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Daily US Opening News And Market Re-Cap: March 28

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From RanSquawk

  • French press reports that France has been in contact with the UK and US regarding the release of emergency oil stocks, according to Presidential sources.
  • UK GDP (Q4 F) Q/Q -0.3% vs. Exp. -0.2% (Prev. -0.2%)
  • Spanish government denies reports that Brussels has told Madrid to receive EU aid in order to recapitalize its banks.

Market Re-Cap
 
Going into the US open, European equity markets are trading slightly lower with some cautious trade observed so far. In individual equity news, France’s Total have shown some choppy trade following reports from their Elgin gas field in the North Sea, shares were seen down as much as 3% but the company have played down the gas leak and have regained slightly in recent trade; however they remain down 1.4%.
 
In terms of data releases, the final reading of Q4 GDP from the UK has recorded a downward revision to -0.3%. Following the disappointing release, GBP/USD spiked lower 20pips and remains in negative territory.
 
In the energy complex, WTI is seen on a downward trend following last night’s build in oil reserves shown by the API data. Earlier in the session French press reported that France had made contact with the UK and the US regarding the release of emergency oil stocks, following this, WTI spiked lower around USD 0.30 but quickly regained.
 
Looking ahead in the session, international market focus moves to the US, with durable goods orders and the weekly DOE oil inventory due later today.
 
US Headlines
 
Fed's Bernanke said if the economy continues to grow at a moderate pace around 2% to 2.5%, unemployment might not fall much more this year. (RTRS) He added that the Fed needs to be realistic about forecasts, and will be ready to respond to the evolving economy. Furthermore, he said that an 8.3% unemployment rate is 'far too high'
 
Fed's Rosengren said further QE would be advisable if US growth slows more than expected and unemployment remains high, but that the US is likely to grow 2.5% in 2012, and that he expects inflation under 2%. (RTRS) Furthermore, the Fed’s policy accommodation should only be removed when it becomes clear that the Fed’s dual mandate can be achieved within a reasonable period of time. But, he also said that if we get a more severe oil shock, which is certainly a possibility, the US recovery could be derailed and also temporary spike in inflation.
 
BarCap US Treasury month end extension seen at +0.02yrs.
 
Asian Headlines
 
Japan's ruling party, the DPJ, failed to reach a consensus agreement on the sales tax. The latest draft has removed a provision on taking the sales tax above 10%. (Sources)
 
BoJ’s Miyao has said the central bank is to take policy action decisively and carefully, adding that one path to end deflation is powerful easing however there is a need to secure credibility and flexibility in monetary policy. BoJ’s easing measures may be supporting the formation of positive trends in the financial environment, according to the BoJ governor. (Sources) Miyao has attributed the recent fall in the JPY to the central bank’s easing actions.
 
EU and UK Headlines
 
Both the Spanish government and the European Commission have denied media reports that Brussels had told Madrid to take an EU bailout to refinance the country’s banks, dismissing the stories as “unfounded”. (RTRS)
 
Fitch said that Portugal’s economy will shrink 3.7% this year, more than the 3.3% estimated by the government, and more than the 3.0% it had forecast in November. Fitch recognises Portuguese banks' progress in 2011 in improving capital and their retail funding structure with a greater proportion of loans funded by deposits. (Sources)
 
French GDP (Q4 F) Q/Q 0.2% vs. Exp. 0.2% (Prev. 0.2%)
French GDP (Q4 F) Y/Y 1.3% vs. Exp. 1.4% (Prev. 1.4%) (Sources)
 
UK GDP for Q4 of last year has been revised downwards to -0.3% as services output fell for the first time in a year, possibly raising questions about how robust the economy is.
UK GDP (Q4 F) Q/Q -0.3% vs. Exp. -0.2% (Prev. -0.2%)
UK GDP (Q4 F) Y/Y 0.5% vs. Exp. 0.7% (Prev. 0.7%)    
UK Current Account (GBP) (Q4) Q/Q -8.5bln vs. Exp. -8.4bln (Prev. -15.2bln, Rev. -10.5bln) (Sources)
 
This session has also seen the release of most of the German regional CPIs, with all releases showing a decline in the yearly figure. Market now awaits German national CPI at 1300BST.
 
Italian PM Monti has said the declining confidence in the EU is due to a slow response to the debt crisis, adding that prevention measures against future crises are much more solid. (Sources) The Italian PM has said a majority of Italians perceive labour reform as a necessary step.
 
After three weeks of negotiations, the Netherlands coalition government remains divided over the budget cuts needed to slash the deficit to the EU-mandated level of 3%. (FT-More) The government remains divided as to whether to tackle reforms to the housing market, labour market and the healthcare system.
 
BarCap Pan Euro Agg month end extension seen at +0.13yrs.
BarCap UK Agg Month end extension seen at +0.31yrs.
 
EQUITIES
 
European bourses are seen mixed going into the US open with most markets spending the morning in negative territory with risk-aversion observed in the markets so far.
 
In individual European stocks news, Total have had a tough trading session in Europe, following market participants reacting to the news from the Elgin gas field in the North Sea. Shares were down up to 3% earlier this morning. Total have played down the news, reporting the leak to be minor, adding that there is no comparison between it and BP’s Deepwater Horizon disaster. Company shares however, remain in negative territory, currently down 1.4%.
 
Nokia are seen as one of the biggest gainers going into the US open. This follows reports from the CEO commenting that the company have made tremendous progress in the last few years, introducing four Lumia devices ahead of schedule as well as announcing the sale of the company’s first Windows phone handset in China. Company shares are currently up 3.5%.
 
Top performing sectors in the BE500: Health Care (+1.14%), Technology (+0.89%), Telecommunications (+0.40%)
Worst performing sectors in the BE500: Basic Materials (-0.78%), Financials (-0.56%), Industrials (-0.08%)

FX
 
GBP/USD is seen on a downward trend going into the US open amid market talk of GBP weakness being put down to a major US name rebalancing its government bond index. The pair also spiked downwards around 20 pips following the release of a downwards revision in UK GDP.
 
EUR/GBP is seen higher in recent trade with some market talk noting month end demand by an EU-based central bank. Should the cross continue to trend higher it may see some deceleration as it hits 0.8400, with market talk of offers at that level. 

 
COMMODITIES

WTI crude has been trending lower since the European open following a large build in yesterday’s API crude inventories and following comments that France is in contact with other countries about a possible release of strategic oil reserves.
 
Oil & Gas News:

•  France is in contact with Britain and the US on a possible release of strategic oil stocks in a matter of weeks in order to push fuel prices down, according to presidential sources. However, other reports suggest there has been no change in the stance of the Obama administration on the use of emergency oil reserves, according to a government official, who reiterated that "all options are on the table" in response to high oil prices.
•  Bank of America analysts have raised their Brent and WTI crude oil price averages to USD 118/BBL and USD 106/BBL in 2012. The bank also said that prices could temporarily hit USD 140/BBL this year on the back of higher liquidity, improved demand and tight supplies.
 
Geopolitical News:

•  The Iranian foreign minister has said he expects a new round of talks with world powers to take place on the 13th of April. In similar news, the Indian trade minister has said the country cannot just rupture ties with Iran.

 

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Wed, 03/28/2012 - 08:19 | 2296805 LongSoupLine
LongSoupLine's picture

Today:

Dovish tag-teaming soundbites by global central bankers at key times (read: selling pressure) to ramp greens.

Wed, 03/28/2012 - 08:41 | 2296852 Confundido
Confundido's picture

We're fucked! 

Wed, 03/28/2012 - 14:55 | 2298159 RollinsArline3
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