President Obama didn’t say much but we did use the words “I will do whatever it takes” and he did express optimism that it can be done by Christmas. These words made a turn in the market from 90 point down to close at the high of the session with 106 points gain.
The markets are expected to react nervously for every piece of information concerning the “Fiscal Cliff” as there are substantial fears that the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the five weeks left before the January 1 deadline.
On the other side of the Atlantic, in Europe, although international lenders agreed on a plan to cut Greek debt, which will allow the country to secure more financial aid and avoid a default, market skepticism grew over a lack of detail on how Athens will implement the reforms needed to meet its new targets.
The positive sentiment surrounding President Obama speech continued during the Asian session today with all exchanges despite Shanghai exchange close higher.
The Asian market closed higher despite disappointing numbers that came both from Hong Kong and Japan.
Japan retail sales for October fell from the year-earlier month, breaking a string of modest increases since December.
In another report, Census and statistics department said that Hong Kong Retail Sales fell to a seasonally adjusted annual rate of 4.00%, from 9.40% in the preceding month.
Later in the day, Italy is expected to go back to the market with another auction of its 10-year government bonds, while the U.S. was to release preliminary data on third quarter growth as well as the weekly government report on jobless claims.
Asset in Focus
Gold futures fell sharply yesterday with a heavy volume despite little news in the sector. This sell-off was attributed to a large future seller that dumps the Gold future contracts and to an estimate raise made to the US GDP numbers that will came out later in the day today. Further improvements in the US economy might cut back the QE3 program announced in September.
The futures rebounded from the previous day’s sell-off on Today, as market players continued to monitor negotiations among U.S. lawmakers to avoid the looming “fiscal cliff” crisis.
Follow yesterday sell off and ahead of the US GDP numbers today, our recommendation is to stay side lines and wait to see how it plays out.