Asia-Pacific Markets Overview - 10/26/2011

Uncertainty over how much progress European leaders are making in these debt talks is likely to dominate trading today. The more cyclical stocks are likely to struggle, after financial names led markets lower overnight. Financials leading the falls is symptomatic of disappointment in European talks to avert a crisis. This theme is likely to extend to our local banks. Apart from gold, most metals were weaker, which is likely to see our miners struggle. Oil was a surprise gainer in a risk-off session. The black gold gained 0.8% but this is unlikely to lift the energy stocks in a market where Europe is the main theme.

We're calling an open of 4182 (-1.1%) for the Aussie market this morning. Traders will be on the lookout for our local CPI numbers, which are due out at 11.30am. If we get a benign print, markets will probably start pricing in a high probability for a rate cut next week. These figures are likely to determine how the RBA will act in next week's interest rate decision. D-day for Europe has arrived, and we are likely to get clarity on the proposals tonight. This makes for an exciting trading session, as participants look to position themselves ahead of the key announcements.

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