US equities were flat this afternoon as traders braced themselves for a poor start to the quarterly earnings season. Meanwhile, in Europe, comments from the ‘Merkozy’ press conference failed to boost investor confidence, with spread betting markets continuing to fret about the lingering debt crisis.
By 4pm (London time) the Dow was up 4.96 point to 12,364.88, while the S&P 500 was 0.39 points lower at 1277.42. In London the FTSE 100 erased earlier gains and was down 0.61% to 5615.12.
‘Merkozy’ reunion
This afternoon marked the first meeting of the year for German chancellor Angela Merkel and French president Nicolas Sarkozy.
After the two leaders caught up on their holiday endeavours, they discussed ways to boost growth in the Eurozone region as well as the final details of a deal to increase fiscal coordination with the currency block.
The press conference, held shortly after the meeting, revealed that the two leaders were determined to solve the crisis and are taking all the measures needed to stabilise the crisis in the Eurozone.
Councillor Merkel issued a strong warning to Greece, saying that faster progress in negotiations with Troika are needed, however insisted that she was determined that no country should be forced to leave the Eurozone.
In terms of fiscal negotiations, the councillor said that the negotiations are coming along ‘well’, and there is a good chance that the treaty could be signed off by the end of January, and by March at the latest.
On the European Financial Stability Facility, the pair said that as well as supporting rescued countries, the fund should be able to intervene in the primary bond market in emergency situations.
All this being said and done, markets will now wait for the next meeting between the two, which is scheduled for 30 January.
Eurozone debt sales
Fresh evidence of unrelenting strain in Eurozone financial markets has surfaced once again today after the yield on German short-term debt turned negative.
Reiterating that investors remain keen to seek safety for their wealth and Germany’s haven status, Berlin was able to sell €3.9 billion in six-month bonds at a yield of -0.0122%.
It is the first time that banks are, in essence, paying to lend money to a Eurozone sovereign at a primary auction. The news comes after the European Central Bank also revealed a new record in the amount of cash (€464 billion) deposited by banks overnight.
Meanwhile, Paris was able to raise €8.42 billion in long-term debt in its latest monthly refinancing operation.
Focus this week will also fall on Spain and Italy in the run-up to their first bond auctions of the year, with little sign that investors have started 2012 with improved appetite for the Eurozone's riskier assets.
China goes shopping for luxury cars
Rolls-Royce Motor Cars reported the best annual sales in its history this morning, which was predominately led by booming demand for its luxury limousines in China. The UK car brand, owned by Germany’s BMW, reported that it sold 3,538 cars in 2011, a 31% rise from the previous year.
Breaking the figure down by region, China was its biggest market, followed by the US. Rolls-Royce’s Asia-Pacific sales were up by 47%, while in the Middle East sales were up 31% and 17% higher in North America.
The report came as BMW also reported the highest group sales in its history. Sales rose 14% in 2011 to 1.67 million vehicles, reinforcing its position as the biggest premium carmakers in the world.
Shares in BMW were up almost 3% by late afternoon at €57.15.
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'Financial Spread Betting Investors Seek Haven in Negative Yielding German Bonds', Article by IG Index, last update: 9-Jan-12
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