Risk assets were fairly choppy throughout European and US trade, but managed to edge higher into the close. Market participants continued to monitor the wires for a potential deal on Greece as European leaders meet.
Anticipation of a positive outcome saw European markets finish in positive territory. In US trade, investors focused on Fed Chief Ben Bernanke's comments regarding the potential impact of the fiscal cliff.
This overshadowed some positive economic data which came in the form of better-than-expected housing starts (0.89 million versus 0.84 million consensus).
Building permits data came in in line with expectations. EUR/USD continued its recovery from the early slump in yesterday's Asian trade and continues to hold above 1.28 in anticipation of a favourable Greece outcome.
A headline suggesting eurozone leaders are considering granting Greece a 10-year moratorium on interest payments on EFSF loans hasn't seen a big reaction in the euro so far, but we are likely to start getting further comments as the meeting is concluded.
Ahead of the open, we are calling the Aussie market up 0.1% at 4390. There isn't much on the economic calendar today, but investors will continue to focus on global macro-economic themes and local interest rate expectations.
The RBA has kept the door open for further rate cuts but unless the global economic picture deteriorates further, a December rate cut remains unlikely. RBA Governor Glenn Stevens made a speech last night in which he reaffirmed the easing bias. However, this does not necessarily mean that further cuts are imminent, particularly with inflation likely to become a concern at some stage.
On a stock level, we expect to see a firmer start for BHP Billiton, with its ADR pointing to a 0.4% rise to $33.71. Commodities were mostly weaker, with oil taking a hit after having had a stellar run lately. Some analysts attribute the drop in oil to reduced concerns that the Middle-East tension will escalate further.
The retail sector will be in focus today, with David Jones set to release first quarter sales ahead of the key festive trading period. CSL Limited has been downgraded to Sell (from Neutral) by Citi. The stock has had a stellar run all year and is now approaching the $50 mark. Traders and investors are likely to start getting nervous at these levels.
Price at 8:00am AEST
Change Since Australian Market Close
US DOW (cash)
US S&P (cash)
UK FTSE (cash)
German DAX (cash)
Japan 225 (cash)
Rio Tinto Plc (London)
BHP Billiton Plc (London)
BHP Billiton Ltd. ADR (US) (AUD)
US Light Crude Oil (December)
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