Equity Update

US equity markets rallied on the day as U.S. housing starts beat economists’ expectations. In addition, investors reacted positively towards news out of Europe, with a report showing German business optimism rose unexpectedly and Spanish short-term financing costs fell sharply. Markets shrugged off continued political unrest with the rejection of a two-month extension of an expiring US payroll tax cut.

All 10 sectors of the S&P were higher, led by economically sensitive sectors Energy, Financials, Industrials and Materials. House builders surged after housing starts numbers came above expectations, Lennar rose 6.32 percent, PulteGroup gained 10.38 percent, DR Horton rose 5.70 percent. Volumes were flat versus recent average.

Jeffries rose 22.88 percent after reporting better than expected EPS and a beating strongly at the top line level. Juniper Networks advanced 8.9 percent following AT&T announcing its decision to abandon the T-Mobile USA merger proposal, which removes a potential headwind for 2012 Capex spending. Baker Hughes traded 7 percent higher after Reuters reported the company has been awarded a three-year USD640 million contract to drill 60 wells in Iraq’s Zubair field.

After hours, Research In Motion rose 11 percent after reports said Microsoft and Nokia mulled a joint bid, while Amazon.com considered buying the maker of the BlackBerry smartphone. Nike rose 3 percent on the back of solid 2Q EPS and revenue numbers. Oracle fell 8.9 percent after 2Q revenues and EPS came below expectations.

Asian stocks rose for a second day, set for the biggest gain in almost three weeks, as China pledged support for exporters and small businesses and after improved U.S. and German economic data. Onesteel, the second-worst performer in the MSCI Asia Pacific Index this year, jumped 6.7 percent after a broker named it among top Australian stock picks for next year. Mining and energy stocks gained as oil and copper prices climbed.

European indices continue their positive trend this morning opening higher ahead of the first of the ECB’s two 36-month long-term repo operations (LTRO). Elsewhere, German retail association said this year’s Christmas sales may match or slightly exceed last year’s levels; last year, sales in November and December totalled EUR76.8bn and revenue may rise 1.5 period in the same period of 2011.