Daily US Opening News And Market Re-Cap: October 21

From RanSquawk:

• The main focus of the market remained on the EU leaders' summit this weekend and next Wednesday, where participants look ahead for further details on the implementation of the EFSF
• News overnight that the EU leaders are considering to increase the lending capacity of the EFSF to USD 1.3trl boosted risk-appetite
• Fitch managing director, Riley, said that the rating agency has no plans to downgrade France, and the upcoming EU summit outcome is unlikely to trigger review of the Italian and Spanish ratings
• ECB's Nowotny said that the ECB discussed cutting interest rate in its last meeting. Also, IFO’s economist Abberger said that the ECB will likely cut interest rate towards 1%, however the timeframe is unclear
• According to German government sources, Eurozone members could tap IMF credit lines without the EFSF involvement

Market Re-Cap

The main focus of the market remained on the EU leaders' summit this weekend and next Wednesday, where participants look ahead for further details on the implementation of the EFSF. News overnight that the EU leaders are considering to increase the lending capacity of the EFSF to USD 1.3trl, as well as approval of a comprehensive plan to tackle the crisis by Wednesday rendered appetite for risk in the market. Comments from Fitch's managing director, Riley, that the rating agency has no plans to downgrade France further boosted sentiment. European equities traded higher for most of the session, with outperformance seen in the Spanish IBEX 35 and Italian FTSE MIB Indices. In the forex market, EUR came under pressure following comments from ECB's Nowotny that the ECB discussed cutting interest rate in its last meeting, as well as downbeat comments from German IFO economist. However, GBP/USD received a boost on market talk of a UK clearer buying in the currency.

Moving into the North American open, the economic calendar remains thin, however markets will keep a close eye on the developments in the Eurozone, together with comments from a raft of scheduled speakers later in the session. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Nov'19-Aug'21, with a purchase target of USD 4.25-5bln is also scheduled for later.

US Headlines:

Fed’s Tarullo said the Fed should consider buying more mortgage bonds to support a fragile economic recovery and a downtrodden housing sector. (RTRS) Also, Fed’s Kocherlakota said he sees the US unemployment in 8.5% range by the end of 2012.

In other news, Fed’s balance sheet fell to USD 2.835trl on October 12, compared to USD 2.843trl a week earlier. Also, foreign central banks’ overall holdings of US marketable securities at the Fed rose by USD 9.4bln in the week ended October 19th, to stand at USD 3.411trl. (RTRS)

Elsewhere, the US Senate defeated a piece of President Obama’s jobs plan, a USD 35bln package to help cash-strapped states employ teachers, police and emergency workers. (Sources)

EU and UK Headlines:

According to a German government source, German chancellor Merkel will not back any form of leveraging involving ECB, adding that IMF and partial bond insurance are the most promising EFSF variations at the moment. (RTRS)

•    German IFO Business Climate (Sep) M/M 107.5 vs. Exp. 106.5 (Prev. 108.7)
•    German IFO Current Assessment (Sep) M/M 117.9 vs. Exp. 115.7 (Prev. 118.1)
•    German IFO Expectations (Sep) M/M 98.0 vs. Exp. 97.3 (Prev. 100.1)
•    UK Public Finances (PSNCR) (GBP) (Sep) M/M 19.9bln vs. Exp. 18.0bln (Prev. 11.8bln)
•    UK Public Sector Net Borrowing (GBP) (Sep) M/M 11.4bln vs. Exp. 11.8bln (Prev. 13.2bln, Rev. to 10.9bln)
•    UK Nationwide Consumer Confidence (Sep) M/M 45 vs. Exp. 49 (Prev. 48) (RTRS)

EQUITIES

The main focus of the market remained on the EU leaders' summit this weekend and next Wednesday, where participants look ahead for further details on the implementation of the EFSF. News overnight that the EU leaders are considering to increase the lending capacity of the EFSF to USD 1.3trl, as well as approval of a comprehensive plan to tackle the crisis by Wednesday rendered appetite for risk in the market. Comments from Fitch's managing director, Riley, that the rating agency has no plans to downgrade France further boosted sentiment. European equities traded higher for most of the session, with outperformance seen in the Spanish IBEX 35 and Italian FTSE MIB Indices. Moving into the North American open, equities continue to trade higher, with financials and basic materials as the best performing sectors.

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

FX

EUR came under pressure following comments from ECB's Nowotny that the ECB discussed cutting interest rate in its last meeting, as well as downbeat comments from German IFO economist. However, GBP/USD received a boost on market talk of a UK clearer buying in the currency. Elsewhere, CHF gained strength in early European trade following news of position adjustments ahead of this weekend’s national election in Switzerland.

COMMMODITIES

WTI crude futures lacked direction during the European session on the back of uncertainty surrounding the outcome of the upcoming EU leaders’ summit this weekend.

Oil & Gas News:

•    According to Xinhua, China’s end-September crude oil stockpiles rose 3% on month.
•    According to a trade source, Nigerian QUA IBOE crude oil loadings will fall to 337,000 BPD in December from 380,000 BPD in November.

Corporate News:

•    Shell has staked its position in north-western British Columbia to build a liquefied natural gas export terminal, the second big industry name to make a major move. The site could be the home of a terminal that would export 2bln cubic feet of gas a day, industry chatter suggests.

Comments

[msmith]

The AUDJPY is hinting that the SPX is preparing to breakout to the upside after the triangle consolidation concludes.  Also the outlook for Gold for the days ahead is higher.  "Risk On" price action to continue.  http://bit.ly/qW0yvy

[jdelano]

STFU

[YesWeKahn]

Fitch is french. Will fitch play political fire by downgrading France? no, never.

[Zedge Hero]

The General Strike in Greece on Wednesday and Thursday covered this week.....

http://www.youtube.com/user/zedgehero