After markets closed in Europe, S&P downgraded the EFSF by one notch to AA+; just hours after a senior S&P official said that he expects Greece to default soon and days after the ratings agency downgraded 9 Eurozone nations. Nevertheless, Europe equities managed to rally following a successful bond auction in France and limited commentary from EU officials.
Attention in Asia will be focused on Chinese GDP which is due out a 1:00pm AEST. This figure has the ability to severely move the market if it differs from expectations, especially if the data shows that the world's source of demand is slowing significantly faster than expectations.
Themes:
The headline real GDP figure is expected to show a year-on-year increase of 8.7% for China, down from 9.1% in the previous quarter. Expect to see some possible risk asset shedding if the figure significantly disappoints the market, but traders could go the other direction and price in an increased chance for growth stimulus measures from the government.
Debt talks in Greece are at the forefront of investor sentiment. S&P Managing Director of Sovereign ratings Kraemer said in an interview with Bloomberg that he believed Greece would default and that authorities are working to avoid a disorderly default. This is not surprising given that the head of the IIF stated that the situation was becoming urgent, but also said current interest rates being offered by the Greek government were completely unreasonable.
Germany has reiterated its stance that the EFSF's funding was adequate and that it would not consider raising guarantees for the rescue fund.
NZ credit card spending was in-line with consensus estimates of -0.2%m/m, representing an unchanged figure from November.
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