Daily US Opening News And Market Re-Cap: September 16
- European equities traded higher supported by news of a coordinated action by various central banks to enhance USD liquidity in order to ease funding concerns surrounding European banks
- EU’s Juncker said that the Eurogroup discussed collateral issue, and collateral will be given for Greek loans at an appropriate price
- EU's Rehn said France, Italy, Belgium and Spain have all ratified more flexible EFSF, adding that the first step in Eurobonds is a feasibility study which the Commission will present this autumn
- Moody’s and S&P placed UBS ratings on review for a potential downgrade
Although the USD-Index has traded in firm positive territory during this morning's session, European equity markets have seen a break-down in the flight-to-quality correlation, and have also traded in the green. Renewed risk appetite and a boost for the financial sector follows on from the ECB announcement yesterday that in co-ordination with the Fed, BoJ, BoE and SNB they'll hold USD liquidity operations in Q4. Today is the EU finance minister and Central Bankers meeting in Poland, in which it looks unlikely that the Greek collateral issue will be solved at today's meeting. A statement from EU's Juncker said all Eurozone members now signed amendment to the EFSF allowing more flexibility, which follows earlier comments from US Treasury Secretary Geithner who was pressing for the Eurozone to leverage EFSF. With market participants still paying careful attention to Eurozone contagion fears, pressure was seen in the EUR/USD pair after earlier market talk that Moody's may downgrade Italy by one notch this weekend.
Moving into the North American open, attention will be paid to the first reading of Septembers University of Michigan Consumer Confidence number, and hope of a slight rebound after last month's fall in sentiment. The spotlight will also remain on any significant comments out of the EU finance minister meeting throughout the day.
A Japan’s ruling party panel said that the finance ministry should strengthen ties with the BoJ in addressing JPY rise, and wanted BoJ to ease monetary policy appropriately, and flexibility in close cooperation with the government. (RTRS)
The Fed’s balance sheet was USD 2.847tln in the week ended Sept. 14th, compared with USD 2.841tln in the week ended Sept. 7th. Also foreign central banks’ overall holdings of US marketable securities at the Fed fell USD 10.94bln in the week ended Sept. 14th to stand at USD 3.463tln. (RTRS)
EU and UK Headlines:
EU's Juncker said that all Eurozone members have now signed amendments to the EFSF, and finance ministers agreed on pricing of future EFSF loans. He also said that the Eurogroup discussed collateral issue, and collateral will be given for Greek loans at an appropriate price. Juncker added that a decision on disbursement of next aid tranche to Greece will be taken in October. (RTRS)
In other news, BoE’s Bean said UK’s inflation rate will come down in 2012, adding that he feels the outlook for Britain’s economy has worsened in the past three to four months, which if prolonged could result in a further round of quantitative easing. Bean also said that the BoE will examine all indicators and take a view on quantitative easing ahead of its meeting in October. (Sun)
NOTE: Moody’s 90 day review of Italy’s sovereign credit rating expired yesterday, however the report could be released anytime between today and Saturday.
European equities traded higher for a vast majority of the session supported by news of a coordinated action by various central banks to enhance USD liquidity in order to ease funding concerns surrounding European banks. Financials remained one of the better performing sectors, with outperformance seen in the Italian FTSE MIB index. However, UBS shares did come under some pressure after Moody’s and S&P placed co.’s ratings on review for a potential downgrade, although prices remained in positive territory. Markets also observed some volatility owing to the quadruple witching day, whereas later in the European session basic materials and oil & gas sectors came under pressure due to strength in the USD-Index. Moving into the North American open, equities continue to trade higher, with financials and utilities as the best performing sectors.
EUR/USD remained under pressure during the European session on mixed messages from the Eurozone finance ministers on the issue of the region’s debt crisis. Market participants remained unconvinced that the issue of Greek collateral will be resolved in the ongoing Eurozone finance ministers’ meeting. In other news, the USD-Index traded higher for a vast majority of the European session.
WTI and Brent crude futures lacked direction during the European session, with prices weighed upon by strength in the USD-Index, however received support after a coordinated action by various central banks to enhance USD liquidity in a move to ease the Eurozone crisis.
Oil & Gas News:
• Libya's Agoco says expects its oil production to rise to 200,000 BPD from 150,000 BPD by the end of September.
• Fighters loyal to the interim Libyan National Transitional Council have reached the outskirts of Sirte from three fronts in an assault on Muammar Gaddafi's hometown and last strongholds.
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