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Stock Market Preview for 06/10/2011

June 10, 2011

stock market previewU.S. stock index futures are lower this morning, with overall trading volumes very light. Asian markets traded mostly on the downside overnight, with Japan as the notable exception.

Chinese markets were initally under pressure after its trade exports slowed, coming in with a $13 billion surplus that was much smaller than expected. At one point the Shanghai B shares index had fallen by more than 6 percent before recouping more than half of those losses.

Japan warned that there would be further rolling power shortages as the country faces delays in the restarting of nuclear plants.

In Europe, Germany raised its 2011 economic forecast to 3.1 percent GDP growth from the earlier estimated 2.5 percent. The Bundesbank also lifted the 2012 outlook to 1.8 percent from the previous 1.5 percent forecast.

But that country’s equity markets are trading lower after a further widening of spreads between Greek debt and the benchmark German bunds. The war of words between Germany and the European Central Bank continued as Germany’s parliament passed a measure calling for private investors to share the burden for a second Greek bailout.

Greece will require up to $130 billion through 2014, according to estimates. The ECB has flatly rejected Germany’s proposal to force an extension of Greek debt by up to seven years, which would amount to a technical default. Banking stocks in Europe and the U.K. were trading on the downside.

The euro is down against the dollar, as are other European currencies in the U.S. Dollar Index basket. Only the yen and the Canadian dollar are up.

The higher dollar is having a limited impact on commodity prices, with crude oil and energy trading lower. Agricultural products are mixed after surging prices yesterday in the face of a weaker planting report from the USDA.

Copper and other industrial metals are lower, as are precious metals. The losses on the industrial side far outpaced precious metals, where the downside was fractional.

In stock-specific news, Lululemon Athletica is trading higher after reporting better-than-expected earnings news this morning as same-store sales result were up 16 percent in its fiscal first quarter. The company also raised guidance for its second quarter and for the full year, well exceeding consensus forecasts.

Next week only two S&P 500 companies will report earnings results: Best Buy on Tuesday and Kroeger on Thursday.

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