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  • DAILY US OPENING NEWS - 20/04/12 0 comments
    Apr 20, 2012 7:56 AM

    · German IFO - Business Climate (Apr) M/M 109.9 vs. Exp. 109.5 (Prev. 109.8).

    · UK Retail Sales (Mar) M/M 1.8% vs. Exp. 0.5% (Prev. -0.8%) - Highest rate since January 2011.

    · A large number of expiries in markets across the pond could see price action volatility.

    · RANsquawk European Morning Briefing Video: www.youtube.com/watch?v=yNDUaCFd_P0

    Market Re-Cap

    European markets are trading higher across the board at the midpoint of the day, with positive data buoying sentiment. Approaching the end of the week, all major bourses look to close higher with the exception of, unsurprisingly, the Spanish IBEX, up on the day, but still 3.5% lower on the week amid concern over the nation's finances.

    Today has seen some positive data from the German IFO institute, recording a beat on expectations and a higher-than-previous reading for the April Business Climate Number, coming in at 109.9. IFO economists noted that Germany is showing resilience to the ongoing crisis and expectations are positive despite higher inflation. Elsewhere, UK Retail Sales surprised to the upside, with March's panic fuel buying putting upward pressure on the reading. Following the release, GBP saw strength across the board and GBP/USD broke through 1.6100 to the upside. The pair remains above this level as North America comes to market.

    Looking ahead in the calendar, no major US data is due, but there are a number of expiries in markets on both sides of the pond, so price action may be volatile.

    Global Headlines

    Japanese Finance Minister said an IMF funding increase to USD 400bln is "coming into sight", and that he expects the BRIC nations to offer funds to the IMF at the appropriate time. The finance minister sees funding figures to be released as early as tomorrow. (Sources) The IMF looks set to reach or pass that target, with USD 320bln secured yesterday and many of the largest emerging economies still to contribute. (FT-More) ECB's Knot and EU's Rehn have said IMF commitments may have to be up to USD 500bln, and expects China to boost resources. (Sources)

    Brazil's finance minister has said his country is still not ready to give numbers on their IMF contribution. The Indian finance minister has said he will take time to provide an answer to the funding question for the IMF. China also remains undecided on an increased IMF contribution. (WSJ/Sources)

    Asian Headlines

    The Japanese economy minister Furukawa has said defeating deflation is the top policy agenda for the government and hopes the bank will consider steps to achieve the 1% price goal, with his personal view being the buying of longer term JGBs as one option. (Sources)

    PIMCO have said the BoJ is likely to ease further at their April 27th meeting and inflation is unlikely to return in the foreseeable future and yields are likely to stay low. (Sources)

    A Chinese state economist has said the overall economic fundamentals of the country are sound and macro policy has large room for adjustment. The economist acknowledged that the economy is slowing in spite of easing measures. The economist forecasts GDP growth to rebound in Q3 of this year with H1 CPI to rise to around 3.6%, with FY CPI at 3.5%. The researcher estimates FY GDP growth at 8.5%. (Sources)

    US Headlines

    Credit ratings agency Egan-Jones may face civil charges for allegedly filing misleading information in its 2008 application to rate asset-backed securities and sovereign debt, according to people familiar with the matter. (FT-More)

    EU and UK Headlines

    German data from the IFO beat expectations on all three measures, with IFO economists commenting that the German economy continues to show resilience and expectations remain positive despite a higher inflation rate. The IFO forecasts steady improvement in the German economy throughout 2012.

    German IFO Business Climate (Apr) M/M 109.9 vs Exp. 109.5 (Prev. 109.8)

    German IFO Current Assessment (Apr) M/M 117.5 vs Exp. 117.0 (Prev. 117.4)

    German IFO Expectations (Apr) M/M 102.7 vs Exp. 102.3 (Prev. 102.7) (RTRS)

    UK retail sales for March surprised to the upside, with analysts noting warmer weather in March providing a boost to the high street and the ONS commenting that panic buying of fuel towards the latter end of the month boosted sales. Following the release, the UK gilt moved to lows, currently down 35 ticks on the session.

    UK Retail Sales (Mar) M/M 1.8% vs Exp. 0.5% (Prev. -0.8%) - Highest since January 2011

    UK Retail Sales (Mar) Y/Y 3.3% vs Exp. 1.5% (Prev. 1.0%) - Highest since January 2011

    UK Retail Sales Ex Auto/Fuel (Mar) M/M 1.5% vs Exp. 0.4% (Prev. -0.8%, Rev. -0.7%)

    UK Retail Sales Ex Auto/Fuel (Mar) Y/Y 2.8% vs Exp. 1.3% (Prev. 1.0%) (RTRS)

    IMF's Lagarde has said is in the UK's interest to boost their commitment to the IMF due to the UK's key partnership with Europe. But Chancellor Osborne is reluctant to pitch in unless emerging nations such as Brazil, Russia and China play their role. (Independent/Times)

    Irish PM Kenny has pledged to do all he can to persuade voters to pass the new EU fiscal compact, as an opinion poll published yesterday suggested a significant number of voters have not decided how they will vote in the public referendum on May 31st. (WSJ)

    EQUITIES

    European equities are trading higher on the day with positive US earnings lifting sentiment overnight, and strong macroeconomic data from Germany and the UK helped aid risk appetite.

    The Chinese Investment Corp. is less pessimistic than some investors about the prospects of European companies, according to a senior official from the company. The Official said the company has been encouraged by the very open stance of the UK government and the US should make it easier to invest. The executive said Europe will easily account for 20% of the company's equity portfolio. (Sources)

    In individual stocks news, IAG have seen some turbulence ahead of the US open, following the news that they are to receive extra units of BMI, bmibaby and BMI Regional, at a discounted price because Lufthansa were experiencing difficulties in offloading the units. In addition to this news, fines against IAG's British Airways unit have been halved to GBP 60mln by the OFT at the closure of a five-year price-fixing case. Further to this, hopes of a third runway at British Airway's headquarters have been reignited by the former transport secretary Darling. As such, IAG shares currently trade higher by 1.3% and Lufthansa shares lower by around 0.75%.

    General Electric (NYSE:GE) Q1 adjusted EPS USD 0.34 vs. Exp. USD 0.33

    - Q1 revenues USD 35.2bln vs. Exp. USD 34.73bln

    Top performing sectors in the BE500: Financials (+1.06%), Telecommunications (+0.90%), Basic Materials (+0.79%)

    Worst performing sectors in the BE500: Technology (-0.88%), Oil & Gas (-0.31%), Industrials (-0.21%)

     

     

    Index

    DAX

    CAC

    FTSE

    EUROSTOXX

    SMI

    Level

    6730.24

    3188.21

    5758.82

    2306.46

    6221.25

    Change (ticks)

    59.02

    14.19

    14.27

    21.79

    17.47

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

    FX

    EUR/USD is trading higher on the day, with support seen from the stronger than expected German IFO data, moving around 30 pips higher in the minutes following the release. The pair did briefly push through 1.3200 to the upside, a large option expiry for the 10am NY cut, however it has come of its highest levels in recent trade, falling back below 1.3200, but still close to the level as North America comes to market.

    GBP strength is observed across the board following strong retail sales data, as such, GBP/USD erased option barriers at 1.6100, hitting new multi month highs in the pair at 1.6123. EUR/GBP also fell towards its 20-month low with unconfirmed market talk of a UK clearer selling in the cross, but failed to break below it, seeing support from the earlier German IFO data.

    JPY weakness has also been observed in FX space, with USD/JPY on an upward trend ahead of the US open following overnight comments from the Japanese economy minister, willing the BoJ to conduct easing to meet their inflation target. In addition to this, PIMCO expects the BoJ to ease monetary policy at their rate meeting on April 27th.

    Currency

    EURUSD

    GBPUSD

    USDJPY

    Level

    1.3187

    1.6108

    81.72

    Change (pips)

    0.0049

    0.0056

    0.1100

    COMMODITIES

    WTI and Brent crude futures are seen trading higher ahead of the NYMEX open following positive macroeconomic data from Germany, and strong retail sales figures from the UK.

    Oil & Gas News:

    · The New York Mercantile Exchange have cut the margin requirement on a number of crude oil spreads after US President Obama called for an increase to reduce speculative activity among traders. The new rates will be effective as of the close on April 23rd, according to the CME.

    · A ship with the capacity of 2mln BBLs docked at Iraq's second new floating facility and is due to load oil, according to the South Oil Company head.

    · China's end-March commercial crude oil stocks were 2% higher from the previous month, with oil product stocks lower by 3.56% over the same period.

    · Saudi Arabia is offering extra crude supplies for some existing customers, according to industry sources. Two customers of the state oil company Saudi Aramco said it had offered additional cargoes under contract terms to already agreed monthly supplies.

    · Drilling for oil and gas in waters off Britain increased by 22% in Q1 from the same period last year, according to a survey conducted by Deloitte Petroleum Services.

    Geopolitical News:

    · An EU Senior Official has said the Iran oil embargo review deadline has been pushed back by one month and Greece has indicated that they can accommodate the Iranian oil embargo.

    · North Korea have vowed to launch satellites "one after another", in a significant rebuttal of international condemnation of the April 13th launch that was seen as a disguised ballistic missile test. An unidentified South Korean official has said one missile remains at the launch site used earlier in the month.

    · A senior Iranian military commander has threatened military action to preserve Iran's control over three small islands that are also claimed by the UAE, in a dispute that illustrates the rising tension between Tehran and the other Gulf capitals.

    Commodity

    WTI Nymex

    OTC Spot Gold

     

    Level

    102.9

    1644.63

     

    Change (NYSEARCA:USD)

    0.63

    1.70

     

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

    LOOKING AHEAD

    Economic Releases

    CDT

    BST

     

    DATA

    EXP

    PREV

    0730

    1330

    CA

    Leading Indicators (Mar) M/M

    0.5%

    0.6%

    0730

    1330

    CA

    CPI (Mar) M/M

    0.5%

    0.4%

    0730

    1330

    CA

    CPI (Mar) Y/Y

    2.0%

    2.6%

    0730

    1330

    CA

    Bank of Canada Core CPI (Mar) M/M

    0.3%

    0.4%

    0730

    1330

    CA

    Bank of Canada Core CPI (Mar) Y/Y

    1.9%

    2.3%

    0900

    1500

    US

    API Monthly Report

      

    0930

    1530

    US

    ECRI Weekly Index (Apr 20) W/W

     

    125.7

    0930

    1530

    US

    ECRI Weekly Index Annualized (Apr 20) W/W

     

    1.4%

    1200

    1800

    US

    Baker Hughes US Rig Count (Apr 20) W/W

     

    1950

     

    Speakers

    0730

    1330

    WLD

    IMF's Lagarde speaks on World Economy

    0800

    1400

    US

    G-20 Finance Ministers & Central Bankers meet in Washington DC

    0830

    1430

    EU

    ECB's Coeure on Historical Parallels with the Current Crisis

    1000

    1600

    GE

    German Chancellor Merkel headlines local election rally

    1130

    1730

    EU

    ECB's Constancio on Challenges to European Monetary Policy

    1145

    1745

    EU

    ECB's Asmussen speaks in Washington DC

    1745

    2345

    EU

    ECB's Asmussen

    N/A

    N/A

    WLD

    IMF and World Bank Group spring meeting

    N/A

    N/A

    CH

    Chinese Premier visits Sweden, Germany

    N/A

    N/A

    EU

    EU's Barnier speaks on Internal Market

    N/A

    N/A

    WLD

    World Investment Forum

     

    Auctions

    1000

    1600

    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

    McDonald's

    **Note:

    Reg NASDAQ/S&P500 April option expiry (2115BST/1515CDT)

    Reg & E-Mini DOW/E-Mini NASDAQ, S&P/RUSSELL April options expiry (1430BST/0830CDT)

    CAC 40 April futures and options expiry (1500BST/0900CDT)

    Euro-Bund/Bobl/Schatz May options expiry (1615BST/1015CDT)

    UST May options expiry (1900CDT/0100BST)

    WTI Crude May futures expiry (1930BST/1330CDT)

    Prices taken at 1223BST

    **'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.

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