Wednesday Morning Cheat Sheet: 3 Stories Moving Markets

The Nikkei fell 1.08 percent in Japan, ostensibly as investors took profits on exports as the yen strengthened slightly to 93.54 to the dollar. Some concerns are building that the markets are becoming oversensitive to official commentary on foreign exchange or fiscal policy. The S&P/ASX 200 climbed 0.90 percent, breaking above 5,000 for the first time since April 2010 following strong earnings and an increase in positive consumer sentiment.

The markets were mixed in Europe as New York headed toward the opening bell. London’s FTSE 100 curbed losses earlier in the session and was up 0.8 percent, while Germany’s DAX broke for higher ground after a slow morning, and was up 0.60 percent. The STOXX 50 spent the session trading losses and gains, and was most recently up 0.24 percent.

U.S. futures at 8:35 a.m.: DJIA: +0.14%, S&P 500: +0.21%, NASDAQ: +0.32%.

Here are three stories to keep an eye on:

1) American voters wanted President Barack Obama to address the economy in last night’s State of the Union address, and he did. Describing the sequester as sudden, harsh, and arbitrary, Obama highlighted how the spending cuts would negatively impact efforts to revitalize education, energy, and research, and even jeopardize the military. With a tax agreement already in pocket, the President reiterated his call for further tax reform as part of the process of addressing the sequestration, a move that Republicans were quick to counter.

Delivering the GOP response, Senator Marco Rubio (R-Fla.) said that more tax increases on the wealthy would inhibit economic growth for all Americans.

european central bank2) Seasonally-adjusted industrial production grew 0.7 percent month over month in the euro area in December, and by 0.5 percent in the EU27, according to estimates released by Eurostat, the statistical office of the European Union. Year over year, industrial production decreased 2.4 percent in the euro area and 2.3 percent in the EU27. All told, the average production index for the euro area fell 2.4 percent in 2012 compared to 2011, and fell 2.1 percent in the EU27.

December’s month-to-month gain was led by increases in both durable and non-durable goods production, while production of intermediate and energy goods fell.

3) “Trade that is fair and free across the Atlantic supports millions of good-paying American jobs,” said the President in the State of the Union address last night. While the rhetoric was not necessarily committal, it is an indication that the White House may be willing to pursue negotiations with the EU on a long-sought free-trade agreement that many agree would be an economic boon for both regions.

But even if the political will is there, practical obstacles remain. Major points of contention include the regulatory structure surrounding farming and agriculture products, and intellectual property. Both already cause an endless headache for regulators and businesses on both sides of the Atlantic, and trying to find an equitable way to blend the governing rules will no doubt prove to be a nightmare.

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