DAILY US OPENING NEWS - 01/04/11

 

 

·   ICE and NASDAQ have made a rival bid for NYSE Euronext for USD 11.3bln

 

·   Fed's Kocherlakota said that Fed funds rate may need to be raised by 75 basis points by the end of 2011

 

·   Lacklustre bond auction from Portugal saw widening of the Portuguese/German 10-year government bond yield spread

 

·   RANsquawk EU Morning Briefing Video: http://www.youtube.com/watch?v=A-pR7nWf0HM

 

Market Re-Cap

 

European equities traded in positive territory for most of the session, with outperformance seen in financials as the sector pared back losses made yesterday during the run-up to Irish bank stress test results, which also weighed upon bunds. Fixed income, particularly T-Notes, came under further pressure following comments from Fed's Kocherlakota that Fed funds rate may need to be raised by 75 basis points by the end of 2011. Also, the Portuguese/German 10-year government bond yield spread observed widening following a lack-lustre bond auction from Portugal, allied with political uncertainty in Portugal as its parliament got dissolved. Elsewhere, EUR came under pressure following lower than expected manufacturing PMI data from the Eurozone, whereas GBP/USD fell more than 30-pips after manufacturing PMI data printed its lowest since October 2010.

 

Looking forward, the main focus of the market remains on the nonfarm payrolls data from the US to be released at 1330 BST, however it is worth noting that ISM manufacturing and construction spending figures from the US are also scheduled for later in the session.

 

Asian Headlines

 

Japanese Finance Minister Yoshihko Noda said the government was not considering asking Bank of Japan to underwrite government bonds to help fund disaster relief after last months devastating earthquake and tsunami and it would need to be cautious about asking for any such underwriting. (Sources)

 

Elsewhere, PBOC’s advisor Xia Bin said China will likely rise interest rates further this year in a bid to squelch stubborn inflation and bring real deposit rates back into positive territory. Also according to China’s State Council researcher, Fan Jianjuan, China may raise rates by 25 basis points around April 10^th. (China Securities Journal/Caijing)

 

·   Japan Tankan Large Manufacturing Index (Q1) Q/Q 6 vs Exp. 5 (Prev. 5)

·   Chinese Manufacturing PMI (Mar) M/M 53.4 vs Exp. 54.0 (Prev. 52.2)

·   Chinese Manufacturing HSBC PMI (Mar) M/M 51.8 vs Exp. 52.4 (Prev. 51.7) (RTRS)

 

US Headlines:

 

Fed's Lacker said he hasn't made up mind yet on whether it is worth cutting QE2 short. (RTRS)

 

In other news, Fed’s balance sheet expanded to USD 2.606trl in the week ended March 30^th from USD 2.585trl the prior week. Also, Fed’s foreign central banks’ overall holdings of US marketable securities fell USD 5.205bln in the week ended March 30^th to stand at USD 3.404trl. (RTRS)

 

EU and UK Headlines:

 

ECB’s Wellink said the central bank should stop buying debt from banks, private sector and governments as the risks are too high. However, ECB also said it will accept all debt instruments backed by the Irish government as collateral against ECB loans. (Het Financieele/RTRS)

 

·   Eurozone Manufacturing PMI (Mar F) M/M 57.5 vs Exp.57.7 (Prev. 59.0)

·   German Manufacturing PMI (Mar F) M/M 60.9 vs. Exp. 60.9 (Prev. 62.7)

·   France Manufacturing PMI (Mar F) M/M 55.4 vs Exp. 56.6 (Prev. 55.7)

·   Italy Manufacturing PMI (Mar) M/M 56.2 vs Exp. 57.9 (Prev. 59.0)

·   UK Manufacturing PMI (Mar) M/M 57.1 vs. Exp. 60.6 (Prev. 61.5), lowest since Oct'10 (RTRS)

 

·   Portuguese bond auction for EUR 1.645bln, 5% Jun'12, bid/cover 1.4 vs. Prev. 2.3 (yield 5.793% vs. Prev. 3.159%) (RTRS)

 

EQUITIES

 

European equities traded in positive territory for most of the session, with outperformance seen in financials as the sector pared back losses made yesterday during the run-up to Irish bank stress test results. In equity specific news,  NYSE Euronext shares jumped around 17% following news that ICE and NASDAQ have made a rival bid for the co. for USD 11.3bln, which also saw LSE shares rise around 2.5%, however Deutsche Boerse shares fell around 3% after counterbid from ICE and NASDAQ. In other news, Intesa Sanpaolo shares fell following market talk of a capital hike, however Carrefour shares moved up after market talk that private equity funds have approached co. to buy its Dia unit. Moving into the North American open, equities continue to trade higher with financials and basic materials as best performing sectors.

 

Index	DAX	CAC	FTSE	EUROSTOXX	SMI
Level	7121.9	4018.18	5962.79	2934.83	6394.98
Change (ticks)	80.59	29.00	54.03	23.92	37.43

 

FX

 

EUR came under pressure following lower than expected manufacturing PMI data from the Eurozone, whereas GBP/USD fell more than 30-pips after manufacturing PMI data printed its lowest since October 2010.

 

In other news, PBOC’S governor Zhou Xiaochuan said issuing a global reserve currency gives countries some benefits in the short term, but this special status may harm their long-term economic development. (RTRS)

 

Currency	EURUSD	GBPUSD	USDJPY
Level	1.4158	1.6054	83.72
Change (pips)	0.0000	0.0026	0.5900

 

COMMODITIES

 

Front month WTI Crude futures moved to a fresh 30 month high during Asian trade, buoyed by reports that OPEC’s crude output dropped by 363,000 BPD in March, with Saudi Arabia unable to fill the supply gap resulting from the conflict in Libya. Prices have retraced slightly during European trade but heading into the North American open, still trade in positive territory on the day.

 

Geopolitical News:

• Gaddafi has sent one of his most trusted advisors as an envoy to London for secret talks with British officials according to reports.
• US Defence Secretary Gates and Admiral Mullen have acknowledged the possibility of a protracted stalemate in Libya.
• Private efforts are under way to persuade Yemeni President Saleh to agree to a transfer of power as the capital braces for potentially violent protests today, according to diplomats.
• Turkey has informed the UN Security Council that it seized a cache of weapons Iran was attempting to export in a breach of the UN arms embargo.

 

Oil & Gas News:

• Libya’s oil head has said it is too early to discuss an OPEC quota exemption.

• Republicans in the US have urged for approval of TransCanada’s plan to build a pipeline that would ship 500,000 barrels of Northern Alberta oil to Texas refineries.

 

Commodity	WTI Nymex	OTC Spot Gold
Level	107.29	1434.43
Change (USD)	0.57	2.13

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CDT	BST		DATA	EXP	PREV
0730	1330	US	Change in Nonfarm Payrolls M/M (Mar)	190K	192K
0730	1330	US	Change in Manufacturing Payrolls M/M (Mar)	30K	33K
0730	1330	US	Change in Private Payrolls M/M (Mar)	210K	222K
0730	1330	US	Unemployment Rate M/M (Mar)	8.9%	8.9%
0730	1330	US	Average Hourly Earnings M/M (Mar)	0.2%	0.0%
0730	1330	US	Average Hourly Earnings Y/Y (Mar)	1.9%	1.7%
0730	1330	US	Average Weekly Hours M/M (Mar)	34.3	34.2
0900	1500	US	Construction Spending M/M (Feb)	-0.2%	-0.7%
0900	1500	US	ISM Manufacturing M/M (Mar)	61.0	61.4
0900	1500	US	ISM Prices Paid M/M (Mar)	82.9	82.0
0930	1530	US	ECRI Weekly Index W/W (Apr 1)		129.3
0930	1530	US	ECRI Weekly Annualised Y/Y (Apr 1)		6.5%
1100	1700	IT	New Car Registrations Y/Y (Mar)		-20.5%
1200	1800	US	Baker Hughes Rig Count W/W (Apr 1)		1738
1200	1800	IT	Budget Balance M/M (Mar)		-8.0B
1200	1800	IT	Budget Balance (Year to Date) Y/Y (Mar)		-10.0B
1600	2200	US	Domestic Vehicle Sales Y/Y (Mar)	10.12M	10.22M
1600	2200	US	Total Vehicle Sales Y/Y (Mar)	13.25M	13.38M
Speakers
0715	1315	US	Fed’s Plosser
0800	1400	US	Fed’s Fisher
0800	1400	US	Fed’s Dudley

 

 

Prices taken at 1231BST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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