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DAILY US OPENING NEWS - 25/08/11

 

 

·       Markets focus on Fed’s Bernanke keynote speech at the Jackson Hole tomorrow

 

·       Finnish finance minister said that his country will not give up its demand for collateral in exchange for the Greek aid

 

·       BoE's Weale said a substantial further weakening of inflation pressures would make more stimulus appropriate, however neither BoE’s forecasts nor recent market movements make a case for more QE

 

·       Apple’s CEO Steve Jobs resigned as the CEO and passed the reins to his right hand man Tim Cook

 

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

 

Market Re-Cap

 

European equities lacked direction during the session amid thin trade ahead of Bernanke's Jackson Hole speech tomorrow, however they remained in positive territory for a vast majority of the session, with financials as one of the best performing sectors. Prices did come under pressure following comments from the Finnish finance minister who said that his country will not give up its demand for collateral. Also, the FTSE 100 index underperformed its European peers, weighed upon by weakness in BP shares following news that oil was discovered floating near source of the Gulf of Mexico spill. Elsewhere, during early European trade, weakness in the USD-index helped support the strength in EUR/USD, GBP/USD and commodity-linked currencies, however as the session progressed the USD-Index came off its earlier lows.

 

Moving into the North American open, markets look ahead to jobless claims date from the US. In fixed income, another Fed's Outright TIPS Purchase operation in the maturity range of Apr'13-Feb'14, with a purchase target of USD 0.25-0.50bln, together with USD 29bln 7-year Note auction are also scheduled for later in the session.

 

Asian Headlines:

 

According to China Securities Journal, China will ease monetary policy in some sectors and raise fiscal spending on cheap homes and irrigation systems to guard against a recession in the world economy. In other news, according to National Business Daily, China’s inflation rate in August may be equal to or even higher than July’s levels. Elsewhere, according to People’s Daily, China can tolerate a certain degree of economic slowdown as it needs to focus on restructuring its economy into a more efficient one and make future growth more sustainable. (China Securities Journal/National Business Daily/People’s Daily)

 

Global News:

 

According to China Information News, China has no choice but to keep buying US debt with forex reserves. The risk of a US sovereign debt default has been pushed back but not eliminated and the US rating downgrade by S&P could speed the USD depreciation and cause the real purchasing power of China’s massive foreign exchange reserves to fall. (China Information News)

 

US, EU and UK Headlines:

 

Despite all the initial attraction the euro simply hasn’t lived up to expectations. Its beauty has proved superficial and, as time has passed, its core is proving rotten. China is now showing that it might have had enough. (WSJ) Meanwhile, Chinese president Hu said he is concerned about the EU debt crisis, however he is confident of Euro and will continue to invest in Europe. (RTRS/Sources)

 

·       German GfK Consumer Confidence Survey (Sep) M/M 5.2 vs. Exp. 5.1 (Prev. 5.4, Rev. to 5.3)

·       UK CBI Reported Sales (Aug) M/M -14 vs. Exp. -10 (Prev. -5)

·       UK Nationwide Consumer Confidence (Jul) M/M 49 vs. Exp. 45 (Prev. 51) (RTRS)

 

 

 

 

 

 

 

EQUITIES

 

European equities lacked direction during the session amid thin trade ahead of Bernanke's Jackson Hole speech tomorrow, however they remained in positive territory for a vast majority of the session, with financials as one of the best performing sectors. Prices did come under pressure following comments from the Finnish finance minister who said that his country will not give up its demand for collateral. Also, the FTSE 100 index underperformed its European peers, weighed upon by weakness in BP shares following news that oil was discovered floating near source of the Gulf of Mexico spill. In equity specific news, Apple’s CEO Steve Jobs resigned as the CEO and passed the reins to his right hand man Tim Cook. Moving into the North American open, equities are trading in positive territory, with financials and industrials as the best performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

5719.61

3169.55

5205.41

2260.27

5352.71

Change (ticks)

38.53

30.00

-0.44

21.57

24.22

 

FX

 

During early European trade, weakness in the USD-index helped support the strength in EUR/USD, GBP/USD and commodity-linked currencies, however as the session progressed the USD-Index came off its earlier lows. EUR came under some pressure after Finnish finance minister said that his country will not give up its demand for collateral in exchange for the Greek aid.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.4447

1.6376

77.20

Change (pips)

0.0033

0.0002

0.2200

 

COMMODITIES

 

WTI and crude futures traded higher in early European trade on the back of a weaker USD-Index and speculation Bernanke may use Friday’s Jackson Hole meeting to announce new measures to revive the ailing US economy.

 

Oil & Gas News:

·       Standard Charted cut its third quarter forecasts for WTI and Brent crude citing weaker than expected demand in the US and speculation output disruptions in the North Sea and Angola will end in its latest report. The bank reduced Brent forecasts to USD 112 from USD 115 a barrel and that WTI may average USD 90 instead of USD 98 per barrel.

 

Geopolitical News:

·       Libyan rebels fighting to overthrow Gaddafi have taken control of an army base west of Tripoli in Zuara, Al Arabiya reported today, as the Pentagon said Libya’s stockpile of chemical weapons were “secure.”

·      Israel has launched several attacks on Gaza, killing four Palestinians and wounding several others, prompting Hamas to allege that the attacks violated an unofficial two-day-long truce.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

85.83

1725.68

Change (NYSEARCA:USD)

0.67

-33.65

 

 

 

 

 

 

 

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0730

1330

US

Initial Jobless Claims W/W (Aug 20)

405K

408K

0730

1330

US

Continuing Claims W/W (Aug 13)

3700K

3702K

0930

1530

US

EIA Natural Gas Storage Change W/W (Aug 19)

74

50

1000

1600

US

Kansas City Fed Manufacturing M/M (Aug)

 

2

1100

1700

FR

Jobseekers – Net Change M/M (Jul)

0.0

33.6

1100

1700

FR

Total Jobseekers M/M (Jul)

2720.4

2720.4

 

Speakers

N/A

N/A

EU

ECB’s Trichet

N/A

N/A

EU

ECB’s Praet

N/A

N/A

EU

ECB’s Gonzalez-Paramo

 

Auctions

1000

1600

US

Fed’s Outright TIPS Purch. Apr’13-Feb’41 (USD 0.25-0.50bln)

1200

1800

US

USD 29bln 7y Note Auction

 

Earnings

US

Tiffany & Co.

 

Prices taken at 1252BST