Daily US Opening News And Market Re-Cap: October 17

From RanSquawk

• Appetite for risk was observed during the Asian and early European session on enhanced prospects that the eight-day deadline given by the G-20 leaders to resolve an ongoing Eurozone debt crisis would bring some positive outcome before the EU leaders' summit on October 23rd
• Comments from the German finance minister and a German government spokesman that a concrete solution for the Eurozone crisis couldn't be found by the EU summit dented risk-appetite later in the session
• The Spanish/German 10-year government bond yield spread widened ahead of the T-Bills and Bonds auctions from Spain later this week

Market Re-Cap

Appetite for risk was observed during the Asian and European sessions on enhanced prospects that the eight-day deadline given by the G-20 leaders to resolve an ongoing Eurozone debt crisis would bring some positive outcome before the EU leaders' summit on October 23rd. Nikkei (+1.41%) closed higher and European equities also received a boost, with financials as one of the better performing sectors, which was further helped by comments from Moody's that accelerating talks to recapitalise European banks are credit positive for the banks. News that China has offered to spend tens of billions buying European infrastructure projects and government debts strengthened the appetite for risk. Strength in equities weighed on Bunds, whereas narrowing was observed in most Eurozone 10-year government bond yield spreads with respect to Bunds. However, later in the European session, comments from the German finance minister and a German government spokesman that a concrete solution for the Eurozone crisis couldn't be found by the EU summit dented risk-appetite. In the forex market, after trading lower during early European trade, the USD-Index ventured in positive territory, which in turn weighed upon EUR/USD, GBP/USD and commodity-linked currencies, however GBP did receive support following a sharp jump in the Rightmove House Prices from the UK overnight. In other news, CHF received a boost across the board following market talk that SNB's president Hildebrand may resign, whereas CAD received support on news that the Canadian finance minister and the Bank of Canada governor may go beyond inflation-beating monetary policy measures.

Moving into the North American open, markets will look ahead to key economic data from the US in the form of Empire manufacturing, industrial production and capacity utilisation. In terms of fixed income, another BoE's asset purchase operation worth GBP 1.7bln in the maturity range of 2015-2020, together with Fed's Outright TIPS sales in the maturity range of Apr'12-Jul'14, with a sale target of USD 1-1.5bln are also scheduled for later. US corporate earnings from the likes of Citigroup, IBM and Wells Fargo are also scheduled for later in the session.

Asian Headlines

The Japanese government downgraded its economic assessment in October for the first time in 6 months adding that the economy is still picking up but pace is decelerating, however remains in a severe state after the earthquake. (RTRS) 

•    Japanese Industrial Production (Aug F) M/M 0.6% vs. Prev. 0.8%
•    Japanese Industrial Production (Aug F) Y/Y 0.4% vs. Prev. 0.6%
•    Japanese Capacity Utilisation (Aug F) M/M 2.4% vs. Prev. 0.6% (RTRS)

Global Headlines:

**Key headlines from the G-20 meeting over the weekend** (RTRS)
-    The G-20 pressed Europe to act decisively before October 23rd EU summit to resolve the sovereign debt crisis. Japan and Canada warned of global recession if the EU falls short.
-    The leaders said that they look forward to further work to maximise the impact of the EFSF, and called on the IMF to consider ways to provide short-term liquidity to countries facing shocks.
-    The leaders pledged to ensure banks are adequately capitalised and have sufficient funding. The leaders backed a mandatory capital surcharge on big lenders of up to 2.5% to be phased in from 2016. Meanwhile, Germany said there is no chance of a global financial transaction tax.
-    US Treasury Secretary, Geithner, said China should let the CNY rise more rapidly after Chinese Premier rebuffed US pressure for a more rapid appreciation.

US Headlines:

US Treasury Secretary, Geithner, said the US economic growth has gained some strength but remains too slow and would benefit from passage of a job creation bill that Congressional Republicans have blocked. (RTRS)

EU and UK Headlines:

**Important Eurozone comments from the weekend**
-    According to the German finance minister, Greek debt crisis cannot be solved without a debt write-down which will most likely exceed that agreed this summer and could reach 50%-60%. However, IIF’s managing director, Dallara, said the EU should stick to the agreed bond swap deal. (ARD/ZDF/RTRS)
-    According to sources, the Eurozone and IMF is examining range of new plans for Greek private sector creditors, including a “hard restructuring” that would see bondholders repaid only half the face value of their bonds. (Sources)
-    China offered to spend tens of billions buying European infrastructure projects and government debts. (Sunday Times)

•    Rightmove House Prices (Oct) M/M 2.8% vs. Prev. 0.7%
•    Rightmove House Prices (Oct) Y/Y 1.2% vs. Prev. 1.5% (RTRS) 

EQUITIES

Appetite for risk was observed during the Asian and European sessions on enhanced prospects that the eight-day deadline given by the G-20 leaders to resolve an ongoing Eurozone debt crisis would bring some positive outcome before the EU leaders' summit on October 23rd. Nikkei (+1.41%) closed higher and European equities also received a boost, with financials as one of the better performing sectors, which was further helped by comments from Moody's that accelerating talks to recapitalise European banks are credit positive for the banks. News that China has offered to spend tens of billions buying European infrastructure projects and government debts strengthened the appetite for risk. However, later in the European session, comments from the German finance minister and a German government spokesman that a concrete solution for the Eurozone crisis couldn't be found by the EU summit, and together with downbeat comments from the Bundesbank on the German economy dented risk-appetite.

**Note: For US equities news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

FX

After trading lower during early European trade, the USD-Index ventured in positive territory, which in turn weighed upon EUR/USD, GBP/USD and commodity-linked currencies, however GBP did receive support following a sharp jump in the Rightmove House Prices from the UK overnight. In other news, CHF received a boost across the board following market talk that SNB's president Hildebrand may resign, whereas CAD received support on news that the Canadian finance minister and the Bank of Canada governor may go beyond inflation-beating monetary policy measures.

COMMMODITIES

WTI and Brent crude futures have been trading higher on optimism of a resolution of the European debt crisis following the G-20 meeting, however prices have come off their best levels with strength in the USD-Index heading into the North American open. 

Oil & Gas News:

•    Saudi Arabia may cut output in the coming months in order to try and steady crude prices, according to Jadwa Investment Co.
•    China’s apparent oil demand growth slowed further in the third quarter, largely in line with economic growth amid domestic policy constraints and global uncertainties. The NDRC said that apparent oil consumption grew only 3.2% from a year earlier in Q3 down from the 5% rise in Q2 and 9.3% in Q1.
•    Morgan Stanley has forecast that demand for oil will decline in the first half of 2012 as supplies increase in Libya, pushing Brent crude prices lower.

Geopolitical News:

•    The heads of the intelligence committees in the US Congress said that an alleged Iranian plot to kill the Saudi Ambassador should be taken very seriously, with one head warning that the US and Iran could be on a collision course. Iran’s supreme leader has warned the US of a resolute response to any reprisals. In the latest news according to an Iranian foreign minister, Iran is ready to examine US plot accusations.

Corporate News:

•    Kinder Morgan has made an agreement to buy El Paso Corp for USD 21.1bln which could create the largest natural gas pipeline network in the US.
•    Anadarko has agreed to pay USD 4bln to BP and said BP will release its claims against Anadarko for approximately USD 6.1bln. Anadarko will also transfer its 25% interest in Mississippi Canyon Block 252 to BP.

**Note: For commodities news in detail, kindly refer to the RANsquawk Daily Energy Commentary report.

Comments

[disabledvet]

And as a side note the world's most powerful energy company was born today. Now watch as the haves vs have-nots of natural gas are realized and indeed all those paper tigers are exposed as exactly as you say they are.

[heyligen]

hahaha, Timmy just away and drastic rescue on october 23 already canceled

[msmith]

We may be looking at critical turning points for the DX, CL, EURUSD, and the AUDJPY.  Also the ES is showing signs of breaking down.  http://bit.ly/qOqM8F

[j0nx]

So where's this much ballyhooed black monday that we were supposed to see today judging from the doom and gloom I was reading from many regulars here yesterday? The day of the crash will be when nobody is expecting it if you ask me.

[Grand Supercycle]

SP500 daily chart now gives bearish signal, warning of a new leg down. Weekly chart reverts to neutral.

http://stockmarket618.wordpress.com