How are markets likely to react on Monday to EU summit results?

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Published: Saturday, December 10, 2011, 15:36 [IST]
 
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How are markets likely to react on Monday?

European Union summit finally ended on Friday with a new pact between 26 European countries, where the leaders of 23 out of 26 countries agreed to adopt stern fiscal budget controls to stem Euro. The only nation decided to remain isolated was Britain.

The news priced in US stocks, S&P 500 gained 1.7% to close at 1,255.19, while Dow Jones added 1.55% to close at 12,184.26 and Nasdaq climbed 1.94% and closed at 2,646.85.

European stock markets also posted gains, FTSE 100 closed 0.83% higher at 5,529.21 and CAC 40 ended 2.48% up at 3,172.35.

How are Markets likely to react on Monday?

The move taken by the European countries may turn out to be positive for the markets. US and European stock markets have already witnessed gains. Overall breadth of the Indian markets is expected to remain strong and under the positive terrain come Monday.

Domestic issues also need to be considered as India is still under the tighter monetary policy. The Reserve Bank of India is going to come out with policy action come December 16, which may be the key factor to determine the direction of the markets.

Currencies:
Euro could rule against the basket of major currencies; factoring in the recent move by the European countries to introduce tighter fiscal rules for the euro-zone nations.

The immediate impact could be in the favour of Euro but if market get drill into details, there can be a twist.

Commodities:
Crude oil rose on Friday with the Brent crude edged up to $108.99 and NYMEX crude ended higher to $99.83. Both Brent and NYMEX crude posted weekly losses, but may maintain rising momentum come Monday morning on the positive news.

Gold and silver were under pressure as investors remained sidelined ahead of the outcome of EU summit. Both gold an silver may remain steady or move up slightly on the latest steps by the European leaders.

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