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Daily US Opening News And Market Re-Cap: March 16

Tyler Durden's picture




 

From RanSquawk

  • A Euroarea official has said the Euroarea may decide on a EUR 692bln firewall.
  • German Chancellor Merkel has reiterated that she is opposed to raising the ESM ceiling beyond EUR 500bln.
  • IEA official says has received no contact concerning an oil release.
  • Market awaits US CPI data at 1230GMT.

Market Re-Cap
 
Ahead of the US open, markets are exhibiting some modest risk appetite, with all major European bourses trading higher, and financials outperforming all other sectors.
 
There has been little in the way of key data from Europe, however we have seen the Eurozone Trade Balance coming in alongside expectations in the seasonally adjusted reading.
 
Bund futures continue to move lower in recent trade as US participants come into the market, with the 10-year German yield crossing the 2% level to the upside, trading at a level not seen since the 10th February. Bunds may also have experienced some pressure following the release of a research note from a major US bank recommending rotation trade with the selling of bonds and the buying of equities.
 
USD/JPY is seen trading higher ahead of the US open following the overnight release of some relatively dovish BoJ minutes, with commentary suggesting further easing in Japan in the future.
 
Taking a look at the energy complex, The IEA have commented on yesterday’s speculation concerning the use of the US’ Special Petroleum Reserve, stating that they have not received any contact regarding any emergency oil release. As such, WTI and Brent crude futures are seen higher; however they have seen some selling off in recent trade.
 
Looking ahead, market participants await US CPI data, due at 1230GMT.
 
US Headlines
 
Fed’s Lacker has said that current economic conditions are unlikely to warrant exceptionally low rates through late 2014, with a rise in interest rates likely to be necessary at some point in 2013. (Sources)
 
Asian Headlines
 
The BoJ has released the minutes for its February 13-14th meeting, showing that all board members agreed to up asset purchases through the buying of JGBs, however the board highlighted that this is not tantamount to monetization. Some members of the board have commented that the bank’s new system of communication makes it clear that it has further easing in mind. (Sources)
 
 
EU and UK Headlines
 
IMF representatives said that the Greek debt-to-GDP ratio is now projected to be 116.5% by 2020, which is lower than initially expected, and Greece may return to the debt markets as early as 2015, but the country still faces important challenges on fiscal issues. (RTRS) Furthermore, they said there is no room for “slippages” by Greece in the new IMF programme, and failure to reach the agreed economic targets would result in an unsustainable dynamic.
 
The UK government intends to cut income tax for the country’s highest earners, and will announce details in the next week’s annual budget, according to government sources. (Guardian) UK Chancellor Osborne is likely to use his budget to announce he is reducing the top rate of income tax from 50% to 40%, according to the same sources. However, it is worth noting that other reports are claiming a cut to 45%. (FT-More) However, it should be noted that a UK PM spokesperson has stated that these reports remain speculative and the government will not comment on budget measures ahead of the release next week. (Sources)
 
UK Chancellor Osborne has warned that credit easing alone will not provide the finance necessary for growth. (FT-More) Director-General of the BCC has urged ministers to create a state-owned bank specifically for lending to SMEs.
 
There has been little in the way of key European data, with the Eurozone Trade Balance coming alongside expectations in the seasonally adjusted figure.
Eurozone Trade Balance SA (EUR) (Jan) M/M 5.9bln vs. Exp. 6.0bln (Prev. 7.5bln, Rev. 7.4bln)
Eurozone Trade Balance (EUR) (Jan) M/M -7.6bln vs. Exp. -3.0bln (Prev. 9.7bln, Rev. 9.1bln) (Sources)
 
A high-ranking Brussels official has said the Euroarea may decide on a EUR 692bln firewall; however there remains some resistance from certain nations. The official further commented that other firewall options are on the table and added that Greece could earn a third bailout if conditions are met.
However, German Chancellor Merkel has stated that she remains opposed to lifting the EUR 500bln ESM ceiling. (Sources)
 
EQUITIES
 
Most European bourses trade in positive territory ahead of the US open, with some modest risk appetite observed in the financials sector.
 
In individual equity news, Tullow Oil is outperforming the rest of the Oil & Gas sector following news that it has encountered a significant quantity of oil in very good quality sandstone reservoirs in Ghana. Tullow Oil shares currently trade higher 3.87%.
 
Banca Monte dei Paschi  remain a particularly volatile stock, with overnight news that speculative parties concerning a 4% stake in the company will have to present their offers today. It also emerged during the session that the bank’s main shareholder is seeking a total sale of 12-13% stake in the bank, according to sources. This has pushed shares down 2.83%.
 
Analysts at Citigroup have noted that in the FTSE 100; dividends, buybacks and mergers & acquisitions will further support returns and the index should double over the next 10 years. (Citigroup/Sources)
 
Top performing sectors in the BE500: Consumer Services (+0.76%), Financials (+0.74%), Basic Materials (+0.62%)
Worst performing sectors in the BE500: Health Care (-0.19%), Utilities (+0.11%), Telecommunications (+0.11%)

FX
 
USD/JPY remains on positive trend following the overnight release of some dovish minutes from the BoJ’s February monetary policy meeting. The pair may see further volatility as we progress through the session with unconfirmed market talk of offers in place from the 84.00 as well as US CPI data due at 1230GMT.

COMMODITIES
 
WTI crude and Brent futures are trading higher ahead of the US open following a volatile session yesterday amid speculation concerning the release of the US Strategic Petroleum Reserve. The US and UK have denied there will be an imminent release, but have announced that they are considering its use to ease fuel prices in the US election year.
 
Oil & Gas News:

•   Britain is poised to cooperate with the US on a release of strategic oil stocks in a bid to prevent fuel prices from choking economic growth in a US election year, according to two British sources. UK PM Cameron said that no decision has been made as yet, but commented that assessing the situation is necessary. Details of the timing, volume and duration of an emergency release are yet to be settled.
•   Selling oil from the US' Strategic Petroleum Reserve to bring down gasoline prices would harm national security and limit the country's ability to respond to a possible supply disruption later in the year, a spokesman for US Senator Murkowski has said.
•   The IEA have said they have not received a request for any emergency oil release, adding that Europe’s oil & gas import bill is as serious as Greek debt.
•   China’s shale gas output is set to reach 6.5BCM in 2015, according to a government five-year shale gas development plan.
•   China have started the construction of the Jinzhou underground state petroleum reserve storage facility.
 
Geopolitical News:

•   The US military are set to double the number of minesweeping ships in the Persian Gulf to bolster US defences in the region.
•   North Korea have planned to launch a long-range rocket carrying an operational satellite, sparking regional condemnation that it is in violation of a UN resolution. Japan, South Korea and the US have voiced their concerns on the launch.
•   Japan, South Korea and global ship insurers are lobbying EU officials to revise planned sanctions against Iran to allow Europe’s insurance market to continue to cover Iranian oil shipments to Asia, according to industry sources.
 

 

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