European stocks continued to show signs of strength and indices were propelled higher on improved data from the German ZEW Economic indicator.  Yesterday's major gainers include the German DAX, EuroStoxx 50, and French CAC which were up 1.82%, 1.49%, and 1.40% respectively.  Nicholas Sarkozy came out against the ratings agencies, following in the footsteps of Mario Draghi, by dismissing the implications of the downgrade.  So far the event was largely priced in, the one weak spot being Portugal where 10-year yields have jumped to over 14%.  Fitch also announced Greece will probably default and trigger CDS before its next debt payment in March.  EURUSD is moving higher as risk appetite returns, trading around 1.2779.
Asian equities are still digesting China's exceedingly weak December Home Prices release with prices falling in 52 of 70 cities monitored and declining for a 4th straight month.  China has not moved to ease further yet because inflation is still running high considering GDP figures.  The Nikkei is leading equities higher, adding 110.92 points or 1.31% to 8577.32.  The Hang Seng and ASX are both marginally higher but still digesting the cooling Chinese housing data.  New Zealand is the bright spot of today's session as the New Zealand Dollar is one of the best performing currencies during the Asian session, rising 0.3358% to 0.8030 versus the USD.  Copper continues to extend gains after a 2.5% rise in the last two sessions, trading up 0.43% to $3.7455.
Oil has moved substantially higher, topping $101.31 as the tensions in Iran support elevated prices and worldwide manufacturing continues to show expansion.  The NY Empire State Manufacturing Index showed tremendous gains, growing at the fastest pace in 9 months.  U.S. Markets were firmer yesterday, as the tech weighted Nasdaq rose 0.64%, followed by the Dow and S&P 500 which each rose 0.48% and 0.36%.  Equities, which are in the midst of earnings season, have seen weaker than expected performance from financials who have seen revenue drop to levels not seen since 2008, led lower by JP Morgan and Citigroup.    One important release was the World Bank report which cut global growth forecasts by the most in 3-years, noting that the contagion from the European crisis will likely affect emerging markets.