The market focused on M&A activities and corporate earnings reports as macroeconomic data were scarce and the unrest in Egypt showed signs of stabilization yesterday. Wall Street surged with the S&P 500 index rising +0.62% and approaching a fresh 2.5-year high. DJIA also gained +0.57%. Of all S&P 500 companies that have reported results so far, 72% beat expectations. The number is the largest proportion since 2006. M&A deals were seen in various sectors including oil drilling, medical diagnostics and internet publishing.

Optimism in equities was not shared in the commodity markets. Oil prices plunged with the front-month WTI contract losing -1.74 to settle at 87.48. The political crisis in Egypt has shown signs of easing as discussion between the government and the opposition leaders began. The cost of insuring Egyptian sovereign debt slid -32bps yesterday to 334, the lowest level since January 25. While the unrest continued, oil supplies have not been disrupted. Meanwhile, high US crude inventories also weighed on prices. The market forecasts US crude inventory rose last week, even after 3 consecutive increases over the past 3 weeks. Cushing stock has surged to the highest level on record in the week ended January 28.

Gold changed little with price hovering around 1340-1355 yesterday. The metal's movement was in line with the currency markets. While gold was supported by ongoing inflationary concerns, the pullback in the euro capped the metal's gains. Signs of moderation in the Egyptian crisis also damped safe-haven demand.

We do not have important US data today. Elsewhere, industrial production in Germany probably climbed +0.2% m/m in December after contracting -0.7% in the prior month. In Canada, housing starts might have dipped -0.5K to 171K in January.