Financial markets consolidated earlier gains due to the ongoing fragile global economic conditions as the New Year begins. Sentiment weakened yesterday after Italy's Unicredit announced 43% discount on rights offer and news that the Spanish government helped the Valencia region make an overdue payment to Deutsche Bank. On a positive note, US' General Motors, Ford and Chrysler reported better-than-estimated vehicle sales in December. Factory orders in the US also came in line with expectations.
Unicredit said that it would sell 7.5B euro of shares at a 43% discount from yesterday's closing price. The discount is the highest seen in recent months and this raised concerns that European banks might struggle to raise capital. El Pais reported that the Spanish government helped the Valencia region make an overdue payment worth of 123M euro to Deutsche Bank. It's said that, though later denied by the Valencia government, the Spanish treasury had gave a verbal guarantee to a lender, making it provide funding to the regional government. ISM non-manufacturing data might have risen to 53 in December from 52 a month ago.
The outlook in the Eurozone has remained gloomy in the New Year. The situation will likely persist at least in the first half of the year. Some good news came from the US as automakers posted the best car sales data since 2008. Light vehicle sales in December increased to 13.56M units, up +8.39% from a year ago. For full year 2011, average car sales reached 12.78M units per month, the highest level since 2008.
On the dataflow, US factory orders climbed +1.8% m/m in November, following a -0.4% contraction a month ago. A series of employment data will be released in the NY session. Initial jobless claims probably fell -1.57% to 375K in the week ended December 31. ADP is expected to have dropped to 175K in December form 206K a month ago. Challenger will also report the number of job cuts in December.
The US Energy Department will release its weekly oil inventory report. According to the industry-sponsored API, crude inventory slipped -4.43 mmb in the week ended December 29. Fuel stocks increased with gasoline and distillate gaining +3.38 mmb and +5.25 mmb respectively.