Comments from Former Greek Prime Minister Papademos damped market sentiment which had shown signs of improvement due to hopes of Chinese growth and absence of particularly bad news from the Eurozone. The Wall Street strengthened in early trading session but gains were erased later in the day with the DJIA slipping -0.01% and the S&P 500 up +0.05%. In the commodity sector, crude oil prices remained under pressure with the front-month WTI and the equivalent Brent crude contracts losing -0.78% and -0.37% respectively. Gold declined further after failing to re-test 1600 with the benchmark Comex contract falling to as low a 1561 before settling at 1576.6, down -0.76%, on Tuesday.
Market sentiment was initially lifted after the China Securities journal reported that the government has plans to speed up approvals of infrastructure and construction projects. It cited an identified person by saying that the year's infrastructure investment must be submitted before the end of June. The acceleration in project approvals, if real, is probably driven by Premier Wen Jiabao's recent urge to stimulate domestic growth.
In the Eurozone, the good news came from Dow Jones' report that 18B euro of funding from the EFSF will be lent to Greek banks for recapitalization on Friday. However, market sentiment was later dampened as the case of Greek exit remains an overhang as Former Greek Prime Minister Papademos stated that the country is considering possibilities to leave the 17-nation bloc although an exit is not likely. Meanwhile, the SYRIZA leader Tsipras continued to promote his anti-bailout platform. He addressed the German taxpayers that it's in their own interests to stop the implementation of the austerity program. The focus of the European leaders' meeting later today should be in focus.
On the dataflow, the US existing home sales came in stronger than expected with an increase to 4.52M units in April from 4.48M a month ago. However, this was upstaged by the Richmond Fed manufacturing index which plunged -10 points 4 in May. Meanwhile, the ICSC-GS chain store sales dropped -1.7% last week despite a gain of +3.8% on annual basis. Released in the Asian session today, the Bank of Japan announced to leave the asset purchase program unchanged despite Fitch's downgrade on the country's sovereign rating. Yet, most analysts anticipate that the central bank would have to implement more easing in coming months.