Sentiment remains subdued on the back of European uncertainty
City Index December 8, 2011 5:10 PM
<p>With European and US markets closing lower last night, Asian stocks may be in for another rough ride today. The falls (in US and Europe […]</p>
With European and US markets closing lower last night, Asian stocks may be in for another rough ride today.
The falls (in US and Europe markets) came after mixed messages from European leaders overnight. French President Nicolas Sarkozy warned the upcoming summit is the last chance to secure an outcome to upcoming debt maturities, while German Chancellor Angela Merkel continues to hold a tough line approach.
Merkel says the Euro’s credibility has suffered and has called for a step by step solution to address the fundamental vulnerabilities of the economic block. The EUR/USD has failed to hold the 1.34 level, last trading at around 1.3344 and could continue to trend lower should today’s Chinese data not print as desired by the market.
Estimates are for the annual inflation rate to have fallen to 4.4% and industrial output 12.8%, but we think these numbers are difficult to reconcile. Any industrial output strength will no doubt have imported inflationary pressures, so it’s one of the other.
Low inflation and strong output are perhaps a too optimistic outcome. In commodities, copper continues to trend lower, down another 2% overnight and now well below the US$3.60/lb resistance level which has held this week.