In the US overnight, the major indices finished the session mixed, but off its lows as renewed fears of European sovereign debt contagion emerged and as investors awaited Alcoa’s Q4 2010 to kick off the latest round of earnings.
The tech-heavy NASDAQ was the best performer, rising 0.2%. On the downside, the broad-based S&P 500 fell 0.1%, while the Dow Jones Industrial Average retreated 0.3%.
Across Asia, regional markets are mostly lower following a mixed close on Wall Street and renewed concerns over the European debt crisis. Weaker-than-expected sales numbers from Alcoa didn’t help confidence either. The Shanghai Composite is the biggest decliner, losing 0.5% while both the Nikkei 225 and Kospi are 0.1% lower. On the upside, the Hang Seng is bucking the broader trend, up 0.7%.
The ASX 200 is modestly softer by 0.1% at 4709 having earlier hit a low of 4692. Unsurprisingly, the market is fairly defensively positioned with the telecommunication, property trust and consumer staple sectors the best performers, all up between 0.5% and 2.1%. On the downside, it’s the material, energy and industrial names that are doing most of the damage in terms of points.
Despite Wall Street starting the week under a degree of pressure, sentiment ahead of the European open looks upbeat due to the start of earnings season and support for crude oil prices after a pipeline shutdown in Alaska. With Japan now back from a long weekend break; comments by the country's finance minister may stand to help Europe at the open. Japan is committed to buying a significant tranche of the Euro-bond issue due later in the month.
This is injecting some confidence into the common currency, pushing asset prices higher. Although the rebound could prove short lived given the marked losses seen by the likes of the DAX during yesterday's trade. In the near term, it's now very much a case of all eyes on Portugal as the country squares up to the prospect of struggling with its three and nine-year bond issues on Wednesday.
The economic agenda is rather quiet again in the coming hours. However, earnings news continues apace with retailer Marks & Spencer likely to headline in the UK. The sales update from Tiffany in the US will again give insight as to the state of consumption over the Christmas period. There's undoubtedly going to be a degree of nervousness surrounding the run of euro-denominated bond issues. Lisbon's going to be in everyone's sights for tomorrow, but whether there is more scope on the downside ahead of this, remains to be seen.
Ahead of the open were calling the FTSE up 30 at 5986, the DAX up 19 at 6876 and the CAC up 18 at 3820.
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