Across Asia, regional indexes are mixed despite the positive US leads stemming from another session of optimistic earnings reports and better-than-expected new home sales data.? The Nikkei 225 and the Hang Seng are both flat, the Kospi is down 0.1%, while the Shanghai Composite is lower by 0.2%.

In Australia, the ASX 200 closed 0.25% firmer at 4497, well off its intra-day highs of 4520.? While the financials, consumer staples and energy sectors contributed a bulk of the points, the materials sector was surprisingly the major drag and prevented the index from convincingly sustaining itself above 4500.

The financial sector was the best performer of the sector heavyweights, finishing firmer by 0.7% and was the biggest contributor to the day's advance.? All four of the major banks were higher between 0.8% and 2.4% with Westpac leading the way.?? Elsewhere in the sector, QBE was down 3.2% and added to yesterday's 5.5% fall which came on the back of a disappointing profit downgrade.? Today, QBE's competitor IAG (Insurance Australia Group)ended lower by more than 4.2% after the company also pre-announced a much lower -than- expected full year net profit of $91m.? This was well below the $199m that Macquarie Group had forecast just as the final dividend of 4.5c was short of Macquarie's 9c forecast.? Despite the disappointing result the company said it was confident of a greatly improved performance in 2011.

The consumer staples sector was another positive contributor to the day's advances, seeing gains of 0.3%.? Among the heavy weight names, Metcash and Wesfarmers were higher by 2.3% and 0.9% respectively,? Woolworths was flat while Fosters ended lower by 0.3%.

On the back of a strong trading update from Coles, Credit Suisse today raised Wesfarmers to neutral from underperform and increased its price target to A$33.00 from A$30.30 saying "continuing outperformance by Coles and an improving discretionary retail environment is likely to provide good share price support". Credit Suisse has also highlighted Coles outperformed Woolworths on comparable and total sales growth basis.

Despite a very marginal retracement in the crude price last night, the energy sector enjoyed a gain of 0.1%.? Among the sector leaders, Santos and Woodside were both lower by 0.4% while Origin Energy and Oil Search were firmer by 0.3% and 1.5% respectively, with Oil Search reiterating its production guidance of between 7.2m-7.4m BOE and lowering its expected cash operating costs.

Certainly the drag on the market over the course of the day was the performance of the materials sector.? This was a bit of a surprise given the positive leads from US peers and broadly higher base metal prices overnight.? After opening higher the sector retreated and finished in negative territory by 0.4%.? Sector heavyweights BHP Billiton and Rio Tinto were both lower by 0.2%, Fortescue Metals was down 2.3%, while gold names Newcrest Mining and Lihir Gold were both weaker by more than 0.5% after the gold price fell 0.8% to US$1182 in overnight trade.

While the general feeling around the market at the moment seems to be one of growing optimism, we still expect a choppy ride over the next month or so.? Last night's S&P price action, which saw it trade above its 200-day moving average was a certainly a positive, but how long will it last?? As we know, trading above it and staying above it are clearly two very different things.? The same can be said for the ASX 200 and the 4500 point level.? For that matter what about 90c for the AUD and $1.30 for the Euro? These are key psychological levels that have been touched in recent days but then met with almost instantaneous resistance suggesting a complete lack of conviction.? You only have to listen to the numerous arguments on "why the euro is still a short" to understand the headwinds faced at these kinds of levels.

All that said, there are definitely growing rumblings that Europe is far from the basket case many were suggesting it was just a few months back and that it won't be long before market sceptics start "chasing the market" for fear of missing out on an end-of-year rally.