Daily Analysis – Greek Election Rally Lifted Asia but the Cheer Quickly Faded

Equities
Asian markets advanced on Monday, encouraged by Greece’s election results which gave the pro-bailout coalition a small majority in the parliament. The Nikkei climbed 1.8% to 8721, the Kospi advanced 1.8% to 1892, and the AX 200 soared 2% to 4137. In greater China, the gains were more limited as the Heng Seng gained 1% to 19428, and the Shanghai Composite rose .4% to 2316. Financial and material stocks led the gains.

In Europe, market opened higher, but the initial gains failed to hold. The FTSE rose .2% to 5491, the DAX edged up .3% to 6248, while the CAC40 fell .7% to 3066. Greece’s Athens Index surge 3.6%, while other debt-encumbered countries struggled. Spain’s IBEX tumbled 3%, and Italy’s MIB sank 2.9% as Spanish 10-year bond yields hit a new record high of 7.18%.

US stocks ended mixed as well. The Dow slipped 25 points to 12742, while the Nasdaq climbed .8% to 2895, and the S&P 500 inched up 2 points to 1345.

Home builders rallied after the NAHB home builder sentiment index rose to 29, its highest level in 5 years. Toll Brothers rose 2.7%, Pulte jumped 3.4%, and Beazer gained 1.9%.

Groupon soared 10.8% after Morgan Stanley upgraded the stock to “overweight”.

Treasuries and Commodities
Bonds traded mixed on Monday. 10-year notes ended flat, while 30-year notes gained 12/32 to yield 2.67%.

Natural gas rocketed up 7.3% to 2.648, while crude oil fell 1% to 83.21, and gasoline dropped 1.6% to 2.6593.

Copper rose .2% to 3.3915, while silver eased .2% to 28.69. Gold closed flat at 1628.

Currencies
The Dollar closed mostly higher as enthusiasm over Greece’s election results faded throughout the Dow. The Euro closed down .5% to 1.2575, after jumping as high as 1.2727 in the early morning. The Swiss Franc and Japanese Yen both slipped .5%, while the Pound and Canadian Dollar both declined .3%. The Australian Dollar bucked the trend, climbing .4% to 1.0123.

Euro Fails to Hold Early Gains

Economic Outlook
Tuesday’s reports will include housing starts and building permits. Earnings are due from Adobe, Barnes & Noble, Discover Financial, FedEx, and Jefferies.

-Bradley Welcher