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Daily US Opening News And Market Re-Cap: March 2

Tyler Durden's picture




 

From RanSquawk

  • The ECB’s overnight deposit facility received a record EUR 777bln from European Banks.
  • EU leaders sign the EU fiscal pact.
  • Half of the Greek bailout is delayed by the Eurogroup, saying further evidence of commitment to reform is needed from Greece.

Market Re-Cap
 
European indices are trading in minor positive territory ahead of the North American open with tentative risk appetite. This follows news that the EU leaders have signed off on the EU fiscal pact, with German Chancellor Merkel commenting that 25 out of 27 countries have signed the agreement.
 
The effects of the ECB’s LTRO continue to trickle through as the ECB announce they received record overnight deposits of EUR 777bln from European Banks.
 
Little in the way of data today, however UK construction PMI released earlier in the session recorded the highest rate of increase in new orders for 21 months.
 
In the energy complex, Brent futures have come down below USD 125.00 from yesterday’s highs with WTI echoing the movements, following market reaction to the confirmation that there were no acts of sabotage on Saudi pipelines yesterday, according to Saudi officials.
 
EUR-led currency pairs are trading down on the session, and USD/JPY continues to climb, hitting a 9 month high earlier today at 81.72.
 
US Headlines
 
Fed’s Williams has said that more stimulus may be needed if the recovery falters or if inflation falls below 2%. Williams has further commented that the best stimulus method would be mortgage bond buying. (Sources)
 
Asian Headlines 
 
Japanese National CPI (Jan) Y/Y 0.1% vs. Exp. -0.1% (Prev. -0.2%) (Sources)
The BoJ’s Shirakawa has said CPI is expected to gradually rise through 2012 and 2013. The central banker has said Japan will continue with easy monetary policy until prices are rising by 1%. (Sources)
 
The Japanese Finance Minister Azumi has said he hopes Europe will quickly agree to reinforce the firewall against the debt crisis. Azumi has further commented that Japan will consider continued buying of EFSF debt, however the country is not yet decided on its contributions to the IMF. (Sources)
 
A World Bank economist has said that Chinese growth may fall below the 8.4% previously forecast, citing the slowdown of the Chinese economy to be more rapid than expected. (Sources)
 
EU and UK Headlines
 
Eurogroup members have delayed the approval of more than half of the EUR 130bln bailout for Greece following demands for further proof that Greece is implementing spending cuts and reforms. (FT-More) The Eurozone Finance Ministers have requested a detailed assessment by the EU and the IMF by next week before handing over the remaining EUR 71.5bln. According to the article, many traders and investors still expect a credit event to be declared as soon as next week.
-Among issues to be resolved is a EUR 300mln gap that re-emerged when the Greek government changed the way in which unemployment benefits would be paid as well as a restructuring of the Greek bank ATEbank.
 
The EFSF agreements for Greece were signed officially at the EU Summit yesterday which are worth EUR 93.5bln, including EUR 30bln in debt swap sweeteners, EUR 35bln for collateral credit enhancement, EUR 23bln for Greek bank recapitalisations and EUR 5.5bln in interest carried. (Sources/RTRS) Alongside these comments, the Greek Finance Minister said it was too early for bondholders to declare PSI participation, but he expects their decision closer to the March 9th deadline.
 
The German finance minister Schaeuble said final decision on the second Greek bailout will be made during a teleconference on March 9th. (Sources) He added that the Greek bailout package now depends on the participation of the private sector.
 
EU Leaders have signed off on the long-awaited EU fiscal pact, with German Chancellor Merkel commenting that 25 out of 27 countries agreed and signed on the pact. (Sources)
 
The ECB have reported that EUR 777bln was deposited with it overnight, a record high in the ECB’s facility. (RTRS) This suggests a further trickling through of the effects of the LTRO, however participants may infer that the record deposits are evidence that the 3-yr loans are not being passed through to the real economy. Further evidence of the LTRO effect is present in the continued fall in the three-month Euribor fix, coming in at 0.948% today.
 
The recent rise in house price indices for the UK may be misrepresenting the UK housing market, with weakness in the North, flat prices in the South and rising prices focused in London. (FT-More) Analysts have also noted that recent so-called strength in mortgage lending is still at historically low levels and does not reflect demand and supply conditions.
 
EQUITIES
 
European equities were trading with modest risk appetite in the European morning, the financials sector were one of the strongest performing sectors; however they have taken moves into negative territory in recent trade.
 
Barclays have reported they took up EUR 8.2bln from the ECB’s LTRO, reassuring markets that the company has enough cash and liquidity to function successfully. Following the announcements, Barclays shares trade up 2.93%, being further pressed upwards by risk sentiment in the financials sector in the morning.
 
Veolia environment continue to trade strongly for the second day in a row following source comments that the Co. is in talks with Natixis SA’s Cube Infrastructure Fund to sell of its mass-transit unit. Company shares currently trade up 4.27%. (Sources)
 
Top performing sectors in the BE500: Utilities (+0.64%), Technology (+0.11%), Financials (-0.06%)
Worst performing sectors in the BE500: Telecommunications (-0.94%), Basic Materials (-0.59%), Consumer Services        (-0.42%)

FX
 
GBP/USD has been facing downward pressure with an extended downwards move amid market talk of UK clearer selling in the pair, with stops said to be tripped on the move through 1.5900, however this remains unconfirmed.
 
EUR/USD has seen a steady decline throughout the European morning, with market talk of Dutch names selling in the pair, however this is also unconfirmed.
 
USD/JPY hit a nine-month high of 81.72 earlier in the session, however has seen some selling off since then, moving back onto a downward trend then stabilising at around 81.50, up 40pips from the open.
 
US Treasury data suggests that China may be decreasing its USD foreign exchange reserves and may be winding up its holdings in EUR-denominated securities during the European debt crisis. (WSJ)

COMMODITIES
 
Following statements from Saudi Arabia confirming there had been no sabotage on pipelines in the country, Brent is coming off highs not seen since July 2008, currently trading below the USD 125 mark.  WTI crude echoed the movements, trading negatively ahead of the North American open.
 
Oil & Gas News:

•   US President Obama has put further pressure on oil and gas companies by pushing for the repeal of tax breaks that benefit the industry.
•   Sri Lanka, which depends on Iran for 90% of oil requirements, is seeking replacement imports from Saudi Arabia.
•   Nomura have said Brent oil prices averaging USD 135/BBL this year would cut economic growth in Asia, with significant headwinds for India, Korea, Thailand and the Philippines.
•   Barclays have said that their Brent price forecast for 2012 is USD 115/BBL, rising to USD 135/BBL in 2015 with balance of risk to the upside. They also expect Nat Gas prices for 2013 to rise to an average USD 3.25/mm BTU.
•   SocGen have recommended selling UK summer 2013 natural gas due to oversupply issues.
 
Geopolitical News:

•   A Saudi official has said there were no acts of sabotage on pipelines in the country, following reports from Iranian state press yesterday claiming an explosion on a key pipeline.
•   Israeli PM Netenyahu is to meet with US President Obama on Monday next week to discuss Iran; however the meeting will be behind closed doors.
•   Israel has announced that it will soon conduct the first test of an advanced antiballistic missile system designed to intercept strikes from enemies such as Syria and Iran. This is an unusual move for Israel as the country historically keeps military developments and testing confidential.
•   Iran will vote today for 290 seats in parliament in the first election since 2009, amid sanctions taking effect on the domestic economy.
•   Japan and the US are close to reaching broad agreement on sanctions against Iran, Japan's Minister of Economy, Trade and Industry Edano told reporters today.

 

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Fri, 03/02/2012 - 09:16 | 2216397 Kevlar Akubra
Kevlar Akubra's picture

There was a young man from Nantucket
Who carried his cash in a bucket
He said with a grin
I'll soon need a bin
And if they print any more I must truck it

Fri, 03/02/2012 - 09:16 | 2216398 JPM Hater001
JPM Hater001's picture

All I know is if we cross 13000 like we did yesterday my wife said she's going to have to put me in treatment.

Fri, 03/02/2012 - 09:18 | 2216400 Spaceman Spiff
Spaceman Spiff's picture

Steve Liesman just did a teaser in Russian.   Probably best to study and advocate central planning in the native tongue.

Fri, 03/02/2012 - 09:17 | 2216401 mammoth mo
mammoth mo's picture

Hopefully - on a slow news day - rational thought will replace knee jerk puffed up optimism.

Of course - I've been waiting on this for months.

Yeah - I could bet on the unstoppable up - however, when common sense tells you the up is manipulated - and the manipulators have no shame - its kind of hard to bet on the up.

 

Your choices - bet on the market to continue to head up - knowing it's all printed.

Bet on the market to go down in some vain attempt to make some money while sticking it to TPTB.

Invest in holding gold or silver for the same reason as above - although it far more likely you will have a better outcome.  Heck if it wasn't for margin control these things would have already settled this.

Stay out of the market in the realization that betting on a ponzi scheme to fall is a sure bet - except even if you win - TPTB will find a way not to pay off.

 

Fri, 03/02/2012 - 09:23 | 2216419 LongSoupLine
LongSoupLine's picture

slow news day?...look for another european algo boner headline to surface.

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