Daily Market Report 28/11/2011
Asian shares jumped on Monday after the robust start of the US holiday shopping season and reports that European policy makers are about to activate a crucial euro zone bailout fund with the help of the IMF, following a rough week marked by the relentless climb of crude oil, the hints of more depressing news by the banks and the weak government data. The discussions between Merkel and Sarkozy over the weekend about legal means to force debt-ridden nations into fiscal discipline, which could make it easier for the European Central Bank to make euro zone bond purchases, boosted risk appetite, with the bulls regaining the control. European stocks opened higher today on hopes of an IMF aid package for Italy. The FTSE 100 finished its worst running streak for nine years on Friday among speculations that private firms will be excused from the responsibility of sharing the cost of the euro zone bailout, with the banks among the biggest winners. Today the UK benchmark was seen opening up 48 points.
In the currency markets, optimism has driven the EUR/USD to start the week higher with the gains remaining modest at the moment. At the time of writing the Euro is trading at 1.3293 against the greenback with immediate support at 1.3190.
In the commodity markets, the yellow metal jumped 1% up on Monday as the euro rose on hopes that Europe will take action in resolving the crippling debt crisis. US crude futures rose more than $1.50 per barrel in early Asian trade on optimism about the fiscal integration among the bloc.
On Monday the British economy lacks fundamentals. Today investors will be eyeing the release of the US new home sales, which is likely to fall in line with the trend of Existing Home Sales, strengthening the US Dollar aversion sentiment. The data will be carefully watched as it will give an indication about the status of the housing sector which triggered the 2008 financial crisis. The focus of the week remains the euro area finance minister’s on Tuesday, with the markets waiting for resolutions on the next tranche for Greece, the Italian and Spanish issue as well as the proceedings of the EFSF.