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DAILY US OPENING NEWS - 13/01/12

 ·      JP Morgan announce disappointing revenues this morning, causing JP Morgan shares to trade down at the midpoint of the European session.

 

·      Italian bond auctions failed to reflect the strong success of the yesterday’s Spanish auctions, with unconfirmed market talk that bidding was marred by technical issues.

 

·      RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=gZMXOyEu4zY

 

 

Market Re-Cap

 

European Indices are trading up at the midpoint of the session following strong performance from financials, however, Italian bond auction results dampened this effect after failing to replicate the success of the Spanish bond auction yesterday with relatively lacklustre demand. There has been market talk that this lull in demand for Italian bonds is due to technical error preventing some participants from bidding in the auction, but this still remains unconfirmed.

 

Heading into the North American open, fixed income futures are still trading higher on the day having seen the Bund touch on a fresh session high and with peripheral 10-year government bond yield spreads widening ahead of the treasury pit open. Markets now anticipate the release of US trade balance figures and The University of Michigan confidence report.

 

US Headlines

 

JP Morgan have posted Q4 corporate earnings for 2011 with below expected revenues, causing JP Morgan shares to fall before the opening of the American markets. (RTRS)

 

Asian Headlines

 

China’s foreign exchange reserves drop for the first time since 1998 as foreign investment moderated, the trade surplus narrowed and European crisis spurred investors to sell off emerging-market assets. (Sources)

 

A Chinese think tank has said the country should be able to control CPI under 4%. (Sources)

China can set 2012 M2 growth target at about 14%, according to Baoliang, Chief Economist of the State Information Centre.

 

Japan’s former Foreign Minister Okada is to become deputy Prime Minister. (Nikkei)

 

 

EU and UK Headlines

 

The Eurozone has posted an unexpected trade surplus this morning, however this was not market moving, as most market activity has revolved around strong performance from financials.

 

A bond auction from Italy disappointed hopeful bidders after a successful auction from the Spanish treasury yesterday, however, there is unconfirmed market talk that there may have been a technical issue preventing prospective parties from bidding.

 

ECB opposes weakening of proposed fiscal pact that would require Eurozone countries to rein in budget deficits, according to ECB’s Asmussen. (NASDAQ:FTD)

 

Germany will reduce its 2012 growth forecast to about 0.75% next week according to the government officials. (Handelsblatt) However, Bundesbank’s Dombret sees no danger of credit crunch in Germany.

 

The EBA will this year postpone the annual stress test for banks usually published in July according to a spokeswoman for the EBA. (Handelsblatt)

 

UK's Osborne said will see a fall in inflation in 2012, and can look to future with "a lot of optimism". (RTRS)

 

EQUITIES

 

Equities are performing positively at the midpoint of the European session following strong performance from financials. However, JP Morgan announced their corporate earnings, with disappointing revenues for the fourth quarter of 2011.

 

Top performing sectors in BE500: Financials (+1.69%), Industrials (+0.73%), Basic Materials (+0.69%)

Worst performing sectors in BE500: Telecommunications (-0.52%), Technology (-0.35%), Health Care (-0.22%)

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6215.05

3237.18

5672.72

2368.08

6036.16

Change (ticks)

35.84

37.20

10.30

22.23

18.09

 

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

 

FX

 

GBPUSD has fallen off session highs of 1.5411 amid unconfirmed market talk of Middle-Eastern names are selling the pair. It is now trading closer to the opening level. EURUSD has also experienced a fall from session highs, and is now trading in negative territory, close to session lows with the USD Index trading up 0.25%.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2792

1.5351

76.71

Change (pips)

-0.0022

0.0018

-0.0500

 

COMMODITIES

 

Oil advanced overnight, trimming the biggest weekly decline in a month, as signs Europe’s debt crisis is easing countered indications that a proposed embargo on Iranian crude will be delayed. Nigerian oil workers are still on strike, however Unions have said the negotiations with the government are “fruitful”.

 

Oil & Gas News:

·  Nigeria’s general strike entered its fifth day, threatening oil exports after the Nigerian President and labour leaders held talks but failed to end a dispute over fuel subsidies. However, one of Nigeria’s main trade unions has said the talks were “fruitful” and ongoing, but strikes would continue until an agreement is reached. Concerning this weekend, unions are to suspend protests that were set to take place according to the BBC.

·  Former OPEC president Khelil has said that OPEC could replace Iranian oil supplies to Europe.

·  Goldman Sachs continues to recommend an overweight allocation on commodities, saying it has the most conviction in oil for 2012.

 

Geopolitical News:

·  Iranian leader Ahmadinejad has ended a lacklustre Latin America tour that yielded kind words from ideological allies, however no clear offers of support against Western sanctions on Iran’s nuclear program.

·  The IAEA has agreed to a meeting with representatives of the Iranian government for the end of this month, according to two diplomats with knowledge of the talks.

·  An EU diplomat has said that Iranian oil sanctions may have a 3-6 month grace period. However the discussions are ongoing and there is no convergence on any one Iran sanction date yet.

·  Japanese Ministers have said that they will discuss Iran measures with US officials next week, with added concerns about Iranian nuclear development and adding they will coordinate with the US on these matters.

 

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

 
 

Commodity

WTI Nymex

OTC Spot Gold

Level

99.34

1642.28

Change (NYSEARCA:USD)

0.24

-7.97

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0730

1330

US

Trade Balance M/M (Nov)

-45.0B

-43.5B

0730

1330

US

Import Price Index M/M (Dec)

-0.1%

0.7%

0730

1330

US

Import Price Index Y/Y (Dec)

8.3%

9.9%

0730

1330

CA

Int’l Merchandise Trade M/M (Nov)

-0.50B

-0.89B

0855

1455

US

Univ. of Michigan Confidence M/M (Jan P)

71.5

69.9

0930

1530

US

ECRI Weekly Index W/W (Jan 13)

 

 

0930

1530

US

ECRI Weekly Annualised Y/Y (Jan 13)

 

 

1200

1800

US

Baker Hughes Rig Count W/W (Jan)

 

2007

1300

1900

US

Treasury Dealer Meeting Agenda

 

 

 

Speakers

1010

1610

US

Fed’s Duke (Voting Member)

1145

1745

US

Fed’s Lacker (Non-Voting Member)

1200

1800

US

Fed’s Evans (Voting Member)

1215

1815

US

Fed’s Bullard (Non-Voting Member)

N/A

N/A

GE

German Chancellor Merkel attends 2-day CDU Party Meeting

N/A

N/A

EU

EU’s Barnier meets with ECB’s Noyer

 

Auctions

1000

1600

US

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

 

 

 

 

 

'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.

 

 

 

Prices taken at 1245GMT