Morning coffee brief

Whatever positive sentiment Asian markets gained from U.S. markets ticking up and a possible resolution in the Greek political arena was quickly spooked when JPMorgan Chase (JPM, quote) disclosed a $2.0 billion loss on synthetic credit securities. Image courtesy Willie Cloete: Dimon acknowledged the bank’s failure but said risk was part of its business. Asian markets also took a left hook from soft Chinese economic data released overnight.

China’s retail sales missed the mark for the month of April by 1.1%. Actual retail sales raised 14.1% versus expectations of 15.2%, while fixed asset investment was reported to be 20.2% in the period of January through April, versus analysts’ expectations of 20.5%. China’s industrial output also fell short of expectations by 12%, only raising 9.3% for the month of April year over year.

The one-two punch sent Asian markets down across the board with the Nikkei225 -0.6%, S&P/ASX -0.2%, Kospi -1.4%, Taiwan Taiex -1.2%, Singapore Straits Times Index -0.7%, Shanghai Composite -0.3%, and Hang Seng -1.2%.

The AUD/USD continued its drop on the China economic news. China is Australia’s largest trading partner and once again is showing signs of further slowing.

Analysts are reaffirming the opinion that China will soon be forced to cut banks’ reserve ratio requirement by up to 50bps in the near future.

Looking across the global markets getting ready to trade, India’s markets are looking to open lower again on mixed cues from global markets and a large U.S. bank stumbling.

What some analysts are now calling an inexcusable two billion dollar loss by JPMorgan is pushing U.S. futures lower after the Dow finally broke a six day losing streak.

Traders will be watching efforts to form a new coalition government in Greece, and going into the weekend it appears more and more likely Greece will be forced to hold new elections in June. 

Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

The economic calendar has a couple of key numbers being released today that traders will be watching:

The Producer Price Index for April leads off at 8:30 a.m. EDT. Analysts are looking for a rise of 0.1% from March’s unchanged results.

At 9:55 a.m. EDT the May University of Michigan’s Consumer Sentiment Index will be released.

Traders will also be looking north to Canada for signs of slowing. Canada can paint a picture of what is to come as they depend on the U.S. but are also huge exporters of crude oil to the BRICs including the U.S.

At 8:30 a.m. EDT Canada will release its Employment Change and Unemployment Rate.

A look at global companies to watch today:

Shares of Sony fell to 32 year lows after reporting weak guidance for the new fiscal year.

Commodity Marker – Electronic Trading

Crude oil




Nat Gas


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U.S. dollar index




as of 7:41 a.m. EDT

Looking at the pre-market we find little notable activity:

Shire PLC (SHPGY, quote) an Ireland biotechnology company catches an upgrade this morning to outperform from neutral by Exane BNP Paribas.

The earnings calendar remains quiet for the remainder of the week with no names reporting on the Emerging Money Index until next week. Next on deck:

VIP – Vimpel Com Ltd5/15/12 before the bell.

RDY – 5/23/12 Dr. Reddy’s Laboratories Ltd before the bell.

Bottom Line: U.S. futures are suggesting a lower open going into the weekend. Traders will be focusing not only on the euro zone today but also the Greece election issues and the backlash from JPMorgan. If U.S. and Canadian economic numbers disappoint and the cloud of uncertainty remains thick in the euro zone look for a reduction of risk into the close.

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