This page has been archived and commenting is disabled.
Daily US Opening News And Market Re-Cap: October 8
From RanSquawk
- All eyes remain on the Eurogroup who are set to discuss Greece, Spain as well as the European Stability Mechanism's official launch.
- Global growth fears continue to weigh on stock futures on both sides of the pond as the World Bank cuts their 2012 and 2013 Chinese growth forecasts.
- Columbus Day looks to keep markets quiet, with the US bond markets closed.
Market Re-Cap
Risk averse sentiment dominate the session, as market participants looked forward to the latest European finance ministers meeting who are due to discuss Spain’s finances, as well as Greece, which is yet to formalise spending cuts in order to receive the next aid tranche. Reports that China's economic growth is expected to have slowed to 7.5% in Q3 from 7.6% in Q2 weighed on basic materials and industrials stocks. The World Bank cut its 2012 GDP forecast for China to 7.7% from 8.2%; 2013 to 8.1% from 8.6%. Uncertainty surrounding the never-ending sovereign debt crisis in Europe weighed on financials, and in turn translated into lower 3m EURUSD cross currency basis. Peripheral bond yields rose, with Italy underperforming, ahead of the supply later on in the week. Going forward, given the Columbus Day holiday across the pond, trade volumes are expected to be below the average.
Asian Headlines
As China returned to market following their five-day Golden Week market holiday, the overnight Asian session was notably risk-off, with the World Bank as well as local Chinese press highlighting the residual weakness of the Chinese economy. Additionally, participants remained jumpy ahead of the EU finance ministers meeting today, where they are expected to make little progress towards a solution for the flagging Greek and Spanish economies. As such, the Shanghai Composite and Hang Seng Index both closed lower. The Nikkei 225 was closed overnight, with a Japanese market holiday keeping volumes light. (RANsquawk)
Chinese HSBC services PMI bounced off its 1yr low to 54.3 from 52.0 in September.
China's economic growth is expected to have slowed to 7.5% in Q3 from 7.6% in Q2, and the government is expected to step-up fine tuning and introduce more interest rate cuts. (China Securities Journal) Elsewhere, The World Bank cut its 2012 GDP forecast for China to 7.7% from 8.2%; 2013 to 8.1% from 8.6%.
EU & UK Headlines
German Industrial Production SA (Aug) M/M -0.5% vs. Exp. -0.6% (Prev. 1.3%, Rev. to 1.2%)
German Industrial Production NSA WDA (Aug) Y/Y -1.4% vs. Exp. -1.6% (Prev. -1.4%, Rev. to -1.3%)
The German government has said Greek reforms deserve respect and are only possible through hard work, and Germany stands by their time-frame in the Greek Memorandum of Understanding. (Newswires)
Alongside the general risk-off tone, the Italian borrowing costs have suffered, with the Italian-German 10yr bond yield spread wider by around 2.5bps heading into the North American crossover, however the Spanish debt markets are not reflecting the moves, as expectations that the country is to receive sovereign aid remain heightened. As such, the Spanish equivalent is actually seen tighter on the day, as the Spanish borrowing costs have declined since mid-morning. (RANsquawk)
Equities
European equities opened lower and have remained in the red throughout the morning, retracing the moves seen in the wake of Friday's surprising US Unemployment report, as safe havens remain in favour ahead of the Eurogroup meeting set for later today. In terms of sectors, financials and basic materials are leading the way lower, in-fitting with the risk-off theme as the somewhat defensive stocks are slightly more shielded from the losses, albeit all ten sectors are in the red. US stock futures are mimicking the moves in their European counterparts, indicating a lower open on Wall Street today. (RANsquawk)
The slowdown in the global economy and anaemic US recovery is expected to result in the worst US quarterly earnings season since late 2009.
FX
EUR/USD trended lower, with shorter dated vols picking up ahead of the Eurogroup meeting. Even though option bias remains tilted towards EUR puts, there is a risk of an extended move higher (short squeeze) should the statement from the latest Eurogroup meeting indicate an agreement to provide Greece with more aid. GBP/USD also trended lower and is trading in close proximity to its intraday option expiry level at 1.6030, down almost 100pips at last check. USD/JPY is lower, after stops were tripped on the break of 78.50 and then at 78.25. (RANsquawk)
Commodities
WTI and Brent crude futures trade lower amid generally risk-off sentiment across the asset classes, with fears towards China being renewed by the World Bank cutting their 2012 and 2013 growth forecasts for the country. Additionally, the safe haven flows in the FX markets have strengthened the USD, weighing on commodities pricing. Similar moves are being observed in spot gold and silver prices, both seen lower on the day. The rest of the session looks to remain quiet due to some selective market closures over the Columbus Day holiday. (RANsquawk)
- 3190 reads
- Printer-friendly version
- Send to friend
- advertisements -


furst