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DAILY US OPENING NEWS - 19/01/12

 

 

·      Commerzbank (CBK GY) has said it can strengthen its core tier 1 capital from its own resources

 

·      Bank of America and Morgan Stanley seen up sharply in pre-market trade following publication of earnings

 

·      Spain sold EUR 6.6bln of bonds today, above the top end of analyst expectations

 

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

 

 

Market Re-Cap

 

 

At the midpoint of the European session, the financial sector is currently leading the equity cash markets seen up over 3%, following upbeat commentary from Commerzbank stating that they can strengthen their core tier 1 capital from their own resources, with the company’s shares trading up over 12%.

 

Demand for French and Spanish bonds were solid and drove down yields today, with the French – German 10-year government bond yield spread tightening, however other factors including Spanish bank troubles caused the Spanish-German 10-year government bond yield spread to widen by 6bps.

 

 

US Headlines

 

A Chinese state researcher has written that a rush into US treasurys that has created a bubble in US sovereign debt could lead to a worsening debt crisis. (Securities Times)

 

Looking ahead, a busy US morning with US CPI figures as well as Housing Starts, the Philadelphia Fed survey and DOE oil inventories. Aftermarket focus will come to the tech sector as earnings reports come from Google, Intel, IBM and Microsoft.

 

 

Asian Headlines

 

China is allowing the nation’s five biggest banks to increase first-quarter lending and weighing a plan to relax capital requirements as economic growth cools. (Sources)

 

 

EU and UK Headlines

 

ECB's Weidmann said EFSF downgrade shows limits of throwing money at the crisis, and unlimited bond buys would jeopardize ECB independence. Weidmann added that the German economy may have contracted a little in Q4 and inflation is to drop below 2% in course of 2012. Weidmann also commented that policy makers should resist pressure to increase government bond purchases in response to the Euro region’s debt crisis. (RTRS/Sources)

 

ECB’s Asmussen says all members of the ESM and not only Germany should be ready to contribute more capital to the ESM and it should be activated as soon as possible. He went on to say that the ECB’s bond buying programme cannot last forever but the ECB has many unconventional measures at its disposal, such as liquidity measures. (RTRS)

 

Greek creditors are discussing a 3.0-4.5% coupon for haircut, according to a source. The Greek finance minister said a critical meeting on PSI concluded yesterday and will resume today. Greece is to reach an agreement with private creditors by the end of the week according to a report. ECB’s Gonzalez-Paramo has said that ECB funding of Greek Government is excluded and that a Greek default is unlikely. (Les Echos/Sources)

                                                    

Irish finance minister says Ireland passes latest quarterly bailout review by ECB/IMF and EC officials (RTRS)

 

IMF said fund approval of the new IMF Greek program depends on the debt deal and staff can begin negotiations with Greeks on a new program.

 

 

EU's Juncker reiterates that Europe is on the brink of a technical recession, and will review EFSF/ESM ceiling in March. (Sources)

 

Taxpayers are to face a new GBP 17.5bln IMF bail-out bill to help struggling European countries. (Telegraph)

 

EQUITIES

 

Ahead of the North American open, stock futures are trading positively, driven by upbeat commentary from Commerzbank who said that they can strengthen their core tier 1 capital from their own resources and strong earnings reports from Bank of America and Morgan Stanley released earlier today.

 

Bank of America Q4 EPS USD 0.15 (may not compare with estimates) vs. Exp. USD 0.13

- Q4 revenue USD 24.89bln vs. Exp. 24.50bln (Sources)

 

Morgan Stanley Q4 loss per share, cont. ops USD 0.14 vs. Exp. loss per share USD 0.57

- Q4 revenues USD 5.709bln vs. Exp. USD 5.50bln (Sources)

 

Top performing sectors in BE500: Financials (+3.88%), Industrials (+1.34%), Basic Materials (+1.01%)

Worst performing sectors in BE500: Health Care (-0.89%), Utilities (-0.52%), Consumer Goods (-0.19%)

 

Aftermarket earnings results released today come from the tech sector, with Google, IBM, Intel and Microsoft all reporting.

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6392.83

3306.26

5735.37

2420.55

6160.04

Change (ticks)

38.26

41.33

33.00

29.91

43.81

 

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

 

FX

 

The USD index is currently trading around intraday lows as safe haven flows are unwound given the strength in financials into the North American open. As such, both EURUSD and GBPUSD are trading at session highs.

 

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2909

1.5446

76.82

Change (pips)

0.0046

0.0008

0.0000

 

COMMODITIES

 

WTI Crude futures are trading higher into the North American open with the USD index seen down 0.3% and with market participants awaiting key US economic data as well as the weekly DOE oil inventory numbers due at 1600GMT.

 

 

Oil & Gas News:

 

·  Norway’s Minister for Oil has said the Barents region is to be a new oil and gas province.

·  Venezuela and Argentina will form a joint venture to invest USD 2.2bln in an Orinoco Belt oil project hoped to produce 100,000BPD.

·  Saudi Arabia fears oil price spike on Iran tension, hopes Brent will stay near USD 100/bbl according to an industry source.

 

 

-API Crude Oil Inventories (Jan 13) W/W -4809K vs. Prev. 397K

-API Gasoline Inventory (Jan 13) W/W 4309K vs. Prev. 1892K

-API Distillate Inventory (Jan 13) W/W -900K vs. Prev. 846K

-API Cushing Crude OK Inventory (Jan 13) W/W -819K vs. Prev. -173K

 

-DOE Crude Oil Inventories W/W (Jan 13) Exp. 3000K (Prev. 4958K)

-DOE Gasoline Inventories W/W (Jan 13) Exp. 2700K (Prev. 3610K)

-DOE Distillate Inventory W/W (Jan 13) Exp. 1500K (Prev. 3985K)

-DOE Cushing OK Crude Inventory W/W (Jan 13) (Prev. -191K)

 

 

Geopolitical News:

 

·  A Japanese government official has said that Japan and the US agree to continue talks on sanctions concerning Iran. The official went on to say that Japan and the US share concerns over Iran’s suspected nuclear arms development.

·  Iran has said it will study Russia’s proposals regarding future talks between Iran, US, Russia, China, Britain, France and Germany according to a high level Iranian official.

·  Iran's Foreign Minister says Iran has never tried to close Hormuz Strait in the past and calls on neighbours not to put themselves in a dangerous position.

·  Chinese Premier Wen has defended their extensive trade with Iran against Western sanctions pressure and warned Tehran against any effort to acquire nuclear weapons.

 

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

 

Commodity

WTI Nymex

OTC Spot Gold

Level

101.96

1664.68

Change (NYSEARCA:USD)

1.37

4.72

 

 

LOOKING AHEAD

 

Economic Releases

CST

GMT

 

DATA

EXP

PREV

0730

1330

US

CPI M/M (Dec)

0.1%

0.0%

0730

1330

US

CPI Y/Y (Dec)

3.0%

3.4%

0730

1330

US

CPI Ex Food & Energy M/M (Dec)

0.1%

0.2%

0730

1330

US

CPI Ex Food & Energy Y/Y (Dec)

2.2%

2.2%

0730

1330

US

Consumer Price Index NSA M/M (Dec)

225.78

226.23

0730

1330

US

CPI Core Index SA M/M (Dec)

 

226.836

0730

1330

US

Housing Starts M/M (Dec)

680K

685K

0730

1330

US

Housing Starts M/M (Dec)

-0.7%

9.3%

0730

1330

US

Building Permits M/M (Dec)

680K

681K

0730

1330

US

Building Permits M/M (Dec)

0.0%

5.7%

0730

1330

US

Initial Jobless Claims W/W (Jan 14)

384K

399K

0730

1330

US

Continuing Claims W/W (Jan 7)

3590K

3628K

0730

1330

CA

Manufacturing Sales M/M (Nov)

1.2%

-0.8%

0900

1500

US

Philadelphia Fed M/M (Jan)

10.3

10.3

0930

1530

US

EIA Natural Gas Storage Change W/W (Jan 13)

-100

-95

1000

1600

US

DOE Crude Oil Inventory  W/W (Jan 13)

3000K

4958K

1000

1600

US

DOE Gasoline Inventory W/W (Jan 13)

2700K

3610K

1000

1600

US

DOE Distillate Inventory W/W (Jan 13)

1500K

3985K

1000

1600

US

DOE Cushing OK Crude Inventory W/W (Jan 13)

 

-191K

1000

1600

US

US DOE Refinery Utilization W/W (Jan 13)

-0.50%

0.60%

 

Speakers

0735

1335

GE

First Reading of Govt's Revived Bank Bailout Legislation

1100

1700

EU

ECB’s Weidmann

1100

1700

WLD

OECD Meeting

1200

1800

GE

German Chancellor Merkel hosts Swedish, Austrian, Portuguese Prime Ministers

1700

2300

EU

EU's Rehn to meet Australia's PM Rudd

N/A

N/A

WLD

G-20 Vice Ministers of Finance

N/A

N/A

EU

EU's Almunia

 

Auctions

1000

1600

US

2-, 5-, and 7-year Note Refunding Announcement

1000

1600

US

Fed’s Outright Trea. Coup. Purch. Jan’18-Nov’19 (USD 4.25-5bln)

1000

1600

UK

BoE Confirms Details of Following Week’s APF Operations

1200

1800

US

USD 15bln 10y TIPS Auction

                 

 

 


Prices taken at 1234GMT