Morning Meeting 10/09/12

Good Morning.

Asian shares traded mixed this morning, Japan's Nikkei Stock Average  fell 0.32% to 8,843.53, South Korea's Kospi fell 0.10% to 1,927.28, on the upside, the Shanghai Composite Index gained 0.12% to 2,130.40 and Hong Kong added 0.09% to 19,819.86.

To understand the market action in asia let's review what happened during the weekend: Chinese media reported on Sunday that consumer-price inflation in August accelerated from July making it more difficult for the country's authorities to make money more easily available to stimulate a slowing economy.

The National Bureau of Statistics reported on Sunday that August inflation rose 2% from a year earlier, faster than the 1.8% rate in July. At the same time, the national statistics agency reported that industrial output in China grew the least in more than three years during August. Production rose 8.9% in the month from a year earlier. In surveys by The Wall Street Journal and by Bloomberg News, economists had expected 9% growth in August. Industrial production had risen at a 9.2% annual rate in July. China's president, Hu Jintao said his government would work to boost domestic demand and aim for more balanced growth, according to Bloomberg.

Domestic demand is the biggest  issue at the moment to be tackle as China posted a wider-than-expected trade surplus in August as imports unexpectedly contracted during the month from the year-ago period, suggesting lackluster domestic demand. Exports exceeded imports by $26.7 billion during the month, beating expectations for $17.2 billion in a Dow Jones Newswires survey of economists.But imports surprised by dropping 2.6% from August 2011, failing expectations for a 3.4% increase, according to Dow Jones Newswires. In July, China had posted a trade surplus of $25.1 billion, falling far short of projections, as exports rose 1% and imports grew 4.7%.

Chinese numbers were not the only readings investors had to worry about as Japan trimmed its GDP for the April-June quarter this morning. Japan's GDP grew 0.2% during the calendar second-quarter, revised down from an initial estimate of 0.3% growth, the Cabinet Office said. On an annualized bases, GDP for the quarter was up 0.7%, less than the earlier estimate of 1.4% growth.

Markets reaction this morning suggested that concerns about Chinese and Japanese growth are outweighed by expectations that bad data would spur further monetary easing and other stimulus to bolster growth. Markets are know addicted to stimulus.

The dollar index hovered near its four-month lows and the dollar traded at 78.20 yen, near the five-week trough of 78.02 plumbed on Friday. The euro eased 0.2 percent to $1.2787, after rallying more than 1 percent on Friday to a four-month high of $1.2815.

U.S. crude futures waere off 0.2 percent at $96.21 a barrel but Brent steadied at $114.30, and spot Gold was up 0.1 percent to $1,737.84 an ounce, nearing Friday's peak of $1,741.30, its highest since February 29.

In Europe, the International Monetary Fund and European Commissioner for Economic and Monetary Affairs Olli Rehn threw their support behind the scheme while ECB executive board member Benoit Coeure said countries that apply for the bond-buying scheme will not necessarily be asked to make more cuts. Madrid intends to discuss conditions attached to the ECB's bond-buying plan with euro zone finance ministers this week. An European Union finance ministers meeting is set for September 14-15. Reuters reports.

Key events for Europe this week include a September 12 ruling by Germany's constitutional court on the new euro zone bailout fund.

The only question rising in my mind now is: How will European markets react to the news coming from Asia? Will they be able to stop the Draghi's plan celebration?

Let's find out.

Have a great day.

Originally posted at www.77sigmatrading.com