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Daily US Opening News And Market Re-Cap: January 24
From RanSquawk
- Greek PSI talks are ongoing. The Greek Conservative Leader Samaras has said he expects the bond swap deal to be completed by March 5th.
- UK Debt reaches the GBP 1tln mark for the first time.
- European equities are trading negatively following French bank downgrades and underperforming earnings reports from the Telecommunications sector.
Market Re-Cap
Despite German and French Manufacturing and Services PMI data outperforming expectations, European equity indices are trading down at the mid-point of the European session on extended concerns over the still-not-settled Greek PSI agreement.
Further downward pressure on German markets came from Siemens’ earnings report earlier this morning, with the company missing their revenue targets and foreseeing a difficult economic environment for them in Q2 of this year.
In UK news, despite an unexpected fall in government spending, UK debt has topped the GBP 1tln mark for the first time.
US Headlines
BarCap US Treasury month end extension seen at +0.01yrs.
Looking forward to the rest of the session, Richmond Fed Manufacturing Index is due at 1500GMT, as well as API inventories later on in the afternoon.
Asian Headlines
Bank of Japan has forecast that their economy will contract in this current fiscal year, but they have kept monetary policy steady at 0-0.1%, further forecasting that the economy will make a steady recovery later in the year fuelled by exports to emerging markets. (RTRS)
EU and UK Headlines
Comments from the Greek Conservative leader Samaras have highlighted March 5th as a completion date for the bond swap deal. (RTRS)
EFSF’s Regling has said an S&P downgrade will not reduce the EFSF’s lending capacity. Regling went on to say that they have obtained about EUR 60bln in commitments for EFSF co-investment funds. (Sources)
The Eurogroup agreed on an ESM based on a Finnish proposal according to the Finnish finance ministry. The Finnish finance ministry highlighted concerns that the fund would be allowed to make loans without unanimous consent from the governments. The ESM is to include a reserve fund when emergency voting is used with the ESM deal set to be signed on Jan 30th. (Sources)
Following European Manufacturing & Services PMI outperforming expectations, this failed to prevent European markets from falling, with all European indices trading down at this point amid the ongoing Greek PSI agreement troubles.
Eurozone PMI Manufacturing M/M (Jan A) 48.7 vs. 47.2 (Exp. 46.9)
Eurozone PMI Services M/M (Jan A) 50.5 vs. Exp. 49.0 (Prev. 48.8)
German Manufacturing PMI (Jan A) M/M 50.9 vs. Exp. 49.0 (Prev. 48.4)
German Services PMI (Jan A) M/M 54.5 vs. Exp. 52.6 (Prev. 52.4)
French PMI Manufacturing M/M (Jan P) 48.5 vs. Exp. 49.0 (Prev. 48.9)
French PMI Services (Jan P) 51.7 vs. Exp. 50.4 (Prev. 50.3)
UK government borrowing data came in with a surprise fall in spending, however UK debt has topped the GBP 1tln mark for the first time in history.
UK Public Finances (PSNCR) M/M (Dec) 22.9bln vs. Exp. 19.0bln (Prev. 10.6bln)
UK Public Sector Net Borrowing M/M (Dec) 10.8bln vs. Exp. 12.1bln (Prev. 15.2bln, Rev. 15.1bln)
UK Public Sector Net Borrowing ex Interventions M/M (Dec) 13.7bln vs. Exp. 14.9bln (Prev. 18.1bln, Rev. 17.9bln)
EQUITIES
European equities are trading in negative territory at the mid-point of the European session with Financials showing the largest fall following S&P action on French banks Credit Agricole, Societe Generale and Groupe BPCE, downgrading the three banks one notch to single-A with a stable outlook. (Sources)
Further focus in the equity markets fell on Industrials, with German market participants placing their attention on Siemens, who have missed revenue targets and foreseen a difficult economic environment for Q2 this year.
The Telecommunications sector has been troubled by KPN who announced a 63% drop in Q4 income, causing shares to fall by as much as 9.7%, the largest drop since 2008. (Sources)
Siemens
-Q1 Net from continuing ops EUR 1.36bln vs. Exp. EUR 1.47bln.
-Q1 Sales EUR 17.9bln vs. Exp. EUR 18.28bln. (Sources)
Top performing sectors in BE500: Utilities (+0.86%), Health Care (-0.02%), Consumer Goods (-0.50%)
Worst performing sectors in BE500: Financials (-2.38%), Industrials (-2.26%), Technology (-1.84%)
Index DAX CAC FTSE EUROSTOXX SMI
Level 6371.2 3301.04 5737.64 2413.33 6093.25
Change (ticks) -65.42 -37.38 -44.92 -28.11 -34.42
FX
Major currency pairs this morning are trading relatively flat following USD index strength earlier in the session, however these losses have been pared, EURUSD continues to trade around the 1.3000 level a touted intraday option expiry.
BarCap’s Chief interest rate strategist has said he expects the EURUSD 1.2000. (Sources)
The Japanese government have commented on the volatility of their FX markets saying that excessive movements in FX is bad for their economy and they will monitor the markets closely, taking decisive steps when needed. (Sources)
The Turkish central bank has said that from Jan 25th Forex selling auctions are to be halted. (Sources)
COMMODITIES
Both Brent and WTI Crude are trading down at this point in the European session due to a slightly stronger USD index and further European concerns over a Greek PSI agreement that is yet to arise. Iran have come under further sanction warnings from Australia and the UK which have said that if necessary, additional forces can be sent to the Gulf to ensure shipping remains uninterrupted.
Oil & Gas News:
• US President Obama is to encourage US booming natural gas output in his State of the Union address, while defending his administration’s energy record, according to reports.
• A boom in US oil production could raise US domestic crude output by a fifth over the next decade, helping to slash the country’s dependence on foreign oil imports, according to a report by the US Energy Information Administration.
• South Sudan has started shutting down oil production amid a deepening dispute with its northern neighbour, Sudan, over transportation fees for its exports.
• India refiners are seeking renewed Iranian oil supply deals.
Geopolitical News:
• UK Defence Secretary Hammond has said the UK will send additional military forces to the Persian Gulf if necessary to keep the Strait of Hormuz open for shipping.
• The Australian Foreign Minister, Rudd, has said Australia will follow the EU in banning imports of Iranian oil.
• Saudi Arabia has promised Spain that it will make up for supplies of oil it loses as a result of EU sanctions on Iran and at the same price, according to the Spanish Foreign Minister.
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State of Confusion speech tonight, comrades.
There's a whiff of a rumor, more like a stench, that Obama may announce a deal re: the morgage crisis. I emailed and called my state attorney general urging him not to participate and emailed the WH to derail any deal that doesn't first involve full investigation and the threat of prosecution for the worst actors.
I have a relatively new TV and don't want to break it when I trow something at it. I think I'll go to the movies.
Watching the Rep debate last night was enough torture for the week.
Republican voters are so disgusted with their choices that they will vote for Obama in frustration. The Democrats are so discusted with Obama that they won't vote at all.
Wanta Bet?
pick a number, any number, everyone is a winner with imaginary numbers.
If we keep grading on a curve, sooner or later the curve will have us back at the beginning.
Starting all over again.
Baltic Dry Index: 807
Head for the hills?
I will also bet that Obama announces a big break thru with the Republicans on OIL, Canada, and the Gulf of Mexico which may include Florida.
In the national interest of course.
In other nwes: If it were not for all the folks who are NOT paying on their mortgages, there would be no damn GDP spending number at all.
BOYCOTT India and China goods.
It's put up or shut up time for economic growth. Tis true...interest rates fall as the economy slows...but so does credit creation. At some point those interest rates must rise to compensate for ill-founded and downright delusional policies. That includes the current batch of LENDING policies. None of this is good for banks btw. Being in these here parts you all may proceed to celebrate!