With the exception of Germany’s DAX Index, the major European stock indices declined after enthusiasm about the Greek debt deal faded.
With the exception of Germany’s DAX Index, most of the major European stock indices slipped slightly into the red on Tuesday after investors had a chance to realize that the Greek debt deal reached by EU finance ministers (who now call themselves the Eurogroup) was not much of a deal at all (NYSEARCA:VGK). The approach of piling more debt onto Greece is another example of fighting fire with fire. The Eurogroup has simply announced that they are finally ready to consider some approaches which include such incremental steps as cutting guarantee costs for Greece’s European Financial Stability Facility loans by 10 basis points (0.10 percent), lowering interest rates on the Greek Loan Facility by one percent and deferred interest payments on European Financial Stability Facility loans for ten years. The elephant in the room which the Eurogroup ignored was the need to write down some of Greece’s debt (NYSEARCA:GREK). With German elections approaching in 2013, that can was kicked down the road.
The FTSE 100 Index managed to cling to a slight 0.18 percent advance as a result of a report from Britain’s Office for National Statistics, indicating that the nation’s third quarter GDP expanded by one percent:
Although it was the strongest quarterly growth since 2007, the resulting level of GDP remains 3 per cent lower than the pre-recession peak recorded at the beginning of 2008.
As of 11:15 EST, the Euro STOXX 50 Index dipped 0.06 percent to 2,541 – staying above its 50-day moving average of 2,509 (NYSEARCA:VGK). The FTSE 100 Index advanced 0.18 percent to 5,797 (NYSEARCA:EWU). The German DAX Index climbed 0.60 percent to 7,335 (NYSEARCA:EWG). France’s CAC 40 Index slipped 0.09 percent to 3,497 (NYSEARCA:EWQ). Spain’s IBEX 35 Index fell 0.40 percent to 7,843 (NYSEARCA:EWP). Italy’s FTSE MIB Index declined 0.32 percent to 15,470 (NYSEARCA:EWI).
As of 11:24 EST, the euro declined 0.32 percent against the dollar, trading at $1.2931 (NYSEARCA:FXE). Dollar Remains Broadly Higher vs. Rivals
Spain’s ten-year bond yield sank to 5.52 percent on Tuesday from Monday’s closing level of 5.61 percent. Spain’s two-year bond yield dropped to 2.92 percent on Tuesday from Monday’s closing level of 3.00 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield dipped to 4.77 percent on Tuesday from Monday’s closing level of 4.78 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil declined by 74 cents (0.67 percent) to $110.18/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
In China, stocks declined despite unexpected gains in the industrial sector. Healthcare and materials sector stocks led the decline. The Shanghai Composite Index sank below 2,000 for the first time since 2009, falling 1.30 percent to 1,991 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index dipped 0.08 percent to 21,844 (NYSEARCA:EWH).
In Japan, stocks advanced as the yen fell (NYSEARCA:FXY) after Shinzo Abe, the leader of the nation’s Liberal Democratic Party, led the battle cry for more monetary easing, which endeared him to stockholders who saw their portfolios expand as a result. The Nikkei 225 Stock Average advanced 0.37 percent to 9,423 (NYSEARCA:EWJ).
American stock index futures were holding near the breakeven level ahead of Tuesday’s opening bell, as concerns about fiscal cliff negotiations overshadowed a better-than-expected report on durable goods orders. Fiscal Cliff Concerns Top Fear Poll The December 12 Dow Jones Industrials future declined 0.09 percent to 12,929 as of 9:12 EST. The December 12 S&P 500 future dipped 0.06 percent to 1,402 (NYSEARCA:SPY). The December 12 Nasdaq 100 future advanced 0.03 percent to 2,646.
Bottom line: The major European stock indices retreated from their earlier advances after further scrutiny revealed that the Eurogroup’s long-awaited Greek debt deal offered little reason for excitement.