DAILY US OPENING NEWS - 26/04/11

 

 

·   EUR/USD printed a 16-month high helped by weakness in the USD-Index and a well received T-Bill auction from Spain

 

·   Lingering debt concerns surrounding Greece saw widening of Eurozone peripheral 10-year government bond yield spreads

 

·   German government adviser Feld said Greece can't avoid debt restructuring, adding that Greece will have a debt ratio of 150% in 2013 or 2014

 

·   RANsquawk EU Morning Briefing Video: http://www.youtube.com/watch?v=59WTkyEO0aI

 

Market Re-Cap

 

European equities traded higher for a vast majority of the European session, despite a lower close to Nikkei (-1.2%) overnight, primarily on the back of strong corporate earnings results from UBS, which led financials to outperform its European peers. A well received T-Bill auction from Spain further enhanced positive sentiment in the market, which allied with weakness in the USD-Index led EUR/USD to print a 16-month high. Despite the strength in equities, bunds maintained strength on the back of lingering Greek debt concerns, which also saw widening of Eurozone peripheral 10-year government bond yield spreads. In other forex news, GBP/USD came under some pressure following a much lower than expected CBI Trends Total Orders data from the UK.

 

Moving forward, markets look ahead to key economic data from the US in the form of consumer confidence, as well as US corporate earnings from the likes of Amazon, and Coca Cola. In fixed income, we have USD 35bln 2-year note auction, allied with another Fed’s Outright Treasury Coupon Purchase operation in the maturity range of May’21 – Nov’27, with a purchase target of USD 1.5-2.5bln, later in the session.

 

Asian Headlines

 

Japan’s cabinet approved almost USD 50bln of spending for post-earthquake rebuilding and as previously suggested by the PM Kan, Japan would have to issue fresh government bonds to funds extra budget.

 

In other news, according to China Securities Journal, China’s annual inflation could edge up to 5.5% in April and prices may stay high for most of the year. However, according to a director at China’s NDRC, Xu Lianzhong, China’s inflation will fall slightly in the second half of 2011. (China Securities Journal/RTRS)

 

US Headlines

 

According to Barron’s latest Big Money poll, nearly 60% of America’s money managers bullish about the stock market’s prospects through the end of the year, but muted in their expectations of how high stocks can rise from here. The Big Money Bulls see the Dow Jones Industrials climbing just 5% more this year. The survey further said that bonds get little love in the survey, with only 1% of managers expecting fixed-income securities to outshine other asset classes. As for US Treasury bonds, 87% of Big Money investors are bearish on the government’s debt. (online.barrons.com)

 

EU and UK Headlines:

 

According to Eurostat: (RTRS)

-    Ireland’s budget deficit more than doubled to 32.4% of GDP in 2010 from 14.3% in 2009.

-    Greek 2010 budget deficit was 10.5% of GDP vs. 15.4% in 2009.

-    Portuguese 2010 budget gap was 9.1% of GDP vs. 10.1% in 2009.

-    Spanish 2010 budget deficit fell to 9.2% of GDP from 11.1% of GDP in 2009.

 

·   UK CBI Trends Total Orders (Apr) M/M -11 vs. Exp. 2 (Prev. 5) (RTRS)

 

·   Spanish 3-month T-Bill auction for EUR 1.163bln, bid/cover 4.43 vs. Prev. 4.33 (yield 1.37% vs. Prev. 0.899%)

·   Spanish 6-month T-Bill auction for EUR 0.806bln, bid/cover 7.11 vs. Prev. 7.65 (yield 1.867% vs. Prev. 1.361%)

·   Italian 6-month T-Bill auction for EUR 8.5bln, bid/cover 1.432 vs. Prev. 1.61 (yield 1.659% vs. Prev. 1.396%) (RTRS)

 

 

 

 

EQUITIES

 

European equities traded higher for a vast majority of the European session, despite a lower close to Nikkei (-1.2%) overnight, primarily on the back of strong corporate earnings results from UBS, which led financials to outperform its European peers. A well received T-Bill auction from Spain further enhanced positive sentiment in the market, and moving into the North American open, equities maintain strength with financials and telecommunications as best performing sectors.

 

For all US corporate earnings in full detail please refer to www.ransquawk.com or alternatively a US equity opening news report shall be sent out to professional users at 1300BST/0700CDT.

 

Index	DAX	CAC	FTSE	EUROSTOXX	SMI
Level	7332.25	4034.92	6041.81	2947.87	6486.32
Change (ticks)	36.76	13.04	23.51	11.57	29.16

 

FX

 

EUR/USD touched a 16-month high during the European session on the back of weakness in the USD-Index, allied with a well received T-Bill auction from Spain. USD-weakness also helped GBP/USD initially, however the pair came under pressure following much weaker than expected CBI Trends Total Orders from the UK.

 

Currency	EURUSD	GBPUSD	USDJPY
Level	1.4614	1.6473	81.72
Change (pips)	0.0032	-0.0025	-0.1100

 

COMMODITIES

 

WTI crude futures have bounced off Asian session lows underpinned by continued weakness in the USD and with no sign of any resolution from the MENA region conflicts.

 

Oil & Gas News:

 

·   According to the chief executive of Saudi Aramco, Saudi Arabia is unhappy with high oil prices and concerned about their impact on the global economy, adding that Saudi Arabia has enough spare crude capacity to meet demand.

·   According to the chief executive of Saudi Aramco, the co. will spend about USD 125bln on projects over the next five years as it seeks to increase refinancing capacity by 50%.

 

Geopolitical News:

 

·   Britain and the US will look today to see if it possible to impose a maritime blockade on fuel supplies to Gaddafi forces.  Also, Italian PM Berlusconi said Italy would join in with strategic bombing raids in Libya, however the decision has caused dissent in Italian governing coalition.

·   Meanwhile, Russia said it will not support any UN Security Council resolutions on Libya which could escalate the conflict in the North African nation.

·   According to the head of Syria’s National Organisation for Human Rights, Syrian security forces stormed the city of Daraa yesterday and opened fire from tanks and armoured vehicles, killing at least 20 people.

 

Commodity	WTI Nymex	OTC Spot Gold
Level	112.1	1504.6
Change (USD)	-0.18	-2.63

 

 

 

 

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CDT	BST		DATA	EXP	PREV
0755	1355	US	Redbook M/M (Apr 26)		1.1%
0755	1355	US	Redbook Y/Y (Apr 26)		5.1%
0800	1400	US	S&P/Case Shiller Home Price Index Y/Y (Feb)		140.86
0800	1400	US	S&P/Case Shiller Composite-20 Y/Y (Feb)	-3.30%	-3.06%
0900	1500	US	Consumer Confidence M/M (Apr)	64.8	63.4
0900	1500	US	Richmond Fed Manufacturing Activity M/M (Apr)	20	20
1530	2130	US	API Crude Oil Inventories W/W (Apr 22)		667K
1530	2130	US	API Gasoline Inventories W/W (Apr 22)		-1792K
1530	2130	US	API Distillate Inventory W/W (Apr 22)		-3361K
1530	2130	US	API Cushing Crude Inventory W/W (Apr 22)		-835K
Speaker
0750	1350	UK	BOE’s Sentance
Auctions
0745	1345	FR	EUR 7.5bln combined 12-, 27-, and 49-week T-Bills
1000	1600	US	Fed’s Outright Trea. Coup. Purch. May’21-Nov’27 (USD 1.5-2.5bln)
1200	1800	US	USD 35bln 2y Note Auction
Earnings
US		Altera, Amazon.com, Broadcom, C.H. Robinson, Coca Cola, Illinois Tool Works

 

**Notes:

Natural Gas/Heating Oil/RBOB May options expiry

 

Prices taken at 1239BST