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  • DAILY US OPENING NEWS - 25/01/12 0 comments
    Jan 25, 2012 8:08 AM
    • UK GDP comes in below expectations, although not as low as many had feared.
    • The Greek government expects the PSI deal to be completed by the end of the week according to a spokesman.
    • The BoE unanimously voted to keep the UK rate at 0.5%, with some members seeing the need for QE in the future.

    Market Re-Cap

    The advance reading of Q4 UK GDP released today came in at -0.2%, slightly below expectations, however many market participants had feared a worse outcome for the indicator, allowing the GBP to pare the losses made in the lead-up to the GDP announcement.

    The Bank of England minutes released today have shown that the MPC unanimously agreed to keep the UK rate at 0.5%, and maintain the volume of the APF, however they also revealed that some MPC members saw the need for further QE in the future.

    Despite higher than expected German IFO Business Climate data this morning, European indices are trading in negative territory, with technology and financial stocks suffering the highest losses. This has seen asset reallocations into safe havens, which has seen Bunds outperform for the morning.

    US Headlines

    BarCap US Treasury month end extension seen at +0.01yrs.

    President Obama has given his third State of the Union address, with much of the policy detail of his speech originated in a plan he submitted to Congress last year aimed at spurring private sector growth. That plan was largely ignored by the Republican-controlled House of Representatives. The President called for the implementation of the so-called Buffet Rule, a measure dictating that households earning in excess of USD 1mln a year would have to pay a minimum of 30% of federal income tax. Families earning that amount would not be able to take tax deductions for interest paid on their mortgage, healthcare or child care costs. (Sources)

    JP Morgan has seen a surge in residential loans refinanced through a flagship government mortgage program after the US housing regulator ushered through revisions late last year, according to a Chase capital markets executive. (Sources)

    Looking into the US session, DoE inventories will be released at 1530GMT as well as the FOMC rate decision for January at 1730GMT and a subsequent Bernanke press conference.

    Asian Headlines

    Japan has posted an annual trade deficit in 2011 for the first time since 1980.

    Japan Trade Balance Total M/M (Dec) (JPY) -205.1bln vs. Exp. -170.0bln (Prev. -684.7bln, Rev. 687.6bln) (RTRS)

    EU and UK Headlines

    UK GDP advance figure for Q4 came in this morning slightly worse than expected, however many had feared a worse outcome.

    UK GDP Q/Q (4Q A) -0.2% vs. Exp. -0.1% (Prev. 0.6%)

    UK GDP Y/Y (4Q A) 0.8% vs. Exp. 0.8% (Prev. 0.5%) (Sources)

    The Portugal Industry Confederation Chief has said the country needs EUR 30bln in additional EU/IMF funds to solve their credit crunch and that he expects the EU/IMF bailout to be extended, sum increased; but first the government has to show it is meeting goals. (Sources)

    Greek Government spokesman has said that Greece debt talks are still at a delicate stage, but following the return of the IIF's Dallara on Thursday, the government aims to have completed the PSI deal by the end of the week. (Sources)

    Allianz have said they are prepared to lend more to troubled Eurozone countries once the EFSF bond insurance mechanism is activated, which should be in the next few weeks. (WSJ)

    The ECB is under pressure from the IMF and the financial industry to take a hit. (FT-More)

    The ECB faces the dilemma it always feared: might it have to take substantial losses on the estimated EUR 35-40bln it spent on Greek bonds, with potentially damaging consequences for itself and the Eurozone.

    German IFO data released today failed to prevent European Indices from trading in negative territory, despite figures coming in slightly above expected values.

    German IFO Business Climate M/M (Jan) 108.3 vs. Exp. 107.6 (Prev. 107.2)

    German IFO Current Assessment M/M (Jan) 116.3 vs. Exp. 116.8 (Prev. 116.7)

    German IFO Expectations M/M (Jan) 100.9 vs. Exp. 99.0 (Prev. 98.4) (Sources)

    EQUITIES

    The Technology sector has suffered the biggest losses at this point in the European session, with Ericsson shares down 14% following significant underperformance for Q4 of 2011.

    Ericsson earnings:

    - 4Q sales SEK 63.7bln vs. Exp. SEK 67.83bln.

    -4Q Net SEK 1.15bln vs. Exp. SEK 4.32bln. (Sources)

    Top performing sectors in BE500: Consumer Goods (+0.06%), Telecommunications (-0.22%), Consumer Services (-0.26%)

    Worst performing sectors in BE500: Technology (-2.32%), Health Care (-1.21%), Financials (-1.06%)

    After market earnings releases from the US include Apple surpassing expectations across the board, with only iPod unit sales falling for Q1.

    Apple Q1 EPS USD 13.87 vs. Exp. USD 10.13

    - Q1 Revenue USD 46.33bln vs. Exp. USD 38.99bln

    - Q1 gross margin 44.7% vs. Exp. 40.8%

    - Q1 iPhone units sold 37.04mln vs. Exp. 30.2mln

    - Q1 iPad units sold 15.43mln vs. Exp. 13.5mln

    - Q1 iPod units sold 15.4mln, down 21%

    - Q1 Macintosh units sold 5.2mln, up 26% (RTRS)

    Significant US earnings released pre-market today include Boeing reporting above expected revenues:

    Boeing Q4 EPS ex-items USD 1.32 vs. Exp. USD 1.01

    Revenues USD 19.6bln vs. Exp. USD 19.39bln (Sources)

    Index

    DAX

    CAC

    FTSE

    EUROSTOXX

    SMI

    Level

    6378.13

    3293.61

    5711.08

    2404.59

    6060.02

    Change (ticks)

    -41.09

    -29.04

    -40.82

    -27.48

    -75.08

    **Note: For US equity news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

    FX

    GBP/USD was trading down in the period preceding the UK GDP announcement amid lack of confidence in the measure. However, although the figure was lower than expected, it was not as low as many had feared.

    The USD index is seen substantially lower heading into the North American open as the market awaits any updates with regard to the Greek debt swap negotiations. As such, commodity prices have moved lower, which is also weighed on the commodity-linked currencies such as AUD.

    Australian Consumer Prices Q/Q (4Q) 0.0% vs. Exp. 0.2% (Prev. 0.6%)

    Australian Consumer Prices Y/Y (4Q) 3.1% vs. Exp. 3.3% (Prev. 3.5%) (RTRS)

    Currency

    EURUSD

    GBPUSD

    USDJPY

    Level

    1.2933

    1.5560

    78.10

    Change (pips)

    -0.0103

    -0.0066

    0.4300

    COMMODITIES

    WTI Crude futures are trading negatively at this point in the European session due to a strengthening in the USD index following weaker than expected UK GDP data.

    Oil & Gas News:

    • US President Obama has dedicated his administration to the further development of shale and other forms of natural gas in the future. Obama said his administration would take "every possible action to safely develop" natural gas, saying the nation had supplies that could last up to 100 years and had the potential to support 600,000 jobs by the end of the decade.
    • Saudi Aramco seeking additional spot gasoline supplies for Feb-June trade.
    • Petrol to hit GBP 7 per gallon in the UK within days. Both petrol and diesel will crash through the GBP 1.50 per litre level to record highs due to shortages following the collapse of the Petroplus Coryton refinery, which provides 10% of the country's fuel. However, according to a source, the refinery may resume oil shipments within 24 hours.

    US API Crude Oil Inventories (Jan 20) W/W 7331K vs. Prev. -4809K

    -API Gasoline Inventory (Jan 20) W/W -573K vs. Prev. 4309K

    -API Distillate Inventory (Jan 20) W/W -2464K vs. Prev. -900K

    -API Cushing Crude OK Inventory (Jan 20) W/W 386K vs. Prev. -819K

    DoE Inventory figures will be released at 1530GMT.

    US DOE Crude Oil Inventories (Jan 20) W/W Exp. 1450K (High 3700K, Low -2100K) (Prev. 4958K)

    -US DOE Gasoline Inventory (Jan 20) W/W Exp. 2000K (High 2500K, Low -1000K) (Prev. 3610K)

    -US DOE Distillate Inventory (Jan 20) W/W Exp. -125K (High 2000K, Low -2500K) (Prev. 3985K)

    -US DOE Refinery Utilization (Jan 20) W/W Exp. -0.60% (High 1.00%, Low -1.25%) (Prev. 0.60%)

    -US DOE Cushing OK Crude Inventory (Jan 20) W/W (Prev. -832K)

    Geopolitical News:

    • Pakistan is not buying Iranian oil according to the country's oil minister, Hussain.
    • The US is determined to prevent Iran from getting nuclear weapons and will take no options off the table to achieve that goal, according to US President Obama in his State of the Union address.
    • Venezuelan Oil Minister Ramirez has said sanctions against Iran are "very dangerous" and will add uncertainty to oil markets.

    **Note: For commodities news in detail, kindly refer to the RANsquawk Daily Energy Commentary report.

    Commodity

    WTI Nymex

    OTC Spot Gold

    Level

    98.06

    1653.45

    Change (NYSEARCA:USD)

    -0.89

    -12.22

    LOOKING AHEAD

    Economic Releases

    CST

    GMT

     

    DATA

    EXP

    PREV

    0900

    1500

    US

    House Price Index M/M (Nov)

    0.0%

    -0.2%

    0900

    1500

    US

    Pending Home Sales M/M (Dec)

    -1.0%

    7.3%

    0900

    1500

    US

    Pending Home Sales Y/Y (Dec)

     

    6.9%

    0930

    1530

    US

    DoE Crude Oil Inventories W/W (Jan 20)

     

    -3438K

    0930

    1530

    US

    DoE Gasoline Inventory W/W (Jan 20)

     

    3717K

    0930

    1530

    US

    DoE Distillate Inventory W/W (Jan 20)

     

    438K

    0930

    1530

    US

    DoE Refinery Utilization W/W (Jan 20)

    -0.60%

    -1.90%

    0930

    1530

    US

    DoE Cushing OK Crude Inventory W/W (Jan 20)

     

    -832K

    1100

    1700

    FR

    Jobseekers - Net Change M/M (Dec)

    25.0

    29.9

    1100

    1700

    FR

    Total Jobseekers M/M (Dec)

    2870K

    2844K

    1130

    1730

    US

    FOMC Rate Decision M/M (Jan)

    0.25%

    0.25%

    1300

    1900

    US

    FOMC quarterly Economic Forecast Summary Q/Q (1Q)

       

    1400

    2000

    NZ

    RBNZ Official Cash Rate M/M (Jan 26)

    2.5%

    2.5%

     

    Speakers

    0800

    1400

    EU

    EU's Van Rompuy meets with European Parliament's Schulz

    0900

    1500

    GE

    German Chancellor Merkel speaks at 2012 WEF

    0930

    1530

    EU

    British PM Cameron Addresses Council of Europe

    1315

    1915

    US

    Fed Chairman Bernanke Press Conference

    N/A

    N/A

    WLD

    Davos World Economic Forum

     

    Auctions

    0845

    1445

    UK

    BoE Asset Purchase Facility GBP 1.7bln 2022-2036 Gilt Purchases

    1030

    1630

    US

    USD 35bln 5-year Note Auction

    **Note:

    Chinese Market Holiday

    'Market talk' - Signifies information that has not been formally tested through traditional journalistic channels and therefore is to be treated as unsubstantiated. Any interpretation of the talk is taken at the readers own risk and is a representation of the rumours within the market place and never generated by ourselves.

    Prices taken at 1242GMT

    DISCLAIMER - The information within this document has been prepared and issued by Real-time Analysis & News Limited on the basis of publicly available information and other sources believed to be reliable. Whilst all reasonable care is taken to ensure that the facts stated are accurate, neither Real-time Analysis & News Limited nor any director, officer or employee shall in any way be responsible for its contents. This document is intended to provide clients with information and should not be construed as an offer or solicitation to buy or sell securities. Registered in England and Wales - Company Number 5633036 - VAT Number 872 9993 52

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