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DAILY US OPENING NEWS - 19/09/11

 

·       Markets remained nervous ahead of a teleconference between Greece and the Troika, which has already been delayed until 1700BST today

 

·       ECB’s Liikanen said that Eurozone growth risks are substantially on the downside, adding that sovereign debt crisis is not just individual countries' problem, but is a systemic Eurozone crisis

 

·       According to a study by the DIW research institute, Germany's 10 biggest banks need EUR 127bln of additional capital

 

·       According to Japan’s Economic Policy Minister, the country may announce outlines of measures to counter the strong JPY as early as tomorrow

 

·       Moody's said it would finish reviewing Italy's sovereign credit rating for a possible downgrade within the next month, adding that Italy faces a challenging economic and financial environment

 

·       RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=qiDVHCLV5Vg

 

Market Re-Cap

 

European equities traded lower amid risk-aversion as concerns surrounding the Eurozone debt persisted, while focus remained on Greece. Underperformance was observed in financials partly due to a funding-shortage faced by Greek banks, together with a study by the DIW research institute suggesting that Germany's 10 biggest banks need EUR 127bln of additional capital. Markets remained nervous ahead of a teleconference between Greece and the Troika, which has already been delayed until 1700BST today. Downbeat comments from ECB's Liikanen on the Eurozone growth allied with a downgrade of the German 2012 growth by the IW research institute further dented the appetite for risk. Elsewhere, strength in the USD-Index weighed on commodities, which resulted in underperformance in basic materials and oil & gas sectors. In the forex market, EUR traded lower across the board on the back the ongoing Greek debt fears, whereas strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies. Also, JPY came under pressure following comments from Japan's Economy Policy minister overnight that Japan may announce measures to counter the currency's strength as early as tomorrow.

 

Moving into the North American open, the economic calendar remains thin, however markets will keep a close eye on the outcome of the teleconference between Greece and Troika. In fixed income, there is another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Mar'13-Mar'14, with a purchase target of USD 0.5-1bln.

 

Asian Headlines:

 

According to Wu Xiaoling, a former deputy central bank governor, China should refrain from boosting credit and fiscal spending again as stimulus measures to avoid fuelling inflation and pushing up government debt. (RTRS)

 

**Note: Today is a Japanese market holiday.

 

US Headlines:

 

A White House official said President Barack Obama is expected to seek a new base tax rate for the wealthy to ensure that millionaires pay at least at the same percentage as middle income taxpayers. The so-called "Buffett Rule” is due to be unveiled Monday. (Sunday Telegraph) However, US Republicans criticised President Obama’s proposal for a new tax on millionaires, calling it ‘class warfare’ and predict it will face heavy opposition in congress. (RTRS)

 

In other news, Fed Bernanke has asked Philadelphia Fed President Clarles Plosser and Chicago Fed President Charles Evans to work with Vice Chairwoman Janet Yellen on how the Fed can better explain its economic goals to the public, citing people familiar with the matter. The main agenda would be to detail the changes in unemployment and inflation it would take to make the central bank turn away from its low interest-rate policy. (WSJ)

 

EU and UK Headlines:

 

According to an article in the Kathimerini newspaper, Greece plans to supply banks with loan guarantees of up to EUR 30bln to ease their liquidity squeeze. (Kathimerini)

 

·         UK Rightmove House Prices (Sep) M/M 0.7% vs. -2.1%

·         UK Rightmove House Prices (Sep) Y/Y 1.5% vs. -0.3% (RTRS)

 

EQUITIES

 

European equities traded lower amid risk-aversion as concerns surrounding the Eurozone debt persisted, while focus remained on Greece. Underperformance was observed in financials partly due to a funding-shortage faced by Greek banks, together with a study by the DIW research institute suggesting that Germany's 10 biggest banks need EUR 127bln of additional capital. Markets remained nervous ahead of a teleconference between Greece and the Troika, which has already been delayed till 1700BST today. Downbeat comments from ECB's Liikanen on the Eurozone growth allied with a downgrade of the German 2012 growth by the IW research institute further dented the appetite for risk. Elsewhere, strength in the USD-Index weighed on commodities, which resulted in underperformance in basic materials and oil & gas sectors. Moving into the North American open, equities continue to trade lower, with basic materials and oil & gas as the worst performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

5444.64

2959.44

5282.81

2109.79

5399

Change (ticks)

-128.87

-71.64

-85.60

-49.49

-53.88

 

FX

 

EUR traded lower across the board on the back the ongoing Greek debt fears, whereas strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies. Also, JPY came under pressure following comments from Japan's Economy Policy minister overnight that Japan may announce measures to counter the currency's strength as early as tomorrow.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3671

1.5720

76.70

Change (pips)

-0.0125

-0.0071

-0.0900

 

COMMODITIES

 

WTI and Brent crude futures traded lower during the European session weighed upon by strength in the USD-Index together with the Eurozone debt concerns.

 

Oil & Gas News:

·       Kuwait and the UAE are pumping more than their OPEC quotas and aim to maintain output, oil officials from the countries said.

·       The OPEC secretary general said IEA has assured that OPEC will not release more oil stocks and they have agreed to improve cooperation over the oil market.

 

Geopolitical News:

·       China urged regional powers on Monday to revive moribund nuclear disarmament talks with North Korea, with its foreign minister Yang Jiechi defending Beijing as an honest broker seeking to defuse confrontation with Pyongyang.

·       Tension is prevailing on the streets of the Yemeni capital, Sanaa, a day after at least 26 anti-government protesters were shot dead and hundreds wounded by troops and gunmen loyal to President Ali Abdullah Saleh.

·       Troops loyal to Libya's interim leaders have been advancing towards the coastal town of Sirte, Col Gaddafi's birthplace and a stronghold of his loyalists.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

87.15

1819.75

Change (NYSEARCA:USD)

-0.81

7.88

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0900

1500

US

NAHB Housing Market Index M/M (Sep)

15

15

 

Speakers

0800

1400

EU

ECB’s Gonzalez-Paramo

0800

1400

GE

Chancellor Merkel

1130

1730

GE

Chancellor Merkel

N/A

N/A

US

President Obama Proposes Deficit-Reduction Plan

N/A

N/A

GR

Conference call between Greek finance minister and the Troika

 

Auctions

0745

1345

FR

EUR 8bln combined 13-, 26- and 48-week T-Bill Auctions

0830

1430

EU

ECB Announces Bond Purchases

1000

1600

US

Fed’s Outright Treasury Coup. Purch. Mar’13 – Mar’14 (USD 0.5-1bln)

 

**Note:  Euribor September options & futures expiry

              USD-Index September futures expiry

              CME Eurodollar September options & futures expiry

              Japanese Market Holiday

 

Prices taken at 1236BST