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DAILY US OPENING NEWS - 09/01/12

 

·      Markets climb on the back of Fitch comments stating France should not expect a ratings downgrade throughout 2012.

 

·      Speculation that China may conduct expansionary monetary policy in order to strengthen consumer demand and exports.

 

·      RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=5-H_2WOyfck   

 

Market Re-Cap

 

Markets are moving positively across the board today following comments from Fitch, dampening speculation that France may be downgraded from its Triple A status. Fitch’s Parker commented that he does not expect to see France downgraded at all throughout 2012. However he added that there are continuing pressures for France from national banks and EFSF liabilities, Parker also reinforced German confidence stating that Germany’s Triple A rating is safe. Markets were also experiencing upwards pressure from strong French manufacturing data performing above expectations and successful Austrian auctions today, tightening the spread between France and Austria on 10-year bunds.

 

Asian Headlines

 

China revises its GDP growth for 2011 upwards from 10.3% to 10.4%.

 

·  Chinese Trade Balance (NYSEARCA:USD) (Dec) 16.52bln vs. Exp. 8.80bln (Prev. 14.53bln)

·  Chinese Exports Y/Y (Dec) 13.4% vs. Exp. 13.4% (Prev. 13.8%)

·  Chinese Imports Y/Y (Dec) 11.8% vs. Exp. 18.0% (Prev. 22.1%)

 

EU and UK Headlines

 

The French economy was reassured today as Fitch’s Parker announced he did not expect a French downgrade this year as well as strong manufacturing production and industrial production being reported above expectations, Fitch also added that German economy still has a safe top debt rating.

 

The Greek government and its private creditors are reportedly edging ever closer to a deal on the PSI, although the IMF appears reserved regarding the plan’s effectiveness.

 

Citigroup’s Chief Economist Willem Buiter has commented on Ireland saying that the state clearly needs further financial assistance on “non-market terms”.

 

·  Bank of France Business Sentiment (Dec) M/M 96 vs. Exp. 95 (Prev. 95)

·  French Industrial Production (Nov) M/M 1.1% vs. Exp. -0.2% (Prev. 0.0%, Rev. 0.1%)

·  French Industrial Production (Nov) Y/Y 0.9% vs. Exp. -0.4% (Prev. 1.8%, Rev. 1.7%)

·  French Manufacturing Production (Nov) M/M 1.3% vs. Exp. -0.4% (Prev. 0.0%, Rev. 0.2%)  

· French Manufacturing Production (Nov) Y/Y 2.2% vs. Exp. -0.1% (Prev. 2.6%)

 

EQUITIES

 

Equity markets have shown positive changes across the board in the first half of the European session on the news that France will not be expecting a downgrade from Fitch during 2012. Top performing sectors as of the midpoint of the European session were: Basic Materials (+3.27%), Financials (+3.01%), Industrials (+1.91%) with the worst Performing sectors: Technology (-0.34%), Healthcare (-0.14%), Telecommunications (+0.94%).

 

European equities were also buoyed by a positive earnings report from Alcoa, whose shares were up 2.5% premarket.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6159.72

3199

5672.5

2340.09

6035.18

Change (ticks)

142.49

71.31

60.24

53.64

47.64

 

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

 

 

FX

 

FX markets have been reacting to Fitch’s announcements today, strengthening the EUR and pushing the EURUSD upwards at the midway point of the European session. AUDUSD is trading up by 93pips, possibly due to market talk at the beginning of the European session concerning bids by Macro funds (unconfirmed).

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2774

1.5461

76.88

Change (pips)

0.0009

0.0003

0.0300

 

 

COMMODITIES

 

At the North American open, WTI Crude futures are up following a weakening of the USD which is partly a result of risk-on sentiment following Fitch’s comments that it expects France will remain a Triple A nation.

 

Oil & Gas News:

·  Saudi Arabia has said it plans to keep Domestic Gas feedstock prices unchanged in 2012, however they may change next year.

·  Saudi Arabia is also to supply full term Crude volumes in February to Asian refineries.

·  Bank of America sees a small recovery in 2013, expects prices to average USD 3.80/MMBTU from USD 4.70 MMBTU prior.

 

Geopolitical News:

·  OPEC will not get involved in any international dispute involving Iran according to Venezuela’s Oil Minister.

·  According to an ex-US adviser on Iran, Iran is unlikely to shut down the Strait of Hormuz in response to Western sanctions.

·  Saudi Arabia have said they will not enter the Japanese political debate on Iranian oil, adding that the Saudi Arabia supplies oil on a commercial and not political basis.

·  Tehran is preparing an underground test of a one-kiloton nuclear device during 2012, much like the test carried out by North Korea in 2006. Underground facilities are under construction in great secrecy behind the noise and fury raised by the start of advanced uranium enrichment at Iran's fortified, subterranean Fordo site near Qom, according to DEBKA file's Iranian sources.

 

Corporate News:

·  Exxon reported unplanned flaring due to a breakdown at its refinery in Torrance, California.

·  Genel Energy is looking to double production in a key oilfield in northern Iraq from 42,800 BPD to 100,000 BPD by the end of the year as it lays out plans for significant upgrading work.

 

**Note: For commodities news in detail, kindly refer to the RANsquawk Daily Energy Commentary report.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

102.63

1630.38

Change (USD)

1.32

18.80

 
LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0630

1230

US

NFIB Small Business Optimism M/M (Dec)

93.9

92.0

0645

1245

US

ICSC Chain Stores W/W (Jan 10)

 

1.2%

0645

1245

US

ICSC Chain Stores Y/Y (Jan 10)

 

5.3%

0715

1315

CA

Housing Starts M/M (Dec)

18.5K

181.1K

0755

1355

US

Redbook M/M (Jan 10)

 

-2.1%

0755

1355

US

Redbook Y/Y (Jan 10)

 

4.9%

0900

1500

US

IBD/TIPP Economic Optimism M/M (Jan)

 

42.8

0900

1500

US

JOLT’s Job Openings M/M (Nov)

 

3267

0900

1500

US

Wholesale Inventories M/M (Nov)

0.5%

1.6%

1530

2130

US

API Crude Oil Inventories W/W (Jan 6)

 

-4429K

1530

2130

US

API Gasoline Inventories W/W (Jan 6)

 

3382K

1530

2130

US

API Distillate Inventory W/W (Jan 6)

 

5245K

1530

2130

US

API Cushing Crude Inventory W/W (Jan 6)

 

200K

N/A

N/A

POR

Bank of Portugal Publishes Winter Economic Bulletin

 

-1.6%

 

Speakers

0800

1400

EU

EU’s Rehn speaks on Eurobonds

0900

1500

EU

ECB’s Nowotny

0930

1530

US

Fed’s Williams (Non-Voting Member)

1010

1610

US

Fed’s Pianalto (Non-Voting Member)

1200

1800

US

Fed’s George (Non-Voting Member)

1230

1830

JN

BoJ’s Governor Shirakawa

N/A

N/A

EU

German Chancellor Merkel & Finance Minister Schauble to meet IMF’s Lagarde

N/A

N/A

US

US Treasury Secretary Geithner begins 2-day visit to China & Japan

 

Auctions

0845

1445

UK

BoE Asset Purchase Facility GBP 1.7bln 2038-2060 Gilt Purchases

0930

1530

UK

DMO Gilt Size Announcement for 4.00% 2016 Conventional Gilt

1000

1600

US

Fed’s Outright Trea. TIPS Purch. Jan’18-Feb’41 (USD 1-1.15bln)

1030

1630

US

52-Week and 4-Week T-Bill Auction

1200

1800

US

USD 32bln 3-yr Note Auction

 

 

Prices taken at 1219GMT

 

 
‘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.