Stock Markets Struggle in Final Days of the Year

European stock markets are slightly down, after weaker than expected U.S. data Wednesday weighed on global sentiment and sent USD and oil prices down. WTI up from earlier lows, but still struggling near the USD 54 mark per barrel, despite looming production cuts. The larger than expected build in crude oil inventories as reported by the API weighed on prices. The concomitant rise in the Yen weighed on Japanese markets which closed with losses of more than 1% and renewed risk aversion is also weighing on European stock markets, although losses have been relatively muted so far and in the case of the DAX not managed to seriously dent the yearend rally that was sparked by Draghi’s re-assurance of continuing bond buying through 2017.

The DAX is still poised for a solid annual rate with levels 11500 contrasting sharply with the low of around 8700 seen in early February. The FTSE 100 is also not far away from this year’s high of 7130, seen in October and far above the low of 5500 from February 11. Trading volumes perked up a bit and U.S. stock futures are narrowly mixed on the last full trading day of the year with many centers closing early tomorrow.

Italian refinancing costs decline in 10 year auction. Italy sold EUR 1.5 billion of 10-year bonds with a coupon of 1.25% at an average yield of 1.77%, down from 1.97% at the previous auction. The bid to cover ratio dropped to 1.42 from 1.58 on November 29. EUR 1 billion of 2016 bond with a coupon of 7.25% were auctioned at 1.72%. At the same time EUR 2.5 billion of 5-year bonds with a coupon of 0.35% were auctioned at an average yield of 0.54%.

Eurozone M3 Accelerated in NNovember

Eurozone M3 money supply growth accelerated to 4.8% year over year in November from 4.4% year over year in the previous month. The pickup was stronger than anticipated and reflects to a large extend a sharp rise in overnight deposits. The counterparts of M3 show that loan growth accelerated, with lending to non-financial corporations up 1.8% year over year, versus 1.7% Year over year in October, while lending to households rose 2.1% year over year, up from 1.9% year over year in October.