DAILY US OPENING NEWS - 19/04/11

 

 

·   A German finance ministry advisor as well as a Greek newspaper said that Greek debt restructuring is inevitable, however the European Commission and the Greek government denied any talks of a restructuring

 

·   Market talk of the ECB buying in Eurozone peripheral debt saw European peripheral 10-year government bond yield spreads to narrow

 

·   CAD gained strength following much higher than expected CPI data from Canada

 

·   OPEC secretary general, Al-Badri, said there is no shortage of oil in the market, adding that there is no need for an extraordinary OPEC meeting

 

·   RANsquawk EU Morning Briefing Video: http://www.youtube.com/watch?v=gCSdC3fGD64

 

Market Re-Cap

 

Greece remained in focus again today, following comments from a German finance ministry advisor as well as a Greek newspaper that Greek debt restructuring is inevitable, however the European Commission and the Greek government denied any talks of a restructuring. On the other hand, bunds came under pressure and Eurozone peripheral 10-year government bond yield spreads saw aggressive tightening following market talk of the ECB buying in Eurozone peripheral debt. In forex news, heading into the North American open, the USD-Index remains around its session low, in turn helping underpin gains in EUR/USD and GBP/USD, whereas EUR/USD also received strength following hawkish comments from ECB's Trichet and Stark early in the session. Also, CAD gained strength following much higher than expected CPI data from Canada.

 

Moving forward, markets look ahead to housing data from the US, as well as another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Oct'13-Mar'15, with a purchase target of USD 5-7bln.

Markets also keep a close eye on corporate earning results from the likes of Goldman Sachs, IBM, Intel, Johnson & Johnson, and Yahoo.

 

Asian Headlines

 

China may raise interest rates once or twice this quarter according to Ba Shuong, a researcher at the State Council’s Development Research Centre. (Economic Information Daily)

 

·   China HSBC Manufacturing PMI (Apr) M/M 51.8 vs. Prev. 51.8 (RTRS)

 

US Headlines:

 

Japanese Finance Minister Noda said that U.S. treasures were still an attractive investment for Japan despite news that rating agency Standard & Poor’s cut the U.S. credit outlook due to concerns about the rising federal budget deficit. Also Japanese Economic Minister Yosano said US Treasuries would still be in demand if a private rating agency cut the U.S long term credit outlook. (RTRS)

 

Also, according to sources with direct knowledge of the matter, Indian central bank is not considering a diversification of its external investments away from US Treasuries given a lack of alternatives. (RTRS)

 

EU and UK Headlines:

 

ECB's Stark said ECB’s rates are still very low even after the hike to 1.25%, adding that ECB’s rates are still very accommodative.

 

·   Eurozone Manufacturing PMI (Apr A) M/M 57.7 vs. Exp. 57.0 (Prev.57.5)

·   Eurozone Services PMI (Apr A) M/M 56.9 vs. Exp 56.9 (Prev. 57.2)

·   German Manufacturing PMI (Apr A) M/M 61.7 vs. Exp. 60.0 (Prev. 60.9)

·   German Services PMI (Apr A) M/M 57.7 vs. Exp. 59.8 (Prev. 60.1)

·   French Manufacturing PMI (Apr P) M/M 56.9 vs. Exp. 55.0 (Prev. 55.4)

·   French Services PMI (Apr P) M/M 63.4 vs. Exp. 60.0 (Prev. 60.4) (RTRS)

 

·   Greek 13-week T-Bill auction for EUR 1.625bln (incl. EUR 375mln in non-competitive bids), bid/cover 3.45 vs. Prev. 5.08 (yield 4.10% vs. Prev. 3.85%)

·   UK Index-Linked Gilt auction for GBP 0.9bln, 0.5% 2050 Index-Linked, bid/cover 1.97 (yield 0.645%) (RTRS)

 

EQUITIES

 

Despite a lower close to the Nikkei (-1.21%), European equities traded higher for vast majority of the session partly on the back of strong European corporate earnings from the likes of Novartis and Actelion. Following initial weakness, financials regained strength after the European Commission and the Greek government rejected talk of a Greek debt restructuring, which also observed the Spanish IBEX 35 and Italian FTSE MIB indices to outperform their European peers. Basic materials also performed well partly due to weakness in the USD-Index. Moving into the North American open, equities continue to trade in positive territory, with consumer goods and industrials as best performing sectors.

 

To get full details of US corporate earnings, kindly refer to RANsquawk’s Daily US Equity Opening News, or visit ransquawk.com

 

Index	DAX	CAC	FTSE	EUROSTOXX	SMI
Level	7060.18	3909.9	5910.7	2863.6	6332.1
Change (ticks)	33.33	28.66	40.62	15.64	87.15

 

FX

 

Heading into the North American open, the USD-Index remains around its session low, in turn helping underpin gains in EUR/USD and GBP/USD, whereas EUR/USD also received strength following hawkish comments from ECB's Trichet and Stark early in the session, allied with better than expected manufacturing PMI data from core Eurozone countries. Also, CAD gained strength following much higher than expected CPI data from Canada.

 

·   Canadian CPI (Mar) M/M 1.1% vs. Exp. 0.6% (Prev. 0.3%)

·   Canadian CPI (Mar) Y/Y 3.3% vs. Exp. 2.8% (Prev. 2.2%)

·   Bank of Canada CPI Core (Mar) M/M 0.7% vs. Exp. 0.2% (Prev. 0.2%)

·   Bank of Canada CPI Core (Mar) Y/Y 1.7% vs. Exp. 1.2% (Prev. 0.9%) (RTRS)

 

In other news, according to an article in China Securities Journal, China is expected to let the CNY rise at a faster pace as a way to help curb inflation. Also, according to a PBOC adviser, CNY will appreciate gradually and the range of CNY fluctuation may be gradually increased. (China Securities Journal/Sources)

 

Currency	EURUSD	GBPUSD	USDJPY
Level	1.4305	1.6298	82.64
Change (pips)	0.0070	0.0032	-0.0200

 

COMMODITIES

 

WTI crude futures traded lower during the European session partly weighed upon by comments from OPEC’s secretary general that there is no shortage of oil in the market, as well as concerns surrounding demand from the top oil consuming nations.

 

Oil & Gas News:

·   OPEC secretary general, Al-Badri, said there is no shortage of oil in the market, adding that there is no need for an extraordinary OPEC meeting. He also said that the oil market has adjusted itself in terms of volume and quality, and called on consumer countries to revise tax systems due to “exceptional circumstances”. He further said that the oil market is very comfortable, and oil price will not fall below USD 100 this year. He added that oil inventories are enough for 58 days, which is 5 days above average, adding that OPEC’s spare capacity is around 4.5mln BPD even after recent disruptions.

·   Iran’s oil minister said oil demand will increase in 2011, adding that oil price will also increase by end of 2011. He further said that any production increase would have no impact on price, and he called on non-OPEC oil producers to coordinate more with OPEC members.

·   According to Italian foreign minister, a meeting of Western and Middle-Eastern states in Rome next month will seek ways of enabling oil from Libyan rebel areas to be sold on world markets.

 

Geopolitical News:

NATO warplanes launched air strikes on the Libyan capital Tripoli and the city of Sirte to the East in early hours of Tuesday.

 

 

Commodity	WTI Nymex	OTC Spot Gold
Level	106.57	1497.15
Change (USD)	-0.55	1.85

 

LOOKING AHEAD

 

Economic Releases

 

CDT	BST		DATA	EXP	PREV
0730	1330	US	Housing Starts M/M (Mar)	520K	479K
0730	1330	US	Housing Starts M/M (Mar)	8.6%	-22.5%
0730	1330	US	Building Permits M/M (Mar)	540K	517K
0730	1330	US	Building Permits M/M (Mar)	1.1%	-8.2%
0730	1330	CA	Leading Indicators M/M (Mar)	0.5%	0.8%
0730	1330	CA	Wholesale Sales M/M (Feb)	-0.1%	1.5%
0755	1355	US	Redbook M/M (Apr 19)		0.9%
0755	1355	US	Redbook Y/Y (Apr 19)		4.7%
1530	2130	US	API Crude Oil Inventories W/W (Apr 15)		1187K
1530	2130	US	API Gasoline Inventories W/W (Apr 15)		-4598K
1530	2130	US	API Distillate Inventory W/W (Apr 15)		-3686K
1530	2130	US	API Cushing Crude Inventory W/W (Apr 15)		-107K
Speakers
0730	1330	UK	BOE’s Bean
0800	1400	EU	ECB’s Constancio
Auction
1000	1600	US	Fed’s Outright Trea. Coup. Purch. Oct’13-Mar’15 (USD 5-7bln)
Earnings
US		CSX Corp., Forest Labs, Goldman Sachs, IBM, Intel, Juniper Networks, Linear Technology, PACCAR, Stryker, Yahoo

 

Prices taken at 1250BST

 

**Notes:

WTI Crude May futures expiry