EU Summit determines market behavior

The crucial summit of Europe's finance ministers which was expected to provide details of a euro zone rescue plan has been cancelled, leading to more anxiety on stock markets around the world.

The 27 finance ministers, including UK Chancellor George Osborne, had been due to meet this morning to prepare a comprehensive response to the problems stalking the euro zone. However, the only meeting aimed at addressing the sovereign debt crisis which is still on the agenda is a summit of European heads of state at 6pm. The news contributed to a sliding trend on Russian stocks.  Elena Kozhukhova, analyst at IC Aton, confessed that “The MICEX index continued to slide beneath 1460 pp on Tuesday, however gained enough to close slightly above. But RTS lost 0.6%” Vasily Konuzin, analyst at IFC Alemar, says growing uncertainties continue to grip the market with "the lack of consensus among European leaders and adjournment of the meeting of euro zone finance ministers resulting in rather impulsive behavior on the markets.”Shifting timelines and the complexity of the problem has led investors to remain cautious on the euro and risky assets until more about the next steps is known.Shares fell sharply late on in Europe and in New York as evidence of a potential failure began spooking markets. The US consumer confidence index in October came in at 39.8 points, falling well short of the  expected 46 points. Maksim Chernega, analyst at IF Oktan, added that “negative closure on the US stocks and US statistics contributed to downgrades of the Russian stock indexes.”During the day, emerging statistical data will influence trading and quotations, says Anton Startsev from IF Olma.“Today we shall not expect strong movements in early trading sessions, but perhaps some deepening downward correction – the external background is still uncertain. The news of the summit may define the nature of trading in the near future, but the reaction to them may be postponed until tomorrow,” said Startsev.Maksim Chernega added that rising oil prices and American index futures trading in the positive range could contribute to a trading day positive. “If there is good news from the EU summit, then the MICEX could grow to 1500-1550 pp during the trading day.”D-Day for Europe's leaders and another day of waiting for the markets is likely to bring more volatility.