Quiet session so far with lack of tier-1 macroeconomic data releases and markets await further news on Greece
Positive comments from Obama and Boehner regarding the fiscal cliff in the US have seen European equities trade higher
Israeli conflict with Gaza continues and there has been speculation of a possible ceasefire in the coming days
RANsquawk European Morning Briefing Video: http://youtu.be/WTCgq9zuPZE
Strength has been seen in European equity markets this morning with all the major bourses holding onto gains of over 1% heading into the second half of the session as markets have reacted well to the more positive tone from Obama and Boehner regarding the looming fiscal cliff in the US. The gains in Europe echoed the Asian session with both the Nikkei 225 and the Shanghai Composite ending the session in positive territory.
Ongoing trouble in the Middle East, along with the buoyant tone out of the US has seen WTI crude futures hit 2-week highs although since the open, WTI has traded sideways.
The calendar for the rest of the day remains on the light-side with a lack of tier-1 macroeconomic data out of either Europe or the US and focus turns to the Eurogroup meeting on Greece tomorrow.
PBOC's governor Zhou said over the weekend that inflation is the main long-term risk for China as the economy makes a transition from a planned economy to a market-based one and deeper financial reforms are needed to complete the move.
Asian equity markets traded in positive territory overnight after US President Obama and Congressional leaders voiced their optimism on the looming fiscal cliff. The Nikkei 225 has once again outperformed other Asian bourses as opposition party leader Abe reiterated his dovish stance.
US House Speaker Boehner said talks with US President Obama were constructive and he outlined a framework with Obama. The US president and Congressional leaders have voiced optimism over resolving the fiscal cliff of tax rises and spending cuts at the end of 2012.
EU & UK Headlines
According to El Confidencial, the final amount of the financial assistance provided by Europe for Spanish banks will be EUR 30bln - EUR 33bln after the government initially announced EUR 40bln would be needed. Spain continues to contend that is does not need anywhere near the size discussed in the markets with the Spanish deputy economy minister saying Spain is likely to need less than EUR 40bln of Eurozone aid its banks.
Spain bad loans reached EUR 182.2bln in September whereas in August Spanish bad loans were EUR 178.6bln. September bad loans ratio was 10.7% compared with 10.52% the previous month.
Germany's Bundesbank says further Greek aid is not the task of ECB and that German economic outlook to worsen as year ends. Bundesbank also says that calls for expansive German fiscal policy are not justified and the European slowdown is currently hurting export sector but the whole German economy could be hit.
The Dutch finance minister says no final decisions on Greece will be made at tomorrow's Eurogroup meeting, and although some progress in talks is expected, no final decision of the release of Greece's next tranche of aid is expected.
European equity markets have echoed their Asian counterparts with the main bourses in positive territory following positive news out of the US on the fiscal cliff, late on Friday afternoon. News out of Spain that Spanish banks are unlikely to need as much financial assistance has seen the financial sector outperform other sectors and on top of this Barclays shares are also up over 4% after Goldman Sachs upgraded the bank to Buy from Neutral.
EUR/USD and GBP/USD both gained from weakness in the USD although option expiries, for today's NY cut at 1.2750 and 1.5900 respectively, are proving key magnetic levels.
AUD/USD trades higher throughout the session, in tandem with spot gold, benefiting from a pick-up in risk appetite after positive news out of the US on the fiscal cliff. Highs in the 1.0390 range have been tested and expiries at 1.0375 and 1.0385 today could also weigh on action in NY trade.
WTI crude futures are trading higher as supply issues gain attention following ongoing unrest in the Middle East. Overall sentiment has improved as Obama and Boehner signalled that a budget agreement can be reached to deal with the fiscal cliff in the US.
The Israeli conflict with Gaza has entered its sixth day and a ceasefire is unlikely in the coming days but progress has been made according to a PLO official and earlier this morning comments from a Palestinian adviser said they were mildly optimistic about a ceasefire. Barack Obama has insisted that Israel delays a major ground operation in the Gaza Strip although the US still remains fully supportive of Israel's right to defend itself. According to sources close to Netanyahu, Israel is ready for ground invasion of Gaza but would prefer a diplomatic solution.
Print 13:04, 19 Nov 2012 - Market Analysis - Source: RANsquawk
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