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DAILY US OPENING NEWS - 28/02/12

· ECB's Nowotny says no need for ECB base rate to move below 1% at the moment.

· S&P's Kraemer has said the outlook on the Eurozone remains negative.

· ECB temporarily suspends use of Greek debt as collateral.

· RANsquawk European Morning Briefing Video: http://youtu.be/vTmxgFue1LQ

Market Re-Cap

Stocks advanced as market participants looked forward to tomorrow's 3yr LTRO by the ECB where the street expects EU banks to borrow around EUR 400-500bln. All ten sectors traded in positive territory for much of the session, however less than impressive demand for the latest Italian government paper saw equity indices lose some of the upside traction. Of note, the ECB allotted EUR 29.469bln in 7-day operation, as well as EUR 134bln for 1-day in bridge to 3yr loans. In other new, although Portugal's finance minister announced the country has passed its 3rd bailout review by the EU/IMF, this did not stop S&P's Kraemer saying that if there is a probability of default, it is higher in Portugal than in any other Euro-Zone country.

US Headlines

Going forward, the latter half of the session sees the release of the latest Durable Goods report, S&P Case-Shiller housing data, as well as the Consumer Confidence report for the month of February.

Asian Headlines

Japanese Retail Sales rose 1.9% in January from a year earlier, the second straight monthly increase. The figures show that the growth was driven by automobile sales, which jumped 24.3% from a year earlier. (Sources)

Chinese economic growth is likely to stop slowing in the second half as export growth stabilizes with a global economic recovery, according to a senior researcher at the Development Research Center of the State Council. (Shanghai Securities)

EU and UK Headlines

S&P downgraded Greece to Selective Default (NYSE:SD) from 'CC'. S&P said that the downgrade followed the Greek government's retroactive insertion of collective action clauses (CACs). However, if the debt exchange is completed as expected, S&P will raise Greece's credit rating to 'CCC'. (RTRS)

-S&P have said they believe Greece would face imminent outright payment default if an insufficient number of bondholders accept the exchange offer.

The EFSF outlook was changed to negative from developing by S&P; 'AA+' ratings affirmed. (RTRS) S&P concluded that credit enhancements sufficient to offset what they view as the reduced creditworthiness of EFSF guarantors are not likely to be forthcoming. The negative outlook on the long-term rating also mirrors the negative outlooks of France and Austria.

The ISDA is to make a decision on Greece CDS triggers by 1700 GMT, Wednesday February 29. (FT Alphaville-More) The ISDA announced that a question relating to the Hellenic Republic has been submitted to the EMEA Determinations Committee. The ISDA will decide whether to accept the question for deliberation or reject it.

The ECB have temporarily suspended the use of Greek debt as collateral, reflecting the Greek debt ratings in the light of the PSI agreements. (Sources)

Standard & Poor's Managing Director Kraemer has commented that the outlook on the Eurozone remains negative, adding that the ECB's LTRO is not a substitute for reforms, but it does help in the immediate term. (Sources)

The ECB's Nowotny has said there is no need for ECB's key interest rate to move below 1% at the moment, adding that the ECB is concerned about the long-term effects of loans. (Sources)

German regional February CPI figures are due for release today, with Hesse, Brandenburg, Bavaria and Saxony reporting yearly CPI higher than the previous readings, with the German preliminary national reading expected at 1300GMT. (Sources)

EQUITIES

European markets are trading in positive territory ahead of the North American open with some renewed risk appetite pre-empting tomorrow's ECB 3-year LTRO.

In individual equity news, Peugeot continue to attract attention following reports that they may sell a 7% stake to General Motors, however a Peugeot spokesman has declined to comment. Company shares currently trade up 6.8%. (Sources)

Barclays have been blocked from implementing two 'highly' abusive tax schemes that could have cost the UK treasury GBP 500mln despite the banks new code of practice in which it pledged not to engage in tax avoidance. Although the Barclays CEO has said the change in tax law will have no material impact, company shares currently trade down 1%. (FT-More)

Bayer reported a below expected net for Q4 before the European market open, however reported a beat on sales for the same period. The company foresee a slight increase in underlying earnings in 2012 and stable pharmaceuticals sales for the year. Company shares are down 1%. (Sources)

Lower performing stocks today include Whitbread, whose Premier Inn unit has reported slowing sales growth in a tough market for UK hotels. Company shares currently trade down 2.3%. (Sources)

Top performing sectors in the BE500: Technology (+0.82%), Consumer Goods (+0.57%), Utilities (+0.51%)

Worst performing sectors in the BE500: Health Care (+0.04%), Oil & Gas (+0.04%), Industrials (+0.18%)

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6878.47

3456.29

5926.17

2522.12

6143.23

Change (ticks)

28.87

14.84

10.62

9.06

-0.69

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

FX

EUR/USD is trading in positive territory ahead of the North American open amid market talk of Russian names buying the pair, however this remains unconfirmed.

EUR/SEK has seen some volatility earlier in the session following a spike lower after the release of better than expected retail sales and higher than expected PPI data from Sweden.

Japanese Finance Minister Azumi has reiterated his stance to the G20 that Japan will take decisive steps as needed on the JPY. (Sources)

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3448

1.5848

80.46

Change (pips)

0.0050

0.0024

-0.1500

COMMODITIES

WTI crude is trading without direction following the European open with Brent futures down around USD 1.00 on the day heading back towards USD 123.00. Focus remains on the debt situation in Greece and participants await the release of API data due after the NYMEX pit close.

Oil & Gas News:

· TransCanada have said they will build the Southern leg of its USD 7bln Keystone XL pipeline first, removing a pinch-point that has led to deep price discounts for US and Canadian crude and forced refiners to rely more heavily on imports.

· Oil exploration activity in the North Sea fell by half last year to only 15 wells, the lowest level since the mid-1960s, according to the trade body Oil & Gas UK. Meanwhile, annual production has declined 18%, three times the average fall registered in recent years. The body have said up to 3bln BOE could be unlocked if the UK government announces the right incentives at next month's budget.

· Qatar have agreed to supply 3.5mln MT per year of liquefied natural gas to Pakistan, according to a Special Assistant to the Pakistani Prime Minister.

Geopolitical News:

· India is considering taking a sovereign guarantee for Indian ships taking Iranian crude from July this year, according to India's Shipping Secretary.

· Iran's Foreign Minister Salehi has said there are two ways to deal with Iran's 'peaceful nuclear programme' - either engagement or confrontation. The minister further commented that Iran does not seek confrontation, adding that he is confident in the peaceful nature of the country's nuclear programme.

Commodity

WTI Nymex

OTC Spot Gold

Level

108.32

1779.48

Change (NYSEARCA:USD)

-0.24

11.80

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

LOOKING AHEAD

Economic Releases

CST

GMT

 

DATA

EXP

PREV

0700

1300

GE

Consumer Price Index M/M (Feb P)

0.5%

-0.4%

0700

1300

GE

Consumer Price Index Y/Y (Feb P)

2.1%

2.1%

0730

1330

US

Durable Goods Orders M/M (Jan)

-1.0%

3.0%

0730

1330

US

Durables Ex Transportation M/M (Jan)

0.0%

2.1%

0730

1330

US

Goods Orders Non-Def Ex Air M/M (Jan)

-1.3%

2.9%

0755

1355

US

Redbook W/W (Feb 24)

 

1.4%

0755

1355

US

Redbook Y/Y (Feb 24)

 

2.9%

0800

1400

US

S&P Case-Shiller 20 City SA M/M (Dec)

-0.40%

-0.70%

0800

1400

US

S&P Case-Shiller Compos. 20 Y/Y (Dec)

-3.60%

-3.67%

0800

1400

US

S&P Case-Shiller US HPI % Y/Y (Q4)

-4.30%

-3.90%

0800

1400

US

S&P Case-Shiller HPI M/M (Dec)

137.17

138.49

0800

1400

US

S&P Case-Shiller US HPI Q/Q (Q4)

 

130.39

0900

1500

US

Consumer Confidence M/M (Feb)

63.0

61.1

0900

1500

US

Richmond Fed Manuf. Index M/M (Feb)

13

12

1530

2130

US

API US Crude Oil Invent W/W (Feb 24)

 

3551K

1530

2130

US

API Cush Crude OK Invent W/W (Feb 24)

 

-344K

1530

2130

US

API US Distillate Inventory W/W (Feb 24)

 

630K

1530

2130

US

API US Gasoline Inventory W/W (Feb 24)

 

314K

1545

2145

NZ

Building Permits M/M (Jan)

3.4%

2.1%

1815

2315

JN

Markit/JMMA Manuf. PM M/M (Feb)

 

50.7

1850

2350

JN

Industrial Production M/M (Jan P)

1.5%

3.8%

1850

2350

JN

Industrial Production Y/Y (Jan P)

-1.6%

-4.3%

N/A

N/A

GE

CPI - Baden Wuerttemberg M/M (Feb)

 

-0.4%

N/A

N/A

GE

CPI - Baden Wuerttemberg Y/Y (Feb)

 

2.2%

N/A

N/A

GE

CPI - North Rhine-West M/M (Feb)

 

-0.4%

N/A

N/A

GE

CPI - North Rhine-West Y/Y (Feb)

 

1.8%

 

Speakers

0800

1400

EU

EU's Almunia speaks at EU Parliament's Internal Market Panel

0900

1500

US

Fed's Duke testifies on housing

1130

1730

SZ

SNB's Jordan speaks in Zurich

1200

1800

EU

EU's Barroso speaks in Brussels

1200

1800

US

Committee on Ways and Means, Obama's Budget Hearing

1300

1900

UK

BoE's Tucker speaks in London

 

Auctions

0845

1445

UK

BoE APF GBP 1.5bln 2027-2060 Gilt Purchases

0930

1530

UK

DMO Announcement of 0.75% '34 IL Gilt and conventional '17 Gilt

1000

1600

US

Fed's Out. Trea. Coup. Purch. May'20-Feb'22 (USD 4.25-5.0bln)

1030

1630

US

USD 60bln 4- and 7-Week Bill Auctions

 

Earnings

UK

Schroders

EU

Bouygues

SZ

N/A

US

Ecolab, FirstEnergy

                 

Prices taken at 1221GMT

'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.