Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called to open higher this morning. This is what's happening today:

• France Debt Rating Cut to AA+ From AAA by Fitch; Outlook Stable

• China’s Economy Grows 7.5% Amid Risk of Deepening Slowdown

• U.K. to Grow 1.1% on Consumer-Spending Growth, Item Club to Say

• Boeing 787 Fire Cause Sought as U.K. Agency Sees No Battery Link

• IVG in ‘Advanced’ Talks With Creditors Over Restructuring

• Merkel Rebuffs Putting-Off-Crisis Accusation as Election Looms

• U.K. Political Funding Furor Rages as Lawmakers Tussle on Change

• Coffey Legacy Haunts GLG Investors as Sibanthracite Pulls IPO

• Belfast Protest Leaders Criticized During Third Night of Unrest

EARNINGS All times CET, estimates where available:

• Kuehne + Nagel (KNIN VX) 6:45, 2Q adj. EPS est. CHF1.27

• Enskilda Banken (SEBA SS) 7:00, 2Q adj. EPS est. SEK1.45

• Galp Energia (GALP PL) TBD, 2Q production, trading

• Hennes & Mauritz (HMB SS) 8am, June sales

• Sthree (STHR LN) 8am, 1H

Asian stocks and the Australian Dollar climbed after China’s economy grew in line with analyst forecasts and the government opened markets wider to foreign investors. Gold and other precious metals rallied.

The MSCI Asia Pacific Index excluding Japan Index rose 0.2 percent at 12:38 p.m. in Hong Kong, while the so-called Aussie strengthened 0.5 percent. Gold added 0.4 percent, extending its biggest weekly jump since 2011, as palladium headed for a one-month high. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent after the gauge reached a record on July 12. Natural gas increased 0.6 percent and corn futures sank.

A Chinese government decision to almost double investment quotas for qualified foreign institutional investors to $150 billion supported markets. Official data showed economic growth slowed to 7.5 percent in the second quarter, matching the median estimate in a Bloomberg survey. Federal Reserve Chairman Ben S. Bernanke said last week that the U.S. would need accommodative monetary policy for the foreseeable future.

“The QFII news is a piece of good news and it shows the regulator wants more capital inflows to support the market,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The GDP figure was no surprise. The market is concerned that the government will now sacrifice short-term growth to alter the structure of the economy. However, that’s the price China needs to pay for long-term sustainable growth.”

MSCI’s Asia Pacific index of regional stocks rallied 2.7 percent last week, the most since the end of April, and an MSCI gauge of global equities climbed 3.4 percent after Bernanke’s comments, which were made July 10. U.S. retail sales probably rose at a faster pace in June and the housing market strengthened, economists forecast before reports this week.

Good day and happy trading!

Kristian Camenzuli