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Daily US Opening News And Market Re-Cap: October 27

Tyler Durden's picture




 

From RanSquawk:

  • European leaders agreed, in principle, to boost the firepower of the EFSF to approximately EUR 1trl using a combination of a special purpose investment vehicle and a debt-insurance scheme. The leaders also struck a deal with private banks and insurers for them to accept a 50% loss on their Greek government bond holdings
  • According to EU sources, the EU is to present Eurobond ideas on November 23rd
  • According to a German government official, direct or indirect financing via the ECB is ruled out, adding that haircut excluded Greek bonds held by the ECB
  • BoE's Fisher said that the BoE will revisit QE once the current purchase is complete, adding that there is a significant chance of a double dip recession in the UK

Market Re-Cap

European leaders agreed, in principle, to boost the firepower of the EFSF to approximately EUR 1trl using a combination of a special purpose investment vehicle and a debt-insurance scheme. The leaders also struck a deal with private banks and insurers for them to accept a 50% loss on their Greek government bond holdings. The news boosted risk-appetite in the market, which helped equities and led to a higher close in the Nikkei (+2.04%), while the Nikkei received additional support on the back of further monetary easing by the Bank of Japan. European equities traded in positive territory during the session, with outperformance seen in the Italian FTSE MIB and Spanish IBEX 35 indices, whereas strong corporate earnings from the likes of Bayer, BASF and AstraZeneca also enhanced positive sentiment. Strength in equities weighed on Bunds and Gilts, whereas the Eurozone 10-year government bond yield spreads tightened across the board. In the forex market, the USD-Index traded lower amid risk-appetite, which rendered support to EUR/USD, GBP/USD and commodity-linked currencies, while JPY and CHF also remained under pressure. However, gains in GBP/USD were capped due to dovish comments from BoE's Fisher, who said that the BoE will revisit QE once the current purchase is complete, adding that there is a significant chance of a double dip recession in the UK. Elsewhere, WTI and Brent crude futures received strength on the back of weakness in the USD-Index.             

Moving into the North American open, markets look ahead to key economic data from the US in the form of jobless claims, advanced GDP and pending home sales reports. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Feb'36-Aug'41, with a purchase target of USD 2.25-2.75bln, together with USD 29bln 7-year Note auction are also scheduled for later in the session.

Asian Headlines:

BoJ kept its policy rate unchanged in the range of 0% - 0.10% but topped up its asset buying programme by JPY 5trl to JPY 20trl, offering its second monetary stimulus in three months. The BoJ said the entire increase will come in the form of additional purchases of government bonds. (RTRS)

US Headlines

Democrats are proposing to slash huge US budget deficits by upto USD 3trl. The plans include equal mix of cuts and revenue hikes, and proposes USD 200-300bln in new economic stimulus. It also calls for USD 400bln in Medicare savings, and includes USD 100bln in Medicaid cuts. (RTRS)

EU and UK Headlines:

European leaders agreed, in principle, to boost the firepower of the EFSF to approximately EUR 1trl. The EFSF will be leveraged in two ways, either by offering insurance, or first-loss guarantees, to purchasers of Eurozone debt in the primary market, or via a special purpose investment vehicle that will be set up in the coming weeks and which is aimed at attracting investment from China and Brazil. The leaders also struck a deal with private banks and insurers for them to accept a 50% loss on their Greek government bond holdings. At the same time, the euro zone will offer "credit enhancements" or sweeteners to the private sector totalling EUR 30bln. (RTRS)

•    German CPI - Saxony (Oct) Y/Y (Oct) 2.7% vs. Prev. 2.6%
•    German CPI - Hesse (Oct) Y/Y 2.4% vs. Prev. 2.3%
•    German CPI - Brandenburg (Oct) Y/Y 2.4% vs. Prev. 2.3%
•    German CPI - Bavaria (Oct) Y/Y 2.7% vs. Prev. 2.5%
•    German CPI - Baden Wuerttemberg (Oct) Y/Y 2.8% vs. Prev. 2.5% (RTRS)

EQUITIES

European leaders agreed, in principle, to boost the firepower of the EFSF to approximately EUR 1trl using a combination of a special purpose investment vehicle and a debt-insurance scheme. The leaders also struck a deal with private banks and insurers for them to accept a 50% loss on their Greek government bond holdings. The news boosted risk-appetite in the market, which helped equities and led to a higher close in the Nikkei (+2.04%), while the Nikkei received additional support on the back of further monetary easing by the Bank of Japan. European equities traded in positive territory during the session, with outperformance seen in the Italian FTSE MIB and Spanish IBEX 35 indices, whereas strong corporate earnings from the likes of Bayer, BASF and AstraZeneca also enhanced positive sentiment. Moving into the North American open, equities continue to trade higher, with financials and basic materials as the best performing sectors.

FX

The USD-Index traded lower amid risk-appetite, which rendered support to EUR/USD, GBP/USD and commodity-linked currencies, while JPY and CHF also remained under pressure. However, gains in GBP/USD were capped due to dovish comments from BoE's Fisher, who said that the BoE will revisit QE once the current purchase is complete, adding that there is a significant chance of a double dip recession in the UK.

•    RBNZ Official Cash Rate (Oct) M/M 2.50% vs. Exp. 2.50% (Prev. 2.50%) (RTRS)

COMMMODITIES

WTI and Brent crude futures rose during the European session as European leaders agreed to boost the region’s rescue fund, together with weakness in the USD-Index.

Oil & Gas News:

•    Libya’s Hamada and Beda fields will resume crude production within two weeks after a delay in logistics, according to Arabian Gulf Oil Co. who operate the fields.

Corporate News:

•    Shell reported their Q3 CCS earnings ex-items at USD 7bln vs. Exp. USD 6.55bln, and co. declared an interim dividend of USD 0.42 per ordinary share. Co.’s Q3 net income USD 6.98bln vs. Prev. USD 3.46bln. In other co. news, the Singapore refinery will return to normal levels in November-December and co. has not lifted force majeure fully. 
•    GDF Suez reported its Q3 EBITDA earnings at EUR 3.235bln vs. Exp. EUR 3.08bln, and co. confirmed targets.
•    ENI said the Mozambique gas discovery is 50% bigger than previously announced, and believes the Mamba Sud area potentially contains up to 637.5bln cubic meters of gas.

 

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Thu, 10/27/2011 - 08:28 | 1816634 msmith
msmith's picture

It feels like the market has gotten a lot more bullish in a short amount of time, which is interesting to note.  However, "risk on" has unfolded as expected.  Equity futures are up big with the USD down big.  The ES, SPX, DX, AUDUSD, EURUSD, and USDCAD charts all have more room to run for the current moves.

Thu, 10/27/2011 - 08:38 | 1816676 msmith
msmith's picture

It feels like the market has gotten a lot more bullish in a short amount of time, which is interesting to note.  However, "risk on" has unfolded as expected. Equity futures are up big with the USD down big. The ES, SPX, DX, AUDUSD, EURUSD, and USDCAD charts all have more room to run for the current moves. http://bit.ly/rDcoCc

Thu, 10/27/2011 - 12:38 | 1817629 i root for that...
i root for that fat jersey governor's picture

yesterday was the first time in the last couple of weeks that I thought the market would turn back down - initiated some shorts, got crashed and stopped out this morning. So the lesson learned is - do not get in front of the train when it could speed up from 0 to 100 miles in 6 secs.  :-(

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