Intraday Market Thoughts

Greece Nears Deal, S&P500 Hits Highest Since July

by Adam Button
Jan 17, 2012 22:54

Risk trades drifted lower in US trading on mixed reports from Greece and financial sector worries but the positive tone from Europe remained the dominant theme. On the day, EUR and AUD were the best performers with JPY and USD lagging but the overall moves were reasonably tame. Chinese property prices highlight the Asia-Pacific session. Ashrafs Intermarket Insights will be issued at the start of the Wednesday Asian session (at about midnight GMT)

Greece may avoid a disorderly bankruptcy after all. An asset manager on the creditors committee was quoted late in the day saying he is highly confident a deal will get done that pays creditors 32-cents per euro. The open question is whether the ISDA will trigger credit-default swaps.

Earlier in the day Fitch said Greece is insolvent and will likely default by March 20. The ratings agency said a negotiated private sector haircut would still constitute a default.

Copper closed at the highest since October. US stocks rose to the highest since July, with the S&P500 briefly climbing above 1300 before closing up 0.4% to 1294. On caveat was Citigroup, which badly missed expectations and was the first major financial to report Q4 results. The Empire Fed climbed to 13.5 compared to the 11 expected.

Cable lagged somewhat as EUR/GBP shorts covered. GBP/USD hit 1.54 shortly after the European close but slowing inflation aided speculation the BOE will expand QE next month.

Italian 10-year yields fell 12bps to 6.50%.

Asia-Pacific Preview

Italian PM Monti is meeting with the UKs Cameron and speaking at the London School of Economics at 2300 GMT. At 0130 GMT, China releases data on Dec property prices in what is the lone indicator that could spark market moves. The World Bank releases growth forecasts beginning at 0200 GMT. At 0430 GMT, Japan releases final November industrial production data. No change from the -4.0% y/y initial reading is expected.


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