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Forex - Dollar lower vs. yen after Abe win

The dollar was lower against the yen on Monday after Japanese Prime Minister Shinzo Abe Abe’s ruling coalition won a majority in parliament’s upper house elections on Sunday.

USD/JPY hit 99.61 during late Asian trade, the lowest since July 18; the pair subsequently consolidated at 99.97, shedding 0.63%.

The pair was likely to find support at 99.03, the low of July 17 and resistance at 100.85, Friday’s high.

The yen was higher following Sunday’s elections in Japan’s upper house, which gives the ruling coalition a majority in both houses of parliament.

The majority will allow Prime Minister Abe to continue to push through a series of structural reforms aimed at spurring economic growth and fighting deflation.

Demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to slow its bond purchase program later this year.

The yen was also higher against the dollar, with EUR/JPY down 0.52% to 131.50.

The U.S. was to release private sector data on existing home sales later in the trading day.
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Asia stocks mixed; Nikkei ends up 0.5% after Abe coalition victory

Asian stock markets were mixed on Monday, with shares in Japan rising after Prime Minister Shinzo Abe’s Liberal Democratic Party won a majority in Sunday’s upper house election.

During late Asian trade, Hong Kong's Hang Seng Index was down 0.1%, Australia’s ASX/200 Index ended 0.6% higher, while Japan’s Nikkei 225 Index closed up 0.5%.

In Tokyo, the Nikkei ended higher following weekend elections in Japan’s upper house, which delivered a victory for Prime Minister Shinzo Abe’s ruling bloc.

The majority victory will allow Prime Minister Abe to continue to push through a series of structural reforms aimed at spurring economic growth and fighting deflation.

Despite the victory, the yen strengthened against the U.S. dollar, weighing on exporters.

USD/JPY fell to hit a session low of 99.59, moving off the previous session’s high of 100.85. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.

Meanwhile, in Australia, the benchmark ASX/200 Index inched higher as sentiment remained supported amid easing concerns over the possibility the Federal Reserve will begin to taper its bond-buying program in the near future.

The big four banks all rose, with National Australia Bank gaining 0.3%, while ANZ Banking Group and Westpac Banking Group advanced 0.3% and 0.5%. Commonwealth Bank of Australia tacked on 0.6%. 

Miners were higher, tracking gains in metal prices. Gold miners Newcrest Mining and Medusa Mining soared 7.5% and 20.9% respectively after gold futures broke above the key USD1,300-level.

Elsewhere, in Hong Kong, the Hang Seng swung between small gains and losses in choppy trade after China’s central bank said on Friday it was removing the lower limit on interest rates for banks, in an effort to help lenders attract more borrowers and spur economic activity.

The China banking sector were among the biggest drags on the index, with China Construction Bank shares dropping 0.6%, Industrial and Commercial Bank of China falling 1.4% and China CITIC Bank declining 2.8%.

Looking ahead, European stock market futures pointed to a modestly higher open.

The EURO STOXX 50 futures pointed to a gain of 0.2% at the open, France’s CAC 40 futures rose 0.1%, London’s FTSE 100 futures eased up 0.2%, while Germany's DAX futures pointed to a flat open.  

The U.S. was to release private sector data on existing home sales later in the trading day.

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Forex - EUR/USD edges higher in quiet trade

The euro edged higher against the dollar on Monday but gains were limited in subdued trade as expectations that the Federal Reserve will start to slow its bond purchase program later this year continued to support the dollar.

EUR/USD hit 1.3170 during late Asian trade, the highest since July 17; the pair subsequently consolidated at 1.3147, edging up 0.07%.

The pair was likely to find support at 1.3088, Friday’s low and resistance at 1.3205, the high of July 11.

Demand for the dollar continued to be underpinned after Fed Chairman Ben Bernanke said last week that the central bank could scale back its asset purchases by the end of the year if the economy continues to improve, but added that there was no “preset course.”

Bernanke said the economic recovery was continuing at a moderate pace but reiterated that monetary policy will remain accommodative for the foreseeable future.

Elsewhere, the euro was lower against the yen, with EUR/JPY falling 0.44% to 131.60.

The yen was higher against the euro and the dollar on Monday after Japanese Prime Minister Shinzo Abe’s party claimed victory in weekend elections in the upper house, which will allow him to continue to push through a series of structural reforms aimed at spurring economic growth and fighting deflation.

USD/JPY was down 0.54% to 100.06, from 100.61 at the close on Friday.

The U.S. was to release private sector data on existing home sales later in the trading day.

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