After a furious three day “dash for trash”, no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago. Copper falls after Chinese stocks see a second day of weakness, down 0.7% while an unexpected tumble in the USDJPY to 7 weeks lows has dragged the Nikkei (-0.5%) and its futures down.

Ongoing conventional sentiment is best summarized by the following quote by William Jackson, senior EM economist at Capital Economics: “markets are being supported by at least stabilization in oil prices. In China there seems to be signs of stabilization in the economic data and also some of the signs from policy makers that are suggesting that we will see more stimulus, which could also boost the markets.” As we reported yesterday, this is precisely the opposite of what is actually happening as China is now far more focused on deleveraging, and intends to reallocate human capital from villages to towns as its next big growth push.

Top news stories include Salesforce.com, GE deals; Icahn-Pep Boys deal sweetener, BNP Paribas equity capital statement, PostNL-Royal Mail deal speculation.

The US market closes early as do the U.K., French and Netherlands while Germany, Switzerland, Italy are shut all day.

Market Wrap

  • S&P 500 futures down 0.1% to 2051
  • Stoxx 600 down 0.2% to 366
  • FTSE 100 up less than 0.1% to 6247
  • DAX closed
  • German 10Yr yield up 1bp to 0.64%
  • Italian 10Yr yield up 2bps to 1.68%
  • Spanish 10Yr yield up 4bps to 1.87%
  • MSCI Asia Pacific up 0.4% to 131
  • Nikkei 225 down 0.5% to 18790
  • Hang Seng up 0.4% to 22138
  • Shanghai Composite down 0.7% to 3612
  • US 10-yr yield up less than 1bp to 2.26%
  • Dollar Index down 0.4% to 97.95
  • WTI Crude futures up 0.3% to $37.60
  • Brent Futures down 0.3% to $37.25
  • Gold spot up 0.3% to $1,073
  • Silver spot up less than 0.1% to $14.32

    • Looking at global markets, Asian stocks traded mixed following the positive lead from Wall St where a continued recovery in commodities bolstered sentiment, after crude rallied on an unexpected drawdown in DOE inventories. This supported Asian bourses with the ASX 200 (+1.3%) further underpinned by miners amid the commodity-wide recovery.

    Nikkei 225 (-0.5%) initially played catch up to the ongoing Santa Rally seen across global stocks on return from yesterday’s public holiday, although pared gains as exporters felt the brunt of JPY strength. Chinese markets were mixed with the Shanghai Comp (-0.7%) led lower by financials amid profit taking in the sector and weakness in China’s largest brokerage Citic as the Co. expects losses to its financing business. JGB’s are mildly weaker as the ongoing strength in stock markets dampened demand for safe haven assets.

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