Equities Update

US equity markets were down modestly following European Central Bank President Mario Draghi’s comments that substantial risks to the economy remain and the law forbids him from stepping up government bond purchases. Adding to investor concern was the global unrest from the death of North Korean leader Kim Jong Il, and how his successor will handle the country’s nuclear program. 

S&P sectors were mostly lower, led by financials which came under pressure amid concern about tighter capital requirements. Basic resources were also lower as spot prices fell. Volumes were 20 percent below 20-days average.

Bank of America fell 4 percent, dropping below USD 5 for the first time since March 2009, on a report that large financial institutions will have to hold extra capital. JPMorgan and Morgan Stanley declined a similar amount. The oil sector traded lower despite a pick up in oil price, Exxon closed down 0.8 percent after a press report said they would consider buying Gulf Keystone for GBP7bn. Apache fell 3.36 percent after announced it would buy a 65 percent stake in Australia’s Barrup for AUD 560m, potentially facing a bidding war with Norwegian Yara that holds the remaining 35 percent stake.

After hours, Red Hat fell 8.66 percent after reporting better than expected 3Q EPS but a lower guidance for the full year. AT&T gained 1.1 percent after abandoning T-Mobile bid, Sprint rose 6 percent.

Asian stocks rose after Federal Reserve Bank of Richmond President Jeffrey Lacker predicted moderate growth in the U.S. economy next year, and Australia’s central bank said growth in Asia remained “solid.” Olympus rallied 16 percent after the Nikkei newspaper reported the scandal-rocked camera maker is planning a 100 billion yen (USD 1.28bn) share sale. Noble Group, the largest shareholder in Gloucester Coal, jumped 5 percent in Singapore as Yanzhou Coal Mining is said to plan a USD 2 billion offer for Gloucester Coal. Brilliance traded up 1.5 percent in Hong Kong after the company said in 2012 the China luxury car market may grow 20 percent.

European indices opened slightly lower. Sacyr and Repsol in Spain are suspended pending an announcement, see company news below. In the Healthcare space Fresenius medical came with a profit warning and AstraZeneca revised it full year targets to the lower end of the range. For the day ahead, we’ll have the German IFO out at 10.00 CET and US housing starts at 14.30. Spain and Greece are coming to the bond market with short term bills.