The daily tug-of-war between the bulls and bears rages on. Still sensitive to the ongoing monetary debate in the United States, Japan’s Nikkei closed Thursday down 5.15 percent although the yen weakened slightly to 101.4150 to the dollar. The economic policies of Prime Minister Shinzo Abe ostensibly led to a boost in first-quarter GDP, but more and more investors seem to think that the stimulus has helped overheat the markets. In Hong Kong, the Hang Seng declined 0.31 percent, while the S&P/ASX 200 declined 0.89 percent in Australia.
Setting a different tone, markets advanced in Europe in mid-day trading. Germany’s DAX was up 0.75 percent, London’s FTSE 100 was up 0.24 percent, and the STOXX 50 index was up 0.84 percent.
U.S. futures at 8:20 a.m.: DJIA: +0.31%, S&P 500: +0.32%, NASDAQ: +0.28%.
Here are three stories to keep an eye on:
1) Euro Zone Economic Sentiment Edges Up: The Economic Sentiment Indicator, compiled by the European Commission, edged up 0.8 points to 89.4 in the EA17 and 1.1 points to 90.8 in the EU27. The increase was the result of improving sentiment in all business sectors except construction. Consumer confidence also increased fractionally (+0.4) for the fourth consecutive month. However, the index still remains well below its long-run average of 100.
A separate report released on Thursday showed the Business Climate Indicator — which is also compiled by the European Commission — increased 0.28 points to -0.76, still below its long-term average of 0 but improving in line with general economic sentiment.
2) Is Europe Holding the Rest of the World Back? Amid the global search for economic growth, it appears that Europe continues to be a drag. With the U.S. and Japan leading the way in global recovery, the Organisation for Economic Cooperation and Development forecasts overall growth of 3.1 percent in 2013, which is 0.3 percent lower than it had predicted last November.
The U.S. is expected to grow by almost 2 percent this year and at 2.8 percent in 2014 — all good news for the world’s largest economy. However, Europe is facing a contraction of 0.6 percent this year, with only around 1 percent growth slated for next year. Germany continues to carry the euro zone, as its growth is expected to more than double to 1.9 percent next year… (Read more.)
3) More Evidence of a Housing Market Recovery: Total sales of U.S. properties in some stage of foreclosure declined 22 percent on the year to 190,121 units, according to the first-quarter Foreclosure & Short Sales Report from RealtyTrac. All told, distressed sales in the first quarter accounted for 36 percent of total home sales.
“We expected foreclosure-related sales to be lower given the downward trend in new foreclosure activity nationwide over the past two and a half years, but the decrease in non-foreclosure short sales was a bit of a surprise given the 11 million homeowners nationwide still underwater,” said Daren Blomquist, vice president at RealtyTrac.