June China industrial profits fell -0.3% y/y. Despite the suspension of trading of a number of issues and the direct support of the government, the Shanghai Composite fell sharply, down -8.48%. The Nikkei 225 was down -0.95%.
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The German lfo July business climate index rose +0.5% on easing of concerns over Greece. The ECB rejected proposals for reopening the local stock and bond markets. After a brief delay, bailout talks on a 3rd program for Greece began today. Bund yields slipped further, to 0.695% and the DAX fell -2.56%.
The turmoil in China stocks was evident both in Europe and in the U.S. Durable Orders for June were a better than expected +3.4%, with ex-transportation up +0.8%. Yields on the 10-Year Note have now slipped below 2.225% and the US$ was weaker. Gold continued to hold above major support and settled at $1,096.40. The weak US$ didn’t help crude oil which sipped further, to $47.39.
Equities set their lows at the opening. Attempts to rally off those lows was met with additional selling. Volume was good, well above recent norms. A late rally helped bring markets off their worst levels at the close.