Daily US Opening News And Market Re-Cap: January 26
- European Indices are trading in positive territory as Greek debt-swap talks are seen to be progressing. At 1800GMT, the IIF’s Dallara and Greek PM Papademos are scheduled to meet in Athens.
- Iran have announced they may cease exporting oil to Europe in a move to pre-empt Western oil sanctions. However, Iranian President Ahmadinejad has said Iran are ready for nuclear talks with the world powers.
- Nokia shares trading higher following Q4 corporate earnings earlier this morning where the EPS non-IFRS exceeded expectations.
Riskier assets advanced today, as market participants reacted to yesterday’s FOMC statement, as well as reports that Greece is making progress in talks for a debt-swap deal. However despite a solid performance by EU stocks, German Bunds remain in positive territory on the back of reports that the ECB has ruled out taking voluntary losses on its Greek bond holdings but is now debating how it would handle any forced losses and whether to explore legal options to avoid such a hit according to sources. As such, should talks between private creditors and other governing bodies stall again, there is a risk that Greece may not be able to meet its looming financial obligations. Of note, Portuguese/German government bond yield spreads continued to widen today, especially in the shorter end of the curve.
BarCap US Treasury month end extension seen at +0.01yrs.
Looking forward to economic releases from the US today, Initial Jobless Claims and Continuing Claims data is due to be released at 1330GMT.
The Nikkei average pulled back from a three-month high, down 0.4%, as disappointing earnings from robot-maker Fanuc weighed on the index, while Tokyo Electric surged after sources said the troubled utility would agree to a USD 13bln bailout. (RTRS)
EU and UK Headlines
BarCap Pan Euro Agg month end extension seen at +0.12yrs.
10yr Bunds are trading in positive territory following reports that the ECB has ruled out taking voluntary losses on its Greek bond holdings but is now debating how it would handle any forced losses and whether to explore legal options to avoid such a hit. One source close to talks among ECB policymakers said that while France, Italy and the ECB board in Frankfurt were against accepting losses, some national central banks, which have expressed reservations over the bond purchases from the start, now accepted that losses may be unavoidable. (RTRS)
UK Prime Minister Cameron has urged Europe to be “bolder” to shake off its economic woes, saying it should explore free trade deals with the US and Africa. (Sources)
Moody's sees UK economy only growing by 0.7% in 2012, with UK interest rates remaining low and unemployment rising slightly to 8.5%. (Sources)
Poor CBI Reported Sales figures were released earlier today, coming in at -22 vs. Exp. -6 (Prev. 9). (RTRS)
European Indices are trading in strong positive territory in the first half of the European session following renewed optimism in progression of the Greek PSI deal as well as the FOMC announcement that their base rate is likely to remain at its current level for the medium-term future.
The Basic Materials sector is outperforming all others at this point following releases from Anglo American, reporting increases in iron ore and copper production as well as reports from Kazakhmys, announcing above expected levels of gold production. (RTRS)
Financials are trading up following announcements from the German Finance Minister that the SoFFin fund will only be used as a preventative medicine for Euro area contagion and will not be needed by German banks, which will be able to cover their own capital requirements. In other financial news, EU risk capital regulation on the insurance sector could face further delays, prompting further trading in financials. (FTD)
Nokia have released their earnings reports, showing higher than expected losses for Q4 of 2011 as well as cutting their dividend per share in half.
Nokia (NOK1V FH) Q4 EPS EUR 0.06 vs. Exp. EUR 0.04 (non-IFRS)
-4Q 2011 net sales EUR 10bln vs. Exp. EUR 10bln
-Cuts dividend to EUR 0.20 per share vs. Exp. EUR 0.19 per share from EUR 0.40 per share (RTRS)
Top performing sectors in BE500: Basic Materials (+2.26%), Financials (+1.54%), Technology (+1.46%)
Worst performing sectors in BE500: Health Care (+0.02%), Telecommunications (0.36%), Oil & Gas (+0.39%)
RBNZ Official Cash Rate Announcement (Jan) M/M 2.50% vs. Exp. 2.50% (Prev. 2.50%) (RTRS) As expected the RBNZ kept rates unchanged, with the central bank governor Bollard noting that financial market sentiment had improved slightly and inflation pressures are 'well contained'.
Goldman Sachs recommended going long EUR/USD in a research note with a stop on a close below 1.29 for an initial target of 1.38 due to improving EU macro data and a dovish Fed policy. (Sources)
Despite earlier market talk of real money accounts selling EUR/USD, the currency pair was boosted by reports that Greek debt-swap deal talks are progressing.
Heading into the North American open, WTI crude futures are trading higher on the back of a weaker USD and renewed sense of optimism over the Greek PSI deal.
Oil & Gas News:
• According to press reports, Iran has threatened to pre-empt the European oil embargo by halting crude exports to Europe. Hosseini, spokesman for the Iranian parliament’s energy committee has said that the drafted bill could come before parliament on Sunday. Separately, Iran lawmaker calls on OPEC to sanction Saudi Arabia on its output hike pledge.
• Libyan oil output rises to 1.3MPBD according to an NOC statement.
• Graham Hartnell, According to LNG and gas consulting firm Poten & Partners, A major demand-driven investment boom in LNG is likely toward the end of this decade, estimated at some USD 263bln.
• The US government sees early signs that Iran's economy has started to feel the pinch of international efforts to curb reliance on its petroleum exports, a State Department spokeswoman said on Wednesday.
• South Sudan have closed the taps on more than half of its oil output, heightening tensions with Sudan after failing to agree on how to share oil revenues between the two countries.