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Daily US Opening News And Market Re-Cap: April 5

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From RanSquawk

  • Risk aversion observed across the asset classes as markets move into the Easter weekend and participants remaining concerned towards Spain’s debt crisis. Spanish/German 10yr back above 400BPS, first time since late November 2011.
  • EUR/CHF briefly broke below 1.2000 on some platforms, the SNB reiterated its stance that it remains committed to the floor.
  • German Industrial Production SA (Feb) M/M -1.3% vs. Exp. -0.5% (Prev. 1.6%)

Market Re-Cap
 
European equities are taking losses as North America comes to market, with particular underperformance noted in the periphery bourses. Risk-aversion pushed both Spanish and Italian yields higher, with the spread between the Spanish 10-year and the Bund crossing above 400BPS for the first time since Late November 2011. The yields have now come off their highs but still remain elevated. It should be noted that markets are generally light today heading into the Easter weekend as investors take risk off the markets, so large surges in volumes have been observed.
 
In the FX markets, EUR/CHF briefly broke below the SNB’s staunchly defended 1.2000 level on some exchanges, but uncertainty remains over the exact low due to different exchanges registering different prints. Needless to say, all exchanges witnessed a 30pip spike upwards in the cross with significant demand seen pushing the cross away from the floor. EUR/CHF now trades around the 1.2020 level.
 
Data releases today have been disappointing, with German Industrial Production coming in at -1.3% for February, below expectations of -0.5%. Some analysts have noted the adverse weather conditions for February weighing down on construction levels in the country. The UK have failed to continue their run of expectation-beating data, coming in alongside consensus for Industrial Production in February and below expectations on the yearly reading.
 
The BoE have also kept their benchmark rate as well as the quantity of their Asset Purchase Facility on hold at 0.5% and GBP 325bln respectively, alongside market expectations.
 
Market now awaits the weekly employment data from the US.
 
Asian Headlines
 
Chinese HSBC Services PMI (Mar) M/M 53.3 (Prev. 53.9) (Sources)
 
US Headlines
 
Climbing rents for apartments are combining with a continued decline in home prices to push once-reluctant buyers into finally taking the plunge, according to economists and real estate agents, helping what appears to be a good start to the housing industry’s all-important spring selling session. (WSJ)
 
US consumers are having an easier time paying debt, according to the American Bankers Association. (RTRS) The ABA recorded timely repayments improved on all 11 of the consumer loan categories tracked in Q4 last year.
 
The US 10-year has now retraced all its losses made since the release of the FOMC minutes on Tuesday. (RANsquawk)
 
EU and UK Headlines
 
A poor reading for German industry worsened market sentiment, recording contractions in both the monthly and yearly readings.
German Industrial Production SA (Feb) M/M -1.3% vs. Exp. -0.5% (Prev. 1.6%)
German Industrial Production NSA WDA (Feb) Y/Y -1.0% vs. Exp. 0.5% (Prev. 1.8%) (Sources)
 
UK Industrial Production (Feb) M/M 0.4% vs. Exp. 0.4% (Prev. -0.4%, Rev. -0.6%)
UK Industrial Production (Feb) Y/Y -2.3% vs. Exp. -2.1% (Prev. -3.8%, Rev. -4.0%) (Sources)
 
The BoE have held their benchmark interest rate at 0.5% and kept the Asset Purchase Facility unchanged at GBP 325bln, alongside analyst expectations. The minutes of the meeting will be published at 0930BST on Wednesday 18th April 2012. (RTRS)
 
The IMF enabled the disbursement to Portugal of EUR 5.17bln following the third Troika review and also noted the 'good progress' made by the country in regards to programme implementation. (RTRS)
                                                    
Some of Portugal’s municipalities may need to restructure their debt once the government determines the exact amount they owe, according to a spokesman for the Parliamentary Affairs Minister Miguel Relvas. (Sources)
 
Fitch said the Irish government's decision to settle its March 31st EUR 3.06bln promissory note instalment by delivering a government bond, rather than cash, is neutral for the sovereign's finances. But it may herald a fuller restructuring that delivers medium term benefits. (Sources) The rating agency commented that the financial burden of recapitalizing banks would remain with Ireland, as the move essentially replaces one form of government obligation with another.
 
The Greek finance minister has said that EUR 20.2bln foreign law and SOE bonds are to be included in the swap deal, with the exchange set to be completed on April 11th. Greece have extended the second leg debt swap deadline for foreign law bonds to April 20th. (Sources)
 
Italian PM Monti’s government has softened plans to reform the labour market in the face of opposition from the main trade union and the centre-left Democratic party, as it hopes to win swift passage through parliament for its controversial legislation while maintaining cross-party unity. (FT-More)
 
EQUITIES
 
Flight from risk dominates the European markets today with participants remaining concerned with the periphery, evident in the losses shown by Mediterranean banks in the morning so far. As such, Banca Monte dei Paschi, Banco Popolare and UniCredit are some of biggest losers of the session so far with many banks having their shares intermittently disrupted by limit down halts.
 
Stock weakness is also observed in German industry, following a disappointing reading for German Industrial Production. In particular, carmaker Daimler is making heavy losses, with the effects compounded by the company going ex-dividend. Daimler shares now trade lower by 5.11%.
 
One of the few European stocks making gains in the session is LVMH, who earlier reported that their Q1 sales growth was to be above the levels reported in Q4 of last year, signalling growth in the company. Following the news, company shares currently trade higher 1.50%.
 
Top performing sectors in the BE500: Health Care (-0.23%), Oil & Gas (-0.31%), Consumer Goods (-0.32%)
Worst performing sectors in the BE500: Utilities (-1.33%), Financials (-1.26%), Telecommunications (-0.77%)

FX
 
EUR weakness is observed across the board amid concerns over contagion from the ongoing debt woes in Spain.
 
The EUR weakness weighed down on EUR/CHF to such an extent that the cross briefly broke below the SNB’s staunchly defended 1.2000 level on some exchanges, but uncertainty remains over the exact low due to different exchanges registering different prints. Needless to say, all exchanges witnessed a 30pip spike upwards in the cross with significant demand seen pushing the cross away from the floor. Following the moves, the SNB reiterated its stance that it is committed to buying foreign exchange in unlimited quantities to defend the floor on EUR/CHF.
 
The flights to safety in the currency markets are observed with both USD and JPY strength across the board as North America comes to market.

COMMODITIES
 
WTI and Brent crude futures are trading higher ahead of the US open, recovering from losses made yesterday following the unexpected build in crude inventories at yesterday’s DOE report. Energy market participants look ahead to the weekly EIA Natural Gas Storage Change data, expected to show a build of 34BCF.
 
Oil & Gas News:

•   Iraq has resumed pumping on the Kirkuk-Ceyhan pipeline following reports of explosions on the export passage. A Turkish energy official reports that an explosion on one of the two pipelines led to a large fire, shutting oil flows on the passage. A security official, however, said that there were three simultaneous explosions at separate points along the line. At first, one of two pipelines was affected and then both flows were stopped following the blasts, according to another energy official. An Iraqi North Oil Company source had claimed that the oil export rate from the pipeline will be unaffected by the bombings because of reserves held at the Turkish port.
•   Iran has blocked sales of oil to two Greek companies, Hellenic Petroleum and Motor Oil Hellas after they failed to make payments, according to Iranian state press.
•   North Sea Brent crude oil loadings set at 135,000BPD in May, according to a trade source.
 
Geopolitical News:

•   US Secretary of State Clinton has said that the time for diplomacy with Iran is not infinite and that all options remain on the table.
•   Key ship insurer, China P&I club, will drop indemnity coverage for tankers carrying Iranian oil to abide by tightening Western sanctions.
 

 


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