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Daily US Opening News And Market Re-Cap: April 2

Tyler Durden's picture




 

From RanSquawk

  • Bundesbank says continues to accept all Eurozone sovereign bonds.
  • Eurozone Unemployment Rate (Feb) M/M 10.8% vs. Exp. 10.8% (Prev. 10.7%).
  • UK Manufacturing PMI (Mar) M/M 52.1 vs. Exp. 50.7 (Prev. 51.2, Rev. 51.5)

Market Re-Cap
 
European cash equities are seen mixed as the market heads into the US session, with the DAX index the only bourse to trade higher at the midpoint of the European session. European markets were seeing some gains following the open after the weekend release of better than expected Chinese manufacturing data, however the main price action of the day occurred after some European press reports that the Bundesbank had stopped accepting sovereign bonds as collateral from Portugal, Ireland and Greece garnered attention, however the Bundesbank were quick to deny reports and state that it continues to accept all Eurozone sovereign bonds. Following the denial, participants witnessed a slight bounceback, but failed to push most markets into the green.
 
Data releases from Europe so far have been varied, with outperformance seen in the UK Manufacturing PMI, beating expectations and recording its highest reading since May of 2011. However, the French manufacturing PMI came in below expectations, weighing on the CAC index as the session progresses. A further release from the Eurozone has shown February unemployment coming in alongside expectations recording a slight increase from January to 10.8%.
 
Looking ahead in the session, markets await the latest ISM Manufacturing and Prices Paid data for the US, due on the wires at 1500BST.
 
Asian Headlines
 
Chinese Manufacturing PMI (March) M/M 53.1 vs. Prev. 51.0 (RTRS) China looks to have cooled fears of a “hard landing” for its economy with robust manufacturing data on Sunday. (FT-More)
 
China’s Q4 current-account surplus fell 30% to USD 60.5bln from USD 86.4bln the previous year. (RTRS)
 
The Bank of China has published a report on the Chinese economy for Q2 2012 which forecasted growth of 8.4% in GDP and 3% in CPI. The possibility of a "hard landing" of Chinese economy is very small. (Xinhua)
 
Japanese Tankan Large Manufacturers Index (Q1) Q/Q -4 vs. Exp. -1 (Prev. -4)
Japanese Tankan Non-Manufacturing (Q1) Q/Q 5 vs. Exp. 5 (Prev. 4)
Japanese Tankan Large Manufacturing Outlook (Q1) Q/Q -3 vs. Exp. 2 (Prev. -5)
Japanese Tankan Non-Manufacturing Outlook (Q1) Q/Q 5 vs. Exp. 6 (Prev. 0)
Japanese Tankan Large All Industry Capex (Q1) Q/Q 0.0% vs. Exp. 0.8% (Prev. 1.4%) (Sources)
 
**Note: Chinese Market Closed
 
EU and UK Headlines
 
EU calls for IMF to boost its war chest. (FT-More) European leaders said they believed the EUR 200bln increase in their fiscal rescue fund agreed on Friday would be enough to persuade non-eurozone countries that Europeans had “done our homework” and lead them to supplement eurozone efforts by building their own global firewall against contagion.
 
Following the EcoFin meeting in Copenhagen on Friday, ECB's Asmussen said the Eurogroup had taken a significant decision and ECB is satisfied with decision, but exploring the establishment of a special Eurozone bank resolution fund is also an option. ECB’s Nowotny said the firewall is ‘sufficient’, ‘reasonable’ and ‘workable’. (RTRS)
 
Greece received Eurogroup approval to withhold payment to private sector creditors who are planning on holding out on the bond swap of the country’s foreign-law bonds, estimated to hold some EUR 6bln, according to two people with close knowledge of the matter. (Sources)
                                                    
Spanish Economy Minister Guindos said a Spanish bailout has never been on the table, and Spain is not seeking emergency financing for its banks, calling the idea "absurd". He added that the EU had given a positive response to the budget so far. (RTRS/Times)
 
German Finance Minister Schaeuble expects Germany’s budget deficit to narrow to 0.9% of GDP. The nation’s total debt will rise to 82.1% of GDP purely because of additional payments to the ESM. (Focus/Spiegel/Sources) It has also been reported that The G-20 and EU are pressuring Germany to avoid reducing its budget deficit too fast so that the country can continue to be Europe’s “engine of growth”.  In other news, Germany will save EUR 30bln in interest payments on government bonds through 2016 because interest rates are so low.
 
Italian PM Monti has said that he has decided not to ask for capital support from the EFSF. (Sources)
 
Manufacturing PMI data for Europe was mixed, with some strong performance seen from the UK, recording its highest reading since May 2011. Underperformance was noted in the French release, weighing down on the CAC index as the session progresses.
French Manufacturing PMI (Mar) M/M 46.7 vs. Exp. 47.6 (Prev. 47.6)
German Manufacturing PMI (Mar F) M/M 48.4 vs. Exp. 48.1 (Prev. 48.1, Feb Prev. 50.2)
Eurozone Manufacturing PMI (Mar F) M/M 47.7 vs. Exp. 47.7 (Prev. 47.7)
UK Manufacturing PMI (Mar) M/M 52.1 vs. Exp. 50.7 (Prev. 51.2, Rev. 51.5) (Sources)
 
Eurozone Unemployment Rate (Feb) M/M 10.8% vs. Exp. 10.8% (Prev. 10.7%) (Sources)
 
Japan’s Kokusai Asset Management has said it remains reluctant to reinvest in Italian and Spanish bonds on concerns over credit downgrades. (RTRS)
 
EQUITIES
 
European equities opened higher today following the release of better than expected Chinese manufacturing data over the weekend, however, the main price action of the day occurred when some Irish press reports garnered attention claiming that the Bundesbank were not accepting sovereign bonds from Portugal, Ireland and Greece. European equities sold off sharply, however a swift statement from the German Central Bank saying that all Eurozone sovereign bonds continue to be accepted allowed markets to bounce back slightly, however markets failed to rebound into positive territory with the exception of the DAX index.
 
In individual equity news, IAG are outperforming the rest of the FTSE index, with reports over the weekend speculating that the company may be eyeing Malaysia’s state-owned carrier to create one of the world’s most powerful aviation groups. (Daily Mail) IAG shares currently trade up 1.1%.
 
For Spanish stock Repsol, their YPF unit is set to have control taken over by the Argentina’s government. The government may decide to renationalise the firm or intervene in its administration, according to reports. Following the news, Repsol shares, alongside the IBEX index, trade lower by 1.9%. (Upstream)
 
Top performing sectors in the BE500: Health Care (+0.67%), Technology (+0.13%), Consumer Goods (+0.09%)
Worst performing sectors in the BE500: Financials (-1.85%), Utilities (-0.99%), Telecommunications (-0.54%)

FX
 
GBP/USD has seen some support progressing through the session following the release of stronger than expected UK manufacturing PMI data and is up around 25pips on the day. Additionally there was some market talk earlier in the session of Middle Eastern names on the bid in the pair, however this remains unconfirmed.
 
USD/JPY is seen on a downward trend as North America comes to market, with market talk of bids in the pair between 82.50-55 with stops touted on a break of these levels to the downside, however this also remains unconfirmed.
 
EUR/USD is seen roughly flat on the session but did see some fluctuations earlier in the session as it sold off most of its gains following the reports from the Irish press regarding the Bundesbank not accepting certain sovereign bonds. The pair failed to bounce bank after the Bundesbank stated they still accept all Eurozone sovereign bonds and now trades in close proximity to a touted option expiry at 1.3350 for the NY cut.

COMMODITIES

WTI and Brent Crude futures were trading higher in the session following better than expected manufacturing PMI figures from China, however as we move towards the US open, the energy complex is making losses on the day moving in tandem with European equities as concerns arise over the state of European sovereign bonds.
 
Oil & Gas News:

•   Iraq’s autonomous Kurdish region has halted its exports of oil as of Sunday, claiming the central government has withheld payment to companies working in the region for 10 months. Following this, Iraq’s crude exports from northern oil fields have dropped to 300,000BPD.
•   Iraqi March oil exports ran at an average of 2.317MBPD, the highest since 2003.
•   The closure of the Yemen liquefied natural gas terminal, after its feed pipeline was blown up last week, is expected to cut its super-cooled gas exports by about four cargoes.
•   India is looking to buy more gas and oil from Qatar as Indian refiners cut their imports from Iran.
•   Qatar is currently producing 720-730,000BPD of oil and is running “flat out” in crude and LNG production, according the Qatari oil minister.
 
Geopolitical News:

•   A former Iranian negotiator has said that the nuclear stand-off between Iran and the West could be ended if the US and Europe recognize Tehran’s right to enrich uranium.
•   President Obama decided that there is enough global supply of non-Iranian oil to move forward on sanctions on countries that buy Iranian oil, according to two US congressional sources.
•   North Korea has criticized US food aid suspension over its planned rocket launch, calling it an “overreaction”, and warned the US that it would render the February deal null and void.
•   At least three Japanese companies including two refiners will not lift any Iranian crude in April, according to sources.
•   White House officials have said the US held constructive discussions with South Korea on reducing their imports of Iranian oil.

 

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