Last Trading Day Of The Year – Full Recap

A year which showed that central planning works (for the fifth year in a row and probably can continue to “work” at least a little longer – in the USSR it surprised everyone with its longevity before it all came crashing down), is drawing to a close. This is what has happened so far on the last trading session of 2013. As market participants head in to the New Year period, volumes are particularly thin with closures being observed across Europe with only the CAC, IBEX and FTSE 100 trading out of the major European indices, with German, Switzerland, Italy and the Nordic countries are already closed. The FTSE and CAC are both trading in the green with BP leading the way for the FTSE earlier in the session after reports the Co. have asked a federal appeals court to block economic loss payments in its settlement of the Gulf of Mexico oil spill. European stocks rise, with real estate, travel & leisure leading gains. Retail shares underperform as Debenhams slumps following its IMS. A number of major markets will close early today. The euro falls against the dollar. Fixed income market are particularly quiet with the Eurex being shut. Whilst Gilts are seen down this morning following on from yesterday’s short-covering gains.

Market recap

S&P 500 futures little changed at 1835.3
Stoxx 600 up 0.2% to 327.8
US 10Yr yield up 2bps to 2.99%
German 10Yr yield little changed at 1.93%
MSCI Asia Pacific up 0.1% to 141.3
Gold spot up 0.5% to $1202/oz

EUROPE

18/19 sectors rise, led by real estate, travel & leisure
Greek October Retail Sales Fall 1.9% y/y
Gainers: CRH +1.9%, Taylor Wimpey +1.8%, Persimmon +1.8%,
Berkeley Group +1.8%, Land Securities +1.6%, Endesa +1.7%, SBM Offshore +1.5%, Telenet Group +1.4%
Decliners: Debenhams -10.1%, Banco Comercial Portugues -2.7%, International Personal Finance -2%, Essentra -1.9%, Petrofac -1.9%, Delta Lloyd -1.5%, Inchcape -1.5%, Lonmin -1.4%

ASIA

Asian stocks rise, with Chinese shares leading gains. Australian shares underperform.
MSCI Asia Pacific up 0.1% to 141.3
Nikkei 225 up 0.7%, Hang Seng up 0.3%, Kospi up 0.5%,
Shanghai Composite up 0.9%, ASX down 0.1%, Sensex up 0.1%
All 10 sectors rise, led by energy, utilities
Singapore Economy Grew 3.7% in 2013, Prime Minister Lee Says
S. Korea’s Dec. Consumer Prices Rise 1.1% Y/y
Gainers: BBMG Corp +6.6%, GOME Electrical Appliances +5.9%, Synnex Technology International +5.2%, China Gas Holdings +4.2%, Rural Electrification Corp +4.1%, Power Finance Corp +4.1%, Byd Co +4%, NWS Holdings +3.1%
Decliners: Vangaurd International -3.9%, MMC Corp -3.4%, Parkson Holdings -2.8%, TSRC Corp -2.8%, Taiwan Mobile -2%, Newcrest Mining -1.9%, China Resources Cement -1.9%, Idea Cellular -1.9%

Overnight news bulletin from Bloomberg

Treasuries decline in the last trade day of the year, 10Y yield holding near 3%, closed at 1.757% on Dec. 31, 2012.
Treasuries delivered a total return of -2.3% this year, according to BofAML’s U.S. Treasury Index, the first yearly loss since 2009 as Fed scales back bond buys
U.S. investment-grade corporates lost 1.3% this year while high yield bonds returned 6.8%, also according to BofAML indexes; the S&P 500 rallied 29%, while the DJIA is headed toward its biggest annual gain since 1996
The yuan rose 2.9% this year, its fourth annual gain in Asia’s best performance for 2013; JPY has fallen 17.4% vs USD while EUR has gained 4.3%
Gold is headed for the biggest slump in three decades and the first annual loss since 2000; silver is poised for the worst annual performance since 1981
Latvia becomes the 18th member of the euro area tomorrow even as opponents of the currency switch outnumber proponents two-to-one as public expectations for accelerating inflation mount, opinion polls show
Fourteen pot shops are scheduled to open in Denver tomorrow, just over a year after Colorado and Washington voters made their states the first to legalize recreational use; Colorado expects $67m in tax revenue
Sovereign yields mostly higher. Nikkei closed for holiday; Japan reopens Jan. 6. Shanghai +0.9%. U.S. equity-index futures little changed. WTI crude declines, copper little changed, gold rises

Asian Headlines

The PBoC said that China’s economy and consumer prices are basically stable and reiterated it is to pursue prudent monetary policy, according to a statement on the Q4 monetary policy committee meeting.

Nomura forecasts 2014 year-end Nikkei 225 average at 18000 and added that the Nikkei 225 could reach 25000 in 2018.

EU & UK Headlines

German Chancellor Merkel says that eliminating the budget deficit is a priority of her third four-year term. (Newswires)

Separately, the German finance minister has said Latvia’s joining of the Eurozone will structurally strengthen the monetary union.

Liquidity in the Eurozone area has risen from EUR 200bln to EUR 274.8bln following yesterday’s MRO and LTRO operations alongside the ECB’s failure to sterilise the aimed quantity in the SMP programme.

ESM has said that the Spain assistance program has expired with a successful exit.

Barclays pan-Euro agg month-end extensions: +0.03y

Barclays Sterling month-end extensions:+0.07y

US Headlines

Fed’s Fisher said his votes on the central bank’s policy panel in 2014 will reflect his concern that the Fed’s bond buying risks stoking inflation and exposing the institution politically.

Barclays US Tsys month-end extensions:+0.07y

Equities

The CAC and FTSE 100 are seen in the green albeit with thin volumes. In terms of stock specific news, BP have asked a federal appeals court to block economic loss payments in ITS USD 9.2bln settlement of the 2010 Gulf of Mexico oil spill unless they can be directly linked to the disaster. UK retailers are under pressure after Debenhams’ profit warning, with the likes of Sainsburys and Marks and Spencers consequently seeing some downside.

Elsewhere, pre-market it was reported for Sanofi that France may allow substitutes for Co.’s Doliprane, France’s most prescribed medicine which led to EUR 276mln of health-system reimbursements in 2012.

In FX markets, EUR is seeing some downside amid signs liquidity in the Eurozone area rising from EUR 200bln to EUR 274.8bln following yesterday’s MRO and LTRO operations alongside the ECB’s failure to sterilise the aimed quantity in the SMP programme. GBP has managed to benefit from GBP/USD holding above the 1.6500 level. Overnight, JPY continued to strengthen which saw USD/JPY test the 105 handle to the downside. USD/JPY has steadily fallen since yesterday after failing to test 105.50 to the upside where there are large option barriers and a key Fibonacci level. However, there has been little in the way of movement for the pair in the European session.

Commodities

Production resumes at Libya’s 25,000 bpd Messla oil field, state-owned National Oil says on its website. China may buy more Iranian oil next year as a state trader is negotiating a new light crude contract that could raise imports from Tehran to levels not seen since tough Western sanctions were imposed in 2012.

Residents of a small town in North Dakota were urged to evacuate after a BNSF train carrying crude oil collided with another train on Monday, setting off a series of explosions and fires,
the latest in a string of incidents that have raised alarms over growing oil-by-rail traffic.

Berkshire Hathaway Inc. will swap about USD 1.4bln in shares of Phillips 66 for full ownership of the energy firm’s pipeline-services business, at billionaire Warren Buffett expands his bet on oil transportation.

SPDR Gold Trust said its holdings fell 0.37% to 798.22 tonnes on Monday from 801.22 tonnes on Friday.