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DAILY US OPENING NEWS - 23/01/12

· Greece has been unable to find a compromise in bondholder negotiations this weekend, however, Greek Finance Minister Venizelos has said he is ready to conclude PSI agreements on time.

· European equity markets are trading in positive territory with financials leading the move higher. Particular strength observed in Italian banks.

· RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=3zc-GZSbXZc

Market Re-Cap

Macro news from Europe has refuted claims made last week that the ESM fund would be doubled to EUR 1tln, with a German spokesman commenting that the country is not of mind that ESM resources should be increased to that level.

Discussions concerning the management of the EFSF and the ESM from German members of parliament have spurred talks that the funds could be run in parallel and even together in an emergency scenario.

The ECB's Weidmann has commented on his confidence in the Eurozone and the German economy, stating that current stagnation is temporary and that we should see a recovery in the Eurozone during 2012.

Financial stocks have shown volatility this morning following comments from French and German Finance Ministers that banking regulations may be relaxed under the Basel III agreement, however this was later denied by the German Finance Minister.

US Headlines

Goldman Sachs have made recommendations concerning US Treasuries, favouring a short position due to the unsustainability of levels below 2% for this cycle. Goldman Sachs is now of the view that these levels will break to the upside at around 2.25-2.50%. (Goldman Sachs)

Asian Headlines

Overnight, Nikkei finished broadly unchanged, with the Shanghai composite and Hang Seng closed due to market holiday.

EU and UK Headlines

As an update to the ongoing Greek negotiations, Greek finance minister Venizelos has said he is ready to finalize PSI agreements on time adding that there is no risk of the deal collapsing anytime soon.

Goldman Sachs have commented on the ongoing Greek bondholder negotiations saying that they expect an agreement to be met ahead of the 20th March redemption, and that this will pave the way for a second financial support package. (Goldman Sachs)

3-Month Euribor did fix lower than expected at 1.168%, with the March contract continuing its positive trend up 4 ticks before the American open, showing increasing European bank liquidity.

Commentary out of Europe today has shown that Germany is against raising the funds of the ESM to EUR 1tln, however German Members of Parliament have discussed the possibility of running the EFSF and the ESM in parallel, and even together in an emergency scenario.

Further European commentary is expected later in the session as EU Finance Ministers will be meeting in Brussels at 1600GMT.

EQUITIES

European equity markets are trading in positive territory following a short squeeze in EURUSD earlier in the session.

Financials have experienced a volatile trading session this morning following comments that Basel III requirements for banks may be relaxed, however the German Finance Minister has denied that there are any talks concerning this.

UK banks have been pressed to cut bonus pools to reflect huge losses triggered by mis-sold loan insurance, with Lloyds banking group taking the largest Payment Protection Insurance charge of GBP 3.2bln. (FT-More)

Top performing sectors in BE500: Financials (+2.27%), Oil & Gas (+1.07%), Basic Materials (+0.74%)

Worst performing sectors in BE500: Utilities (-1.02%), Health Care (-0.38%), Consumer Goods (-0.12%)

Halliburton (NYSE:HAL) Q4 adjusted EPS USD 1.00 vs. Exp. USD 0.99

- Q4 Revenue USD 7.06bln vs. Exp. USD 6.81bln

- Q4 drilling & evaluation revenue USD 2.74bln

- Q4 completion & production revenue USD 4.33bln

- Q4 Net USD 906mln

Other US earnings releases today include Texas Instruments, reporting after market.

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6433.22

3336.67

5770.88

2441.36

6126.84

Change (ticks)

28.83

15.17

42.33

14.40

4.17

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

FX

Following a short squeeze in EURUSD, the pair is trading up and is testing the 1.30 level. The USD index is also trading at around intraday lows heading into the North American open.

CFTC's COT report said the net EUR short position increased 3% to USD 25.5bln for the week to 17th January, the largest net short position since at least 2007. (CFTC)

AUDUSD is trading strongly, up 68pips, at the midpoint of the session amid earlier market talk of Middle Eastern names buying the currency pair.

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2998

1.5570

76.92

Change (pips)

0.0067

-0.0006

-0.0900

COMMODITIES

Heading into the North American open, WTI and Brent are pressing upwards following the announcement that EU officials have agreed to impose an Iranian oil embargo, with full implementation of the ban to begin on the 1st of July.

Oil & Gas News:

· A group of six Democrats in the US House of Representatives have introduced a bill that aims to levy a windfall tax of up to 100% on "excess" profits earned by oil companies from oil and natural gas products.

· China's December Saudi Arabian crude imports are the 4th highest on record, with imports reaching 1.12MBPD.

Geopolitical News:

· EU envoys agree to impose an embargo on Iranian oil imports, but have decided to delay the full implementation of the ban until the 1st of July, according to an EU diplomat.

· US aircraft carrier USS Abraham Lincoln has sailed through the Strait of Hormuz and into the Gulf without incident after an earlier threat from Iran saying they would take action if any American carriers returned to the waterway. Iran commented on the military movement saying that it considered the deployment of carriers in the Gulf as routine activity, backing away from their earlier claim.

· China has urged calm and restraint in the dispute between Sudan and South Sudan over a transit fee that threatened to cut off crude exports from the country.

· South Sudan will announce plans for an oil export pipeline through East Africa next week, a priority for the new nation because its crude is "no longer safe" in Sudan, according to a government spokesman.

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

Commodity

WTI Nymex

OTC Spot Gold

Level

98.46

1674.48

Change (NYSEARCA:USD)

-1.93

7.82

LOOKING AHEAD

Economic Releases

CST

GMT

DATA

EXP

PREV

0900

1500

EU

Eurozone Consumer Sentiment M/M (Jan A)

-21.4

-21.1

Speakers

0545

1145

GE

German Chancellor Merkel hosts Belgian PM Di Rupo

1000

1600

EU

Euro-Area Finance Ministers Meet in Brussels

1100

1700

EU

German Chancellor Merkel Gives Speech on 10 years of the Euro

1130

1730

EU

German Chancellor Merkel to Meet with EU's Barroso , Van Rompuy

1200

1800

UK

BoE's Posen

Auctions

0745

1345

FR

EUR 8.3bln combined 13-, 24- & 50-week T-Bill Auctions

0830

1430

EU

ECB Announces Bond Purchases

0845

1445

UK

BoE Asset Purchase Facility GBP 1.7bln 2015-2021 Gilt Purchases

1000

1600

US

Fed's Outright Trea. Coup. Purch. Aug'22-Feb'31 (USD 1.5-2.0bln)

1030

1630

US

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

                 

**Note:

Chinese Market Holiday

'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 1222GMT