Asian Pacific markets closed higher on Wednesday as optimism grew that Greek debt talks were finally nearing a conclusion after a string of delays. The Shanghai Composite rose 2.4%, while Hong Kong’s Hang Seng added 1.5% and the Australian S&P/ASX gained 0.4%. Japan’s Nikkei closed up 1.1%, but came off its highs after touching its 200-day moving average at just above the psychological level of 9,000.
European stock markets opened higher today. The gains were limited though due to the lack of any significant economic data and as traders waited for news on the Greek debt swap negotiations. But with the euro rallying, some investors seem to have convinced themselves that Athens is about to finalise details of a debt swap with bondholders, and its policymakers are close to accepting further austerity measures. Others are probably now just waiting for a confirmation before jumping on the bandwagon. While the FTSE 100 was up only modestly this morning, the German DAX rose around 1%. The latter has broken above the 6780 resistance level, clearing the way for a possible move to 7,000, the previous level of support.
Bank stocks were among the best performers in London due, in part, to bullish comments about the sector from Citigroup. But Citi analysts were less keen on Royal Bank of Scotland (RBS.L) as they cut its rating to "neutral" from "buy." Miners and energy stocks were also strong, although BHP Billiton, the world’s largest miner, bucked the trend as it reported a surprise 6% fall in its half-year earnings.
The economic calendar was relatively light today. The British Retail Consortium’s Shop Price Index, a measure of inflation, fell to 1.4% y-o-y in January from 1.7% in December. Food inflation eased to 3.7% from 4.2%, while non-food inflation fell to zero from 0.3%. German Trade Surplus was €13.9 billion in December, a touch shy of expectations of €14.1bn. For the whole of 2011, the surplus was €158.1bn compared to €154.9bn in 2010. From 2010 to 2011, the country’s exports increased 11.4% and imports rose 13.2%. The French budget deficit narrowed to €90.8 billion in December from €97.2bn the month before. The Swiss Unemployment Rate in January was unchanged at 3.1%, as expected.