Equities

We saw a rollercoaster ride with US equities yesterday, with SPX futures climbing overnight, rolling over with the European open, only to reverse once again and finish close to the overnight highs (SPX +0.20 percent, NDX +0.38 percent, INDU +0.38 percent). Catalysts for the moves were EU Summit related with back and forth headlines and much speculation continuing around what will be announced today and Friday. More chatter around S&P cutting EU AAA rates put pressure on the market mid-day, but a report in a Japanese newspaper that the G-20 is considering a USD600bn IMF lending program sent the market back to the highs (this was later denied by the IMF). Financials were the top performers with XLF up 121bps. The main event begins today with an ‘informal dinner’; other macro news – US initial jobless claims and wholesale industries.

Asian stocks fell as investors appeared to take a more cautious view of the debt crisis talks, and reports showed unexpected declines in Japanese machinery orders and Australian employment. Australia’s S&P/ASX 200 slid 0.1 percent as the number of people employed fell by 6,300 after a revised increase of 16,800 in October, the statistics bureau said in Sydney overnight. In single stocks Tokyo Electric Power Co. tumbled for a fifth day, losing 8 percent, after a Japanese newspaper published an un-sourced report that it will be taken over by the government and most of the management replaced.

European stock index futures opened higher open this morning, as the consensus view amongst investors seems to be that the ECB will cut rates further, and that the euro zone debt summit beginning today will yield positive results. Eurostoxx, DAX and CAC futures are currently trading up around 0.7 percent. BoE rate decision also out this afternoon – no change expected.