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DAILY US OPENING NEWS - 27/04/11

 

·   Q1 UK advanced GDP was in-line with consensus dismissing any fears of a weak number

 

·   European peripheral 10yr bond yield spreads continue to widen as concerns on a potential Greek debt restructuring weigh on sentiment

 

·   S&P cut Japan’s sovereign outlook to negative from stable

 

·   RANsquawk EU Morning Briefing Video: http://www.youtube.com/watch?v=LclZnxc8-BU

 

Market Re-Cap

 

An in-line advanced quarterly GDP data from the UK remained the highlight of today’s morning session, which promoted risk-appetite and boosted European and UK equities. GBP/USD rose around 70 pips following the release of the GDP data, whereas Gilts and Bunds came under pressure as a consequence. In other news, JPY weakness was observed across the board after S&P downgraded Japan’s sovereign outlook to negative from stable. However, AUD gained strength following higher than expected consumer prices data from Australia overnight. It is also worth noting that Eurozone peripheral 10-year government bond yield spreads generally widened on the back of ongoing debt concerns surrounding Greece.

 

Moving forward, markets look ahead to durable goods data from the US, allied with the FOMC rate decision and Fed’s Bernanke press conference following the rate decision. In fixed income, results of the USD 35bln 5-year note auction remains in focus, due to be released at 1630 BST. Markets will also keep a close eye on the US corporate earnings.  

 

Asian Headlines

 

S&P threatened to cut Japan’s sovereign rating, warning that the huge cost of last month’s devastating earthquake will hurt the country’/s already weak public finances without tax hikes. S&P affirmed its long-term rating on Japan at AA- but cut the outlook to negative from stable. Meanwhile, Japan’s Deputy Finance Minister Igarashi said the cut in Japan’s sovereign rating outlook by S&P shows doubts about Tokyo’s efforts on fiscal reform. (RTRS)

 

According to China’s State Information Centre, China’s economy may grow by 9.6% in the second quarter of 2011. The State Information Centre predicted the CPI will climb 5% in the second quarter. (RTRS)

 

US Headlines

 

·   MBA Mortgage Applications (Apr 22) W/W -5.6% vs. Prev. 5.3% (RTRS)

 

EU and UK Headlines:

 

ECB's Orphanides said the ECB is ready to raise rates if necessary. He further said that he is "troubled" by continued turmoil in bond markets, however it is no longer necessary to intervene in the bond market. (RTRS)

 

·   UK GDP (Q1 A) Q/Q 0.5% vs. Exp. 0.5% (Prev. -0.5%)

·   UK GDP (Q1 A) Y/Y 1.8% vs. Exp. 1.8% (Prev. 1.5%)

·   German CPI - Baden-Wuerttemberg (Apr) Y/Y 2.6% vs. Prev. 2.1%

·   German CPI - Bavaria (Apr) Y/Y 2.5% vs. Exp 2.1%

·   German CPI - North Rhine-West (Apr) Y/Y 2.5% vs. Prev. 2.0%

·   German CPI - Brandenburg (Apr) Y/Y 2.2% vs Prev 2.0%

·   German CPI - Hesse (Apr) Y/Y 2.1% vs. Prev. 1.8% (RTRS)

 

EQUITIES

 

UK and European equity markets received a relief rally after UK Q1 advanced GDP was in-line with expectations quashing any speculation of a weaker number and a prolonged contraction in UK growth prospects. In individual stock news, BP shares have risen over 1% after its quarterly earnings but Barclays has underperformed after its Q1 net income missed street estimates.

 

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

7413.63

4071.67

6081.83

2976.52

6490.35

Change (ticks)

57.12

26.38

12.47

21.16

13.76

 

FX

 

GBP/USD gained over 1 point on the back of a 0.5% reading in Q/Q growth in the UK for the first three months of the year. Analysts have also noted a dividend payment by a large UK bank in excess of USD 2bln to change into GBP as another factor in the pair’s strength. Elsewhere, some weakness has been observed in the JPY which is evident across the board following the S&P move overnight to cut the country’s sovereign outlook to negative from stable.

 

·   Australia Consumer Prices (Q1) Q/Q 1.6% vs. Exp. 1.2 (Prev. 0.4%)

·   Australia Consumer Prices (Q1) Y/Y 3.3% vs. Exp. 3.0% (Prev. 2.7%) (RTRS)

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.4675

1.6558

82.19

Change (pips)

0.0031

0.0076

0.6400

 

COMMODITIES

 

Moving into the NYMEX pit open, WTI crude futures traded in minor positive territory as an in-line quarterly GDP data from the UK promoted risk-appetite, allied with the ongoing geopolitical tension in the MENA region.

 

Oil & Gas News:

·   President Obama urged world oil producers to lift crude output to curb the rise in gasoline prices, as he sought to deflect public anger over high gasoline prices that have hurt his popularity among voters.

·   According to the IMF economic growth for the most Middle Eastern and North African oil exports is likely to accelerate this year, although some may see a sharp slowdown due to social unrest.

·   According to sources, Angola will reduce daily crude exports in June by 6.8% from a month earlier.

·   According to sources, unidentified attackers blew up a facility at a pipeline that transports natural gas from Egypt to Israel and Jordan, and authorities suspended gas flows after the explosion.

 

Geopolitical News:

·   Syrian President Assad poured troops into a suburb of the capital overnight while his tanks pounded Deraa to crush resistance in the southern city where the revolt against his autocratic rule began on March 18. Also, according to witnesses, at least 30 Syrian army tanks on tan carriers were seen moving on Damascus circular highway.

·   Meanwhile, Germany said it would strongly support EU economic sanctions on Syria.

·   According to a rebel spokesman, Libyan government forces are using grid missiles to bombard area near Misrata’s port.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

112.41

1507.68

Change (NYSEARCA:USD)

0.20

1.38

 

 

 

 

 

 

 

 

 

 

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0730

1330

US

Durable Goods Orders M/M (Mar)

2.3%

-0.9%

0730

1330

US

Durable ex. Transportation M/M (Mar)

2.0%

-0.6%

0730

1330

US

Cap Goods Orders Nondef Ex Air M/M (Mar)

3.8%

-1.3%

0730

1330

US

Midwest Manufacturing M/M (Mar)

 

83.3

0930

1530

US

DOE Crude Oil Inventories W/W (Apr 22)

1500K

-2322K

0930

1530

US

DOE Gasoline Inventories W/W (Apr 22)

-1000K

-1583K

0930

1530

US

DOE Distillate Inventory W/W (Apr 22)

0K

-2504K

0930

1530

US

DOE Cushing Crude Inventory W/W (Apr 22)

 

-770K

0930

1530

US

DOE Refinery Utilisation W/W (Apr 22)

1.00%

1.10%

1100

1700

FR

Jobseekers – Net Change M/M (Mar)

-10.0

-2.1

1100

1700

FR

Total Jobseekers M/M (Mar)

 

2701.1

1130

1730

US

FOMC Rate Decision M/M (Apr)

0.25%

0.25%

1600

2200

NZ

RBNZ Official Cash Rate M/M (Apr)

2.50%

2.50%

N/A

N/A

GE

CPI M/M (Apr P)

0.2%

0.5%

N/A

N/A

GE

CPI Y/Y (Apr P)

2.4%

2.1%

 

Speaker

1315

1915

US

Fed’s Bernanke Press Conference

 

Auction

1030

1630

US

USD 35bln 5y Note Auction

 

 

 

 

 

 

 

 

 

Earnings

US

Aflac, Baidu, ConocoPhillips, eBay, Genzyme, National Oilwell Varco, Norfolk Southern, Northrop Grumman, Starbucks, Xilinx

 

**Notes: Natural Gas May futures expiry

 

Prices taken at 1150BST