Daily US Opening News And Market Re-Cap: August 12

Tyler Durden's picture

From RanSquawk

  • Countries including France, Italy, Spain and Belgium imposed a short-selling ban, which helped financials
  • According to sources, Chancellor Merkel may not be able to keep her promise of getting changes to the EFSF before end-September
  • The 10-year yield in Italy fell below 5% and in France fell below the 3% level, demonstrating that ECB’s SMP bond-buying programme may be working
  • CHF weakened across the board partly on the back of market talk that the SNB was conducting currency swap operations via small Swiss corporate banks

Market Re-Cap
 
Volatility continued across European equities in early trade supported by a short-selling ban imposed by countries including France, Italy, Spain and Belgium. However, prices came under pressure following news that Chancellor Merkel may not be able to keep her promise of getting changes to the EFSF before end-September, together with lower than expected GDP data from France. As the session progressed, appetite for risk emerged as the dominant theme as equities moved higher, led by financials, whereas the Eurozone 10-year government bond yield spreads tightened across the board, with aggressive narrowing witnessed in the French/German spread. This was supported by market talk of the ECB buying in the Italian and Spanish government debts, with the 10-year yield in Italy falling below 5% and France below the 3% level. Elsewhere, CHF weakened across the board partly on the back of market talk that the SNB was conducting currency swap operations via small Swiss corporate banks. Also, a weakening USD-Index supported EUR/USD and GBP/USD, whereas the latter received further boost following an upward revision to the UK's construction output data, which is said to add 0.1% to country's Q2 GDP. The release of Project Merlin data showing an enhanced lending by UK banks in Q2 as compared to Q1 helped the GBP currency further.
 
Moving into the North American open, markets look ahead to key economic data from the US in the form of retail sales, business inventories, and University of Michigan confidence report. Fed's Dudley and President Obama are also scheduled to speak later in the session.
 
Asia Headlines:
 
Japan’s government cut its economic growth forecast for the current fiscal year to 0.5% from 1.5% to reflect the slump in factory output after a magnitude 9.0 earthquake, tsunami and nuclear meltdown in March, the Cabinet said. Japan’s recovery from natural disaster faces growing risks from an uncertain global economic outlook and rising JPY, nevertheless, the government expects the economy to grow 2.7% – 2.9% next fiscal year. Japan will aim to keep its ceiling for new borrowing unchanged next fiscal year, the government said. (RTRS)
 
•    Japanese Industrial Production (Jul F) M/M 3.8% vs. Prev. 3.9%
•    Japanese Industrial Production (Jul F)Y/Y -1.7% vs. Prev. -1.6%
•    Japanese Capacity Utilisation (Jun) M/M 5.2% vs. Prev. 12.8% (RTRS)
 
US Headlines:
 
Fed’s balance sheet expanded to USD 2.856tln in the week ended Aug 10th from USD 2.851tln in the week ended Aug 3rd. Also, foreign central banks’ holding of US marketable securities at the Fed rose USD 3.823bln in the week ended Aug 10th to stand at USD 3.476tln. (RTRS)
 
EU and UK Headlines:
 
A ban on short-selling financial stocks in four European countries including France takes effect today, a co-ordinated attempt to restore confidence in a market hit by rumours and higher borrowing costs. France, Italy, Spain, Belgium imposed a ban which will vary in detail depending on the country, the European Securities and Markets Authority (ESMA) said. France will ban short-selling on 11 financial stocks for 15 days, Spain will protect 16 stocks for 15 days, while Belgium will ban short-selling for 4 financial stocks for an indefinite period. Italian regulator Consob introduced a 15 day short-selling ban of financial stocks, covering 20 companies in the banking and insurance sector. (RTRS/Sources)
 
In other news, according to UK’s ONS, construction output rose by 2.3% quarter-on-quarter, faster than the 0.5% estimate used to calculate preliminary GDP data released last month. Year-on-year construction output grew by 0.8%, rather than contracting by 1.4%. The ONS also said that the upward revision to construction output will add 0.1% to UK’s Q2 GDP estimate. (RTRS)
 
•    French GDP (Q2 P) Q/Q 0.0% vs. Exp. 0.3% (Prev. 0.9%)
•    French GDP (Q2 P) Y/Y 1.6% vs. Exp. 1.6% vs. Exp. 2.0% (Prev. 2.2%, Rev. to 2.1%)
•    French CPI (Jul) M/M -0.4% vs. Exp. -0.3% (Prev. 0.1%)
•    French CPI (Jul) Y/Y 1.9% vs. Exp. 2.2% (Prev. 2.1%) (RTRS)
 
EQUITIES
 
Volatility continued across European equities in early trade supported by a short-selling ban imposed by countries including France, Italy, Spain and Belgium. However, prices came under pressure following news that Chancellor Merkel may not be able to keep her promise of getting changes to the EFSF before end-September, together with lower than expected GDP data from France. As the session progressed, appetite for risk emerged as the dominant theme as equities moved higher, led by financials, and moving into the North American open equities continue to trade in positive territory, with outperformance seen in the Eurozone peripheral indices.

FX
 
CHF weakened across the board partly on the back of market talk that the SNB was conducting currency swap operations via small Swiss corporate banks. Also, a weakening USD-Index supported EUR/USD and GBP/USD, whereas the latter received further boost following an upward revision to the UK's construction output data, which is said to add 0.1% to country's Q2 GDP. The release of Project Merlin data showing an enhanced lending by UK banks in Q2 as compared to Q1 helped the GBP currency further.

COMMODITIES
 
After trading lower in early European trade, WTI and Brent crude futures came off their worst levels as the USD-Index weakened.
 
Oil & Gas News:

•    Indian finance minister said India has paid the first instalment of oil import debts to Iran.
•    According to reports from Bernstein & Co, Saudi Arabia may start cutting oil output to achieve prices of at least USD 85 per barrel to keep spending levels sustained.
 
Geopolitical News:

•    Syrian forced killed at least 19 people in raids near the Lebanon border and in the country’s Sunni tribal heartland, activists said. Washington said sanctions were needed on Syria’s oil industry. European states warned of tougher UN response, however, Russia, and China opposed UN sanctions against Assad.
•    Libyan rebels said they had captured part of oil town of Brega while their forces in the West pushed toward Zawiyah, trying to get within striking distance of Gaddafi’s capital.
•    South Korea’s navy rescued three North Korean fishing boats and seven fishermen after the vessel drifted over a disputed border in the West Sea, a military official said.

Full report:

Daily Us Opening News