Forex Market Commentaries - Markets Rise After Holiday Hibernation

The Markets Wake Up After The Holiday Slumber

Jan 2 • Market Commentaries • 6223 Views • 1 Comment on The Markets Wake Up After The Holiday Slumber

European equities have risen during the first trading day of the year, following the Stoxx Europe 600 Index’s first annual loss since 2008, as gauges of carmakers and chemical producers advanced. Asian shares in the markets that were open overnight/early morning had mixed fortunes.

The Stoxx 600 rose 0.2 percent to 245.11 by 9:00 a.m. in London. The U.S. and U.K. markets are closed today for the New Year’s holiday. Futures on the Standard & Poor’s 500 Index therefore didn’t trade, while the MSCI Asia Pacific excluding Japan Index slipped 0.3 percent.

Circa 157 billion euros of debt will mature in the 17-member euro area during the first three months of 2012, according to UBS. National Eurozone leaders have pledged to draft a stricter fiscal concord for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will renew their series of meetings in Berlin on Jan. 9th.

Chinese and Indian manufacturing gauges rose in December, suggesting that Asia’s fastest-growing major economies are so far withstanding the fallout from Europe’s sovereign-debt crisis. In China, a purchasing managers’ index was at 50.3 from 49 in November, the Beijing-based logistics federation said in a statement yesterday. An Indian PMI rose to 54.2 from 51, HSBC Holdings Plc and Markit Economics said today.

A Chinese manufacturing index released by HSBC and Markit on Dec. 30 indicated that manufacturing contracted for a second month. At the same time, HSBC said that “the pace of China’s slowdown is starting to stabilise.” In the Chinese PMI data, an index of export orders was at 48.6 from 45.6 in November, still below 50, the dividing line between contraction and expansion. A measure of output jumped to 53.4 from 50.9.

Nomura estimates that China’s economy, the biggest contributor to global growth, will expand 7.9 percent in 2012, the least in 13 years. Inflation is moderating after reaching a three-year high of 6.5 percent in July.

 

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Market Overview
In a quiet morning session due to the UK markets being closed and USA also the euro pared initial early losses versus the dollar and yen while European shares were little changed on the first trading day of 2012 as the region’s crisis enters a new year. Emerging-market stocks fell, snapping two days of gains.

The 17-nation euro weakened 0.1 percent to $1.2950 as of 8:30 a.m. in London, after earlier dropping as much as 0.3 percent. It reduced a 0.2 percent decline against the yen. The Stoxx Europe 600 Index rose 0.1 percent, following last year’s 11 percent slump. The MSCI Emerging Markets Index has slipped 0.3 percent. Financial markets from Japan to the U.K. and the U.S. are closed for a holiday.

The euro traded at 99.67 yen, after falling on Dec. 30 below 100 for the first time since June 2001. Some 157 billion euros in debt will mature in the 17-member euro area in the first three months of 2012, according to UBS AG. By the end of that period, leaders have pledged to draft a stricter rulebook for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin Jan. 9 to work out details.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners, rose 0.1 percent, the first increase in three days. It climbed 1.5 percent in 2011. Treasuries gained 9.78 percent last year, the most since 2008, as investors sought the relative safety of U.S. debt. Standard & Poor’s 500 Index futures didn’t trade because of the holiday.

Market snapshot at 10:00 am GMT (UK time)

The STOXX 50 is up 1.21%, the CAC is up 0.82% and the DAX is up 1.53%. The MIB is up 1.19%. The euro slipped to an 11-year low against the yen, before paring declines, on concern that the European debt crisis will hamper economic growth and destabilise financial markets as 2012 begins.

The euro fell to as low as 98.66 yen, the least since December 2000, before trading little changed at 99.61 yen at 8:47 a.m. London time. It weakened 0.1 percent to $1.2945. The 17-nation currency depreciated the most against the Canadian dollar, slipping 0.3 percent.

The euro posted its first back-to-back annual declines against the dollar in a decade last year. It was also the worst performer among 10 developed-nation currencies in 2011, sliding 2.1 percent, according to Bloomberg Correlation-Weighted Indexes.

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