Markets Steady On Mixed News

Markets are mixed as the week starts. Positive news of Chinese export growth was offset by negative news of Japan's GDP contraction. Greek's parliament passed the 2013 budget, which is crucial to unlocking the next tranche of bailout fund for the country. But uncertainties remain as EU finance ministers are unlikely to approve release of the fund in the meeting in Brussels.

And, sentiments are also weighed down by the concern of fiscal cliff in US and markets will pay close attention to Obama's meeting with's meeting with House Democratic Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell later in the week, as well as his open negotiation with House Speaker John Boehner.

In China, trade surplus widened to $32.0b in October from 27.7 in the prior month as driven by acceleration in exports growth. Exports soared 11.6% yoy to $175.4B, up from 9.9% yoy in September, while Imports growth stayed at 2.4% yoy. Geographically, exports to the US climbed 9% yoy, up from 5.5% yoy in September while that to ASEAN countries up to 44.8% yoy from 25.5% yoy in September. Shipments to the EU continued to decline. Exports to the EU slipped -8.1% yoy in October, though it's improved from a -10.7% yoy decline a month ago.

Japan's economy contracted -0.9% qoq in 3Q12, compared with a downwardly revised 0.1% growth a quarter ago. While not technically fallen to recession, Japan's economy has contract in 5 over the past 8 quarters. The country's economic growth has mainly relied on public spending which is not sustainable due to the government's huge fiscal burden.

Other than the GDP data, Japan's employment and economic confidence remained weak. The BOJ has to extend and expand its asset buying program to stimulate domestic demand while excessive strength in Japanese yen should be curbed so as to help exports.

In Greece, prime minister Samaras got the 2013 budget approved with 167 lawmakers voted for it, over 300 total. Samaras said that the country has taken the "second decisive step with even greater unity" and "what we'll see from now on is recovery and growth." In the 2013 budget, a deficit of -5.2% of GDP is projected, together with a sixth year of contraction, by -4.5%.

Government debt will reach EUR 346.2b, hitting 189% of GDP, comparing to this year's 176%. Eurozone finance ministers will meet in Brussels today but it's believed that there won't be any decision on releasing the next tranche of bailout fund for Greece, nor grating a 2-year extension to Greece's fiscal adjustment program.