Markets discount Greek election results

World stock markets were mixed on Monday. US stocks recorded small gains after choppy trading session. The investor optimism was underpinned by the launch of the sovereign bond-buying program last week by the European Central Bank. The main indexes closed with marginal gains after swinging between small gains and losses. The ICE dollar index remained unchanged at 94.7720. The investors discounted the Greek election results clearly considering them no threat to stability of financial markets. Investor attention will be focused on earnings reports this week and the policy-setting Federal Open Market Committee two-day meeting starting today. The Fed is expected to leave interest rates unchanged. Today Apple and Yahoo will report their earnings and a number of indicators including the Durable Goods Orders, Case-Shiller 20 City Home Price Index and, Markit’s Composite and Service PMIs and New Home Sales will be published in US. At 14:30 CET December Durable Goods Orders will be released. The tentative outlook is positive for US dollar. At 15:45 CET Markit’s PMI January preliminary data will be released, and 16:00 CET December New Home Sales and January Conference Board’s Consumer Confidence index will be published in US, the tentative outlook is positive as indicators are expected to rise.

European stocks closed higher with Stoxx Europe 600 gaining 0.6%, recording its eighth straight win. On Monday anti-austerity Syriza party formed a coalition with the anti-bailout Independent Greeks party. The euro remained higher against most of 16 major currencies. Investors consider the possibility of Greek exit from euro-zone unlikely, as euro-zone finance ministers signaled their willingness to do a deal with Tsipras with possible debt-maturity extension but no debt writedown. Today at 10:30 CET fourth quarter yoy GDP preliminary data will be released in UK, the tentative outlook is positive for the Pound with a forecast of 2.8% growth rate against 2.6% previous quarter.

Nikkei fell 0.3% on Monday, and is rising today as investors expect the earnings reports from Japanese exporters will reflect the gains from a weaker yen. Economy minister Akira Amari said today that the central bank was not constrained by a loose schedule of about two years for achieving its inflation goal with falling energy prices likely delaying efforts to reach its target. The comment indicates that the Bank of Japan is not considering extra monetary stimulus measures, providing some extra support to yen.

Oil fell on Monday as concerns over Greek election possible fall-out for euro-zone economy added to worries about slowing global economy. Earlier Monday, the Organization of the Petroleum Exporting Countries’ Secretary-General Abdalla el-Badri said oil at $200 a barrel would be possible if producers don’t invest in new supply. He indicated $45 - $55 as likely the bottom, with a rebound likely “very soon”, according to Reuters. Experts expect the oversupply to persist at least through the first half of 2015. In its January outlook the US Energy Information Administration forecast Brent crude to average $58 a barrel this year and $75 a barrel in 2016.

Gold fell for a third day to the lowest in a week before Federal Reserve policy meeting and as European finance ministers agreed to work with the new Greek Prime Minister to restructure the Greek debt repayment schedule to keep the country in the euro-zone.