Low volumes and a lack of tier-1 data out of Europe have led to a quiet morning session with the fiscal cliff continuing to remain in focus. European equities opened broadly unchanged and trade in minor negative territory as a lack of progress in the US on the fiscal cliff weighs on sentiment. All the major bourses in Europe are nursing losses in early trade with the Telecommunications sector (-1.85%) being the biggest lagger in Europe as Dutch company KPN cut their 2013 dividend estimate and announced they would not pay a 2012 dividend. Shares in the company plunged 15% at the open.
The SP/GE 10-year spread has widened this morning following comments from Spanish PM Rajoy over the weekend. Rajoy told union leaders that German Chancellor Merkel is opposed to a sovereign bailout for Spain because she isn’t willing to submit the proposal to German parliament. The Spanish 10-year yield currently trades near session highs at 5.435%.
In the FX markets, USD/JPY opened over 70 pips higher on Sunday evening as Japan elected the LDP to power with a super-majority. LDP leader Abe is pro-easing so JPY weakness was observed however the move has been almost completely retraced, moving back below the 84.00 handle to trade 83.67 last (+14 pips).
Looking ahead, there is a lack of tier-1 macroeconomic from the US and volumes are expected to remain light as the fiscal cliff situation remains unresolved.
Print 11:35, 17 Dec 2012 - Market Analysis - Source: RANsquawk
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