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Market Relieves Temporarily after Germany Passes EFSF Bill

It's believed that the market will get a temporary boost after Germany's parliament approved the new EFSF fund with 523 votes in favor and 85 against. Supporters of the plan far exceeded expectations. Passage of the measure signaled the largest Eurozone economy's guaranteed loans will increase to 211B euro from 123B euro. All members of the Eurozone will have to approve the new rescue fund for it to be carried out. Countries such as France, Italy, Spain, Slovenia and Finland have already passed it. With approval by the lower house today, Germany's upper house of parliament will debate the fund. The biggest uncertainty now is Slovakia which is scheduled to vote on October 25.

Confidence in the Eurozone deteriorated as a result of the intensified debt crisis. Economic confidence fell to 95 in September, the lowest level in almost 2 years, from an upwardly revised 98.4 in the prior month. The market had anticipated it slipped more moderately to 96. Consumer confidence sank further to -19.1 from -16.5 in August, industrial confidence slid to -5.9 from -2.7 while services confidence dropped to 0 from 3.7. Sentiment is expected to remain weak in coming months amid concerns about the ability by debt-ridden countries to implement austerity measures and effectiveness of measures to tame the crisis.

Concerning the oil market, t he ICE proposed to introduce ICE Brent NX (New Expiry) Crude Futures and Options contracts from the February 2013 contract month. According to the Exchange, the new contract aims to align the futures market with the new assessment period in the cash and Dated Brent crude markets which has been lengthened to 25 days from 21 days. According to David Peniket, the CEO of ICE, 'it is important that the Brent physical and derivatives markets continue to develop together to reinforce Brent's role as the leading crude oil benchmark for global market participants. ICE Futures Europe has a track record of working with market participants to ensure that ICE Brent contracts reflect the fundamentals of the North Sea crude market and meet the requirements of the industry'. The first contract expiry month is proposed to be February 2013 with trading commencing in 4Q11. The current ICE Brent Futures and Options contracts will continue to be made available for trading and will be the only contracts available with expiry months through to and including January 2013.

In the US session, natural gas inventory probably climbed +97 bcb to 3 298 bcf in the week ended September 23. A series of economic indicators will be released today. GDP probably grew +1.2% in 2Q11, higher than flash estimate of +1.0%. Initial jobless claims might have fallen -3K to 420K in the week ended September 24 while pending homes sales contracting -2.1% m/m in August following a -1.3% fall in July.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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