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Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires
UK 100 called to open -15pts, with enthusiasm from the Greek debt deal waning as it is increasingly considered another might kick of an already extremely dented Athenian can, and not quite the medium-term sustainability solution that would really settle things. Germany still against a debt haircut (take losses on holdings) being proposed as part of restructuring.
Focus also returned to the US Fiscal Cliff impasse and worries about global growth with the OCED slashing growth prospects across the board, citing the upcoming US tax hikes/spending acts as a recession driver. This countered the good set of US data (Durable Goods, Housing, Consumer confidence, Richmond Fed), and leas many to ask whether the post-election excitement that a resolution could be achieved had run its course and the stark reality being that the two parties remain for from agreement.
Overnight, Asian markets weak following the US close, and Chinese markets fell below their key 2000 level to near 4-year lows despite the commerce minister saying the nation had no problem achieving its 2012 GDP target and may even exceed it. More positive data that slowing growth has bottomed out may be needed before a rebound begins? Power transition also an issue with a potentially more conservative approach seen as inappropriate when rekindled growth required.
The index has found resistance again at rising lows from July, and this may remain a hurdle in the short term after the bounce from 5600. With Greece still a nagging issue and both the limited progress on the US fiscal cliff and slower global growth back to the fore, headway may be limited towards long term falling highs at 5900.
In FX, the GBP/USD has fallen back from its 3-week highs while EUR/USD has faltered at 1-month highs as the USD benefited from safe haven seeking on the combination of concerns which arose yesterday. The EUR suffered on Greek debt deal worries. USD/JPY also turned back from its highs as the JPY was sought amongst the havens.
In commodities, Gold has suffered from the stronger USD, turning around at recent $1755 highs as the dollar is sought for safety and inflation concerns gave way to renewed growth anxiety. Both Brent Crude and US Light Crude saw their prices fall back below recent rising support.
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UK Company Headlines: (Source: Reuters/DJ Newswires)
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