2 Jan 2012: European leaders look to buy time to contain the Eurozone crisis

FTSE 100 5572 Up 10bp
S&P 500 1258 Down 43bp
NIFTY 50 India 4640 Up 34bp
  • Tough 2012 expected in the Eurozone
    • About Euro 157bn worth of debt will mature in the first 3 months of 2012
    • Spiralling borrowing costs in 2011 saw political changes in Italy and Spain
    • Europe’s political leaders set to hold talks in late January to amend the inter-governmental pact of the EU, and to draft a stricter rulebook to control Govt spending
    • Merkel and Sarkozy to develop a ‘road map’ for commonly issued Eurozone bonds
    • Italy’s 10-year bond yields dropped 14 basis points today, while Spain’s went up by 10 basis points
    • All of Eurozone set to help Italy ‘buy time’ and hence turn around their debt; Italy must repay Euro 53bn in the first quarter of 2012
  • Exxon wins $900mn in Venezuela claim
    • International Arbitration panel awards ExxonMobil $908mn in compensation for Venezuela’s 2007 nationalisation of assets
    • This compensation is about 10% of what Exxon had sought in a battle between this global company and one of the world’s largest oil exporters
    • Due to several nationalisation projects, Venezuela faces many such arbitration claims but all of these are expected to ‘be in Venezuela’s favour due to such small payouts’
  • European stocks rise on the first trading day of the year
    • SXXP stocks gained on 1st, as carmakers and chemical producers advanced, while Asian shares fell on the same trading day; Stoxx rose 20 basis points, while MSCI Asia-Pacific slipped 0.3%
    • Biggest gainer was Siemens AG with a 1.2% gain
    • A fund manager explains that a lot of investors in Europe, having cleaned their portfolios have liquidity to invest which might finally trigger a bullish trend in SXXP, after it entered a bearish trend in August 2011
    • This growth is also attributed to reports of growth in the US, and the possibility that the Eurozone crisis will be contained

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