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Daily US Opening News And Market Re-Cap: March 30
From RanSquawk
- EU’s Juncker says the Eurogroup have agreed on a firewall of EUR 800bln.
- Greek PM says has not ruled out the need for further financial aid.
- BoE’s Clark says FPC should not aim to stimulate the UK credit market
Market Re-Cap
European markets got off to a bad start following early reports that the Greek PM has not ruled out a further aid package for the country, however European cash equities are now trading higher as US participants come to market. Markets have been reacting to the announcement from EU’s Juncker that the Eurogroup has agreed upon Eurozone bailout funds of EUR 800bln.
Elsewhere in the session, FPC member Clark commented that the FPC should not aim to stimulate credit growth in the UK, adding that direct intervention in the mortgage market is too politically volatile, but may be considered in the coming years. Following the reports, GBP/USD spiked lower around 15 pips, however it remains in positive territory, moving above the 1.6000 level in recent trade.
In terms of data, the Eurozone CPI estimate for March came in just above expectations at 2.6%, 0.1% above the 2.5% consensus. The market reaction to this data, however, was relatively muted as participants await Eurogroup commentary.
Looking ahead in the session, participants await commentary on the Spanish budget, US Personal Spending and Canadian GDP.
US Headlines
Fed's Bernanke said there is a reasonable chance that the US economy will return to 3% growth in the longer term, though the pace of recovery has been extremely sluggish. (RTRS/Sources) The Fed Chairman added that the Fed has the tools to tighten policy when needed, and the rate guidance is based on how officials currently see the economy.
Fed's Plosser has said that raising rates by 1% by the end of 2012 is ‘conceivable’ due to sound employment growth and stable inflation. Fed’s Lacker commented that the current monetary policy stance is appropriate but there is evidence that quantitative easing is having a mixed impact.
BarCap US Treasury month end extension seen at +0.02yrs.
Asian Headlines
Japanese Markit/JMMA Manufacturing PMI (Mar) M/M 51.1 (Prev. 50.5)
Japanese National CPI (Feb) Y/Y 0.3% vs. Exp. 0.0% (Prev. 0.1%)
Japanese Industrial Production (Feb P) M/M -1.2% vs. Exp. 1.3% (Prev. 1.9%)
Japanese Industrial Production (Feb P) Y/Y 1.5% vs. Exp. 3.7% (Prev. -1.3%) (Sources)
EU and UK Headlines
EU’s Juncker says the Eurogroup have come to a decision on the firewall, with the EU confirming that it has now mobilized EUR 800bln in rescue funds. (Sources)
The Greek PM has not ruled out the need for a new financial aid package, according to press reports. (RTRS)
The Portuguese PM has said he is negotiating up to EUR 5bln in an additional line with the EIB. (Sources)
German finance minister Schaeuble said Germany will not accept Euro-bonds nor the ECB as a lender of last resort. He also noted that IMF aid will be at a similar level to the last 2 years. (Sources)
The Spanish government has said it would not be diverted from plans to liberalise the labour market and impose more austerity to cut the deficit as it was confronted with a one day strike yesterday. (FT-More) Montoro, the Spanish budget minister, is expected to reveal at least EUR 17bln of extra spending cuts and tax rises in the delayed 2012 budget, taking place later today. Ahead of the Spanish budget release, ECB's Bonnici said the EU and ECB are monitoring Spain very closely despite the Spanish debt and deficit situation being more sustainable. (RTRS)
Yesterday’s announcement of an Irish debt deferment plan may be seen with scepticism in Frankfurt because of the increased longer term costs to Ireland and fears that the government was acting for reasons of short-term expediency. (FT-More)
German Retail Sales (Feb) M/M -1.1% vs. Exp. 1.1% (Prev. -1.6%, Rev. to -1.2%)
German Retail Sales (Feb) Y/Y 1.7% vs. Exp. 0.1% (Prev. 1.6%, Rev. to 1.7%)
French Consumer Spending (Feb) M/M 3.0% vs. Exp. 0.2% (Prev. -0.4%)
French Consumer Spending (Feb) Y/Y 0.5% vs. Exp. -2.5% (Prev. -2.2%)
French Consumer Spending beat expectations with analysts noting colder-than-average weather pointing towards a surge in energy as well as textiles and leather consumption.
UK FPC member Clark has said the FPC should not aim to stimulate UK credit growth, adding that the FPC must take early action on stability threats even if the action risks being unnecessary. Commenting on the on the UK credit market, Clark said direct intervention is too much of a political football for now but may be reviewed in the coming years. (Sources)
BarCap Pan Euro Agg month end extension seen at +0.07yrs.
BarCap UK Agg Month end extension seen at +0.31yrs.
EQUITIES
European equities are seen higher moving into the US open following the confirmation by EU’s Juncker that the Eurozone firewall ceiling has been agreed upon with the EU confirming that it has now mobilized EUR 800bln in rescue funds.
In individual equities news, IAG shares are seen performing strongly following confirmation that they will receive early clearance from the European Commission for its takeover of BMI. The deal will push their share of slots at London Heathrow from 44.8% to 53.5%. (FT-More). IAG shares are now seen up just under 3%.
Total remain under pressure due to their Elgin gas field leak, with the latest reports suggesting that the leak is still ongoing, however the situation remains stable. The UK government has said that the company is mobilizing two rigs to drill a relief well and halt the leak. Total shares are up around 0.6% on the day; this follows French consumer spending data coming in much stronger than expected, with the energy component particularly high. However, on the week, shares remain lower around 7.6%. (Sources)
Top performing sectors in the BE500: Basic Materials (+2.04%), Industrials (+1.54%), Financials (+1.17%)
Worst performing sectors in the BE500: Telecommunications (-0.12%), Health Care (+0.12%), Utilities (+0.44%)
FX
EUR/USD has seen a volatile session, taking immediate tumbles following early reports that Greece may require a third financial aid package, spiking lower around 20pips. The pair has been grinding upwards since then with markets reacting to the final announcement that the EU have agreed upon a European firewall of EUR 800bln.
EUR/NOK has also seen severe fluctuations following the release of far stronger than expected Norwegian retail sales, the cross spiked lower around 200pips.
AUD/USD is currently trading in close proximity to the 1.0400 option expiry due for today's 10am NY cut (1500BST) the pair is seen up around 20pips on the day.
COMMODITIES
WTI crude futures are trading higher this morning reversing a portion of the losses seen yesterday. Market participants now await the release of several economic data releases from the US including the March Chicago PMI report. Meanwhile, attention in Europe turns to the Euro group meeting in Copenhagen and whether an agreement can be struck to form an adequate firewall to protect the fragile economic recovery in the Euro-Zone.
Oil & Gas News:
• Japan’s crude oil imports from Iran fell 32.7% in February from a year earlier to 305,800BPD, according to the Ministry of Economy, Trade and Industry. The reduction comes as the country responds to US demands to curb purchases from the country.
• Latest press reports suggest a US-led delegation may seek reassurances that Saudi Arabia will not reduce production if countries tap emergency reserves.
• Refinery utilisation at China’s largest plants was little changed from two weeks ago showing an average capacity use of 82.21% yesterday.
• Oman’s oil output is to increase in April by 30,000BPD with an aim for 915,000BPD output this year, according to the Oman oil minister. The country expects oil prices this year to be between USD 120 to USD 125/bbl.
• Australia's reputation as a fiscally stable investment destination for global oil and gas players is being threatened by speculation around federal government changes to the business taxation system, the local upstream industry association said today.
Geopolitical News:
• Japan’s defence minister has said he had issued an order to shoot down a North Korean rocket if it falls towards Japanese territory.
• Due to sanction law signed in December, US President Barack Obama, is likely to determine today that there will be enough oil in the world market to allow counties to cut imports from Iran, taking another step towards sanctioning those nations that do not, according to analysts and a congressional aide.
• UK foreign minister, William Hague, has said Iran should not doubt major powers’ determination to stop it getting a nuclear bomb but did hint that sanctions could be eased if Iran gave ground in its long running nuclear dispute.
• US Secretary of State Hillary Clinton is due to arrive in Saudi Arabia today for talks to weigh limited options available to end the violence in Syria and launch a strategic forum with Gulf allies.
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