Market Update - 30 October 2012

• Beginning with the Eurozone, Spiegel magazine obtained a draft version of the Troika report on Greece that calls on European bodies and official creditors to write off a chunk of their loans, while Greece must carry out further reforms that involve significant loss in sovereignty. This proposal was actively hosed by Merkel’s spokesman, Steffen Seibert, as “out of the question” when speaking to reporters in Berlin overnight, so it remains to be seen what, if anything, will happen when the final report is out on November 12 on Greece’s progress in meeting its debt targets.

• Official data out early in the session showed that Spanish retail sales slipped 10.9% in September on a year-on-year basis, leading the FTSE 100 around 0.45% lower, IBEX down 0.37% and DAX off 0.45%, but later in the session data on German wages released showed that they had their sharpest rise in almost four years in its July survey, up 3.2% on a year-on-year basis led by chemicals and metal industries.

• USDMYR tracking the mild risk off environment opened higher at 3.0600. Expected trading range for the week still in 3.0300-3.0800 with volatility expected due to the low volume.

• Mario Monti and Mariano Rajoy met in Madrid last night and reaffirmed their support to help Greece remain in the Eurozone, while both were a little drawn on the plans for an EU ‘super commisioner’. Monti said that such a commissioner would be a sign of mistrust, and that Europe is “facing adolescent difficulties- spots and mood swings”.

• The US front was quiet overnight as stock trading was cancelled for a second day with the threat of Hurricane Sandy continuing to bear down upon the East cost. The shutdown was the first for consecutive days due to weather since 1888 and exchanges are planning to reopen on October 31, weather permitting.

• Gasoline futures jumped 2.6% as the immediate impact of the storm weighed on investor sentiment more than the backdrop of global growth continuing to slow while yields on Treasury 10-year notes fell to almost a two-week low in the shortened session, admittedly on small volumes.

• With regards to indices, stocks fell on the day in a quiet start to the week due to Hurricane Sandy, the FTSE100 fell 0.2% to 5,795.1 on the close led by BT Group Plc and Hargreaves Lansdown Plc as investors continued to speculate on when a Spanish bailout request may come. Elsewhere, markets ended on a downbeat note, CAC fell 0.76%, DAX dropped 0.4% and the IBEX was off 0.6%.