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  • DAILY US OPENING NEWS - 09/02/12 0 comments
    Feb 9, 2012 8:16 AM

    · BoE hold base rate at 0.5%, increase amount of QE to GBP 325bln.

    · ECB hold base rate at 1.00%, as expected.

    · RANsquawk European Morning Briefing Video: http://youtu.be/FvVVbWYiLQs

    Market Re-Cap

    Chinese CPI came in at 4.5% overnight much higher than anticipated, however, was mainly seen as a one-off reading given the inflationary effects of a 10.5% increase in food prices due to the Lunar New Year holiday in January. Moving into the European session, focus has remained on Greece where the latest reports suggest that Greek leaders have been looking to revise budget targets for 2014 dragging out the on-going negotiations. As such it is now becoming unlikely that a decision will be made before the European finance ministers meet in Brussels later today at 1700GMT. Elsewhere, there was a raft of corporate earnings to digest which painted a relatively mixed picture with Credit Suisse and ING falling after disappointing numbers but Daimler firmly bucking the trend with the carmaker saying they forecast a significant increase in unit sales for 2012.

    Analysts are expecting commentary from ECB's Mario Draghi at 1330GMT on the Greek situation and the forthcoming 3yr LTRO due at the end of the month.

    US Headlines

    US regulators are preparing to announce a settlement worth USD 39.5bln that would resolve allegations that five leading banks systematically abused borrowers in their pursuit of improper home seizures. (FT-More)

    Asian Headlines

    Chinese CPI (Jan) Y/Y 4.5% vs. Exp. 4.0% (Prev. 4.1%)

    Chinese PPI (Jan) Y/Y 0.7% vs. Exp. 0.8% (Prev. 1.7%) (Sources)

    Analysts have attributed the unexpected upswing in CPI to a seasonal increase in food prices that took place over the Chinese New Year period.

    According to a Fitch analyst, Chinese banks are to see assets deteriorate but Non-Performing Loans will not reflect this. The analyst further commented that the Chinese authorities have the flexibility to keep problems from showing up in banks' books. (Sources)

    China needs to cut RRR due to squeezed liquidity for small and medium sized companies, according to Qi Jingmei, a researcher at the State Information Center, he also went on to forecast Chinese CPI to fall below 4% in February. (Sources)

    China may lend Europe up to EUR 100bln for its bailout fund, according to Chinese Press. (South China Morning Post)

    EU and UK Headlines

    The Bank of England has held its base rate at 0.5% and will inject a further GBP 50bln into the UK economy. The BoE has cited an underlying slowdown in the pace of recovery in the final quarter of 2011, and further concerns over indebtedness of European countries.

    The BoE have changed the areas in which they will concentrate their purchases, with the bulk of purchases focussing on the front-end as opposed to the long-end in previous QE programs. These changes have been made in order to prevent a concentration of maturities, and it is likely the curve will steepen as a result. (RTRS/Sources)

    The ECB have held their base rate at 1.00%, along with expectations. Further comments are expected from Draghi at the press conference at 1330GMT. (Sources)

    According to a draft Troika report leaked yesterday evening, and as speculated earlier this week, 15,000 jobs would be cut in the Greek public sector this year, and 150,000 public sector jobs would be cut by 2015, with a 20% reduction in the minimum wage. Furthermore, the supplemental pensions would be cut by EUR 600mln, and Greece would abolish permanent public sector jobs. (RTRS)

    UK Industrial and Manufacturing Production data released today showed modest gains, outperforming expectations.

    UK Manufacturing Production (Dec) M/M 1.0% vs. Exp. 0.2% (Prev. -0.2%, Rev. -0.1%)

    UK Manufacturing Production (Dec) Y/Y 0.8% vs. Exp. 0.3% (Prev. -0.6%, Rev. -1.0%)

    UK Industrial Production (Dec) M/M 0.5% vs. Exp. 0.2% (Prev. -0.7%, Rev. -0.5%)

    UK Industrial Production (Dec) Y/Y -3.3% vs. Exp. -3.1% (Prev. -3.1%, Rev. -3.6%) (Sources)

    The UK have recorded the smallest total trade deficit since April 2003, following expanding exports and record foreign oil sales for December last year. UK Visible Trade Balance (GBP) (Dec) M/M -7111mln vs. Exp. -8600mln (Prev. -8644mln, Rev. -8908mln) (Sources)

    EQUITIES

    European equity market performance is mixed ahead of the North American open with the Dax outperforming other markets following optimistic earnings from Daimler (+3.92%), whose Mercedes-Benz unit recorded a 39% increase in profits for Q4 of last year.

    Credit Suisse have experienced a volatile trading session following the announcement of their corporate earnings, reporting unexpected losses for Q4 of 2011, following high realignment costs, strategic exits and accelerated risk reduction. Company shares currently trade down 3.13%.

    Top performing sectors in the BE500: Oil & Gas (+0.93%), Financials (+0.72%), Consumer Goods (+0.65%)

    Worst performing sectors in the BE500: Utilities (-1.87%), Technology (-0.54%), Health Care (-0.27%)

     

     

    Index

    DAX

    CAC

    FTSE

    EUROSTOXX

    SMI

    Level

    6801.42

    3423.27

    5892.4

    2522.55

    6159.83

    Change (ticks)

    52.66

    13.27

    16.47

    9.63

    3.97

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

    FX

    GBP/USD has exhibited movements to the upside following the BoE Rate Announcement, reassuring markets that the central bank expects a gradual improvement in the UK economy throughout 2012. The BoE decided to increase the overall level of QE to GBP 325bln, however, some analysts were looking for a higher level, increasing market confidence in the credibility of the GBP, which in turn resulted in a temporary short squeeze.

    EUR/USD has remained relatively flat following the ECB rate decision as the central bank decided to hold rates, alongside expectations.

    Currency

    EURUSD

    GBPUSD

    USDJPY

    Level

    1.3255

    1.5867

    77.22

    Change (pips)

    -0.0005

    0.0049

    0.1800

    COMMODITIES

    Both Brent and WTI futures are trading in positive territory ahead of the North American open on renewed optimism that Greece is closer to a second bailout agreement, however, a German Government Official has said he sees no decision on Greece this evening in Brussels.

    Oil & Gas News:

    · Pennsylvania lawmakers passed a bill to let counties levy fees on natural-gas wells, which the state estimates may generate about USD 211mln in revenue this year.

    · Bakken Blend crude production in North Dakota climbed to an average of 534,879BPD in December, a new record for the state, according to preliminary data released by the state Industrial Commission's Department of Mineral Resources.

    · The Bosphorus Strait has reopened following closure due to snow, preventing Russian tankers travelling through the passage.

    · Azeri Crude exports are to rise to 23.15MBBLs in March.

    · UK Trade deficit shrinks to a record 22-month low in December following record sales of foreign oil.

    · BG Group sees US gas production at 80,000BOE/D by 2015.

    Geopolitical News:

    · Nigeria's main rebel group in the oil-rich Niger Delta has threatened to launch more attacks on the oil industry, days after it claimed responsibility for an explosion on an Eni-owned pipeline.

    · An Iranian Strategist, Alireza Forghani, has provided legal and religious justification for the annihilation of Israel and the Jewish people, according to conservative Farsi website Alef. Forghani further commented that "Iran must attack Israel by 2014".

    · According to a Qatari Emir Adviser, Iran will not shut the Strait of Hormuz.

    Commodity

    WTI Nymex

    OTC Spot Gold

    Level

    99.58

    1732.23

    Change (NYSEARCA:USD)

    0.87

    -0.98

    **Note:

    Brent Crude March options expiry (1930GMT/1330CST)

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

    LOOKING AHEAD

    Economic Releases

    CST

    GMT

     

    DATA

    EXP

    PREV

    0730

    1330

    US

    Initial Jobless Claims (Feb 4) W/W

    370K

    367K

    0730

    1330

    US

    Continuing Claims (Jan 28) W/W

    3500K

    3437K

    0730

    1330

    CA

    New Housing Price Index (Dec) M/M

    0.2%

    0.3%

    0730

    1330

    CA

    New Housing Price Index (Dec) Y/Y

    2.5%

    2.5%

    0900

    1500

    US

    Wholesale Inventories (Dec) M/M

    0.4%

    0.1%

    0900

    1500

    UK

    NIESR GDP Estimate (Jan) M/M

     

    0.1%

    0930

    1530

    US

    EIA Natural Gas Storage Change (Feb 3) W/W

    -87

    -132

    1750

    2350

    JN

    Domestic CGPI (Jan) M/M

    0.1%

    0.1%

    1750

    2350

    JN

    Domestic CGPI (Jan) Y/Y

    0.8%

    1.3%

     

    Speakers

    0730

    1330

    EU

    ECB Press Conference

    1100

    1700

    US

    CBO Director Elmendorf

    1130

    1730

    IT

    Italian PM Monti

    1200

    1800

    GE

    Bundesbank's Nagel

    N/A

    N/A

    EU

    ECB Governing Council meeting

    N/A

    N/A

    EU

    EU's Barnier at Financial Services Conference

    N/A

    N/A

    US

    Italian PM Monti to meet US President Obama

     

    Auctions

    1000

    1600

    US

    Fed's Outright Trea. Coup. Purch. Feb'18-Nov'19 (USD 4.25-5.0bln)

    1000

    1600

    US

    30-yr TIPS Announcement

    1200

    1800

    US

    USD 16bln 30-yr Note Auction

     

    Earnings

    UK

    N/A

    EU

    N/A

    SZ

    N/A

    US

    Lorillard, Noble Energy, PepsiCo, Philip Morris International

                     

    Prices taken at 1251GMT

    .

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