Daily US Opening News And Market Re-Cap: September 18
- European equities continue to sell off in a continuation of the moves seen yesterday, as investors continue to take profits from the steep gains observed since the FOMC's announcement of their open-ended bond buying program last week.
- German ZEW Survey shows investor confidence rising for the first time in 5 months, as the ECB's bond-buying programme alleviates concerns towards the Eurozone.
- Spanish T-bill auction passes by smoothly, setting up the Spanish treasury for their bond sale later in the week.
Stocks fell in Europe today, that’s in spite of the fact that German investor confidence rose the first time in 5 months (ZEW), as market participants focused on somewhat unfavourable auction schedule for Spain, which may force the Treasury to raise its T-bill issuance in order to meet its zero-net funding target. As a result, Bunds traded higher throughout the session, with the shorter-dated Spanish and Italian bonds underperforming (Italian and Spanish 2s up by c.3bps). Of note, Spanish 10y bond yield has risen back above 6% and given the upcoming supply, there is a risk that yields will continue to rise and flatten the curve. On that note, the Spanish Treasury is set to sell a new 3y benchmark and a 10y re-opening this Thursday, which proved notoriously difficult to sell in the past. Spain is also planning to issue EUR 8bln in private placements with EUR 3bln on Sep-21st and EUR 5bln in mid-October.
Both the Nikkei 225 and the Shanghai Composite closed lower as the tensions between China and Japan regarding the Senkaku Islands hits stocks that have cross-country exposure, as China threatens to undertake economic sanctions against Japan. The Nikkei 225 and Shanghai Composite closed lower by 0.4% and 0.9% respectively. (RANsquawk)
EU & UK Headlines
German ZEW Survey for economic sentiment beat expectations with a reading of -18.2, with the consensus for a -20.0 reading. The data release showed the first rise in economic expectations for 5 months. ZEW economists commented that the unveiling of the ECB's bond-buying program has helped lift sentiment towards the periphery, and thus, help boost confidence. (Newswires/RANsquawk)
UK inflation numbers come in alongside expectations with CPI for August at 0.5% M/M and 2.5% Y/Y. The ONS commented that the main downward contributions came from furniture, clothes, household services, and with an upward contribution from fuel. (Newswires/RANsquawk)
The Spanish treasury sold EUR 4.6bln, above the indicative range, in their 12- and 18-month T-bill issuance, with bid/covers showing some decent demand on both lines with declining yields, which bodes well ahead of the country's bond auctions this Thursday. (Newswires/RANsquawk)
European equities have drifted lower since the open in a continuation of the themes seen yesterday, as investors take profits on the steep gains seen over the past two weeks, particularly following the FOMC open-ended bond-buying announcement. The peripheral bourses are underperforming, with the Italian and Spanish bourses both trading lower by over 1.75% as the riskier assets suffer from the sell-off. The preference for safer stocks has hit the riskier equities, with financials leading the way lower, closely followed by oil & gas and basic materials. US stock futures are seen moving in-line with their European counterparts, indicating a lower open on Wall Street today. In individual stocks news, Royal Dutch Shell have been forced to announce the abandonment of their plans to drill wells off the coast of Alaska after a vital piece of safety equipment was damaged during a testing period. (FT-More) After a morning's trade in Europe, Royal Dutch Shell shares are seen lower by 0.8%.
Despite posting a better than expected Q1 EPS of USD 1.45, FedEx have cut their forecast for Q2 EPS to between USD 1.30-1.45 vs. Exp. USD 1.67, prompting a move lower in FedEx's share price in pre-market trade of 2.6%. In a sector-related move, Deutsche Post shares moved 0.6% lower in the DAX. (Newswires/RANsquawk)
EUR/USD edged lower for much of the session, but talk of Eastern European names on the bid in recent trade saw the pair move off earlier lows. Barriers are said to be placed at 1.3175 and 1.3200 levels. Elsewhere, GBP/USD is little changed and to a degree benefited from risk averse trade flows. Offers seen into 1.6275 and then at 1.6300. USD/JPY traded steady in spite of the looming monetary policy meeting by the BoJ, offers seen at 78.80/79.00.
Heading into the NYMEX pit open, WTI crude futures are lower by over USD 0.50 in a continuation of the dramatic USD 4.00 losses seen in the contract heading into yesterday's NYMEX pit close. Profit-taking, the theme present across the asset classes, is pressing the energy complex alongside comments from a Persian Gulf official, who commented that Saudi Arabia is taking action to reduce oil prices. Spot gold and silver prices are moving in-line with the broader commodities index, trading lower by over 0.3% apiece.
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