Asian Morning Briefing: U.S. Stocks Edge Lower

By Dow Jones Business News, 
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MARKETS AT A GLANCE

(Data as of approximately 5 p.m. ET)

                       LAST    CHANGE  % CHG
DJIA                 16722.34  -21.29  -0.13%
Nasdaq                4234.08   -3.12  -0.07%
S&P 500               1924.24   -0.73  -0.04%
Japan: Nikkei 225    15034.25   98.33   0.66%
Hang Seng            23291.04  209.39   0.91%
Shanghai Composite    2038.31   -0.91  -0.04%
S&P BSE Sensex       24858.59  173.74   0.70%
Australia: S&P/ASX     5479.7   -38.8  -0.70%
UK: FTSE 100           6836.3   -27.8  -0.41%


                    PRICE CHG  YIELD
U.S. 2 Year             -1/32  0.407
U.S. 5 Year             -8/32  1.644
U.S. 10 Year           -21/32  2.603
Australia 10 Year      -12/32  3.731
China 10 Year           10/32   4.06
India 10 Year           -3/32  8.599
Japan 10 Year            0/32  0.589
German 10 Year         -11/32  1.411


                          LAST(MID)  CHANGE
Australia $ (AUD/USD)        0.9263  -0.0003
Yen (USD/JPY)                 102.5    -0.01
S. Korean Won (USD/KRW)     1023.39    -0.12
Chinese Yuan (USD/CNY)        6.255        0
Euro (EUR/USD)               1.3627        0
WSJ Dollar Index              73.42        0


               LAST   CHANGE  % CHG
Crude Oil     102.83    0.36  0.35%
Brent Crude   108.84    0.01  0.01%
Gold            1245       1  0.08%

     SNAPSHOT:

U.S. stocks edged lower Tuesday as investors pause to digest recent string of record highs. The euro pushed higher against the dollar and other currencies. Treasurys fell for a fourth straight session. Oil settled slightly higher on signs of stronger consumer demand. Gold edged lower on the stocks retreat and weaker dollar.

OPENING CALL:

Australia on Wednesday will release its first-quarter GDP figures. Strong mining exports have kept Australia's overall economic growth relatively strong, but the sharp fall expected in mining investment in coming years -- which will take a toll on employment and domestic demand -- has Australian policy makers scrambling to find alternate sources of support for the economy. Australia's GDP expanded by 2.8% year-over-year in the fourth quarter of 2013 and is forecast to grow by 2.1% in the first quarter of 2014.

EQUITIES:

U.S. stocks edged lower, with the S&P 500 index failing to hit a record high for the first time in four sessions.

On Monday, the Dow rose for a third-straight session to produce a second-straight record close, while the S&P 500 posted a third-straight record high and the fifth in six sessions.

Despite the recent streak of new highs, it has been a slow grind higher for the broader market, characterized by low volume. The S&P 500 has hit 15 record highs this year, but is up just 4.1% year to date. Overall volume fell Monday to the third-lowest daily total of the year. On Tuesday, traders said activity increased, but only slightly.

Investors are unwilling to buy or sell aggressively at current levels, without significant new catalysts, money managers say. With corporate-earnings season essentially over, investors may be looking ahead to the monthly employment report due Friday, which is expected to show that 210,000 jobs were added in May.

Dan Morris, global investment strategist at TIAA-CREF, which has $569 billion in assets under management, said although many investors believe the long-term outlook for stocks remains bright, they don't feel an urgency to buy until there is confirmation that economic growth is accelerating.

"There's not a lot of enthusiastic buying," Mr. Morris said. "It is difficult at this point to come up with a really optimistic case for equities."

In corporate news, Quiksilver tumbled 41% after the apparel retailer reported late Monday a wider-than-expected fiscal second-quarter loss and revenue that slid more than forecast. The company also said general sales trends of recent quarters would continue in the second half of 2014.

Asian markets were mixed Tuesday. Japan's Nikkei Stock Average rose 0.7% to a two-month high, while China's Shanghai Composite eased less than 0.1%.

FOREX:

The euro pushed higher against other currencies, as investors took in stride a disappointing euro-zone inflation report and positioned themselves for this week's European Central Bank meeting.

The common currency gained 0.2% against the dollar, to $1.3629, and climbed 0.4% against the yen, to Yen139.73.

The euro strengthened despite the fact that annual inflation for May in the euro zone increased by just 0.5%. Consumer prices rose by 0.7% in April and 0.5% in March. The ECB has used inflation as a gauge to measure the overall health and pace of the economic recovery for the 18-member currency bloc. Extremely low inflation has made it difficult for peripheral member countries to lower their debt and boost their competitiveness.

Very low prices put additional pressure on the central bank to act at its Thursday meeting. The market has largely priced in the probability that the ECB will lower its repo and deposit rates-the euro fell to $1.3586 last week, its lowest level against the dollar since Feb. 13. The central bank may also implement measures to boost lending to the private sector in the euro zone.

That may not be sufficient, Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange wrote in a research report.

"The risk, however, is that the ECB falls short of aggressive easing expectations, which could propel the euro higher in the near term," Mr. Esiner wrote.

BONDS:

The roaring Treasury bond market has come to a screeching halt.

Investors cashed their chips out of the U.S. Treasury bond market for a fourth straight session as concerns grew that the price rally that accelerated in May might have run its course.

It marks the longest losing streak for the U.S. government-bond market in two months. The yield on the benchmark 10-year note has risen since hitting about 2.4% on May 29, the lowest level since October.

"It feels like demand has been sated when the yield hit 2.4%," said Brian Edmonds, head of interest rates at Cantor Fitzgerald LP, though he said he was surprised by the magnitude of the selling over a short period of time.

COMMODITIES:

U.S. oil prices rose slightly, overcoming a morning dip after U.S. car makers reported strong sales.

Light, sweet crude for July delivery settled up 19 cents, or 0.2%, to $102.66 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe also rallied late to settle up 0.2 cent, or 0.02%, to $108.85 a barrel.

U.S. car makers on Tuesday reported their strongest sales since the 2008 financial crisis. Combined with other positive economic data on manufacturing growth from Monday, signs of stronger consumer demand exist, said Carl Larry, analyst for Oil Outlooks & Opinions.

"Fuel efficiency be damned, we're driving a lot more cars, which is going to increase the demand for gasoline," Mr. Larry said.

Gold futures posted a slight gain, as a retreat in U.S. equities and a weaker dollar perked up investor interest in the haven asset.

TODAY'S HEADLINES:

China's First Capitalist Firm Gets OK for $37B Deal

Shareholders approved Citic Pacific's takeover of the assets of its parent, sealing the deal on what some analysts have called a landmark reform measure for China's state-owned enterprises.

Samsung's Holding Company to Go Public

Samsung Everland, the holding company of Samsung Group, is planning to list by the first quarter of 2015, in a move widely seen as key to a transfer of power within Samsung's founding Lee family.

China Ship Seen Ramming Vietnamese Vessel

Vietnam TV identified a Chinese ship ramming a Vietnamese vessel on Sunday, in the latest of clashes near a deep- sea drilling platform deployed last month by China in waters off the disputed Paracel Islands.

Apple Keeps U.S. Smartphone Market-Share Lead, But Samsung Gains Ground

Apple maintained a solid lead in the U.S. smartphone market for the three months that ended in April, but second- place manufacturer Samsung Electronics posted a slight increase in market share, according to figures from market research firm comScore.

Regional Brokerages to Help Govt Unload Japan Post Shares --Nikkei

Japan'sFinance Ministry will seek to add midtier brokerages as principal underwriters when selling its stake in the conglomerate that operates the postal system, The Nikkei reported in its Wednesday edition.

Obama Backs $1BEurope Defense Fund

President Obama said he would send more U.S. military equipment and increase joint exercises in Poland as he proposed a new $1 billion fund to bolster European security.

Judge Rules in Favor of States in S&P Suit

A U.S. federal judge rules that lawsuits filed by more than a dozen states against Standard & Poor's should be heard separately in state courts, a setback for the world's largest credit-rating firm.

U.S. Auto Sales Surge in May

U.S. auto sales surged in May, confirming that the cold winter had more to do with damping demand earlier this year than a dip in consumer confidence.

Facebook to Acquire Finnish Start-Up Pryte

Facebook is acquiring Pryte, a Helsinki-based technology company as part of its continuing efforts to bring affordable Internet access to people across the globe.

ECB Anxious About U.S. Fines on EU Banks

The ECB, anxious about potentially massive U.S. penalties against BNP Paribas and other continental banks, is considering adding an element to financial-health exams to try to estimate the possible damage.

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TODAY'S CALENDAR


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  06-03-141745ET
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This article appears in: Energy , Bonds , International

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