Daily Market Report 29/11/2011
Asian stocks continued their rally on Tuesday on hopes that Euro zone leaders are moving closer to action to stem the debt crisis in the region and that a robust US holiday shopping season in underway. European shares opened flat today as investors will be closing watching the Eurogroup meeting for further details on the next bailout payment to Greece and the leverage of the ESFS. London’s blue chips rose 2.9% yesterday, on its second consecutive day of gains after nine straight sessions of declines, as equities on both sides of the Atlantic rose and yields on euro zone bonds declined, with financial and basic resources stocks among the big winners. However given the denial of rumours that the IMF was going to get involved, it looks like the euphoria has worn off. The FTSE 100 is hovering around 5.300 at the time of writing.
In the energy markets, US crude futures lost 64 cents at $97.57 a barrel in the early trade on Tuesday after Fitch revised its outlook on the US credit rating to negative from stable for failing to tackle its ballooning budget deficit. In the commodity markets, the yellow brick holds steady above $1.700 per ounce, after staging its biggest one-day rally in three weeks yesterday with a nearly 2% climb.
A busy economic calendar today paves the way for choppy trading conditions. All eyes will be fixed on the euro zone finance ministers meeting. With Moody’s warning about the probability of multiple defaults by eurozone countries, S&Ps threatening to downgrade the outlook on France’s top level AAA and US President Obama urging EU Officials to act decisively the pressure mounts in Europe. With Berlin rejecting the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of calming markets, while yields on Spanish, Italian and French government benchmark bonds have all been pushed to euro lifetime highs. Merkel and Sarkozy aim to outline proposals for fiscal union before the EU summit on 9th December.
In the UK, markets wait for George Osborne’s Autumn statement, which is expected to unveil a string of measures to provide loans to cash-strapped firms in an attempt to kick-start the UK economy.
There is a swathe of economic data coming from the US today with the most notable being the consumer confidence reading. A rebound in consumer confidence could improve the outlook for the world’s largest economy, and we may see a bullish reaction in the US Dollar as the data hint at a stronger recovery for 2012.