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DAILY US OPENING NEWS - 08/12/11

 

·      Reports suggested that the G20 is considering USD 600bln lending programme for the IMF to help the Eurozone, however the news was later denied by the IMF and Japanese officials

 

·      According to sources, the EU is discussing EUR 200bln loan to the IMF with EUR 150bln from the Eurozone, and the  Eurozone is negotiating lifting EUR 500bln cap on the EFSF and ESM lending

 

·      Le Monde wrote, French banks need EUR 7bln of additional capital, however recapitalisation can be done without any state aid. Later, French ACP financial regulator declined to comment on the report

 

·      The Bank of England kept its key benchmark interest rate and asset purchase target unchanged at 0.50% and GBP 275bln respectively

 

·      RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=8QZazPGBB9g

 

Market Re-Cap

 

European equities opened higher partly on the back of reports that the G20 is considering a USD 600bln lending programme for the IMF to help the Eurozone, however the news was later denied by the IMF and Japanese officials. European equities gradually pared back earlier gains as market participants focused on the upcoming EBA stress test results, together with the EU summit where the European Council will review the overall economic situation in Europe. News of S&P placing the EU's AAA rating on credit watch negative further dented the appetite for risk, and financials came under pressure with underperformance seen in the shares of SocGen and AXA among others. In fixed income, Bund futures traded range-bound, amid light volume, as market participants awaited the ECB's rate-decision later in the session, whereas the Eurozone 10-year government bond yield spreads were largely unmoved.

 

In the forex market, EUR/USD and GBP/USD came off their earlier highs as the USD-Index regained strength, however EUR/USD did receive some support after a senior Eurozone source said that the Eurozone is likely to agree to a EUR 150bln loan to the IMF via bilateral loans from central banks. Elsewhere, AUD came under pressure overnight following an unexpected decline in the Australian employment change data, whereas NZD lost strength partly after the Reserve Bank of New Zealand slashed its growth forecast for the country.

 

Moving into the North American open, a number of risk-events lay ahead, including interest rate decisions from the ECB and ECB's press-conference following the rate-decision, EBA's stress test results for the European banks, as well as the EU summit today and tomorrow. Markets will also keep a close eye on key economic data from the US in the form of jobless claims, wholesale inventories/sales and EIA natural gas storage change reports. In fixed income, 5-year TIPS together with 3-, 10-, and 30-year Note refunding announcements, and Fed's Outright Treasury Coupon purchase/sales operations are also scheduled for later.

 

Asian Headlines:

 

Moody’s said Japan’s Aa3 rating outlook is stable, but over the long term key challenges could emerge. (RTRS)

 

US, EU and UK Headlines

 

S&P places 'AAA' rating on EU on watch negative (RTRS)

- S&P could lower the EU rating by one notch if they lower one or more member states currently rated 'AAA'.

- EU’s rating to have special focus on largest contributors, France and Germany

- S&P placed the ratings of the large banking groups across the EU on watch negative, including BNP Paribas, Commerzbank and Deutsche Bank.

 

EQUITIES

 

European equities opened higher partly on the back of reports that the G20 is considering a USD 600bln lending programme for the IMF to help the Eurozone, however the news was later denied by the IMF and Japanese officials. European equities gradually pared back earlier gains as market participants focused on the upcoming EBA stress test results, together with the EU summit where the European Council will review the overall economic situation in Europe. News of S&P placing the EU's AAA rating on credit watch negative further dented the appetite for risk, and financials came under pressure with underperformance seen in the shares of SocGen and AXA among others. Moving into the North American open, European equities are trading mixed, with oil & gas and industrials as the worst performing sectors.

 

**Note: For US equity news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6017.08

3174.87

5572.59

2345.49

5773.83

Change (ticks)

22.35

-1.11

25.68

0.57

7.59

 

FX

 

EUR/USD and GBP/USD came off their earlier highs as the USD-Index regained strength, however EUR/USD did receive some support after a senior Eurozone source said that the Eurozone is likely to agree to a EUR 150bln loan to the IMF via bilateral loans from central banks. Elsewhere, AUD came under pressure overnight following an unexpected decline in the Australian employment change data, whereas NZD lost strength partly after the Reserve Bank of New Zealand slashed its growth forecast for the country.

 

·       Australian Employment Change (Nov) M/M -6K vs. Exp. 10.0K (Prev. 10.1K, Rev. 16.8K)

·       Australian Unemployment Rate (Nov) M/M 5.3% vs. Exp. 5.2% (Prev. 5.2%) (RTRS)

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3386

1.5712

77.36

Change (pips)

-0.0026

0.0002

-0.3200

 

COMMMODITIES

 

WTI crude futures traded in positive territory during the European session with weakness in the USD-index ahead of several key events in Europe.

 

Oil & Gas News:

·       A planned reversal in the direction of oil flowing through the Seaway pipeline will begin carrying barrels of crude out of the oversupplied Midwest to the U.S. Gulf Coast refineries by April 1, 2012, according to a filing with regulators.

·       The Saudi Arabia oil minister said the country is in no rush to agree a new OPEC quota and seeks to have a spare oil production capacity for the kingdom of between 1.5 MBPD to 2.0 MBPD.

·       CME Group said it is considering developing an oil futures contract for light, sweet crude brought to the US Gulf Coast by the Seaway and Eagle Ford pipelines.

 

Geopolitical News:

·       A Syrian oil pipeline has been hit by a bomb today according to Al-Jazeera.

 

Corporate News:

·       ConocoPhilips is making good progress finding buyers for two of its US refineries and is on track to split the co. by May according to the company’s Senior Vice President Al Hirshberg. In other news the company reported a unit start-up at 362,000 BPD Roxana, Illinois.

·       Chevron intends to spend USD 28.5 billion on upstream projects in 2012, the bulk of its overall USD 32.7bln capital budget.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

100.88

1739.93

Change (NYSEARCA:USD)

0.39

-1.88

 

LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0645

1245

EU

ECB’s Rate Announcement M/M (Dec)

1.00%

1.25%

0715

1315

CA

Housing Starts M/M (Nov)

200.0K

207.6K

0730

1330

US

Initial Jobless Claims W/W (Dec 3)

395K

402K

0730

1330

US

Continuing Claims W/W (Nov 26)

3700K

3740K

0730

1330

CA

New Housing Price Index M/M (Oct)

0.2%

0.2%

0730

1330

CA

New Housing Price Index Y/Y (Oct)

2.5%

2.3%

0900

1500

US

Wholesale Inventories M/M (Oct)

0.3%

-0.1%

0900

1500

US

Wholesale Sales M/M (Oct)

0.4%

0.5%

0930

1530

US

EIA Natural Gas Storage Change W/W (Dec)

-16

-1

0930

1530

CA

Bank of Canada’s Financial System Review

 

 

1750

2350

JN

BSI Large All Industry Q/Q (Q4)

 

6.6

1750

2350

JN

GDP Q/Q (Q3 F)

1.3%

1.5%

1750

2350

JN

GDP Annualised Y/Y (Q3 F)

5.2%

6.0%

1750

2350

JN

Nominal GDP Q/Q (Q3 F)

1.2%

1.4%

 

Speakers

0705

1305

GE

Finance Minister Schaeuble

0730

1330

EU

ECB’s Press-Conference Following Rate Decision

0930

1530

EU

ECB’s Constancio

1000

1600

FR

Finance Minister Baroin

1100

1700

EU

EBA’s formal recommendation and the final aggregate results of the recapitalisation exercise

1230

1830

EU

First Session of EU Summit in Brussels

N/A

N/A

GE

Chancellor Merkel

 

Auctions

1000

1600

US

3-, 10-, and 30-year Note Refunding Announcement

1000

1600

US

5y TIPS Refunding Announcement

1000

1600

US

Fed’s Outright Trea. Coup.  Purch. Feb’20-Nov’21 (USD 4.25-5bln)

1000

1600

US

Announcement of Size of 3-, 6- & 12- month T-Bills

1000

1600

UK

BoE Confirms Details of Following Week’s APF Operations

1300

1900

US

Fed’s Outright Trea. Coup. Sales Mar’12-Sep’12 (USD 8-8.75bln)

 

Prices taken at 1213GMT

 

 

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‘Market talk’ – Signifies information that has not been formally tested through traditional journalistic channels and therefore is to be treated as unsubstantiated. Any interpretation of the talk is taken at the readers own risk and is a representation of the rumours within the market place and never generated by ourselves.

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