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DAILY US OPENING NEWS - 07/02/12

· Greek PM due to meet with party leaders some time after 1600GMT, according to Greek press.

· SNB says it will not tolerate EUR/CHF breaching the 1.2000 level.

· RBA unexpectedly hold base rate at 4.25%.

· RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=_xbimIsQx10

Market Re-Cap

Ahead of the North American open, European Indices are trading in negative territory following further deliberations over a Greek settlement, with a tentative meeting between the Greek PM and his respective Party Leaders scheduled for some time after 1600GMT as well as an underperforming Basic Materials sector following caution over the upcoming Glencore/Xstrata merger.

In foreign exchange news, the EUR/CHF currency pair has exhibited volatility following comments from the SNB's acting Chair Jordan. Jordan has committed the Central Banks' resources to preventing any further appreciation of the CHF adding that the SNB will buy unlimited amounts of Forex to defend the minimum level of 1.2000. Overnight, the AUD index has appreciated following an unexpected move by the RBA to hold its base rate at 4.25%, with many analysts expecting a drop in rates due to the global economic outlook and domestic job losses.

In terms of European economic releases, German Industrial Production data fell below expectations for the month of December, posting a 2.9% fall while the figure was expected to stay flat at 0.0%.

US Headlines

President Obama will release his budget plan next week, calling for USD 3trl in deficit reductions over 10 years, including USD 1.5trl in tax increases to fall mostly on the wealthiest Americans. (WSJ)

Senate votes 75-20 to approve the USD 63bln FAA bill setting in place four years of airport construction and repairs as well as an ambitious plan to replace the country's radar system. (Sources)

Data from the US later today will give a further insight into the US labour market with the JOLT figure for December expected at 1500GMT.

Asian Headlines

Japan's push to enter a broad Asia-Pacific trade pact known as the Trans-Pacific Partnership faces one of its toughest challenges this week in the form of Washington's approval. The Japanese pact is opposed by many American manufacturers and unions, but also those who do not believe Japan can deliver on its promises. (WSJ)

Fitch's Colquhoun has said a Chinese hard landing is potentially the biggest risk for global economy in 2012. These remarks have come following an IMF cut of Chinese growth forecasts to 8.25% from 9.0%. (Sources)

EU and UK Headlines

According to ekathimerini, the Greek PM is due to meet respective party leaders some time after 1600GMT to discuss new austerity measures required to meet the Troika's standards for a second bailout. (Sources)

European Commission Vice-President Kroes has said that a Greek exit from the Euro would not end the currency union, adding that there would be "absolutely no man overboard" if Greece was to leave the EMU. (NASDAQ:BBC)

German Industrial Production data posted earlier in the European session reported disappointing figures for the month of December, with analysts expecting no change, however the figures exhibited a significant decline.

German Industrial Production SA (Dec) M/M -2.9% vs. Exp. 0.0% (Prev. -0.6%, Rev. 0.0%)

German Industrial Production NSA WDA (Dec) Y/Y 0.9% vs. Exp. 4.3% (Prev. 3.6%, Rev. 4.4%) (Sources)

UK same store sales have fallen as consumer caution has returned to the UK economy, this caution has been reflected in the second worst January performance since the measure began 1995.

UK BRC Sales Like-For-Like (Jan) Y/Y -0.3% vs. Exp. 0.8% (Prev. 2.2%) (Sources)

EQUITIES

European equity markets are trading negatively ahead of the North American pulled downwards by the Basic Materials sector following news concerning the Glencore/Xstrata merger, with some shareholders, including Schroders PLC, intending to vote against the proposals. (Sources)

Despite weaker than expected revenues from GlaxoSmithKline which, in turn, weighed on the share price, the Health Care sector in Europe is showing modest gains due to defensive movements into the sector's stocks and away from the riskier assets.

GlaxoSmithKline Q4 ex-items EPS GBP 0.284 vs. Exp. GBP 0.283

- Q4 group revenue GBP 6.98bln vs. Exp. GBP 7.31bln

- Sees GBP 1-2bln share buyback in 2012

- Q4 dividend GBP 0.21

- Q4 consumer healthcare sales increased 3% to GBP 1.27bln

- Co. in active discussions to sell rest on non-core OTC.

Shire have advanced yesterday's gains amid further talk that the company is subject to takeover talks, with Bayer, Pfizer and AstraZeneca previously being linked to the company. (Sources)

The Consumer Goods sector is also suffering losses with Swatch Group exhibiting the largest percentage loss. The group published a set of corporate earnings that has "no positive surprises at all" according to a Swiss analyst. The company reported below expected operating profits and witnessed the largest share decline since November 21st. (Sources)

UBS have reported their corporate earnings for Q4 2011, showing unexpected underperformance for net profits and trading income, with the company saying that further tactical cost-cutting is limited and their revenue growth and net new money are facing significant headwinds. Following this, UBS are trading down ahead of the North American open. (Sources)

Top performing sectors in the BE500: Health Care (+0.58%), Utilities (-0.16%), Telecommunications (-0.49%)

Worst performing sectors in the BE500: Basic Materials (-1.38%), Industrials (-1.31%), Consumer Goods (-0.88%)

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6688.43

3380.74

5854.77

2486.99

6135.97

Change (ticks)

-76.40

-24.53

-37.43

-20.90

-11.06

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

FX

Statements from the SNB's acting Chair Jordan have reiterated the Swiss Central Banks' stance that it will not tolerate EUR/CHF breaching the 1.2000 level, and the SNB will buy unlimited amounts of Forex to prevent the CHF from appreciating further. (Sources)

AUD index has appreciated following announcements from the RBA that they will maintain their base rate at 4.25%. Most analysts had expected a fall in rates to 4.00% due to concern over the global economic outlook as well as domestic job losses. (Sources)

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3108

1.5806

76.81

Change (pips)

-0.0022

-0.0015

0.2600

COMMODITIES

Heading into the North American open, WTI and Brent crude futures are trading near the unchanged level as market participants await further clarity on debt swap talks in Greece.

Oil & Gas News:

  • Barclays sees WTI crude at USD 112/BBL and Brent Crude at USD 118/BBL in Q2 2012.
  • Exports of liquefied natural gas from the US will likely cause the domestic price of natural gas to increase minimally between 2015 and 2035, an Energy Information Administration (NYSEMKT:EIA) official said.
  • According to Iranian envoy to New Delhi, India is to pay 45% of its oil imports from Iran using INR and that Indian demand for Iranian oil is normal. Adds that Iran has no plans to extend discount on crude sales to India.
  • The Iranian oil minister yesterday placed a ban on licenses for foreign companies wishing to develop domestic petrochemical projects in Iran, Mehr news agency reported.
  • A Turkey energy official has said natural gas flow from Azerbaijan halted today and gas flows from Iran have declined. However officials noted that the cut in Azeri and Iranian gas supply are both due to a technical problem.

Geopolitical News:

  • Some 20,000 marines, seamen and air crews from half a dozen countries, a US nuclear aircraft carrier strike group and three US Marine gunship carriers are practicing an attack on a fictitious mechanized enemy division which has invaded its neighbour. It is the largest amphibian exercise seen in the West for a decade, staged to simulate a potential Iranian invasion of an allied Persian Gulf country and a marine landing on the Iranian coast. Based largely on US personnel and hardware, French, British, Italian, Dutch, Australian and New Zealand military elements are integrated in the drill.

Commodity

WTI Nymex

OTC Spot Gold

Level

96.14

1714.38

Change (NYSEARCA:USD)

-0.77

-5.97

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

LOOKING AHEAD

Economic Releases

CST

GMT

 

DATA

EXP

PREV

0645

1245

US

ICSC Chain Store Sales (Feb 3) W/W

 

0.1%

0645

1245

US

ICSC Chain Store Sales (Feb 3) Y/Y

 

3.9%

0730

1330

CA

Building Permits (Dec) M/M

1.0%

-3.6%

0755

1355

US

Redbook (Feb 3) W/W

 

-1.8%

0755

1355

US

Redbook (Feb 3) Y/Y

 

2.0%

0800

1400

EU

ECB Publish the Consolidated Financial Statement of the Eurosystem

   

0900

1500

US

JOLT Job Openings (Dec) M/M

3250

3161

0900

1500

US

IBD/TIPP Economic Optimism (Feb) M/M

48.6

47.5

1400

2000

US

Consumer Credit (USD) (Dec) M/M

7.000B

20.374B

1530

2130

US

API Crude Oil Inventories (Feb 3) W/W

 

2067K

1530

2130

US

API Gasoline Inventories (Feb 3) W/W

 

-222K

1530

2130

US

API Distillate Inventory (Feb 3) W/W

 

970K

1530

2130

US

API Cushing Crude OK Inventory (Feb 3) W/W

 

1482K

1750

2350

JN

Current Account Balance (Dec) Y/Y

-71.2%

-85.5%

1750

2350

JN

Trade Balance - BoP Basis (JPY) (Dec) Y/Y

-135.0B

-585.1B

 

Speakers

0650

1250

CA

BoC Dep. Governor Macklem

0730

1330

GE

German Economy Minister Roesler briefs reporters

0900

1500

US

Fed's Bernanke Testifies to Senate Budget Committee (Voter)

1200

1800

GE

German Chancellor Merkel speaks on the future of Europe

N/A

N/A

GR

Greek Party Leaders Meeting

 

Auctions

0930

1530

UK

DMO announce the size of 4.5% 2034 gilt for sale on Feb 16th

1000

1600

US

Fed's Outright TIPS Sale Jul'12-Jan'15 (USD 1.0-1.5bln)

1030

1630

US

Combined USD 61bln 4- and 52-Week T-Bill Auctions

1200

1800

US

USD 32bln 3-yr Note Auction

 

Earnings

UK

N/A

EU

N/A

SZ

N/A

US

Walt-Disney

                 

Prices taken at 1215GMT