Daily US Opening News And Market Re-Cap: October 4
- Both the ECB and BoE keep their monetary policy on hold; alongside expectations. Attention now turns to the Draghi press conference due at 1330BST/0730CDT.
- News that Greece's next aid tranche could be delayed until after the ECOFIN meeting on November 12th accelerates European stock's slide from a higher open.
- FOMC September minutes due at 1900BST/1300CDT; expected to show Bernanke's rationale behind extending bond purchases.
Markets were in sleep mode for most of the session, ahead of the BoE monetary policy decision, as well as the ECB’s press conference where the President is unlikely to outline any new measures and instead reiterate that the ECB stands ready to do whatever is necessary. The BoE held both their rates and asset purchase target unchanged, however it is widely expected that the central bank will boost the facility by another GBP 50bln in November. Today’s supply from both Spain and France was easily absorbed by the market, both were supported by the recent decline in bond yields. Going forward, apart from digesting comments from Draghi, market participants will get to see the release of the latest weekly jobs report, durables revisions and the minutes from the FOMC.
The Nikkei 225 closed higher by 0.9% at 8,824 in a reversal of the recent trends seen over the past few days as participants look ahead optimistically to central bank releases from the ECB and FOMC today. Additionally, the JPY weakened overnight, assisting Japanese exporters off the low levels seen in recent weeks. (RANsquawk)
HSBC cut its Chinese 2012 GDP growth forecast overnight to 7.8% from 8.0%; Raised 2013 GDP growth forecast to 8.6% from 8.5% on expectations of Chinese stimulus. (Newswires)
After the first US Presidential debates the latest CNN poll shows 67% believe Romney won the debate with 25% for Obama. (CNN) The conclusion of the debate and the performance of Romney was said to have been behind the move higher in US stock futures overnight.
EU & UK Headlines
Issuance from the Spanish Tresor is easily absorbed, selling to the top of the indicative range, with average yields coming in below previous auction, as the short-end of the Spanish curve continues to benefit from expectations that Spain will eventually request aid from the European powers.
Reports suggest that the decision on the next aid tranche for Greece could be delayed, as the Greek government and the Troika continue to struggle to find a common ground over the right austerity mix ahead of next week's Eurozone finance minister's meeting. (Newswires/RANsquawk)
After opening sharply higher, equities have come under selling pressure and moved into minor negative territory heading into the North American crossover, as reports that the Greek program could be, once again, delayed weighed on stocks. Basic materials and oil & gas sectors lead the way lower, however financials are seen modestly higher on the session, as participants look ahead to the key ECB press conference.
German carmakers are performing strongly, despite the lower DAX, as Daimler's Mercedes-Benz unit reports September car sales rising 2.4% over the month, and confirm the unit is on track for a new full-year sales record. As such, a number of German carmakers are outperforming the downbeat market, with BMW and Volkswagen seen higher by over 1.2% apiece.
Even though spot EUR rate edged higher, lack of risk appetite and near-term risk events including the ECB press conference supported implied vols. Gamma buying was also evident in GBP/USD, with the spot trading around 1.6100. The BoE kept the benchmark borrowing rate and the APF unchanged, as expected. However, the MPC will likely sanction a further QE next month. (RANsquawk)
WTI and Brent crude futures are trading higher ahead of the NYMEX pit open, recovering modestly from the steep losses seen in yesterday's US session. Energy prices are also being supported by the latest news from Syria, as the Turkish government moves closer to using military force beyond their country's border. Spot gold and silver prices are reflecting the moves higher across the broader commodities market, trading higher by over 0.5% apiece. The next key risk event for the energy complex comes with the EIA Natural Gas Storage Change numbers as well as the FOMC September minutes. (RANsquawk)