The lack of follow through in Chinese markets to the PBOC interest rate cuts that sent European and North American markets last Friday provided a big overhang to Monday’s trading that left indices trading flat to slightly lower as they paused to digest last week’s gains. Sober second thought analysis of the PBOC moves suggest they have been seen as a combination of a catch up move to replace last summer’s volatility driven capital outflows and possibly a sign of deeper problems. Press reports over the weekend have been mixed with China’s government apparently backing away from its 7% growth target, the possibility of more rate cuts and talk the Yuan could be getting close to inclusion in the IMF’s Special Drawing Rights (SDF) basket next year. Ongoing concerns over China’s economy stopped the PBOC rally dead in its tracks and more significantly, added to concerns about what a slow China could mean for energy demand, sending crude oil sharply lower again. Currency trading saw USD slip back a bit with resource currencies and JPY the prime beneficiaries with NOK, AUD and NZD benefitting the most. CHF trailed its peers on reports the SNB will decide on December 10th how to respond to any new stimulus that may come from the ECB in early December. I don't usually include direct links to articles in the press but this one over the weekend I find quite striking as it shows how just how fortunate Canada is to come out of last week’s election ended with a majority government and not a minority government/coalition showdown between parties. In Portugal’s recent election, the ruling party lost seats and slipped into a minority while the two opposition parties (who combined hold a majority of seats) have formed a coalition to try and take over but have been blocked. It’s turning into a big mess especially with the opposition parties looking to take the country out of the Euro. http://www.telegraph.co.uk/finance/economics/11949701/AEP-Eurozone-crosses-Rubicon-as-Portugals-anti-euro-Left-banned-from-power.html http://www.telegraph.co.uk/finance/economics/11954611/Why-Portugals-constitutional-crisis-a-threat-to-all-Europes-democracies.html Poland’s weekend election also showed Euroskeptic forces registering strong gains. The Law and Justice Party won an outright majority in the legislature with 242 seats while Civic Platform dropped to 133. Meanwhile, Spain’s government has scheduled its long expected election for December 20th, and later this month at an EU summit, UK PM Cameron is expected to present his negotiating demands for keeping the UK in the EU heading into a referendum on the matter likely in 2016. The next 24 hours may see more consolidation with limited major news but this may just be the calm before a big flurry of activity with Apple and Twitter reporting after the close Tuesday and the FOMC interest rate decision on Wednesday afternoon. Corporate News Hartford Financial $0.86 vs street $0.98, 10% drop in net investment income Economic News Significant announcements released overnight include: US new home sales 468K vs street 550K Germany IFO business climate 108.2 vs street 107.8 Germany IFO current assessment 112.6 vs street 113.5 Germany IFO expectations 103.8 vs street 102.4 UK CBI total orders (18) vs street (9) UK CBI business optimism (12) vs street 2 Upcoming significant economic announcements include: 8:45 am AEDT NZ trade balance street ($825M) 12:30 pm AEDT China industrial profits previous (8.8%) 8:30 am GMT Sweden trade balance street SEK 1.7B 9:30 am GMT UK Q3 GDP street 2.4% 8:30 am EDT US durable goods street (1.5%) 8:30 am EDT US durables ex transport street 0.0% 9:45 am EDT US flash service PMI street 55.5 10:00 am EDT US consumer confidence street 103.0 10:00 am EDT US Richmond Fed street (3) CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.