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Sep 28, 2012, 09.10 AM IST | Source: CNBC-TV18

US mkts snap losing streak on China easing hopes, Spain

The US equity markets snapped losing streak, rising for the first time this week on the back of support from Spain PM comments and expectation of China easing.

Gautam Broker

Research Analyst, CNBC-TV18

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By Gautam Broker, Research Analyst at CNBC-TV18

The US equity markets snapped losing streak, rising for the first time this week on the back of support from Spain PM comments and expectation of China easing.

Spanish government unveiled another round of austerity, aiming to cut the deficit by euro 40 billion in 2013.

Budget estimates show government expects a contraction of just 0.5 percent, which is much better-than-expectations.

Spanish government says austerity goes beyond European Union recommendations and is seen as precursor to asking for aid

Budget will come up for discussion in parliament tomorrow; Catalonia secession is also in focus.

Moody’s review of Spain rating also awaited, which is likely to be released by month end 

Periphery yields eased a bit after this news yesterday. Spanish 10-year bond yields went down by 12 basis points to 5.95 percent and Italian 10-year bond yields fell by 9 basis points to 5.12 percent

Italy's bond auctions were reasonably successful, which sold a total of euro 5.6 billion.

China liquidity injections through reverse repo’s raised hopes of additional easing.

US data was not supportive but jobless claims offset other negative indicators.

Durable goods orders for August came in at -13.2 percent as against expectation of -4.5 percent - Biggest monthly drop since January 2009

Final revision to real Q2 GDP surprised negatively, which fell to 1.3 percent from 1.7 percent

US Initial jobless fell to 3,59,000, down by 26,000 on week - First decline in the 4 week moving average

US markets at close on Thursday: Dow Jones gained 0.5 percent to close at 13,485.9 and S&P 500 Index rose 1 percent to 1,447.2 while Nasdaq was up 1.4 percent.

European markets on Thursday: DAX and FTSE were up 0.2 percent each while CAC rose 0.7 percent. Spain declined 0.2 percent while Italy was up 0.3 percent.

Today: SGX Nifty moved up 0.5% to 5711. Asian markets gained barring Nikkei.

Currencies

Euro hit an intraday low of 1.282 against the US dollar yesterday

But euro rebounded to settle at 1.291, up 0.3 percent post Spain budget.

Dollar index was on the back foot at 79.5 as against high of above 80 day before.

Australian dollar was stronger on commodity rally at 1.045 to the US dollar against 1.032 levels yesterday.

Commodities

Brent crude moved up 2.2 percent to USD 112.4 a barrel yesterday - Largest percentage gain since early August, which was up 0.7 percent for the week now

WTI crude was up at around USD 92 a barrel yesterday from low of USD 88.9 a barrel on Wednesday.

Israel--Iran tensions on nuke program supported crude oil prices.

Gold recovered to USD 1779 an ounce from around USD 1730 an ounce level a day before.

But gold has been seeing resistance around USD 1780 an ounce.

LME Copper was up 0.5 percent yesterday, which gained 0.4 percent today 

What to watch out for

China Leading Index

China Biz Sentiment

China HSBC Manufacturing PMI (September)

France Q2 GDP detailed

German Retail Sales

Eurozone CPI

US Personal Consumption

Chicago PMI September

University of Michigan consumer sentiment

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