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DAILY US OPENING NEWS - 09/05/11

 

·   Speculation regarding a potential Greek debt restructuring or an exit from Eurozone were swiftly denied by Greek, German, French, and EU officials

 

·   WTI crude futures moved back above USD 100 per barrel level during the European session helped by comments from Goldman Sachs and BarCap that the latest pullback in commodity prices is temporary

 

·   RANsquawk EU Morning Briefing Video: http://www.youtube.com/watch?v=HOC3nAoGSiM

 

Market Re-Cap

 

Speculation regarding a potential Greek debt restructuring or an exit from Eurozone remained the focus of the market, however both were swiftly denied by Greek, German, French, and EU officials, which allied with a sharp increase in German exports for the month of March provided support to EUR/USD. In other news, European equities traded lower during the session, with particular underperformance seen in financials following the trade update from HSBC, where co. said profits in Europe were impacted by lower trading activity. Weakness in equities supported bund futures, while most peripheral 10-year government bond yield spreads with respect to bunds showed minor widening. Elsewhere, WTI crude futures moved back above USD 100 per barrel level during the European session helped by comments from Goldman Sachs and BarCap that the latest pullback in commodity prices is temporary, allied with JPMorgan boosting its 2011 oil price forecasts.

 

Moving ahead, the economic calendar remains light, however there is a Fed's Outright Treasury Coupon Purchase operation in the maturity range of May'18 - Feb'21, with a purchase target of USD 6-8bln, scheduled for later in the session.

 

Asian Headlines

 

Many BOJ board members said it was hard to determine when supply constraints triggered by the devastating earthquake in March will ease, minutes of the BOJ’s April -7 meeting shows. A few members said that while a BOJ cannot directly remove supply constrains, it was necessary for the central bank to keep carefully monitoring whether such constrains could continue to exert downward pressure on the economy. Also in other news a Ministry of Finance representative said government has no plant to ask BOJ to underwrite JGBs. (RTRS)

 

In other news, China’s economic growth is expected to slow in H2 of this year according to the Director of economic forecasting at the State Information Centre. According to China National Radio, Chinese April CPI may have been about 5%, In other news, the People’s Daily Reported that Chinese inflation will likely fall to 3% in the next two to three years. (China Business News, China National Radio/People’s Daily)

 

US Headlines:

 

Morgan Stanley adjusted its GDP growth forecast for US for the third time this year, and sees a growth of +3.3% over the fourth quarter of 2011 vs. its previous forecast of +3.6%. (ZeroHedge)

 

EU and UK Headlines:

 

EU Commission said it hopes to see a decision on interest rate cut for Irish bailout loans in coming weeks, adding that it is opposed to any debt restructuring for Ireland. (RTRS)

 

Also, German Finance minister spokesman said there is no discussion at moment about further interest rate cut for Greek bailout, adding that there's no clause for quitting Eurozone in treaties. (RTRS)

 

·   German Trade Balance (EUR) (Mar) M/M 18.9bln vs. Exp. 11.8bln (Prev. 12.1bln, Rev. to 11.9bln)

·   German Exports SA (Mar) M/M 7.3% vs. Exp. 1.1% (Prev. 2.7%, Rev. to 2.8%)

·   German Imports SA (Mar) M/M 3.1% vs. Exp. 0.8% (Prev. 3.7%, Rev. to 4.0%)

·   German Current Account (EUR) (Mar) M/M 19.5bln vs. Exp. 13.3bln (Prev 8.9bln, Rev. to 8.7bln)

·   Halifax House Prices SA (Apr) M/M -1.4% vs. Exp. 0.1% (Prev. 0.1%)

·   Halifax House Prices (Apr) 3M/Y -3.7% vs. Exp. -3.0% (Prev. -2.9%)

·   Eurozone Sentix Investor Confidence (May) M/M 10.9 vs. Exp. 13.8 (Prev. 14.2) (RTRS)

 

·   German 6-month T-Bill auction for EUR 4.497bln, bid/cover 1.5 vs. Prev. 1.30 (yield 1.1796% vs. Prev. 1.088%) (RTRS)

 

EQUITIES

 

European equities traded lower during the session, with particular underperformance seen in financials following the trade update from HSBC, where co. said profits in Europe were impacted by lower trading activity. However, MAN shares initially spiked more than 3.5%, after Volkswagen raised its stake in the co. above 30%, whereas Scania shares rose over 10% on relief that it won’t have to bear the main burden of the integration cost of the merger. Moving into the North American open, European equities continue to trade in negative territory, with financials and utilities as worst performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

7418.53

4018.37

5942.04

2912.59

6483.51

Change (ticks)

-73.72

-39.64

-34.73

-40.31

-43

 

FX

 

EUR/USD received support after Greek, German, French, and EU officials denied speculation regarding a potential Greek debt restructuring or an exit from Eurozone, allied with a sharp jump in German exports in the month of March.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.4405

1.6380

80.77

Change (pips)

0.0089

0.0013

0.1400

 

 

COMMODITIES

 

WTI crude futures moved back above USD 100 per barrel level during the European session helped by comments from Goldman Sachs and BarCap that the latest pullback in commodity prices is temporary, allied with JPMorgan boosting its 2011 oil price forecasts.

 

Oil & Gas News:

·   According to the head of commodity research at Goldman Sachs, given the magnitude in the pullback in commodity prices, it does create an opportunity for more upside potential, particularly in the second half of 2011, when fundamentals are expected to tighten.

·   Also, according to Kevin Norrish, managing director at Barclays Capital, the recent pullback in commodity prices is not a turning point, and he expects to see a pretty good recovery from these levels before too long.

·   JPMorgan has increased its oil price forecasts because OPEC and other producers aren’t matching rising demand and consumers will take time to react to higher prices. 2011 Brent crude forecast has been raised to USD 120/bbl from USD 110/bbl and WTI crude raised to USD 109.50 from USD 99.00.

 

Comments from OPEC countries:

·   An Iranian oil official said Iran's daily oil refining capacity will increase considerably in near future.  He was cited as saying that total oil refining capacity will reach 2.14mln BPD by 2015 and 3.4mln BPD by 2025.  He further mentioned that Iran also plans to boost its gasoline storage capacity from the current figure of 11.5bln litres to 14.5bln litres by 2015 and to 17.5bln litres by 2025.

·   Qatar Oil Minister said market is well supplied, and stocks are healthy, adding that he does not expect OPEC to make a “dramatic” decision during the upcoming OPEC meeting in June.

·   According to sources, Saudi Arabia will keep crude supply to European refiners and one major oil firm unchanged in June from May. Saudi Arabia will supply full term volumes to most of its customers in Asia in June, stable from the previous month, the source added.

 

Geopolitical News:

·   Libyan pro-Gaddafi forces have dropped bombs on four large oil-storage tanks in the city of Misrata, destroying the facilities and sparking a fire that spread to four more, according to a rebel spokesman.

·   A dramatic feud at the highest level of Iran's government appears to be intensifying, with speculation that president Ahmadinejad may be preparing to resign after a reported political dispute between Ahmadinejad and the country's supreme leader, Ayatollah Khamenei.

·   Yemeni forces opened fire on protesters blockading a government building in Taiz, killing at least one person. Meanwhile, Yemen’s opposition coalition called on Gulf States to pressure President Saleh to relinquish power.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

100.08

1505.1

Change (NYSEARCA:USD)

2.90

9.50

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0715

1315

CA

Housing Starts M/M (Apr)

183.0K

188.8K

0900

1500

US

Employment Trends M/M (Apr)

 

100.9

 

Speaker

N/A

N/A

WLD

US-China Strategic  Economic Dialogue

 

Auction

1000

1600

US

Fed’s Outright Trea. Coup.  Purch. May’18-Feb’21 (USD 6-8bln)

 

 

 

Prices taken at 1253BST