Daily US Opening News And Market Re-Cap: January 20
- Greek PSI deal comes closer to a conclusion, bondholder haircuts could be announced today.
- General Electric (GE) misses revenue target, trades down 3.5% in pre-market.
- Cautious sentiment ruling European markets, all European indices tipping into negative territory.
European indices as well as major currency pairs are trading in slight negative territory at the midpoint of today’s session due to profit-taking and cautious sentiment dominating the market, with the worst performing sector being Oil & Gas showing volatile trading this morning.
In European macro news, Greek PSI talks are closer to coming to a conclusion, with a source saying that the haircut announcement is likely to be today.
A US foreclosure deal may be reached in February, with mortgage servicers possibly facing as much as USD 25bln in fines and penalties. (NY Post)
Looking forward to the rest of the session, Canadian CPI data is due to be released as well as US Existing Homes Sales.
HSBC Flash China Manufacturing Survey (Jan) M/M 48.8 vs. Exp. 48.7 (Sources)
RTRS Japanese Tankan Manufacturing Index -5 (Jan) M/M vs. Prev. -5
RTRS Japanese Tankan Non-Manufacturing Index 6 (Jan) M/M vs. Prev. 6 (RTRS)
EU and UK Headlines
A draft ESM treaty stated that the combined lending capacity of ESM/EFSF would remain at a minimum of EUR 500bln. Countries could only apply for ESM help if they started ratification of the fiscal compact treaty and that the treaty will come into place when countries representing 90% of subscribed capital had approved it. Additionally the draft noted that collective action clauses will be introduced in all new Euro-zone bonds one month after the ESM treaty enters into force. The fund also comments that it sees bond losses as ‘exceptional’. (RTRS)
According to a source, Greece has edged closer towards an agreement on the PSI talks, with the bondholder haircut announcement possibly being announced today. Greek Finance Minister Venizelos has said that debt swap talks will resume at 1730GMT. (Sources)
Spain is to enact deficit law approved in September by the end of March. The law will limit the entire public sector to structural deficits of 0.4% of GDP with debt of 60%, a wage-bargaining system based on productivity gains, consolidation of 40 different types of employment contracts into one for full-time workers and another for part-time workers and finally, a pledge that taxpayer money will not be used to pay for additional financial legislation regulation. (WSJ)
EU’s Barnier has said that the European economy is facing stagnation in the coming months. However, Europe has the absolute will to take the needed crisis measures and that the EU can survive the crisis and even emerge stronger. (Sources)
Due to profit-taking sentiment, markets are displaying cautious activity this morning. Particular market fluctuations today came from the Italian banking sector, with UniCredit shares being suspended several times this morning following news that Italian banks (and in particular UniCredit) were the biggest users of the special three-year funding mechanism launched by the ECB in December. (FT-More)
Other volatile European stocks included ThyssenKrupp, who reported their Q1 results to be well below Q1 of 2011. Shares in the company have recovered from a 4.5% drop and are currently trading down 0.5%.
Vodafone are performing strongly today following the announcement that there is no need to refer a company tax case to a larger bench, with Indian authorities refunding a INR 25bln cash deposit made by the company.
Top performing sectors in BE500: (Consumer Goods +0.59%), Telecommunications (+0.38%), Financials (+0.32%)
Worst performing sectors in BE500: Oil & Gas (-1.81%), Basic Materials (-1.08%), Utilities (-0.85%)
Earnings released today include General Electric missing their revenue target, pushing their shares downwards, currently trading -3.5% in the pre-market.
General Electric (GE) Q4 Op. EPS USD 0.39 vs. Exp. USD 0.38
- Q4 revenue USD 37.97bln vs. USD 40.04bln
- sees restructuring dividend from GE capital to GE this year
- GE capital earned USD 1.6bln. up 58% for quarter
- Q4 net USD 3.73bln vs. Exp. 4.02bln
- GE Capital earned USD 1.6bln for Q4
- Q4 infrastructure orders up 15%
- Q4 energy infrastructure revenue USD 12.99bln
Most major currency pairs are trading down today due profit-taking sentiment and cautious market behaviour. This activity has pushed EUR/USD down.
EUR/USD is currently trading in close proximity to a touted option expiry at 1.2900, potentially causing some FX market activity later in the session.
Major economic releases today include UK Retail Sales data coming in line with expectations, showing modest growth, but failing to strengthen GBP/USD by any significant amount.
WTI and Brent are trading in negative territory this morning, coming down to intraday lows, with WTI Crude pushed below the USD 100/B level for most of the session so far, arising from profit-taking and cautious sentiment being the main theme of the European markets, which in turn boosted the USD.
Oil & Gas News:
• Nigeria will produce another oil industry bill for submission to the parliament within 30 days according to the Petroleum Minister Alison-Nadueke.
• Japan has asked the US to be flexible on the tougher regime of sanctions covering imports of Iranian crude that were signed into law on December 31st by US President Obama. Japan's Minister of Economy, Trade and Industry Edano also said that Japan’s imports of Iranian crude oil are on the decline, and the trend will continue.
• French President Sarkozy has commented further on the Iranian sanctions saying that there is a need to halt Iran oil purchases and freeze Central Bank holdings, reiterating that a military solution must be avoided. Sarkozy has further appealed to Russia and China for full cooperation on this matter.