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DAILY US OPENING NEWS - 16/02/12

· EU's Juncker has said that substantial progress has been made following the Eurogroup teleconference and he is confident decisions will be made on Monday.

· A CDU lawmaker has said Germany will reconsider Greek aid support, adding that Greek criticism may impact the vote on aid.

· Iran has signalled it is ready to reopen negotiations with world powers on its nuclear program.

· Moody's have placed 109 European banks on review for downgrade, citing weakening sovereign creditworthiness.

· RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=nMNQsT0npnc

Market Re-Cap

Equities came under pressure today after Moody's placed long-term debt and deposit ratings on review at 109 European banks, citing weakening sovereign creditworthiness. In addition to that, SocGen reported less than impressive earnings, which saw profits fall nearly 90% due to write-downs on sovereign bond holdings, as well as a sizeable loss by its investment banking division. Uncertainty over the health of the EU banking system meant that the USD-LIBOR OIS spread held near to Wednesday's levels, while the 3-month Euribor fixing was only marginally lower. As a result, the financial sector underperformed throughout the session, closely followed by basic materials and industrials as commodity prices came under pressure on the back of a firmer USD. Of note, ECB's Liikanen said the ECB could cut rates further if such action was needed, however it is not currently on the agenda. Liikanen also stated that monetary policy was the central banks' most important tool and suggested exiting other policy measures as soon as possible.

However this may just prove necessary since earlier today ECB forecasters cut 2012 GDP projection to 0.1% vs. 0.8% growth in November forecast, while 2013 GDP projection was revised to 1.1% vs. 1.6% in the November forecast.

US Headlines

US foreclosure activity rose 8% to 66,542 in January suggesting the backlogged process is beginning to thaw, according to a report from RealtyTrac. (RTRS)

Going forward, the latter half of the session sees the release of the latest PPI report, as well as various housing data. Of note, the US Treasury will publish the details of next week's 2y, 5y and 7y note auctions.

Asian Headlines

China should cap their contribution to the EFSF at EUR 92.6bln, the same contribution as Spain, according to a researcher with the Chinese Academy of Social Sciences. (Shanghai Securities News)

EU and UK Headlines

Following the Euro-group conference call, EU's Juncker said that substantial further progress has been made and is confident the Eurogroup will make decisions on Monday. (RTRS)

-Juncker added that the Troika has presented its debt sustainability report and the Greek government, along-side the Troika have identified extra budget moves, however further considerations are needed on specifics.

The Troika needs a permanent presence in Greece with authority according to a Euro-zone government source. (RTRS) The source also suggested an Escrow account would ensure Greece gives priority to debt servicing and would be needed before Europe can proceed.

A Greek finance ministry official has said Greece is to accept stepped up loan oversight as part of the October decisions made last year. The official also played down the issue of an escrow account as a technical issue. (Sources)

A German CDU lawmaker has said today that lawmakers will reconsider Greek aid support, adding that Greek criticism may impact the vote. (Sources)

British consumers became more confident about their prospects in January on the back of diminished pessimism about the outlook for the economy and the jobs market. The report cites falling inflation and price cuts at the UK's big energy suppliers relieving pressure on household budgets.

-Nationwide Consumer Confidence (Jan) M/M 47 vs. Exp. 40 (Prev. 38) (Sources)

EQUITIES

European indices have been facing downwards pressure this morning following overnight moves from Moody's, placing 109 European Banks on review for a downgrade. Moody's have cited weakness in sovereign creditworthiness as the driving factor behind these decisions.

The financial sector is underperforming ahead of the North American open following Moody's actions as well as below estimated corporate earnings from SocGen and Axa. SocGen have reported a 90% decrease in losses following sovereign debt writedowns as well as a loss from its investment banking unit of EUR 482mln. However, SocGen are facing a possible downgrade of 1 notch, compared with a downgrade of 2 or more notches at other European banks. After an initial loss following earnings, company shares currently trade +0.7%. AXA have also shown a below-expected set of corporate earnings, with 2H net EUR 325mln vs. Exp. EUR 1.93bln, adding that Greek debts are now behind the company. Following this, company shares trade down -2.4%. (Sources)

The basic materials sector has also been trading in negative territory with a strengthening USD index weighing down on the sector's equities.

The Spanish IBEX has been suffering heavier losses than its European counterparts following the news that the Spanish securities regulator has lifted the short-selling ban. (Sources)

Top performing sectors in the BE500: Consumer Goods (-0.31%), Technology (-0.38%), Oil & Gas (-0.52%)

Worst performing sectors in the BE500: Financials (-1.65%), Basic Materials (-1.49%), Industrials (-1.26%)

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6681.61

3365.42

5845.23

2464.87

6180.23

Change (ticks)

-76.33

-24.93

-46.93

-29.09

-18.11

**Note:

SMI February options expiry (1620GMT/1020CST)

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

FX

EUR/USD currently trades in negative territory amid risk-averse sentiment following Moody's actions overnight as well as the release of the ECB's quarterly professional forecasts. GDP growth figures for the Eurozone have been revised down since the last report in November, predicting lower than previous GDP growth for 2012 and 2013. (Sources)

GBP/USD has been trading in negative territory most of the European session so far, however it has been supported by better than expected consumer confidence data overnight from Nationwide. (Sources)

SEK has experienced some volatility earlier in the session, following a cut in interest rates from the Swedish Central Bank as well as a downwards revision in GDP forecasts for the country and an unexpected dip in CPI. The initial move after the announcement was 200 pip spike in EUR/SEK. (Sources)

The Swiss Economic Minister has said the CHF is over-valued, adding that the market will need intervention at EUR/CHF 1.2000 for a few more months. This is part of continued commentary on the currency pair and did not move markets. (Sources)

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2982

1.5670

78.78

Change (pips)

-0.0084

-0.0023

0.3500

COMMODITIES

Markets are trading with a general risk averse tone ahead of the North American open with concerns still remaining over a Greek bailout deal. Following this, the USD index is strong on the session, weighing down upon WTI crude futures.

Oil & Gas News:

· China is seeking to increase crude oil imports from Russia above the 300,000BPD it receives via the East Siberia-Pacific Ocean pipeline, but Moscow has no plans "so far" to boost its flows of the blend to its neighbour, an official with Russia's Transneft pipeline operator has said.

· Uganda has unveiled a new bill to regulate the country's oil sector as it prepares for commercial oil production, the country's parliament said in a statement.

Geopolitical News:

· Iran has signalled it is ready to relaunch nuclear negotiations with world powers as Tehran responded to a letter from the EU's foreign policy chief, originally send in October.

· The chances of conflict in the Middle-East rose yesterday as Iran unveiled its latest nuclear advances. The developments are likely to strengthen the hand of Israeli hardliners who favour airstrikes within months to thwart Iran's alleged pursuit of nuclear weapons.

· The EU trade commissioner has brushed off the potential impact of any Iranian suspension of oil supplies saying that such a threat would not sway Europe from its opposition to Iran acquiring nuclear weapons.

· Iran's ambassador to Russia says Tehran will accept no preliminary conditions for potential nuclear talks with global powers.

· Amid rising tensions over Iran's nuclear program, the Japanese government is considering dispatching Self-Defense Forces to escort oil tankers in the event of a closure of the Strait of Hormuz, and conducting minesweeping operations in the region.

· Turkey's Koc Energy Group chairman said the group had held talks with U.S. officials about planned sanctions on oil purchases from Iran and asked if its oil refiner Tupras unit will be compensated for any losses.

· China said on Thursday it would send a senior diplomat to Syria as it steps up efforts to mediate in the Syrian crisis after being scolded by the West and many in the Arab world for vetoing a U.N. resolution calling for Syria's president to step down.

Commodity

WTI Nymex

OTC Spot Gold

Level

100.97

1715.99

Change (NYSEARCA:USD)

-0.83

-12.16

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

LOOKING AHEAD

Economic Releases

CST

GMT

 

DATA

EXP

PREV

0730

1330

US

Initial Jobless Claims (Feb 11) W/W

365K

358K

0730

1330

US

Continuing Claims (Feb 4) W/W

3490K

3515K

0730

1330

US

PPI (Jan) M/M

0.4%

-0.1%

0730

1330

US

PPI (Jan) Y/Y

4.1%

4.8%

0730

1330

US

PPI Ex. Food & Energy (Jan) M/M

0.2%

0.3%

0730

1330

US

PPI Ex. Food & Energy (Jan) Y/Y

2.7%

3.0%

0730

1330

US

Housing Starts (Jan) M/M

675K

657K

0730

1330

US

Housing Starts (Jan) M/M

2.7%

-4.1%

0730

1330

US

Building Permits (Jan) M/M

680K

671K

0730

1330

US

Building Permits (Jan) M/M

1.3%

-0.1%

0730

1330

CA

International Securities Transactions (Dec) M/M

10.00B

14.99B

0730

1330

CA

Manufacturing Sales (Dec) M/M

2.0%

2.0%

0900

1500

US

Mortgage Delinquencies (Q4) Q/Q

 

7.99%

0900

1500

US

MBA Mortgage Foreclosures (Q4) Q/Q

 

4.43%

0900

1500

US

Philadelphia Fed Manufacturing Survey (Feb) M/M

9.0

7.3

0930

1530

US

EIA Natural Gas Storage Change (Feb 10) W/W

-120

-78

 

Speakers

0800

1400

US

Fed's Bernanke on Community Banking (FOMC Voter)

0900

1500

US

US Treasury Secretary Geithner testifies on Budget

0900

1500

US

Fed's Kamin (FOMC Non-Voter)

0900

1500

US

US Treasury Under-Secretary Brainard

 

Auctions

1000

1600

UK

BoE Confirms Details of Following Week's APF Operations

1000

1600

US

Fed's Outright Trea. Coup. Purch. Feb'36-Feb'42 (USD 1.5-2.0bln)

1000

1600

US

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

1200

1800

US

USD 9bln 30-yr TIPS auction

 

Earnings

UK

N/A

EU

N/A

SZ

N/A

US

Applied Materials, Baidu, EOG Resources, PG&E

                 

**Note:

SMI February options expiry (1620GMT/1020CST)

Prices taken at 1240GMT