Across Asia, markets are mostly weaker after soft manufacturing and services PMI data out of Europe dampened risk sentiment. This followed on from China’s HSBC flash manufacturing PMI number which came in at 49.7, remaining in contractionary territory and highlighting the need for the recently-announced monetary easing. Equity markets globally now seem to have reached an interesting inflection point after having gotten off to a great start to the year. Investors are still hesitant to buy into the global growth story, due in part to persistent concerns about how bad things can go in Europe, and partly due to uncertainty on how China will manage in its attempt to engineer a soft landing.

Japan’s Nikkei has once again bucked the trend in the Asian region, gaining 0.2% as exporters strengthen on the back of a weaker yen. Australia briefly poked its head above water this morning, only to get sold off on the back of a deepening political crisis. Kevin Rudd resigned as Foreign Minister and Prime Minister Julia Gillard has called a leadership vote for Monday. Looking at the rest of the region, the Hang Seng is down 0.8%, while the Shanghai is up 03%. US and European markets are facing flat to modest losses at the open.

Greece fears seemed to have receded a touch last night, with global economic data seemingly the overriding driver. However, Dutch Finance Minister Jan Kees de Jager caused a stir by saying he had ‘doubts’ that Greece could implement the second bailout program. The talk on trading floors today is that once again Germany will stand firm and resist increasing the size of the financial ‘firewall’, with a spokesman for Angela Merkel suggesting there was no need to increase the size of the ESM. WTI continues to find support after the recent break of the May high and commentary from the Iranian supreme leader Ayatollah Khamenei , who said, ‘No obstacles can stop Iran's nuclear work’. This suggests that tension in the Middle-East will see both WTI and Brent supported, again highlighting that gold is in vogue as a hedge against any future spikes. The rising oil price is a concern, with some analysts feeling another $10 rise in prices could severely crimp global growth.

There were quite a number of earnings reports out today, with some of the well-received releases coming from Insurance Australia Group, Cabcharge and David Jones. IAG’s interim net profit was down 10.6% to $144 million, but was well above an expected $110 million after a lower-than-expected $396 million in claims from natural disasters. IAG confirmed its previous insurance margin guidance. DJS’ total sales were down 3.1% for the second quarter to $598.5 million, better than the $557 million expected. The company has launched Australia’s first ever department store and reaffirmed first-half profit guidance down 15%-20%. We continue to see a number of stocks that have been smashed recently with poor results expected, but not delivered, bouncing hard.

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

Gordon Campbell: On the Budget’s Spreadsheet Victories

It wasn’t as if expectations were sky high, exactly. Chances are, it was always more likely that we’d be seeing Bigfoot rampage through the Beehive lock-up than catch a glimpse of a credible growth agenda from this government. More >>

Sludge Budget Report - Short The Dollar! MEMO: To international bankers FROM: C.D. Sludge Please short the dollar! It'll be good for both you and us. And you know you want to. Greexit, Eurogeddon... watch out... flight to quality and all that. Follow your instincts. The NZ Debt Management Office has been so surprised at the unprecedentedly low interest rates that it can borrow at that it has already entirely pre-funded the 2013 fiscal deficit - all $8 billion of it! More >>

Pattrick Smellie Comment: Doddling along the best we can hope forCriticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity. Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale. More >>