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DAILY US OPENING NEWS - 16/03/12

· A Euroarea official has said the Euroarea may decide on a EUR 692bln firewall.

· German Chancellor Merkel has reiterated that she is opposed to raising the ESM ceiling beyond EUR 500bln.

· IEA official says has received no contact concerning an oil release.

· Market awaits US CPI data at 1230GMT.

· RANsquawk European Morning Briefing Video: http://youtu.be/5V77c7uEiDc

Market Re-Cap

Ahead of the US open, markets are exhibiting some modest risk appetite, with all major European bourses trading higher, and financials outperforming all other sectors.

There has been little in the way of key data from Europe, however we have seen the Eurozone Trade Balance coming in alongside expectations in the seasonally adjusted reading.

Bund futures continue to move lower in recent trade as US participants come into the market, with the 10-year German yield crossing the 2% level to the upside, trading at a level not seen since the 10th February. Bunds may also have experienced some pressure following the release of a research note from a major US bank recommending rotation trade with the selling of bonds and the buying of equities.

USD/JPY is seen trading higher ahead of the US open following the overnight release of some relatively dovish BoJ minutes, with commentary suggesting further easing in Japan in the future.

Taking a look at the energy complex, The IEA have commented on yesterday's speculation concerning the use of the US' Special Petroleum Reserve, stating that they have not received any contact regarding any emergency oil release. As such, WTI and Brent crude futures are seen higher; however they have seen some selling off in recent trade.

Looking ahead, market participants await US CPI data, due at 1230GMT.

US Headlines

Fed's Lacker has said that current economic conditions are unlikely to warrant exceptionally low rates through late 2014, with a rise in interest rates likely to be necessary at some point in 2013. (Sources)

Asian Headlines

The BoJ has released the minutes for its February 13-14th meeting, showing that all board members agreed to up asset purchases through the buying of JGBs, however the board highlighted that this is not tantamount to monetization. Some members of the board have commented that the bank's new system of communication makes it clear that it has further easing in mind. (Sources)

EU and UK Headlines

IMF representatives said that the Greek debt-to-GDP ratio is now projected to be 116.5% by 2020, which is lower than initially expected, and Greece may return to the debt markets as early as 2015, but the country still faces important challenges on fiscal issues. (RTRS) Furthermore, they said there is no room for "slippages" by Greece in the new IMF programme, and failure to reach the agreed economic targets would result in an unsustainable dynamic.

The UK government intends to cut income tax for the country's highest earners, and will announce details in the next week's annual budget, according to government sources. (Guardian) UK Chancellor Osborne is likely to use his budget to announce he is reducing the top rate of income tax from 50% to 40%, according to the same sources. However, it is worth noting that other reports are claiming a cut to 45%. (FT-More) However, it should be noted that a UK PM spokesperson has stated that these reports remain speculative and the government will not comment on budget measures ahead of the release next week. (Sources)

UK Chancellor Osborne has warned that credit easing alone will not provide the finance necessary for growth. (FT-More) Director-General of the BCC has urged ministers to create a state-owned bank specifically for lending to SMEs.

There has been little in the way of key European data, with the Eurozone Trade Balance coming alongside expectations in the seasonally adjusted figure.

Eurozone Trade Balance SA (EUR) (Jan) M/M 5.9bln vs. Exp. 6.0bln (Prev. 7.5bln, Rev. 7.4bln)

Eurozone Trade Balance (EUR) (Jan) M/M -7.6bln vs. Exp. -3.0bln (Prev. 9.7bln, Rev. 9.1bln) (Sources)

A high-ranking Brussels official has said the Euroarea may decide on a EUR 692bln firewall; however there remains some resistance from certain nations. The official further commented that other firewall options are on the table and added that Greece could earn a third bailout if conditions are met.

However, German Chancellor Merkel has stated that she remains opposed to lifting the EUR 500bln ESM ceiling. (Sources)

EQUITIES

Most European bourses trade in positive territory ahead of the US open, with some modest risk appetite observed in the financials sector.

In individual equity news, Tullow Oil is outperforming the rest of the Oil & Gas sector following news that it has encountered a significant quantity of oil in very good quality sandstone reservoirs in Ghana. Tullow Oil shares currently trade higher 3.87%.

Banca Monte dei Paschi remain a particularly volatile stock, with overnight news that speculative parties concerning a 4% stake in the company will have to present their offers today. It also emerged during the session that the bank's main shareholder is seeking a total sale of 12-13% stake in the bank, according to sources. This has pushed shares down 2.83%.

Analysts at Citigroup have noted that in the FTSE 100; dividends, buybacks and mergers & acquisitions will further support returns and the index should double over the next 10 years. (Citigroup/Sources)

Top performing sectors in the BE500: Consumer Services (+0.76%), Financials (+0.74%), Basic Materials (+0.62%)

Worst performing sectors in the BE500: Health Care (-0.19%), Utilities (+0.11%), Telecommunications (+0.11%)

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

7185.91

3588.24

5967.06

2604.9

6349.06

Change (ticks)

41.46

8.03

26.34

10.93

16.84

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

FX

USD/JPY remains on positive trend following the overnight release of some dovish minutes from the BoJ's February monetary policy meeting. The pair may see further volatility as we progress through the session with unconfirmed market talk of offers in place from the 84.00 as well as US CPI data due at 1230GMT.

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3069

1.5734

83.88

Change (pips)

-0.0011

0.0023

0.3100

COMMODITIES

WTI crude and Brent futures are trading higher ahead of the US open following a volatile session yesterday amid speculation concerning the release of the US Strategic Petroleum Reserve. The US and UK have denied there will be an imminent release, but have announced that they are considering its use to ease fuel prices in the US election year.

Oil & Gas News:

· Britain is poised to cooperate with the US on a release of strategic oil stocks in a bid to prevent fuel prices from choking economic growth in a US election year, according to two British sources. UK PM Cameron said that no decision has been made as yet, but commented that assessing the situation is necessary. Details of the timing, volume and duration of an emergency release are yet to be settled.

· Selling oil from the US' Strategic Petroleum Reserve to bring down gasoline prices would harm national security and limit the country's ability to respond to a possible supply disruption later in the year, a spokesman for US Senator Murkowski has said.

· The IEA have said they have not received a request for any emergency oil release, adding that Europe's oil & gas import bill is as serious as Greek debt.

· China's shale gas output is set to reach 6.5BCM in 2015, according to a government five-year shale gas development plan.

· China have started the construction of the Jinzhou underground state petroleum reserve storage facility.

Geopolitical News:

· The US military are set to double the number of minesweeping ships in the Persian Gulf to bolster US defences in the region.

· North Korea have planned to launch a long-range rocket carrying an operational satellite, sparking regional condemnation that it is in violation of a UN resolution. Japan, South Korea and the US have voiced their concerns on the launch.

· Japan, South Korea and global ship insurers are lobbying EU officials to revise planned sanctions against Iran to allow Europe's insurance market to continue to cover Iranian oil shipments to Asia, according to industry sources.

Commodity

WTI Nymex

OTC Spot Gold

Level

105.45

1646.19

Change (NYSEARCA:USD)

0.34

-12.23

**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

1230

US

CPI (Feb) M/M

0.4%

0.2%

0730

1230

US

CPI (Feb) Y/Y

2.9%

2.9%

0730

1230

US

CPI Ex. Food & Energy (Feb) M/M

0.2%

0.2%

0730

1230

US

CPI Ex. Food & Energy (Feb) Y/Y

2.2%

2.3%

0730

1230

US

Consumer Price Index NSA (Feb) M/M

227.972

226.665

0730

1230

US

Core Consumer Price Index SA (Feb) M/M

 

227.684

0730

1230

CA

International Securities Transactions (NYSEARCA:CAD) (Jan) M/M

9.00B

7.38B

0730

1230

CA

Manufacturing Sales (Jan) M/M

0.2%

0.6%

0815

1315

US

Industrial Production (Feb) M/M

0.4%

0.0%

0815

1315

US

Capacity Utilization (Feb) M/M

78.8%

78.5%

0855

1355

US

University of Michigan Confidence (Mar P) M/M

76.0

75.3

0900

1400

US

API Monthly Report

   

0930

1430

US

ECRI Weekly Index (Feb 17) W/W

 

124.3

0930

1430

US

ECRI Weekly Index Annualised (Feb 17) Y/Y

 

-2.6%

1200

1700

US

Baker Hughes Rig Count (Mar 16) W/W

 

1973

N/A

N/A

US

Cleveland Fed CPI (Feb) M/M

 

0.2%

 

Speakers

1100

1600

PO

Portuguese Finance Minister Gaspar speaks in Washington D.C.

1200

1700

IT

Italian Industry minister Passera and others speak at conference

1220

1720

GE

German Chancellor Merkel

1400

1900

US

Fed's Evans speaks on monetary policy (Non-Voter)

N/A

N/A

EU

ECB's Draghi talks at forum on monetary policy

N/A

N/A

EU

EU's Barroso in Italy

N/A

N/A

UK

BoE Financial Policy Committee Meeting

 

Auctions

1000

1500

US

Fed's Outright Trea. Coup. Sale Feb'14 - May'14 (USD 8.0-8.75bln)

 

Earnings

UK

N/A

EU

N/A

SZ

N/A

US

N/A

**Note:

CAC 40 March futures and options expiry (1500GMT/1000CDT)

Dollar Index March futures expiry (1516GMT/1016CDT)

Prices taken at 1145GMT

'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.