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DAILY US OPENING NEWS - 17/01/12

 

 

·      Chinese GDP data came in higher than expected Y/Y overnight for Q4 at 8.9% vs. Exp. 8.7%.

 

·      German ZEW survey reports greatest jump in economic sentiment since July 2009.

 

·      Fitch’s Parker renews Greek economic concerns stating his opinion that Greece is insolvent and will happen quite soon.

 

·      ECB's Nowotny says ECB looking for alternatives to SMP and that the ECB has no plans for a rate cut.

 

·      RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=LPyrfGv5hFM

 

 

Market Re-Cap

 

China published strong real GDP growth and Industrial Production figures overnight, outperforming expectations. This affirmed energy demand from China has pushed price levels for both WTI Crude and Brent to trade upwards throughout the day. European markets are trading positively in the first half of the European session following an optimistic ZEW survey concerning the German economy, supporting cautious positive sentiment with regards to German recession. The front month Euribor is coming under pressure this morning following the ECB’s Nowotny commenting that there are no plans for European rate cuts. Following another eventful Spanish T-bill auction, where yields almost halved, markets were fuelled by stronger borrowing, causing positive shifts in the first half of the European session. These lower yields contracted the spread between Spanish and German bonds.UK CPI and RPI data was released today, showing the lowest rate of CPI since April 2009, down to 4.2%, moving towards the BoE’s inflation target of 2.0%.

 

US Headlines

 

Looking forward to the rest of the session, Wells Fargo and Citigroup will be publishing their earnings at 1300GMT as well as Empire Manufacturing figures from the US.

 

 

Asian Headlines

 

Chinese Industrial Production YTD Y/Y (Dec) 13.9% vs. Exp. 13.8% (Prev. 14.0%)

Chinese Industrial Production Y/Y (Dec) 12.8% vs. 12.3% (Prev. 12.4%)

Chinese Real GDP Q/Q (4Q) 2.0% (Prev. 2.3%)

Chinese Real GDP Y/Y (4Q) 8.9% vs. Exp. 8.7% (Prev. 9.1%)

Chinese Real GDP YTD Y/Y (4Q) 9.2% vs. Exp. 9.2% (Prev. 9.4%)

 

The Chinese Vice Premier has commented on the global economy saying the situation is very “complicated, grim.” (Sources)

 

 

EU and UK Headlines

 

The Greek economy is again uncertain following comments from Fitch’s Parker, saying that Greece is insolvent, default would not be a surprise and will happen again quite soon. (Sources)

 

S&P yesterday cut the EFSF to AA+ from AAA; outlook to developing from watch negative. (RTRS) The EFSF's obligations are no longer fully supported either by guarantees from EFSF members rated AAA by S&P, or by AAA rated securities. A developing outlook reflects the ability of S&P to either upgrade or downgrade the EFSF’s credit rating in the next rating revision. S&P’s have also affirmed EIB’s credit rating at AAA, outlook negative.

 

EFSF Chief Regling said the EFSF has sufficient means to fulfil commitments, and that S&P's short term rating of the Euro-zone bailout fund remains at the highest possible level. The fund also said the downgrade does not reduce their lending capacity. (Sources)

 

 

 

 

ECB's Draghi says the ECB are satisfied with effect of 3-year loans, however, growth prospects are dismal and the situation remains grave. (Sources)

 

Spanish bond yields fell sharply after the T-bill auction today following increased borrowing fuelling market growth and closing the spread between Spanish and German bonds.

 

UK CPI Y/Y (Dec) 4.2% vs. Exp. 4.2% (Prev. 4.8%)

UK RPI (Dec) Y/Y 4.8% vs. Exp. 4.7% (Prev. 5.2%)

Eurozone CPI Y/Y (Dec) 2.7% vs. Exp. 2.8% (Prev. 3.0%)

 

EQUITIES

 

In terms of China, the Shanghai Composite closed up 4.2% in its biggest single-day percentage gain since October 2009 following strong data overnight which has underpinned the strength in commodity markets today.

 

Following a cautiously optimistic ZEW survey on the German economy, as well as low Spanish bond yields resulting from increased borrowing, European markets are trading positively in the first half of the session today.

 

Top performing sectors in BE500: Basic Materials (+1.79%), Oil & Gas (+1.48%), Industrials (+1.44%)

Worst performing sectors in BE500: Telecommunications (+0.06%), Health Care (+0.20%), Consumer Goods (+0.62%)

 

Important earnings results released today include Wells Fargo and Citigroup, both publishing their results for Q4 of last year at 1300GMT:

 

Wells Fargo Exp. EPS USD 0.72, Exp. Sales Revenue USD 19.98bln

Citigroup Exp. EPS USD 0.52, Exp. Sales Revenue USD 18.46bln

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6328.27

3268.79

5699.26

2397.49

6058.79

Change (ticks)

108.26

43.79

41.82

35.93

27.55

 

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

 

FX

 

Most major pairs are trading up at the midway point of the session, with EURUSD trading positively following strengthened sentiment concerning the German economy due to the optimistic ZEW survey.

 

Commodity linked currencies are trading positively this morning due to strong industrial production and real GDP data released from China overnight.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2784

1.5383

76.80

Change (pips)

0.0117

0.0058

0.0200

 

 

 

 

COMMODITIES

 

Following overnight Chinese data releases confirming strong real GDP growth of 8.9% and higher than expected Industrial production levels, both Crude and Brent are trading higher, with WTI Crude levels at just under USD 101/B with gains seen at over USD 2.00 and Brent pushing above USD 112/B. Prices taken at 1224GMT.

 

Oil & Gas News:

·   Saudi Arabia’s Naimi has said he wants Crude prices stabilized at around USD 100/B.

·   OPEC has raised its demand forecast for its crude by 60,000 BPD to 30.15mln BPD on weaker non-OPEC supply.

·   Nigerian unions have suspended their nationwide strike, hours after President Jonathan partially reinstated subsidies to keep gasoline prices low.

 

 

Geopolitical News:

·   Saudi Arabia has expressed doubts over Iran’s claim it could block the Strait of Hormuz and made clear it was ready to pump oil after sanctions threatened to cut Iranian sales of crude. Iran has commented on this, requesting that Saudi Arabia does not replace any sanctioned oil.

·   Iran’s Oil Minister said the international oil market was balanced and OPEC members were committed to the cartel’s production ceiling.

·   The UAE has urged a “diplomatic solution” to Iran’s threat on Strait of Hormuz.

·   France is pushing for faster enforcement of the EU’s proposed ban on oil imports from Iran, two officials with knowledge on the matter have said.

·   Mehmanparast, a spokesman for Iran’s Foreign Ministry has said the EU is moving toward the proposed oil embargo under pressure from the US and isn’t prepared to embark on such actions, adding that the sanctions are “illegal and illogical”.

 

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

 

 

Commodity

WTI Nymex

OTC Spot Gold

Level

100.72

1662.12

Change (NYSEARCA:USD)

2.02

18.32

 

 
 

 

 

LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0730

1330

US

Empire Manufacturing M/M (Jan)

11.00

9.53

0730

1330

US

Revisions: Empire Manufacturing Y/Y 2011

 

 

0730

1330

CA

International Securities Transactions M/M (Nov)

 

2.03B

0800

1400

CA

Bank of Canada Rate Decision M/M (Jan)

1.00%

1.00%

1730

2330

AU

Westpac Consumer Confidence SA M/M (Jan)

 

-8.3%

1730

2330

AU

Westpac Consumer Confidence Index M/M (Jan)

 

94.7

N/A

N/A

JN

Cabinet Office Monthly Economic Report M/M (Jan)

 

 

 

Speakers

1230

1830

UK

BoE’s Posen

1230

1830

GE

ECB’s Weidmann

1700

2300

IT

Italy PM Monti meets with British PM Cameron

N/A

N/A

GR

Troika arrive in Athens on talks for 6th review of bailout

N/A

N/A

EU

ECB’s Nowotny and Hungary’s Simor in Euromoney Conference

N/A

N/A

EU

EU’s Barnier on official visit to Beijing

N/A

N/A

EU

EU's Almunia speaks at "Future of Europe" event

N/A

N/A

EU

EU's Rehn in Strasbourg

 

Auctions

0845

1445

UK

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

1000

1600

US

Fed’s Outright Trea. Coup. Purch. Feb’36-Nov’41 (USD 2.25-2.75bln)

1030

1630

US

USD 56bln combined 3-, and 6-month T-Bill Auctions

 

 

 

 

***NY Crude February options expiry (1930GMT/1330CST)

 



Prices taken at 1240GMT