EUROPEAN CLOSING THOUGHTS 20/09/12

We were expecting a volatile day and we had a volatile day. Initial jobless claims dropped by 3,000 to a seasonally adjusted 382,000 in the week ended Sept. 15, the Labor Department said Thursday. The elevated level of claims exceeded market expectations of 375,000. Claims from two weeks ago were revised up to 385,000 from an original reading of 382,000. The average of new claims over the past month, meanwhile, rose by 2,000 to 377,750. That's the highest level since late June. Among other US data, The leading-economic index declined 0.1% in August, matching the consensus of estimates. Let's have a look deeper in the Leading Indicator: 6 of the 10 indicators made negative contributions in August, led by new orders for manufacturers. Other negative contributions came from consumers' expectations, manufacturing hours, jobless claims, building permits and manufacturers' new orders for consumer goods and materials. The biggest positive contribution came from the interest-rate spread. Other positive contributions came from stock prices, manufacturers' new orders for core capital goods and a leading-credit index. Separately, the Philadelphia Federal Reserve's index of business conditions rose to -1.9 in September from -7.0 in August. The index was expected to improve to -4.0. Although new orders rose modestly, the survey showed, shipments of products dropped and inventories jumped. At European cash close the DJIA dropped 0.20% to 13,551.40, the S&P500 fell 0.24% to 1,457.53 and the Nasdaq Index traded 0.38% lower to 3,170.51. Sluggish Macro readings have pointed out that economies around the world are not in better shape than they were in July. We do not have to forget that the S&P had rallied more than 5% on hopes that the central bank move will put the US economy on the recovery path. It all comes down to how long does it take to the QE to reach the real economy! European stock markets were off from daily lows but where unable to erase early losses. The Stoxx500 fell 0.58% to 2,552.65, the German Dax at european cash close traded just few points below the flat line at 7,384.51. The Spanish and the Italian equity benchmarks led losers today respectively down 1.16% and 1.43%. Gold for December delivery dropped $4.20, or 0.2%, to $1,767.40 an ounce on Comex. The precious metal was pressured by a higher dollar. The dollar index, which tracks the greenback's performance against six other major currencies, rose to 79.54 from 79.071 in late North American trading yesterday. The common currency traded 0.88% lower versus the greenback, closing the European trading session at 1.2956$. Crude for October delivery slipped 0.09% to $91.93 a barrel on NYMEX paring some of the early losses after the Philly Fed's reading. We had enough food for our brain today, the triple witching kept the market around September pins. In our opinion if a shift in sentiment will come it will come after the expiry, but it's too early to load the “short” gun. Have a great evening.