Morning note, data, events, bonds and earnings 23rd November 2012

Good morning,

With the US out last night, European markets saw volumes fall by an average of 25%. The continued run in the Euro and JPY weakness helped push basic material prices high and lifting European equity markets. The were also boosted by the China HSBC PMI, which came in at 50.4, indicating growth.

In the bond market, Greece 10yr yields firmed 37bps to 16.06%, whilst strong demand in the Spanish auction, saw 10yr yields fall a further 7bps to 5.62%. Italy's debt also continued to firm, now trading comfortably below 5%, at 4.77%

FTSE +0.7% v.low volume; O/P: cons.goods, cons.services U/P: telco, Oil&gas,
CAC +0.6% v.low volume; O/P: tech, utilities U/P: telco, oil&gas
DAX +0.8% v.low volume; O/P: cons.services, financial U/P: utilities, cons.goods
IBEX +0.9% v.low volume; O/P: cons.services, oil&gas U/P: tech, utilities

Sector charts mixed overnight, however, all markets finally saw basic materials at the upper end. The financial sector also remain strong, despite a very good performance over the last 6 months.
I was expecting more inflows to Oil & Gas, this I still believe to be the next level of rotation, however, it does require some patience.

Data over night saw French PMI manufacturing come in at 44.7 vs expected 44.00, services came in 46.1 vs expected 45.0.
German PMI manu was 46.8 vs expected 46.0, services 48.0 vs expected 48.3.
Both countries help support the European numbers, where manufacturing was 46.2, vs estimates 45.6, and services 45.7, vs expected 46.0.
Eurozone consumer services came in weaker at -26.9, vs the survey -25.9.

Markets.With the US and Japan closed, equity volumes will mirror Europe's reduced levels. With the sectors gearing towards more defensive sectors like consumer goods, Asia will continue to see these names trending firmer.
The recent run in China property is starting to look overdone, its time to reduce.
Whilst oils lack luster performance, despite crude trending higher, should see rotation into the sector. Petrochina(857) looks attractive here. This should also help boost the chemicals industry as well, as stronger than expected PMI in China should see sentiment improve.
Markets open firmer, then trend sideways throughout the session as the Eur continues to hold the 1.29 level. There seems little to push the Euro through resistance levels at present, but should the EU budget talks provide some positive light, we should see flows start moving out of UST's into the higher yielding European debt.

Data. 13:00 Singapore CPI
15:00 German GDP, import/exports, govt spending, consumption
15:45 France production outlook
16:00 Spain producer prices
17:00 Italy retail sales
17:00 German IFO
Thailand customs exports/trade balance

Events.17:30 India Chairman of PM's to discuss direct taxes
21:00 Portugal Bank of Portugal monthly budget
EU leaders summit on 7yr budget

Bonds.19:00 UK 1,3,6 month auction

Earnings.Net dragon(HK), Parkson(HK), Genting Plantations(MK), Genting(MK), Telekom Malaysia(MK), Aeon Malay(MK), Sime darby(MK), Philip morris(CZ)

Stoddart