Stability at start!

“True stability results when presumed order and presumed disorder are balanced. A truly stable system expects the unexpected, is prepared to be disrupted, waits to be transformed.” - Tom Robbins.

The markets world over have been waiting to be transformed. For the time being, Investors can look forward to a positive start on the back of a couple of encouraging reports on the debt-stricken eurozone. European leaders have prepared draft operational rules for the European Financial Stability Facility (EFSF). The budget committee of Germany's lower house of parliament is scheduled to vote on the amended guidelines for the euro zone's rescue fund. Eurozone and EU finance chiefs are also scheduled to discuss EFSF terms of reference.

Asian stocks are up amid speculation that the IMF will help Italy financially after the nation’s borrowing costs surged. Belgium, Italy, Spain and France are due to raise money via debt auctions this week. Jobs data and other important statistics from the US will also be in focus this week.



For India, the big question is whether Parliament will function without much ruckus. FDI in retail has become the latest issue of confrontation. Q2 GDP data is another key apart from reports on manufacturing, services, exports and auto sales. So, hold on tight as volatility and uncertainty are less likely to vanish in a hurry.

FIIs were net sellers of Rs 8.05bn (provisional) in the cash segment on Friday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 10.36bn on the same day.

The foreign funds were net buyers of Rs 3.49bn in the F&O segment on Friday, NSE data shows.

FIIs were net sellers at Rs 11.06bn in the cash segment on Thursday, according to SEBI web site. Mutual Funds were net buyers of Rs 1.51bn in the cash segment on the same day.

Global Data Watch Today: German Preliminary CPI, Eurozone M3 Money Supply, GfK German Consumer Climate and US New Home Sales.

Asian Markets on Monday:

Asian markets are trading firm after reports showed that European leaders were taking desirable steps to contain the damage from the region's sovereign debt crisis. Also, the IMF vowed to help Italy deal with soaring borrowing costs.

Strength in many commodities helped boost some Asian resource stocks. Also adding to the positive mood was news about strong Thanksgiving retail sales in the US.

The MSCI Asia Pacific Index was up 2.1% at 10:34 a.m. in Tokyo. Almost 11 shares increased for every one that declined on the Index. It was down 4.6% last week, the most since the five days ended Sept. 23.

The Nikkei in Japan was up ~1.8% at 8,304. The Hang Seng in Hong Kong rose ~1.9% at 18,021 while the Shanghai Composite index in China was flat at 2,380. The Kospi in South Korea jumped ~2% at 1,811 while the Taiex in Taiwan gained ~1.85% at 6,910.

The Straits Times in Singapore was up ~1.4% at 2,680. The S&P/ASX 200 index in Australia climbed ~1% at 4,065 while the NZX 50 index in New Zealand was up 0.7% at 3,235.

Over the weekend, reports emerged that the International Monetary Fund (IMF) may provide financial support for Italy, which saw its government bond yields surge again on Friday.

The IMF is preparing a 600 billion euro ($794 billion) loan for Italy in case the country’s debt crisis worsens, according to reports.

Italy would pay an interest rate of 4-5% on the loan, according to the newspaper.

This week is an important one for European bond issuance, with Belgium, Italy, Spain and France all are due to issue up to a combined total of 19.5 billion euros ($26 billion) in bonds besides another €9 billion to €9.5 billion in bills, according to reports.

German Finance Minister Wolfgang Schaeuble called for fast-track treaty changes to tighten budget discipline to calm markets.

Italian Prime Minister Mario Monti is set to propose more austerity measures this week to balance the country’s budget by 2013, the Wall Street Journal reported yesterday.

US stock futures rose after Thanksgiving retail sales climbed to a record and on hopes that that European leaders will boost efforts to solve the sovereign-debt crisis.

US retail sales during the Thanksgiving weekend increased 16% to $52.4 billion, according to the National Retail Federation, citing a survey conducted by BIGresearch. The average shopper spent $398.62, up from $365.34 a year earlier.

The Dollar Index, which tracks the US currency against six major rivals, dropped 0.6%. The greenback slipped 0.2% to 77.61 yen and weakened 1.5% to 98.51 cents against its Australian counterpart.

The euro rebounded from a four-week slump against the dollar and rose 0.3% to 103.18 yen.

The kiwi rallied 1.3% to 74.99 US cents.

New Zealand Prime Minister John Key’s National Party won 48% of the vote on Nov. 26, up from 45% three years ago, allowing him to form the next government with support from political allies in parliament.

His administration will focus on advancing the sale of state assets and returning the budget to surplus by 2014 to 2015 or earlier, the 50-year-old leader said in Auckland after the election.

US Markets on Friday:

US equity indices finished lower in a truncated session on Friday as investors chose to remain on the sidelines ahead of the weekend amid no signs of relief from the eurozone.

All three benchmark indexes ended lower for the week as rising eurozone bond yields kept investors on tenterhooks during a holiday-shortened trading session.

The Dow Jones Industrial Average fell 25.77 points, or 0.2%, to close at 11.231.78 after tapping a high of 11,361.47 during the session.

Dow, which fell more than 236 points on Wednesday to close at a more than six-week low, finished 4.8% lower for the week.

The US trading session was shorter than usual on Friday, with trading on the New York Stock Exchange closing at 1 p.m. Eastern time.

The Standard & Poor’s 500 Index declined by 3.12 points, or 0.3%, to finish at 1,158.67. Energy logged the biggest loss among its 10 industry groups. The index saw a weekly loss of 4.7%.

The S&P 500 index and the Nasdaq Composite index each notched their seventh-losing session in a row, with the S&P 500 suffering from its worst losing streak since the seven session decline that ended on Aug. 2.

The Nasdaq shed 0.8%, or 18.57 points, to end at 2,441.51 after touching a high of 2,477.03. For the week, it fell 5.1%.

For every stock that rose more than one fell on the NYSE. Trading volumes were tepid after the Thanksgiving holiday on Thursday. Nearly 442 million shares traded on the NYSE. Composite volume was at nearly 1.7 billion.

The dollar gained against the euro, the British pound and the Japanese yen.

Oil for January delivery rose 40 cents to $96.57 a barrel.

Gold futures for December delivery fell $10.10 to $1,685.70 an ounce.

The price on the benchmark 10-year U.S. Treasury fell slightly, with the yield rising to at 1.97% from 1.94% late on Wednesday.

Worries about Europe's debt crisis continued to dominate the week amid a series of lackluster debt auctions and rising eurozone bond yields.

The Italian government sold 8 billion euros ($10.7 billion) of six-month Treasury bills, producing an average yield of 6.50%, up from 3.54% in an Oct. 26 sale.

Italian 10-year bond yields moved back above 7%, a level that eventually required bailouts for Greece, Portugal and Ireland. The Spanish 10-year yield also rose to within spitting distance of the worrisome level.

Fitch downgraded Portugal's sovereign debt rating to junk, while Moody's axed Hungary's credit rating further into junk territory. Standard and Poor's downgraded Belgium's credit rating.

German Chancellor Angela Merkel and French President Nicolas Sarkozy continued to oppose eurobonds as a solution, but the leaders did suggest that some type of fiscal unity could help stem the crisis.

But any move would require a treaty change that all 27 EU members would need to ratify, a process that could take years. That is among the options expected to be discussed when EU leaders gather in Brussels next month.

Shares of AT&T eased after the telecom service provider said that it was taking a $4 billion charge to cover the break-up fee it will owe, if its deal to acquire T-Mobile falls through.

The FCC said it will oppose the merger, becoming the second regulatory body to do so.

Shares of biotechnology group Pozen Inc. rallied 45% to $3.62. In a regulatory filing on Wednesday, Pozen said that it has sold its rights to future royalties on US sales of its pain reliever compound MT 400 to CPPIB Credit Investments for $75 million up-front plus certain payments.

Amarin Corp.’s stock climbed 6.5% to $7.10 after the company said that the US Food and Drug Administration (USFDA) accepted for review an application for a drug to treat patients with high levels of triglycerides, a type of blood fat.

European Markets on Friday:

European stock benchmarks ended higher on Friday, snapping a six-session losing streak despite a series of downbeat news on the region's deepening debt crisis.

The Stoxx Europe 600 index gained 0.7% to end at 221.54. The index had fallen 7.2% over the previous six trading sessions.

The French CAC 40 index rose 1.2% to 2,856.97. In Germany, the DAX 30 index jumped 1.2% to 5,492.87. The UK’s FTSE 100 index rose 0.7% to 5,164.65.

Italy sold 8 billion euros ($10.7 billion) of six-month bills, but at a yield of 6.504%, a euro-era high. Italy’s FTSE MIB stock index rose 0.1% to 13,937.40.

Markets had been pressured by disappointment over a meeting between German, French and Italian leaders on Thursday.

German Chancellor Angela Merkel again criticized those calling for the issuance of euro bonds, while French President Nicolas Sarkozy said that the leaders had agreed not to put additional pressure on the European Central Bank.

Hungary’s BUX index sank 3.1% to 16,454.24 after Moody’s Investors Service cut the government’s bond rating one notch to Ba1 late on Thursday.

The ratings firm retained a negative outlook on Hungarian bonds, saying that it was looking increasingly uncertain the country will meet its fiscal-consolidation and debt-reduction targets.