Barchart.com U.S. Morning Call

Overnight Developments

* The European DJ Stoxx 50 this morning is up +0.83% and Mar S&Ps are up +5.30 points. European stocks gained as better-than-expected economic data continues to point to a strengthening economy. Dec Euro-Zone PMI composite rose a more than expected +0.5 to a 2-year high of 54.2, while the Dec German PMI manufacturing index rose a more-than-expected +0.7 to a 19-month high of 53.1. European bank stocks rallied after Reuters reported that global regulators will give banks an unspecified grace period to adopt new capital rules, which eases worries that they would have to raise money hurriedly through share sales. The new rules are being drawn up by the Basel Committee on Banking Supervision, a group of central bankers and regulators from 30 countries, who will implement the new regulations starting 2012. Deutsche Bank AG rose nearly 5% when CA Cheuvreux upgraded Germany's biggest lender to "selected list" from "outperform," while BNP Paribas SA gained 2.4% after WestLB raised its recommendation on France's largest bank to "buy" from "add. Rounding out the bullish factors for today's gains was the smaller-than-expected increase in Nov Euro-Zone CPI which rose +0.1% m/m and +0.5% y/y with the +1.0% y/y gain in the Nov core CPI the smallest increase in nine years. Undercutting some of the bullish enthusiasm was the 4.8% drop in Bank of Ireland Plc after Irish central bank Governor Honohan said it's "quite possible" the government may end up with 50% of one or both of the country's biggest banks and that the lenders may need significant new capital after the country's so-called bad bank buys loans from them at a discount.

* The Asian markets today closed mostly lower with Japan up +0.93%, Hong Kong -0.93%, China -0.63%, Taiwan -0.72%, Australia -0.25%, Singapore +0.54%, South Korea -0.13%, India +0.21%. Japanese banks surged and led Japan's stock market higher after the Nikkei newspaper said lenders would be given at least 10 years to comply with stricter international capital rules being drawn up by the Basel Committee on Banking Supervision. Chinese stocks closed lower after a commissioner from the China Banking Regulatory Commission said at a forum in Beijing that China's banks will face risks from bad loans and lending concentration to certain industries and big customers for a "long period of time." Foreign investors continue to pour money into China after Nov foreign direct investment in China surged +32% y/y to $7.02 billion, the fastest pace of growth in 16 months, although total investment through the first 11 months of the year is still down 9.9%. China's Q4 GDP is estimated to grow 10.5% q/q and China's Ministry of Commerce predicts that foreign direct investment will grow steadily in the next few months and may stay within the $7 billion to $8 billion monthly range attracted since Aug.
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IWAN CAHYO SURYADI, "The Trend is Your Friend"