The first day of the EU summit contained few surprises and financial markets treaded water amid ongoing worries over the sovereign debt crisis in the Eurozone. Wall Street declined with the DJIA and S&P 500 indices losing -0.20% and -0.21% respectively. In the commodity sector, crude oil prices slumped with key support breached. The front-month contract for WTI crude oil plunged to as low as 77.28 before ending the day at 77.69, down -3.14% while the equivalent Brent crude contract slipped to 90.88 before setting at 91.36, down -2.29%. Gold tumbled with the benchmark Comex contract falling to a 4-week low of 1547.6 before closing at 1550.4, down -1.77%.

The European Council President Herman Van Rompuy announced that EU leaders have agreed on a growth pact worth of 120B euro, including 10B euro capital boost for the European Investment Bank (EIB). Rompuy stated that the growth pact is a sign of our unrelenting commitment and it brings together all concrete measures that we will swiftly take. Meanwhile, French President Hollande urged for very rapid solutions to support countries in the greatest difficulty of the markets even though they have made considerable efforts to restore their public finances. For the second day of the EU summit, leaders are expected to discuss the potential use of the EFSF/ESM.

In the US, economic data and the new healthcare policy also dampened market sentiment. Initial jobless claims fell -6K to 386K in the week ended June 23 but the reading for the previous week was revised higher to 392K. the 4-week moving average was dowm -1K to 386K. Kansas Fed manufacturing index dipped -6 points to 3 in June while the production index also dropped -5 points to 12. The Supreme Court approved Obama's health reforms. While this gave a timely boost to the Democratic Party ahead before the election, the reforms raised concerns over the growth outlook.

On the dataflow, the US personal income and spending probably edged up +0.2% and +0.1% m/m in May. Core PCE might have gained +0.2% in May after a +0.1% increase in the prior month. Chicago PMI might have climbed to 53 in June from 52.7 a month ago while the final reading of University of Michigan Confidence probably stayed unchanged at 74.1 in June.