Danske Daily - 31 October 2012‏

US markets will open again today after a two-day shutdown.

Positive earnings surprises pushed European stocks higher yesterday and the positive sentiment has continued in Asia overnight.

We expect Norges Bank to push interest rates higher by signalling a rate hike within the next six months.

Markets Overnight
Hurricane Sandy caused widespread damages in the US Tuesday and forecasters warn that further inland and coastal flooding is likely. More than eight million people were without power yesterday and the New York transit system is hard hit as the subway has flooded. A full recovery in the affected areas is likely to take weeks. After two days of closure, US financial markets will open again today.

The President of the Minneapolis Fed, Kocherlakota, in a speech last night stated that the current inflation outlook and the level of unemployment suggest that monetary policy is still too tight.

With the US markets closed yesterday, liquidity has generally been thin. Despite weaker data from the German labour market and a decline in economic sentiment, European equity markets rose yesterday as several companies including BP and Deutsche Bank reported earnings that topped estimates. The positive sentiment in stocks has carried over to Asian trading with most indices higher this morning. The US S&P future has advanced 0.1% overnight.

Bond markets have been quiet with the US markets closed. The German 10-year Bund is still trading close to the lower end of its recent trading range. In the euro area periphery, spreads tightened slightly yesterday.

In FX markets EUR/USD has risen and is now trading closer to the 1.30 level. JPY managed to strengthen yesterday despite further monetary policy easing from the Bank of Japan and JPY has held on to the gains overnight. NOK has strengthened against EUR over the past few days and we expect the policy meeting today to lend further support to NOK.

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