11 DECEMBER 2012: EUROPEAN LEADERS URGE MONTI TO STAY
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
EU leaders urged the next Italian government to stick to Mario Monti’s reform agenda after the Prime Minister’s surprise decision to resign earlier than expected. Silvio Berlusconi’s return to front-line politics rattled the financial markets in Europe. Ten year Italian bonds, a good barometer on investor’s confidence, fell to 4,75 percent. EURO/USD also fell well below 1,29 on Monday, but has since recovered and trades at 1.2942 in early Asian trading.
Monti’s surprise weekend announcement came after Berlusconi’s People of Freedom Party withdraw its support for his technocrat government which over the last year has brought some predictability back to Italian politics. Monti, a former EU-Commissioner, has been seen as Brussels’ man and enjoy strong support from Germany’s Angela Merkel. Monti is a strong supporter of the Euro in contrast to Berlusconi who is seen as a Euro skeptic. Italian shares fell along with bonds yesterday. New elections are scheduled for February.
In the US political haggling over the “fiscal cliff” continues with no solution in sight as the clock is ticking closer to the 31st December deadline. US indexes ended flat with low turn-over. Asian stocks are marginally up. Australian stocks gained 0,4 percent on stronger commodity prices and better prospects for China. The Japanese Nikkei dropped after successive days of gain. A 10 % rally over the last month has worried investors as see signs of over buying.
The dollar firmed against Yen trading at 82,40. JPY is also under pressure by expectations of monetary easing by the Bank of Japan (BOJ). Oil prices were up during yesterday’s trade. Brent crude reached USD 108 a barrel, but has as gold and precious metals fallen back in early Asian trade. Brent trades at 107,25 and gold has dropped from 1715 to 1708.
Copyright: United World Capital